The opinion of the court was delivered by: BECHTLE
Presently before the court is a motion for summary judgment filed by defendants William and Maris Plaginos ("Plaginos"), and a motion for summary judgment filed by defendant United States Internal Revenue Service (the "government"). Briefly stated, the moving parties here call upon the court to resolve the validity and priority of an assignment of a Pennsylvania liquor license to the Plaginos and of a subsequently filed federal tax lien on that liquor license. For the reasons stated herein, the motion of the government will be denied, and the motion of the Plaginos will be granted.
The parties have stipulated to all of the material facts.
On June 5, 1980, Main Line Restaurants, Inc. ("Main Line") borrowed $60,000.00 from Jaybee Loan Company ("Jaybee"). Main Line gave Jaybee a security interest in all of its restaurant equipment, including Restaurant Liquor License No. R-12993. Subsequently, financial statements were timely filed covering the equipment, including the liquor license, with the Recorder of Deeds of Montgomery County, the Prothonotary of Montgomery County, and the Secretary of the Commonwealth of Pennsylvania. Presumably Jaybee also took possession of the liquor license.
On April 13, 1981, April 20, 1981, and August 3, 1981, the Commissioner of the Internal Revenue Service (the "Commissioner") assessed against, gave notice to, and demanded payment from Main Line for unpaid trust fund federal employment taxes and interest for the third and fourth quarters of 1980 and the first quarter of 1981. On July 20, 1981, the Commissioner assessed against, gave notice to, and demanded payment from Main Line for unpaid federal unemployment taxes and interest for 1981. These assessments remain unsatisfied, and additional amounts have accrued since the date of notice and demand. The government filed notices of a federal tax lien under the Internal Revenue Code with the Prothonotary of Montgomery County on July 15, 1981, September 1, 1981, and June 22, 1983.
On May 23, 1983, Jaybee assigned its title and interest in the liquor license to the Plaginos.
The appropriate financing statements were timely filed with the Recorder of Deeds of Montgomery County, the Prothonotary of Montgomery County, and the Secretary of the Commonwealth of Pennsylvania. Presumably the Plaginos also took possession of the liquor license.
On June 23, 1983, the May agreement was revised by supplemental agreement ("June agreement") between Main Line, the Plaginos, and 21 West. In the June agreement Main Line agreed to transfer the liquor license directly to 21 West for a consideration of $60,000.00,
and the Plaginos agreed to sell the other liquor and restaurant assets of Main Line, excluding those for which the May agreement directed an inventory to be taken,
to 21 West for a consideration of $115,000.00 Payment of the consideration for the liquor license and the $115,000.00 inventory was to be made directly to the Plaginos.
On August 17, 1983, the government served notice on 21 West seeking all property of Main Line which was in 21 West's possession, plus statutory additions. This amount totaled $60,359.58. On June 18, 1984, 21 West, pursuant to a court Order, deposited the sum of $62,283.12 with the Registry of the Court which represents the sum of $60,000.00 plus interest thereon from December 20, 1983. From this fund, 21 West was awarded costs of $30.50.
The Plaginos and the government are now before the court claiming the interest in the fund. The parties stipulate that no funds have been turned over to the government.
Main Line, 21 West, and the Commonwealth of Pennsylvania disclaim all further interest in the fund.
The Plaginos argue: (1) the government's execution on a Pennsylvania liquor license is wrongful because the federal statute permits the government to levy upon property only as defined by state law and a liquor license is not property under Pennsylvania law; (2) execution on the liquor license by the government is wrongful because the execution would impair the Plaginos' property interest in the license; and (3) execution on the liquor license by the government is wrongful because the execution would impair the Plaginos' property interest.
The government argues on the contrary that: (1) the Plaginos acquired no property right directly in or collateral to the liquor license; and (2) the Internal Revenue Code authorizes the Commissioner to lien and levy ...