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UNITED STATES v. CAPOBIANCO

January 7, 1987

UNITED STATES OF AMERICA
v.
FRANK CAPOBIANCO, ET AL.



The opinion of the court was delivered by: TROUTMAN

 This Memorandum and Order represents another chapter in the continuing saga of the government's attempt to collect more than $194,000 in unpaid taxes owed by Frank Capobianco. The convoluted history and surprising developments are set forth in detail in this Court's prior Memorandum and Order. United States of America v. Frank Capobianco, et al., No. 80-2500, slip op. (ED. Pa. November 20, 1984).

 At issue then, as now, was the status of a property on Madison Street in Allentown, Pennsylvania. In mid-1983, all parties remaining in the case believed that the property had been sold pursuant to a foreclosure of the mortgage held by Onofrio Capobianco. Pursuant to that belief, Onofrio's estate, recognizing the validity of the government's tax lien on the property, even though it had been sold, agreed to a summary judgment against it in the amount of $7,449.50. It later developed, however, that Onofrio himself had purchased the property at the foreclosure sale through an attorney, Robert McFadden. Hence, no distribution had been made to Onofrio as a result of the sale and his estate was no longer willing to make a cash payment. It did not, however, oppose the government's subsequent motion for summary judgment which sought the sale of the Madison Street property and the entire proceeds thereof in satisfaction of the tax liens.

 After summary judgment had been granted, Michael Capobianco sought to enter the case and assert his purported interest in the Madison Street property. For reasons previously stated, we held that Michael had no interest in the property and thus denied his motion to intervene as a defendant. That decision resulted in an appeal. Before it was decided, however, both the United States and Michael Capobianco agreed to have the case remanded for the purpose of determining Michael Capobianco's interest in the property. Accordingly, we permitted his intervention in 1985. In April, 1986, we denied the government's motion to dismiss Michael's counter-claim challenging the continuing validity of the government's tax liens against the Madison Street property.

 Now before the Court is the government's motion for summary judgment, once again seeking foreclosure of its liens against the Madison Street property. Michael Capobianco opposes the motion, contending that the liens were discharged by the mortgage foreclosure sale held in 1981.

 It is obvious that the threshold question at this juncture is whether Michael Capobianco owns the Madison Street property. If he does not, he has no standing to challenge the validity of the government's tax liens against it. The estate of Onofrio Capobianco agreed to recognize the liens in 1984, although it repudiated that portion of the agreement which called for a cash payment to the government. As noted, the estate did not oppose the government's later motion to foreclose its liens against the Madison Street property and obtain the entire proceeds of the sale thereof.

 Although we now have a more extensive record available, the additional information supplied to the Court through the depositions of Robert McFadden and James Williams and the affidavits of Anthony Capobianco *fn1" merely confirm the correctness of our prior determination that Michael Capobianco does not own the disputed property.

 According to the testimony of Robert McFadden, the attorney who purchased the property at a mortgage foreclosure sale held in May, 1981, Onofrio and Frank Capobianco, who were brothers, directed McFadden to execute on a previously obtained foreclosure of the mortgage that Onofrio held against Frank's Madison Street property. (McFadden Deposition at 31). At Onofrio's direction, McFadden bid on the property at the sale and bought it for $25,000. (Id. at 10). After exceptions to the sale were dismissed in September, 1982, the Sheriff of Lehigh County contacted McFadden to inquire as to whose name should go on the deed. Pursuant to Onofrio's instruction, McFadden directed the Sheriff to put Michael Capobianco's name on the deed and send the deed to McFadden. Thereafter, the deed was recorded according to established procedures relating to mortgage foreclosure sales and the deed was mailed to Robert McFadden. (Id. at 45-48). McFadden testified that his final conversation with Onofrio Capobianco with respect to the Madison Street property occurred in September, 1982, when he was directed to have Michael's name placed on the deed. (Id.) McFadden also testified that Onofrio never told him what to do with the deed and that he kept it in his files where it still remains, and never told anyone, including Michael, about it. (Id. at 49-42). Onofrio died in December, 1982.

 Although Michael did not become aware of his record title to the property until the summer of 1984, and the deed is still in the possession of Robert McFadden, he contends that delivery of the deed to McFadden at Onofrio's request constitutes constructive delivery to him. Thus, he contends that he now owns the property, and further contends that the government's tax liens were discharged by the 1981 sale.

 Contrary to Michael's argument that there are disputed factual issues with respect to Onofrio's donative intent, the sole issue for resolution is a legal one: do the foregoing undisputed facts establish constructive delivery of the deed to Michael under the law of Pennsylvania?

 In Fiore v. Fiore, 405 Pa. 303, 174 A.2d 858 (1961), the Pennsylvania Supreme Court reiterated that one of the indispensable requirements for establishing a grantee's ownership of gift property is legal delivery of the deed to him. While delivery need not be actual, and the grantee need not know that he was deeded the property, placing the deed in the hands of a third person, standing alone, is not effective as constructive legal delivery. "In order for the delivery to be effectual and result in a culmination of the transition of the title, there must be an express and definite instruction that the deed is to be given to the grantee then or at some future time[.]", Id. (emphasis in original) (citations omitted).

 Here, it is undisputed that there was no such instruction. Moreover, the deed remains in the possession of the third party, McFadden. Since there has not been legal delivery of the deed, title to the property has never passed to Michael Capobianco. Further, since Onofrio Capobianco is now deceased, there can be no instruction and no delivery.

 While Michael seeks to focus the Court's attention on issues of fact with respect to donative intent, that aspect of whether there was an effective gift of the property from Onofrio to Michael is rendered irrelevant by the failure of delivery. Thus, Michael's assertion that the government failed to move for summary judgment on purely legal grounds is without merit.

 In an ordinary case, our disposition of the delivery issue would end the matter. An additional issue, such as the validity of the government's tax liens on the disputed property, would not normally be addressed in that it is not necessary for a decision on the motion. *fn2" This case, however, has not been ordinary. The mere fact that the matter has been pending for more than six years attests to its unusual character. Although the claims of Onofrio Capobianco's estate have already been adjudicated, the Court would not find it surprising if the executors, heirs, devisees or beneficiaries were now to seek further delays in the foreclosure of the liens. There seems to be no shortage of Capobianco relatives to come forward, sequentially, claiming that someone's purported interest in the property has not been properly taken ...


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