#### UNITED STATES of America v. DEL RAY SPORTSWEAR, INC., Parlane Sportswear Co., Inc., and Jay L. Fialkow.

Civ. A. No. 63-862.

United States District Court D. Massachusetts.

Sept. 23, 1965.

*449Thomas R. Manning, Tax Division, Department of Justice, Washingon, D. C., for plaintiff.

Richard A. Kaye, of Kaye & Fialkow, Boston, Mass., for defendants.

CAFFREY, District Judge.

This matter came before the Court on the Government’s motion for summary judgment. The motion is based upon the deposition of Paul B. Gold, President of defendant Parlane Sportswear Co., Inc.; affidavit of Alvin M. Kelley, District Director of Internal Revenue Service; affidavit of William B. Duffy, Jr., Assistant United States Attorney; a certified copy of notice of federal tax lien filed with the Town Clerk, Town Hall, Whitman, Massachusetts, on November 2, 1962; a certified copy of the articles of incorporation of Del Ray Sportswear, Inc.; and the complaint and answer. An affidavit of Paul B. Gold was filed in opposition to the motion and the parties have filed memoranda of law in support of their respective positions.

The taxpayer involved herein is Del Ray Sportswear, Inc. (Del Ray), a Massachusetts corporation with a place of business in Whitman, Massachusetts. A default judgment was entered herein against Del Ray on December 30, 1964 in the amount of $12,180.61, and the United States seeks to enforce tax liens asserted against property of Del Ray in partial satisfaction of that judgment. The property against which the Government seeks to foreclose its lien is a fund of $1747.27 alleged to be in the possession of defendant Jay L. Fialkow, Esq.

It appears from the papers referred to above that on November 9, 1962 the defendant Parlane Sportswear Co., Inc. (Parlane), a Massachusetts corporation with a usual place of business in Boston, Massachusetts, advanced funds to Del Ray in excess of $1747.27. On that date Del Ray had completed certain work under a contract it had with Sherry Hill Sportswear, Inc. (not a party herein), but because of insufficient funds to pay its employees Del Ray was unable to deliver the completed work to Sherry Hill. Also on November 9, 1962, the defendant Jay L. Fialkow, as attorney for Parlane, received four checks drawn by Sherry Hill payable to Del Ray in the total amount of $1747.27, representing the amount due from Sherry Hill to Del Ray for the work done by Del Ray for Sherry Hill. These checks were deposited to Fialkow’s account and remittance was made to Parlane.

On October 2,1962, more than a month prior to November 9, 1962, the District Director of Internal Revenue made an assessment against Del Ray for a federal withholding tax deficiency for the second quarter of the year 1962 in the amount of $6856.74, and on October 2 a notice of and demand for payment of this assessment was made on Del Ray, but no payment was made. Notices of federal tax liens pertaining to this assessment were filed with the Town Clerk, Town Hall, Whitman, Massachusetts on November 2, 1962, and with the Registry of Deeds, Plymouth County, Plymouth, Massachusetts, on November 9, 1962.

By reason of the provisions of 26 U.S. C. 6321, which accords to the United States a lien upon all property and rights to property belonging to a taxpayer who neglects or refuses to pay his tax liability after demand, and by reason of 26 U.S.C. 6322, which provides that the lien imposed by Section 6321 arises at the time the assessment is made, and by reason of the provisions of 26 U.S.C. 6323 dealing *450with the validity of the lien after notice thereof has been filed in accordance with State law, I rule that the United States acquired a valid lien against the personal property of the taxpayer Del Ray on November 2, 1962; that the $1747.27 in the possession of the defendant Parlane is property or right to property of Del Ray; that the lien of the United States having been duly recorded takes priority over the rights of Parlane; that Del Ray is indebted to the United States in the amount of the default judgment, $12,180.-61; and that the federal tax lien filed on November 2, 1962 with the Town Clerk, Whitman, Massachusetts in the sum of $6856.74 is entitled to priority to the fund of $1747.27 in possession of Parlane as against Parlane’s claim. Accordingly, it is ordered that said federal tax lien be foreclosed against said fund, that the defendant Parlane turn over the fund to the United States of America in partial satisfaction of the debt of Del Ray; and that the United States of America recover a deficiency judgment against Del Ray for the remaining portion of the unpaid federal tax liability.