Document: 363 U.S. 509 80 S.Ct. 1277 4 L.Ed.2d 1365 Robert AQUILINO and Joseph Spero, d/b/a Home Maintenance Company, Colonial Sand Stone Co., Inc., Petitioners,v.UNITED STATES of America, Ada Bottone, et al. No. 1. Argued Oct. 15, 1959. Decided June 20, 1960. Mr. Charles S. Friedman, Mount Vernon, for petitioners. Howard A. Heffron, Washingon, D.C., respondents. Chief Justice WARREN delivered the opinion Court. 1 In this case we are asked to determine which two competing claimants—the Federal Government by virtue its tax lien, or certain petitioning subcontractors their rights under Section 36—a New York Lien Law—is entitled a sum money owed general construction contract was performed taxpayer. 2 The taxpayer, Fleetwood Paving Corporation, is contractor, in July August 1952, agreed remodel restaurant belonging one herein referred as owner. petitioners September that year entered into subcontract with taxpayer supply labor materials remodeling job. Shortly thereafter, obligations subcontract, but were not fully compensated contractor-taxpayer. Therefore on November 3, 10, they filed notices mechanic's liens owner's realty office Clerk Westchester County. 1953, instituted actions Supreme Court foreclose those liens. 3 By order court, owner permitted deposit court $2,000 she still original contract, thereafter dismissed defendant action. Government, having previously levied upon alleged indebtedness enter party defendant. asserted precedence over claims because following facts: Director Internal Revenue December 1951 March 1952 received assessment lists containing assessments against unpaid federal withholding social security taxes. On October 31, notice City York, city wherein maintained principal place business. claimed priority lien Sections 3670 3671 Code 1939, 26 U.S.C.A. §§ 3670, 3671.1 contended since contractor-taxpayer them more than $2,200 supplied job, Law, 36—a,2 he had no property interest contract. 5 Court, Special Term, 140 N.Y.S.2d 355, granted petitioners' motion summary judgment. ground decision Government's ineffective it been designated law filing realty. appeal, Appellate Division affirmed, there debt due from could attach, A.D.2d 747, 153 268. reasoned fund deposited substitute her attached; property, have substituted property. Appeals held taken effect prior claims. It therefore reversed lower courts, ruled United States judgment, rather petitioners, should Term. N.Y.2d 511, 169 9, 146 N.E.2d 774. We certiorari, 359 904, 79 577, 570. 6 threshold question case, all cases where asserts whether what extent 'property' 'rights property' attach. answering question, both state courts must look law, has long rule 'in application revenue act, controls determining nature legal * sought be reached statute.'3 Morgan v. Commissioner, 309 78, 82, 60 424, 426, 84 L.Ed. 585. Thus, only Terms ago, 'creates merely attaches consequences, federally defined, created *.' Bess, 357 51, 55, 78 1054, 1057, 1135.4 However, once attached taxpayer's state-created interests, province consistently determines property.'5 Vorreiter, 355 19, 23, reversing 134 Colo. 543, 307 P.2d 475; White Bear Brewing 350 1010, 76 646, 100 871, 7 Cir., 227 F.2d 359; Colotta, 808, 725, 224 Miss. 33, So.2d 474, 86 19; Scovil, 348 218, 75 244, 99 271; Liverpool & London Globe Ins. 215, 247, 268; Acri, 211, 239, 264; Britain, 347 81, 74 367, 98 520; Gilbert Associates, 345 361, 73 701, 97 1071; Security Trust Sav. Bank, 340 47, 71 111, 95 53; People State Illinois ex rel. Gordon Campbell, 329 362, 67 340, 91 348; Waddill, Holland Flinn, 323 353, 65 304, 89 294. ascertaining reconciling lienors based logic sound principles. This approach strikes proper balance between legitimate traditional creating defining citizens, necessity uniform administration statutes. Petitioners contend did make determination light these settled Relying express language Law number decisions interpreting statute, conclude actually his right collect amounts constitute direct trust benefit subcontractors, bare title any beneficial so proceeds remain after settled. other hand, gives an ordinary contractor-taxpayer's encompass entire 8 conflict resolved buy highest York. cannot say satisfactorily resolved.6 find discussion court's indicate possessed law. Nor made clearly defined. believe interests concerned questions decided vacate judgment Appeals, remand may ascertain then dispose according established principles 9 Vacated remanded. 10 HARLAN, dissenting Nos. 23.* 11 I am unable subscribe reasoning underlies Court's disposition cases. holding turn sanctioned result prohibited us line dealing liens.1 12 cases, delinquent defaulting contractor whose unpaid. chose action allegedly holds real estate improvements made, respect If enforce imposing action, would prevail. Under cited note 1, supra, 36712 prevails such except (1) attach become 'choate' before attaches, (2) specifically protected § 3672(a), 3672(a).3 conceded present 3672(a) considered choate applicable decisions. See Kings County Iron Works, 1955, 232. 13 believes, however, different, Aquilino claim claims, Durham Lumber given, circumstances superior contractor. said that, subcontractors' thus him owner, enunciated 1135, can exists 14 see how makes difference, purposes tax-lien purports prefer parties claiming through giving contractor's itself. instances, contractual duty pay latter subcontractors. attempting satisfy And seeking themselves precisely same thing—a arises relationship contractor.4 neither instance entitles them, required main obligates him. requires subordination ignored instance, does equally other. 15 Bess require contrary conclusion. That while cash surrender value life insurance policy owned paid death, during life. There reason why concepts control. To read standing proposition also controlling defeats '(t)he relative taxes always determined finally courts.' 213, 241, 264. thing say, require, rule, disregarded. quite another permit control lien's situations indistinguishable fact, rightly wrongly, enforced rule. Given supremacy field, surely appraise true impact within criteria Cf. Carpenter Shaw, 280 363, 50 121, 122, 478; Detroit Murray 489, 492, 458, 460, 441. recognize substantial equivalence create new evenhanded already one. seems me Judge Fuld not, past our defeat otherwise converting subcontractor.5 16 lead confusion statute. A diminished imposition interest, liened portion nor alienate it. Yet situation, affected diminution. 215. preserved today's decision, subsequent elusive distinction diminishing greater initially conferring lesser one.6 very difficulty experiences trying really full ownership subject favor demonstrates futility draw distinctions purposes. venture suggest remand, equal facility label 'lien,' relevant incidents being either case. Why legislatures readily respond choosing former alternative? 17 affirm reverse 23 North Carolina accord arising without satisfying requirements laid down standard choateness thought undesirable restriction States' freedom regulate relationships, establishing expressly overruled emasculated dubious distinctions. 18 BLACK, adhering views expressed Commissioner Stern, 39, 1047, 1052, 1126, 59, 1059, concurs opinion. 3670: 'If person liable neglects refuses demand, amount (including penalty, additional amount, addition tax, together costs accrue thereto) shall personal, person.' 3671: 'Unless date fixed arise at time list collector continue until liability satisfied becomes unenforceable lapse time.' These provisions appear 1954 Code. Int.Rev.Code 1954, 6321, 6322, 6322. McKinney's N.Y. Laws, (1958 Supp.), 36—a, provides follows: 'The funds improvement hereby declared hands applied first payment architects, engineers, surveyors, laborers materialmen out improvement, premiums surety bond bonds accuring making officer, director agent who applies consents purpose fails hereinbefore mentioned guilty larceny punishable provided section thirteen hundred penal Such civil article three-a chapter share fund, filed, file, recovered improvement. For only, include obligation moneys well him.' repealed N.Y.Laws 1959, c. 696, 14. matter covered now included N.Y.Consol. (1959 70, 71. suggested definition governed although supplying content nebulous body apparently left future think unsound ignores long-established role played places task undefined indeed anomalous 'property which, all. unique existed here. aside fact involved payable policy, whereas involves apparent essentially identical. assert adverse theory never acquired Finally, attempted characterize problem involving claimants solely death. considerations led conclusion announced inconsistent mandate governs fail perceive lies inconsistency. declare efficient resolve interests. Subsequent Appeals' instant re 300, 184 585, 157 587, petition writ certiorari sub nom. Coblentz, 841, 1606. Coblentz authority assignment 475 Judiciary Consol.Laws, 30 B15—37.0 Administrative (No. Co. al., 522, 1282.) Savings 1950, Ltd., 725; 1956, 871; 1957, 23; R. F. Ball Construction 1958, 442, 510; Hulley, 358 66, 117, 106. text sections, set forth page 1279. comparable 6321 printed notes 524, 1283. section, amended, provides: 'Such valid mortgagee, pledgee, purchaser, creditor thereof 53 Stat. 882. provision 6323(a). noteworthy furnish statement 'before receiving part price, due,' retain appropriate 'from contractor.' N.C.Gen.Stat.1950, 44—8. (Emphasis added.) Although indicates statutory conditions satisfied, obviously recognizes basis transaction source rights. akin estate, suggests, monetary 'It is, now, exceedingly paramount levy uniformly throughout land. 474; 220—221, 244; 87, 367; 232, 237. so, follows state's respondents point—that deemed 'trust funds' (§ 36—a; 13, subd. (7))—may construed affect government lien.' N.Y.2d, 516, 14, N.E.2d, pages 777—778. will do distinguish type lien-priority remains sense enjoy if discharges secures. temporarily deprived device securing debt, restored enjoyment when discharged. illusory collected alienated 'real' Whether diminution sufficiently definite complete admitted 'choateness' developed applied, retained taxpayers here imposed prevailed lien.

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