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KARNO-SMITH CO. v. MALONEY

August 14, 1939

KARNO-SMITH CO.
v.
MALONEY, Collector of Internal Revenue



The opinion of the court was delivered by: FORMAN

The facts in this case, as given below, were stipulated, and the case was tried without a jury.

On October 21, 1931, the plaintiff, general contractor, entered into a contract with the State House Commission acting for the State of New Jersey for the construction of boulevards and approaches to the State House Addition and War Memorial Building at Trenton, New Jersey. On November 16, 1931, the plaintiff entered into a contract with the New Jersey Brick and Supply Co., Inc., to furnish and deliver all granite for the undertaking. The New Jersey Brick and Supply Co., Inc., in turn, purchased the granite from the Cold Spring Granite Co. The granite so purchased actually went into the operation.

 Pursuant to the provision of the Statute of New Jersey, entitled, "An Act to protect persons performing labor or furnishing materials for the construction, alteration or repair of public works", approved Feb. 16, 1918 (N.J.Laws of 1918, page 203 [N.J.S.A. 2:60-207 et seq.]), plaintiff, as general contractor, gave a bond conditioned, among other things, for the payment by all subcontractors for all materials furnished in the construction of said public works.

 Now, the New Jersey Brick and Supply Co., Inc., also owed the United States Government money for income tax for the year 1930, and on February 28, 1932, a warrant for distraint was served upon the New Jersey Brick Co. for the balance of its 1930 tax. This warrant remained unsatisfied, and on September 10, 1932, a notice of tax lien was recorded in the office of the Clerk of Mercer County, New Jersey, which disclosed that the New Jersey Brick and Supply Co. hereinafter called the taxpayer, was indebted to the United States in the sum of $1,145.67 for Income Taxes for the year 1930.

 On September 12, 1932, the defendant's predecessor in office served a notice upon the plaintiff in the following language:

 "Notice of Levy on Bank Deposits

 "United States of America,

 "First Collection District

 "State of New Jersey

 "To Karno-Smith Company,

 (Name of bank with which taxpayer has money ...


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