right of a defendant to proceed against a taxpayer or the one from whom the tax is alleged to be due. It merely restrains defendant's activities as to property on which the plaintiff has acquired a prior lien. * * * Our holding in this respect is, of course, predicated upon the issue raised by defendant's motion to dismiss. Whether the plaintiff, upon final hearing, can establish his prior lien, so as to entitle him to a permanent injunction, is a matter for the further consideration of the District Court.'
The cases cited and quoted above amply establish the jurisdiction of this court and, incidentally, are applicable to defendant's argument on these motions that plaintiffs have failed to state facts upon which relief can be granted. Further reference to the latter arguments will be made infra.
The fact that plaintiff's claim as the equitable, rather than as legal, owners of the money, does not weaken the soundness of their position in their suit to quash the distraint upon property alleged not to belong to the tax payer. Compare Hubbard Inv. Co. v. Brast, 4 Cir., 59 F.2d 709; Glenn v. American Surety Co., 6 Cir., 160 F.2d 977.
Defendant, United States of America, contends next that as to it, the court is without jurisdiction. In support defendant cites the well established rule that the sovereign is not subject to its courts except as is consents to be.
Such consent, however, is precisely found by Act of Dec. 2, 1942, 56 Stat. 1026, 28 U.S.C.A. § 901 et seq. Sec. 1 thereof as amended now provides:
'Upon the conditions herein prescribed for the protection of the United States, the consent of the United States is given to be named a party in any suit which is now pending or which may hereafter be brought in any United States district court * * * to quiet title to or for the foreclosure of a mortgage or other lien, upon real estate or personal property, for the purpose of securing an adjudication touching any mortgage or other lien the United States may have or claim on the premises or personal property involved.'
The applicability of this section to the instant proceeding is amply illustrated by the decision in the case of Jones, Coolector, v. Tower Production Company, 10 Cir., 138 F.2d 675, 677. That action was initially instituted to enjoin the Collector from enforcing an asserted lien upon property claimed to be owned by one, Wofford, which property the plaintiff claimed was owned by it. A decree was entered enjoining the collector and on appeal the court said:
'The real purpose of the action was to secure an adjudication that the beneficial title to an undivided one-half interest in the leases never vested in Wofford and that the tax lien of the United States never attached thereto. It was not a simple case where a Collector seeks to collect by distraint the taxes of one person out of the property of another.
'There was a real controversy, presenting substantial issues of law and fact, respecting the title to an interest in the leases and the funds and the claim that the lien of the United States attached thereto. It was necessary to determine that controversy before the relief sought could be granted. It was, in substance, an action to determine title and the rights of the United States under a tax lien asserted by it against such interest and the funds. Upon the issues thus presented the United States was entitled to be heard. The question of whether a suit is against the United States is not to be determined by the mere nominal party on the record, but by the issues presented and the effect of the judgment which can be entered in response to those issued. * * * We conclude that it was a suit against the United States.
'The United States now can be made a party to the action under the Act of December 2, 1942 and the rights of Tower and the United States can be fully adjudicated and a binding decree entered.'
The words of the court quoted above find equal application in the present proceeding. The United States is accordingly properly a party to this action and defendant's motion to dismiss as to it, is denied.
The final contention made by both defendants to these motions is that the complaint fails to state facts upon which any relief can be granted against either.
This contention similarly is without merit and cannot be sustained. Defendants, in their brief, argue that while it is conceded that the prohibitions contained in title 26 U.S.C.A. Int.Rev.Code, § 3653, supra, do not include a suit brought by a third party to restrain the Collector from levying on property belonging to the third party to satisfy the tax liability of another ( Jones v. Kemp, 10 Cir., 144 F.2d 478, 480; Long v. Rasmussen, D.C., 281 F. 236; Rothensies v. Ullman, supra), the instant suit is not such an action. It is argued that the complaint does not allege a levy upon any property of the plaintiffs, the only levy mentioned being upon the property of Mary E. Walsh, which is in the hands of the Federal Trust Company.
Examination of the allegations of the complaint, however, fails to support this contention. As noted hereinbefore, paragraph 4 invokes the jurisdiction of this court 'upon the fact that property of the plaintiff 'has been taken or detained' by defendant John E. Manning * * * .'
Again in paragraph 17 of the complaint the allegation is that defendant Manning issued a warrant for distraint and subsequently levied 'upon the aforesaid monies in the possession of Federal Trust Company, surviving trustee as aforesaid, as monies belonging to said Mary E. Walsh * * * .' And finally in paragraph 19 of the complaint the plaintiffs allege that the monies 'are the property and monies of the plaintiff's and not the said Mary E. Walsh and are not subject to distraint, levy or seizure by defendants * * * .'
In the face of these and other allegations of the complaint and of the cited decisions, supra, there is a sufficient averment of facts upon which relief might be granted against both defendants. Such relief is dependent, of course, on whether upon trial of the issues, plaintiffs can establish their lien as prior to that of the defendants so as to entitle them to the permanent injunction they seek.
The motions, accordingly, are denied. An order may be submitted in accordance with the conclusions above.