Francis, Hall and Burton. The opinion of the court was delivered by Francis, J.A.D.
[36 NJSuper Page 574] Plaintiff Tanenbaum Textile Co., Inc., brought this action in replevin to obtain possession of a check dated November 13, 1952, in the amount of $6,284.25 drawn on the Treasurer of the United States by the New York Quartermaster Procurement Agency to the order of
defendant Vogue Foundations, Inc. The check had been endorsed in blank by Vogue and was in the hands of its attorney, the defendant Herman Golden, Esq. Pursuant to the writ the sheriff seized the instrument and delivered it to Tanenbaum which posted a bond to secure payment in accordance with the judgment of the court.
The United States of America intervened through the District Director of Internal Revenue, claiming the proceeds by virtue of certain tax liens against Vogue. Golden asserted rights in the check by reason of an alleged attorney's lien for services rendered to Vogue. Vogue counterclaimed but its answer and counterclaim in the replevin action are not included in the appendix and consequently the nature of the claim does not appear. The pretrial order reserved the counterclaim for disposition by jury trial at a later time. In answer to the intervention, Vogue admitted the existence of tax liens in an amount in excess of the check and also that as to it the United States had a prior right to the sum represented thereby. The admission could not have been avoided since prior to November 13, 1952 unpaid taxes withheld by Vogue totaling $13,193.48 had appeared on the assessment list received by the District Director, and thus constituted liens. 26 U.S.C.A. § 3671 (1940). In fact, $11,478.69 of these liens had been recorded with the Register of Essex County prior to the assignment and the agreements hereafter referred to.
After hearing without a jury, the trial court determined that Tanenbaum was entitled to the check and the proceeds thereof and that its right was paramount to the tax lien. Golden was declared to have no interest therein. Judgment was entered for Tanenbaum against all defendants. The United States filed this appeal.
Absence of disposition of the Vogue counterclaim raised a serious question as to whether an appealable final judgment existed. The right of appeal arises only when a controversy presented to the trial court is adjudicated as to all parties and all issues (Peterson v. Falzarano , 6 N.J. 447, 453 (1951); Vollbehr v. Ingram , 22 N.J. Super. 249 (App.
Div. 1952)), subject to the qualification established by R.R. 4:55-2, which was not taken advantage of here. However, our inquiry at the oral argument elicited the undisputed information that the counterclaim has since been withdrawn. On this agreement we shall deal with the issues presented.
Recital of the facts is necessary to an understanding of the claims of the parties.
On December 6, 1951 the New York Quartermaster Procurement Agency awarded a contract to Vogue for the manufacture of 250,000 waterproof clothing bags at a price of $1.05 per bag. Delivery was to be made between March 31 and June 30, 1952. Apparently in anticipation thereof, Tanenbaum contracted to furnish the material necessary to the making of the bags, namely, 254,500 yards at $.7538 per yard. The terms called for payment ten days after delivery of each shipment.
Between February and April 1952 Tanenbaum delivered in excess of 21,000 yards of the cloth. On April 15 Vogue was advised that its credit line was exhausted and unless satisfactory arrangements were made, further shipments would be on a cash basis only.
As the result, on April 25, 1952 a letter agreement was entered into under which Tanenbaum undertook to advance $1,500 to Vogue to enable it to meet current payroll expenses, and further to deliver the balance of the yardage to complete the commitment to the government. To assure payment, Vogue agreed to establish a special account in a bank to be selected by Tanenbaum and to deposit therein all moneys received from the United States for performance of the clothing bag contract, subject to withdrawal only on the signature of an officer of Tanenbaum.
Tanenbaum was further authorized thereby to draw on the account for reimbursement of the $1,500 and to the extent of $.76 per bag shipped to the government. Any remaining balance was to be turned over to Vogue. The account was to continue until all goods sent to Vogue were paid for.
It was agreed also that Vogue would execute any documents necessary "to effectively assign to a financial institution
to be designated by" Tanenbaum, "all of our right, title and interest" in the government contract to secure all monies due or to become due to Tanenbaum. The record shows that the bank account was opened. An assignment to the Bank of Manhattan Company, dated June 24, 1952, was put in evidence. The late date was not explained.
In July, when only 26,500 bags had been delivered, Vogue experienced further and apparently insurmountable obstacles in its attempt to fulfill the government contract. On July 17, 1952 the Procurement Agency was advised that an "impasse" had been reached "due to factors entirely beyond our control." The letter asserted that the lessor of the premises leased by Vogue for its manufacturing purposes had discovered that the process used in cementing the bags was contrary to the terms of the lease and had refused permission for the work to continue. Efforts to locate other quarters had been unsuccessful.
On account of its inability to proceed further, Vogue requested permission to "subcontract the balance" of the contract to Electro-Plastics Fabrics, Inc., of Pulaski, Va. It proposed to do this at "no profit" and in order to expedite delinquent deliveries.
No additional cost was to be involved for the government and if any such cost arose, Vogue would absorb it. The letter pointed out that the cloth necessary for the remaining bags was being held by ...