Speakman, Artaserse and Haneman. The opinion of the court was delivered by Haneman, J.s.c. (temporarily assigned).
[41 NJSuper Page 368] On September 12, 1951 the District Director of Internal Revenue
at Newark, New Jersey, received an assessment list from the Commissioner of Internal Revenue, which list demonstrated that Leone Construction Company, Inc. (hereinafter referred to as Leone) owed the United States withholding taxes on the second quarter of 1951 payrolls in the amount of $3,928.81. A federal tax lien was thereafter filed against Leone on November 20, 1951 in the Bergen County Clerk's Office, Book 9, page 468.
On December 3, 1951 the District Director of Internal Revenue at Newark, New Jersey received an assessment list from the Commissioner of Internal Revenue, which list demonstrated that Leone owed the United States withholding taxes on its third quarter of 1951 payrolls in the amount of $3,058.62. A federal tax lien was thereafter filed against Leone on February 14, 1952 in the Bergen County Clerk's Office, Book 10, page 133.
On June 27, 1952 the District Director of Internal Revenue at Newark, New Jersey, received an assessment list from the Commissioner of Internal Revenue, which list demonstrated that Leone owed the United States withholding taxes on its first quarter of 1951 in the amount of $5,830.92. A federal tax lien was thereafter filed against Leone on October 10, 1952 in the Hudson County Register's Office, Book 5, page 549.
On August 19, 1953 Leone entered into a contract with the plaintiffs Rocco Damato and Rosario Damato, trading under the name of Damato's Gas Station and Garage (hereinafter referred to as Damato), for the erection of a gas station for said plaintiffs on premises owned by them at Seventh Street and Newark Avenue, Jersey City, New Jersey, for the sum of $26,238. By reason of certain extras agreed upon between the parties, the total sum of the contract was increased to $27,961.10. Of this sum Damato paid $18,827, leaving a balance of $8,134.10.
All of the defendants, with the exception of Star Roofing Co., Clark Door Company, Inc., and Union Glass Co. had, before undertaking any work on their subcontracts with Leone, filed mechanic's notices of intention. J. Turco Paving
Contractor, Inc. was the sole contractor or materialman who filed a lien claim pursuant to N.J.S. 2 A:44-91. The last work under the contract was performed on March 5, 1954, after which date Leone apparently abandoned its contract. On March 10, 1955 plaintiffs filed a complaint by way of interpleader, seeking to deposit the balance of $8,134.10 above referred to into court. The appellant United States of America intervened in this action. On a motion for summary judgment, the court granted judgment for the plaintiffs in interpleader. At the plenary trial held thereafter, the court concluded that the appellant's contention that it was entitled to prior payment by virtue of its federal tax lien was without merit, and judgment was entered in behalf of the defendant subcontractors.
The court found that on March 5, 1954 the work left unfinished would have required the expenditure of $4,134.50. (Damato concedes error in this figure, and that it should be $3,862), which included the completion of the outside porcelain work, concrete driveways, repair to roofing (should have been for electrical work), installation of heating, repairs to defective overhead doors, and to remove an encroachment in order to comply with the terms of the contract. Other damages also were claimed, but there was no proof of their amount.
During the progress of the construction the New Jersey Turnpike condemned the premises, and in order to give clear title, plaintiffs agreed, at the request of the Turnpike Authority, to hold certain monies in escrow to satisfy the claims of subconstractors in return for the latter discharging their mechanic's notices of intention, lien claim, and any rights under the Mechanic's Lien Law. In reliance upon this agreement the subcontractors did execute the required discharges of their rights to effectuate the above purpose.
The statute under which the appellant claims its right to priority reads as follows:
"§ 3670. * * * If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, penalty, additional ...