The opinion of the court was delivered by: SMITH
The claim of the plaintiff to a prior lien is predicated on the pertinent provision of Section 3670 of Title 26 U.S.C., 26 U.S.C.A. § 3670. This section reads as follows:
'If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, penalty, additional amount, or addition to such tax, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.'
Section 3671 of Title 26 U.S.C. 26 U.S.C.A. § 3671, which is also applicable, reads as follows:
'Unless another date is specifically fixed by law, the lien shall arise at the time the assessment list was received by the collector and shall continue until the liability for such amount is satisfied or becomes unenforceable by reason of lapse of time.'
The right to the fund here asserted by the defendants, except Nelson F. Stamler, is predicated on the pertinent provisions of the New Jersey Statute, N.J.S.A. 2A:152-7 152-7 to 2A:152-10, inclusive. These are quoted in the appendix hereto annexed.
It appears from the stipulation of facts that prior to October 23, 1950 criminal proceedings against one Leo Link, alias J. W. Donaldson, the taxpayer, were instituted by the law enforcement officials of the County of Cumberland, where Link and others were charged by indictment with conspiracy to violate the gambling laws of the State, and particularly N.J.S.A. 2:135-3, now N.J.S.A. 2A:112-3. These proceedings were pending when, on October 23, 1950, certain law enforcement officials, under the supervision of the defendant Nelson F. Stamler, then a Deputy Attorney General, under the authority of a search warrant issued by the Honorable J. Wallace Leyden, a judge of the Superior Court, made a search of the residence of Link, located in Teaneck, Bergen County, New Jersey. While on the premises they discovered and seized currency in the amount of $ 127,000, the fund here in question. The seizure was made under the authority vested in the said officials by the pertinent provisions of the State law. See Appendix. The date of the seizure, to wit, October 23, 1950, is crucial because of the claim of the defendants, except Stamler, that their title in the fund became absolute upon its seizure.
Thereafter, criminal proceedings against Link were initiated in Bergen County, where he was charged by indictment with a violation of the gambling laws of the State, and particularly N.J.S.A. 2:135-3, now N.J.S.A. 2A:112-3. The said indictment was returned by the Grand Jury on May 31, 1951. Link was arraigned in due course, and, on June 20, 1952, after the retraction of his former plea of 'not guilty,' entered a plea of 'non vult' to the charges contained in the said indictment. A final judgment was entered by the Court on June 26, 1952, when Link was sentenced.
It should be noted that the fund theretofore held by Stamler was deposited by him with one A. Theodore Holmes, then the County Treasurer of Bergen County, on June 12, 1952, prior to Link's entry of his plea of 'non vult.' Thereafter, on June 18, 1952, the fund was lodged in a safe deposit box in the Peoples Trust Company of Bergen County, a bank selected by the Board of Chosen Freeholders. It should be noted further that the present County Treasurer of Bergen County is one Charles B. Bleasby, joined herein as a defendant.
Thereafter, on April 20, 1953, the criminal proceedings against Link having been concluded in the manner aforesaid, the said Holmes, acting in his capacity as County Treasurer, instituted a proceeding under the express provisions of the statute, N.J.S.A. 2A:152-9, in the Superior Court of New Jersey. The Director of Internal Revenue was joined as a party but he, represented by counsel, appeared specially and objected to the jurisdiction of the Court; thereafter he did not participate in the proceedings. A final order was entered in the proceedings on September 18, 1953; this order declared the fund contraband and directed its forfeiture to the County of Bergen. The judgment was affirmed by the Supreme Court of New Jersey, State v. Link, 14 N.J. 466, 102 A.2d 609. The judgment of forfeiture did not affect the rights of the plaintiff, and there is no contention here that it did.
The order entered in the Superior Court is not before this Court. However, a pertinent recital therein contained is quoted in the opinion of the Court in the case of State v. Link, supra, 102 A.2d at page 613. The recital reads as follows:
'The proof seems to indicate that if it is anybody's money it is Link's money, and it was money used either as the proceeds of or in connection with, set apart and segregated, as part of his gambling operations in this county, Cumberland County and Passaic County, and I think the conclusion is ...