[79 NJSuper Page 39] The United States assessed wage and excise taxes against defendant Samson Trailer Manufacturing Corp. (hereinafter Samson), for the years 1961 and 1962 in the total sum of $7,913.60 plus interest. Notices of lien for the taxes in question were filed with the County Clerk of Burlington County on December 22, 1961, and March 7 and 8, June 13 and July 26, 1952. Internal Revenue Code (1954) sec. 6323, 26 U.S.C.A. § 6323; N.J.S.A. 46:16-13.
Plaintiff Harris Equipment & Service Co. (hereinafter Harris), recovered a judgment against Samson for the sum of $719.27 damages and costs. Judgment was entered July 24, 1962. On August 16, 1962 execution on said judgment was issued to Elmer Earl, sergeant at arms of this court, and on August 21, 1962, he levied on certain goods and chattels of Samson at its place of business in Maple Shade, New Jersey. On September 18, 1962 he gave notice of sale, and on October 11, 1962 sold the goods and chattels at public sale. After announcing that the sale was subject to existing liens, he sold and struck off the goods to the highest bidder. The total proceeds of sale amounted to $376.
Immediately upon the conclusion of the sale, a representative of the United States Internal Revenue Service served upon the sergeant at arms a notice of levy setting forth that Samson was then indebted to the United States, as per schedule in said notice set forth, in the total sum of $8,250.01, and further reciting as follows:
"You are further notified that demand has been made upon the taxpayer for the amount set forth herein, and that such amount is still due, owing, and unpaid from this taxpayer, and that the lien provided for by Section 6321, Internal Revenue Code of 1954, now exists upon all property or rights to property belonging to the aforesaid taxpayer. Accordingly, you are further notified that all property, rights to property, moneys, credits and bank deposits now in your possession and belonging to this taxpayer (or with respect to which you are obligated) and all sums of money or other obligations owing from you to this taxpayer are hereby levied upon and seized for satisfaction of the aforesaid tax, together with all additions provided by law, and demand is hereby made upon you for the amount necessary to satisfy the liability set forth herein, or for such lesser sum as you may be indebted to him, to be applied as payment on his tax liability."
At the same time the representative served on the sergeant at arms a document denominated a "Final Demand" for payment of said sum in his hands. The sergeant at arms properly refused to release said funds pending a determination by the court as to which claimant is entitled thereto. Stebbins v. Walker , 14 N.J. Law 90 (Sup. Ct. 1833).
Plaintiff Harris now petitions this court for an order requiring the Sergeant at arms to pay over the proceeds of said execution sale proceeds to it. The matter is before the court on order to show cause why the sergeant at arms should not be ordered to pay said monies to plaintiff in accordance with the prayer of the petition. The United States opposes the petition and claims the fund under its notice of levy and final demand.
It is apparent plaintiff concedes that the lien of the United States is prior to its judgment and execution. Plaintiff, nevertheless, argues that since the sergeant at arms announced that the goods and chattels were to be sold subject to existing liens, it is entitled to receive the proceeds of the execution sale and the United States must pursue its remedy against the chattels themselves in the hands of the purchasers or subsequent holders thereof.
The United States, on the other hand, contending that its lien, is a prior lien on the property of the judgment debtor, attached at once to the proceeds of the sale in the hands of the sergeant at arms, representing as it does property or the right to property belonging to the taxpayer (Samson) within the meaning of Internal Revenue Code sec. 6321, 26 U.S.C.A. § 6321. The United States therefore argues that it is entitled to payment of the proceeds of sale, although the sale was conducted at the instance of the judgment creditor.
Surprisingly, the precise point here at issue does not appear to have been decided by the courts.
Plaintiff cites as support for its position Mushback v. Ryerson , 11 N.J. Law 346 (Sup. Ct. 1830), and Ersa, Inc. v. Dudley , 234 F.2d 178 (3 Cir. 1956). In the former case the court upheld the amercement of a sheriff for applying the proceeds of an execution ...