Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Piontek v. Ceritano

Decided: February 13, 1981.

JOSEPH R. PIONTEK AND DIANA L. PIONTEK, HIS WIFE, AND PINECONE MEADOW, INC., PLAINTIFFS,
v.
ARMAND CERITANO, SOMERS K. STEELMAN, INTERNAL REVENUE SERVICE, FEDERAL DEPOSIT INSURANCE CORPORATION AND TANNENBAUM & MILASK, INC., DEFENDANTS, FIDELITY BANK, DEFENDANT-RESPONDENT, UNITED STATES OF AMERICA, APPELLANT, ROBERT J. SEAMAN, LAWRENCE M. VECCHIO, RESPONDENTS



On Appeal from Superior Court, Chancery Division, Camden County.

Michels, Kole and Ard. The opinion of the court was delivered by Kole, J.A.D.

Kole

[177 NJSuper Page 612] The factual summary that follows suffices for the purpose of this opinion.

In August 1974 plaintiffs (hereafter, the Pionteks) purchased a tavern from defendants Ceritano and Steelman. The purchase price of $250,000 included a $102,397 promissory note of the Pionteks in favor of these defendants. At some point after the purchase of the tavern the Pionteks decided that the sellers had made fraudulent misrepresentations in connection with the sale and that there should be a set-off on the amount due on the note. Accordingly, they began depositing the money due and payable on the note in escrow with an attorney, Seaman. One of the sellers, Ceritano, was the subject of an Internal Revenue Service (hereafter, the Government or the IRS) assessment against him of in excess of $77,000, plus penalties, by reason of his failure to pay certain federal taxes beginning in 1963. In March, May and August 1964 and February 1965 the IRS made assessments in that amount by mailing notices and demands for payment to him. When payment was not forthcoming, in October 1975 the IRS served notices of levy on the Pionteks and Seaman who, as indicated, was holding part of the proceeds due under the note in escrow.*fn1 The IRS did not file any notice of lien as to these assessments.

In September 1977 the Pionteks, through their attorney Vecchio, instituted the present action against, among others, Ceritano, Steelman, IRS and Fidelity Bank (hereafter Fidelity). Fidelity was made a defendant by reason of its having obtained a judgment against Ceritano in May 1977 for approximately $606,995. Since that judgment was not paid, in June 1977 Fidelity served notice of levy upon the Pionteks with respect to Ceritano's rights in the note. In addition to seeking in this action a set-off against the amount due on the note against Ceritano and Steelman, the complaint sought an adjudication of the rights of the other parties we have named in the proceeds of the note or

the amount due on the note. After trial of the set-off issue, the trial judge determined that the Pionteks were entitled to a set-off on the note of $17,575.34 and determined the total amount due on the note. It required that the Pionteks deposit with Seaman, the escrow agent, an amount which, together with that which he already held in escrow, would aggregate the sum due and owing on the note. The escrowed money was to be subject to distribution by later order after the court determined the rights thereto of the various parties. It appears that the total amount so to be distributed was about $135,000. From that amount the court ordered attorneys' fees of $3,972.75 to be paid to Vecchio, who instituted the action for the Pionteks, and $1,234.59 to Seaman, such fees to be paid before any other distribution was made. The court further determined that Ceritano owned a 90%, and Steelman owned a 10%, interest in the note and that the balance found to be due Ceritano on the note, apart from other claims not here relevant, was to be distributed to Fidelity since it was held to have priority over the Government's rights claimed by virtue of the Government's levy. It appears that some $75,000 of the note proceeds were thus to be paid to Fidelity and that there was no balance of the proceeds remaining to pay any part of the claim asserted by the Government.

The trial judge held that since the Government had not filed a notice of its lien and Fidelity had a judgment lien against the note obligation or its proceeds (hereafter both sometimes referred to as "the note"), Fidelity had priority under 26 U.S.C.A. ยง 6323(a), and the mere levy by the Government on the taxpayer's rights in the note did not suffice to give the Government a prior lien. He further held that under the contract of sale between the Pionteks and the sellers, Ceritano and Steelman, the sellers had agreed to indemnify and hold the Pionteks harmless against loss, damages and liability resulting from certain breaches of the sales contract provisions as set forth therein, and that since the sellers had committed such breaches, the attorneys' fees were attributable to problems resulting

therefrom. These fees, the judge determined, were entitled to be paid before the amount due the sellers -- both Ceritano and Steelman -- and to each of them was ascertained. The Government appeals from these rulings.

On this appeal the Government claims that (1) the judge erred in holding that the Government's levy on the note was not sufficient to give it a prior lien over Fidelity's claimed judgment lien, and (2) the judge erred in determining that the award of fees to the attorneys Seaman and Vecchio had priority over the federal tax lien. We reverse and hold that the Government's tax lien had priority over both Fidelity's asserted judgment lien and the attorneys' fees awarded Vecchio and Seaman.

I

The Government's Priority Over ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.