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United States v. Standard Paving Co.

JUL. 1, 1960

United States v. Standard Paving Co.

DATED JUL. 1, 1960
DOCUMENT ATTRIBUTES
  • Case Name
    UNITED STATES OF AMERICA, Plaintiff IN INTERVENTION v. THE STANDARD PAVING COMPANY, PETER J. CROWLEY COMPANY, AND A. L. JACKSON COMPANY, ALL ILLINOIS CORPORATIONS, JOINT VENTURERS DOING BUSINESS AS STANDARD-CROWLEY-JACKSON; TWIN EXCAVATING CO. INC; CREST FINANCE CO. INC.; ROAD MACHINERY & SUPPLIES CO. OF MINNEAPOLIS, INC.; AND PETER KIEWIT & SONS' CO., Defendants THE STANDARD PAVING COMPANY, PETER J. CROWLEY COMPANY, AND A. L. JACKSON COMPANY, ALL ILLINOIS CORPORATIONS, JOINT VENTURERS DOING BUSINESS AS STANDARD-CROWLEY-JACKSON, Plaintiffs v. TWIN EXCAVATING CO. INC.; CREST FINANCE CO. INC.; ROAD MACHINERY & SUPPLIES CO. OF MINNEAPOLIS, INC.; AND PETER KIEWIT & SONS' CO., Defendants
  • Court
    United States District Court for the Northern District of Illinois
  • Docket
    No. 59 C 8
  • Judge
    IGOE
  • Parallel Citation
    60-2 U.S. Tax Cas. (CCH) P9774
    6 A.F.T.R.2d (RIA) 6037
  • Language
    English
  • Tax Analysts Electronic Citation
    1960 LEX 46-418

United States v. Standard Paving Co.

         U.S. District Court, No. Dist. Illinois, East. Div.

 

 

                              07/01/60.

 

 

Findings of Fact and Conclusions of Law

IGOE, District Judge: The above-captioned case came on to be heard by the Court without a jury. Plaintiff in Intervention, United States of America, appeared by its attorney, R. Tieken, United States Attorney for the Northern District of Illinois, and Harvey M. Silets, Assistant United States Attorney.

The Defendants in Intervention were represented as follows: The Standard Paving Company, Peter J. Crowley Company, A. L. Jackson Company, doing business as Standard-Crowley-Jackson, represented by Thompson, Raymond, Mayer, Jenner and Bloomstein; Twin Excavating Co., Inc., not having filed its pleading or otherwise being represented; Crest Finance Co., Inc., represented by Rappaport, Clorfene and Rappaport; Road Machinery & Supplies Co. of Minneapolis, Inc., represented by Askow, Stevens and Hardy; Peter Kiewit & Sons' Co., represented by David Levinson and James M. Goff.

The Court, after having carefully considered the pleadings, the Stipulation of Facts, and exhibits, finds the following facts to be true and correct and, based thereon, reaches the following conclusions of law:

Findings of Fact

1. The defendants, Standard Paving Company, Peter J. Crowley Company, and A. L. Jackson Company, are all Illinois corporations each having its principal place of business within the state of Illinois, and are joint venturers doing business as Standard-Crowley-Jackson.

2. The defendants, Twin Excavating Co., Inc. and Road Machinery & Supplies Co. of Minneapolis, Inc., are corporations organized under the laws of the state of Minnesota with their principal places of business in Minneapolis, Minnesota.

3. Defendant Crest Finance Co., Inc., is a corporation organized under the laws of the state of Illinois with its principal place of business at Chicago, Illinois.

4. Defendant Peter Kiewit & Sons' Co., is a corporation organized under the laws of the state of Nebraska with its principal place of business at Omaha, Nebraska.

5. United States of America is a sovereign corporation and body politic.

6. The Standard Paving Company, Peter J. Crowley Company, and A. L. Jackson Company (hereinafter referred to as Standard-Crowley -Jackson) filed a complaint with the United States District Court for the Northern District of Illinois on January 5, 1959, which was assigned the civil action number 59 C 8, and thereafter it paid into the registry of the Court the sum of $ 17,369.94. Named as defendants in the said action were United States of America, Twin Excavating Co., Inc., and Crest Finance Co., Inc.

7. On April 13, 1959, the United States of America having petitioned the Honorable Edwin A. Robson for leave to intervene as a party plaintiff and for an order dismissing United States of America as a party defendant in the action referred to in paragraph 6, this Honorable Court ordered that United States of America be dismissed as a party defendant and be permitted to file its complaint in intervention as a party plaintiff.

8. On April 20, 1959, Standard-Crowley-Jackson obtained leave of the Honorable Edwin A. Robson and did file its amended complaint in this action.

9. On May 14, 1959, United States of America as plaintiff in intervention filed its complaint in intervention with this Honorable Court by which it asserted its claim to the fund formerly deposited to the registry of the Court by Standard-Crowley-Jackson by virtue of its liens and upon all property and rights of property belonging to the defendant-taxpayer, Twin Excavating Co., Inc.

10. The action brought by the United States of America as plaintiff in intervention was brought pursuant to Sections 7401, 7402 and 7403 of the Internal Revenue Code of 1954 and pursuant to Section 1345 of Title 28, United States Code.

11. The action by the United States of America has been authorized by the Commissioner of Internal Revenue, the delegate of the Secretary of the Treasury of the United States and was brought under the direction of the Attorney General of the United States.

12. During all times between on or about April 1, 1958, and September 30, 1958, divers individuals performed services for the defendant, Twin Excavating Co., Inc., 7601 Fifty-Sixth Avenue, North, Minneapolis, Minnesota, by which defendant they were paid wages. On account of said employment and payment of wages the Commissioner of Internal Revenue made assessments against the said defendant-taxpayer for each quarter year period within said dates, of the amount deducted and withheld by said defendant from said wages, as the collection of taxes upon the income of said employees (otherwise known as "withholding tax") and Federal Insurance Contributions Act taxes in respect to the said wages. The District Director of Internal Revenue for the Internal Revenue District which includes the city of Minneapolis, Minnesota, gave notice of said assessments to and demanded payment thereof from the defendant, Twin Excavating Co., Inc. The said District Director also filed with the Registrar of Deeds, State of Minnesota, County of Hennepin, Notices of Federal Tax Liens upon all the property and rights to property belonging to the said defendant. The aforementioned assessment and dates of assessments, notices and demands and filing of notices of Federal Tax Liens are set out opposite the respective quarter-year periods as follows:

   Quarter    Kind of    Amount of   Dates of  Dates of    Dates of

 

 Year Ended  Assessment  Assessment Assessment  Notices   Notices of

 

                                                  and     Liens Filed

 

                                                Demand

 

 __________  __________  __________ __________ ________   ___________

 

 

 6/30/58    Tax         $ 15,995.68

 

            Penalty          799.78

 

            Interest          39.35

 

                        ___________

 

            TOTAL       $ 16,834.81   8/15/58   8/15/58    9/10/58 &

 

                                                           9/11/58

 

 6/30/58    Penalty          303.53  11/ 7/58  11/ 7/58    1/20/59

 

 9/30/58    Tax            5,231.97

 

            Penalty          261.60

 

            Interest          12.03

 

                         __________

 

            TOTAL        $ 5,505.60  11/14/58  11/14/58    1/20/59

 

 

13. Under Seal of the Treasury of the United States, assessment certificates dated August 15, 1958, November 7, 1958, and November 14, 1958 were issued containing therein the assessments referred to in paragraph 12 hereof of the Twin Excavating Co., Inc., 7601 Fifty-Sixth Avenue North, Minneapolis, Minnesota, for the quarterly periods ended respectively on June 30, 1958, June 30, 1958, and September 30, 1958. Copies of Notices of Demand, Form 17, for the said respective quarterly periods and account ledger cards of the Twin Excavating Co., Inc., for the said quarterly periods were subsequently prepared.

14. Notices of Federal Tax Liens, Form 668, were filed with the District Court of the United States for the District of Minnesota on September 10, 1958, and on January 20, 1959, respectively. Notices of Federal Tax Liens, Form 668, were filed with the Registrar of Deeds, County of Hennepin, State of Minnesota, on September 11, 1958, and January 20, 1959, respectively. Said Notices of Federal Tax Liens are the Notices of Liensreferred to in paragraph 12.

15. No part of the outstanding aggregate balance of $ 22,643.94 of the assessment against the defendant, Twin Excavating Co., Inc. for withholding taxes and Federal Insurance Contributions Act taxes, together with accrued interest and penalty, has been paid.

16. The defendants, The Standard Paving Company, Peter J. Crowley Company, and A. L. Jackson Company, doing business as Standard -Crowley-Jackson, are indebted to the taxpayer-defendant, Twin Excavating Co., Inc., by at least the sum of $ 17,369.94. The said defendants, immediately prior to filing this suit, are in possession of at least said amount of funds belonging to the defendant-taxpayer, Twin Excavating Co., Inc., which sum has been deposited into the registry of the Court.

17. On October 9, 1958, at 11:05 a.m. notice of levy pursuant to Section 6331 of the Internal Revenue Code of 1954 was served upon the defendant, Standard-Crowley-Jackson, by and through its Executive Vice -President, A. R. Ramser, in the amount of $ 16,920.49, which sum represented withholding tax and Federal Insurance Contribusions Act taxes assessed against the Twin Excavating Co., Inc., in the amount of $ 16,834.81, plus statutory additions of $ 85.68, and by such notice of levy the defendant, the Standard Paving Company, was put on notice that all property and rights to property, moneys, credits and bank deposits in their possession and belonging to the Twin Excavating Co., Inc., and all sums of money or other obligations owing from the Standard Paving Company to Twin Excavating Co., Inc., were thereby levied upon and seized in satisfaction of the aforesaid tax, together with all additions provided by law, and demand was made thereby upon the Standard Paving Company for the amount necessary to satisfy the liabilities set forth above or for such lesser sum as the Standard -Crowley-Jackson Company may be indebted to the taxpayer, Twin Excavating Co., Inc., to be applied as a payment under the tax liability of the Twin Excavating Co., Inc.

18. Standard-Crowley-Jackson were the principal contractors under Contract T-1A with the Illinois State Highway Commission for the construction of a certain portion of the Illinois Toll Road in the neighborhood of Harvey, Illinois, under a contract dated June 28, 1957.

19. On September 20, 1957, Twin Excavating Co., Inc., defendant -taxpayer herein, and Standard-Crowley-Jackson, depositor of the fund herein in question, executed a contract for the performance of certain work and the furnishing of certain materials, to wit, to move, haul, place, and compact certain borrow excavation per Toll Road contract specifications at the Northern Illinois Toll Road Highway Section T-1A; the said contract provided that the borrow "must be approved by Toll Road contract specifications, " and that Twin Excavating Co. Inc. had the option to haul, place and compact approximately 560,000 cubic yards of borrow at 85 cents per yard based on minimum yardage requirements set forth in the said contract, provided that such amounts were subject to Toll Road measurements.

20. Under the terms of the contract referred to in paragraph 19 hereof, Standard-Crowley-Jackson agreed to make payment to Twin Excavating Co. Inc. for performance of its work in a sum based upon Toll Road estimates only. The payments to be made initially to Twin Excavating Co. Inc., by Standard-Crowley-Jackson were based upon certain weekly reports or invoices of borrow transported from the borrow excavation and predicated on a count of a number of loads of borrow carried to the site of the construction. The weekly reports or invoices for the material delivered in the period from March 24, 1958 to June 7, 1958, all contained the following statement:

     "The above total is subject to revision as to exact quantity by

 

cross section, by Section Engineer."

 

 

Any acceptance of the estimated work as indicated by the aforesaid weekly reports or invoices furnished to Standard-Crowley -Jackson was subject to revision.

21. On the following dates, Crest Finance Company, Inc., made loans in the amounts indicated below to Twin Excavating Co., Inc., secured by promissory notes and secured by the assignment of Twin Excavating Company's right to performance by Standard-Crowley-Jackson under their contract referred to in paragraph 19 hereof as estimated by weekly reports or invoices of materials furnished:

                   Period            Amount Estimated

 

 Date of     Covered by Weekly           in Weekly

 

   Loan      Reports (Invoices)     Reports (Invoices)  Amount of Loan

 

 _______     __________________     __________________  ______________

 

 

 3/21/58                3/21/58         $ 7,379.79        $ 4,800.00

 

 4/ 3/58     3/24/58 to 3/31/58          18,360.00         10,575.36

 

 4/10/58                4/ 4/58           9,494.50          5,468.83

 

 4/18/58     4/ 5/58 to 4/17/58          21,386.00         12,318.34

 

 5/13/58     4/18/58 to 5/12/58          25,296.00         12,480.00

 

 5/19/58     5/13/58 to 5/17/58          10,659.00          4,800.00

 

 5/27/58     5/19/58 to 5/24/58          11,577.00          4,800.00

 

 6/ 6/58     5/26/58 to 6/ 4/58          12,087.00          6,720.00

 

 6/10/58     6/ 5/58 to 6/ 7/58           8,500.00          5,760.00

 

                                      ____________       ___________

 

                                      $ 124,739.29       $ 67,722.53

 

 

None of the above assignments or notes have every been recorded for record.

22. Standard-Crowley-Jackson paid to the Crest Finance Company, Inc. the following sums on the following dates:

 5/ 9/58                                                   $ 44,316.45

 

 7/24/58                                                     20,000.00

 

                                                           ___________

 

                                                           $ 64,316.45

 

 

The payment made on May 9, 1958 by Standard-Crowley-Jackson of $ 44,316.45 was by a check made payable jointly to the taxpayer -defendant, Twin Excavating Co., Inc., and the defendant, Crest Finance Co. Inc. Crest Finance Co. Inc. deducted the sum of $ 30,000.00 therefrom in full payment of its advances to Twin Excavating Co., Inc., with interest thereon, based upon the three weekly reports or invoices which covered the period from March 24, 1958 to April 17, 1958, and totaling the sum of $ 49,240.50. The amount of $ 20,000.00 paid on July 24, 1958 was applied in payment against the balance of advances made by Crest Finance Co. Inc. to Twin Excavating Co., Inc., and based upon other weekly reports and invoices in paragraph 21 herein.

23. Standard-Crowley-Jackson claims there existed a substantial shortage in cubic yards of material delivered to Standard-Crowley -Jackson on the T-1A contract heretofore mentioned in paragraph 19 herein. The said shortage, it is claimed, was the difference between the cross section computation of the pit determined by the Toll Highway Section Engineer and the amount represented by Twin Excavating Company's load count; that the shortage was estimated to be between 80,000 and 90,000 cubic yards. If such shortage, or any other similar shortage did in fact exist, the amounts estimated on the weekly reports, referred to in paragraphs 20 and 21 hereof as owing by Standard-Crowley-Jackson to Twin Excavating Co., Inc. would be reduced accordingly by the dollar amount of such shortage.

24. The final cross section computation by the Section Engineer was completed on November 5, 1958.

25. Road Machinery and Supplies Company of Minneapolis, Inc., commencing July 26, 1957, leased to Twin Excavating Company, Inc., one American Model M-96 Sheepsfoot Tamping Roller, Serial Number 8279, at the agreed rental of $ 220.00 per month. A contract covering the terms of said lease arrangement was entered into on December 19, 1957.

26. Pursuant to the terms of said contract, Twin Excavating Company, Inc., used the aforesaid Sheepsfoot Tamping Roller in connection with the work under the prime contract T-1A for the Illinois State Toll Highway Commission for the period from July 26, 1957, to and including July 15, 1958.

27. Twin Excavating Company, Inc. failed to return the aforesaid Sheepsfoot Tamping Rollar to Road Machinery & Supplies as they were obligated to do pursuant to the terms of the aforesaid lease, and an agent of Road Machinery & Supplies Company came from Minneapolis, Minnesota to Harvey, Illinois, to obtain the return of said Sheepsfoot Tamping Roller on September 29, 1958. In connection with obtaining the return of said Sheepsfoot Tamping Roller, Road Machinery & Supplies Company expended the sum of $ 356.44 expenses and required two days time of its agent, J. A. Fitzenz at $ 30.00 a day for a total expense of $ 416.44.

28. Twin Excavating Company, Inc. paid to Road Machinery & Supplies Company the sum of $ 660.00 in three installments dated July 31, 1957, March 17, 1958, and May 5, 1959. There is now due and owing Road Machinery & Supplies Company from Twin Excavating Company, Inc., the sum of $ 2,816.44 in connection with the aforesaid lease of the Sheepsfoot Tamping Roller.

29. On or about December 16, 1958, the Road Machinery and Supplies Company of Minneapolis, Inc. filed a Notice of Claim for the amount set forth in paragraph 28 herein.

30. On March 31, 1958, Peter Kiewit Sons' Co. leased to Twin Excavating Co. Inc., one Hebhard Sheepsfoot Roller, Model 22-S/N 22262 RS 11-294 at the agreed rate of $ 400.00 per month. A lease agreement was executed by the parties.

31. Said Gebhard Sheepsfoot Roller was delivered to Twin Excavating Co., Inc. on March 29, 1958, and was returned to Peter Kiewit Sons' Co. on September 3, 1958.

32. Twin Excavating Co., Inc. used said Gebhard Sheepsfoot Roller in connection with the work under the prime contract T-1A for the Illinois State Toll Highway Commission during the period between May 1, 1958 and July 15, 1958.

33. Twin Excavating Co., Inc. made no payment to Peter Kiewit Sons' Co. on account of the rental of said Gebhard Sheepsfoot Roller, and there is now due and owing to Peter Kiewit Sons' Co. the sum of $ 2,000.00 as rental for said equipment, including $ 1,200.00 as rental for the months of May, June and July, 1958.

34. On or about January 22, 1959, the defendant, Peter Kiewit Sons' Co. filed a notice of lien claim with the Illinois State Toll Highway Commission, 20 North Wacker Drive, Chicago 6, Illinois, in the sum of $ 1,200.00.

35. The defendant, Twin Excavating Co., Inc., has not appeared nor was represented in court, and has not filed its answer or other pleading to the Complaint in Intervention filed by the United States of America.

36. Statutory interest due upon the assessments referred to in paragraph 12 to and including July 1, 1960 is $ 2,461.01. No part of said statutory interest accrued to July 1, 1960 has been paid.

37. United States of America, Plaintiff in Intervention, has a valid and subsisting lien in the amount of $ 25,104.95 against the fund referred to in paragraph 6 of these findings, deposited with this Court.

38. Road Machinery & Supplies Co. of Minneapolis, Inc., Defendant, has a valid and subsisting lien in the amount of $ 2,816.44 against the fund referred to in paragraph 6 of these findings, deposited with this Court.

39. Peter Kiewit & Sons' Co., Defendant, has a valid and subsisting lien in the amount of $ 2,000.00 against the fund referred to in paragraph 6 of these findings, deposited with this Court.

Conclusions of Law

1. Any finding of fact which may be considered a conclusion of law is hereby concluded as a matter of law.

2. The Court has jurisdiction of the subject matter of this action.

3. The defendant, Twin Excavating Co., Inc., is indebted to the United States of America in the sum of $ 25,104.95, plus interest until paid, as provided by law, for taxes as set forth above in paragraph 12.

4. The United States of America is entitled to judgment with interest against the defendant in the aforesaid indebtedness in the total sum of $ 25,104.95, plus costs of this action, together with statutory interest, until the judgment is satisfied.

5. Under the Federal Decisions the tax liens which are the subject of the suit in intervention by the United States of America, constitute choate perfected tax liens and, in all respects, are superior to the assignments and claims on behalf of the Crest Finance Company in and to the fund now on deposit with the Clerk of the Court, as is described in paragraph 6 of the Findings of Fact.

6. There is now due and owing to the defendants, Peter Kiewit & Sons' Co., and Road Machinery & Supplies Co., of Minneapolis, Inc., by Twin Excavating Co., Inc., the sums of $ 2,000.00 and $ 2,816.44 respectively, which constitute liens which are prior in right to the aforesaid lien of the United States in the amount of $ 25,104.95, to the aforesaid sum of money deposited with this Court, as is more fully described in paragraph 6 of the Findings of Fact. Aquilino v. United States; United States v. Durham Lumber Co., decided by the Supreme Court of the United States June 20, 1960.

7. The defendant, Crest Finance Co., Inc., does not fall within the class of persons protected by Section 6323, Internal Revenue Code of 1954, with respect to the relative priorities of its lien, and the lien of the United States to the fund deposited with this Court.

8. Judgment will be entered upon the aforesaid Findings of Fact and Conclusions of Law, and the fund deposited with this Court, as is more fully described in paragraph 6 of the Findings of Fact, shall be distributed as follows:

 Peter Kiewit & Sons' Co.                                   $ 2,000.00

 

 Road Machinery & Supplies Co. of Minneapolis, Inc.           2,816.44

 

 United States of America                                    12,553.50

 

 

in full satisfaction of their respective claims to the aforesaid fund.
DOCUMENT ATTRIBUTES
  • Case Name
    UNITED STATES OF AMERICA, Plaintiff IN INTERVENTION v. THE STANDARD PAVING COMPANY, PETER J. CROWLEY COMPANY, AND A. L. JACKSON COMPANY, ALL ILLINOIS CORPORATIONS, JOINT VENTURERS DOING BUSINESS AS STANDARD-CROWLEY-JACKSON; TWIN EXCAVATING CO. INC; CREST FINANCE CO. INC.; ROAD MACHINERY & SUPPLIES CO. OF MINNEAPOLIS, INC.; AND PETER KIEWIT & SONS' CO., Defendants THE STANDARD PAVING COMPANY, PETER J. CROWLEY COMPANY, AND A. L. JACKSON COMPANY, ALL ILLINOIS CORPORATIONS, JOINT VENTURERS DOING BUSINESS AS STANDARD-CROWLEY-JACKSON, Plaintiffs v. TWIN EXCAVATING CO. INC.; CREST FINANCE CO. INC.; ROAD MACHINERY & SUPPLIES CO. OF MINNEAPOLIS, INC.; AND PETER KIEWIT & SONS' CO., Defendants
  • Court
    United States District Court for the Northern District of Illinois
  • Docket
    No. 59 C 8
  • Judge
    IGOE
  • Parallel Citation
    60-2 U.S. Tax Cas. (CCH) P9774
    6 A.F.T.R.2d (RIA) 6037
  • Language
    English
  • Tax Analysts Electronic Citation
    1960 LEX 46-418
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