Annotations- Property in Custody of County
Commissioner
6332 Annotations: Property
in Custody of County Commissioner- Levy
Penalty
for Failure to Surrender Property: Property in Custody of
County
Commissioner
[58-2 USTC ¶9649]Estate of Katherine
A. Drew
N.
Y. Surrogate's Court, Westchester County, 123 N. Y. L. J., No. 111, 171
NYS2d 171, 1/16/58
[1954 Code Secs. 6331(a) and 6332(a)--similar to 1939 Code Secs. 3692
and 3710(a)]
Collection of taxes: Levy: Beneficiary of estate: Estate proceeds
ordered held for the benefit of a delinquent taxpayer by New York
Surrogate's Court.--In accounting proceedings in the Surrogate's
Court of New York, a decree was entered directing that the balance of
the estate be held by the Commissioner of Westchester County, until
further order, for the benefit of the beneficiary of the estate. At this
point a notice of levy was served upon the custodian of the fund, in
accord with 1954 Code Sec. 6331, followed by the institution of these
proceedings to withdraw the fund on deposit in partial satisfaction of
the Government's claim for unpaid income taxes. The Court held that the
United States
is not in the same position as an ordinary creditor and that the
surrogate has jurisdiction to enforce a lien for unpaid income taxes and
"no policy of this state may interfere with the power of Congress
to levy and collect taxes on income." Accordingly, the application
to withdraw the money held on deposit for the beneficiary of the estate
was granted.
Paul W.
Williams, United States Attorney,
New York
, N. Y., for petitioner.
DILLON, Judge:
Estate of
Katherine Ada Drew, dec'd. The account of the administrator d. b. n. was
settled by a decree of this court dated August 2, 1955, and such decree
directed that the balance of the estate be paid to the Commissioner of
Finance of Westchester County "to be held for the benefit of Morgan
A. Drew, until further order of this Court." The United States of
America served a notice of levy upon the commissioner of finance
pursuant to section 6331 of the Internal Revenue Code of 1954, and then
instituted the within proceeding to withdraw the fund on deposit in
partial satisfaction of its claim for unpaid income taxes against Morgan
A. Drew. A creditor of a beneficiary of an estate is neither a necessary
party to an accounting proceeding under section 262 of the Surrogate's
Court Act, nor a person interested in the estate of decedent under
subdivision 10 of section 314 of the Surrogate's Court Act. In Matter
of Riegel (165 Misc., 265), Surrogate Foley dismissed objections
interposed to an accounting proceeding by a creditor of a beneficiary,
stating at page 267: "The law properly confines the right to compel
an accounting or to object to an account to persons legally interested.
It excludes from appearance in a proceeding alleged creditors of
creditors, or of legatees and other classes of beneficiaries" (see
also Duncan v. Guest, 5 Redf., 440). However, the United States
is not in the same position as an ordinary creditor and as was pointed
out in Matter of Rosenberg (269 N. Y., 247, 251) the surrogate
has jurisdiction to enforce a lien for unpaid income taxes, and "no
policy of this State may interfere with the power of Congress to levy
and collect taxes on income." The court determines that the
United States
is entitled to the money being held for the benefit of Morgan A. Drew,
and accordingly the application to withdraw such money is granted.
Submit order.
