Aquilino v. United States

PETITIONER: Robert Aquilino and Joseph Sero dba Home Maintenance Co.
RESPONDENT: United States, Ada Bottone, Fleetwood Paving Corp., Colonial Sand and Stone Co. Inc.
LOCATION: Fleetwood Paving Co.

DECIDED BY: Warren Court (1958-1962)

CITATION: 363 US 509 (1960)
ARGUED: Oct 15, 1959
DECIDED: Jun 20, 1960
GRANTED: Feb 24, 1959

Charles S. Friedman - for the petitioners
Howard A. Heffron - for the respondent

Facts of the case

A general contractor defaulted on federal tax payments and payments to subcontractors. Under the Internal Revenue Code, the U.S. government claimed priority over the lien on the “property rights to the property” of the general contractor. The subcontractors also claimed priority, because the amounts owed to them were large enough that they constituted “trust funds” under a New York tax law. The subcontractors were the beneficiaries of these “trust funds” so the general contractor had no property rights. The New York Supreme Court, Special Term, granted the subcontractor’s motion to for summary judgment and the Appellate Division affirmed. The Court of Appeals of New York ruled in favor of the United States


Does the statutorily-created trust create “property” or “rights to property” under federal tax law?

Media for Aquilino v. United States

Audio Transcription for Oral Argument - October 15, 1959 in Aquilino v. United States

Earl Warren:

Number 1, Robert Aquilino and Joseph Spero, Home Maintenance Company, Incorporated, Petitioners, versus United States of America.

Charles S. Friedman:

Mr. Chief Justice --

Earl Warren:

Mr. Friedman.

Charles S. Friedman:

-- may it please the Court.

For some three days, this Court which have listened to a contest between giants here, that it listened to the United States Government has one contest with five different States over property that amounts -- will eventually amount to billions of dollars.

We're engaged in a contest here between that -- one of those giants to wit, the United States and two small subcontractors from the State of New York.

The amount of money involved is small.

It's only $2200.

The Government tax reached that far.

It has been awarded to them and they claimed of it's -- and it's been awarded to them upon the basis that it was property of the taxpayer under 3670 of the Internal Revenue Code.

We claim that the property belongs to these subcontractors under the law of the State of New York.

Some brief reference of the facts is essential.

In 19 -- in December 1951, and again in March of 1952, the Government filed two assessment liens for small amounts with the collector of Internal Revenue in Albany, New York.

That lien may be -- what has been very amply described as the secret pernicious lien of the United States Government to wit, it's one of those liens that nobody, except the United States Government and the collector knows about it.

Made so by the decisions of this Court, I suppose you might.


Charles S. Friedman:

That may be so, Your Honor.

Sometime thereafter, totally unaware of this lien and totally unconnected with the tax -- delinquent taxpayer, a Mrs. Bottone bought some rail property in Westchester County.

She bought this property in July of 1942.

Some seven months after the Government filed its first lien.

She intended to conduct a business thereon and have some remodeling work and intended to have some remodeling work done.

She employed the delinquent taxpayer here, Fleetwood Paving Company, to do that work.

Prior to that, Fleetwood Paving have no real business relationship with her, nor with the subcontractors, who I represent the petitioners herein.

Fleetwood Paving Corporation thereupon, entered into contracts with the two petitioners herein as subcontractors, to wit, Aquilino and Colonial Sand Company.

Both these subcontractors very promptly and quickly performed their subcontracts and completed their work.

They remain unpaid to this date.

Now, I mentioned these dates despite the fact that in our opinion, these dates are unimportant, unimportant for this reason.

The question is whether or not this is property of this -- of the delinquent taxpayer, the general contractor.

We say that that isn't.

And therefore, the time of filing by anybody is unimportant.