Source: https://supreme.justia.com/cases/federal/us/314/480/
Timestamp: 2019-04-22 08:15:13+00:00

Document:
1. Under R.S. § 3466, in the distribution of assets of an insolvent debtor through a general receivership, an unsecured tax claim of the United States takes priority over the like claim of a State. P. 314 U. S. 483.
2. The priority of unsecured claims of the United States under R.S. § 3466 attaches upon the taking over of the insolvent debtor's property by a general receivership, and cannot be divested by subsequent proceedings for the perfection of liens claimed by a State. P. 314 U. S. 486.
Held, that the lien thus created is not a specific and perfect lien entitled to priority, despite R.S. § 3466, over a claim of the United States, but is an inchoate and general lien requiring further procedure to define and enforce it. P. 314 U. S. 484.
The United States rests its assertion of priority upon § 3466 of the Revised Statutes. [Footnote 1] Despite the contention of Texas to the contrary, that section clearly applies to this proceeding. As we recently remarked in United States v. Emory, [Footnote 2] § 3466 covers in terms the case of an insolvent debtor who has committed an act of bankruptcy, and there are few more familiar examples of an act of bankruptcy than the appointment of a receiver because of the debtor's insolvency. Cf. § 3(a)(4), of the Bankruptcy Act, U.S.C. Title 11, § 21(a)(4). Here, the district court expressly found that Nix was insolvent, and it appointed a receiver. It is true that the original petition was filed by a mortgagee, rather than by a general creditor. But, if any limitations upon the operation of § 3466 might otherwise have flowed from this circumstance, they were removed by the subsequent character of the proceeding.
"shall be a preferred lien, first and prior to any and all other existing liens, upon all of the property of any distributor, devoted to or used in his business as a distributor. . . . [Footnote 3]"
theory that mortgaged property passes to the mortgagee, and is no longer a part of the estate of the mortgagor. See Conard v. Atlantic Insurance Co., supra, at 26 U. S. 441-442. The question of whether the priority of the United States under § 3466 would also be defeated by a specific and perfected lien upon property whose title remained in the debtor was reserved in those cases. Id; Brent v. Bank of Washington, supra, at 35 U. S. 611-612. However, it was determined that a general judgment lien upon the lands of an insolvent debtor does not take precedence over claims of the United States unless execution of the judgment has proceeded far enough to take the land out of the possession of the debtor. Thelusson v. Smith, supra, at 15 U. S. 425-426.
In more recent years, the Court has had occasion to consider the argument that liens created in favor of states or counties by state statutes entitled them to priority over the United States under § 3466. In Spokane County v. United States, 279 U. S. 80, the priority of the United States was upheld. The state statutes involved provided that, if a certain personal property tax was not paid, and if the personal property against which it had been assessed was no longer in the hands of the delinquent taxpayer, the amount of the unpaid tax should become a lien upon all the real and personal property of the taxpayer. They went on to prescribe the procedure by which the lien was to be enforced. The Court determined that the statutory lien did not become specific until this procedure had been followed. Since these procedural conditions had not been satisfied in the case before it, the Court refused priority to the tax claims of the county. It specifically declined to consider what "the effect of more completed procedure in the perfecting of the liens under the law of the state" would have been. 279 U.S. at 279 U. S. 95.
We think that it is equally unnecessary to test that assumption here. Prior to the appointment of the receiver on November 20, 1933, the state of Texas had made no move to assert the lien proclaimed in Article 7065a-7. And the priority which attached to the claim of the United States on that day (United States v. Oklahoma, 261 U. S. 253, 261 U. S. 260) could not be divested by any subsequent proceedings in connection with the state's lien. 288 U.S. at 288 U. S. 293.
distributor which is "devoted to or used in his business as a distributor," rather than his property in general. This is thought to make the lien sufficiently specific. Moreover, the State argues, and the Supreme Court of Texas has declared, [Footnote 5] that the provisions of the Texas Civil Statutes which govern the levy, seizure, and sale of the property of delinquent taxpayers generally [Footnote 6] are inapplicable to the gasoline tax. We are, of course, bound by this authoritative construction of the statute.
With respect to this contention, it may first be said that the property "devoted to or used in his business as a distributor" is neither specific nor constant. But a more important consideration is that the amount of the claim secured by the lien is unliquidated and uncertain. As we said in New York v. Maclay: "If the state were to . . . omit to ascertain the debt, it would never be able to sell anything, for it would not know how much to sell." 288 U.S. at 288 U. S. 293. That the legislature of Texas recognized this is revealed by another section of the statute. Article 7065a-8(d) declared that, in the event of default, when it might become necessary for the state "to bring suit or to intervene . . . for the establishment or collection" of its claims in judicial proceedings, the tax reports required of the distributor by other provisions of the statute [Footnote 7] should be "prima facie evidence of the contents thereof," but "the incorrectness of said report or audit may be shown." Thus, it was clearly envisaged that the amount of the taxes due, for which the lien was security, should be left to determination by the courts.
courts. In addition to the statutory provisions referred to above, Article 7065a-8(e) regulates the pleadings in suits by the Attorney General to collect the tax, and Article 7065a-9 determines the venue of such suits. Consequently, while it was clearly intended by Article 7065a-7 to create a lien in favor of the state, we must conclude that, of necessity, it was nothing more than an inchoate and general lien. Certainly it did not, of its own force, divest the taxpayer of either title or possession. It could not become specific until the exact amount of the taxes due had been determined, and it could not be enforced without the assistance of the courts. Like the tax lien in New York v. Maclay, supra, it served "merely as a caveat of a more perfect lien to come." 288 U.S. at 288 U. S. 294.
We are not now called upon to decide whether the chattel mortgages held by Dailey are entitled to priority over the claim of the United States. [Footnote 8] We hold only that the tax claim of the United States is entitled to priority over the tax claim of Texas. The case is remanded to the Court of Civil Appeals for proceedings not inconsistent with this opinion.
In United States v. Oklahoma, 261 U. S. 253, the question was not reached because it was found that the "insolvency" upon which the operation of § 3466 is conditioned was absent. The Court sustained the priority of the United States under § 3466 in United States v. Knott, 298 U. S. 544. The Florida statutes there involved required foreign surety corporations to deposit certain bonds with the State Treasurer for the protection of Florida residents. This arrangement was held to create no more than "an inchoate general lien" for the benefit of unknown persons who might become entitled to the fund, and not to limit the effect of § 3466.

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