Source: http://www.chanrobles.com/usa/us_supremecourt/326/265/case.php
Timestamp: 2019-10-14 18:32:50
Document Index: 134896547

Matched Legal Cases: ['§ 3670', 'art, 317', '§ 3670', '§ 3671', '§ 3670', '§ 3671', '§ 3678', '§ 3670', '§ 3678']

GLASS CITY BANK V. UNITED STATES, 326 U. S. 265 (1945) - US SUPREME COURT DECISIONS ON-LINE
US Supreme Court Decisions On-Line> Volume 326 > GLASS CITY BANK V. UNITED STATES, 326 U. S. 265 (1945)
Subscribe to Cases that cite 326 U. S. 265
In 1941, the petitioner bank obtained a judgment in a Pennsylvania State Court against one Frank A. Maddas, for about $19,000.00. The United States had unpaid, judicially established, income tax claims against Maddas for the years 1920, 1921, and 1922 [Footnote 1] which exceeded chanroblesvirtualawlibrary
$1,000,000. Maddas v. Commissioner, 40 B.T.A. 572, 114 F.2d 548. Because of Maddas' past services as a State court receiver of a brewing company, the trustee of that company, now in bankruptcy, owes Maddas $3,228.53. The issue here is whether the bank or the government may recover on the debt owed to Maddas. The bank claims under a lien alleged to have been created by an attachment-execution issued on its State court judgment and served on the trustee in bankruptcy February 21, 1941. The United States claimed priority, by virtue of a tax lien under 26 U.S.C. §§ 3670-3671, [Footnote 2] which both parties admit arose in 1935, five years prior to the taxpayer's services as receiver. The contention of the bank in the District Court [Footnote 3] was that the statutory tax lien, which became effective in 1935, did not cover Maddas' claim, since it did not exist when the lien arose but only thereafter, and that the government therefore could reach the debt only by garnishment or distraint, as provided by other sections of the Internal chanroblesvirtualawlibrary
Revenue Code. The Circuit Court of Appeals concluded that the statutory tax lien did cover after-acquired property, and accordingly affirmed the District Court's judgment for the United States. 146 F.2d 831. We granted certiorari because of statements made in the opinions of other courts which seemed to conflict with the conclusion below. United States v. Long Island Drug Co., 115 F.2d 983; United States v. Pacific Railroad, 1 F. 97.
"any property and rights to property, whether real or personal, or to subject any such property and rights to property owned by the delinquent, or in which he has any right, title, or interest, to the payment of such tax."
(Italics supplied). For here is a plain intent to subject to the lien "property owned by the delinquent" when suit is filed, rather than only that owned when the lien arose. Indeed, the meaning of these sections is so plain as to render superfluous a detailed discussion of the legislative history, which is consistent with our interpretation. [Footnote 4]
Furthermore the agencies administering the statute have construed it in the same way. Thus, in 1928, General chanroblesvirtualawlibrary
And, in Graves v. Commissioner, 12 B.T.A. 124, 133, the Tax Board said that the lien applied, "of course, to all the property that the tax debtor subsequently acquired."
The bank's arguments on behalf of a statutory construction supporting its claims are without merit. We are told that to increase unduly the scope of the government's lien is unwise. But most of the objections raised would apply not merely to liens that cover after-acquired property, but also with equal force to most other types of liens. At any rate, the wisdom of legislation is a question for Congress. We are further told that the tax lien cannot attach to Maddas' claim, because the law of Pennsylvania, where this obligation arose, does not treat "future earning capacity" as "property rights to property." But the question of whether the tax lien covers future earning capacity is not before us. For the government here seeks to reach an already existing obligation for services rendered, which clearly falls within the statutory language. Cf. Matter of Rosenberg, 269 N.Y. 247, 199 N.E. 206. Moreover, the Congressional meaning is not to be determined by resorting to the local law of Pennsylvania. United States v. Snyder, 149 U. S. 210; Helvering v. Stuart, 317 U. S. 154, 317 U. S. 161-162.
Our conclusion is that the lien applies to property owned by the delinquent at any time during the life of the lien. chanroblesvirtualawlibrary
This is in accord with all the cases that have directly passed upon this question. [Footnote 5] As previously noted, there are two cases, which contain language which might lead to another conclusion. But nothing there said offers any persuasive reason for restricting the scope of the lien.
Citizens National Bank v. United States, 135 F.2d 527; Nelson v. United States, 139 F.2d 162; Investment & Securities Co. v. United States, 140 F.2d 894; United States v. Worley, 64 F.Supp. 271; Minnesota Mut. Life Ins. Co. v. United States, 47 F.2d 942, 944. See also United States v. Warren R. Co., 127 F.2d 134; Matter of Rosenberg, supra.
I am unable to find in the applicable statutes the clear expression of Congressional intent which I think is required to extend the tax lien to after-acquired property. Under § 3670, the lien is imposed as to taxpayers delinquent after demand "upon all property and rights to property, whether real or personal, belonging to such person." By § 3671, the lien arises, unless another date is specifically fixed by law, "at the time the assessment list was received by the collector," and continues "until the liability for such amount is satisfied or becomes unenforceable by reason of lapse of time." Nothing in these sections gives any indication that Congress intended the lien to reach after-acquired property. The language used, whether in § 3670 or in § 3671, is fully satisfied if the lien is held to attach to property belonging to the taxpayer as of the time the lien arises. [Footnote 2/1] Had Congress intended to reach not only chanroblesvirtualawlibrary
Nor is such an intent supplied by use of the present tense of the verb "has" in the final clause of § 3678(a). [Footnote 2/2] That section merely provides for the manner in which the lien defined by §§ 3670 and 3671 shall be enforced. Section 3678(a), in my opinion, was not intended to add to the scope of the lien or extend its definition beyond the limits defined by those sections. If the lien was designed to reach after-acquired property, the alternative method specified in § 3678(a) for reaching the property then owned by the debtor would seem to be redundant.
I find nothing in the legislative history which discloses any intention, more clearly than the words of the statute themselves, to include after-acquired property within the coverage of the lien. In the absence of clearer statutory foundation, the comparatively recent administrative construction chanroblesvirtualawlibrary
"(a) Filing. -- In any case where there has been a refusal or neglect to pay any tax, and it has become necessary to seize and sell property and rights to property, whether real or personal, to satisfy the same, whether distraint proceedings have been commenced or not, the Attorney General, at the request of the Commissioner, may direct a civil action to be filed, in a district court of the United States, to enforce the lien of the United States for tax upon any property and rights to property, whether real or personal, or to subject any such property and rights to property owned by the delinquent, or in which he has any right, title, or interest, to the payment of such tax."