Source: https://www.legalcrystal.com/case/95112/county-spokane-vs-united-states
Timestamp: 2018-03-18 15:27:29
Document Index: 662197966

Matched Legal Cases: ['§ 3466', '§ 3466', '§ 8', '§ 3466', '§ 3466', '§ 3466', '§ 3466', '§ 3466']

County of Spokane Vs United States - Citation 95112 - Court Judgment | LegalCrystal
County of Spokane Vs. United States - Court Judgment
LegalCrystal Citation legalcrystal.com/95112
Case Number 279 U.S. 80
Appellant County of Spokane
.....due to the united states over those due to a state or its agencies against the same found for state taxes, under § 3466 of the revised statutes of the united states. in august, 1922, a receiver for the culton-moylan-reilly auto company, an insolvent corporation, was appointed by the superior court of spokane county, washington. under the order of the court, the receiver sold the personal property of the corporation and reduced the same to cash, which he held for distribution. on march 1, 1921, and march 1, 1922, spokane and whitman counties, of the state of washington, had assessed against the personal property of the company the total amounts of $6,195.38 and $410.36 respectively, but the taxes were page 279 u. s. 86 not paid and the proceeds of the subsequent sale.....
County of Spokane v. United States - 279 U.S. 80 (1929)
U.S. Supreme Court County of Spokane v. United States, 279 U.S. 80 (1929)
1. Congress has power to provide that taxes due to the United States by an insolvent debtor shall have priority in payment over taxes due by him to a state. Pp. 279 U. S. 86 -93.
2. Under Rev.Stats. § 3466, a debt owed to the United States in the form of income taxes and penalties assessed for former years after the taxpayer has become insolvent and his personal property has been taken by a receiver in a state court for the payment of his debts is entitled to payment out of the fund derived by the receiver from his sale of such property, with priority (1) over county taxes assessed on those funds after the federal assessments were made and (2) over county taxes assessed on personal property of the taxpayer before the appointment of the receiver but not shown to be supported by a specific lien under the state law. P. 279 U. S. 93 .
Certiorari, 278 U.S. 585, to review a Judgment of the Supreme Court of Washington which, reversing a state court of first instance, upheld a claim of the United States for payment of income taxes and penalties from funds in the hands of a receiver, in priority over claims for county taxes.
In August, 1922, a receiver for the Culton-Moylan-Reilly Auto Company, an insolvent corporation, was appointed by the superior court of Spokane county, Washington. Under the order of the court, the receiver sold the personal property of the corporation and reduced the same to cash, which he held for distribution. On March 1, 1921, and March 1, 1922, Spokane and Whitman Counties, of the State of Washington, had assessed against the personal property of the company the total amounts of $6,195.38 and $410.36 respectively, but the taxes were
The Constitution, Article I, § 8, provides that Congress shall have power to lay and collect taxes and to make all laws which shall be necessary and proper to carry this and its other powers into execution. Article IV of
The language has been varied very little since these original enactments. The whole Act of 1797 come up for consideration in United States v. Fisher. There seems to have been a division among the judges. Chief Justice Marshall delivered the opinion of the Court, which upheld the priority of the United States as against the claims of the states, and held that the Act extended not only to revenue officers and persons accountable for public money, but to debtors generally. The Chief Justice said (p. 6 U. S. 396 ):
The colleagues of Judge Yeates concurred with him, but one of them expressed regret that the opinion in the Fisher case, supra, delivered previously, had not been furnished for comparison. The decisions in the Fisher and the Nicholls cases created much popular excitement, and, united with other issues of a similar character as between the supporters of the federal government and the state governments, led to much concern over the open defiance of the decision of this Court, until the issues were disposed of in the case of United States v. Judge Peters, 5 Cranch 115. See the account of the litigation in Charles Warren's Supreme Court in United States History, vol. 1, 372, 538 et seq. Four years after the decision in the Nicholls case, a review of that case was sought in this Court on a writ of error. When it came to be heard after nine years more of inaction, it was dismissed for lack of jurisdiction, on the ground that the record did not disclose the insolvency of the debtor, so as to make § 3466 applicable, and thus was eliminated the federal question. 17 U. S. 4 Wheat. 311.
No question of the construction of § 3466 seems to have come before this Court again until, in Field v. United States, 9 Pet. 182, it was sought to make certain trustees liable from their own funds, because they had made disbursements out of a bankrupt's estate, as to which the United States was entitled to priority. It was objected that the distribution had been made under order of the parish court in an action in which the United States was
Page 279 U. S. 90
not a party. This Court held that the United States was not bound to become a party, and said, p. 34 U. S. 201 :
In United States v. Snyder, 149 U. S. 210 , the question was raised whether the tax system of the United States could be made subject to the recording liens of the states. This Court said, p. 149 U. S. 214 :
In United States v. San Juan County, 280 F. 120, and in Stover v. Scotch Hills Coal Co., 4 F.2d 748, § 3466 came directly under consideration, and the priority of the United States against that of the states was fully sustained. It was also sustained by an unreported decision of the district court of the Eastern District of Washington in a proceeding relating to the very taxes here involved, but the judgment was reversed for lack of jurisdiction because the jurisdiction of the state courts had first attached. Merryweather v. United States, 12 F.2d 407.
In United States v. National Surety Co., 254 U. S. 73 , the question was whether, in the distribution of a bankrupt's
After these cases came the case of United States v. Oklahoma, 261 U. S. 253 , in which the question was of the application of § 3466 to the liquidation of a state bank under the state law and of priority of debts of the United States in such a case. This Court found that the section did not apply, because there did not appear to be insolvency of the bank as used therein. But the Court had to consider the meaning and effect of the section, and said, p. 261 U. S. 260 :
"Where the debtor is divested of his property in one of the modes specified in the act, the person who becomes invested with the title is made trustee for the United States and bound first to pay its debt out of the debtor's property. Beaston v. Farmers' Bank of Delaware, 12 Pet. 102, 37 U. S. 133 -135 (9 L.ed. 1017). The priority given the United States cannot be impaired or superseded by state law."
Section 3466 was fully considered in the case of Price v. United States, 269 U. S. 492 , and its history from 1789 clearly traced. See also United States v. Butterworth-Judson Corp., 269 U. S. 504 ; Bramwell v. U.S. Fidelity Co., 269 U. S. 483 ; Stripe v. United States, 269 U. S. 503 . In these cases, the word "debts" used in the section was held to include taxes. The Court said in the Price case, citing an opinion of Mr. Justice Story, p. 269 U. S. 499 :
"The claim of the United States does not rest upon any sovereign prerogative, but the priority statutes were enacted to advance the same public policy which governs in the cases of royal prerogative -- that is, to secure adequate public revenue to sustain the public burdens. United States v. State Bank of North Carolina, 6 Pet. 29,
Page 279 U. S. 93
31 U. S. 35 . And, to that end, § 3466 is to be construed liberally. Its purpose is not to be defeated by unnecessarily restricting the application of the word 'debts' within a narrow or technical meaning."
There remains only to determine what priority it has conferred. It may withhold it or vary it, and it has sometimes done so. When in this case did the priority attach and apply? It was said in United States v. Oklahoma, 261 U. S. 253 , 261 U. S. 260 , that, in a case like this, it applied when the receiver was appointed. The appointment was on August 28, 1922. The taxes and penalties due the United States, amounting to $70,268.58, were assessed on February 28 1923, and May 2, 1923, and therefore the priority of the United States attached on or before those dates. No assessment by the counties upon specific property in the hands of the receiver was made until September 23, 1924. The claim of the United States therefore had priority over such claims.
Assessments for Spokane County for $6,195.38, and of Whitman county for $410.36, were made in 1921 and 1922, before the receiver was appointed. What is the effect of those claims against the fund in court? In Wilberg v. Yakima County, 132 Wash. 219, it is held that the amount of the tax is the personal obligation of the person who owned the property at the time of the assessment, and that the tax is to be collected, if the property still continues in the hands of the person against whom it was assessed, from the property; if that specific property does not exist in such hands, the amount of the tax may be collected as a lien upon all the real and personal property of the person assessed, and may be collected from the other personal or real property of such person by seizure,