Source: https://www.chanrobles.com/usa/us_supremecourt/377/351/case.php
Timestamp: 2020-08-14 17:19:18
Document Index: 433490071

Matched Legal Cases: ['§ 6321', '§ 6321', '§ 3466', '§ 6321', '§ 3466', '§ 191', '§ 6323', '§ 3466']

317 F.2d 446, affirmed. chanrobles.com-red
This case involves a conflict between two liens upon the property of a solvent Vermont taxpayer -- a federal tax lien arising under the provisions of 26 U.S.C. §§ 6321 and 6322 [Footnote 1] and an antecedent state tax lien based on a Vermont law worded in terms virtually identical to the provisions of those federal statutes.
"[s]uch lien shall arise at the time the assessment and demand is made by the commissioner of taxes, and shall continue until the liability for such sum, with interest and costs, is satisfied or becomes unenforceable. [Footnote 2] "
"at the time the assessment is made, and shall continue until the liability for the amount so assessed is satisfied or becomes unenforceable by reason of lapse of time. [Footnote 3]"
In 1961, the United States brought the present action in the Federal District Court for Vermont to foreclose the federal lien against the property of Cutting & Trimming chanrobles.com-red
The Court of Appeals affirmed, reasoning that, under this Court's decision in United States v. New Britain, 347 U. S. 81,
317 F.2d 446, 452. Accordingly, the appellate court applied "the cardinal rule'" laid down by Chief Justice Marshall in @ 25 U. S. 179 (1827):
Both parties urge that decision here is governed by United States v. New Britain, 347 U. S. 81. In that case, involving conflicting municipal and federal statutory liens, the Court held that "the priority of each statutory lien contested here must depend on the time it attached to the property in question and became choate." Id. at 347 U. S. 86. In determining the choateness of the liens involved, the Court
Id. at 347 U. S. 84. Vermont's claim for the priority of its lien over the later federal lien is based on the fact that its lien is as completely "perfected" as was the federal lien in New Britain. Opposing this claim, the United States urges that different standards of choateness apply to federal and state liens, even where, as here, they are based on statutes identical in every material respect. The argument, in short, is that an antecedent state lien, in order to obtain priority over a federal lien based on §§ 6321 and 6322, cannot, like the federal lien, attach to all of the taxpayer's property, but must, rather, like the municipal liens in New Britain, attach to specifically identified portions of that property.
The requirement that a competing lien must be choate in order to take priority over a later federal tax lien stems from the decision in United States v. Security Trust & Savings Bank, 340 U. S. 47. There, an attachment lien which gave no right to proceed against the attached property unless judgment was obtained within three years or within an extension provided by the statute was held junior to a federal tax lien which had arisen after the date of the attachment but prior to the date of judgment on the ground that
Id. at 340 U. S. 50. The Security Trust rationale has since been applied in a case where a federal tax lien arose prior to judgment on a garnishment lien, United States v. chanrobles.com-red
Liverpool & London & Globe Ins. Co., 348 U. S. 215, [Footnote 4] and comparable defects have been held to require the according of priority to the federal lien in a series of cases involving competing mechanics' liens. [Footnote 5]
340 U.S. at 340 U. S. 51. Relying on this statement, the United States urges us to read Security Trust as establishing the proposition that federal tax liens are entitled to priority not only over "a lis pendens notice that a right to perfect a lien exists," but over any antecedent lien which is not sufficiently perfected to prevail against the explicit priority which R.S. § 3466 gives to claims of the United States in situations involving insolvency. [Footnote 6] More particularly, it is suggested chanrobles.com-red
Section 3466, on its face, permits no exception whatsoever from the statutory command that, "[w]henever any person indebted to the United States is insolvent . . . , debts due to the United States shall be first satisfied." The statute applies to all the insolvent's debts to the Government, whether or not arising from taxes, and whether or not secured by a lien. In United States v. Gilbert Associates, 345 U. S. 361, without questioning that the lienor was identified, the amount of the lien certain or the property subject to the lien definite, this Court accorded priority to subsequently arising claims of the United States against an insolvent debtor on the ground that:
Id. at 345 U. S. 366. [Footnote 7]
The state tax commissioner's assessment and demand in the present case clearly did not meet that standard, chanrobles.com-red
nor, so far as that goes, did the writ of attachment served on the Chittenden Trust Company. [Footnote 8] But the New Britain case, 347 U. S. 81, in which "[t]he taxpayer had not been divested by the Town of either title or possession," makes quite clear that different standards apply where the United States' claim is based on a tax lien existing under §§ 6321 and 6322. [Footnote 9]
"When the debtor is insolvent, Congress has expressly given priority to the payment of indebtedness owing the United States, whether secured by liens or otherwise, by § 3466 of the Revised Statutes, 31 U.S.C. . . . § 191. In that circumstance, where all the property of the debtor is involved, Congress has protected the federal revenues by imposing an absolute priority [citing United States v. Gilbert Associates, 345 U. S. 361; United States v. Waddill, Holland & Flinn, 323 U. S. 353]. Where the debtor is not insolvent, Congress has failed to expressly provide for federal priority . . . although the United States is free to pursue the whole of the debtor's property wherever situated."
United States v. New Britain, 347 U. S. 81, 347 U. S. 85.
It is undisputed that the State's lien here meets the test laid down in New Britain that "the identity of the lienor, the property subject to the lien, and the amount of the lien are established." 347 U.S. at 347 U. S. 84. Moreover, unlike those cases in which the Security Trust rationale was applied to subordinate liens on the ground that judgment had not been obtained prior to the time the federal lien chanrobles.com-red
arose, [Footnote 10] it is as true of Vermont's lien here [Footnote 11] as it was of the federal lien in New Britain that
Bull v. United States, 295 U. S. 247, 295 U. S. 260. [Footnote 12]
No claim is made here that Vermont's lien comes within any of the four classifications to which § 6323 accords priority until notice of the federal tax lien has been filed. Consequently, we put to one side such cases as United States v. Pioneer American Ins. Co., 374 U. S. 84; United States v. R. F. Ball Construction Co., 355 U. S. 587, and United States v. Scovil, 348 U. S. 218, which are concerned with the federal standards to be applied in determining whether the security interests envisaged in that provision have in fact been created. See also United States v. Gilbert Associates, 345 U. S. 361, 345 U. S. 363-365.
United States v. Hulley, 358 U. S. 66; United States v. Vorreiter, 355 U. S. 15; United States v. White Bear Brewing Co., 350 U. S. 1010; United States v. Colotta, 350 U.S. 808.
See also Gordon v. Campbell, 329 U. S. 362, 329 U. S. 375-376; United States v. Waddill, Holland & Flinn, 323 U. S. 353, 323 U. S. 359-360.
Indeed, this Court has repeatedly reserved the question whether the priority given the United States by R.S. § 3466 can be overcome even by a prior specific and perfected lien. United States v. Gilbert Associates, 345 U. S. 361, 345 U. S. 365; Illinois v. Campbell, 329 U. S. 362, 329 U. S. 370; United States v. Waddill Co., 323 U. S. 353, 323 U. S. 355-356; United States v. Texas, 314 U. S. 480, 314 U. S. 484-486; New York v. Maclay, 288 U. S. 290, 288 U. S. 294; Spokane County v. United States, 279 U. S. 80, 279 U. S. 95.
See also Crest Finance Co. v. United States, 368 U. S. 347.
See notes 4 and < a>| 4 and < a>S. 351fn5|>5, supra, and accompanying text.
See 317 F.2d 448, n. 2.