Court Opinion

ID: 3993248
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:52:29.105668+00
Date Added: 2024-06-11T07:44:25.927985
License: Public Domain

Under subchapter VIII of the social security act (42 U.S.C.A. (Sup.), § 1001), a tax is levied upon the "income of every individual . . . equal to the following percentages of the wages. . . received by him . . .," which tax (42 U.S.C.A. (Sup.), § 1002) "shall be collected by the employer of the taxpayer, by deducting the amount of the tax from the wages as and when paid."
Pursuant to § 1002, Ericksen deducted from the wages of his employees on the Edmonds school job the taxes due from them to the United States under § 1001. By virtue of 26 U.S.C.A., § 3661, the wages so withheld by Ericksen constituted, in his hands, "aspecial fund in trust for the United States." As I view it, this "special fund" is an integral part of the $9,320.70 retained percentage of the contract price paid into court *Page 237 
by the school district. Clearly, if the controversy over the right to this "special fund" were between the United States and Ericksen alone, the claim of the government could not be denied.
Now, there is no principle of law more firmly established nor more generally recognized than that the rights of an assignee can be no greater than the rights of his assignor. It is my view, therefore, that, since Ericksen would not be heard to assert a claim to the "special fund" created by his withholding the tax from the wages of his employees, pursuant to § 1002, the appellant (his assignee) should not be permitted to do so.
Section 12, subd. (c), of chapter 214, Laws of 1939, p. 849 (Rem. Rev. Stat. (Sup.), § 9998-114 [P.C. § 6233-309]), amending § 14, chapter 162, Laws of 1937, p. 604, provides:
"In the event of any distribution of an employer's assets pursuant to an order of any court under the laws of this state, including any receivership, probate, legal dissolution, or similar proceeding, or in case of any assignment for the benefit of creditors, composition, or similar proceeding, contributionsthen or thereafter due shall be a lien upon all the assets ofsuch employer." (Italics mine.)
This statute took effect June 7, 1939. The assignment from Ericksen to appellant was made July 20, 1939. This is the distinguishing feature between this and the case of In reCascade Fixture Co., 8 Wash. 2d 263, 111 P.2d 991, in which the court said:
"As for the 1939 amendment, its language does provide that, in dissolution proceedings, the amounts due to the department of unemployment compensation shall be a lien, prior to all other liens, with certain exceptions. However, in order to apply that provision to the case at bar, it would be necessary to construe the language of the amendment as having a retroactive effect,due to the fact that the mortgage *Page 238 antedated the enactment of the amendment." (Italics mine.)
Since, in this case, the amendment (Laws of 1939, chapter 214, § 12 (c), p. 849) antedates the assignment, it would not be giving retroactive effect to the statute to accept it at its face value. Plainly, it imposes a lien on assets of the employers for "contributions then . . . due," namely, at the time "of anydistribution of . . . [his] assets pursuant to an order of anycourt under the laws of this state, . . ." (Italics mine.)
It would seem clear that any order made in this interpleader proceeding will constitute a distribution of Ericksen's assets in contemplation of the statute. I think the judgment should be affirmed.
BEALS, J., concurs with BLAKE, J.