Court Opinion

ID: 9884654
Source: CourtListenerOpinion
Date Created: 2023-10-06 03:05:14.985581+00
Date Added: 2024-06-11T07:48:40.100448
License: Public Domain

Hallows, J.
(concurring). While I agree with the result reached by the court on the ground the lien of the Industrial Commission does not constitute it a judgment creditor within the meaning of Int. Rev. Code of 1954, sec. 6323, so as to be protected from the ubiquitous lien of the United States government, I must disagree with the court’s dicta that assuming the Industrial Commission is a judgment creditor under sec. 6323, it still does not have priority.
At the time the United States government filed a notice of lien on June 14, 1965', it had no lien and consequently the notice was not then effective. The lien of the commission arose upon the filing of the warrant on June 17, 1965. The demand of the United States government which is a prerequisite to the creation of its lien was not made until June 24, 1965. The majority believes: (1) A demand is not essential to the question of priority and (2) a demand subsequent to the filing of notice of lien is sufficient to vitalize that notice nunc pro tune.
The two federal circuit court cases relied upon offer no support for the majority’s position emasculating the protection given mortgagees, pledgees, purchasers, and judgment creditors by the Int. Rev. Code of 1954, sec. 6323. In In Re Baltimore Pearl Hominy Co. (4th Cir. 1925), 5 Fed. (2d) 553, the court was dealing with a claim in a bankruptcy proceeding for subrogation to a *533government lien. Creditors had advanced money to compromise a federal tax claim. About two months after the payment of the compromise amount of the assessment the taxpayer was adjudged a bankrupt. The court held the government had a lien at the time of payment to which the creditors were subrogated because while no formal demand by the government had been made prior to the payment, the voluntary agreement between the commissioner and the taxpayer to compromise the amount was in effect a demand and if not a demand a waiver sufficient to support a lien. Of course, under these circumstances no notice of lien was filed and the court took pains to point out, “It is not contended that the trustees occupied the superior position of judgment creditors without notice of the circumstances which we have held created the lien for taxes in favor of the government.” Consequently, this case is no authority for the very proposition the court stated it was not deciding.
In Macatee, Inc., v. United States (5th Cir. 1954), 214 Fed. (2d) 717, a demand was made by the government a few days prior to the dates on which the collector received the assessment lists. Subsequently, the government filed notices of lien, but prior to the filing of these notices Macatee acquired a statutory attachment lien. The court held the government lien was good against the statutory attachment lien without filing of any notice and although Macatee became a judgment creditor subsequently in the attachment suit, this was too late for priority because the government had by then filed its notice of lien. This case is not authority that a bogus notice of lien filed when the federal government has no lien is effective to give priority over persons protected by Int. Eev. Code of 1954, sec. 6323.
The majority opinion in footnote number 21 characterizes certain language in Detroit Bank v. United States (1943), 317 U. S. 329, 335, 63 Sup. Ct. 297, 87 L. Ed. *534304, as dicta. This is error. The issue was whether a tax lien for estate taxes imposed by sec. 315 (a) of the Eevenue Act of 1936 attached at the date of the decedent’s death without an assessment or demand or whether that lien was subject to being recorded under the provisions of Eevised Statutes, sec. 3186, in order to give it superiority to a lien of a mortgagee who acquired his mortgage for value in good faith without knowledge of the tax lien. Sec. 3186 is a predecessor section to the sections under consideration in the majority opinion. The court in deciding sec. 315 (a) alone applied to the estate tax lien distinguished the legislative history of that section and E. S. sec. 3186 to prove that each was intended to operate independently of each other. In this context the court said, “of particular significance is the difference in time when the liens attach under the two sections. Under E. S. sec. 3186 there is no lien and no notice can be recorded until there has been a demand by the collector and a refusal to pay it by the taxpayer. Under sec. 315 (a) as has been stated the lien arises on the death of the decedent and becomes effective against the purchasers and the mortgagees without assessment or demand and obviously before it would be possible to record a notice of lien under the provisions of E. S. sec. 3186.” I think this language of the United States supreme court is good law; and the dicta of our majority opinion, bad law.
The only logical interpretation of Int. Eev. Code of 1954, sec. 6323, is that unless the demand is waived or made prior to or within sixty days of the date the collector receives the assessment list and before the notice of lien is filed the favored mortgagees, pledgees, purchasers, and judgment creditors are protected if their rights accrue prior to the filing of the notice of lien. But if a notice of lien is filed before the demand is made or waived in fact, the lien although relating back to the *535date of the assessment for other purposes is not effective to defeat the rights of the favored class designated in sec. 6323 which have accrued prior to the demand or waiver. The filing of the notice of lien must be of a lien then existing, not one which may or may not come into existence depending upon a later demand or waiver. The federal government should not be allowed to file a notice of lien when it has none and then claim retro-activity of the demand so as to breathe life into the lifeless form of the notice and be a basis for a priority of lien. Sec. 6323 does not so provide and no cases so hold.