Court Opinion

ID: 7816112
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:36:46.473237+00
Date Added: 2024-06-11T16:30:36.466334
License: Public Domain

Carleton Harris, Chief Justice (Dissenting). I cannot agree with tbe Majority opinion, for I am unable to distinguish the facts in tbe case at bar from those in U. S. v. Bond, 279 F. 2d 837 (C. A. 4th), and In re New Haven Clock & Watch Co., 253 F. 2d 577 (C. A. 2nd). I do not consider that discussion of those cases is necessary, for brief quotations from tbe opinions will suffice to explain my views. In Bond, tbe court said: “For tbe same reasons, we must subordinate to priority of tbe federal tax liens tbe claim for an attorney fee paid by Perpetual in protection of tbe lien of its mortgage. Tbe fee was incurred long after tbe atatacbment of tbe federal tax lien; and at the time of tbe execution of the mortgage and tbe creation of tbe debt secured thereby, the future existence or amount of such attorney fee, was, at best, speculative and uncertain.” In New Haven, that court said: “The Bank sought an order in the District Court including an award of reasonable attorney’s fees because the Clock Company, in the assignment contract, agreed ‘to reimburse the Bank for any and all legal and other expenses incurred in and about the checking, handling and collection of the accounts hereby assigned to the Bank and the preparation and enforcement of any agreement relating thereto.’ The Government, in its oral argument before this Court and in its brief, opposed this claim on the ground that the United States, acting pursuant to Sections 3670 and 3671 of the Internal Revenue Code of 1939, and Sections 6321 and 6322 of the Internal Revenue Code of 1954, 26 U. S. C. §§ 6321, 6322, had a tax lien on the proceeds of the assigned accounts which was prior to the ‘inchoate’ lien of the Bank. Since the amount of the Bank’s lien for attorney’s fees was unknown at the time of the Clock Company’s petition for reorganization, this lien was ‘inchoate’ in the sense used to determine its priority as against a United States tax lien. United States v. City of New Britain, 347 U. S. 81, 84, 74 S. Ct. 367, 98 L. Ed. 520. Thus, the Government’s lien is superior to the claim for attorney’s fees if the United States has complied with the aforementioned provisions of the Internal Revenue Codes and in addition has filed the notice of the lien as required * * Here, there is no dispute that the lien was properly filed and recorded. The Majority apparently depend in large measure upon the fact that our statute provides that a reasonable attorney’s fee is enforceable as a contract of indemnity. In my view, this provision lends no weight to the position taken by the Majority. The sole question here is when the insurance company’s lien for attorneys’ fees came into existence, i.e., did the attorneys’ fee become choate before the Government filed its lien claim? There was a default on the note in October, 1960,1 and the Majority state: “. . . the holder of the note, immediately upon such default, became entitled to enforce the contract of indemnity; and all of this was prior to any lien filed by the United States Government. So we are definitely of the opinion that the right for attorney’s fee became choate before the United States Government filed its lien claim.” The question, in my view, is not when the company became entitled to enforce the provision for an attorney’s fee, but rather, when it actually did enforce it. I emphatically disagree with the statement of the Majority, for I cannot see that the company was due to add the attorney’s fee immediately upon default. Debtors frequently are a few days late in making payments, but no one would contend that this permits a note holder to add an attorney’s fee. The default in payments on this note occurred in October, but I daresay that if Rogers had subsequently made the October payment, and the other payments, no foreclosure suit would have been filed. Certainly, if delinquent payments had been made and accepted by the company, it would not be contended that Pioneer should be permitted to add an attorney’s fee. In such event, there would have been no occasion to enforce any contract for indemnity, for there would have been no loss. "While the default occurred in October, 1960, the foreclosure suit was not filed until March, 24, 1961. The claim for attorney’s fee can only be enforced by court action, and though I am primarily of the opinion that an attorney’s fee would not have priority over the Government’s tax liens until it had been definitely fixed by the court, (prior to the recording of the liens) still, if that be error, then certainly I can see no possible priority for the attorney’s fee until a suit is filed asking for the fee. Both the filing of the complaint, and the order fixing the fee, occurred after the recording of the federal tax liens. The note provides: “The undersigned also agree(s) that in the event of default herein and of the placing of this note in the hands of an attorney for collection, or this note is collected through any court proceedings, to pay a reasonable attorney’s fee.” Our statute, quoted by the Majority, also provides that the attorney’s fee is enforceable “for services actually rendered.” Therefore, under the language of both the note and the statute, a default in payment is not sufficient to enable the note holder to add an attorney’s fee; services actually rendered by an attorney (generally the filing of a suit) are necessary. But, if it be said that an attorney could render service in trying to collect payments on the nóte before actually instituting any suit, I point out that this record is silent as to when this matter was placed in the hands of the attorneys for Pioneer. There is no evidence that appellee’s attorneys rendered any service relative to collection of the note prior to the filing of the foreclosure complaint. The Majority state that to allow the Government to recover the amount sought would “violate the rules against unjust enrichment.” I personally find no merit in this contention. The Government has its attorneys, and I am quite sure, wolud have been only too glad to have brought its own proceeding for sale of the property to satisfy the tax liens if such action would have given it priority over appellee. While I have commented to some extent relative to statements in the Majority opinion, this dissent is primarily based on the holdings in the Bond and New Haven cases, a reading of which persuades me that the lien for attorneys’ fee did not become choate until a definite, fixed amount was allowed by the court. As previously stated, this, of course, was long after the recording of the federal tax liens. I accordingly feel that the Government should preváil in its contention, and respectfully dissent.   The first two federal tax liens were recorded in November, 1960, and January of 1961.