Court Opinion

ID: 8878157
Source: CourtListenerOpinion
Date Created: 2022-11-26 19:45:23.268544+00
Date Added: 2024-06-11T17:06:29.164628
License: Public Domain

HAYNSWORTH, Chief Judge,
(concurring) :
I join the opinion of the Court, because of the relevant decisions of the Supreme Court treating the claims of mechanics lienors as inchoate and subordinate to a variety of secured claims of the United States, though, under state law, the mechanics lien would be entitled to priority. I must confess, however, considerable doubt about the legitimate viability of the Insolvency Statute as applied in such recent cases as Commonwealth of Kentucky, Department of Revenue v. United States, 6 Cir., 383 F.2d 13. Indeed, were it not for the decision of the Supreme Court in United States v. Vermont, 377 U.S. 351, 84 S.Ct. 1267, 12 L.Ed.2d 370, I should think we would be confronted in this ease with a grave question of the survival of the Insolvency Statute after enactment of the Federal Tax Lien Act of 1966.1
It is most unfortunate that the Congress, when considering the Federal Tax Lien Act of 1966, did not focus its attention specifically upon the Insolvency Statute. Had it done so, I am confident the Insolvency Statute would have been repealed or substantially amended, for all of the time, attention and effort expended in drafting, considering and passing the Federal Tax Lien Act of 1966 will be fruitless, except in bankruptcy cases, if the Insolvency Statute is applied to preserve the super-priorities which the Federal Tax Lien Act of 1966 undertook to withdraw from tax claims. The question of priorities is wholly or largely academic, unless the debtor is insolvent, and the clearly stated purpose of the Federal Tax Lien Act of 1966 was to regulate the priority of federal tax claims when competing for payment out of the assets of an insolvent taxpayer with secured claims which would enjoy priority under state law.
The failure of Congress to deal specifically with the Insolvency Statute when amending the federal tax lien statute leaves a lurking question arising out of United States v. Vermont, supra, which suggests a definite independence between the two statutes and differences in their meaning and application. In Vermont, the opinion of the Supreme Court states that the taxpayer was solvent, though from the opinion in the Court of Appeals,2 it would appear that there was simply an absence of proof of insolvency, such proof being wholly unnecessary under the federal tax lien statute, but its decision suggests that, when the taxpayer is insolvent, the only probable occasion for litigation about the matter, the Insolvency Statute should be applied without regard to the unamended tax lien statute.
The subsequent enactment of the Federal Tax Lien Act of 1966 and its legislative history may lead the Supreme Court to a different conclusion in dealing with federal tax claims when the Government has elected to invoke the Insolvency Statute rather than the Tax Lien Act of 1966, but, in the present circumstances, in light of Vermont’s rationale, I cannot say that the Federal Tax Lien Act of 1966 by implication repealed the Insolvency Statute entirely so as to be inapplicable to a contractual claim, or so modified it as to accommodate the priorities which would be recognized if the distribution were being effected by a court in bankruptcy.
Without specific congressional consideration of the Insolvency Statute or a fresh reconsideration of it by the Su*162preme Court, it remains an anachronism under which federal claims are accorded greater priority when the distribution of the assets of an insolvent debtor is being effected under state law than when it is being effected under the Bankruptcy Act, under which federal tax claims may be arguably entitled to priorities which the Federal Tax Lien Act of 1966 would deny them, and under which other government claims, deferred to tax claims in bankruptcy, may be entitled to greater priority under a state regulated distribution of the insolvent’s assets.
In light of the course of decision in the Supreme Court, I do not think this Court in this case is free to consider a judicial development of rational answers. I mention the problems, for it seems to me that, particularly after enactment of the Federal Tax Lien Act of 1966, there is an urgent need for congressional attention to the Insolvency Statute, so that what, if anything, was intended to be left of it may be made manifest.

. Pub.L. 89-719, 80 Stat. 1125.

. 2 Cir., 317 F.2d 446.