Court Opinion

ID: 9637473
Source: CourtListenerOpinion
Date Created: 2023-08-22 15:07:24.51148+00
Date Added: 2024-06-11T18:09:56.272433
License: Public Domain

HUTCHESON, Circuit Judge
(concurring specially).
I am in agreement with the result reached by the majority, but because I have reached that agreement by a different route, I think it well to briefly state my reasons.
The principles governing the disposition of this appeal are well settled. Collier in his excellent work on Bankruptcy, 14th Edition, Vol. 4, page 157, thus states them:
“In summary it can be said that under the Act of 1898 any lien, consensual or non-consensual, which was valid under applicable lien law remained valid in bankruptcy unless invalidated by some specific provision of the Act. This principle also governs under the Act of 1938, * * * and under the Act of 1898 all liens valid in bankruptcy had precedence over unsecured claims entitled to priority under Section 64.1 * * * This general principle remains true under the Act of 1938, subject to the fact that Sec. 67, sub. c subordinates statutory liens under certain circumstances to debts having first and second priority under Section 64.”
*402“In the drastic revision of Sec. 67, the drafters of the Act of 1938 took the caution and care to codify generally the case law that had developed under the. Act of 1898 on the subject of statutory liens. * * * Section 67, sub. b not only codifies, but it makes clear what was doubtful before, viz., that statutory liens may be perfected after bankruptcy if they arose prior thereto, * * *.2
When, therefore, both before and after the Act of 1938, a lien arises under 'the laws of a state before bankruptcy, and further steps to be taken with reference to it are steps in its collection or its enforcement rather than in its creation, such a lien remains valid in bankruptcy. Thus 67, sub. b in the Act of 1938, taken by itself has effected little change in the law of bankruptcy. Sec. 67, sub. c, however, has introduced a completely new feature as to “statutory liens * * * on personal property not accompanied by possession of such property”. This new feature is that while recognizing them as valid, it subordinates all such liens to two priorities. That is, 67, sub. c, has provided that such statutory liens and others dealt with in the paragraph shall under certain circumstances be subordinated to unsecured claims that enjoy a first and second priority.
Because of Section 67, sub. c, the City of New Orleans must, to prevail, establish more than that it had a statutory tax lien on personal property which arose before bankruptcy and was, therefore, valid both-before and under Sec. 67, sub. b. It must establish that before bankruptcy its lien was accompanied by possession of the property, and since it stands admitted that it did not have possession, its claim must fall. In this view, it becomes unimportant to determine whether, as the City claims, under the provision of the constitution of Louisiana that taxes on movables shall be collected by seizure and sale by the tax collector, and the provision of Sec. 49 of Act 170 of 1898, providing that when a receiver, liquidator, sheriff, or other court officer takes possession of personal property he shall pay at once all taxes, the City’s lien exists before or arises only a'fter seizure.3 For whether the seizure was a step in the creation, or, as in Knox-Powell-Stockton Co., supra, merely one of the steps for its enforcement, the sine qua non of its validity as a first and unsubordinated lien under 67, sub. c, that the lien be accompanied by possession at the time bankruptcy occurs, was absent here, and the City’s claim to a clear and unsubordinated lien, priming the chattel mortgage and vendor’s lien, falls. The reasons prompting the subordinating features of 67, sub. c are not hard to see. Collier states them very well: “Under the law as it stood prior to the Act of 1938, statutory liens came in ahead of prior liens. As a result of long inaction of tax authorities, liens for taxes which had accumulated over a number of years often consumed a bankrupt’s entire estate even to the exclusion of costs and expenses of bankruptcy proceedings. * * * To afford protection to administrative costs and expenses to wage claims, the authors of subdivision b, which expressly reaffirmed the validity of statutory liens, collaborated in a limited subordination of those liens.” Pp. 167, 168.
Nor may the City be heard to say that though subordinated by the statute to the two priorities, nothing in the statute purports to subordinate it to the mortgage lien which but for the bankruptcy it would have primed. Such claim is completely answered by the consideration that since the mortgage lien is not, and the City’s lien is, subordinate to these two priorities, the City’s claim must be subordinate to the mortgage. The reasonableness of this is supported by the holding of the Supreme Court of Louisiana in the Tropical Printing Co. case, supra, “It would be anomalous to hold that the claim of the city of New Orleans, which is subordinate to the claim of the United States [there under Sec. 3466, 31 U.S.C.A. § 191], is yet superior to the claim for costs of administration, notwithstanding the claim of the United States is subordinate to the claim for costs of administration.”
For these reasons, I concur in the affirmance.

 In re Cardwell, D.C., 52 F.2d 158; City of Dallas v. Ryan, 5 Cir., 62 F.2d 959; In re Knox-Powell-Stockton Co., 9 Cir., 100 F.2d 979.

 Cf. Cutler-Hammer, Inc., v. Wayne, 5 Cir., 101 F.2d 823, certiorari denied, 307 U.S. 635, 59 S.Ct. 1031, 83 L.Ed. 1517; American Coal Burner Co. v. Merritt, 6 Cir., 129 F.2d 314.

 Cf. Cleveland Steel Co. v. Joe Kaufman, 155 La. 529, 99 So. 428; Morelock v. Morgan & Bird Gravel Co., 174 La. 658, 141 So. 368; Tropical Printing Co. v. Union Title Guarantee Co., Inc., 180 La. 702, 157 So. 534, 544.