South
Carolina
[55-1 USTC
¶9137]
United States of America
, Petitioner v. R. P. Scovil et al.
In
the Supreme Court of the
United States
, No. 35.--October Term, 1954, 348 US 218, 75 SCt 244,
January 10, 1955
On Writ of Certiorari to the Supreme Court of the State of
South Carolina
.
[1939 Code Sec. 3672(a)--similar to 1954 Code Sec. 6323]
Lien for taxes: Validity against landlord's distress lien.--The
landlord on
April 7, 1952
, distressed upon all the assets of the tenant-taxpayer. A receiver was
appointed on
April 8, 1952
. The
United States
filed its tax lien on
April 10, 1952
. The tax lien was held to be superior to the landlord's distress lien
which was not a mortgage, pledge or judgment lien. Moreover, the
distress lien was not perfected at the time the Government's tax lien
was filed, because the tenant-taxpayer under
South Carolina
law had five days in which to put up bond and free the property from the
lien of the distraint.
Simon E.
Sobeloff, Solicitor General, H. Brian Holland, Assistant Attorney
General, John R. Benney, Ellis N. Slack, A. F. Prescott, Special
Assistants to the Attorney General, for petitioner. J. D. Todd, Jr.,
Greenville
, S. C., Thomas A. Wofford,
Greenville
, S. C., for respondent.
MINTON,
Justice:
This case
involves the relative priority of a landlord's distress for rent under
the laws of
South Carolina
and a lien for unpaid taxes due the
United States
. The landlord, herein referred to as respondent, on
April 7, 1952
, filed in the Court of Common Pleas for
Greenville County
,
South Carolina
, and affidavit setting forth that Dan Tassey, Inc., was indebted to him
for rent and requesting a distress warrant which issued. The master's
report shows only that the landlord for past due rent "proceeded on
the 7th day of April, 1952 to distress upon the assets of said
corporation for said rent in arrears." The record does not disclose
what was actually done in the distress proceedings. South Carolina Code
Annotated, 1952, §41-151, provides when the affidavit of a landlord is
filed the magistrate may issue his distress warrant naming the amount
due with costs and deliver the warrant to an officer for service. The
officer shall forthwith demand payment (§41-153), and if not paid, he
shall distrain sufficient property on the rented premises to pay the
amount, giving a list of property distrained together with a copy of the
distress warrant to the tenant. The distress must be reasonable as to
amount of property distrained, on penalty of action for damages (§41-158,
41-159). The tenant has give days in which to put up bond and free the
property from the lien of distraint (§41-160).
The next day,
April 8, 1952
, a receiver was appointed for the corporate taxpayertenant as an
insolvent. All of the assets of the corporation passed to the receiver,
who sold them and realized therefrom the fund over which this contest is
waged.
[Tax
Liens Filed]
For nonpayment
of taxes due, the Collector of Internal Revenue received the proper
assessment lists in his office on March 19, 1951, May 24, 1951, August
29, 1951, December 3, 1951, February 23, 1952, and February 28, 1952,
and notice of these liens thereafter was filed in the proper office in
Greenville County, South Carolina, on April 10, 1952. Section 3671 of
the Internal Revenue Code provides that the lien for such unpaid taxes
attaches when the assessment lists are received by the Collector.
Therefore, long before the landlord obtained a distress warrant the
Government's liens for taxes had attached.
The Supreme
Court of South Carolina held [53-2 USTC ¶9605] the, since the distress
warrant was perfected before the receiver was appointed, the landlord's
distress lien was superior to the
United States
' priority created by §3466, Revised Statutes, 31
U. S.
C. §191. 224 S. C. 233, 78 S. E. 2d 277. We granted certiorari. 347
U. S.
974. However, we find it unnecessary to pass upon the effect of that
section. We hold that the Government must prevail because of its liens
under §3670, Internal Revenue Code.
The landlord
had a lien other than a mortgage, pledge, or judgment lien. As to all
other liens, such as the distress lien in the instant case, §3672 of
the Internal Revenue Code affords no protection. United States v.
Security Trust Co., 340
U. S.
47, 51 [50-2 USTC ¶9492] (concurring opinion). Cf. United States v.
Gilbert Associates, Inc., 345
U. S.
361, 362-365 [53-1 USTC ¶9291]. Moreover, the distress lien was not
perfected in the federal sense at the time the Government's liens were
filed. Such perfection is, of course, a matter of federal law. United
States v. Waddill Co., 323
U. S.
353 [45-1 USTC ¶9126]; Illinois v. Campbell, 329
U. S.
362, 371. The five-day period specified by §41-160 of the South
Carolina Code had not elapsed. During this time the tenant-taxpayer
could have reacquired any interest the landlord may have had in his
property by posting bond as provided by the Code. Therefore, such a lien
was only a caveat of a more perfect lien to come, as we have so often
held in other cases. United States v. Security Trust Co., supra;
United States v. Gilbert Associates, Inc., supra; United States v.
Waddill Co., supra, at 357-359; New York v. Maclay, 288 U. S.
290.
It was decided
in the trial court and argued here that the landlord was a purchaser
within the meaning of §3672 of the Internal Revenue Code and,
therefore, that the Government lien was invalid as to him. A purchaser
within the meaning of §3672 usually means one who acquires title for a
valuable consideration in the manner of vendor and vendee. Obviously,
the landlord was not a purchaser.
The judgment
is reversed.
