Investment & Securities Co. v. United States
| Decision Date | 16 February 1944 |
| Docket Number | No. 10531.,10531. |
| Parties | INVESTMENT & SECURITIES CO. v. UNITED STATES. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Witherspoon, Witherspoon & Kelley and William V. Kelley, Jr., all of Spokane, Wash., for appellant.
Samuel O. Clark, Jr., Asst. Atty. Gen., Sewall Key, A. F. Prescott, Edward H. Horton, and Maryhelen Wigle, Sp. Assts. to Atty. Gen. (Edward M. Connelly, U. S. Atty., and Harvey Erickson, Asst. U. S. Atty., both of Spokane, Wash., of counsel), for appellee.
Before WILBUR, GARRECHT, and HEALY, Circuit Judges.
On February 18, 1934, the United States of America made an assessment for income taxes for the year 1928, against Judson G. Rosebush, a resident of Wisconsin, in the amount of $37,220.85. Notices of tax lien were filed with the clerk of the United States District Court of Wisconsin and with the Register of Deeds for Outagamie County, Wisconsin, during April, 1934.
On April 20, 1937, Judson G. Rosebush submitted an offer of $820 for shares in the Inland Empire Paper Company of Spokane, Washington. At this time, Rosebush was indebted to the appellant, investment and Securities Company of Spokane, Washington, in the amount of $76,749, on two promissory notes which had been transferred to the appellant as the collection and liquidating organization for the benefit of depositors of the Old National Bank of Spokane, Washington. The Inland Empire Paper Company stock was security for this indebtedness and was being sold by the appellant. At the time Rosebush made his offer to purchase the Inland Empire Paper Company stock, the appellant corporation had discovered that Rosebush had paid up his assessments on certain shares he owned in the Exchange National Bank of Spokane, Washington, and that said bank was planning to pay its creditors in full and pay something to its former shareholders. So, when Rosebush made this bid for the paper company stock, the Investment and Securities Company attempted to get an assignment of his claim against the Exchange National Bank and threatened to bring legal action against Rosebush. To avoid being sued and in consideration of the opportunity to reacquire his stock in the Inland Empire Paper Company, Rosebush finally assigned to the appellant corporation, on July 27, 1937, any recovery which might be made on the assessment paid to the Exchange National Bank. Said assignment was made subject to the prior lien of the United States for income taxes.
In the same year, 1937, the United States brought action in the District Court for the Eastern District of Wisconsin against Rosebush for the nonpayment of taxes; on November 26, 1941, judgment was entered against Rosebush in the amount of $37,220.85.
On November 27, 1941, the United States Attorney for the Eastern District of Wisconsin caused a writ of fieri facias to be issued, commanding the United States Marshal of the Eastern District of Washington to levy on property of Rosebush in his district on account of the said judgment, and the writ was duly served on the Shareholders' Agent of the Exchange National Bank of Spokane for the unpaid taxes.
The present action was commenced by Charles P. Robbins, Shareholders' Agent of the Exchange National Bank of Spokane, Washington, in the nature of an interpleader. The agent paid $4,250 into court and prayed that all parties interested be joined to determine the ownership of the funds, and be enjoined from suing the said agent therefor.
The lower court found that the rights of the Investment and Securities Company under the assignment were junior to the tax lien of the United States Government.
The assignment in issue here contained the following statement: "* * * It is understood that the Collector of Internal Revenue has filed an Order of Distraint against the party of the second part and that this assignment is subsequent and junior to any lien against said recovery that said Collector of Internal Revenue may have acquired by virtue of such Order of Distraint."
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