Wise v. L. & C. Wise Co.

• Court: New York Court of Appeals Court of Appeals
• Writing for the Court: O'BRIEN
• Citation: Wise v. L. & C. Wise Co., 153 N. Y. 507 (N.Y. 1897)
• Decision Date: 05 October 1897
• Parties: DAVID L. WISE et al., Plaintiffs, v. L. & C. WISE COMPANY, Defendant. In the Matter of the Application of JOHN S. MCMASTER, as Ancillary Receiver of L. & C. WISE COMPANY. SIMON GOLDENBERG, Respondent; RECEIVER OF TAXES IN THE CITY OF NEW YORK, Appellant.

153 N.Y. 507

47 N.E. 788

WISE

v.L. & C. WISE CO.

Court of Appeals of New York.

Oct. 5, 1897.

Appeal from supreme court, appellate division, First department.

Action by David L. Wise and others against the L. & C. Wise Company. One McMasters was appointed receiver, and the property was turned over to him, subject to the lien of certain executions held by Simon Goldenberg among others. The receiver of taxes for the city of New York presented a claim for personal taxes, which was sustained at special term. The appellate division, however, reversed the order (42 N. Y. Supp. 54), and the receiver of taxes appeals. Affirmed.

Robert G. Monroe, for appellant.

Otto Horwitz, for respondent.

O'BRIEN, J.

The question in this case is whether taxes assessed upon the personal property of a corporation, and which became due subsequent to the levy of an attachment and execution thereon at the suit of creditors, are a prior lien upon the assets in the hands of a receiver for distribution, under the direction of the court, and which arose from a sale of the property subject to the levy. The defendant was a New Jersey corporation, doing business in New York, and, being insolvent, one McMasters was appointed receiver of its property in this state December 7, 1893. Prior to the time of his appointment, attachments had been levied upon the personal property, issued in actions at law, in which judgments were subsequently recovered, and executions issued, and levies made. The lien under these executions was acquired September 23, 1893, the date of the levy upon the attachments. On the 23d of December, 1893, the sheriff, under an order of the court, delivered all the property held by him under the attachments and executions to the receiver, who received it subject to all liens thereon, and reserving to all creditors their rights against the proceeds in the hands of the receiver, and their respective priorities of lien. The proceeds of the property in the hands of the receiver were not sufficient to pay the judgments upon which the sheriff had taken possession of the property. The receiver of taxes for the city of New York presented a claim to the receiver for $556.92, personal taxes for the year 1893, which he claimed was a lien on the fund prior to the judgments. The court, at special term, sustained this claim, and ordered the receiver to pay the taxes in preference to the judgments. The appellate division, however, reversed the order, and directed that the entire fund be paid over to the judgment creditors, and from this decision the receiver of taxes has appealed to this court.

The contention of the learned counsel for the receiver of taxes rests upon a somewhat novel proposition. It is that from the most ancient times the courts of England have recognized the right of the sovereign, representing the state, to priority of payment over all other claims, though they may have been secured by specific liens; that the people of this state have succeeded to all the prerogatives of the British crown as parts of the common law suitable and applicable to our condition. In support of his contention he has called our attention to various authorities in England and in this country. Giles v. Grover, 9 Bing. 130, 285; 2 Bac. Abr. p. 363; Toll. Ex'rs, c. 2, p. 259; In re Columbian Ins. Co., 3 Abb. Dec. 239; Central Trust Co. v. New York, C. & N. R. Co., 110 N. Y. 250, 18 N. E. 92;Union Trust Co. v. Illinois M. Ry. Co., 117 U. S. 434, 6 Sup. Ct. 809;U. S. v. State Bank of North Carolina, 6 Pet. 29-34.

The general doctrines contained in these cases would seem, upon a superficial view, to go far in support of the contention upon which this appeal is based, although it should be observed that a very important fact present in this case was absent in the cases cited, and that was the existence of a specific lien at law upon the personal property acquired by a levy under valid legal process in the hands of the sheriff. On a closer examination, however, it will be found that they do not sustain the broad principle contended for. They undoubtedly go far enough to sustain the principle that when a fund is in the hands of the court, or the trustee of an insolvent person or corporation, a claim due to the government upon a debt or for taxes is entitled to a preference in certain cases, or under certain circumstances. The prerogatives of the crown with respect to the imposition...