Abrams v. United States, No. 16228.

CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)
Writing for the CourtGARDNER, VOGEL and MATTHES, Circuit
Citation274 F.2d 8
PartiesHarold J. ABRAMS, Appellant, v. UNITED STATES of America, Appellee.
Decision Date15 January 1960
Docket NumberNo. 16228.

274 F.2d 8 (1960)

Harold J. ABRAMS, Appellant,
v.
UNITED STATES of America, Appellee.

No. 16228.

United States Court of Appeals Eighth Circuit.

January 15, 1960.


274 F.2d 9
COPYRIGHT MATERIAL OMITTED
274 F.2d 10
Harold I. Elbert, St. Louis, Mo., for appellant

Louise Foster, Atty., Tax Division, Dept. of Justice, Washington, D. C., for appellee.

Before GARDNER, VOGEL and MATTHES, Circuit Judges.

VOGEL, Circuit Judge.

The United States, plaintiff-appellee, brought an action against Harold J. Abrams, defendant-appellant, to recover $650.00 paid by Abrams to one Bernard Barken for legal services prior to and in connection with a general assignment for the benefit of creditors executed by Harber Products, Inc. The District Court held that payment of the fee violated the statutory priority given to debts owed the United States by § 3466, Revised Statutes (31 U.S.C.A. § 191),1 which priority arose here because of Harber Products' indebtedness to the government for federal taxes, and that therefore under § 3467, Revised Statutes (31 U.S.C.A. § 192)2 the United States was entitled to recover from Abrams the amount paid by him in violation of its priority. The lower court also ruled that the provision in the deed of assignment providing for payment of the fee constituted a void preference under § 426.010 of 22 Vernon's Annotated Missouri Statutes (1949).3 Judgment was accordingly entered for the United States, from which result Abrams has appealed.

An understanding of the questions presented requires a review of the facts in some detail. Harber Products, Inc., manufactured plastic rainwear. In 1954 a severe drought greatly reduced its sales and placed the company in jeopardous financial condition. Among its then outstanding obligations was a debt to the United States of $12,054.66 for unpaid Withholding Taxes covering the years 1952 and 1953 and for Unemployment Taxes due during 1952, 1953 and 1954. In September of 1954 Bernard Barken, an attorney, was paid a retainer of $50.00 or $100.00 by the company to review its financial condition. Barken thereupon conferred with Harber Products' auditor and familiarized himself with the company's problems. He also consulted, without avail, several department stores in regard to the sale of Harber Products' rainwear. In November,

274 F.2d 11
Barken concluded that there was no hope for the company's continued existence. He then contacted Abrams, an attorney who specialized in insolvency proceedings and who had acted as trustee under more than one hundred assignments for the benefit of creditors. It was agreed by them that Abrams would act as trustee under such an assignment by Harber Products

Prior to the execution of the deed of trust Barken conferred with Abrams three times, during which conferences he supplied him with information on Harber Products' assets and liabilities and lists of its creditors and accounts receivable. Barken also prepared the necessary shareholder resolutions and director minutes authorizing the assignment. Abrams testified before the court below that, "without the figures I could not have accepted the assignment", and that he "required" the minutes prior to the assignment. During the conferences Barken also helped Abrams familiarize himself with the general nature of Harber Products' business and assets. Barken additionally informed Abrams that a Mrs. Bertha Sloofman, mother of the two principal officers of Harber Products, held a bill of sale covering a major portion of the company's machinery and equipment. Abrams thereupon informed Barken that he "could not accept the assignment as trustee with this bill of sale authority because it would only lead to litigation considering it embraced the majority of the equipment of the company and the relationship between the officers and Mrs. Sloofman being sons and mother," and that "he did not want to take an assignment that would be comprised mostly of litigation." Barken alone then conferred with Mrs. Sloofman and her two sons and prevailed upon her to execute a waiver of any interest in the property she might have under the bill of sale.

Barken and Abrams collaborated in drafting the assignment deed. It was typed in Abrams' office and executed on December 2, 1954. The deed provided, inter alia, that:

"The Trustee shall be authorized to employ counsel if necessary, and to pay such counsel a reasonable fee, and to pay a reasonable fee to counsel for the Assignor."

Following the assignment Barken made arrangements with the two principal officers of Harber Products to turn over to Abrams two automobiles owned by the corporation which were in their possession. In addition, Abrams asked Barken to represent him in a replevin action brought by the Singer Sewing Machine Company against Harber Products. Barken filed an answer and subsequently joined in a stipulation permitting Singer Sewing Machine Company to have a judgment for recovery. Barken also appeared for Abrams in a suit brought by the Victory Products Company against Harber Products for a money judgment, which also resulted in Barken's consent to an adverse decree. Abrams further testified that at his request Barken attended the trustee's sale on December 15, 1954, "in the event any question arose as to whether any of the fixtures might be attached to the `freehold' and claimed by the landlord * * *". Finally, Barken supplied Abrams with certain information necessary for the preparation of Harber Products' final tax returns.

Pursuant to the provisions of the assignment, Abrams paid Barken on May 13, 1955, the sum of $650.00, which Abrams testified he felt to be a reasonable fee. Abrams further stated that:

"In fixing the fee I did not take into consideration any services which he (Barken) may have rendered his client (Harber Products) before the assignment was executed and which did not refer to the assignment, but I considered his work in preparing the directors\' and stockholders\' minutes authorizing the assignment, the time he devoted in meeting with me and discussing the financial affairs of the company. I considered those things occurring immediately prior to December 2, 1954.
274 F.2d 12
"I considered his negotiations with Mrs. Sloofman very highly because I knew of the existence of the bill of sale which Mrs. Sloofman had * * * and I would not take the assignment if that bill of sale remained in existence * * *.
"I bore in mind the surrender of the two automobiles in fixing the fee * * *. In fixing his fee I considered Mr. Barken had spent maybe an hour or two at the trustee\'s sale, it was not an important item. However, he was there at my request. I also considered the two lawsuits * * *. I also considered
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9 practice notes
  • U.S. v. Idaho Falls Associates Ltd. Partnership, No. 97-00178-E-BLW.
    • United States
    • U.S. District Court — District of Idaho
    • September 30, 1999
    ...expenses of a receivership take precedence over claims asserted by the Government pursuant to 31 U.S.C. § 3713. Abrams v. United States, 274 F.2d 8, 12 (8th Cir. 1960). See also, Kennebec Box Co. v. O.S. Richards Corp., 5 F.2d 951 (2d Cir.1925) (holding that the expenses of the receivership......
  • In re Estate of Funk, No. 100232.
    • United States
    • Supreme Court of Illinois
    • April 20, 2006
    ...he who shares in a benefit should contribute a like share to the expenses incurred in realizing the benefit.'" Abrams v. United States, 274 F.2d 8, 13 (8th Cir.1960), quoting In re Kennedy, 14 Fed. Cas. 309, 309 (W.D.Pa.1873). In accordance with this equitable principle, creditors, includin......
  • United States v. MacIntyre, CIVIL ACTION H-10-2812
    • United States
    • United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas
    • June 25, 2012
    ...Section 3713's reach is broad, United States v. Moore, 423 U.S. 77, 82-83, 96 S. Ct. 310 (1975), but not absolute, Abrams v. United States, 274 F.2d 8, 12 (8th Cir. 1960). Some courts have held that the government has priority over debts of the decedant but not debts of the estate. See Esta......
  • Holly Knitwear, Inc., Matter of
    • United States
    • New Jersey Superior Court – Appellate Division
    • March 9, 1976
    ...claimant. We agree. It is not disputed that administrative expenses have priority over federal tax claims (see Abrams v. United States, 274 F.2d 8, 12 (8 Cir. 1960); Cf. Kennebec Box Co. v. O. S. Richards Corp., 5 F.2d 951 (2 Cir. 1925); Lerman v. Lincoln Novelty Co., 130 N.J.Eq. 144, 147, ......
  • Request a trial to view additional results
9 cases
  • U.S. v. Idaho Falls Associates Ltd. Partnership, No. 97-00178-E-BLW.
    • United States
    • U.S. District Court — District of Idaho
    • September 30, 1999
    ...expenses of a receivership take precedence over claims asserted by the Government pursuant to 31 U.S.C. § 3713. Abrams v. United States, 274 F.2d 8, 12 (8th Cir. 1960). See also, Kennebec Box Co. v. O.S. Richards Corp., 5 F.2d 951 (2d Cir.1925) (holding that the expenses of the receivership......
  • In re Estate of Funk, No. 100232.
    • United States
    • Supreme Court of Illinois
    • April 20, 2006
    ...he who shares in a benefit should contribute a like share to the expenses incurred in realizing the benefit.'" Abrams v. United States, 274 F.2d 8, 13 (8th Cir.1960), quoting In re Kennedy, 14 Fed. Cas. 309, 309 (W.D.Pa.1873). In accordance with this equitable principle, creditors, includin......
  • United States v. MacIntyre, CIVIL ACTION H-10-2812
    • United States
    • United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas
    • June 25, 2012
    ...Section 3713's reach is broad, United States v. Moore, 423 U.S. 77, 82-83, 96 S. Ct. 310 (1975), but not absolute, Abrams v. United States, 274 F.2d 8, 12 (8th Cir. 1960). Some courts have held that the government has priority over debts of the decedant but not debts of the estate. See Esta......
  • Holly Knitwear, Inc., Matter of
    • United States
    • New Jersey Superior Court – Appellate Division
    • March 9, 1976
    ...claimant. We agree. It is not disputed that administrative expenses have priority over federal tax claims (see Abrams v. United States, 274 F.2d 8, 12 (8 Cir. 1960); Cf. Kennebec Box Co. v. O. S. Richards Corp., 5 F.2d 951 (2 Cir. 1925); Lerman v. Lincoln Novelty Co., 130 N.J.Eq. 144, 147, ......
  • Request a trial to view additional results

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