Beeghly v. Wilson

• Decision Date: 05 July 1957
• Docket Number: Civ. No. 942.
• Citation: 152 F. Supp. 726
• Parties: Ellen BEEGHLY and Kindig & Beebe, Plaintiffs, v. Glen H. WILSON, also known as Glenwood H. Wilson; Washington National Insurance Company; United States of America, Defendants.
• Court: U.S. District Court — Northern District of Iowa

152 F. Supp. 726

Ellen BEEGHLY and Kindig & Beebe, Plaintiffs, v. Glen H. WILSON, also known as Glenwood H. Wilson; Washington National Insurance Company; United States of America, Defendants.

Civ. No. 942.

United States District Court N. D. Iowa, W. D.

July 5, 1957.

George Davis, Whicher & Davis, Sioux City, Iowa, for plaintiffs.

Yelderman, Martin & Smith, Austin, Tex., for defendant Glen H. Wilson.

John J. Vizintos, Shull, Marshall, Mayne, Marks & Vizintos, Sioux City, Iowa, for Washington Nat. Ins. Co.

F. E. Van Alstine, U. S. Dist. Atty., and Philip C. Lovrien, Asst. U. S. Dist. Atty., Sioux City, Iowa, for defendant United States.

GRAVEN, District Judge.

In this case the plaintiffs are holders of judgments against the defendant Glen H. Wilson. That defendant was a general agent of the defendant Washington National Insurance Company. Under his general agent's contract he was entitled to commissions on renewal premiums paid on the policies written by him. That contract is dated November 1, 1949. The defendant United States of America, hereinafter referred to as the Government, is the holder of claims for unpaid income taxes against the defendant Glen H. Wilson which are the subject of a tax lien. The Government claims priority over the plaintiffs as to the renewal commissions owing and to become owing the defendant Glen H. Wilson. The defendant Washington National Insurance Company makes a claim in connection with the renewal commissions to which reference will be made later.

On November 4, 1953, the plaintiff Ellen Beeghly recovered a judgment against the defendant Glen H. Wilson in the District Court of Iowa in and for Woodbury County in the sum of $5,000. On the same day the plaintiff Kindig & Beebe also recovered a judgment against that defendant in the same court in the sum of $2,000. On November 8, 1954, the Commissioner of Internal Revenue made an assessment against the defendant Wilson for delinquent income taxes in the sum of $1,819.43 for the tax year 1952 and in the sum of $1,088.40 for the tax year 1953. Prior to the fore-part of 1953 the defendant Wilson was a resident of and domiciled at Sioux City, Woodbury County, Iowa. From that time until the present he has been a resident of and domiciled in Travis County, Texas.

The Commissioner filed notice of the tax liens in the office of the County Clerk of Courts of Travis County, Texas, on January 13, 1955. He also filed notice of those liens in the office of the County Recorder of Woodbury County, Iowa, on January 21, 1955.

On December 16, 1955, the plaintiffs caused general executions to be issued on their judgments. Under those executions notices of garnishment were served on the defendant Washington National Insurance Company on December 20, 1955. As of the date of the garnishment that garnishee was not indebted to the defendant Wilson for renewal premiums. However, as of August 1, 1956, it was indebted to him for such commissions in the sum of $552.73. Under the defendant Wilson's general agent's contract, he also was entitled to commissions on the renewal premiums paid after August 1, 1956, on policies which had been written by him.

Chapter 630, Code of Iowa 1954, I.C.A., makes provision for proceedings auxiliary to execution. On January 21, 1956, the plaintiffs commenced the present proceedings in the District Court of Iowa in and for Woodbury County under the provisions of that Chapter. The original parties defendant to the proceedings were Glen H. Wilson and the Washington National Insurance Company.

On February 10, 1956, the Government served notice of levy on the Washington National Insurance Company claiming a lien upon renewal commissions owing and to become owing Glen H. Wilson under his general agent's contract. Glen H. Wilson and Washington National Insurance Company appeared and filed pleadings in the proceedings instituted by the plaintiffs. In its answer filed therein, the Washington National Insurance Company set forth that it had been served with the Government's notice of levy. The plaintiffs thereupon made application to the District Court of Iowa in and for Woodbury County to have the United States of America made a party defendant to the action. That application was granted. Upon being made a party to the action, the United States of America removed to this Court.

There is not involved in this case Section 191, Title 31, U.S.C.A., which is known as the Government priority statute. That statute is only applicable in insolvency cases. In the present case there is no claim or showing that the defendant. Glen H. Wilson was or is insolvent. There is involved Sections 6321, 6322, and 6323, Title 26, U.S.C.A. Those sections provide as follows:

Section 6321:

"If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, additional amount, addition to tax, or assessable penalty, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person."

Section 6322:

"Unless another date is specifically fixed by law, the lien imposed by section 6321 shall arise at the time the assessment is made and shall continue until the liability for the amount so assessed is satisfied or becomes unenforceable by reason of lapse of time."

Section 6323:

"(a) Invalidity of lien without notice. — Except as otherwise provided in subsection (c), the lien imposed by section 6321 shall not be valid as against any mortgagee, pledgee, purchaser, or judgment creditor until notice thereof has been filed by the Secretary or his delegate—

"(1) Under state or territorial laws. — In the office designated by the law of the State or Territory in which the property subject to the lien is situated, whenever the State or Territory has by law designated an office within the State or Territory for the filing of such notice * * *"

It is not controverted that the office of the County Clerk of Courts in Texas and the office of the County Recorder in Iowa are the proper offices for the filing of notices of federal tax liens under Section 6323 (a) (1). See Section 335.11, Code of Iowa 1954, I.C.A. The Internal Revenue Code of 1954 became effective August 16th, 1954. Under the provisions of that Code the claim of the Government for taxes becomes a lien on the date of their assessment. Prior to the effective date of that Code such a claim did not become a lien until the date the Collector of Internal Revenue received from the Commissioner of Internal Revenue an assessment list carrying the unpaid tax liability of the delinquent taxpayer. In the present case the claims of the Government were assessed on November 8th, 1954, and the lien of the Government came into existence on that date.

In the present case the right of the defendant Glen H. Wilson to the renewal commissions constituted intangible property, i. e., a chose in action. Section 6321 is broad in its scope. It makes a Government tax lien a lien "upon all property and rights to property, whether real or personal." In the case of Citizens State Bank of Barstow, Texas v. Vidal, 10 Cir., 1940, 114 F.2d 380, 382-383, the Court in referring to the tax lien statute stated:

"The statute covering collection of taxes is broad and comprehensive and Congress intended to subject all of a taxpayer's property, except that specifically exempt to the payment of taxes. `Property' is a word of very broad meaning and when used without qualification, may reasonably be construed to include obligations, rights and other intangibles, as well as physical things."

Section 6321 was formerly Section 3670, 26 U.S.C. In the case of Glass City Bank of Jeanette Pennsylvania v. United States, 1945, 326 U.S. 265, at page 267, 66 S.Ct. 108, at page 110, 90 L.Ed. 56, the United States Supreme Court stated:

"By Section 3670, U.S.C., 26 U.S. C.A.Int.Rev.Code, § 3670, Congress impressed a lien upon `all property and rights to property, whether real or personal, belonging' to a tax delinquent. Stronger language could hardly have been selected to reveal a purpose to assure the collection of taxes."

It is well settled that under that statute the Government has a lien upon the intangible property of a delinquent taxpayer. The tax lien is a continuing lien and will attach to obligations which come into existence thereafter. Glass City Bank of Jeanette Pennsylvania v. United States, supra. In that case the tax lien was held to attach to the claim of a taxpayer for services rendered subsequent to the time the lien came into existence. The tax lien has been enforced against various types of intangible property. It has been enforced against the cash surrender value of life insurance policies owned by the taxpayer and this without reference to the question of whether the policies were fully matured or whether notice was given to the beneficiaries. Kyle v. McGuirk, 3 Cir., 1936, 82 F.2d 212; Knox v. Great West Life Assur. Co., D.C.1952, 109 F. Supp. 207; United States v. Ison, D.C. 1946, 67 F.Supp. 40; Smith v. Donnelly, D.C.1946, 65 F.Supp. 415. It has been enforced against annuity and endowment policies. Cannon v. Nicholas, 10 Cir., 1935, 80 F.2d 934; United States v. Trout, D.C.1942, 46 F.Supp. 484. The tax lien has been enforced against disability payments payable under life insurance policies. Fried v. United States, D.C.1955, 150 F.Supp. 486, reversed sub nom, Fried v. New York Life Insurance Co., 2 Cir., 1957, 241 F.2d 504, certiorari denied 77 S.Ct. 1382. It has been enforced against a cause of action of a contract vendee of real estate against his vendor for restitution. Bensinger v. Davidson, D.C.1956, 147 F.Supp. 240. In an article by Paul E. Anderson entitled "Federal Tax Liens — Their Nature and Priority," 41 California Law Review 241 (1953), the author states (p. 251):

"Once the federal tax lien has attached to certain property, the

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