Brown v. General Laundry Service
| Decision Date | 04 April 1955 |
| Docket Number | No. 89569,89569 |
| Court | Connecticut Superior Court |
| Parties | , 55-1 USTC P 9427 Louis BROWN v. GENERAL LAUNDRY SERVICE, Inc., et al |
Camp, Williams & Richardson, New Britain, for plaintiff.
Adrian W. Maher, U. S. Dist. Atty., Bridgeport, and Edward J. Lonergan, Asst. U. S. Dist. Atty., Hartford, for United States of America.
Nair & Nair, New Britain, for defendants William G. Dunn and Tingue Brown & Co. Harold Koplowitz, New Britain, for city of New Britain.
This action was instituted to foreclose the first and second mortgages on New Britain real estate of the General Laundry Service, Inc. A judgment of foreclosure by sale was rendered by the Superior Court on June 22, 1951. Pursuant thereto the property was sold for $27,500. In addition to the proceeds of the sale of the mortgaged property, a receiver of rents reported collection of $571.24, making a total of $28,071.24 available for distribution. The court by its supplemental judgment dated December 18, 1951, ordered distribution to the respective parties in order of their priority as follows: To the committee and others for the expenses of the sale, $1761.09; to the city of New Britain for general taxes due on the foreclosed premises on the lists of 1946 to 1950 inclusive, $3075.07, and water assessments, $512.64, a total of $3587.71; to Louis Brown, the plaintiff, holder of the first and second mortgages, the sum of $15,319.35; to William G. Dunn of New Britain, holder of a judgment lien, the sum of $2017.18; to the United States of America for (1) federal insurance contributions, the assessment lists on which were received on various dates in 1949 and 1950, (2) federal unemployment contributions for the year 1948, the assessment list of which had been received on June 26, 1950, and (3) withholding taxes, the assessment lists of which had been received on various dates in 1948, 1949 and 1950, a total of $8475.13.
The United States of America appealed to the Supreme Court of Errors, claiming that the tax and water liens of the city of New Britain did not take precedence of the claims of the United States of America for taxes. The city of New Britain entered into a stipulation of facts with the federal government and filed a brief and argued the case in the state Supreme Court. Neither the plaintiff nor any other defendant participated in the appeal either as appellant or appellee. The judgment of the Superior Court was affirmed by the Supreme Court of Errors. Brown v. General Laundry Service, Inc., 139 Conn. 363, 94 A.2d 10. On writ of certiorari, the judgment of the Connecticut court was reviewed by the Supreme Court of the United States. United States v. City of New Britain, 347 U.S. 81, 74 S.Ct. 367, 98 L.Ed. 520. The Supreme Court vacated the judgment of the Connecticut Supreme Court of Errors and remanded the case to have determined the order of the various liens asserted in accordance with the opinion.
The liens in question are statutory. The pertinent language of the statutes involved follows.
Section 1853 of the General Statutes: 'The interest of each person in each item of real estate, which shall have been legally set in his assessment list, shall be subject to a lien for that part of his taxes laid upon the valuation of such interest, as found in such list when finally completed * * *.' It goes on to provide that the lien shall exist from the first day of October or other assessment date of the municipality in the year previous to that in which the tax shall have become due 'and, during its existence, shall take precedence of all transfers and incumbrances, in any manner affecting such interest in such item, or any part of it.'
Section 758 provides that water rates, if not paid when due, shall constitute a lien upon premises served, which lien shall take precedence over all other liens or incumbrances except taxes.
Section 3670 of the Internal Revenue Code, 26 U.S.C.A. § 3670:
Section 3671 of the Internal Revenue Code, 26 U.S.C.A. § 3671:
Section 3672 of the Internal Revenue Code, 26 U.S.C.A. § 3672:
The Supreme Court laid down the following rules which this court is obliged to follow in determining the order of priority of the various liens asserted: (1) The first in time is the first in right. (2) The priority of each statutory lien contested must depend on the time it attached to the property in question and became choate. (3) A lien becomes choate when the identity of the lienor, the property subject to the lien, and the amount of the lien are established. (4) Federal tax liens are general and become choate at the time the assessment list is received in the office of the collector of internal revenue. (5) In the instant case, certain of the city's tax and water-rent liens attached to the specific property and became choate prior to the attachment of the federal tax liens. It is obvious that certain others became choate after the federal tax liens attached. (6) The United States is not interested in whether the state or its political subdivisions receive taxes and water rents prior to mortgagees and judgment creditors. That is a matter of state law. But as to any funds in excess of the amount necessary to pay the mortgage and judgment creditors, Congress intended to assert the federal liens. There is nothing in the language of § 3672 of the Internal Revenue Code to show that Congress intended antecedent federal tax liens to rank behind any but the specific categories of interest set out therein.
The United States of America is, therefore, entitled to share only in the excess of the amount necessary to pay the plaintiff mortgagee and the judgment lienor, William G. Dunn. After deducting the judgment debt of the plaintiff mortgagee, the expenses of the sale and the amount of the judgment lien, there is on hand for distribution in which the federal government may share, the sum of $8973.62.
The parties are in agreement on the amounts of all the statutory liens involved; the time when the liens for water rent became choate; the time when the liens of the federal government for withholding, federal insurance contribution and unemployment taxes attached to the property and became choate upon the receipt of the assessment list for such taxes by the collector of internal revenue; the assessment dates of the real estate taxes of the city; and the fact that the tax rate of the city of New Britain is not established by the city's common council until the third Wednesday of the January following the assessment date (i. e., no earlier...
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