Crocker Nat. Bank v. Trical Mfg. Co., 74-2230

• Decision Date: 05 September 1975
• Docket Number: No. 74-2230,74-2230
• Citation: 523 F.2d 1037
• Parties: 76-1 USTC P 9196 In the Matter of CROCKER NATIONAL BANK, formerly Crocker-Citizens National Bank, a national banking association, Plaintiff, v. TRICAL MANUFACTURING COMPANY, a partnership, et al., Defendants. UNITED STATES of America, Interpleader-Appellee, v. Dean SAKEL, Interpleader-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1037

523 F.2d 1037

76-1 USTC P 9196

In the Matter of CROCKER NATIONAL BANK, formerly

Crocker-Citizens National Bank, a national banking

association, Plaintiff, v. TRICAL MANUFACTURING COMPANY, a partnership, et al., Defendants.

UNITED STATES of America, Interpleader-Appellee, v. Dean SAKEL, Interpleader-Appellant.

No. 74-2230.

United States Court of Appeals, Ninth Circuit.

Sept. 5, 1975.

A. Alan Berger, San Jose, Cal., for appellant.

James L. Browning, Jr., U. S. Atty., San Francisco, Cal., Scott P. Crampton, Asst. Atty. Gen., and Ernest J. Brown, Acting Chief, App. Section, Tax Div., Dept. of Justice, Washington, D. C., for appellee.

OPINION

Before KOELSCH and HUFSTEDLER, Circuit Judges, and SMITH, ^* District Judge.

KOELSCH, Circuit Judge:

This is an appeal from a summary judgment for the United States. ¹

The question in this case results from the following sequence of events:

(1) Appellant, an unsecured creditor, placed a pre-judgment writ of attachment on the property of a partnership; (2) the partnership transferred title to the property to a successor corporation; (3) the corporation incurred unpaid tax liabilities; (4) a federal tax lien was recorded; and (5) the attaching creditor thereafter obtained a judgment. The question is whether the tax collector or appellant has prior right to the property.

The answer is: "the tax collector."

The United States has a lien under 26 U.S.C. § 6321 against "all property and rights to property" of taxpayer corporation, arising at the time the tax is assessed, 26 U.S.C. § 6322. Under 26 U.S.C. § 6323(a), the tax lien has priority over the claim of a judgment lien creditor if notice of the tax lien is filed before the judgment is obtained; it is undisputed here that it was. As a result, appellant quite properly concedes the incontestable fact that, if the partnership had not transferred the property and itself incurred the unpaid assessment, his rights as an attaching creditor would be inferior to the tax lien. See United States v. Security Trust & Savings Bank, 340 U.S. 47, 71 S.Ct. 111, 95 L.Ed. 53 (1950). He nevertheless argues that transfer to the corporation alters the result.

The essential thrust of the argument is that the tax lien attaches only to property of the taxpayer; that under California law the corporation took the partnership property subject to the writ of attachment; and that upon perfection of the attachment lien by judgment it became apparent that the corporation did not obtain property to which the tax lien could attach.

That position is untenable in this case. As the parties recognize, property rights of the taxpayer are determined by reference to state law. See, e. g., Aquilino v. United States, 363 U.S. 509, 510, 80 S.Ct. 1277, 4 L.Ed.2d 1365 (1960). It is true that under some circumstances the Court has held that a taxpayer did not obtain in any real sense property rights to which a tax lien could attach when under state law the taxpayer's rights in the property were subordinated to those of other claimants and did not vest until the others claims were satisfied. See, e. g., Aquilino, supra; United States v. Durham Lumber Co., 363 U.S. 522, 80 S.Ct. 1282, 4 L.Ed.2d 1371 (1960).

However, that is not the case here. Under California law a prejudgment attachment gives the attaching creditor an inchoate lien contingent on the outcome of the suit; it does not affect title or prevent transfer of the property subject to the lien. Security Trust & Savings Bank, supra, at 50; Bass v. Stodd, 357 F.2d 458, 464-465 (9th Cir. 1966); Puissegur v. Yarbrough, 29 Cal.2d 409, 412, 175 P.2d 830, 831 (1946); Howe v. Johnson, 117 Cal. 37, 48 P. 978 (1897). The transferee of the property takes what the transferor had a vested interest subject to divestment upon the contingency of plaintiff's obtaining judgment occurring. Hence the corporation here had a present property right to which the tax lien could attach, and the statute in terms makes the tax lien once recorded superior to the inchoate lien. ²

Indeed, appellant's position is necessarily rejected by Security Trust & Savings Bank, supra. The situation there was identical to that presented here, save there was no intervening transfer after the attachment lien was placed on the property. Were appellant's position accepted that such a lien immediately...