District of Columbia v. Hechinger Properties Co, 3350.
| Decision Date | 05 February 1964 |
| Docket Number | No. 3350.,3350. |
| Citation | 197 A.2d 157 |
| Parties | DISTRICT OF COLUMBIA, a municipal corporation, Appellant, v. HECHINGER PROPERTIES COMPANY, a corporation, Appellee. |
| Court | D.C. Court of Appeals |
Henry E. Wixon, Asst. Corp. Counsel, with whom Chester H. Gray, Corp. Counsel, Milton D. Korman, Principal Asst. Corp. Counsel, and Gordon M. Van Sanford, Asst. Corp. Counsel, were on the brief, for appellant.
Gilbert Hahn, Jr., Washington, D. C., with whom Mark B. Sandground, Washington, D. C., was on the brief, for appellee.
Before HOOD, Chief Judge, and QUINN and MYERS, Associate Judges.
On September 8, 1961, Hechinger Properties Company filed a complaint against Russell T. and Betty L. Piersanti for unpaid rent in the amount of $2,700.00, and a writ of attachment was issued on the same date. On November 7, 1961, a judgment was entered in rem against the property and the marshal was ordered to sell the property and remit the proceeds, less sale expenses, to the plaintiff. The marshal, pursuant to this judgment, sold the property for approximately $1,000.00.
On November 27, 1961, the District of Columbia served Notice of Levy and Warrant for Distraint upon the United States marshal for unpaid taxes owing to the District of Columbia by defendant Russell T. Piersanti in the total amount of $271.20, consisting of $94.81 for District of Columbia sales taxes for January, 1961, $63.23 actually withheld as District income taxes from his employees' wages for the fourth quarter of 1960, and $113.16 assessed against Piersanti for District income taxes withheld or required to be withheld by him, from employees' wages for the first and second quarters of 1961.
On March 12, 1962, by consent order, the marshal was directed to remit to Hechinger the excess (less costs of sale) above the disputed $271.20 and to hold this sum to await final disposition by the court.1
On June 24, 1963, the trial court found in favor of Hechinger and ordered the District to pay the $271.20 to Hechinger. From this order, the District appealed.
The District's position at trial was that under Section 47-1586g(f) (2), D.C.Code, 1961,2 its lien for withholding taxes attached and its priority dated, at the latest, from the last day of the month following the close of the second quarter of 1961, over a month before Hechinger filed its complaint and obtained its judgment. Hechinger argued that this provision merely created the lien but did not grant a priority from the date of the accrual of the lien and did not, without further action by the District, give the District the right to collect the lien. It argued that the priority dates from, and the right to collect is controlled by, action taken under Section 47-312 of the Code3 which provides that a lien for taxes "may be acquired in the same manner that liens for personal property taxes are acquired." [Emphasis added.]
Under Section 47-1406, D.C.Code, 1961,4 liens for personal property taxes are acquired by filing a certificate of delinquent taxes with the Clerk of the United States District Court.
The trial court, in a Memorandum Opinion, said:
As to sales taxes, the trial court stated:
We have carefully considered the issues raised by this appeal and believe it will simplify the questions if withholding taxes and sales taxes are discussed separately.
Section 47-1586g(f) (2),6 in respect to the case where the employer fails to pay over the amounts withheld to the Collector, not only specifically creates a lien, but provides that it shall accrue on the date the amounts were withheld or, if not withheld, on the date the amounts were required to be withheld.
Taxes are liens only when and to the extent made so by statute, Ervin v. State of Alabama, 5th Cir., 80 F.2d 432; Cooley on Taxation, vol. 3, §§ 1230-1240; Union Central Life Ins. Co. v. Black, 67 Utah 268, 247 P. 486, 47 A.L.R. 372.
A lien created by statute exists independently of the various means of enforcement which the statute permits.7 If the lien is given by the statute, further proceedings are not necessary to fix the status of the property. In our case a lien commenced at the time the income tax was withheld, or on the date it should have been withheld. It was perfected, it was choate, at these times and no further action was necessary to perfect it. It has long been regarded as a universal principle that a prior lien gives a prior legal right which is entitled to prior satisfaction out of the subject it binds. Howard v. Milwaukee and St. Paul R. Co., 101 U.S. 837, 25 L.Ed. 1081; Rankin & Schatzell v. Scott, 12 Wheat. 177, 25 U.S. 177, 179, 6 L.Ed. 592.
The construction given 47-1586g(f) (2) by the trial court must be tested against the intent and purpose of Congress. The trial court held that the District has no lien until it records a withholding tax lien in the United States District Court. But Section 47-312, by itself, with no reliance upon any other statute, gives the District the right to acquire a lien for taxes in the same manner that liens for personal property taxes are acquired, i. e., by filing a certificate of delinquent taxes with the United States District Court, pursuant to the authority of Section 47-1406 of the Code. If we uphold the trial court's interpretation, Section 47-1586g(f) (2) is meaningless. We do not believe Congress intended to enact a nullity in adopting Section 47-1586g(f) (2). We think that its purpose was clear — to give the District a lien which arises and exists on the date income taxes are withheld or are required to be withheld by the employer and has priority over other claims.
Accordingly, we hold that the trial court erred in finding that the District of Columbia not having filed a certificate under Section 47-1406, was not entitled to the sums that were actually withheld or those that should have been withheld, by Piersanti, and rule that the District is entitled to these sums.
Section 47-2608 provides that:
"[t]he [sales] tax imposed by this chapter and interest and penalties thereon shall become, from the time due and payable, a personal debt of the person liable to pay the same to the District." [Emphasis added.]
Section 47-2610 provides that taxes imposed under this chapter may be collected in the manner that taxes on personal property are collected, i. e., by Distraint and Levy. It also provides that liens for these taxes may be acquired in the same manner as liens for personal property, i. e., by filing a certificate of delinquent taxes with the United States District Court.
We construe Section 47-2610 as a mere permissive way ("may" be collected) in which the District of Columbia can give notice, if it desires, to creditors or potential creditors of its prior claims. While we may think that the better practice would...
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