Dugan v. Missouri Neon & Plastic Advertising Company

• Decision Date: 11 November 1971
• Docket Number: Civ. A. No. 2710.
• Citation: 334 F. Supp. 1222
• Court: U.S. District Court — Western District of Missouri
• Parties: M. R. DUGAN d/b/a M. R. Dugan Auction Company, Plaintiff, v. MISSOURI NEON & PLASTIC ADVERTISING COMPANY et al., Defendants.

334 F. Supp. 1222

M. R. DUGAN d/b/a M. R. Dugan Auction Company, Plaintiff, v. MISSOURI NEON & PLASTIC ADVERTISING COMPANY et al., Defendants.

Civ. A. No. 2710.

United States District Court, W. D. Missouri, S. D.

November 11, 1971.

James H. Wesley, II, Springfield, Mo., for plaintiff.

Bert C. Hurn, U.S. Atty. for Western District of Missouri, Paul Anthony White, Asst. U.S. Atty., for the United States.

James F. Fleischaker, Joplin, Mo., for Tubelite Co., Inc.

MEMORANDUM AND ORDER GRANTING SUMMARY JUDGMENT IN FAVOR OF THE UNITED STATES

COLLINSON, District Judge.

This is an interpleader action. Plaintiff has deposited the sum of $6274.03 into the registry of the Court, and has named the three adverse claimants to this sum as defendants. Presently pending are motions for summary judgment filed by Tubelite Company, Inc. hereinafter "Tubelite" and the United States. The third named defendant, Missouri Neon and Plastic Advertising Company, has not filed an answer in this action.

The facts are not in dispute. In May, 1970, Tubelite filed an action against Told Brothers Sign Company, Inc. "Told Bros.", in the Circuit Court of Jasper County, Missouri, and obtained service upon Told Bros. On June 5, 1970, the United States made assessments for withholding tax and interest against Dickerson Advertising, Inc., d/b/a Told Bros., and on August 19, 1970, filed a tax lien notice. On October 2, 1970, Tubelite obtained a default judgment against Told Bros. and, on the same date, the United States made another assessment against Dickerson Advertising, Inc., d/b/a Told Bros.

On October 15, 1970, plaintiff herein came into possession of $7081.75, the gross proceeds from the public auction of property owned by Told Bros. Immediately after the auction, plaintiff was served with a summons of garnishment which had been previously obtained by Tubelite.

On November 20, 1970, the United States filed a notice of a tax lien relative to the assessment against Told Bros. on October 2, 1970.

The present action was filed on February 12, 1971, while the garnishment action was pending in the state trial court. The plaintiff has deposited the sum of $6274.03 into the registry, representing the proceeds of the auction, less commission and expenses. Plaintiff requests costs and attorneys' fees from this sum. Tubelite claims $4421.92 and interest thereon from the date of garnishment. The United States claims $3065.78 plus interest and penalties under its tax lien of August 19, 1970; and $2391.66 plus interest and penalties under its tax lien of November 20, 1970. Missouri Neon and Plastic Advertising Company, although failing to plead in this action, is said to claim the proceeds of the sale by reason of the fact that it owns all the stock in Told Bros.

Tubelite has conceded that notice of a tax lien filed by the Government on August 19, 1970, gives the United States a prior claim to the proceeds in the amount of $3065.78. However, Tubelite claims the remainder of the proceeds under a prior lien to the Government's November 20, 1970, tax lien.

The United States claims a tax lien under the provisions of 26 U.S.C. § 6321, which provides:

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 6323(a) of the same Title provides:

The lien imposed by section 6321 shall not be valid as against any purchaser, holder of a security interest, mechanic's lienor, or judgment lien creditor until notice thereof which meets the requirements of subsection (f) has been filed by the Secretary or his delegate.

The lien imposed by § 6321, supra, arises at the time assessment is made, 26 U.S.C. § 6322, but is not valid against a judgment lien creditor until notice of the lien is duly filed for record. Tubelite, claiming to be a judgment lien creditor, asserts it has a lien, which came into existence prior to the filing of the notice of the second federal tax lien.

The only question of law present herein is whether or not Tubelite was a judgment lien creditor prior to the filing of the Government's tax lien.

Tubelite obtained a default judgment against Told Bros. on October 2, 1970. In Missouri, a judgment is a lien upon real property in the county in which the judgment is rendered or in which a transcript thereof has been filed. This lien commences the day of the rendition of the judgment and continues for three years unless revived. See Missouri Supreme Court Rules 74.34, 74.35, 74.71, and 74.74, V.A.M.R. However, no lien on personal property is created until an execution has been issued and levied. Rule 76.17, V.A.M.R., provides:

No execution prior to the levy thereof shall be a lien on any goods, chattels or other personal property, or the rights or shares in any stock, or any real estate to which the lien of the judgment, order or decree does not extend * * *.

See also § 513.085, RSMo 1959.

Therefore, under Missouri law, Tubelite obtained no judgment lien as a result of its default judgment against Told Bros. on October 2, 1970.

However, Tubelite contends that it became a judgment lien creditor on October 15, 1970, by serving a summons of garnishment on plaintiff. Tubelite cites § 525.040, RSMo 19...