Dupre v. Joe's Riverside Seafood, Inc.
| Decision Date | 28 March 1991 |
| Docket Number | No. CA,CA |
| Citation | 578 So.2d 158 |
| Parties | Elfray J. DUPRE v. JOE'S RIVERSIDE SEAFOOD, INC. 90 0032. 578 So.2d 158 |
| Court | Court of Appeal of Louisiana — District of US |
Robert U. Soniat, James R. Reid, Phelps, Dunbar, Marks, Claverie & Sims, New Orleans, for petitioner.
Russel J. Cremaldi, Darnall, Biggs, Trowbridge, Supple & Cremaldi, Franklin, for intervenor--Commercial Bank & Trust Co.
Joseph I. Billiot, in Pro. Per.
Gerald J. Arceneaux, Westwego, for Sheriff Harry Lee.
Gary R. Allen, Chief, Appellate Section, Tax Div., Dept. of Justice, Washington, D.C., for appellant.
Before COVINGTON, C.J., and LANIER and GONZALES, JJ.
This action commenced as a suit in contract by a vendor seeking (1) the balance due on the purchase price of crabmeat, (2) recognition of its vendor's lien and (3) a writ of sequestration. Suit was filed by Elfray J. Dupre, the vendor, against Joe's Riverside Seafood, Inc. (Riverside), the purchaser. The trial court ordered the crabmeat sequestered. Commercial Bank & Trust Company (Commercial), a creditor of Riverside, intervened seeking recognition of its security rights in the crabmeat, or recovery of its value. The trial court ordered the sale of the sequestered crabmeat and deposit of the proceeds into the registry of the court. The Internal Revenue Service (IRS) filed a Notice of Levy attaching all proceeds derived from the sale. An agreement was reached by Dupre, Riverside and Commercial, pursuant to which the trial court entered a consent judgment which ordered the proceeds of the sale, $57,621.83, be distributed $46,097.46 to Commercial and $11,524.37 to Dupre. The clerk of court (Clerk) refused to distribute the proceeds because of the IRS levy. Commercial then filed a rule for a writ of mandamus against the Clerk and the IRS asserting that its security rights primed the IRS tax lien and it was entitled to have the Clerk distribute the proceeds in accordance with the consent judgment. After a hearing, the trial court found, as a matter of law, that Commercial's security rights primed the IRS tax lien and ordered the Clerk to distribute the proceeds in accordance with the consent judgment. The IRS took this devolutive appeal.
The relevant facts were stipulated by the parties, in pertinent part, as follows:
1. At all times relevant to this case, Joseph Billiot, d/b/a Joe's Riverside Seafood, and Joe's Riverside Seafood, Inc., were engaged in the business of purchasing, processing and selling seafood--particularly crabmeat in Saint Mary's [sic] Parish.
2. Mr. Billiot and the corporation began borrowing money from Commercial Bank & Trust Company in 1983.
3. On July 16, 1985, Joe's Riverside Seafood, Inc., pledged as security for its indebtedness to Commercial Bank & Trust Co. three collateral mortgage notes which in turn were secured by chattel mortgages.
4. One of the aforementioned collateral mortgage notes, which was dated November 3, 1983, and was in the original face amount of $60,000, was secured by a chattel mortgage on all inventory of Joe's Riverside Seafood, Inc.
5. The collateral mortgage securing this note was recorded in the mortgage and conveyance records of Saint Mary's [sic] Parish on November 11, 1983....
6. Another of the collateral mortgage notes described in paragraph 3 above, this one dated May 30, 1984 and in the original face amount of $400,000.00 was also secured by a chattel mortgage on the inventory of Joe's Riverside Seafood, Inc.
7. The collateral mortgage securing this note was recorded in the mortgage and conveyance records of Saint Mary's [sic] Parish on May 30, 1984....
8. The amount currently due on the notes described above exceeds the amount on deposit with this court in connection with this court [sic].
9. On February 26, 1986, and for the periods listed below a duly authorized delegate of the United States Secretary of the Treasury made assessments against Joe's Riverside Seafood, Inc., pursuant to the Federal Insurance Contributions Act (26 U.S.C. Secs. 3101, et seq.) on [sic] the following amounts:
TAX PERIOD AMOUNT OF
ENDED ASSESSMENT
---------- ----------
6/30/85 $50,819.92
9/30/85 $34,019.28
12/31/85 $ 4,064.27
10. Despite notice of said assessments and demand for payments thereof, Joe's Riverside Seafood, Inc., paid only $21,278.08 against them before ceasing operations.
11. Accordingly, there is presently due and owing on the assessments described in paragraph 9 above the sum of $83,971.07, plus interest and statutory additions thereto.
12. The Notice of Federal Tax Lien with respect to the assessments described in paragraph 9 ... was filed in the mortgage and conveyance records of Saint Mary's [sic] Parish in [sic] April 26, 1986.
13. On August 1, 1986, Joe's Riverside Seafood, Inc., placed 167 containers of crabmeat in storage at the New Orleans Cold Storage and Warehouse Co., Ltd.
14. Commercial Bank & Trust Company held collateral mortgages on this crabmeat, which constituted inventory of Joe's Riverside Seafood, Inc.
15. New Orleans Cold Storage and Warehouse Co., Ltd., issued a warehouse receipt with respect to the crabmeat described in paragraph 14 above in the name of Joe's Riverside Seafood, Inc., and in care of Commercial Bank & Trust Company....
16. The warehouse receipt explicitly provided that notice to the bank was necessary for withdrawal of the crabmeat.
17. Joe's Riverside Seafood, Inc., pledged its interest in the aforementioned warehouse receipt to Commercial Bank & Trust Company by means of a Collateral Pledge Agreement dated August 1, 1986....
18. This Collateral Pledge Agreement was filed in the mortgage and conveyance records of Jefferson Parish on August 11, 1987 [1, and in the records of Saint Mary's [sic] Parish on October 23, 1986.
19. Commercial Bank & Trust Company has been in possession of the warehouse receipt at all times pertinent to this case.
20. On October 2, 1986, Elfray J. Dupre' initiated this action alleging that he had sold crabmeat to Joe's Riverside Seafood, Inc., and that Joe's Riverside Seafood, Inc., owed him $51,662.89 as the unpaid sales price of said crabmeat.
21. Elfray J. Dupre' claimed a vendor's lien on the crabmeat described in paragraph 13 above and subsequently had it sequestered.
22. On October 21, 1986, Commercial Bank & Trust Company filed a petition in intervention claiming that it had a security interest in the crabmeat senior to any vendor's lien Elfray J. Dupre' might have.
23. On January 16, 1987, Elfray J. Dupre' sought and, on January 19, 1987, obtained from this Court an order directing the Sheriff of Jefferson Parish to sell the aforementioned crabmeat and deposit the proceeds of the sale into the registry of this Court.
24. On February 11, 1987, the Sheriff of Jefferson Parish sold the aforementioned crabmeat and deposited the proceeds of the sale, totaling $57,621.83, into the registry of this Court.
25. These proceeds (hereinafter the "Fund") are the subject of the instant litigation between the United States and Commercial Bank & Trust Company.
26. By service on the Clerk of this Court on March 6, 1987, of a Notice of Levy dated February 12, 1986, the United States attempted to seize the Fund to satisfy the assessments against Joe's Riverside Seafood, Inc., described in paragraph 9 above.
27. On March 31, 1988, Elfray J. Dupre' and Commercial Bank & Trust Company reached an agreement as to the division of the Fund between themselves.
28. However, because of the levy described above, the Clerk of this Court has refused to disburse the funds.
29. In response, Commercial Bank & Trust Company joined the United States as a party to this action, which has, thus, become a concursus proceeding.
30. Commercial Bank & Trust Company did not become aware of the federal tax liens against the property of Joe's Riverside Seafood, Inc., until after it perfected its security interest in the warehouse receipt described in paragraph 15 above.
31. There [sic] no competent or direct evidence as to when Joe's Riverside Seafood, Inc., acquired the crabmeat described above. (Footnote omitted)
(Assignment of error number 1)
The IRS contends the trial court erred in finding its tax lien was primed by Commercial's security rights 2 and in awarding the proceeds of the sale of the crabmeat to Commercial and Dupre.
The principal statutory provisions governing federal tax liens are Sections 6321-6323 of the Internal Revenue Code, 26 U.S.C.A. Secs. 6321-6323. Section 6321 gives the IRS a lien in the amount of a delinquent taxpayer's liability upon all property and rights to property, whether real or personal, belonging to the taxpayer. This lien arises on the date the IRS assesses the unpaid taxes, applies to currently owned as well as after-acquired property and continues until the taxpayer satisfies the debt or the statute of limitations runs. 26 U.S.C.A. Sec. 6322; Metropolitan National Bank v. United States, 901 F.2d 1297 (5th Cir.1990); Texas Commerce Bank-Fort Worth, N.A. v. United States, 896 F.2d 152 (5th Cir.1990); Atlantic States Construction, Inc. v. Hand, Arendall, Bedsole, Greaves and Johnston, 892 F.2d 1530 (11th Cir.1990). The question of whether and to what extent a taxpayer has "property" or "rights to property" to which a tax lien attaches is determined under the applicable state law. Metropolitan National Bank v. United States, 901 F.2d at 1300; Du-Mar Marine Service, Inc. v. State Bank & Trust Company of Golden Meadow, LA., 697 F.Supp. 929 (E.D.La.1988). In this case, the applicable state law is that of Louisiana. It is undisputed that the taxpayer owned, or had rights to, the subject property (crabmeat), to which the federal tax lien attached.
Once it has been determined under state law that the taxpayer owns property or rights to property, federal law controls for the purpose of determining whether an attached tax lien has priority over competing liens asserted...
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