In re Whyte
| Decision Date | 20 September 1993 |
| Docket Number | Bankruptcy No. 90-60289. Adv. No. 90-6115. |
| Citation | 164 BR 976 |
| Parties | In re Herbert George WHYTE, Debtor. Paul CHAEL, Trustee, Plaintiff, v. Herbert George WHYTE, United States of America, Walgreen Company and First Federal Savings Bank of Indiana, Defendants. |
| Court | U.S. Bankruptcy Court — Northern District of Indiana |
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William Walden, Munster, IN, for debtor.
Paul Chael, Crown Point, IN, plaintiff pro se.
Robin Morlock, U.S. Attorney's Office, Dyer, IN, R. Brian Woodward, Merrillville, IN, for defendants.
This Adversary Proceeding is before the Court on a Motion filed on October 27, 1992 by the United States of America on behalf of its Agency the Internal Revenue Service (hereinafter: "IRS") to Alter Judgment or for New Trial (hereinafter: "Motion"). The Motion of the IRS is directed to the Court's Findings of Fact, Conclusions of Law and Judgment dated October 9, 1992, and entered of record on October 14, 1992 (hereinafter: "Judgment").
The Judgment arose out of an interpleader complaint filed by Paul Chael in this case, as the former Chapter 13 Trustee of the Debtor (hereinafter: "Trustee"), under former Case No. 89-61704 which was dismissed. The interplead funds had been paid to the Trustee by Walgreens Co., as lessee of a certain written lease between it and the Debtor as lessor during the course of the previous Chapter 13 case. The IRS and First Federal Savings Bank of Indiana (hereinafter: "First Federal") both asserted a first and prior lien in the interplead funds. This Adversary Proceeding was submitted to the Court as an Agreed Case by virtue of a Joint Signed Stipulation of Facts and Issues to be Briefed filed by the IRS and First Federal on February 14, 1991.
The Judgment determined the respective lien rights of the IRS and First Federal in these rentals. The Judgment determined that pursuant to Indiana law, rents to accrue in the future arising out of a written lease are generally classified as real estate, or "chattels real", while rentals that have accrued are classified as intangible personal property in the nature of a debt or chose in action. Judgment, pp. 60-62. The Judgment thus decided that rents that had accrued or had actually become due and owing by Walgreens to the Debtor were in the nature of personalty, rather than realty, and that although the IRS had filed a Notice of Federal Tax Lien with the Lake County, Indiana, Recorder on December 20, 1988, (hereinafter: "Notice"), that Notice did not effect a tax lien in the accrued rentals that was prior to the security interest (Assignment of Rentals) of First Federal, because I.C. XX-X-XX-XX(a), which had been enacted by the State of Indiana pursuant to 26 U.S.C. § 6323(f)(1)(A), had been generally repealed by P.L. 338-1987, Sec. 2 on May 4, 1987. That statutory provision was repealed and replaced by I.C. XX-X-XX-XX pursuant to P.L. 338-1987, Sec. 1, on May 4, 1987, or prior to the filing of the Notice. Indiana Code 36-2-11-25(a) as constituted at the time the IRS filed its Notice on December 20, 1988, only makes direct reference to perfecting a tax lien in real property and not to personal property. Thus, the Court concluded in its Judgment that in order for the IRS to perfect a tax lien as to personalty of the Debtor after May 4, 1987, i.e. the accrued rents paid by Walgreens to the Trustee of the Debtor, the IRS would have to file its Notice of Federal Tax Lien with the Clerk of the District Court pursuant to 26 U.S.C. § 6323(f)(1)(B), as the State of Indiana by the repeal of I.C. XX-X-XX-XX(a) no longer had designated one office that met the requirements of 26 U.S.C. § 6323(f)(1)(A)(ii), as to the filing of a Notice of Federal Tax Lien in personalty at the time the IRS had filed its Notice with the Lake County, Indiana, Recorder.
The IRS asserted that as surmised by the Court's Judgment, as First Federal had stipulated, that the IRS had filed its Notice of federal tax lien on December 20, 1988 in the "proper federal tax lien index". See, Stipulation filed February 14, 1991, ¶ 11. Thus, it asserts that this issue was not briefed by it, although First Federal raised this issue in its brief. See, IRS Motion, pp. 2-5.
As a consequence, the IRS and First Federal filed their Mutual Waiver of Certain Arguments and Agreed Order which the Court approved on January 8, 1993, wherein it was agreed between the parties that First Federal waived any objection to the IRS' motion or on appeal, that the IRS should have anticipated the need to brief the issue of whether its Notice of liens must be filed with the Clerk of the United States District Court.
The brief of the IRS filed on January 15, 1993 in support of its Motion asserts that the proper place to file a Notice of Federal Tax Lien as to personalty subsequent to May 4, 1987, or pursuant to I.C. XX-X-XX-XX(a), was the Lake County, Indiana, Recorder. In the alternative the IRS asserts at I.C. XX-X-XX-XX, Sec. 2 was only a partial repealer of I.C. XX-X-XX-XX(a), leaving that provision in effect as to personalty.
It should also be noted that in its brief the IRS withdrew its prior argument that the property in issue constituted real property, and concurred with the Court's Judgment that the status or nature of the property should be determined subsequent to the filing of the lien. See, IRS Brief, p. 23. However, the IRS asserts that the status or nature of the rentals should be determined as of the time that the Trustee's interpleader complaint was filed and not at the time the rentals accrued. That is, the interplead funds should be viewed as a bank account, i.e. the bank account maintained by the Trustee for the accrued rentals received by the Trustee from Walgreens during the course of the prior chapter 13 case, rather than as accrued rents timely paid by Walgreens to the Debtor's Chapter 13 Trustee. Thus, the IRS asserts that at the time the Debtor's prior Chapter 13 case was dismissed, the Debtor did not hold a chose in action versus Walgreens for accrued rents under a lease as Walgreens had satisfied its obligation to the Debtor when it had previously paid the rents to the Trustee. IRS Brief, pp. 23-24.
Indiana Code 36-2-11-25(a) which was in effect when the IRS filed its Notice on December 20, 1988 stated as follows:
Sec. 25. (a) This section applies to a lien arising under Section 107 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601 et seq. () and to any other federal lien on real property provided for in the statutes or regulations of the United States. In order for a lien covered by this section to be perfected, notice of the lien must be filed in the office of the recorder of the county in which the real property subject to the lien is located.
(Emphasis supplied).1
Indiana Code 36-2-11-25 was added by P.L. 338-1987, Sec. 1, May 4, 1987. Section 2 of P.L. 338-1987 stated as follows:
"I.C. XX-X-XX-XX IS REPEALED."
Indiana Code 36-2-11-21(a) which was repealed by P.L. 338-1987, Sec. 2, stated as follows:
Sec. 21. (a) Notices of liens for federal taxes and certificates discharging those liens may be filed in the office of the recorder of the county in which the property subject to the lien is located. (Emphasis supplied).2
It is noted that I.C. XX-X-XX-XX(a) expressly and unequivocally talks only in terms of "real property" and not in terms of "real property and personal property", or "property" generally, while repealed I.C. XX-X-XX-XX(a), and its predecessor, Acts 1925, Chapter 50, Section 1, talk generally in terms of "property" without distinguishing between "real property" or "personal property."
The court would also note that subsequent to the Court's Judgment, the Indiana Legislature Amended XX-X-XX-XX(a) to now read as follows:
Certainly this amendment makes it clear that federal tax liens in both real and personal property may now be perfected by filing the notice thereof with the county recorder's office. This court is aware that Indiana courts have allowed evidence of an act's amendment to influence their interpretation where the prior act was ambiguous. See Oster v. Department of Treasury, 219 Ind. 313, 317, 37 N.E.2d 528, 529 (1941); Yarlott v. Brown, 192 Ind. 648, 138 N.E. 17 (1923); Taylor v. State ex rel. Ogle, 168 Ind. 294, 80 N.E. 849 (1907); Hennessey v. Breed, Elliott and Harrison, Inc., 92 Ind.App. 165, 176 N.E. 251 (1931). However, a subsequent amendment to an unambiguous act cannot influence the Court's interpretation thereof.
Indiana Code 36-2-11-25(a), and its predecessors I.C. XX-X-XX-XX(a), and Acts 1925, Chapter 50, Section 1, as well as its successor, 1993 Ind. P.L. 256, were all enacted pursuant to 26 U.S.C. § 6323(f)(1) which provides as follows:
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