In the matter of Green, 36385.

• Decision Date: 30 September 1954
• Docket Number: No. 36385.,36385.
• Citation: 124 F. Supp. 481
• Parties: In the Matter of Ben GREEN, Bankrupt.
• Court: U.S. District Court — Northern District of Alabama

124 F. Supp. 481

In the Matter of Ben GREEN, Bankrupt.

No. 36385.

United States District Court N. D. Alabama, S. D.

September 30, 1954.

McGowen & McGowen, Birmingham, Ala., for the Trustee.

Chas. A. Guthrie, Birmingham, Ala., and J. Eugene Foster, Montgomery, Ala., for the State Dept. of Industrial Relations.

John D. Hill, U. S. Atty., Birmingham, Ala., for the United States.

LYNNE, Chief Judge.

Here for review on his certificate is an order of Honorable Stephen B. Coleman, Referee in Bankruptcy, dated June 17, 1953, pertaining to the distribution of funds of the bankrupt estate to apply on recorded tax liens in favor of State Department of Industrial Relations of Alabama. Insisting that the referee erred in avoiding its lien for taxes, established by 26 U.S.C.A. § 3670, the United States stands squarely on the position that a trustee in bankruptcy is not a judgment creditor within the meaning of 26 U.S.C.A. § 3672(a). Without attempting either to review or to analyze the opinions of both trial and appellate courts which are in irreconcilable conflict, this court is of the opinion that the United States is right in its contention.

Judicial gloss placed upon the words "judgment creditor" as employed by Congress in Section 3672 conclusively establishes that such words were used "in the usual, conventional sense of a judgment of a court of record". United States v. Gilbert Associates, 345 U.S. 361, at page 364, 73 S.Ct. 701, at page 703, 97 L.Ed. 1071. See concurring opinion of Mr. Justice Jackson in United States v. Security Trust & Savings Bank, 340 U.S. 47, at page 52, 71 S.Ct. 111, at page 114, 95 L.Ed. 53.

Concededly, neither of these cases was dealing with bankruptcy. If the trustee in bankruptcy in the instant proceeding (wherein there is no conventional judgment creditor to whose rights the trustee would succeed by operation of Section 70, sub. e of the Act is endowed with the status of a judgment creditor, it must be because of the provisions of Section 70, sub. c of the Bankruptcy Act, 11 U.S.C.A. § 110, sub. c, which read as follows:

"The trustee may have the benefit of all defenses available to the bankrupt as against third persons, including statutes of limitation, statutes of frauds, usury, and other personal defenses; and a waiver of any such defense by the bankrupt after bankruptcy shall not bind the trustee. The trustee, as to all property, whether or not coming into possession or control of the court, upon which a creditor of the bankrupt could have obtained a lien by legal or equitable proceedings at the date of bankruptcy, shall be

...