Indus. Comm'n v. United States (In re Brumer)

• Decision Date: 29 March 1948
• Citation: 252 Wis. 425,31 N.W.2d 599
• Parties: In re BRUMER et al. INDUSTRIAL COMMISSION v. UNITED STATES.
• Court: Wisconsin Supreme Court

252 Wis. 425

31 N.W.2d 599

In re BRUMER et al.

INDUSTRIAL COMMISSION

v.UNITED STATES.

Supreme Court of Wisconsin.

March 29, 1948.

Appeal from a judgment of the Circuit Court for Milwaukee County; Daniel W. Sullivan, Judge.

Proceeding in the matter of the voluntary assignment for benefit of creditors by John Brumer, doing business as Powers Manufacturing Company, wherein the Industrial Commission and the United States claimed the sum held by the receiver for distribution to creditors by virtue of tax liens exceeding that sum. From a judgment awarding priority to the claim of the United States, the Industrial Commission appeals.-[By Editorial Staff.]

Affirmed.

One John J. Brumer, doing business as Powers Mfg. Co., made a voluntary assignment for the benefit of creditors. After the payment of administration expenses the receiver held $2813.80 for distribution to creditors. This sum was claimed both by the appellant and respondent. The basis of the plaintiff's claim was a tax warrant filed in the circuit court for Milwaukee County on the 24th day of July, 1945, in the amount of $3981. This warrant was filed pursuant to the provisions of sec. 108.22(2), Stats.1945. That subsection provides: ‘The clerk shall enter in the judgment docket the name of the employer mentioned in the warrant and the amount of the contributions, interest, costs and other fees for which the warrant is issued and the date when such copy is filed. Thereupon the amount of such warrant so docketed shall become a lien upon the title to and interest in real property of the employer against whom it is issued in the same manner as a judgment duly docketed in the office of such clerk.’ The warrant was filed pursuant to the statute on July 24, 1945, at 10:00 A.M. Subsequently, by an instrument duly executed by the receiver and the appellant, appellant released its lien on certain lands owned by Brumer and it was agreed that the proceeds derived from the sale of the lands should stand in lieu thereof. The release was dated May 17, 1946, and filed, and its execution noted on the judgment docket March 4, 1947. The respondent was not a party to this transaction. The appellant filed a claim which included the amount of the tax warrant and other sums due from Brumer to the State of Wisconsin.

The respondent filed tax claims of the United States against the receiver amounting in the aggregate to $8704.54. It is the contention of the appellant that by reason of the filing of the tax warrant prior to the time that the respondent's tax claim was filed in the assignment proceedings it has a priority over the respondent's claim for the amount remaining in the hands of the receiver which was derived from the sale of the real estate heretofore mentioned. The trial court held that the claim of the respondent was prior to that of the appellant. Judgment was entered accordingly on November 17, 1947, from which the claimant Industrial Commission of Wisconsin appeals.Stanley Rector, Chief Counsel, and W. H. Putnam, Asst. both of Madison, for appellant.

Theron LaMar Caudle, Ast. Atty. Gen., and Sewall Key, George A. Stinson, and Homer R. Miller, Sp. Assts. to Atty. Gen., and Timothy T. Cronin, U. S. Atty., and Howard W. Hilgendorf, Asst. U. S. Atty., both of Milwaukee, for respondent.

ROSENBERRY, Chief Justice.

No question is raised as to the validity of the appellant's lien. The respondent contends that it is entitled to the entire fund by virtue of priority rights granted to it under sec. 3466 of the Revised Statutes of the United States, 31 U.S.C.A. § 191. The section is as follows: ‘Whenever any person indebted to the United States is insolvent, or whenever the estate of any deceased debtor, in the hands of the executors or administrators, is insufficient to pay all the debts due from the deceased, the debts due to the United States shall be first satisfied; and the priority established shall extend as well to cases in which a debtor, not having sufficient property to pay all his debts, makes a voluntary assignment thereof, or in which the estate and effects of an absconding, concealed, or absent debtor are attached by process of law, as to cases in which an act of bankruptcy is committed.’ Section 3672, 26 U.S.C.A. Int.Rev.Code, United States Revised Statutes, § 3186, provides: ‘Such lien shall not be valid as against any mortgagee * * * (the lien referred to is created by sec. 3670) until notice thereof has been filed by the collector-(1) Under State of Territorial Laws. In accordance with the law of the State or Territory in which the property subject to the lien is situated, whenever the State or Territory has by law provided for the filing of such notice.’

Sec. 74.76, Wis.Stats.1945, provides for the filing of notices of liens or internal revenue taxes payable to the United States of America. In this case the respondent does not claim by virtue of the provisions of sec. 3672 but under the provisions of sec. 3466, already set out. The respondent argues that assuming that the commission (appellant) has a valid lien which attached to debtor's real estate prior to the assignment such lien was not sufficiently specific to divest the government of its priority under sec. 3466, R.S. Consequently the government is entitled to that portion of the fund derived from the sale of the real estate. The decision of the question under consideration depends upon whether the lien of the appellant is ‘sufficiently specific and perfect’ to overcome the provisions of...