ITT Diversified Credit Corp. v. Couch
| Decision Date | 06 September 1983 |
| Docket Number | LTD,INC,Y-,RINK-A-DINK,No. 81SA322,81SA322 |
| Citation | 669 P.2d 1355 |
| Parties | ITT DIVERSIFIED CREDIT CORP., Plaintiff-Appellee, v. Donald E. COUCH, Treasurer, Jefferson County, State of Colorado, and Board of County Commissioners for the County of Jefferson, Alan Charnes, Executive Director, Department of Revenue, State of Colorado, and The Department of Revenue, State of Colorado, Defendants-Appellees, v., Lee Reichardt, Inc., and Lee Reichardt, individually, Intervenors-Appellants, v., a Colorado Corp., Intervenor, v. Robert H. SUMMERS, individually, Intervenor. |
| Court | Colorado Supreme Court |
J.D. MacFarlane, Atty. Gen., Richard F. Hennessey, Deputy Atty. Gen., Mary J. Mullarkey, Sol. Gen., Billy Shuman, Asst. Sol. Gen., Denver, for Alan Charnes & Dept. of Revenue, defendants-appellees.
Patrick R. Mahan, County Atty., Richard F. Mutzebaugh, Asst. County Atty., Denver, for Donald E. Couch and Bd. of County Commissioners, defendants-appellees.
Shoemaker, Wham, Krisor & Bendelow, Susan E. Burch, Edward M. Bendelow, Denver, for intervenors-appellants.
The intervenors-appellants (intervenors) appeal the decision of the district court that tax liens upon the goods and business fixtures of a taxpayer asserted by the State of Colorado and other governmental entities for delinquent sales and withholding taxes take priority over the intervenors' security interest in the property. 1 The intervenors urge three grounds for reversal: (1) The trial court failed to make adequate findings of fact and conclusions of law as required by C.R.C.P. 52(a). (2) The trial court erred in holding that the tax liens are prior to the intervenors' perfected security interest in the delinquent taxpayer's property. (3) The decision of the trial court subjects the intervenors to unequal treatment under the Fourteenth Amendment to the United States Constitution. We affirm the judgment of the trial court.
The financing statement was filed with the Colorado Secretary of State.
On January 22, 1979, TNT borrowed funds from ITT Diversified Credit Corporation (ITT) and executed a security agreement and financing statement giving ITT a security interest in TNT's inventory of goods. The financing statement provided that the following property was covered:
"All inventory of goods, whenever acquired and wherever located, including, without limitation, commercial, vehicular, recreational, household, professional, industrial, musical or farm goods and all parts, accessories and other goods used or intended to be used in connection with any of the foregoing, now owned or hereafter acquired; wherever located."
When TNT failed to make the required payments, ITT, under the terms of its security agreement, repossessed some of TNT's inventory on November 7 or 9, 1979. Thereafter, on November 16, 1979, Rink-A-Dinks repossessed TNT's remaining equipment and inventory. Approximately ninety percent of the property repossessed by Rink-A-Dinks was comprised of inventory and parts for motorcycles. Ten percent of the property was in the form of equipment and business fixtures.
When the Colorado Department of Revenue (Department) did not receive tax returns from TNT in the late months of 1979, the Department computed an estimate of TNT's tax delinquencies pursuant to section 39-26-118(2)(a) and (b), C.R.S.1973. A ten-day delinquency notice was sent to TNT, which failed to respond. Accordingly, three distraint warrants were issued by the Department against TNT in November and December of 1979. The warrants authorized the levy and seizure of all merchandise and fixtures located at TNT's place of business. The distraint warrants were served on the deputy treasurer for Jefferson County on December 27, 1979. The treasurer was designated by the Department as its agent to collect the delinquent taxes owed to the State of Colorado by TNT.
After receiving two "bad checks" from TNT (the checks were stamped "account closed"), Jefferson County issued its own distraint warrant on December 26, 1979, to enforce the payment of personal property taxes due for that year. All of TNT's property, including the goods which had been repossessed by ITT and the intervenors, was seized pursuant to the warrants. Later, on March 10, 1980, additional motorcycles were seized by Jefferson County by virtue of a second distraint warrant which was issued on that date.
On February 11, 1980, an involuntary bankruptcy petition was filed in the United States Bankruptcy Court for the District of Colorado against TNT by Lee Reichardt, another of the intervenors and the owner of the corporate stock of Rink-A-Dinks. The bankruptcy action triggered an automatic stay order of all proceedings against TNT. The stay was released by the bankruptcy court on April 28, 1980.
This case arose on March 7, 1980, when ITT filed its complaint in replevin seeking to recover the property which had been seized by Jefferson County. After the stay order was vacated by the bankruptcy court and pursuant to a written stipulation of all parties, ITT filed a redelivery bond in the amount of $9,465.47 and obtained possession of the property it had earlier repossessed. Lee Reichardt filed a similar bond in the sum of $9,298 to secure the release of the property which had been repossessed by Rink-A-Dinks. The Department and its executive director were added as indispensable parties to the case. The intervenors were permitted to intervene to protect their interests in the property. 2
Following a court trial, the trial judge found in favor of Jefferson County in the amount of $1,424.15 for delinquent property taxes. Judgment was entered in favor of the Department in the amount of $14,343.22 for delinquent sales and withholding taxes. The judgments were entered against ITT and the intervenors. ITT has not appealed from the judgment of the trial court. Nor is the trial court's decision on the property tax issue involved in this appeal.
The intervenors' first argument for reversal is that the trial court's findings of fact and conclusions of law are insufficient under C.R.C.P. 52(a) to support the entry of the judgment against them. The basis for the intervenors' argument is that the trial court made only one finding regarding them and it concerns the release of property when the redelivery bond was posted. No specific findings were entered by the trial court on the allegations made by the intervenors in their various pleadings. Nor did the trial court make specific findings which established the intervenors' liability for the taxes due and owing to the governmental entities. However, in its conclusions of law, the trial court determined that ITT and the intervenors were secured parties who had repossessed the property of the delinquent taxpayer and were, therefore, liable for the unpaid sales and withholding taxes. The trial court entered judgment against ITT and the intervenors for the unpaid taxes, including interest. No penalties were awarded to the governmental bodies by the trial court in its final judgment.
The intervenors' argument is rejected for two reasons. First, the findings of fact and conclusions of law entered by the trial court and the evidence offered at trial provide an adequate foundation for the entry of judgment against the intervenors. Uptime Corp. v. Colorado Research Corp., 161 Colo. 87, 420 P.2d 232 (1966); Murray v. Rock, 147 Colo. 561, 364 P.2d 393 (1961). The well-reasoned decision of the trial court provides us with a clear understanding of the reasons for its ruling. Twin Lakes Reservoir and Canal Co. v. Bond, 156 Colo. 433, 399 P.2d 793 (1965); Bulow v. Ward Terry & Co., 155 Colo. 560, 396 P.2d 232 (1964).
Second, the intervenors concede in their briefs filed in this court that the facts are undisputed and that the pivotal issues in the case involve questions of law. Indeed, the intervenors urge that the case not be returned to the trial court for entry of further factual findings. We are at a loss to understand why this argument for reversal has been advanced. Since there is no dispute in the evidence and the issues raised by the intervenors are questions of law, we will resolve the case on its merits. See Mowry v. Jackson, 140 Colo. 197, 343 P.2d 833 (1959).
The Jefferson County Treasurer, acting on behalf of Jefferson County and the Department, seized the inventory and business fixtures which had been repossessed from TNT by the intervenors to enforce the sales tax liens. Accordingly, the question to be answered is whether the tax liens take priority over the intervenors' perfected security interest in the goods and business fixtures of the defaulting debtor who failed to pay the requisite taxes.
Section 39-26-117, C.R.S.1973 (1982 Repl.Vol. 16B), provides in pertinent part:
"Tax lien--exemption from lien. (1)(a) The tax imposed by this part 1 shall be a first and prior lien upon the goods and business fixtures of or used by any retailer under lease, title retaining contract, or other contract arrangement, excepting stock of goods sold or for sale in the ordinary course of business, and shall take precedence on all...
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