Polk County, Iowa, v. Burns

• Decision Date: 27 December 1917
• Docket Number: 174.
• Citation: 247 F. 399
• Parties: POLK COUNTY, IOWA, v. BURNS et al. In re HOSMER.
• Court: U.S. Court of Appeals — Eighth Circuit

247 F. 399

POLK COUNTY, IOWA, v. BURNS et al.

In re HOSMER.

No. 174.

United States Court of Appeals, Eighth Circuit.

December 27, 1917

Don B Shaw, of Des Moines, Iowa (George A. Wilson, Ward C. Henry Arthur T. Wallace, and Oscar Strauss, all of Des Moines Iowa, on the brief), for petitioner.

Neal M Monroe, of Des Moines, Iowa (James L. Parrish, William E. Miller, and Charles F. Maxwell, all of Des Moines, Iowa, on the brief), for respondents.

Before HOOK and SMITH, Circuit Judges, and AMIDON, District Judge.

AMIDON District Judge.

Julius H. Hosmer was engaged in the farm machinery and automobile business under the name of Hawkeye Buggy & Implement Company. He leased four different pieces of real property in the city of Des Moines, Iowa, for carrying on his business, in each of which he had personal property. June 3, 1915, he became a bankrupt, and at the time was owing rent upon each of his leaseholds. The landlords presented claims for this rent, and asked that the same be given priority over all other claims as to the personal property contained in each building, upon the ground that the landlord was entitled to a lien upon such property for rent under the laws of the state. The treasurer of Polk county presented a claim for $920.47 for personal taxes assessed against Hosmer for the years 1913, 1914, and 1915, and demanded that this claim be given priority over the landlords' claims for rent. The referee and the trial court gave priority to the landlords' liens, and the treasurer files this petition to revise.

The personal property in each of the four leased buildings has been sold, and the funds arising therefrom kept distinct. Following the referee's report we will designate the buildings by letters. The rent claim against building (a) was $624.48, which accrued between January 1 and June 3, 1915. The property in this building consisted of horses, harness, trucks, and wagons, which sold for $3,064.50, thus leaving a surplus over and above the claim for rent of $2,440.02. The rent claim on building (b) was $4,424.83 for rent accruing between January 1 and June 3, 1915. The property located in this building was part of the bankrupt's stock of goods and merchandise. It sold for $970, thus leaving a deficit of $3,454.83, for which a general claim has been allowed against the estate. The claim for rent against building (c) was for $707.11, which accrued between April 1 and June 3, 1915. The property located in this building sold for $55, leaving a deficit of $652.11, for which a general claim was allowed against the estate. It consisted of transfer property and equipment, warehouse trucks, and unloading planks. The claim for rent against the last building, (d), was $650, accruing between May 1 and June 3, 1915. The personal property here sold for $1,750, leaving a surplus of $1,100 over and above the rent. The property is not specifically described in the claim, but, considering the uses to which the building is limited by the lease, it may fairly be inferred that it was part of the bankrupt's stock of goods and merchandise. The uses of the building are set forth in the lease to be 'as a showroom for all grades and kinds of farm machinery, carriages, automobiles, or anything in that line.'

The personal property taxes, for which the county treasurer makes claim, are for the years 1913, 1914, and 1915. By the statute of Iowa personal property is assessed for purposes of taxation as of the 1st day of January each year. Code, Sec. 1350. So the taxes are prior in time to the rent. The principal item in the personal assessment of the bankrupt was 'merchandise and office fixtures.' For the year 1913 that item amounted to $18,000 out of a total assessment of $19,400; for 1914, to $10,500 out of a total assessment of $13,900; for 1915, to $6,150 out of a total assessment of $8,090.

The county treasurer bases his claim upon section 64a of the Bankruptcy Law. That section, however, has reference to payment out of the general funds of the estate. It shows that purpose plainly by its language. It says that taxes legally due shall be paid in advance of dividends to creditors. This provision was not intended to disturb priority of liens as fixed by substantive law. The demands of the state for its revenue are so paramount that most private liens are made subject to the lien of public taxes, without regard to priority of time. This, however, is not invariably true as to personal taxes. To ascertain the right of priority as to them we must look to the revenue law of the state. Section 1400 of the Code of Iowa provides as follows:

'Taxes due from any person upon personal property shall be a lien upon any and all real estate owned by such person, or to which he may acquire title. * * * Taxes upon stocks of goods or merchandise shall be a lien thereon, and shall continue a lien thereon when sold in bulk, and may be collected from the owner, purchaser or vendee.'

This statute is substantially the same as section 1015 of the Code of 1897. Under this statute taxes upon personal property are a lien upon real estate; but the bankrupt owned no real estate in the present case,...