State v. Woodroof

• Decision Date: 18 May 1950
• Docket Number: 8 Div. 476
• Citation: 46 So.2d 553,253 Ala. 620
• Parties: , 50-1 USTC P 9315, 42 A.F.T.R. 194 STATE v. WOODROOF et al.
• Court: Alabama Supreme Court

Page 553

46 So.2d 553

253 Ala. 620, 50-1 USTC P 9315, 42 A.F.T.R. 194

STATE v.WOODROOF et al.

8 Div. 476.

Supreme Court of Alabama.

May 18, 1950.

A. A. Carmichael, Atty. Gen., and H. Grady Tiller, Asst. Atty. Gen., for appellant.

Theron Lamar Caudle, Asst. Atty. Gen., and Ellis N. Slack, A. F. Prescott and F. E. Youngman, Sp. Assts. to Atty. Gen., for appellee United States.

Malone & Malone, of Athens, for appellee Woodroof, receiver.

FOSTER, Justice.

This appeal brings up for review orders of a court of equity making distribution of assets of an insolvent corporation, Automatic Gas Company of Athens, Alabama.

On June 4, 1948, a petition was filed in equity by all the stockholders alleging insolvency of the corporation and inability to carry on its business and praying that it be dissolved and a receiver appointed to make proper distribution of its assets.The court on the same day made an order dissolving the corporation and appointing a receiver.On June 10, 1948, the receiver filed a petition to sell all the property, attaching an inventory of the real and personal property, and alleging that there is a mortgage on the greater part of the personal property and on all of the real property of the corporation and a vendor's lien on a portion of the real property, and that it would be to the interest of the creditors to sell it all free from encumbrances and that said lien and mortgage be paid out of the proceeds of the sale.

On the same day the court ordered such a sale to be made by the receiver after specified publication, either publicly or privately, and that all creditors file their claims in said court by August 11, 1948, and that notice of said order be published as directed.Such notice was given.On June 16, 1948, the receiver filed a petition for authority to sell a Jeep to the holder of a conditional sales contract in consideration of satisfying the debt, and for $300 to be paid over and above the debt.The court confirmed said transaction on the same day.

On June 18, 1948, the receiver filed a report of sale of the other assets of the corporation for $15,750, and that same had been paid.On June 19, 1948, the court confirmed said sale and ordered a deed to be executed to the purchaser.

On June 28, 1848, the First National Bank of Fayette, Alabama, filed a claim for the principal sum of $5,750 and interest $460 and attorneys' fee of $655, making a total of $6,865 by mortgage on real and personal property.

On the same day Glaze and Grisham filed a claim for the sum of $800.82 and attorney's fee of $114.08 by a vendor's lien on certain land of the corporation.

On July 1, 1948, the receiver filed a petion for the allowance and payment of those two claims last above stated.And on the same day the court made an order that the receiver pay said claims in full.Various unsecured claims were filed within the time specified in the order.

On July 3, 1948, the tax collector of the county filed a claim for ad valorem State and county taxes of $269.30.

On July 6, 1948, the State Department of Revenue filed a claim for taxes due the State in the sum of $976.03, of which

Income tax, year ending
                  October 31, 1947           $ 37.19
                Sales Tax, etc., from
                  Sept. 1, 1947 to Jan. 31
                  1948                        825.94($741.71)
                Sales Tax, etc., from Feb
                  1, 1948 to May 30, 1948      82.05
                Franchise Tax and Permit
                   Fee for 1948                30.85
                                             ----------------
                        Total                $976.03
                

Attached were exhibits showing the items of each claim.Each such itemized verified statement was filed in the office of the probate judge on May 19, 1948, claiming a lien under Title 51, section 883, Code, upon property and rights to property, real and personal, belonging to said taxpayer.

For that part of the sales tax extending from September 1, 1947 to January 31, 1948, a final assessment had been made on March 29, 1948, in the sum of $741.71.For this amount the State Department of Revenue did on May 31, 1948 issue an execution for the collection of said sum and placed it in the possession of the sheriff of the county and it was in his possession when the instant petition was filed and levied on the property of the corporation.

On July 7, 1948, the United States filed a claim for income taxes for 1948 in the sum of $254.22 and interest from March 10, 1948.An assessment for the same was made.It was certified by the Commissioner of Revenue March 15, 1948, and assessment list dated February 1948.

A statement of said claim in said amount and claiming to be a lien in favor of the United States on all property and rights to property belonging to the taxpayer was filed in the office of the Judge of Probate of Limestone County.The date of such filing was May 21, 1948.

There was also a claim filed by the United States in the sum of $951.13, made up of the following items: withholding tax third quarter, 1947, $231.40; withholding tax fourth quarter, 1947, $412.30; withholding tax first quarter, 1948, $307.43, claiming that the same was a lien in favor of the United States upon all property and rights to property belonging to the taxpayer.The claim was dated May 19, 1948, and filed for record on May 21, 1948.

This certificate of lien filed in the probate office on behalf of the United States does not purport to cover the entire claim of the United States, which was filed in court.The entire claim filed by the United States was in the sum of $1,250.30, which included certain items of withholding tax to 1948 and the employment taxes for 1947-1948.

On August 6, 1948, the United States filed an additional claim of $526.73 for employment F.U.T.A. tax.The assessment list covering this item bears date of July 28, 1948, for which there was filed in the probate office no notice of lien.

On August 9, 1948, Fred Hagan filed a claim alleged to be secured by a mortgage to one Cecil Gardner and by him transferred to the City National Bank of Sylacauga, and by it to the said Fred Hagan, in the total sum of $3,797.50.

The City of Athens filed a claim in the sum of $76.50 claiming a State improvement lien in said sum as a preferred claim.

On August 9, 1948, the receiver filed a petition for authority to pay both of said claims as preferred claims and on that date it was ordered and decreed by the court that the receiver pay the amount of said claims.That order together with all the others, which had been previously made, was without notice to any of the other claimants.

On August 17, 1948, the receiver filed in court a statement of the funds which he had received and which had been disbursed, including a preferred claim of Remington-Rand of $347.88, which was not mentioned above, showing a total payment of $12,001.78, and declaring they were all secured by mortgages, vendors' liens and assessments.He then reported certain items due employees and then the claim for taxes and unsecured creditors showing a total of $27,842.36, including what had been paid, and showing that he had received a total sum of $16,211.79, that he had paid out the total sum of $12,043.53, leaving a balance to be distributed of $4,168.26.He then prayed that the court fix a date to hear the claims of the State of Alabama and the United States for taxes and the various claims for unpaid wages.The court set a date to hear said claims and upon the hearing proof was made, as indicated above, in respect to the claims of the United States and the State of Alabama.On September 7, 1948, the court rendered a final decree, after hearing the evidence in respect to those claims, finding that the receiver had in his possession the sum of $4169.41.The court then proceeded to direct the manner of its distribution, including five percent as receiver's fee, court costs and the payment of $269.30 to the State of Alabama for its ad valorem tax, and directed the payment of other items of costs and attorneys' fees, and out of the balance directed the payment of $2,050.45 to the Collector of Internal Revenue in payment of the claim of the United States, leaving a balance of $118.43, which was directed to be paid to the State Department of Revenue as a credit on its claim for sales tax filed in this cause.

From that decree, the State of Alabama took an appeal on September 25, 1948, not only from that decree but also from all other decrees prior to said date of September 7, 1948 made in this cause.The State alone has assigned errors.Notice of the appeal was given to the various other creditors who filed their claims, but none of them have appeared or assigned errors.

The primary question of importance is whether or not the United States is entitled to priority of payment over the State of Alabama as to the amount of taxes due them each, respectively.

Before reaching that question, it is well to observe that no question is here presented as to the orders of court in making distribution of the funds received by the receiver prior to the final decree of September 7, 1948.We have held that an order of a court of equity administering a trust estate, directing the payment of certain claims ascertained by the court to be due and payable, is a final decree from which an appeal will lie to the Supreme Court.Carter v. Mitchell, 225 Ala. 287, 142 So. 514.It was also held in that case that when an appeal is taken from a final decree in a court of equity administering a trust, the appellant could not assign errors in respect to a final decree which had previously been rendered in the cause more than six months prior to the date of appeal.

In this casethe appellant has assigned as error the several orders of the court in respect to the distribution of the funds received by the receiver due the mortgagee and lien holders, adjudged by the court to have priority over other claims.Those orders appear to have been made within six months prior to the time when the instant appeal was taken and, therefore, are subject to...