U.S. (Treasury Dept., I.R.S.) v. Globe Corp.
| Decision Date | 05 February 1976 |
| Docket Number | No. 11726,11726 |
| Citation | 546 P.2d 11,113 Ariz. 44 |
| Parties | , 76-1 USTC P 9430, 18 UCC Rep.Serv. 789 UNITED STATES of America (TREASURY DEPARTMENT, INTERNAL REVENUE SERVICE), Appellant, v. GLOBE CORPORATION, an Illinois Corporation, Appellee. |
| Court | Arizona Supreme Court |
William C. Smitherman, U.S. Atty., by James P. Loss, Asst. U.S. Atty, Phoenix, Scott P. Crampton, Meyer Rothwacks, Elmer J. Kelsey, William M. Brown, Attys., Tax Div., Dept. of Justice, Washington, D.C., for appellant.
Fennemore, Craig, von Ammon & Udall, by Francis J. Slavin, Jr., Phoenix, for appellee.
The Valley Gin Company, as plaintiff in the Superior Court, commenced this action to determine the proper party to receive $15,694.10, the balance of the proceeds from crops grown on land leased by the Globe Corporation to Lee Wong Farms, Inc. The Superior Court, after authorizing the deposit of the fund with the court, awarded the Valley Gin Company § 635.40 as costs and attorneys' fees from the fund and ordered that the Valley Gin Company be dismissed from the action. Both the United States and the Globe Corporation were named defendants. Both filed motions for summary judgment. The court below denied the motion of the United States and granted the motion of the Globe Corporation. The United States has appealed. The judgment is set aside and this cause is remanded with directions.
The facts are not in dispute. Lee Wong Farms, Inc. leased certain lands from the Globe Corporation. The lease, dated December 29, 1966, was for four years and provided for an annual rental of $45,000 payable in equal installments on January 1 and August 1 of each year. Pursuant to the lease, Lee Wong Farms, Inc. was in possession of the demised property in April of 1970, at which time it planted a cotton crop scheduled for harvest in late 1970. The cost of planting and growing the crop was advanced by the Valley Gin Company. In the summer of 1970, Lee Wong Farms, Inc. encountered financial difficulty and was unable to meet its obligations. Consequently, the Valley Gin Company took over the harvesting and processing of the crop and satisfied its claim from the proceeds. The balance was interpleaded with the result as stated.
The United States claimed the fund by reason of certain tax liens filed during June and July of 1970. Globe claimed the fund because Lee Wong Farms, Inc. failed to make the rental payment due August 1, 1970. Globe has asserted both a statutory and a contractual landlord's lien on the fund, either of which it claims is entitled to priority over the federal tax liens. The United States on appeal contends that the statutory landlord's lien was inchoate (was not a perfected security interest) at the time the federal tax liens were filed, that the contractual landlord's lien did not constitute a properly protected security interest under the Uniform Commercial Code, and that neither the statutory landlord's lien nor the contractual landlord's lien is entitled to priority over the federal tax liens. The United States also contends that since its liens are entitled to priority, the trial court erred in awarding Valley Gin Company costs and attorneys' fees.
By the United States Internal Revenue Code, § 6321, there is created a lien in favor of the United States upon all property and rights to property belonging to any person who neglects or refuses to pay his tax liability after demand. The lien arises at the time the assessment is made and continues until the liability for the assessed amount is satisfied or becomes unenforceable by reason of lapse of time. Internal Revenue Code, § 6322. The liens asserted by the United States are based on taxes assessed during May and June of 1970 and recorded pursuant to the authority of § 6323 during June and July of 1970.
Globe asserts a statutory lien by reason of A.R.S. § 33--362(C), reading:
As stated, the United States' position is that Globe's lien was not a perfected security interest and therefore it was not entitled to priority over the federal liens.
Under Arizona law, a landlord has a lien for rent upon crops grown or growing on the leased premises until the rent is paid, A.R.S. § 33--362(C), supra, and the lien attaches at the beginning of the tenancy. In re Menzies, 60 F.2d 1064 (D.C.Ariz.1932); Dewar v. Hagans, 61 Ariz. 201, 146 P.2d 208, 151 A.L.R. 673 (1944). The lien is for rent due or to become due, Murphey v. Brown, 12 Ariz. 268, 100 P. 801 (1909). The landlord acquires a fixed, specific lien in the amount of the rent due on his tenant's goods and property rather than a mere claim for priority of payment. In re Menzies, supra. The lien exists independent of any proceedings. Dewar v. Hagans, supra.
While agreeing that the Arizona law is as stated, the United States urges that merely because the landlord's lien attaches at the beginning of the tenancy does not mean that it is so perfected as to have priority over the federal tax lien. As to this, a lien may be classified by the state as choate (specific and perfected) so as to defeat other state liens, but whether it is sufficient to defeat a federal tax lien is a question of federal law. United States v. Pioneer American Insurance Co., 374 U.S. 84, 83 S.Ct. 1651, 10 L.Ed.2d 770 (1963); United States v. Scovil, 348 U.S. 218, 75 S.Ct. 244, 99 L.Ed. 271 (1955); United States v. City of New Britain, Conn., 347 U.S. 81, 74 S.Ct. 367, 98 L.Ed. 520 (1954); Kuffel v. United States, 103 Ariz. 321, 441 P.2d 771 (1968).
To have priority over a federal tax lien, a state lien must be choate under federal law. United States v. State of Vermont, 377 U.S. 351, 84 S.Ct. 1267, 12 L.Ed.2d 370 (1964); United States v. Security Trust & Savings Bank, 340 U.S. 47, 71 S.Ct. 111, 95 L.Ed. 53 (1950); T. H. Rogers Lumber Company v. Apel, 468 F.2d 14 (10th Cir. 1972). To be choate under federal law, the identity of the lienor, the identity of the property subject to the lien and the amount of the lien must be certain. United States v. City of New Britain, Conn., supra.
Globe's position is that the choate doctrine is no longer applicable because the Federal Tax Lien Act of 1966 was adopted subsequent to the cited cases and that it set new standards for determining when a state lien prevails over a federal tax lien. It is argued that Globe's statutory lien qualifies for priority under the Federal Tax Lien Act of 1966 for either of two reasons. First, because Globe qualifies as a holder of a 'security interest' under the Internal Revenue Code §§ 6323(a) and 6323(h)(1).
Section 6323(a) provides that:
'(t)he lien imposed by section 6321 shall not be valid as against any * * * holder of a security interest * * * until notice thereof which meets the requirements of subsection (f) has been filed by the Secretary or his delegate.'
Section 6323(h)(1) defines a 'security interest' as:
However, while Globe's statutory landlord's lien arises out of the landlord-tenant relationship, the lien is not within the meaning of § 6323(a).
The purpose of the Federal Tax Lien Act was to conform the internal revenue laws with the developments in the Uniform Commercial Code, Senate Report No. 1708, House Report No. 1884, 89th Congress, 2d Session (1966). The security interest referred to in the tax act must therefore be read in conjunction with the Uniform Commercial Code.
Article nine of the Uniform Commercial Code does not apply to this statutory lien. A.R.S. § 44--3102(B). A lien which is not protected as a security interest by the Uniform Commercial Code is not a security interest within the meaning of § 6323(a) of the Federal Tax Lien Act. United States v. Sterling National Bank & T. Co. of N.Y., 360 F.Supp. 917 (S.D.N.Y.1973), aff'd in part, rev'd in part on other grounds, 494 F.2d 919 (2d Cir. 1974). See also Plumb, Federal Liens and Priorities, 77 Yale L.J. 605, 680--682 (1968). Because Globe's statutory lien was not protected as a security interest under the Uniform Commercial Code, it is not entitled to priority under § 6323(a) of the Federal Act.
Globe also contends that its statutory lien qualifies for a priority status under the provisions of § 6323(c).
Section 6323(c)(1) reads:
'To the extent provided in this subsection, even though notice of a lien imposed by section 6321 has been filed, such lien shall not be valid with respect to a security interest which came into existence after tax lien filing but which--
(i) a commercial transactions financing agreement,
(ii) a real property construction or improvement financing agreement, or
(iii) an obligatory disbursement agreement, and
Section 6323(c)(3)(A) defines a 'real property construction or improvement financing agreement' as:
or
(iii) the raising or harvesting of a farm crop or the raising of livestock or other animals.
For purposes of clause (iii), the furnishing of goods and services shall...
To continue reading
Request your trial
-
Torres v. Jai Dining Servs. (Phx.), Inc.
...(citing Van Dever v. Sears, Roebuck & Co. , 129 Ariz. 150, 151-52, 629 P.2d 566, 567–68 (App. 1981) ; United States v. Globe Corp. , 113 Ariz. 44, 51, 546 P.2d 11, 18 (1976) )). This general waiver rule "serves objectives of fair notice, and promotes both the ability to meet issues and judi......
-
Clark Equipment Co. v. Arizona Property and Cas. Ins. Guar. Fund
...the Fund made this argument below. The Fund's argument regarding Clark's admission is therefore waived. See United States v. Globe Corp., 113 Ariz. 44, 51, 546 P.2d 11, 18 (1976). Second, we do not agree that, in these circumstances, the disclosure statement constituted a judicial admission......
-
Shurlow v. Bonthuis
...1969); Dunham's Music House, Inc. v. Asheville Theatres, Inc., 10 N.C.App. 242, 245, 178 S.E.2d 124 (1970); United States v. Globe Corp., 113 Ariz. 44, 50, 546 P.2d 11 (1976); Todsen v. Runge, 211 Neb. 226, 232-233, 318 N.W.2d 88 (1982). Plaintiffs argue that most of, if not all, these case......
- State v. Ceja
-
TABLE OF AUTHORITIES
...as recognized in Monarch Tile, Inc. v. City of Florence, 212 F.3d 1219 (11th Cir. 2000) 16-3United States v. Globe Corporation, 113 Ariz. 44, 546 P.2d 11 (1976)................... 12-2United States v. Hoffman, 170 Ariz. 477, 826 P.2d 340 (App. 1992)................... 1-10United States v. K......
-
TABLE OF AUTHORITIES
...Supp. 752 (D. Conn. 1965)............................................................................. 1-34 United States v. Globe Corp., 113 Ariz. 44, 546 P.2d 11 (1976)................................................................. 7-18, 19 United States v. Hall, 472 F.2d 261 (5th Cir. ......
-
§ 7.2.3.3 Landlord's Lien.
...on the premises and not exempt by law. A.R.S. § 33-362 . The lien attaches at the beginning of the tenancy, United States v. Globe Corp., 113 Ariz. 44, 546 P.2d 11 (1976) , and a landlord is not required to give notice in order to assert his lien. Lake v. Stewart, 117 Ariz. 520, 573 P.2d 92......
-
12.1 Liens Subject to Extinguishment.
...(1964). Determining whether a lien is choate or inchoate is a question of federal law and can be complex. United States v. Globe Corp., 113 Ariz. 44, 546 P.2d 11 (1976) (en banc) held that that while an Arizona landlord’s statutory lien for rent was choate and good for all state purposes, u......