U.S. v. Colotta

• Decision Date: 18 April 1955
• Docket Number: No. 39593,39593
• Citation: 79 So.2d 474,224 Miss. 33
• Parties: , 55-2 USTC P 9584 UNITED STATES of America v. I. J. COLOTTA et al.
• Court: Mississippi Supreme Court

Page 474

79 So.2d 474

224 Miss. 33, 55-2 USTC P 9584

UNITED STATES of America v.I. J. COLOTTA et al.

No. 39593.

Supreme Court of Mississippi.

April 18, 1955.

H. Brian Holland, U. S. Asst. Atty. Gen., Ellis N. Slack, A. F. Prescott, Fred E. Youngman, Special Asst. to Atty. Gen., Washington, D. C., Thomas R. Ethridge, U. S. Atty., Oxford, for appellant.

Stanny Sanders, Cooper & Harper, Neill, Clark & Townsend, Indianola, for appellee.

HOLMES, Justice.

The question presented on this appeal is whether a tax lien of the United States for delinquent income taxes is prior in right to a mechanic's lien asserted under Section 356 et seq., of the Mississippi Code of 1942, where the Federal tax lien attached subsequent to the effective date of the mechanic's lien.

The action was originally instituted on or about March 26, 1953 by the appellee, Frank M. Rinehart, against I. J. Colotta and others to recover a judgment against Colotta in the sum of $4,144.02, alleged to have been the balance owing on a construction contract, and asserting a lien for labor and materials, commonly called a mechanic's lien, against certain particularly described real property, and wherein the other appellees, L. E. Chambless and F. R. Long, appeared asserting a like lien for $825.86, as the amount due them by contract for the installation of a heating system in connection with the same construction contract.

In May and June, 1952the appellees entered into written contracts with I. J. Colotta whereby they obligated themselves to furnish all labor and materials for the construction of a building and the installation of a heating system therein on certain particularly described lots owned by the said Colotta in Indianola, Mississippi.The contracts were performed and the work completed on November 3, 1952, at which time there was due and owing to the appellee, Frank M. Rinehart, on his contract a balance of $4,144.02, and due and owing to the appellees, L. A. Chambless and F. R. Long, on their contract the sum of $825.86.On May 7, 1952, Colotta executed a deed of trust covering the property here involved to W. A. Hull and J. A. Hull, securing the sum of $15,000, and advances, all to be used in paying for labor and materials in the construction of the building in question.

On December 5, 1952, an assessment list was received by the Director of Internal Revenue covering Federal income taxes, penalties and interest assessed against the said Colotta and his wife for the years 1946 to 1949, both inclusive, in the amount of $46,729.23.On December 8, 1952, the Director of Internal Revenue filed in the office of the Chancery Clerk of Sunflower County, wherein was situated the property in question, notice of said claimed Federal tax lien.

Upon a hearing of the cause, the chancellor entered a decree granting priority of payment of the indebtedness secured by the aforesaid deed of trust to W. A. Hull and J. A. Hull, and adjudging the appellees to have priority of payment under their asserted mechanic's liens second to the mortgage lien of the said W. A. Hull and J. A. Hull, but prior and superior to the Federal tax lien of the United States.The priority accorded by the chancellor to the aforesaid deed of trust is not questioned.The United States prosecutes this appeal, contending that the chancellor erred in awarding priority to the mechanic's liens over the Federal tax lien.

The Federal tax lien is asserted under Sections 3670, 3671 and 3672, 26 U.S.C., 1952 ed.The mechanic's liens are asserted under Section 356 et seq. of the Mississippi Code of 1942.By said section 3670, it is provided that if any person liable to pay any tax neglects or refuses to pay said tax, the amount (including any interest, penalties, additional amount, or addition to such tax, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property or rights to property, whether real or personal, belonging to such person.

By said Section 3671, it is provided that unless another date is specifically fixed by law, the lien shall arise at the time the assessment list was received by the collector.

By said Section 3672, it is provided that the Federal tax lien shall not be valid as against any mortgagee, pledgee, purchaser, or judgment creditor unless notice thereof has been filed by the collector--(designating the office wherein it may be filed).

Section 356 of the Mississippi Code of 1942 provides that every house, building, structure, etc., erected, altered or repaired shall be liable for the debt contracted and owing, for labor done and materials furnished, and that such debt shall be a lien thereon from the time of making the contract.

Section 360 of the Code of 1942 provides that any person entitled to and desiring the benefit of the lien shall commence his suit in the circuit court within twelve months next after the time when the money became due and payable.

There is no dispute as to the amount for which the mechanic's liens are claimed, or as to the identity of the lienors, or as to the certainty and definiteness of the property on which the mechanic's liens are asserted.The sole question is whether under the facts related the Federal tax lien is to be accorded priority over the mechanic's liens.The appellants assert such priority under the authority of the Supreme Court's decisions in United States v. Security Trust and Savings Bank, 340 U.S. 47, 71 S.Ct. 111, 95 L.Ed. 53;United States v. Gilbert Associates, 345 U.S. 361, 73 S.Ct. 701, 97 L.Ed. 1071;United States v. City of New Britain, Conn., 347 U.S. 81, 74 S.Ct. 367, 98 L.Ed. 520;United States v. Acri, 348 U.S. 211, 75 S.Ct. 239;United States v. Liverpool & London & Globe Insurance Co., 348 U.S. 215, 75 S.Ct. 247;andUnited States v. Scovil, 348 U.S. 218, 75 S.Ct. 244.

The appellant contends that the Federal tax lien is valid as against all other liens with the exception that it is not valid as against any mortgagee, pledgee, purchaser, or judgment creditor until notice thereof has been filed by the collector in the designated office.It is further the contention of the appellant that under the Mississippi statutes a mechanic's lien is inchoate and imperfect until reduced to a judgment in accordance with the prescribed statutory proceeding for the enforcement of such lien.

The cases relied upon by the appellant are in the main cases involving the question of priority between attachment liens and a Federal tax lien, and cases wherein the insolvency of the debtor was shown, with the exception, however, of the case of United States v. City of New Britain, Conn., supra, which involved a question of priority between the Federal tax lien and a city's specific and perfected statutory lien for real estate taxes and water rents.

The cases relied upon by the appellant and involving the question of priority between attachment liens and a Federal tax lien, and involving debtors shown to be insolvent, are, in our opinion, not applicable to the question...