United States v. Albert Holman Lumber Co.

• Decision Date: 25 August 1953
• Docket Number: No. 14310.,14310.
• Parties: UNITED STATES v. ALBERT HOLMAN LUMBER CO. et al.
• Court: U.S. Court of Appeals — Fifth Circuit

206 F.2d 685 (1953)

UNITED STATES v. ALBERT HOLMAN LUMBER CO. et al.

No. 14310.

United States Court of Appeals Fifth Circuit.

August 25, 1953.

Harvey M. Spear, Sp. Asst. to Atty. Gen., Dept. of Justice, Charles S. Lyon, Acting Asst. Atty. Gen., Ellis N. Slack, Sp. Asst. to Atty. Gen., Fred E. Youngman, Asst. to Atty. Gen., and A. F. Prescott, Asst. to Atty. Gen., Washington, D. C., John D. Hill, U. S. Atty., W. R. Bradford, Asst. U. S. Atty., Birmingham, Ala., for appellant.

Henry Holman Mize and Joseph G. Burns, Tuscaloosa, Ala., Mize & Spiro, Tuscaloosa, Ala., of counsel, for appellees.

Before HUTCHESON, Chief Judge, and BORAH and RUSSELL, Circuit Judges.

BORAH, Circuit Judge.

This is an appeal from a final judgment of the United States District Court for the Northern District of Alabama holding that appellees had materialmen's liens upon the estate of A. M. Price, deceased, which were superior to federal income tax liens claimed by the United States of America, appellant.

The undisputed facts are these. In the year 1946, A. M. Price and Margaret L. Price, husband and wife, purchased a dwelling house and lot in Tuscaloosa, Alabama, described as lot number 2 of Forest Lake Subdivision Number One. In connection with the purchase thereof, Price and his wife on April 16, 1946, executed a purchase money mortgage to the First Federal Savings and Loan Association of Tuscaloosa, which mortgage was filed for record in the Probate Office of Tuscaloosa County on April 18, 1946, and is recorded in the mortgage records. Thereafter, on February 11, 1949, Price and his wife were divorced and in accordance with the terms of an agreed property settlement Margaret L. Price conveyed her interest in the aforementioned property to Price and the latter thereupon became the sole owner thereof, subject to the mortgage. On June 5, 1949, Price married Christine Price and they lived together on the above described property as their homestead until his death on or about December 1, 1949.

During the period of his second marriage and specifically from September to November, 1949, Price repaired and renovated the dwelling house in question. In connection therewith he entered into contracts for building materials with appellees Albert Holman Lumber Company and Allen & Jemison Company under the terms of which Price bought and each of them sold and furnished to him building materials which were used in improving and repairing the dwelling. No part of the indebtedness which Price incurred as a result of these contracts was paid at the time of his death or at any time subsequent thereto, and by reason of his failure to discharge this indebtedness Albert Holman Lumber Company was and is entitled to a materialman's lien on the property in the sum of $757.62 with interest from November 17, 1949, and Allen & Jemison Company was and is entitled to a like lien in the amount of $857.43 with interest thereon from October 20, 1949. These liens were claimed separately and severally as to both the land and the buildings and improvements thereon in the proceedings hereinafter described.

On January 3, 1950, Christine Price, the widow, was appointed as administratrix of the deceased's estate by the Probate Court of Tuscaloosa County and the administration of the estate is still pending in that court. On February 2, 1950, Allen & Jemison Company in compliance with Alabama law¹ and for the purpose of securing its indebtedness filed a verified statement of its lien in the office of the judge of probate of Tuscaloosa County. On March 9, 1950, Albert Holman Lumber Company for similar reasons filed in the office of the judge of probate a verified statement of its lien. On April 22, 1950, and within the six months period prescribed by Section 42, Title 33, Code of Alabama of 1940, Holman Company filed its bill of complaint in the Circuit Court of Tuscaloosa County against Christine Price individually and as administratrix, the numerous Price children, and the First Federal Savings and Loan Association of Tuscaloosa. The relief prayed was for a decree in its favor and against Christine Price and the Price children for the amount of the lien with interest; for the condemnation and sale of the land and improvements; and for an adjudication of the rights and priorities of Holman Company and the Loan Association. Following the institution of this suit and on April 28, 1950, a suit was filed in the same court by Allen & Jemison Company against Christine Price individually and as administratrix. The prayer was for a recognition of its lien, for a personal decree against respondent in both capacities for the amount of the lien plus interest, and for the condemnation and sale of the property to satisfy the lien.

On or about April 9, 1951, during the pendency of the state court proceedings, jeopardy assessments were executed by the Commissioner of Internal Revenue covering income taxes, interests thereon, and fraud penalties which were assessed against the deceased for the years 1944 to 1947, inclusive. The assessment lists were received on April 12, 1951, by the Collector of Internal Revenue for the District of Alabama and on April 17, 1951, he filed a notice of tax lien in the Probate Office of Tuscaloosa County in favor of the United States in the total sum of $148,595.05. At that time claims had already been filed in the Probate Court in the total approximate amount of $44,965.69, excluding real property mortgages, and the estimated net value of the property belonging to the estate of the deceased was approximately $50,000.00 over and above the mortgages thereon.

This suit is an outgrowth of the state court proceeding which was instituted by appellee Albert Holman Lumber Company. By an amendment to its bill of complaint filed therein, appellee herein named Allen & Jemison Company and the United States of America as additional parties respondent on the grounds, among others: (1) that in order that those entitled to liens on the property shall have the same protection, the Jemison case should be consolidated with this cause and heard as one, in which the validity of each alleged lien and the priority, if any, of each can be determined and adjusted; and (2) that the tax lien of the United States is inferior to the materialman's lien claimed by the complainant. The amended prayer for relief asked that the rights and priorities of complainant and the respondents First Federal Savings and Loan Association of Tuscaloosa, Allen & Jemison Company, and the United States be determined, adjusted, and adjudicated. This amendment was allowed; process was issued; and the impleaded respondents duly entered an appearance. Thereafter, the suit was removed to the United States District Court for the Northern District of Alabama on petition of the United States and a trial was had upon the pleadings, evidence, and an agreed written stipulation of facts. The District Court made fact findings and concluded that the mortgage of the First Federal Savings and Loan Association of Tuscaloosa was superior to the materialman's liens and the alleged tax lien of the United States, which is not disputed here. Further, and what is important on this appeal, the court concluded that under the law of Alabama, the plaintiff, Albert Holman Lumber Company, and the defendant, Allen & Jemison Company each had perfected its materialman's lien prior to the time that the federal tax lien was recorded and that each have a specific and perfected materialman's lien that is superior to the Federal tax lien claimed by the United States. Judgment was accordingly entered in favor of Holman Company and Jemison Company and against Christine Price as administratrix of the deceased's estate for the specified amounts due on their respective liens and a sale of the property was ordered, and the United States Marshal was directed to deposit the proceeds with the Clerk for disposition in accordance with the further orders of the court. From this judgment the United States has appealed and the defendant below, Allen & Jemison Company, now appears as co-appellee with the plaintiff, Albert Holman Lumber Company.

The tax lien asserted by the United States stems from 53 Stat. 448, 449, 26 U.S.C. (1946 ed.) §§ 3670, 3671, 3672. Section 3670 provides: "If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, penalty, 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 and rights to property, whether real or personal, belonging to such person." Section 3671 provides that unless some other date is specified by law the lien arises when the assessment lists are received by the collector, which effective date is here conceded to be April 12, 1951. Section 3672 provides...