United States v. Anders Contracting Co., 1364.

Citation111 F. Supp. 700
Decision Date21 April 1953
Docket NumberNo. 1364.,1364.
CourtUnited States District Courts. 4th Circuit. United States District Court of South Carolina
PartiesUNITED STATES v. ANDERS CONTRACTING CO., Inc. et al.

John C. Williams, U. S. Atty., Spartanburg, S. C., W. A. Bull, Ass't U. S. Atty., Greenville, S. C., for plaintiff.

J. Wilbur Hicks, Greenville, S. C., for defendant Greenville Auto Sales Co.

WYCHE, Chief Judge.

From the agreed facts and certain documents in this case it appears that: On September 15, 1950, the Government duly filed a tax lien against the Anders Company for something over $8000 in the proper Recording Office for Greenville County, South Carolina.

On April 6, 1951, the Auto Sales Company sold a Ford truck to the Anders Company, and, contemporaneously with the sale, and as a part thereof, took a conditional sales contract, securing a note for the balance of the purchase price, which provided, among other things, as follows: The purchaser "hereby acknowledge having this date received from Greenville Auto Sales, Inc., the motor vehicle herein below described, in its present condition, together with its equipment, for which I agree to pay you on the terms and conditions set forth in the note." And, "it is agreed that the title to and ownership in said chattel are vested in you and your assigns, irrespective of any taking and delivery thereof to me until said indebtedness shall have been paid in money, at which time ownership and title shall pass to me." Further, "if any of my indebtedness shall become due and remain unpaid, or if the chattel is removed or attempted to be removed from the State, or otherwise disposed of; or if the said chattel shall be used in violation of the prohibition law, either State or Federal, then this mortgage shall become immediately due and collectible." Also, "it is further agreed, that in the event of default or breach of any of the conditions of this contract or mortgage, that the mortgagee shall be entitled to the immediate possession of said chattel, and is hereby authorized to sell the same after 5 days legal notice * * *."

On July 5, 1951, the Government filed another tax lien against the Anders Company in the amount of $1583.

On July 23, 1951, the conditional sales contract given to the Auto Company, and described above, was duly recorded.

The Anders Company defaulted in its payments and on January 21, 1952, the Auto Company made an agreement with the Deputy Collector of Internal Revenue at Greenville, South Carolina, in which it was agreed that the truck should be sold, the proceeds held in trust and the claims of all parties transferred to the proceeds, the purchaser taking clear title to the truck. The sale was held after advertisement for fifteen days, and the Auto Company was the highest bidder at $250, and became the purchaser at that price.

The Anders Company made no claim to the funds. The question to be determined is: Who is entitled to the $250, the Government, by virtue of its tax liens, or the Auto Company, under the terms of its conditional sales contract?

The Government contends that it had two liens on the truck and is entitled to the proceeds by virtue of one or both of these liens, the first lien arising out of a tax claim, filed September 15, 1950, before the sale of the truck on April 6, 1951, and the second lien arising out of a tax claim, filed July 5, 1951, after the sale above mentioned; and that both liens became effective inasmuch as the conditional sales contract dated April 6, 1951, was not filed for record until July 23, 1951.

The contention of the Auto Company is that there was vested in the Anders Company only a limited property right when the truck was sold to it; that the Auto Company retained the general property, as indicated by the terms of the conditional sales contract, and the lien which was retained concurrently with the sale to the Anders Company; and that the property rights retained by the seller, and the lien created by the conditional sales contract or mortgage, are superior to both of the tax claims of the Government, irrespective of whether or not the contract was recorded.

The Government bases its claim on the Federal Statutes as set forth in 26 U.S.C.A. §§ 3670-3672. These sections do no define property, or rights to property mentioned in the statute, therefore, I must look to the law of South Carolina to determine the property and property rights of the parties. Karno-Smith Co. v. Maloney 3 Cir., 1940, 112 F.2d 690.

Under the law of South Carolina, an instrument of the nature of the conditional sales contract given to the Auto Company by the Anders Company is classed as a chattel mortgage. Regardless of its classification, this instrument is a contract between the buyer and the seller and the parties are free to incorporate into such a contract any terms mutually agreeable and the courts are required to enforce such terms unless they contain something repugnant to the laws of the State.

Under the provisions of the conditional sales contract, the Auto Company retained title and conveyed only possession of the truck to the purchaser, and in case of default it had the right to regain possession without aid from the courts. The Auto Company having both title and possession was authorized under the contract, to sell the truck.

The Anders Company never obtained title to the truck. It only got possession and an equitable right to obtain title upon performance of the contract, by paying in accordance with the terms laid down in the agreement. Title was not only retained by the seller, but was protected by a contemporaneous lien expressed in the conditional sales contract, enabling the seller to extinguish any rights the purchaser had under the contract. The Anders Company never obtained any absolute property or property rights in the truck. Such rights as it acquired were qualified and limited by the terms of the retention title contract and sales agreement which were executed before any property or property rights vested in the Anders Company as purchaser.

A case which is closely analogous to the principles involved in the case at bar is Goodrich Silvertown, Inc., v. Rogers, 189 S.C. 101, 200 S.E. 91, 94, where the Easter-by Motor Company on March 15, 1934, sold an automobile to the defendant Rogers and took a chattel mortgage on the car, which provided that its lien would cover all after-acquired property placed on the car, and was recorded on the same date. On May 12, 1934, the plaintiff Goodrich Silvertown, Inc. sold tires to the defendant Rogers and took a retention title contract, which was not recorded until twelve days later, May 24, 1934. The tires were placed on the car when they were bought. The Easterby Company claimed the tires under its chattel mortgage, and the Goodrich Silvertown, Inc. brought an action against Rogers and Easterby Company to determine ownership of the tires. The plaintiff Goodrich Silvertown, Inc. obtained judgment and Easterby Company appealed. Judge G....

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10 cases
  • Wethered v. Alban Tractor Co.
    • United States
    • Maryland Court of Appeals
    • March 9, 1961
    ...those who deal with and trust the debtor after the execution of the unrecorded mortgage. Reliance was put on United States v. Anders Contracting Co., D.C.W.D.S.C., 111 F.Supp. 700, which held that a conditional sales contract, classed as a chattel mortgage under South Carolina law, which wa......
  • United States v. Lebanon Woolen Mills Corporation
    • United States
    • U.S. District Court — District of New Hampshire
    • July 9, 1964
    ...are already fully protected. Another decisional path which the court has not followed, is that described in United States v. Anders Contracting Co., 111 F.Supp. 700 (W.D.S.C.1953), a case granting priority over a federal tax lien to an unfiled conditional sales agreement under circumstances......
  • Mason City and Clear Lake R. Co. v. Imperial Seed Co., Civ. No. 677.
    • United States
    • U.S. District Court — Northern District of Iowa
    • June 10, 1957
    ...See also note 21 Iowa Law Review 109 (1935); United States v. Gargill, 1 Cir., 1955, 218 F.2d 556, 559; United States v. Anders Contracting Co., D.C.W.D.S.C.1953, 111 F.Supp. 700, 702. The provision in the plaintiff's lease in question created the relationship of chattel mortgagee and chatt......
  • United States v. E. Regensburg & Sons
    • United States
    • U.S. District Court — Southern District of New York
    • October 11, 1954
    ...yield. But Congress has left undefined the meaning to be attributed to the phrase "rights to property", U. S. v. Anders Contracting Co., Inc., D.C.W.D.S.C., 1953, 111 F.Supp. 700, 702, and to the term "pledgee." Indubitably, Congress could, pursuant to its taxing power, have given federal c......
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