United States v. Levin
| Decision Date | 18 February 1955 |
| Docket Number | No. 6916.,6916. |
| Citation | 128 F. Supp. 465 |
| Parties | UNITED STATES of America, v. Nathan LEVIN et al. |
| Court | U.S. District Court — District of Maryland |
George Cochran Doub, U. S. Atty., Walter E. Black, Jr., Asst. U. S. Atty., Baltimore, Md., H. Brian Holland, Asst. Atty. Gen., Andrew D. Sharpe, F. A. Michels, and Arthur L. Biggins, Sp. Assts. to the Atty. Gen., for plaintiff.
Sidney I. Kellam, Baltimore, Md., for Leah Levin.
Herbert Matz, Baltimore, Md., for Max Cohen.
M. William Adelson, Baltimore, Md., for George Calvin Jones and Thomas DeBoufre.
This case raises the question whether a lien for federal income taxes, filed as required by Section 3672, I.R.C., 26 U.S. C.A., is superior, so far as personal property of the taxpayer is concerned, to: (1) a judgment of a Maryland court entered before such filing, but on which the judgment creditor had not theretofore caused an execution to be issued or levied on the personal property; (2) a chattel mortgage, duly executed and recorded after such filing, but before any other action had been taken by the government to enforce its lien; (3) a judgment, entered after such filing, but before any other action by the government.
The Commissioner of Internal Revenue made assessments of taxes on the income of the defendant Nathan Levin for each of the years 1945-1948. The assessment lists were received by the then Collector of Internal Revenue at Baltimore, on October 25, 1948 (for the years 1945-47) and on May 13, 1949 (for the year 1948). The Collector filed a notice of each tax lien in the office of the Clerk of the Superior Court of Baltimore City. The taxable periods, the dates of the making of the assessments, the dates of the filing of the lien notices, the amounts of taxes and interest assessed and the totals thereof, are as follows:
Date of Assessment Notice of Lien
(List received filed with
Clerk of
Year by Collector) Superior Court Taxes Interest Totals
1945 Oct. 25, 1948 Jan. 17, 1949 $ 522.01 $76.55 $ 598.56*
1946 Oct. 25, 1948 Jan. 17, 1949 269.00 23.31 292.31
1947 Oct. 25, 1948 Jan. 17, 1949 2787.89 74.27 2862.16
1948 May 13, 1949 Aug. 11, 1949 514.00 4.68 518.68
On the dates when the notices of lien were filed, as aforesaid, the taxpayer owned certain equipment and fixtures used in a business which he operated at 1300 North Washington Street, Baltimore, Maryland.
On January 24, 1950, the defendant Leah Levine, formerly Leah Levin, wife of the taxpayer, purchased said equipment and fixtures from the taxpayer. In order to finance the transaction, Leah Levin borrowed $12,000 from the defendant Max Cohen; and, as security for the loan, Leah Levin and her husband, the taxpayer, executed a chattel mortgage to Max Cohen on the equipment and fixtures. The loan was made and the mortgage was executed and placed on record on January 24, 1950.
On November 24, 1948, the defendant Samuel Singer obtained a judgment for $4,016 and costs, against Nathan Levin in the Superior Court of Baltimore City. Samuel Singer did not cause any execution to be issued or levied on any of the personal property of the defendant Nathan Levin.
On July 19, 1950, the defendants George Calvin Jones and Thomas DeBoufre secured a judgment against Nathan Levin, on which a balance of $291.99, with interest and costs, remains unpaid.
On October 6, 1953, the government filed its complaint against the above named defendants, and others who have since been dismissed from the case, alleging most of the foregoing facts, listing the personal property covered by the government's lien, and praying: (1) for judgment against the defendant Nathan Levin for $4,271.71, with interest and costs; (2) for an adjudication that the government has a valid lien in and upon said personal property for the income taxes assessed, and that said lien is prior in right to any and all claims of any and all other parties to this suit; (3) for the sale of said property by an officer of this court and an order that the proceeds received from such sale, or so much thereof as may be necessary to satisfy the money judgment, with interest, be applied on said judgment after payment of all costs; and (4) for other and further relief. Nathan Levin did not appear, and a judgment for $4,271.71, with interest according to law, and costs, was entered against him on December 2, 1954. The other defendants have filed answers demanding their respective shares of the proceeds of any sale in accordance with their alleged claims and priorities.
Internal Revenue Code of 1939:
Annotated Code of Maryland, 1951 Ed., Article 17, § 12 ():
1. In Maryland a judgment is a lien on real property and leasehold interests in the county (or Baltimore City) in which the judgment is rendered or recorded under Article 26, § 20, of the Annotated Code of Maryland; but it is not a lien on personal property until an execution has been issued. "A lien fastens upon personal property from the time of the delivery of the writ of fi. fa. to the sheriff." Prentiss Tool & Supply Co. v. Whitman & Barnes Co., 88 Md. 240, at page 243, 41 A. 49, at page 50. See also In re Day, D.C.Md., 22 F.Supp. 946, at page 949. Singer's judgment never became a lien on the personal property involved in this case because he never caused an execution to be issued.
Therefore, unless Section 3672(a) is to be literally construed to give priority to any judgment creditor of the taxpayer, whether he has a lien or not, and wherever the judgment may have been rendered, the government's tax lien must prevail over Singer's judgment. The point has been flatly decided by the Court of Appeals for the 9th Circuit in Miller v. Bank of America, N. T. & S. A., 166 F.2d 415, in which the court held that since there had been no levy of execution by the appellant-judgment creditor the tax lien of the government was paramount and superior. The court said:
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