United States v. State of California
| Decision Date | 11 July 1960 |
| Docket Number | No. 16474.,16474. |
| Citation | 281 F.2d 726 |
| Parties | UNITED STATES of America, Appellant, v. STATE OF CALIFORNIA, acting by and through the State Board of Equalization, the Department of Employment and the Department of Alcoholic Beverage Control; Charles E. Hoppe, Trustee of the Estate of Lee C. Belt, doing business as "Lejac's," Bankrupt, and Louis A. Cudia, Sr., and John S. San Fillipo, Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Charles K. Rice, Asst. Atty. Gen., Lee A. Jackson, A. F. Prescott, George F. Lynch, Attys., Dept. of Justice, Washington, D. C., Lynn J. Gillard, U. S. Atty., Charles Elmer Collett, Asst. U. S. Atty., San Francisco, Cal., for appellant.
Stanley Mosk, Atty. Gen., for the State of California, Ernest P. Goodman and Eugene B. Jacobs, Deputies Atty. Gen., for appellees.
Before STEPHENS, BARNES and MERRILL, Circuit Judges.
This case arises out of bankruptcy proceedings in which the United States petitioned for an order (1) decreeing that its tax liens against property of the bankrupt and proceeds of sale of such property were superior to the claims of the State of California for taxes, and (2) directing that California return to the receiver for payment to the United States proceeds of sale in the sum of $4,668.99. The referee denied the petition and the District Court affirmed. The United States then took this appeal.
The property involved is a liquor license issued by the State of California. Section 24049, of the California Business and Professions Code, provided at the time applicable:
"The department may refuse the renewal or transfer of any license when applicant is delinquent in the payment of any taxes due under this division or under the Sales and Use Tax Law, or any amounts due under the Unemployment Insurance Code, the Personal Income Tax Law, or the Bank and Corporation Tax Law."
Belt, the bankrupt, on May 11, 1956, was issued an on-sale general liquor license by the State of California. Prior to December 28, 1956, Belt applied to the State Department of Alcoholic Beverage Control for renewal of the license. Belt was delinquent in payment of Federal Withholding and Social Security taxes. On December 28, 1956, the United States, pursuant to a warrant of distraint, closed Belt's business operation by seizing his property, including his liquor license certificate. On January 7, 1957, an involuntary petition in bankruptcy was filed against Belt. On January 8, 1957, the United States surrendered the license certificate to the receiver in bankruptcy. The California Department of Alcoholic Beverage Control then renewed Belt's license and issued a 1957 certificate to him. On January 28, 1957, at auction, the license was sold by the receiver to certain purchasers subject to the approval of the department. This sale was confirmed (subject to state approval) by the referee on February 8, 1957. The department withheld transfer of the license to the purchasers pending payment of delinquent state sales and use taxes and unemployment contributions. The receiver then made payment to the state of these sums. After such payment and investigation of the moral character of the purchasers, the department on April 10, 1957, transferred the license and issued a certificate to the purchasers. From the proceeds of sale, the United States received $1,831.01. It seeks recovery of the amount of delinquent taxes paid to the state by the receiver as a condition to transfer of license.
The United States contends that to permit the state to retain this sum is to permit the state, through its state-created rule, to defeat the paramount right of the United States to levy and collect taxes pursuant to Article I, § 8, of the United States Constitution, and is to render the United States tax claim subordinate to that of the state.
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Terwilliger's Catering Plus, Inc., In re
...the state to enforce its revenue collection provisions when a liquor license was subjected to a tax lien sale. United States v. State of California, 281 F.2d 726 (9th Cir.1960). The Ohio statute, Ohio Rev.Code Ann. Sec. 4303.26(B)(1), is similar. It too seeks to prevent license transfers wh......
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Business Title Corp. v. Division of Labor Law Enforcement
...of that case was seriously weakened by the decision of the Court of Appeals for the Ninth Circuit in United States v. State of California, 281 F.2d 726, at p. 728 (9th Cir. 1960), where the court said: 'Here the license existed because the state had issued it. If the licensee acquired somet......
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In re AJ Bayless Markets, Inc.
...priority in payment from the sale proceeds of a liquor license and related business assets. The Court distinguished United States v. California, 281 F.2d 726 (9th Cir.1960), in which the transfer of a license was conditioned on payment of claims to the State, by noting, among other things, ......
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Business Title Corp. v. Division of Labor Law Enforcement
...to property' until the prior claims specified by section 24074 were paid. Defendant rely heavily on the case of United States v. State of California (9th Cir. 1960) 281 F.2d 726, which arose out of bankruptcy proceedings. There, a California liquor licensee was delinquent in payment of fede......