United States v. Woodside, 538

• Citation: 34 F. Supp. 281
• Decision Date: 13 August 1940
• Docket Number: 521.,No. 538,538
• Court: U.S. District Court — District of South Carolina
• Parties: UNITED STATES v. WOODSIDE et al. (two cases).

34 F. Supp. 281

UNITED STATES v. WOODSIDE et al. (two cases).

Nos. 538, 521.

District Court, W. D. South Carolina.

August 13, 1940.

Samuel O. Clark, Jr., Asst. Atty. Gen., Andrew D. Sharpe and J. Leonard Lyons, Sp. Assts. to the Atty. Gen., and Oscar H. Doyle, U. S. Atty., and E. P. Riley, Asst. U. S. Atty., both of Greenville, S. C., for plaintiff.

W. B. McGowan, Wilton H. Earle, and A. C. Mann, all of Greenville, S. C., for defendants.

LUMPKIN, District Judge.

On May 7, 1940, this court issued its decree of foreclosure and sale in the case of the United States of America v. Robert I. Woodside et al., and on May 8, 1940, a similar decree was issued in the case of the United States of America v. John T. Woodside et al. The decree in each suit directed the sale of certain real estate therein described on account of the assessment of income taxes and interest thereon, which assessment was received by the Collector of Internal Revenue for the collection district of South Carolina on May 20, 1930, notice of each lien was filed on June 11, 1932, with the clerk of court for Greenville County, S. C., in which county the said defendants reside. The income tax lien entered against Robert I. Woodside was for the aggregate amount of $15,364.03, and that against John T. Woodside was in the aggregate amount of $52,182.63.

The real estate in each of these actions was duly sold by the marshal on sales day in June, 1940, and the entire proceeds of said sale were ordered to be paid to the clerk of the United States District Court for this District, to be held in the registry of the court until further order establishing the rank of the claims as between the City of Greenville, the County of Greenville, the State of South Carolina and the United States of America.

The question as to the priority or rank of these claims or liens in both suits was heard together, and the court is passing one order dealing with both cases, as the points involved are for practical purposes identical.

The action in the Robert I. Woodside case was commenced in October, 1936, and the action in the John T. Woodside case was commenced in December, 1937, both being suits in equity to enforce and foreclose the lien in favor of the United States on account of unpaid income taxes. There was no insolvency proceeding of any nature, but the question of priority of the respective liens arises in the distribution of the proceeds of sale held by the court under the decrees above referred to. Part of the properties are situate within the corporate limits of the City of Greenville, S. C., and against some of these properties there are unpaid paving assessments, most of which were assessed prior to 1930, and there are taxes due the City of Greenville, S. C., on the properties within its limits since 1935, and there are state and county taxes due to the County of Greenville, S. C., since 1931, all of which is fully shown by the pleadings, and about which there is no question, the only question before the court being that of priority.

I make the following findings of fact in the Robert I. Woodside case:

The income tax lien of the Federal Government is in the amount of $15,364.03, and became effective May 20, 1930, which lien in favor of the United States of America is general and not specific against any property of the debtor.

The lien for state and county taxes owing to the County of Greenville, S. C., is in the sum of $1,694.06 through the year 1939, the taxes on the part of the property not having been paid since 1930, details of which are shown in the answer interposed by Greenville County, which lien is specific and charged against the respective pieces of property.

The lien for the paving assessments owing to the City of Greenville, S. C., is in the sum of $835.75, which lien was duly ratified on September 30, 1929, against the actual front footage of each respective lot as shown on a plat thereof, and same constitutes a specific lien against said lots on the front footage basis, and is not a charge against the owner.

The lien for taxes owing to the City of Greenville, S. C., is in the sum of $170.95 through the year 1939, which lien is specific against the respective lots as fully shown in the answer interposed by the City of Greenville, S. C.

All of the real property involved in this suit was conveyed away by the said Robert I. Woodside on January 23, 1931, to Securities Investment Company, which company held the legal title thereto until the sale on June 3, 1940, by foreclosure under decree passed by this court on May 7, 1940.

I make the following findings of fact in the John T. Woodside case:

The income tax lien of the Federal Government is in the amount of $52,182.63, and became effective May 20, 1930, which lien in favor of the United States of America is general and not specific against any property of the debtor.

The lien for state and county taxes owing to the County of Greenville, S. C., is in the sum of $369.21 through the year 1939, details of which are shown in the answer and supplemental answer interposed by Greenville County, which lien is specific and charged against the respective pieces of property.

The lien for the paving assessments owing to the City of Greenville, S. C., is in the sum of $158.13, which lien was duly ratified on December 5, 1939, against the actual front footage of each respective lot, and same constitutes a specific lien against said lots on the front footage basis, and is not a charge against the owner.

The lien for taxes owing to the City of Greenville, S. C., is in the sum of $63.46 through the year 1939, which lien is specific against the respective lots as fully shown in the answer interposed by the City of Greenville, S. C.

All of the real property involved in this suit was conveyed away by the said John T. Woodside on June 25, 1932, to his wife Mrs. Lou C. Woodside, who held the legal title thereto until the sale on June 3, 1940, by foreclosure under decree passed by this court on May 8, 1940.

There are insufficient funds in both cases to satisfy the respective governmental units. The order of payment is necessarily dependent upon the facts and the law governing the contesting claimants' rights.

My conclusions of law under the facts and circumstances here in both cases are set forth below:

The Federal Government under authority of the 16th Amendment ratified February 25, 1913, was granted "power to levy and collect taxes on incomes" and the Enabling Acts subsequently passed provided machinery for enforcing the collection of said taxes. Under the circumstances therein named, Section 3466 of the Revised Statutes, 31 U.S.C.A. § 191, gives to the United States a prior lien for debts owing to the Government, and it is its contention in this case that said section is applicable, the claim being advanced that the judgment debtors are insolvent or committed an act of bankruptcy. It must be borne in mind that these suits were to foreclose the tax liens of the Government. In invoking...