Walter E. Heller & Co. Southeast, Inc. v. Williams

• Decision Date: 03 April 1984
• Docket Number: No. 82-1271,82-1271
• Citation: Walter E. Heller & Co. Southeast, Inc. v. Williams, 450 So.2d 521 (Fla. App. 1984)
• Court: Florida District Court of Appeals
• Parties: WALTER E. HELLER & COMPANY SOUTHEAST, INC., Appellant, v. Petition of B.W. WILLIAMS, Jr., Acting Tax Collector of Dade County, Florida, Appellee.

Page 521

450 So.2d 521

WALTER E. HELLER & COMPANY SOUTHEAST, INC., Appellant, v.Petition of B.W. WILLIAMS, Jr., ActingTax Collector of Dade County, Florida, Appellee.

No. 82-1271.

District Court of Appeal of Florida Third District.

April 3, 1984.

Rehearing Denied June 8, 1984.

Britton, Cohen, Kaufman and Schantz and John L. Britton and J. Robert Olian, Miami, for appellant.

Robert A. Ginsberg, County Atty., and Thomas Goldstein and Robert Krawcheck, Asst. County Attys., for appellee.

Before HENDRY, BASKIN and DANIEL S. PEARSON, JJ.

HENDRY, Judge.

This is an appeal from an order of the Circuit Court in and for Dade County, Florida, denying the claim of the appellant to an interest in certain property and adjudging said property to be subject to levy and seizure by the Tax Collector for unpaid ad valorem personal property taxes which were due and owing to Dade County, as the taxing authority.

The issue presented is whether the County has a superior right to enforce the collection of unpaid personal property taxes against property allegedly owned by the delinquent taxpayer but which is subject to a creditor's prior recorded lien or security interest.The trial court concluded the county's right to enforce its tax was paramount.However, after thorough consideration of the issue in light of the briefs and arguments of counsel and the applicable law, we conclude otherwise.In our view the county's lien for taxes was not, under the facts of this case, entitled to priority as against the claim of the secured creditor whose lien was first in time.

The facts, as reflected by the record, are as follows.In September, 1980, B.W. Williams, Jr., as Acting Dade County Tax Collector(Tax Collector), caused to be filed in the circuit court in accordance with section 197.086, Florida Statutes(1979), ¹ a "Petition for Order Ratifying and Confirming Issuance of Delinquent Personal Property Tax Warrants" with respect to unpaid personal property taxes for the year 1979.The petition referenced a list of delinquent taxpayers for that year, which list included an apparel manufacturer and its subsidiary, Bodin Apparel, Inc./Giamo, Inc.(Bodin).It was recited in the petition that in April, 1980 the tax collector had advertised, pursuant to statute(§ 197.062,Fla.Stat.(1979)), the list of delinquent 1979 taxpayers and amounts of tax due and now sought to collect said taxes by the issuance of a multiple warrant providing for the levy upon and seizure of such tangible personal property as determined necessary by the tax collector, to be effected by means of a separate warrant applicable to a particular delinquent taxpayer.On October 23, 1980the circuit court entered its order authorizing the issuance of individual warrants and levy and seizure of so much of the tangible personal property of each of the taxpayers described on the 1979 delinquent personal property tax list as was necessary to satisfy the unpaid taxes.The order further provided for retention of the court's jurisdiction to hear such timely objections of taxpayers to the levy and seizure of their tangible personal property as might be warranted under the statutes and laws of this state and, in the event of such objection, prohibited levy and seizure of the taxpayer's personal property without prior leave of court.

The court file below reflects that on July 10, 1981 the Tax Collector filed a motion to authorize the issuance of supplemental tax warrants for collection of delinquent ad valorem personal property taxes due from Bodin for the years 1979 and 1980, totalling some $160,213.36.Pursuant to section 197.086, Florida Statutes(1979), the warrants were sought to issue against Republic Textile Equipment Co. of South Carolina, Inc.(Republic) and against Paul and Felice Dubin and Heller based upon the following facts alleged by the Tax Collector.

In November, 1979 Bodin had collateralized loans from Heller with all of its personal and real property and all of its present and future accounts receivable, which accounts were at the time of the petition being received by Heller through lock boxes at Southeast First National Bank of Miami (Southeast Bank).As to said accounts receivable, the Tax Collector asserted a superior lien for payment of the delinquent taxes, pursuant to section 197.056(1), Florida Statutes(1979).²Additionally, it was alleged that on or about June 17, 1980 Bodin sold the bulk of its tangible personal property--equipment used in its clothing manufacturing business--to Republic for $1,000,000, subject to the security interest of Heller in the property, and that Republic still owed money to Bodin for same.Thus it was alleged that Republic was a debtor of Bodin subject to the issuance of a tax warrant under section 197.086(2), Florida Statutes(1979), to the extent of the indebtedness.Finally, it was stated that on or about October 24, 1980 Bodin sold part of its real property located in Dade County to Paul and Felice Dubin and took back two promissory notes in the amounts of $100,000 and $215,000, which had been duly recorded and which obligation allegedly subjected the Dubins to the issuance of tax warrants under section 197.086(2).

On July 30, 1981the court entered its order on the motion to issue supplemental tax warrants, declaring that a tax warrant should issue against the Dubins, as debtors of Bodin, to the extent of such indebtedness and in the mode and manner of then present payments until Bodin's delinquent taxes were paid in full, and further providing that no warrant should then issue against Heller but that a warrant might issue against Southeast Bank with Heller free to present any challenge as to priority at such time.

By way of response, the Dubins asserted that the two promissory notes in question had been assigned by Bodin to Heller on October 24, 1980 and that an issue of priority might thus arise and therefore the Dubins, as "garnishees" under section 197.086(2), Florida Statutes(1979), sought a determination from the court as to whom payment should be made.Shortly thereafter, Heller filed its claim to the debt sought to be levied upon.Heller alleged that because of the assignment to it of the notes in accordance with the provisions of its recorded security interest and financing agreements with Bodin there were no monies due Bodin on said notes between the time of the service of the tax warrant on the Dubins and their response--the applicable period under the garnishment statute, section 77.06(1), Florida Statutes(1979)--and therefore "garnishment" under section 197.086(2) was improper and the debt should be paid to Heller.

A hearing was held before the court on the above objections and claim on November 23, 1981.The Assistant County Attorney representing the Tax Collector stated by way of background that the county discovered during its efforts to collect Bodin's delinquent taxes that almost all of the equipment on which the taxes were due had been removed from Dade County and that certain equipment had been released to Republic based on a pro rata share of the taxes owed, a very small amount of money, paid by Republic to secure its release.He further stated that because it was discovered that two tax bills had been mislaid, the full amount of taxes owed by Bodin for 1979 and 1981 was some $300,000 (the affidavit on file specified the amount of such taxes as $313,768.81), not as stated initially some $160,000.³The Tax Collector learned that in conjunction with a financing arrangement involving loans of some $7,000,000, Heller had acquired a security interest in all of the equipment and other personal and real property of Bodin as well as its accounts receivable.On November 1, 1979 Heller filed standard U.C.C. financing statements, which were recorded on that date, covering essentially all tangible and intangible property of Bodin, present and future accounts receivable and contract rights, and real property of Bodin.Accounts financing security agreements were executed by Bodin in favor of Heller on October 30, 1979.

The Tax Collector became aware of further dealings between Heller, Bodin and Republic in May and June, 1980.At that time, in what was described as essentially a paper transaction, Heller loaned $1,000,000 to Republic who in turn paid this sum to Bodin for its equipment which Republic was to sell, for a commission, for Heller.The proceeds to Bodin served to reduce its debt to Heller.Based on the foregoing facts, the Tax Collector sought the supplemental tax warrants against the Dubins and Bodin's accounts receivable being received by Heller through lock boxes at Southeast Bank.

Counsel for Heller took the position at the hearing that under section 197.086, Florida Statutes(1979) the question presented was strictly one of priorities and Heller's claim had priority since Bodin's assignment of the Dubin mortgage to Heller on October 24, 1980 was prior in time to the service of the supplemental tax warrant on the Dubins on July 30, 1981.The transaction was explained thusly: Heller, who previously had a mortgage on the Bodin real property in question which secured a promissory note for about $2,000,000, executed a partial release of its mortgage in order to allow Bodin to sell the property to the Dubins and when Bodin sold the property to the Dubins, they gave a mortgage back to Bodin who simultaneously assigned the mortgage to Heller, for valuable consideration, all of this occurring in October, 1980, well before the service of this tax warrant.

The Tax Collector's legal position was, and is, that under section 197.056, Florida Statutes(1979), the county is granted a superior lien for its taxes upon all of the personal property of the taxpayer, which lien may be enforced by levy and seizure upon personal property of the taxpayer, including debts owed to the taxpayer, regardless of the interests of prior creditors therein.Heller's counsel's response was that the county had...