In the office of the clerk of the District Court of the United States for the District of Columbia, if the property subject to the lien is situated in the District of Columbia."
In order to take advantage of the fact that the lien was not filed until August 1, 1938, and that notice of the lien was not given by the Collector until March 31, 1939, the assignee would have to establish that he comes within the provisions of Section 3672(a); in other words, he would have to prove himself to be a mortgagee, pledgee, purchaser, or judgment creditor.
The assignee does not, in the instant case, come within any of the categories described in Section 3672(a). The assignment in June, 1938, was for a past due consideration -- wages already earned. It has been held that a pledgee who receives property as security for a pre-existing debt is not considered a purchaser within the recording acts: See 51 C.J. p. 99, note 35(h).
In Goodwin Gas Stove and Meter Company's Assigned Estate, 166 Pa. 296, 299, 31 A. 91, 92, it was held that an assignee for the benefit of creditors is not a "purchaser" within the meaning of the Pennsylvania lien recording laws. Said the court: "* * * If the commonwealth's claim attached to the property in his possession, as it undoubtedly did, he could not divest it by making an assignment for the benefit of creditors. That an assignee for the benefit of creditors is not a 'purchaser,' within the meaning of the word which protects lien creditors or vendees for value, is familiar law. Neither the rights of the assignee, nor those of the general creditors could rise higher than those of the assignor, and, as the property was subject to the commonwealth's lien in his hands, it remained subject to it in the hands of the assignee; and, inasmuch as the fund distributed arises from the sale of that property, the lien attaches to the proceeds as firmly as it did to the property itself in the hands of the debtor."
The decisions establish that it is the burden of the plaintiff to prove that he comes within the class of "mortgagee, pledgee, purchaser, or judgment creditor": See MacKenzie v. United States, 9 Cir., 109 F.2d 540. In that case the court held that a prior tax lien prevailed over an attachment, even though notice of the tax lien was filed after the attachment.
For the reasons stated, I rule that the government's lien became effective to the extent of the sum of $774.20 in May of 1938 prior to the assignment of the claim against Steinberg Bros. to the plaintiff, and that the notice provisions of the Statutes dealing with liens did not in any manner invalidate the lien as against the plaintiff and the Union, the assignees.
Since the amount paid into Court ($246.24), being the Fund which arose from the claims in bankruptcy, was less than the amount of the government liens ($774.20), the Collector of Internal Revenue is entitled to have the fund turned over to him, diminished only by the amount of $36.93, which is the amount of attorney's fee payable to Herman Toll, who performed services in the creation of the Fund, and subject also to the payment out of this Fund of the costs of the present proceeding, which the Court directs to be paid out of the Fund.
I base my ruling that the attorney's fee should be paid out of the Fund involved in this proceeding upon the well recognized principle that an attorney has a lien on a fund which has been created as a result of his efforts in litigation: Sprague v. Ticonic Bank, 307 U.S. 161, 59 S. Ct. 777, 83 L. Ed. 1184; Harris's Appeal (Jacoby's Appeal), 323 Pa. 124, 125, 186 A. 92.
The Supreme Court of Pennsylvania, in Harris's Appeal (Jacoby's Appeal), supra, succinctly stated the policy of the courts to sustain an award of reasonable counsel fee and costs to an attorney whose services have helped to produce the Fund (323 Pa. page 128, 186 A. page 94): "If a principle in law or equity can be found to sustain an award of reasonable counsel fee and costs to the owner's attorney, who litigated the compensation dispute and whose services helped produce the fund, it ought to be applied."
Conclusions of Law.
On the facts found I conclude as a matter of law:
1. The United States of America has liens for taxes, interest and penalties in the total sum of $774.20 against the property of J. Michalowski and Charles Jasecki, trading as United Coat Shop, which liens were effective on May 10 and 12, 1938.
2. As of May 10 and 12, 1938, the said defendants, J. Michalowski and Charles Jasecki, trading as United Coat Shop, were the owners of a certain chose in action in the form of indebtedness owing by Steinberg Bros., which debtor had filed a Petition in Bankruptcy under Section 74 of the Bankruptcy Act, 11 U.S.C.A. § 202, on February 15, 1938.
3. On May 10 and 12, 1938, the liens of the United States for the said Social Security taxes, interest and penalties became effective as against the said indebtedness owing by the bankrupt, Steinberg Bros., to J. Michalowski and Charles Jasecki, trading as United Coat Shop.
4. The assignment of the claim against Steinberg Bros. by United Coat Shop to Amalgamated Clothing Workers of America in June, 1938, was subject to the liens of the United States for the said Social Security taxes, interest and penalties.
5. The plaintiff Filipowicz (and/or the Union) was not a mortgagee, pledgee, purchaser or judgment creditor with respect to the said assigned indebtedness and the fact that notice of the lien had not been filed at the time of the assignment did not give the plaintiff a superior right to the proceeds of the claim as against the liens of the United States for the said taxes.
6. The Fund which has now been paid into the Registry of the Court, and which fund arose from the said claim in bankruptcy, is impressed with the said liens in favor of the United States for the said taxes, interest and penalties, totaling $774.20.
7.Herman Toll, one of the defendants, having rendered services as an attorney in the filing and prosecution of the claim against the bankrupt estate, which resulted in the creation of the Fund, is entitled to payment in full of his fee in the amount of $36.93, which is reasonable compensation for his services.
8. The said Fund shall be distributed in the following manner:
(a) For the payment of the proper costs of this proceeding.
(b) To Herman Toll, attorney fee, $36.93.
(c) The balance of the fund is to be paid over to W. J. Rothensies, Collector of Internal Revenue, First District of Pennsylvania, to be applied on account of the payment of the said social security taxes, interest and penalties.
An order for judgment may be submitted in accordance with this opinion.
© 1992-2004 VersusLaw Inc.