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IN RE BOWEN

November 25, 1942;

In re BOWEN


The opinion of the court was delivered by: KALODNER

The pertinent facts so far as the question posed is concerned may be briefly summarized as follows:

 On August 12, 1933, the Bureau of Internal Revenue made an assessment for income taxes for 1926 against the bankrupt, Bowen, in the amount of $15,297.68, plus accrued interest of $5,883.53, or a total of $21,181.21. Notice of tax lien was filed in October, 1933, in the Office of the Prothonotary of Lehigh County, Pennsylvania, and in the Office of the Clerk of the United States District Court for the Eastern District of Pennsylvania.

 In May, 1935, the Bureau of Internal Revenue made an assessment against Bowen and others of $13,108.92 for distilled spirits taxes on alcohol manufactured in December, 1926. Notices of this lien were filed in May, 1935, in the Office of the Prothonotary of Lehigh County, Pennsylvania, and in the Office of the Clerk of the United States District Court for the Eastern District of Pennsylvania.

 Through the filing of notices of these tax liens the United States of America acquired liens against all of Bowen's property, both real and personal, good against Bowen and subsequent mortgagees, purchasers in good faith, and judgment creditors. Section 3672 Internal Revenue Code, 26 U.S.C.A. Int.Rev.Code § 3672, Revised Statutes Section 3186(c) and (d).

 Subsequently in September, 1935, one Henry Baker obtained a judgment against Bowen in the Court of Common Pleas of Lehigh County in the sum of $79,240.42. Since the notices of tax liens above referred to were filed prior to Baker's judgment, the latter was of course inferior to both of the Federal tax liens.

 At the time of the filing of the tax liens and the entry of Baker's judgment, Bowen's principal asset was the ground and building at 809-11-13 Hamilton Street, Allentown, Lehigh County, Pennsylvania. Bowen owned other properties which, while they are not concerned with the issue here, it may be stated, were mortgaged for more than their value.

 In December, 1938, when the Hamilton Street property was still Bowen's principal asset, Baker in compliance with Treasury Decision 4446 *fn2" filed an application for a certificate of discharge from the Hamilton Street property of the Federal tax liens above mentioned with the Collector of Internal Revenue.

 The application listed purportedly outstanding liens against the property, and included two appraisals by independent realty appraisers, one at $308,000 and the other at $314,600.

 Baker paid $150 as a consideration for the discharge.

 On March 10, 1939, following an investigation of Baker's application, the Commissioner authorized the Collector to issue the certificates of discharge.

 The certificates were issued and filed of record April 14, 1939, with the Prothonotary of Lehigh County and the Clerk of the United States District Court, thereby extinguishing the Federal tax liens as to the Hamilton Street property, under Section 3675 of the Internal Revenue Code, Section 3675, 26 U.S.C.A. Int.Rev.Code.

 Section 3675 reads as follows:

 "§ 3675. Effect of certificates of release or partial discharge


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