under South Carolina law by a landlord on a corporate tenant's assets for arrearages in rent of an insolvent tenant made before the appointment of a receiver because of insolvency. The lower court held that the landlord's lien was perfected under the laws of South Carolina, that the amount specified in the distraint was not available to the receiver to pay other debts of the tenant, and rejected the Government's claim of preference. The chronological sequence in that case was as follows. The assessment lists involving the claimed taxes of the government were received by the Collector on March 19, 1951, May 24, 1951, August 29, 1951, December 3, 1951, February 23, 1952 and February 28, 1952. The landlord's distress was filed on April 7, 1952 in the Courts of Common Pleas, South Carolina. The next day a Receiver was appointed for the business and on April 10, 1952 the Collector filed the aforesaid liens in the proper office for the recording of liens in the State Court of Greenville County, South Carolina, the business situs of the bankrupt. The Supreme Court of South Carolina held that since the lien had been perfected under State law, the government could have no greater right in the property in the hands of the Receiver than the insolvent. It further held that the government liens were not valid as against the landlord until properly recorded under the provisions of Section 3672(a). The United States Supreme Court rejected these contentions and reversed.
The only difference to be noted in the facts of the Scovil case, supra, as compared with those in the instant case is that under South Carolina law the tenant had a five day period to recover the property by posting bond in the amount of the distraint. The decision of Mr. Justice Minton noted these facts and concluded that the claimed lien actually was in the nature of a caveat of a more perfected lien to come, since the tenant had the five day period from April 7 to enter the bond, which period had not expired when the Collector recorded his liens. The law of Pennsylvania has no comparable provision although it does provide that within five days from a distraint the tenant may, under the common law writ of replevin, recapture his goods by posting bond. 68 P.S. § 250.306, Act of April 6, 1951, P.L. 69, Art. III, Sec. 306. Also, in the instant case, there is no showing that the Collector ever recorded the liens in the Courts of Common Pleas of Philadelphia County. Upon careful analysis of the Scovil case, however, I do not consider that these differences in fact are controlling and a different result warranted.
The problems faced by the landlord in this case, as properly suggested in the Government's brief, are that he must either show that the exception clause of Section 3672(a) is broader than it appears on a literal reading of the section or that, as a distraining landlord, he falls within one of the four categories there listed. An examination of the legislative history of Sections 3670, 3671 and 3672 make it clear that Congress originally intended the lien of the government for unpaid taxes to be paramount upon all property and rights to property, real or personal, belonging to the taxpayer in default. The earliest tax lien Act was that of July 13, 1866, 14 Stat. 107, amended by the Act of March 1, 1879, 20 Stat. 331. That Act fixed the time of the lien as the time when the assessment list was received by the Collector of the district. The decision of the Supreme Court of the United States in United States v. Snyder, 1892, 149 U.S. 210, 13 S. Ct. 846, 37 L. Ed. 705, interpreted the aforementioned section, R.S. § 3186, and held that the Federal tax lien was so broad as to continue to attach to property even in the hands of a bona fide purchaser who had no notice of the existence of the lien. To remedy this obviously harsh and unfair situation, Congress on March 4, 1913, at 37 Stat. 1016, amended the section by providing that the lien should not be valid against any mortgagee, purchaser or judgment creditor until notice there of had been filed in accordance with other provisions of the amendment. It was not until the Act of June 29, 1939, 53 Stat. 882, that the word 'pledgee' was included among those protected to relieve another obviously unfair situation; see the concurring opinion of Mr. Justice Jackson in United States of America v. Security Trust and Savings Bank, 1950, 340 U.S. 47, 51, 71 S. Ct. 111, 95 L. Ed. 53. It is clear, therefore, that the protective provisions of Section 3672(a) are to be strictly, rather than liberally construed as contended for by the landlord in this case. It is equally clear that in order to be protected, the claimant must show that he is within the protection of one of the four classes named, Filipowicz v. Rothensies, D.C.E.D.Pa.1942, 43 F.Supp. 619.
With respect to the contention that the landlord in this case can be considered a judgment creditor, the case of United States v. Gilbert Associates, Inc., 1952, 345 U.S. 361, 73 S. Ct. 701, 703, 97 L. Ed. 1071, is controlling. In that case, a New Hampshire town had filed a tax assessment under New Hampshire law against certain property which assessment under New Hampshire law was "in the nature of a judgment". The court held that the words 'judgment creditor' in Section 3672(a) were used by Congress in the usual conventional sense of a judgment of a court of record. I can see no difference in the position of the landlord in this case and the claimant in the Gilbert Associates, Inc. case, supra. The landlord in this case was not a judgment creditor in the usual conventional sense of a judgment of a court of record.
As to the contention that the landlord in this case might be 'a purchaser' under the facts of this case, which contention seems to have been given considerable weight by the Referee in his opinion, the opinion of Mr. Justice Minton in the Scovil case, supra, is completely dispositive. There, as here, the lower court substantially adopted that position. Mr. Justice Minton interpreted the word 'purchaser' within the meaning of Section 3672(a) as one who acquires title for a valuable consideration in the manner of vendor and vendee and that the landlord in that case, who had -- as here -- distrained for rent, was not and could not be a purchaser under the terms of that section. It is not contended in this case that the landlord is either mortgagee or pledgee. Consequently, the landlord's lien must be held subordinate to the general lien of the United States obtained under the provisions of Section 3670. It follows, therefore, that the award of the preference to the landlord over the Government's claim must be set aside and the action of the Referee reversed.
An appropriate order will be entered.