Industrial Commission v. United States , 252 Wis. 425 ( 1948 )

The following opinion was filed September 28, 1948: In this case the appellant moved for rehearing upon the following propositions:

1. The appellant being a judgment creditor, it is entitled to the protection afforded that class of creditors by sec. 3672, 26 USCA, Int. Rev. Code, sec. 3186, U.S.R.S.

2. If the appellant is not a judgment creditor, then sec. 3672 does not apply, but the court is respectfully requested to indicate what defect in the Wisconsin statute, sec. 108.22(2), precludes a resulting judgment creditor status and the application of sec. 3672.

We shall consider the second question first. In the opinion filed in this case it was assumed that the appellant was a judgment creditor pursuant to the provisions of sec. 108.22(2), Wis. Stats. It was held that the claim of a judgment creditor must have the requisite degree of specificity, and cited the case of United States v. Texas, 314 U.S. 480, 62 Sup. Ct. 350,86 L. Ed. 356, to sustain that proposition.

It is true that United States v. Texas, supra, did not deal with a judgment creditor, but it did deal with a lien created by the statutes of the state of Texas, which provided that all gasoline taxes "shall be a preferred lien, first and prior to any and all other existing liens, upon all of the property of any distributor, devoted to or used in his business as a distributor," nor does it deal with the provisions of sub. (a) of sec. 3672, which provides: "Invalidity of lien without notice. Such lien shall not be valid as against any mortgagee, pledgee, purchaser, or judgment creditor until notice thereof has been filed by the collector," but it does deal with liens and cites cases which deal with judgment creditors.

In Thelusson v. Smith, 2 Wheat. 396, 4 L. Ed. 271, the claimant was a judgment creditor. The court held, as stated in the syllabus:

"A judgment gives to the judgment creditor a lien on the debtor's lands, and a preference over all subsequent judgment creditors, but the law defeats the preference in favor of the United States in the cases specified in the act of 1799, ch. 128, sec. 65."

This is now sec. 3466, U.S.R.S., sec. 191, 31 USCA. It was said in United States v. Texas, supra, p. 485, citing Thelussonv. Smith, supra:

"That a general judgment lien upon the lands of an insolvent debtor does not take precedence over claims of the United States unless execution of the judgment has proceeded far enough to take the land out of the possession of the debtor."

In Brent v. Bank of Washington, 10 Peters, 596,9 L. Ed. 547, it was held that sec. 65 (now sec. 3466) operates to give the United States a priority as against a judgment creditor.

Appellant refuses to recognize that the conflict in this case is not between the United States as a lien claimant and the appellant as the holder of a judgment lien, but relates solely to the question whether in an insolvency proceeding other than one in bankruptcy under the federal act a debt of the United States has priority over other debts of the insolvent, including those owing to a judgment creditor who has taken no steps to make his judgment attach to specific property of the insolvent. There can be no question that a judgment is a debt. Toth v.Toth, 242 Mich. 23, 217 N.W. 913, 56 A.L.R. 839. Taxes due to the United States are debts within the meaning of sec. 3466, already set out. Price v. United States, 269 U.S. 492,46 Sup. Ct. 180, 70 L. Ed. 373.

In United States v. Remund, 330 U.S. 539, 544,67 Sup. Ct. 891, 91 L. Ed. 1082, the United States supreme court said:

"Only the plainest inconsistency would warrant our finding an implied exception to the operation of so clear a command as that of sec. 3466. In this case, as in that, we think such inconsistency is wholly wanting."

So in this case the claim of the appellant being a debt, the debt due the United States having a priority over it in an insolvency, proceeding, under the provisions of sec. 3466, we adhere to our former conclusion.

By the Court. — Motion for rehearing denied, with $25 costs.