United States v. F. Gordon Spoor
2016 U.S. App. LEXIS 17973
| 11th Cir. | 2016Background
- Decedent Louise P. Gallagher died owning nearly all of her estate value in membership units of a closely held company (Paxton). F. Gordon Spoor was both personal representative of the estate and trustee of a revocable trust holding the units.
- The estate filed Form 706, elected installment treatment under I.R.C. § 6166, and later elected a § 6324A designated-property lien on the Paxton units (recorded 2010) as collateral for deferred estate tax payments.
- The estate defaulted on deferred payments; the IRS accelerated the balance and filed suit in 2013 to foreclose the § 6324A lien and income tax liens (§ 6321). The Estate did not dispute amounts owed.
- Spoor claimed unpaid personal representative/trustee commissions (about $486,265 unpaid) and sought priority for those administrative expenses over the IRS’s § 6324A lien.
- The district court held Spoor’s claim (filed earlier) had priority under the common-law “first in time, first in right” rule. The Eleventh Circuit reversed, holding § 6324A special liens are not subordinated to executor/trustee administrative expense claims and that § 6321 income tax liens also take priority over such commissions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether executor/trustee administrative expenses (commissions) have priority over a § 6324A designated-property estate tax lien | Spoor: his compensation claim arose prior to the § 6324A lien and thus prevails under the common-law first-in-time rule | United States: § 6324A’s text and structure exclude any administrative-expense exception; Congress narrowed priorities for § 6324A liens | Held for United States: § 6324A liens are not subject to executor/trustee administrative expenses; Spoor’s claim is not a lien and thus first-in-time rule does not apply |
| Whether Spoor’s compensation claim qualifies as a lien for priority analysis | Spoor: statutory entitlement to commissions should functionally secure priority | United States: Florida law grants compensation rights but not a security interest; no lien exists to compete with federal tax liens | Held: Spoor’s claim is not a lien under state law, so it cannot prime federal tax liens |
| Whether income tax liens under § 6321 have priority over unpaid administrative expenses | United States: § 6321-created income tax liens and the priority rules in §§ 6323/6324 control and displace executor commissions | Spoor: first-in-time rule or equitable considerations should allow administrative expenses priority | Held: § 6321 income tax liens take priority over the estate’s administrative expenses when competing for the same assets |
| Whether the district court erred in applying common-law first-in-time rule to alter statutory priorities | Spoor: silence in § 6324A invites common-law rule and policy favors compensating executors | United States: statutory text, structure, and Congress’s selective exceptions displace the common-law rule here | Held: the court erred; statutory text and structure control and foreclose an administrative-expense exception to § 6324A liens |
Key Cases Cited
- United States v. New Britain, 347 U.S. 81 (1954) (explains first-in-time priority rule where statute is silent)
- United States v. McDermott, 507 U.S. 447 (1993) (applies first-in-time rule to competing liens when federal statute does not allocate priority)
- Hamdan v. Rumsfeld, 548 U.S. 557 (2006) (negative inference from omission in statutory text supports Congress’s intent)
- Keene Corp. v. United States, 508 U.S. 200 (1993) (discusses significance of disparate statutory language when construing congressional intent)
- Permanent Mission of India v. City of New York, 551 U.S. 193 (2007) (definition and understanding of a lien for purposes of priority analysis)
REVERSED and REMANDED.