42 A.2d 606 | Pa. | 1945
The legal issue here involved deals with the relative priority to be accorded the United States and the Commonwealth of Pennsylvania as lien claimants. *240
On January 27, 1944, The Littlestown National Bank entered a judgment in Adams County against Penn Tile Works Company, and, on the same date, issued a fi. fa. in pursuance of which the sheriff, on March 4, 1944, sold certain personal property belonging to the judgment debtor. A dispute arose in regard to the distribution of the proceeds of the sale and the sheriff was permitted to pay the fund into court.
The claim of the United States was based upon a lien for employment taxes imposed under section 1600 of the Internal Revenue Code (26 U.S.C.A. sec. 1600; 53 Stat. 183), as amended. Sections 3670 and 3671 of the Internal Revenue Code (26 U.S.C.A. secs. 3670, 3671; 53 Stat. 448, 449), provide that if any taxes are not paid they shall be a lien in favor of the United States upon all property, real or personal, belonging to the taxpayer, such lien to arise at the time the assessment list is received by the collector. Here the lien arose on March 10, 1943, and notice thereof was filed with the Prothonotary of Adams County on July 21, 1943, some six months before the lien of the execution creditor attached by virtue of its levy.
The claim of the Commonwealth was based on liens for unemployment compensation contributions prescribed by section 301 of the Unemployment Compensation Law of December 5, 1936, P. L. (1937) 2897, as amended. Section 308.1, which was added to this law by the Act of April 23, 1942, P. L. 60, Sec. 4, provides that all contributions due and payable under the provisions of the act shall be a lien upon the employer's property, real and personal, from the date a lien therefor is entered of record. Here the liens of the Commonwealth arose on January 28, 1944 and March 15, 1944, at which times certified copies thereof, transmitted by the Department of Labor and Industry, were recorded by the Prothonotary of Adams County.
The auditor who was appointed by the court to make distribution held that the proceeds of the sale, after *241 payment of the costs, should be paid out first on the lien of the Government; as that claim exhausted the fund nothing was available for the liens of the Commonwealth. The Court of Common Pleas confirmed the auditor's report. The Commonwealth appeals on the ground that its liens were entitled to priority.
The United States does not assert priority by reason of any sovereign prerogative. And although Congress, under its power to lay and collect taxes, may provide that taxes due to the United States shall have precedence over those due to a state (County of Spokane v. United States,
How does the Commonwealth seek to overthrow the priority thus apparently assured to the United States? It relies upon section 308.1 which, added to the Unemployment Compensation Law by the Act of April 23, 1942, P. L. 60, sec. 4, provides that whenever the property *242 of an employer is sold at a judicial sale all contributions which have been entered of record shall first be allowed and paid out of the proceeds of such sale in the same manner and to the same extent that state taxes are paid.2 The payment of state taxes is governed by the Fiscal Code of April 9, 1929, P. L. 343, sec. 1401, which makes such taxes a first lien upon the property, both real and personal, of the taxpayer, and provides that whenever such property shall be sold at a judicial sale all taxes due the Commonwealth shall first be allowed and paid out of the proceeds of the sale before any other claim or lien. Accordingly, the Commonwealth contends that out of the present fund the unemployment compensation contributions due to it should be paid ahead of the employment taxes due the United States and of all other claims or liens whatsoever.
We need not consider whether it was intended by this legislation to confer upon state taxes and unemployment compensation contributions priority not only over other claims and liens arising under the laws of the Commonwealth but also over liens of the United States, for, whatever may have been such intention and whatever interpretation may be given to these statutes, the Supreme Court of the United States has ruled that a priority in favor of the United States which arises from priority in the date of its lien cannot, without the consent of Congress, be impaired or superseded by state law in favor of subsequent liens imposed by authority of any law or judicial decision of the state. In Michigan v. United States,
" 'It is of the very nature and essence of a lien, that no matter into whose hands the property goes, it passes cumonere'. . . . Hence it is not debatable that a tax lien imposed by a law of Congress, as we have held the present lien is imposed, cannot, without the consent of Congress, be displaced by later liens imposed by authority of any state law or judicial decision. United States v. Snyder, supra; UnitedStates v. Greenville,
"As the federal lien with which we are here concerned attached to private property prior to the acquisition of any interest in that property by the state, we need not consider the extent to which Congress may give, or intended by § 315 (a) to give, priority to a federal lien over a previously perfected state lien. Compare New York v. Maclay, supra, 292; SpokaneCounty v. United States, supra, 95; United States v. Texas, supra, 484-6."
In United States v. City of Greenville,
The auditor and the court below were right in giving priority to the federal lien over the state liens in the distribution of the proceeds of the judicial sale.
Order affirmed; costs to be paid by appellant.