*1 nеgligence and the law defendant’s matter of between accident. trial court should have opinion are of the
We question of defend- changed causation the answer granted judg- and negligence to “Yes” from “No” ant’s changed. so plaintiffs the verdict as on ment for Judgment cause remanded By and reversed Court. — in accordance with enter directions to with opinion.
Hansen, J., part. took no Plaintiff, v. North Corporation, Gate North Gate others, Defendants: and Inc., Bowl, Industrial Intervening Appellant: and Plаintiff Commission, Intervening Plaintiff America, United Respondent.* April February 14, 1967. 28— * rehearing denied, costs, September 11, without Motion *5 appellant there were For the Industrial Commission Spencer, by Arnold unem- J. chief briefs counsel ployment compensation division, and H. Putnam of W. argu- Madison, attorney, division, and oral enforcements ment Mr. Putnam. argued respondent Howard
For the cause was Feldman, attorney, Department Justice, Washing- J. ton, C., Rogovin, on the brief Mitchell D. with whom were general attorney States, of the United Lee аssistant Joseph Kovner, attorneys, Department A. Jackson and Justice, Washington, D. C. *6 presented appeal: Three on this J. issues are
Wilkie, 1. the federal Is there an of fact as to issue whether government upon made a defendant tax- demand payer sufficient to validate tax lien? its government
2. Must the federal file notice of its tax register county lien with the of in in order deeds Dane acquire priority against to the lien of the Com- Industrial acquired pursuant (2), mission to 108.22 Stats.? filing required, If 3. where demand is made taxpayer filing, after the date of does the effective datе of the tax lien accrue at the time of or at the time when demand is made? Issue
No Fact on Demand. of necessary validity A demand is of the establish government’s lien,, federal lien can until no arise payment.3 Appellant there has been a demand for asserts summary judgment that should never have been entered in favor the United States because there was an issue withholding payment of fact toas whether demand for upon taxes was ever made the defendant.
However, paragraph complaint in 2 of the States, alleged United the United States that the ad- liability ministrative assessments of tax were made on May 12,1965. Paragraph complaint 7 of the same asserts that notice of payment assessment and demand for were upon made defendant on June 1965. The Industrial Commission did not controvert either of allegations complaint,4 these two in its or affidavits Ruth, Inc., B. Sherman v. O. S. The V. Marie and Winifred (D. 1957), Supp. Myrick 630; C. Mass. 150 Fed. v. United 1961), (5th (2d) 312; Cir. 296 Fed. Textile Products v. Super. 291, Feldan (2d) N. J. 148 Atl. fact, appellant’s complaint appears aсcept the date of 24, 1965, Paragraph June as the date of demand. of7 the Indus “ complaint trial Commission’s states: ‘Notice assessment and summary judg- filed in with the connection motions for ment. parties, essence, agreed an
Thus submitted case argument to the trial trial court. No was made in the court there was an as to issue fact whether demand was ever made. This for the defense is raised appeal. raising first time on this this defense too late.5 comes
Accordingly, there is of fact as to no issue whether оr federal made demand taxpayer. only the defendant to be issue resolved here is what is the date of effective the federal tax lien *7 against the as lien the Industrial Commission. This question by a properly is of law can which be resolved summary judgment.6 answering question, In this federal Security In United States v. applied. Trust law must be Savings & Bank the United States supreme court said: provision “The effect aof lien in relation a to owing federal law for the collection of debts the United always Hence, although question. is а federal a specific per- state court’s classification of fected lien as and weight, subject entitled to it to reexamination 7 Court.” this
Thus, question filing of whether tax federal required acquire priority against lien is to lien of Industrial Commission and whether the federal tax lien from stems the date of or the date of demand by applying must be resolved federal law. payment taxpayer demand were made the defendant 24, 1965, June but said defendant has refused or ne- glected pay owing to the taxes due which are and to the United ” States of America.’ Conway, ante, p. 76, Harrington v. (2d) 721; State 148 N. W. Downing (1918), 582,
v.
166 Wis.
Need ubiquitous Int. creates Sec. Rev. Code property of federal tax lien to all which attaches im- lien delinquent taxpayer. Sec. 6322 states posed by the assessment at the time sec. 6321 “shall arise liability for the continue until is made and shall unenforceable amount or becomes so assessed is satisfied lapse that within of time.” 6303 states reason Sec. delegate secretary sixty days or his after assessmеnt tax, unpaid “give person for the notice to each liable shall stating demanding payment thereof.” and amount Although required proof of demand is validate lien, the lien back to the time of assessment relates bearing no on the relative the date demand has priority of the lien.8
Under the facts in the the effective date case bar May 12, 1965, before the of the would be well date of the lien of the effective Industrial Commission given (June 17, 1965). scope Sec. was broad Snyder.9 Snyder in United States v. the federal tax Snyder property lien or arose before sold his assessment purchaser bona for value. to a The tax lien had fide Louisiana, prop been recorded never situs erty, required by the as Louisiana constitution. 8 Macatee, Inc., *8 (5th 1954), (2d) v. United States Cir. 214 Fed. 717, 719; (C. 1880), v. R. Co. United States C. Mo. 1 Fed. Pacific Code, USCA, 97; 6322; 26 Internal Revenue see. William T. Plumb, Jr., Problems, I, Federal Tax Collection and Lien Part 13 247, 249, (1958), 250; Comment, Tax Law Review Relative Judgment and Federal Tax Priorities State Liens to the Lien of University Creditors, (1965), 87, 89; 15 American Law Review Anderson, Priоrity, Federal Tax Liens —Their Paul E. Nature and (1953), 241, 271; Mertens, 41 California Law Review 9 Law Taxation, 93, p. sec. 54.40. Federal Income 9 210, Sup. 846, (1893), Snyder 149 13 Ct. U. S. L. Ed. 37 6321, an antecedent of sec. involved Int. Rev. Code of sec. 3186 Revised Statutes.
525 holding: supreme United two-fold States court made (1) subject That the lien for taxes was recording states, (2) that the lien laws and was against subsequent purchaser bona enforceable fide holding for value without notice. that the federal This paramount purchasers tax lien is as to and creditors without notice of lien in United States was followed Curry.1 v. present
The result of these cases was that
sec.
give
1954,11
Int. Rev. Code
construed
was
comprehensive
impossible
secret
lien
made it
which
dealing
people
protect against.
in real
To
estate to
Congress
problem,
passed
present
avoid this
sec.
Code,
6323 of the Internal Revenue
miti
which section
gates
mortgagees, purchasers,
the secret
lien as to
or
judgment
by requiring
creditors
that notice of the tax
lien
in
be filed
before
property
state
it attaches to the
prior
However,
to the above interests.12
the statute has
always
strictly construed,
provides
been
relief from
and
only
countervailing
the secret
lien
when the
lien comes
10 (D.
1912),
Md.
C.
526 specified within one of the All classes in the statute.13 subject other priority are creditors of the secret federal tax lien from the date of assessment.14 bar, parties judge the case at both and the trial have assumed that a Industrial Commission is Code, creditor under sec. Int. Rev. so that pre federal must file notice of its lien to rights against its serve the Industrial Commission’s lien. (2), Stats., provides 108.22 Sec. that the amount due the commission is to be determined an administrative 108.10, proceеding pursuant to sec. Stats.15 Once this determined, (2) specifies amount is 108.22 that: 13 Security Savings Bank, supra, United Trust & foot page “My history note 53: conclusion from this is that provisions types from the statute excludes of this secret lien those specifically of interests it which included in the statute and no Note, others.” The Federal Tax Lien —A Practitioner’s Guide to Priority Problems, the Resolution and Avoidance of 36 York New University (1961), 1316, 1320; Plumb, Law Review William T. Jr., Problems, II, Federal Tax Collection and Lien Part 13 Tax (1958), 459, Law Review 467. also United See States v. Gilbert Sup. Associates 345 U. S. 73 Ct. L. Ed. 14Macatee, Inc., States, supra, v. United footnote 8. (1) “108.10 Settlement of issues other than benefit claims. any arising chapter any In connection with issue under this as to liability, employer persons of an Wisconsin, of one or more provided which no respect review is under section 108.09 and with penalty provided 108.24, to which no following in section procedure apply: shall “(2) deputy designated A purpose the commission for the investigate any shall liability, the existence and extent of such may issue аn accordingly; provided, initial determination how- ever, deputy may any such set aside or amend such de- any termination at subsequent time on the basis information or copy correct clerical A mistake. of each determination shall be mailed to thereby. employer the last known address of the affected employer may request hearing any as to matter therein, by filing request deputy such days with the within mailing after procedure such and in accordance such with as the may by prescribe. commission rule Any “(3) hearing duly requested ap- shall be held before an peal provided by tribunal established in the manner section 108.09 *10 judgment “. . . The clerk shall enter in the docket the the employer name of the mentioned in the warrant and contributions, interest, amount the and other costs fees for the which warrant is issued and the date when copy Thereupon such is filed. the docketed warrant so respects judgment shall be all considered in a as a final creating perfected right, employer’s lien title personal рroperty and in interest all of real his and county in located wherein the warrant is docketed.” (4), (5) applicable proceedings and section 108.09 shall be to the days appeal before such tribunal. Within 20 after the tribunal’s employer’s address, decision has mailed been to the he last known may petition gen- pursuant the commission for review thereof rules, eral commission or the commission on recommendation may proceedings counsel on its motion transfer itself own reverse, change, аppeal and or aside set the decision of the tribunal previously case, the basis of evidence submitted in or di- such taking testimony. rect the of additional “(4) authority any The commission’s to take as to issue action proceeding specified or under this section shall be the same as that (6) (a), (b) (c). in s. 108.09 and “(5) employer may judicial The commence action for the re- hereunder, provided of a employer, view commission decision said exhausting provided hereunder, after the remedies has commenced days such action within 30 after such decision his was mailed to scope judicial last review, known address. The and the manner applicable, thereof insofar provided as shall be the same as that (7). in s. 108.09 “(6) mailing The provided determinations and decisions in (2), (4) (5) class, subsections may and shall be first performed by include the use of postal department services requiring payment of extra fees. “(7) Any by deputy any by determination a ap- or decision an peal by tribunal or the commission shall becomе conclusive with respect employer hearing unless he has acted to secure a or provided, as review hereinbefore binding but shall be on the only commission in so far as the relevant facts were included in deputy, record appeal which was before the tribunal or com- mission at the time the determination or decision was issued.” 16 The Industrial getting Commission’s method of prop a lien on erty entirely requirement administrative. docketing with clerk of court does proceeding not make judicial a one. judgment
Thus, a becomes Industrial Commission only creditor the commission’s because the statute makes going judgment lien a not obtained lien. The lien is obtaining through procedure a court nor it obtained judgment a in a state court. “judgment purposes of sec. term creditor” for Code, always to mean Int. Rev. has been construed In the creditor in conventional sense.17 given bar, statutory
case at lien is which is involved “judgment the force and effect of a lien” under state laws. Just such case was involved United States *11 Gilbert, Gilbert Associates.18 In federal employment, withholding, tax for and in assessed liens come taxes that became due 1943 and 1948. between August although 6, 1948, of the lien on Notice was filed and demand on the made assessment had been by period. the United States several times within Hampshire A New town made an assessment of an ad 1947, corporate taxpayer April 1, valorem tax on the April 1, 1948, Hamp and and the decisions New supreme judg shire court raised this to a assessment ment. appeal supreme court,
On to the United States judgment coming a town contended it was creditor with- protection in the of sec. of the Internal Revenue (presently Code 1954). sec. Int. Rev. Code of Thus, since notice of the federal tax lien was filed after assessment, prior. town’s lien town’s was supreme rejected court the town’s contention that it judgment awas creditor. The required federal tax laws uniformity interpretation of “judgment and the term could creditor” not be fettered various state defini- tions. Security Savings Bank, United States Trust supra, & foot pages 51,
notе 18 Supra, footnote 13. Congress instance, used we think “. . . this usual, con- ‘judgment in the creditor’ sec. 3672 words record, judgment a court of since of a of ventional sense Congress do not think all states have such courts. We may taxing of authorities who had in mind the action acting Hampshire judicially and some as in he New something states, ‘in other the end where result taxing judgment,’ nature of while in other states the ad- quasi-judicially are considered authorities act and ministrative bodies.” not a bar, In the case at Commission Industrial purposes 6323, Int. Rev. creditor Code, by an administrative because its lien was obtained cir- procedure in the contest then docketed without cuit court. The thus does Industrial Commission protected are come within the class creditors who requirement lien be with that notice the tax filed register tax lien is valid deeds. federal against from the the Industrial date Commission taxpayer. demand is made assessment once May 12, made on full month The assessment was filed on before Industrial Commission’s was granting June 1965. The order of the trial court grоund. summary judgment be affirmed on should this *12 Priority is Determined as the of Notice
Date is Filed. Assuming judg- the Industrial is a that Commission 6323, Code, purposes creditor of Int. ment sec. Rev. by imposed the that lien 6321 that section states against the until not be valid Industrial Commission shall bar, In the case notice of federal notice is filed. at the 14, The tax lien was filed on June 1965. lien of the 17, was Industrial Commission docketed June 1965. 19 Associates, supra, 13, v. United States Gilbert at footnote page 364.
530 However, taxpayer upon defendant was not demand the 24, question made until whether the June 1965. validity at the of оf the federal lien time tax accrues filed, demand, made after notice is or when demand is whether lien of date. the is effective as an earlier Appellant support proposition cites the cases precedent that demand is to a valid federal condition cases, however, tax lien. In all these no demand at all taxpayer. bar, was made In the at case made, demand has issue demand been but is whether filing must be before order made notice in tax the federal from effectiveness stem the date against judgment as creditors.21 Hominy In In re Baltimore Pearl Co.22 court held by by that the demand could be waived taxpayer. said, purpose The court “. . . The of re- quiring precedent a demand as a condition to the tax be- coming protection taxpayer; any a lien is right protection may by such be person waived Inc., Macatee, interested.” United States23 sheds light additional on the function of demand in tax lien Macatee, cases. demand was made on the before the сollector received assessment list.. (1961), v. Alban Co. 408, Wethered Tractor 224 Md. 168 Atl. (2d) pages 364, 365; and cases cited therein Sherman B. Ruth, Inc., Winifred, supra, v. O. S. V. The Marie and 3; footnote Myrick States, supra, 3; v. United footnote Textile Products v. Feldan, supra, footnote 3. by appellant One of the cases cited does contain some lan guage supporting position. his In Detroit Bank v. United States 329, 335, Sup. 317 U. S. Ct. 87 L. Ed. supreme United States court states: “Under S.R. sec. 3186 [now there no lien 6323] and no notice can be recorded until there has been a pay demand collector and a refusal it the tax payer.” ease, however, discussing In this the court was the estate entirely lien, lien, tax an different and referred to the lien under only sec. 6323 in dicta. 22 (4th 1925), (2d) Cir. 5 Fed. 23 Supra, footnote 8. *13 although 3670, Int. sec. court said that the lien under (now 1954) did 6321, Int. of Rev. Code sec. Rev. Code taxpayer, not arise until on the after demand was made require did not the be made after sec. 3670 that demand receipt of the court concluded: assessment list. The requiring purpose “The of such a and demand notice protection taxpayer. for the little is of the It has ... determining priority or no relation to of liens between If a United States and other demand lienholders. essential, receipt after is the assessment list ... receipt demand would relate back the from that date.” to date such priority and the lien take would The Macatee been Case that once demand has indicates made, when, rights no matter priorities preserved. bar, are at In- case argues dustrial Commission notice was against ineffective been its because demand had not previous filing. requires made which statute require that notice be filed that demand be does Furthermore, made first. made, once demand demand relates the time of back assessment to estab- except lish a lien all as to other creditors those stated in sec. Int. Rev. Code. The lien exists from assessment, against date of but the lien is not effective judgment creditors until notice is filed. requirement designed of a primarily demand is
for taxpayеr. the benefit of the Other creditors have way knowing no payment whether for demand has made taxpayer, they been but are aware of the government’s assertion of a lien once notice has been filed. Under Code, Int. Rev. demand on the may taxpayer any made sixty be time days within after policy date assessment. The of the federal statutes procedure is that while this designed administrative going the benefit of the on, the United States 24 Macatee, Inc., States, supra, v. United page footnote *14 against creditors protect to itself other should be able go through formality demand do have to the of who and refusal.
Thus, granting summary judgment must be the order affirmed.
By the Court. —Order affirmed. J., part. took no
Hansen, agree (concurring). J. I with the While Hallows, by ground result reached the on the lien of the court judgment it a Industrial Commission not constitute does meaning 1954, creditor within Int. Rev. Code of 6323, ubiquitous protected sec. as to so be from the disagree government, of the United I must with assuming dicta court’s that Commis- Industrial judgment 6323, sion is a creditor under it still sec. does priority. not have government
At time United States filed a 14, 1965', notice of lien on June it had no lien and conse- quently the notice was not then The lien effective. of the upon filing commission arose of the warrant on June govern- 1965. The demand the United States prerequisite ment which is a to the creation its lien was not made until majority June 1965. The be- (1) lieves: A question demand is not essential to the priority (2) a subsequent demand to the of notice of lien is sufficient to vitalize notice nunc pro tune.
The two federal circuit court cases relied offеr no support majority’s position for emasculating the protection given mortgagees, pledgees, purchasers, and creditors the Int. Rev. Code Re 6323. In In Baltimore Pearl Hominy (4th Co. Cir. 1925), (2d) Fed. dealing the court was with a bankruptcy claim in proceeding subrogation to a money government lien. had advanced Creditors compromise after About two months federal tax claim. payment compromise of the assess- amount bankrupt. adjudged The court ment the was government payment held the had a lien at the time of subrogated because while which the were creditors no formal made demand had been agreement prior payment, voluntary between *15 compromise the the commissioner and the to amount in a and if not a demand a was effect demand course, support waiver a lien. Of under sufficient to these no of lien and the circumstances notice was filed pains point out, court took to “It is not contended judgment occupied superior position the trustees the of creditоrs without notice of the circumstances which we have held lien for of the created the taxes favor government.” Consequently, authority case no this is very deciding. proposition the court it stated was Macatee, Inc., 1954), (5th United 214 Cir. (2d) 717, by government Fed. a demand was made days prior a few to the on which the collector dates govern- Subsequently, received assessment lists. lien, filing prior ment filed notices of but to the of these acquired statutory notices Macatee a attachment lien. government аgainst good The court held the lien was statutory any attachment lien without notice and although Macatee became a creditor subse- quently suit, in the prior- attachment this too late for was ity government by because the had then filed notice its authority bogus of lien. This case is not that a notice of lien filed when the federal no lien has give priority persons to protected effective by over Int. 1954, Eev. Code sec. majority opinion in footnote number 21 character- language
izes certain in Detroit Bank v. United States 329, Sup. 317 U. S. Ct. 87 L. Ed. was whether as dicta. This is error. issue by (a) imposed tax lien for estate taxes sec. de- the date Eevenue Act of 1936 attached or or demand cedent’s death an without assessment being under subject recorded whether that was provisions Statutes, in order to of Eevised give mortgagee acquired superiority it to a lien of a who knowledge mortgage good his for value in faith without predecessor to the the tax lien. section Sec. opinion. majority sections under cоnsideration in the deciding applied (a) The court in sec. 315 alone distinguished legislative history estate tax lien prove that section and E. sec. 3186 to that each S. was operate independently intended to of each other. In this said, significance particular context the court “of is the difference in time when liens attach under the two sections. Under E. there S. sec. 3186 is no lien no can notice be recorded until there has been demand pay taxpayer. the collector and a refusаl it (a) Under sec. 315 as has been stated the lien arises against the death of the decedent and becomes effective purchasers mortgagees and the or without assessment *16 obviously demand and possible before it would be provisions record notice of lien under the S. E. language I sec. 3186.” think this of the United States supreme good law; court is majority and the dicta of our opinion, bad law. only logical interpretation of Int. Code of Eev. is that unless the demand is or waived prior sixty days
made to or within of thе date the collec- tor receives the assessment list and before the notice of mortgagees, filed the pledgees, favored purchasers, protected and creditors are rights if their prior filing accrue of the notice of lien. But if a notice of lien is filed before the demand is made or fact, although relating in the lien waived back to the purposes date of the for not assessment other effective rights designated to defeat of the favored class prior sec. 6323 which havе accrued to the demand or waiver. of the notice of lien be of a lien must existing, may may then not one or which not come into depending upon existence a later demand or waiver. The federal should be allowed to file notice of claim lien when it none then has retro- activity of the demand as to breathe life so into the life- form of priority less the notice and be a basis provide lien. Sec. 6323 does not so and no so hold. cases Appellant, Glendale, First National Bank County and others, Re Sheriff Milwaukee spondents. April 14,
March 2—