Abram I. JONES, Plaintiff,
Robert D. S. MUSTARD, Defendant, United States of America, Intervenor.
Distraint for rent upon personal property of tenant, wherein the United States intervened asserting priority of federal tax liens against proceeds of sale of property distrained. The Superior Court, Layton, J., held that preferential right of landlord under statute to payment of one year's rent growing due at time of seizure out of proceeds of sale of tenant's personalty seized on leased premises was an inchoate lien not entitled to priority over federal tax liens filed before distraint for rent, though tenancy began before tax liens came into being.
Order in conformity with opinion.
[49 Del. 85] The question presented here is one of priority of liens upon a fund paid into
Court by the Sheriff of Sussex. The fund in dispute resulted from a distraint for rent by the Sheriff upon the personal property of the lessee of certain premises in Rehoboth, Delaware.
The following facts are stipulated. Jones, the owner of the property, leased it to Plaza Corporation for a period of one year with the option of renewing for five additional years. The opinion of renewal was exercised and as of July 20, 1949, the rent due was $3,350. Under the terms of the lease, rent was payable in advance. On July 20, 1950, the Sheriff of Sussex County, as bailiff for lessor, distrained on lessee's personal property and on September 20 of the same year it was sold. A net sum of $1,595.93 was realized from the sale to which the lessor claims a preference.
Federal tax liens were filed in the office of the Recorder of Deeds in and for Sussex County as follows:
| Lien No.
|| Date Filed
|| Amount |
[49 Del. 86] Whichever of the two claimants is entitled to priority will obviously receive the entire fund.
W. Howard Thompson, Georgetown, Del., for plaintiff.
H. Newton White, Jr., U.S. Atty., Wilmington, Del., for intervenor.
The United States takes the position that its liens for taxes have priority by virtue of Sec. 3670, Title 26 U.S.C. which, insofar as pertinent reads:
‘ If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, penalty, additional amount, or addition to such tax, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person. 53 Stat. 448.’
Sec. 3672 goes on to provide that such lien shall not be valid as against mortgagees, pledgees, purchasers, or judgment creditors, ‘ * * * until notice thereof has been filed by the collector * * *’ in accordance with the laws of the state where the property subject to the lien is situated. It is agreed that the proper notice was given in this case by the collector. The Government bases its claim to priority upon the familiar ...