A tax lien of the United States under § 3670 of the Internal
Revenue Code held entitled to priority over a landlord's distress
lien under South Carolina law where the distress lien was obtained
(but not perfected) after the federal tax lien had attached, but
before notice thereof had been filed. Pp.
348 U. S.
218-221.
(a) Section 3672 affords no protection to the holder of a
distress lien such as that here involved. P.
348 U. S.
220.
(b) Whether the distress lien was perfected at the time the lien
of the United States was filed is a question of federal law. P.
348 U. S.
220.
(c) The distress lien in this case was not perfected in the
federal sense at the time the liens of the United States were
filed. P.
348 U. S.
220.
(d) The landlord in this case was not a "purchaser" within the
meaning of § 3672 of the Internal Revenue Code, and the tax lien of
the United States was not invalid as to him under that section. Pp.
348 U. S.
220-221.
224 S.C. 233,
78 S.E.2d
277, reversed.
MR. JUSTICE MINTON delivered the opinion of the Court.
This case involves the relative priority of a landlord's
distress for rent under the laws of South Carolina and a lien for
unpaid taxes due the United States. The landlord, herein referred
to as respondent, on April 7, 1952, filed in the Court of Common
Pleas for Greenville County,
Page 348 U. S. 219
South Carolina, an affidavit setting forth that the Dan Tassey,
Inc., was indebted to him for rent and requesting a distress
warrant, which issued. The master's report shows only that the
landlord for past due rent "proceeded on the 7th day of April, 1952
to distress upon the assets of said corporation for said rent in
arrears." The record does not disclose what was actually done in
the distress proceedings. South Carolina Code Annotated, 1952, §
41�151, provides when the affidavit of a landlord is filed, the
magistrate may issue his distress warrant naming the amount due
with costs, and deliver the warrant to an officer for service. The
officer shall forthwith demand payment (§ 41�153), and, if not
paid, he shall distrain sufficient property on the rented premises
to pay the amount, giving a list of property distrained, together
with a copy of the distress warrant, to the tenant. The distress
must be reasonable as to amount of property distrained, on penalty
of action for damages (§§ 41�158, 41�159). The tenant has five days
in which to put up bond and free the property from the lien of
distraint (§ 41�160).
The next day, April 8, 1952, a receiver was appointed for the
corporate taxpayer tenant as an insolvent. All of the assets of the
corporation passed to the receiver, who sold them and realized
therefrom the fund over which this contest is waged.
For nonpayment of taxes due, the Collector of Internal Revenue
received the proper assessment lists in his office on March 19,
1951, May 24, 1951, August 29, 1951, December 3, 1951, February 23,
1952, and February 28, 1952, and notice of these liens thereafter
was filed in the proper office in Greenville County, South
Carolina, on April 10, 1952. Section 3671 of the Internal Revenue
Code provides that the lien for such unpaid taxes attaches when the
assessment lists are received by the Collector.
Page 348 U. S. 220
Therefore, long before the landlord obtained a distress warrant,
the Government's liens for taxes had attached.
The Supreme Court of South Carolina held that, since the
distress warrant was perfected before the receiver was appointed,
the landlord's distress lien was superior to the United States'
priority created by § 3466, Revised Statutes, 31 U.S.C. § 191. We
granted certiorari, 347 U.S. 974. However, we find it unnecessary
to pass upon the effect of that section. We hold that the
Government must prevail because of its liens under § 3670, Internal
Revenue Code.
The landlord had a lien other than a mortgage, pledge, or
judgment lien. As to all other liens, such as the distress lien in
the instant case, § 3672 of the Internal Revenue Code affords no
protection.
United States v. Security Trust Co.,
340 U. S. 47,
340 U. S. 51
(concurring opinion).
Cf. United States v. Gilbert Associates,
Inc., 345 U. S. 361,
345 U. S.
362-365. Moreover, the distress lien was not perfected
in the federal sense at the time the Government's liens were filed.
Such perfection is, of course, a matter of federal law.
United
States v. Waddill Co., 323 U. S. 353;
Illinois v. Campbell, 329 U. S. 362,
329 U. S. 371.
The five-day period specified by § 41-160 of the South Carolina
Code had not elapsed. During this time, the tenant taxpayer could
have reacquired any interest the landlord may have had in his
property by posting bond, as provided by the Code. Therefore, such
a lien was only a caveat of a more perfect lien to come, as we have
so often held in other cases.
United States v. Security Trust
Co., supra; United States v. Gilbert Associates, Inc., supra;
United States v. Waddill Co., supra, at
323 U. S.
357-35;
New York v. Maclay, 288 U.
S. 290.
It was decided in the trial court and argued here that the
landlord was a purchaser within the meaning of § 3672 of the
Internal Revenue Code and, therefore, that
Page 348 U. S. 221
the Government lien was invalid as to him. A purchaser within
the meaning of § 3672 usually means one who acquires title for a
valuable consideration in the manner of vendor and vendee.
Obviously, the landlord was not a purchaser.
The judgment is
Reversed.