Liquor Dealers Credit Control, Inc. v. Comptroller of the Treasury

Barnes, J.,

filed the following dissenting opinion.

I dissent because in my opinion the majority has not properly construed Code (1957) Article 81, Section 342(b), as amended by the Acts of 1958, Chapter 91.

As is pointed out in the majority opinion the purpose of the amendatory language in the Acts of 1958, Chapter 91 was to make it clear that the lien provided for in Section 342(b) would apply to personal property as well as to real property, Judge Charles C. Marbury having ruled at nisi prius that it did not apply to personalty. This is quite clear from the title to Chapter 91 which states, inter alia, that the act is one “* * * providing that the lien created by the Retail Sales Act shall apply to both real and personal property” (emphasis supplied). The words added to the first part of the statute were “all” and “real and/or personal” so that the language was “shall be a lien upon all the property, real and/or personal, of any person liable to pay the same * * *.” (Emphasis supplied). It is quite •important to observe that the existing language of the statute stating the effect of the lien created by the original statute, i.e., “The lien provided for in this section shall have the full force .and effect of a lien of judgment”, was not changed in any way. *663 Then was added by Chapter 91 the sentence at the end of Section 342(b) which reads: “Any such lien on personal property shall not be effective as against an innocent purchaser for value unless the personal property has been levied upon by an officer of a court.”

The legislative intent is to be ascertained by a careful reading of the language used by the General Assembly in the legislation itself.

As we said in Welsh v. Kuntz, 196 Md. 86, 93 , 75 A. 2d 343, 345 (1950):

“The cardinal rule of statutory construction is that statutes should always be construed to effectuate the intention of the Legislature. The manifest intention will always prevail over the rules of grammatical construction. On the other hand, a court is generally not at liberty to surmise a legislative intention contrary to the plain language of the statute, or to indulge in the license of inserting or omitting words with the view of making the statute express an intention which is not evidenced in the original form.” (Emphasis supplied).

As I see it, the majority has, in effect, added seven unstated words after the words “shall have the full force and effect of a lien of judgment”, i.e., “on which an execution had been issued.” Their absence from the legislation clearly indicates to me that the General Assembly meant exactly what it said when it stated that the lien should have the “full force and effect of a lien of judgment”, namely, that the lien was the one established for judgments under the existing Maryland law. This law is fully analyzed and well stated by Judge (now Chief Judge) Prescott, for the Court, in Harris v. Max Kohner, Inc., 230 Md. 349, 352-354 , 187 A. 2d 97, 98-99 (1963) as follows:

“The appellee concedes, as it of course must, that the obtention of judgment, alone, creates no lien upon a judgment debtor’s personal property. Cf. Maryland Rule 620 (September 1958 Ed. in force as of November 28, 1961). In the instant case, however, Kohner *664 had not only secured a judgment, but had also obtained a writ of fieri facias and placed it in the hands of the Chief Constable. At common law, when an execution was issued, it became a lien upon and bound the debtor’s goods by relation from the test-day of the writ. Jones v. Jones, 1 Bland 443 , 448. This principle frequently worked hardship upon an innocent purchaser of goods from a judgment-debtor, who bought them in the interval between the teste of the writ and the day on which it was given to' the sheriff to be executed. To remedy this, it was enacted in the Statute of Frauds, 29 Ch. 2, Chapter 3, Section 16, ‘that * * * no Writ of Fieri facias * * * shall bind the Property of the Goods against whom such Writ of Execution is sued forth, but from the Time that such Writ shall be delivered to the Sheriff, Under-Sheriff or Coroners, to be executed: * * *.’ 2 Alexander's British Statutes (Coe’s Ed.), 511, 512, 551, 552. This statute is in force in Maryland.

“Professor Poe says:

‘The meaning and effect of this statute are that until the writ is actually'delivered to the sheriff, the defendant may lawfully and validly sell or otherwise dispose of his goods; and his assignee acquiring title in good faith will be protected against the execution-creditor. But after the zvrit is once delivered to the sheriff, the goods are virtually in the custody of the law, and are made subject to the lien of the execution. Accordingly, an assignee or purchaser from the debtor then buys them at his peril, for it will be the right and the duty of the sheriff to seize and sell them under the fi. fa., notwithstanding the alienation by the judgment-debtor in the interval between the delivery of the writ to the sheriff and the actual levy.’

2 Poe, Pleading and Practice, § 666. Mr. Evans gives practically the same interpretation of the statute at pp. 478 and 479 in his Maryland Practice (1867). And dating the inception of a lien upon a judgment debtor’s personalty from the time a writ of fi. fa. is *665 delivered to the sheriff for execution seems to be the prevailing view throughout this country, although there are a few States, which, usually by statutory enactments, date the inception of the lien from the time the property is seized and not before. 30A Am. Jur., Judgments, §522; 33 C.J.S., Executions, §124.

“The above statement of Professor Poe should, perhaps, be qualified by adding that the lien on the judgment debtor’s goods attaches only to goods located within the sheriff’s bailiwick. And the delivery of the writ to the sheriff must be made, in good faith, for the purpose of its execution. Myers Co. v. Banking & Trust Co., 170 Md. 198 , 183 A. 543 . We are not called upon at this time to consider what happens to the writ after its return date.

“An unbroken chain of decisions of this Court supports the interpretation given to the statute by Professor Poe and Mr. Evans. Jones v. Jones, supra; Selby v. Magruder, 6 Har. & J. 454; Harris v. Alcock, 10 G. & J. 226, 251 ; Furlong v. Edwards, 3 Md. 99, 113 ; Prentiss Co. v. Whitman & Barnes Co., 88 Md. 240, 243 , 41 A. 49 . See also United States v. Levin, 128 F. Supp. 465 (U.S. D.C., Md., opinion by Thomsen, J.) and In Re Continental Midway Corporation, 185 F. Supp. 867 (U.S. D.C., Md., opinion by Chesnut, J.) both stating Maryland law. And cf. Meyers Co. v. Banking & Trust Co., supra.

“In Furlong , this Court stated: ‘The position assumed by the learned judge who delivered the opinion below, as respects the time when the creditor acquires his lien, is in our judgment erroneous. * * * The case of Harris v. Alcock [supra], in our own court expressly decides, that the issuing and levying of a fieri jadas, secures for the creditor a priority or lien upon the debtor’s equitable interest in personal property covered by a mortgage, which lien dates from the time the execution was placed in the officer’s hands.’ ”

We must assume that the General Assembly originally enacted Section 342(b) and amended it by Chapter 91 with *666 knowledge of this long and clearly established Maryland law. As our predecessors said in McKee v. McKee, 17 Md. 352, 359:

“ ‘Where words used in an Act of Assembly have received a judicial construction, it is presumed that the Legislature employed them in that sense, unless a contrary intent can be gathered from the whole Act.’ ”

See Kepner v. U. S., 195 U. S. 100, 124 , 24 S. Ct. 797, 49 L. Ed. 114 (1904). See also 82 C.J.S. Statutes §330, page 653.

If the language used were of doubtful meaning or was ambiguous, we should construe it in favor of the taxpayer and against the State. As we stated in Comptroller v. Rockhill, Inc., 205 Md. 226, 234 , 107 A. 2d 93, 98 (1954):

“In interpreting a tax statute, the court must not extend its provisions by implication beyond the clear import of the language employed. Such a statute, in case of doubt as to its scope, should be construed most strongly in favor of the citizen and against the State.”

See also Baltimore Foundry and Machine Corporation v. Comptroller, 211 Md. 386, 319 , 127 A. 2d 368, 369 (1956).

The majority states that “the legislature intended to create a perfected tax lien” and that “Any other construction would be unreasonable under the circumstances.” I suggest, with great respect, that this begs the question. The General Assembly did not state that it was creating a perfected lien, but that it was creating a lien having the full force andI effect of a lien of judgment. What could be clearer from this language than that as to the newly added personalty, there was no perfected lien until delivery of the writ of fieri facias or other process to the officer of the court for levy? The General Assembly clearly had the necessity for a levy in mind as the last sentence indicates. The majority states, in effect, that unless the lien on personalty was perfected upon filing of the notice of the lien with the clerk, the last sentence added by Chapter 91 would have no meaning. But in my opinion, this is by no means the case. On the contrary, the last sentence confirms the existing Maryland law in *667 regard to liens of a judgment so far as personal property was concerned, namely, that there is no lien until the process of writ for the levy is delivered to the levying officer at which time an inchoate lien arises as to personal property within the levying officer’s bailiwick, to become consummate when the levy is actually made. See In re Continental Midmay Corporation, 185 F. Supp. 867, 873 (D. Md. 1960, Chesnut, J.) and the excellent review of the Maryland law in that case. As Judge Prescott pointed out, for the Court, in Harris in his quotation from Poe on Pleading and Practice, set out above, the purchaser from the debtor purchased the personal property at his peril “in the interval between the delivery of the writ to the sheriff and the actual levy.”

It was to eliminate this inequitable situation which existed and still exists generally in regard to innocent purchasers for value in this interval between delivery of the writ and the levy, that the last sentence was added by Chapter 91. This language is entirely consistent with the existing Maryland law and has an important meaning quite apart from any notion that there is any lien on personalty until the time the Comptroller has issued an execution upon the lien filed with the Clerk.

In my opinion, there is no indication in Chapter 91 that there was to be any change in the Maryland law in regard to the effect of a lien of judgment as it applied to personal property and all of the language is entirely consistent with the legislative intent that there was to be no change in that law. I would so rule.

In addition to the language of the statute, itself, it seems apparent to me that the Comptroller, prior to the enactment of Chapter 91, when he considered that the words “all property” in the then existing legislation included personal property, he construed the language “shall have the * * * effect of a lien of judgment” as requiring a levy to establish the State’s lien. See In re Meisel, 159 F. Supp. 879 (D. Md. 1958). Chief Judge Thomsen for the United States District Court for the District of Maryland, after stating that the Comptroller had filed a lien notice with the Clerk of the Circuit Court for Anne Arundel County for unpaid sales and use faxes on May 5, 1955, ordered the Clerk on December 30, 1955 to issue a writ *668 of fi. fa. on the lien directed to the Sheriff of Anne Arundel County to seize certain chattels belonging to the debtor, which levy was made by the Sheriff on January 4, 1956, stated in Note 1 on page 882 of 159 F. Supp.

“The Comptroller based his petition for review on two grounds, but for the purpose of this appeal he has abandoned the first: that ‘the Comptroller’s lien is superior to the lien of the District Director of Internal Revenue for the reason that the latter, though recorded prior in point of time to the Comptroller’s lien, does not attach to personal property until levy is effected; and that the Comptroller’s, lien, perfected through levy and possession of the goods, must therefore prevail.’ In any event this ground is without merit for reasons stated in United States v. Levin, D. C. Md., 128 F. Supp. 465 and the authorities cited therein at pp. 468, 469. The State lien in this, case had the force and effect of a lien of judgment. Ann. Code, Md. 1957, Art. 81, Sec. 342(b).” (Emphasis supplied) .

This case indicates that the Comptroller’s construction of the applicable language of Section 342(b) and of the necessity of a levy to make consummate the inthoate lien arising upon delivery of the writ of fi. fa. was in accord with what, in my opinion, is the proper construction of the language in Section 342(b). This prior construction by the Comptroller of the language is significant. Cf. Comptroller v. Rockhill, Inc., supra.

I would reverse the order of the lower court.