Brief of Respondent, Edward Oravitz,, Administrator of the State of John Oravitz, Deceased — United States v. Acri

. LISRARY '

UPREME CouRT.Us5 nCT

UL}

In the Supreme Court of the United States |

OCTOBER TERM, 1954.

No. 33.

UNITED STATES OF AMERICA,

Petitioner,

Vv.

MICHAEL P. ACRI, DOLLAR SAVINGS & TRUST CO., THE

DOLLAR SAVINGS & TRUST CO. OF YOUNGSTOWN, OHIO,

GUARDIAN OF THE ESTATE OF MICHAEL P. ACRI, and

EDWARD ORAVITZ, ADMINISTRATOR OF THE ESTATE OF

JOHN ORAVEC, a.k.a... ORAVITZ, DECEASED.

BRIEF OF RESPONDENT, EDWARD ORAVITZ,

ADMINISTRATOR OF THE ESTATE OF JOHN

ORAVITZ, DECEASED.

Joun A. WILLO,

509-10 Union National Bank Bldg..

Youngstown, Ohio,

Francis B. KAvANAGH,

120 Sunset Road,

Avon Lake, Ohio,

ISRAEL FREEMAN,

Office of the Attorney General,

State House Annex,

Columbus 15, Ohio,

Counsel for Respondent.

THE GATES LEGAL PUBLISHING CO CLEVELAND. OHIO-——-MAIN 1.9647

TABLE OF CONTENTS.

STATEMENT OF Facts. __. ; ae

ARGUMENT ____. et Bre Me ey geet oe ok Pilg SR

Whether the lien of an attaching creditor under

the provisions of the Ohio Statutes has priority

over Federal tax liens assessed, levied and re-

corded subsequently to the date of the attach-

gated sella AeA Ra LOCI elt ewan

Nature of attachment lien under Ohio statutes

No inchoacy of lien under Ohio statutes _____

Inapplicability of California law ___________

Priority of attachment lien _---__-__________

Priority of ‘debt due United States” _______

Operative effect of attachment lien _________

Statute cannot be construed to displace valid

I a a acie

Federal courts follow state law in attachment

0 iE te ares I AS SAS COO

Pre-emption of jurisdiction by state court ___

EIR LR URE Soa eed RE SP

ApPpENDIx A (ADDITIONAL PorTIONS OF REcorRD)

Defendant’s Exhibit A. Judgment of Common

Pleas Court in the Case of Oravitz v. Acri

Plaintiff's Exhibit 1. Notice of Tax Lien Under

Internal Revenue Laws

Plaintiff's Exhibit 2. Notice of Levy

APPENDIX B (STaturteEs)

Page’s Ohio General Code

California Code, Section 542 (a)

Internal Revenue Code

TABLE OF AUTHORITIES.

Federal Courts.

Bernstein v. Heyghen Ferres Societe (C. C. A. 2

1947), 163 Fed. (2) 246 ~ ee SO SE tag ae

Carswell Construction Co., Re, 13 Fed. (2) 667____ 11

Crowther v. Fidelity Insurance Co., 85 Fed. 41_____ 17

Domenech v. Lee, 66 Fed. (2) 31, certiorari dismissed .

I e nasinsbieds 16-17

Erie R. R. v. Tompkins, 304 U. S. 64, 84 L. Ed. 1188 17

Freeman v. Howe, 24 How. 450, 16 L. Ed. 749 ie ae

Gustin v. Sunlife Assn. (C. C. A. 6th) 154 Fed. (2)

Re ea eR TC i Recital hs Ate nee 17

Illinois v. Campbell, 329 U. Sg362, 91 L. Ed. 348... 10

Mackenzie v. United States (C. C. A. 9th, 1940), 109

EB BRR el Sit RRA ens. cee ee 11

Met-Woods Products v. Sparks Withington Corp. (D.

C. Mich. 1947), 74 Fed. Supp. 979 _..._--__.__ 17

Molton v. Missouri, 295 U. S. 97, 79 L. Ed. 1327. _. 19

New Orleans v. Harreil, 134 Fed. (2) 399 _..__...__ 11

Princess Lida v. Thompson, 305 U. S. 456, 83 L. Ed.

Sis tide das iokd eessiicishsihcdiarictasleneneckonbitase oe. ae

Pulliam v. Osborne, 17 How. 471, 15 L. Ed. 154. 19

Rankin v. Scott, 25 U. S. 177, 12 Wheaton 177 _ &@9

Rowe Bros., Re, 18 Fed. (2) 658 _.. i

Security First National Bank v. Rindge Land and

Navigution Co., 85 Fed. (2) 557, 107 A. L. R.,

1240, certiorari denied 299 U. S. 613, 300 U. S.

686 ____. 16

Spokane County v. United States, 279 U. S. 80, 73

L. Ed. 621 - ae tn Shae

Swift v. Tyson, 16 Pet. 1, 10 L. Ed. 865.-.-- =.

United States v. Acres (Mo. 1947), 73 Fed. Sup. 820

U.S. v. Acri, et al., etc., 109 Fed. itl 943, 209 Fed.

se a Ee eS Ra

United States v. Bunk vein New York, 296 U. S. 463, 80

L. Ed. 331 . NSE: AS ERE EE See LO DE

United States v. Canal Bank (C. C. Me.), 3 Story 79,

ee MR: TO: RI oe ae a

U.S. v. Collins (C. C. N. Y.), Fed. Cas. No. 14834___

U. S. v. Fisher, 2 Cranch. 358, 2 L. Ed. 304 __._____

United States v. Gilbert Associates, 345 U.S. 361___

21

United States v. Knott, 298 U.S. 544. = _10, 16

U. S. v. Martin Fireproofing Corp. (C. C. Ohio 1948),

BE es. IME: MINI Gilles noc tons pntesehsicer ceicbiooseicabanmiicanoreniontte

U. S. v. Mechanics Bank (D. C. Pa.), Fed. Cas. No.

I ai taste sales sled ccc selalic bag ee idan ines attetcotsoe

11

11

United States v. New Britain, 347 U.S. 81 ______9, 13, 21

United States v. Security Trust (1950), 340 U. S. 47,

95 L. Ed. 53 - Praca Fe

United States v. Texas, 314 U. S. 480, 86 L. Ed. 356 _-

United States v. Waddill, 323 U. S. 353, 89 L. Ed. 294

Vandenbark v. Glass Co., 311 U. S. 538, 85 L. Ed. 327

West v. American Telephone Co., 311 U. S. 538, 85 L.

Ed. 139, 132 A. L. R. 956, 19 O. Op. 77 aoe

Winston-Salem v. Powell Paving Co. (1937), 7 Fed.

Supp. 424

11

11

17

17

12

Ohio Courts.

Alsdorf v. Reed, 45 Ohio St., 653

Benedict v. Peters, 58 O. S. 527

Green v. Coit (1909), 81 Ohio St., 280

James Ward & Co. v. Howard (1861), 12 O. S., 158

Liebman v. Ashbaker, 36 O. S. 94

Malkey v. Ruggles (1923), 240.N.P. (IN. S.) 433... 13

McCombs v. Howard, 18 O. S. 422 __. Saks 4

Ohio Auxiliary Fire Alarm Co. v. Heisley (Circuit

Court of Cuyahoga crmand 1893) 7C. C. 483; 4

a | see * .

Oil Well Supply Co. v. Koen, 64 O. S. 568 . 4

Pilgrim Distributing ssaiehe v. tiasiiaies 148 O. S.

ere Oo OS Oo =)

RN nee ae oe es ae

Rempe v. Ravens, 68 O. S. 113_. : 4,6

ROCO HOMES, Re (1942), 23 O. Op. 516 ee

Shorten v. Drake (1882), 38 Ohio St. 76 13

St. John v. Parson, 54 O. App. 420 __- 4

Wright, et al. v. Franklin Bank, et al., 59 Ohio St. 80 14

Other State Courts.

Bishop v. Black (1951), 64S. E. (2) 167 ... .. ‘12

Hopkins v. Duffy (Pa.), 9 Lance. Bar 125 11

Louisiana State University v. Hart (Louisiana Su-

preme Court, 1946), 210 La. 78, 26 So. (2d) 361,

174 A. L. R. 1366 11, 14, 15

Tildestly Coal Co. v. American Fuel Corp. (1947),

130 W. Va. 720, 45 S. E. (2) 750 12

United States v. Yates (Texas Court of Civil Appeals,

1947) 204 S. W. (2d) 399 11,15

Texts and Opinions.

5 Am. Jur. p. 87, sec. 815 3, 16

5 Am. Jur. Section 825, p. 93 13

6 Am. Jur. p. 873, sec. 548 12

12 Am. Jur., p. 86, Sec. 443 16

Annotation, 83 L. Ed. 1239 - eet

7 Corpus Juris Secundum, Sections 254, 255, p. 430

et seq. . Fe a an ae aaa

ep a a eR eennmeneninae wesc «|

4 O. Jur. p. 201, sec. 158 4

4 O. Jur. p. 202, sec. 159 5

4 O. Jur. p. 248, secs. 190 to 192 3

4 O. Jur. p. 250, see. 192 5

5 O. Jur. pp. 657, 658 ONS eo ot ee ee ae

5 O. Jur. p. 663, Sec. 316 ----__. es ere a ie atat eae

11 O. Jur. p. 136, sec. 782 eee «|

14 O. Jur. p. 444, sec. 249 18

1 Op. A. G. 616 - 11

Statutes.

Deering’s California Code of Civil Procedure (1949):

Sec. 537 8

Sec. 542a 5, 8, 28

Sec. 542b 8

Internal Revenue Code:

Sec. 3670 (26 U.S. C., 1946 ed., Sec. 3670)

| 12, 16, 29

Sec. 3671 (26 U.S. C., 1946 ed., Sec. 3671) 12, 29

Sec, 3672 (26 U.S. C., 1946 ed., Sec. 3672) 12, 29

Ohio General Code:

Sec. 11819 (R. C. 2715.01)

Sec. 11837 (R. C. 2715.19) 3, 4, 8, 13,

Sec. 11858 (R. C. 2715.40)

Sec. 11859 (R. C. 2715.41)

Revised Statutes:

Sec. 3466 (31 U.S. C., 1946 ed., See. 191) 1),

Rules of Civil Procedure, Conformity Rule 64 (28

U.S.C. A.) 17,

Rule 38 of the United States Supreme Court

In the Supreme Court of the United States

OCTOBER TERM, 1954.

No. 33.

UNITED STATES OF AMERICA,

Petitioner,

Vv.

MICHAEL P. ACRI, DOLLAR SAVINGS & TRUST CO., THE

DOLLAR SAVINGS & TRUST CO. OF YOUNGSTOWN, OHIO,

GUARDIAN OF THE ESTATE OF MICHAEL P. ACRI, and

EDWARD ORAVITZ, ADMINISTRATOR OF THE ESTATE OF

JOHN ORAVEC, a.k.a., ORAVITZ, DECEASED.

BRIEF OF RESPONDENT, EDWARD ORAVITZ,

ADMINISTRATOR OF THE ESTATE OF JOHN

ORAVITZ, DECEASED.

The Circuit Court of Appeals for the Sixth Circuit

affirmed a judgment of the U. S. District Court for the

Northern District of Ohio, Eastern Division, declaring an

attachment lien, duly perfected in a State court action for

wrongful death and resulting in judgment therein, to be

superior to a lien for income taxes filed subsequent to the

attachment, the District Court following the Ohio law

that such attachment is an “execution in advance” under

the Ohio statutes and superior to liens subsequently filed.

STATEMENT OF FACTS.

On February 17, 1947, Michael P. Acri shot and killed

John Oravec while the latter was partaking of refresh-

ments at the Acri Tavern. Found guilty of murder, he

was sentenced to a life term at the Ohio State Penitentiary.

2

Surviving are Oravec’s parents, of whom he was the sole

support.

Acri and his wife were possessed of considerable prop-

erty; but the most liquid assets were cash savings and

Government bonds contained in a safe-deposit box at the

vauit of the Dollar Savings and Trust Company in the

name of Acri, discovered by Mr. John Willo, Counsel for

the administrator of the Oravee estate.

On August 6th, 1947, suit for wrongful death was filed

in the Court of Common Pleas of Mahoning County, and

on the same day an attachment of the funds and sccurities

at the Dollar Savings and Trust Co. was issued and service

had on garnishee.

On January 19, 1949, on trial before Judge Doyle,

judgment in the sum of $18,500 was rendered in favor

of the administrato~ suing on behalf of Oravec’s parents.

The journal entry reads in part:

“The Court further finds that by an attachment

proceeding duly commenced in this action on the 6th

day of August, 1947, the plaintiff acquired a valid lien

upon the monies, bonds, credits and other property

belonging to the defendant, particularly, the monies,

bonds and valuables contained in No. 710 box at the

safety deposit vault of the Dollar Savings and Trust

Co. of Youngstown, Ohio: that said lien is a valid and

subsisting lien upon said property, as of said 6th day

of August, 1947. and for the full payment and satis-

faction of the judgment entered herein.”’

Subsequent to the attachment for wrongful death on

August 6th, 1947, the Commissioner for Internal Revenue

had assessed taxes against Acri for the years 1942 to 1946.

The assessment list covering these taxes was received by

the Collector of Internal Revenue, and Demand for Pay-

ment was mailed to Acri on November 11, 1947.

3

On November 21, 1947, a tax lien was filed in the

office of Recorder of Mahoning County, Ohio, and on the

same date notice of tax lien and notice of levy were served

upon The Dollar Savings & Trust Company.

On June 14, 1948, The Dollar Savings & Trust Com-

pany was appcinted guardian of the estate of Michael P.

Acri, who had been incarcerated upon his conviction for

the murder of Oravec.

ARGUMENT.

Whether the lien of an attaching creditor under the

provisions of the Ohio Statutes has priority over Federal

tax liens assessed, levied and recorded subsequeatly to

the date of the attachment lien.

NATURE OF ATTACHMENT LIEN UNDER OHIO

STATUTES.

The nature of an attachment has been stated to be a

“direct apprepriation by authority of law of specific prop-

erty of the debtor, for the purpose of satisfying the de-

mand, and the lien thereby created is substantial and

enduring, as much as a mortgage or pledge.” 5 Am. Jur.

p. 87, Sec. 815.

The Ohio General Code, section 11837 (R. C.

2715.19) provides:

“An order of attachment shall bind the property at-

tached from the time of service. A garnishee shall be

liable to the plaintiff in attachment for all property of

the defendant in his hands, and money and credits

due from him to the defendant, from the time he is

served with the written notice.”

The absoluteness of an attachment lien under the

Ohio statute, as distinguished from being a mere inchoate

4

right to lien or lis pendens, is stated by the Ohio Supreme

Court in Rempe v. Ravens, 68 O. S. 113 at 128:

“The writ of attachment or garnishment is in the

nature of an ‘execution in advance’ and the office and

purpose of such writ is to hold and bind the property

seized until final judgment in the attachment proceed-

ing, and if upon final hearing in the attachment suit

judgment is rendered in favor of the pl: ..uff, the

effect of such judgment is to give plaintiff the right

to enforce any lien he shall have acquired by his

attachment or garnishment against whatever interest

_ «ue defendar:t may have in the prope: ty attached or

garnished.”’

The opinion of Justice Minton in United States v.

Security Trust (1956), 340 U.S. 47, 95 L. Ed. 53, founded

on the California statute and the decisions construing it,

does not harmonize with the laws of Ohio. There is no

decision in Ohio which holds an attachment lien to be only

a contingent or inchoate right, a mere ..s pendens, which

gives it no priority over a subsequent lien. An attachment

in Ohio is considered a proceeding in rem, the lien whereof

prevails over subsequent liens unless released or the main

action dismissed. Pilgrim Distributing Corp. v. Gals-

worthy, 148 O. S. 567; St. John v. Parson, 54 O. App. 420;

Oil Well Supply Co. v. Koen, 64 O. S. 568. “The attaching

creditor acquires from the levy a right to have the prop-

erty held by the attaching officer, and under subsequent

order, a right to have the property sold.” 4 O. Jur. p. 201,

sec. 158.

When an order of attachment is issued and executed

by seizure, the levy gives rise to a lien. The General Code

of Ohio, Sec. 11837 (R. C. 2715.19), specifically provides

that “an order «f attachment shall bind the property at-

tached from the time of service.” Liebman v. Ashbaker,

36 O. S. 94; McCombs v. Howard, 18 O. S. 422. “The lien

9]

of the attacliment does not depend upon the sufficiency

of the affidavit, but upon the taking of the property under

the writ.” Benedict v. Peters, 58 O. S. 527 at 536; 4 O. Jur.

p. 202, sec. 159.

The procedure of determining priorities in attach-—

ment cases is provided by Sec. 11858, G. C. (R. C.

2715.40) of Ohio. A trial of the claimant's right to the

property can be had only at the instance of stich claimant.

4 QO. Jur. p. 250, sec. 192. Section 11859 G. C. (R. C.

2715.41) of Ohio further provides:

“When several attachments are executed on the same

property, or the same person is made garnishee by

several parties, on motion of any of the plaintiffs the

court may order a reference to ascertain and report

the amounts and priorities of the several attach-

ments.”

NO INCHOACY OF LIEN UNDER OHIO STATUTES.

Counsel for the Government attempt in their brief

to foist on this honorable court the wrong concept that

an attachment in Onio creates no lien on the property at-

tached, and is merely a caveat or lis pendens as regarded

by the courts of California under the California statute

and followed by Mr. Justice Minton in the Security Trust

case, 340 U.S., 47. The Government in its brief states:

“It is clear that an attachment under Ohio law

does not give to plaintiff a choate lien—that it is

a mere lis pendens notice that a right to perfect a lien

exists.”

We wish here to emphasize that this statement of the

Ohio law is wholly inaccurate, and that there is no such

thing in that state as an inchoate attachment lien; nor

is there any similarity in the decisions of Ohio and

California as to the nature of such lien under the statutes

of these respective states.

6

Equally so is the smear on the state judge on page 7

of the Government’s brief—a man known for his fairness

and integrity—that the damages awarded for the wrong-

ful death of the young man killed by Acri were speculative

and conjectural.

An attachment lien validly obtained under the Ohio

law creates a property right which cannot be displaced

by subsequent liens. A levy in that state under an order

of attachment or garnishment confers upon the attaching

creditor a lien with respect to the property attached which

will prevail over all subsequent liens. The rule prevailing

in Ohio is stated in the 1954 edition of Ohio Jurisprudence,

Vol. 5, p. 663, Sec. 316:

“Contests between attachment, and other rights,

titles, or encumbrances, are determined as a general

rule by priority in time by applying the maxim ‘q ti

prior est tempore potior est jure.’ The priority of an

attachment lien depends nct when the order of attach-

ment is made but at the time of service * * *. It is

a general rule that the attachment lien is superior

to all subsequent rights, titles, and encumbrances.”

(Emphasis added.)

It is on this principle that the district court judge,

in the case at bar, rested his opinion (109 Fed. Supp. 943),

which was affirmed by the Circuit Court of Appeals (209

Fed. (2) 258).

From the earliest time, as well as currently. the pro-

visional remedy of attachment is regarded by the courts

of Ohio in the nature of an ‘execution in advance.” James

Ward & Co. v. Howard (1861), 12 O S., 158; Rempe v.

Ravens (1903), 68 Ohio St., 113, at 128; Green v. Coit

(1909), 81 Ohio St., 280, at 285. In the latter case the

Supreme Court of Ohio stated:

“Attachment is an extraordinary remedy; it is in

the nature of an execution before judgment; by

7

means of it the rights of a party may be determined

without service of process upon him and even with-

out his knowledge; it is intended to create a lien on

the property of the defendant, authorized only by

Statute.” (Emphasis -dded.)

As to the nature of the right acquired by an attaching

creditor under the statutes of Ohio, the text in Ohio Juris-

prudence, 1954 edition, Vol. °, pp. 657, 658, further states:

“Garnishment renders the garnishee ‘liable’ to

the attachment plaintiff. By service of garnishee

process the attachment plaintiff acquires a right in

respect to property or credits of the defendant which

are in the hands of the garnishee. This right is gen-

erally regarded as in the nature of a lien upon the

title or right of action of the defendant. Garnishment

holds the garnishee to a personal liability and gives

the attaching creditor a lien on a debt so far as to

restrain the garnishee from paying it over to the

original debtor. * * * A garnishing creditor acquires

such an interest in the property subject to the gar-

nishment that where such is the subject ot litigation

in another court the creditor is entitled to intervene

to protect his interest. The lien or right which the

attaching creditor acquires by garnishment extends

to all property of the defendant in the hands of the

garnishee and to money and credits due from him to

the defendant.”

It has been further held that the legal effect of a

garnishment order in an attachment proceedings, where

judgment is rendered for the plaintiff, is to transfer the

indebtedness of the garnishee to the plaintiff in the attach-

ment so far as the same may be necessary to satisfy his

judgment, with the right to foreclose mortgages seized

under the garnishment order, in the same manner as if

acquired by an assignmen‘. Alsdorf v. Reed, 45 Ohio St..

653.

8

INAPPLICABILITY OF CALIFORNIA LAW.

The California attachment statute differs materially

from the one in Ohio and the decisions interpreting the

former have no application to the latter. The California

Code of Civil Procedure, section 937, subjects the prop-

erty attached “as security for the satisfaction of any judg-

ment that may be recovered,” whereas the Ohio statute,

G. C. 11837 (R. C. 2715.19), provides that “an order of

ttachment shall bind the property attached from the time

of service.” No lien is expressly »rovided by the Cali-

fornia statute when the property attached is personal

property, although a lien is Provided hy section 542a

when the attachment is on real property, upon the re-

cording of a copy cf the writ together with a description

of the property attached. As to attachments on personal

Property, section 542b provides:

“An attachment or garnishme: t of personal property

* * * shall cease to be of any force and effect and the

Property levied on be released from the attachment or

garnishment at the expiration of three years after the

issuance of the writ of attachment under which said

levy was made.”

Construing the California statute in an attachment on

real property, in the case of United States vy. Securities

Trust and Savings Bank, ete., 340 U.S. 47, 95 L. Ed. 53,

Mr. Justice Minton Stated:

“The attachment lien gives the attachment creditor no

right to proceed against the property unless he gets

judgment within three years or within such extension

as the statute provides. Numerous contingencies

might arise that would prevent the attachment lien

from ever becoming perfected by a judgment awarded

9

Inasmuch as the Government depends upon the de-

cision of the above cited California case, we believe it will

aid the Court for us, at this time, to quote further from

Mr. Justice Minton’s decision:

“The effect of a lien in relation to a provision of

federal law for the collection of debts owing the

United States is always a federal question. Hence,

although a state court's classification of a lien as spe-

cific and perfected is entitled to weight, it is subject

to re-examination by this Court. On the other hand,

if the state court itself describes the lien as inchoate,

this classification is ‘practically conclusive.’ Illinois

vs. Campbell, 329 U. S. 362, 371. The Supreme Court

of California has so described its attachment lien in

the case of Puissequr vs. Yarbrough, 29 Calif. 2d 409,

412, by stating that ‘the attaching creditor obtains

only a potential right or a contingent lien.’ Examina-

tion of the California statute shows that the above

is an apt description. * * *”

PRIORITY OF ATTACHMENT LIEN.

The rule that a lien prior in time is prior in right has

been consistently followed by this honorable court since

the time of the immortal Marshall. In Rankin v. Scott, 25

U. S. 177, 12 Wheaton 177 at 179, Chief Justice Marshall

stated:

“The principle is believed to be universal, that a

prior lien gives a prior claim, which is entitled to prior

satisfaction out of the subject it binds, unless the lien

be intrinsically defective, or be displaced by some act

of the party holding it, which shall postpone him in

a court of law or equity to a subsequent claimant.”

Mr. Justice Minton, following this pronouncement in the

recent case of United States v. New Britain, 347 U.S. 81,

said:

10

“This principle is widely accepted and applied, in

the absence of legislation to the contrary. 33 American

Jurisprudence, Liens, Sec. 33; 53 C. J. S., Liens, Sec.

106. We think that Congress had this cardinal rule in

mind when it enacted Sec. 3670, a schedule of priority

not being set forth therein. Thus, the priority of each

statutory lien contested here must depend on the time

it attached to the property in question and became

choate.”’

The principle applies equally to the attachment plain-

tiff here, who perfected his lien on specific property long

before the Government knew it had any claim against the

owner of the attached property, and long before it had

commenced proceedings to assert its lien under the provi-

sions of the Internal Revenue Act.

The cases cited by opposing counsel on priority of

“debts due the United States’ have no application. Such

priority must rest on the debtor’s insolvency and must

relate to property belonging to his estate. “If, therefore,

before the preference has accrued to the United States the

debtor has made a bon fide conveyance of his estat~ to a

third person, or has mortgaged the same to secure a debt,

or if his property has been seized under a fi. fa., the prop-

erty is divested out of the debtor and cannot be made

liable to the United States.” United States v. Knott, 298

U. S., 544, at 549, Opinion by Brandeis, J.

In Illinois v. Campbell, 329 U. S. 362, 91 L. Ed. 348,

this honorable court held that it would follow the decisions

of state courts on the question of inchoacy of lien, but

intimated that it would not accord priority to a claim of

the United States for taxes over a lien asserted against the

assets of an insolvent debtor which is definite as respects

the identity of the lienor, the amount of the lien, and the

property to which it attaches. All these prerequisites were

present as far as the attachment lien here is concerned.

1]

The holder of a mechanic's lien was held in the Tayler-

craft case, U. S. v. Martin Fireproofing Corp. (C. C. Ohio

1948), 168 Fed (2) 808, to have priority over a subse-

quent income tax lien. See also Re Carswell Construction

Co., 13 Fed. (2) 667. Other decisions ae o1 similar effect

and similarly give an attachment lien, perfected prior to

the filing of an income tax lien, priority over the latter;

Louisiana State University v. Hart (1946), 210 La. 78, 174

A. L. R. 1366; United States v. Yates (Tex. 1947), 204

S. W. (2) 399. These cases, distinguishing the Mackenzie

case (C. C. 9, Cal.) 109 Fed. (2) 540, proceed upon the

theory that the nature of the rights flowing from an

attachment must be determined by the law of the state.

Spokane County v. United States, 279 U.S. 80, 73 L. Ed.

621: United States v. Waddill, 323 U. S. 353, 89 L. Ed. 294;

New Orleans v. Harrell, 134 Fed. (2) 399; United States v.

Texas, 314 U. S. 480, 86 L. Ed. 356, cited in Louisiana

University case, supra. The same rule was applied to liens

under Sec. 3466 (U.S.C. Sec. 191, Title 31) for “debts due

to the United States.” United States v. Canal Bank (C. C.

Me.), 3 Story 79, Fed. Cas. No. 14,715; U. S. v. Collins

(C. C. N. Y.), Fed. Cas. No. 14,834; U. S. v. Mechanics

Bank (D.C. Pa.), Fed. Cas. No. 15,756; Hopkins vs. Duffy

(Pa.), 9 Lane. Bar 125; United States v. Acres (Mo. 1947),

73 Fed. Sup. 820.

It was also ruled by the Attorney General (1823), 1

Op. A. G. 616, that the priority of the United States cannot

reach back over any valid lien, whether it be general or

specific.

In the instant case there is no lack of specificity in the

lien perfected by the attachment; the moneys and se-

curities have been specifically levied on and the attach-

ment lien affected as provided by statute, before the Gov-

ernment has taken any steps to assert its lien.

12

PRIORITY OF “DEBT DU® UNITED STATES.”

Section 3466 of the Revised Statutes, 31 U. S. C. A.

sec. 191, provides that all debts owed to the government

shall have a prior right to being paid first. This statute is

wholly inapplicable, because at the time we obtained our

,evy under the attachment there vras no debt due the

United States for income taxes, nor lien effected therefor

under the provisions of the Internal Revenue Act, sections

3670, 3671 and 3672, 26 U.S.C. A. No priority or lien for

the tax could be claimed until the collector of internal

revenue has received the assessment list, made demand for

payment upon the taxpayer, and filed the notice of lien at

the office of the county recorder. In our case all of this

statutory procedure was subsequent to the attachment and

therefore no debt or lien existed in favor of the govern-

ment at the time our attachment was perfected.

Furthermore, the priority provided by section 3466

applies only to insolvency cases. It has been held that this

section does not give priority to a tax claim, or creates a

lien in favor of the Government, in the absence of insol-

vency of the taxpayer. Winston-Salem v. Powell Paving

Co. (1937), 7 Fed. Supp. 424; Bishop v. Black (1951), 64

S. E. (2) 167; Re Rowe Bros., 18 Fed. (2) 658; Tidestly

Coal Co. v. American Fuel Corp. (1947), 130 W. Va. 720,

45 S. E. (2) 750; U. S. v. Fisher, 2 Cranch. 358, 2 L. Ed.

304, opinion by Marshall, C.J. See also 6 Am. Jur. p. 873,

sec. 548, and cases in Annotation 83-L. Ed. 1239, where

liens obtained by execution levies were he.d superior to

the claim of the United States for income taxes. In Ohio,

as previously shown, an attachment is treated as an execu-

tion in advance.

13

OPERATIVE EFFECT OF ATTACHMENT LIEN.

It is well recognized in the great majority of jurisdic-

tions that an attachment properly obtained either by seiz-

ure or garnishment proceedings creates a specific lien

which operates on the property concerned from the date

of service of the writ of attachment. 7 Corpus Juris Secun-

dum, Sections 254, 255, p. 430 et seg.; 5 American Juris-

prudence, Section 825, p. 93. In Ohio this rule clearly pre-

vails by force of the provisions of Ohio General Code

Section 11837 (R. C. 2715.19) that “an order of attach-

ment shall bind the property attached from the time of

service.”

This statutory rule was recognized and reiterated in

Ohio Auxiliary Fire Alarm Co. v. Heisley (Circuit Court

of Cuyahoga County, 1893) 7 C. C. 483; 4 C. D. 691,

wherein the first syllabus provides in part:

“The service of a writ of garnishment upon a

party claimed to be indebted to the defendant binds in

his hands the property he may have belonging to the

defendant at the time he is served with the writ.”

And in Malkey v. Ruggles (1923), 24.0. N. P. (N.5.)

433, 434, it was stated that “under the provisions of Gen-

eral Code an attachment is a lien from the time of seizure.”

The Supreme Court of Ohio at a very early date

announced the rule that contests involving priorities be-

tween attachment and other lien claims were to be deter-

mined by application of the maxim, “qui prior est tempore

potior est jure.” Shorten v. Drake (1882), 38 Ohio St. 76.

It was followed by Justice Minton in the New Britain case,

347 U. S. 81. This priority of time rule has been applied

in holding an attachment lien to be superior to a subse-

quently issued execution. Malkey v. Ruggles, 24 O. N. P.

(N. S.), 433. It has also been held that an attachment

14

lien is superior to an unrecorded mortgage. Wright, et al

v. Franklin Bank, et al., 59 Ohio St. 80.

From the foregoing it appears indisputable that the

attachment lien of the administrator is superior to the gen-

eral lien of the United States for income taxes in the

instant matter, since the attachment lien was obtained

some thre months before the Collector of Internal Reve-

nue either received the assessment lists, demandec pay-

ment of delinquent taxes from Acri, or filed the applicable

Notice of Tax Lien. This concept has been applied in the

following decisions which concern the precise question

presented herein.

In the case of Louisiane State University vs. Hart,

(Louisiana Supreme Court, 1946), 210 La. 78, 26 So. (2d)

361, 174 A. L. R. 1366, the University brought suit for

$75,000 on an alleged overpayment for furniture pur-

chased from one Smith. The suit was filed on July 25,

1939, and a writ of attachment was issued the same day.

On February 13, 1940. the United States Commis-

sioner assessed income taxes, penalties and interest in the

amount of some $305,000 against Smith for the years 1936,

1937 and 1938. Qn February 15, 1940, the Coilector of

Internal Revenue received the Commissioner’s assessment

list and on the following day filed proper notices of tax

liens. Subsequent to this time the University recovered

judgment in the amount of $25,000 against Smith.

In the suit which ensued on the question of the pri-

ority of the University’s lien over that of the Government's

for income taxes, the Cour: held as follows in the fourth

syllabus of the A. L. R. report:

“A federal tax lien for inc ome taxes and penalties

arising between the date of attachment of the tax

debtor's property and the date of judgment, which

maintained it, is subordinate to the lien resulting from

15

the attachment. and the attaching creditor is to be

preferred to the Uniied States in the disposition of the

proceeds of the property seized under the writ of

attachment. —

In the case of United States vr. Yates (Texas Court |

Civil Appeals, 1947) 204 S. W. (2d) 399. the plaintiff.

Yates, brought an action to recover judgment against one

Russell, for amounts due for rent of equipment and ber

on a construction job. The United States intervened.

claiming prior liens on the basis of Russells delinquent

taxes. The facts reported disclosed that Yates pertected

an attachment lien on May 15, 1944, while the Govern-

ment did not file its Notice of Tax Lien until May 26, 1944.

The Court, in affirming judgment for Yates on his attach-

ment lien, held in the second syllabus:

“A specific attachment lien, levied on airport con-

struction contractor's property before date on which

Federal Government fixed its tax lien on proceeds of

sale of attached property, was entitled to priority over

government's lien, though attaching creditor's claims

were not reduced to judgment.”

In this regard it will be noted that in Louisiana Suite

University v. Hart, 210 La. 78, 26 So. (2d) 361, 174 A. L.

R. 1366, supra, the Court at page 1370, A. L. R. report,

said:

“The United States relies on the case of Mackenzie v.

United States, 109 F. (2d) 540, but a reference to that

case shows that the lien of the government arose prior

to the issuance of the attachment, while in this case it

arose subsequent to the attachment.”

And in United States v. Yates, 204 S. W. (2d) 399,

supra, the same distinguishing factor is both apparent and

was noted by the court.

16

STATUTE CANNOT BE CONSTRUED TO DISPLACE

VALID SUBSISTING LIENS.

We have shown that an attachment lien is a property

right, in the nature of a mortgage or pledge (5 Am. Jur.,

p. 87, Sec. 815) and so regarded by the Ohio decisions.

Congress never intended to displace valid prior liens by

liens for income taxes subsequently obtained. The pro-

vision of Section 3670 of the Internal Revenue Code, that

the indebtedness for an income tax “shall be a lien in

favor of the United States upon all property and rights to

property belonging to such person,” could under no cir-

cumstances be construed as to embrace property which

had been legally aliened or encumbered by the taxpayer,

and no longer belonging to him except subject to the

vested rights acquired therein by bona fide lienholders.

United States v. Knott, 298 U. S., 544, at 549. To hold

otherwise would be violative of the due process clause and

equal protection of the laws as guaranteed by the Fifth

and Fourteenth Amendments of the United States Con-

stitution.

Accordingly it is generally recognized, that an act of

the legislature which postpones an existing valid lien and

makes a subsequently created lien superior thereto is a

law impairing vested property rights. See 12 Am. Jur.,

p. 86, Sec. 443.

Thus it was held that the right of creditors holding

secured obligations to retain their lien until the obligation

is paid is a substantive property right, and depriving

creditors of such right is violative of those constitutional

guarantees. Security First National Bank v. Rindge Land

and Navigation Co., 85 Fed. (2) 557, 107 A. L. R.. 1240,

certiorari denied 299 U. S. 613, 300 U. S. 686. Similarly,

a statute which makes assessments for workmen’s com-

pensation a lien superior to the lien of a mortgage. Dome-

17

nech v. Lee, 66 Fed. (2) 31, certiorari dismissed 290 U. S.

708; or a statute giving mining materialmen a lien supe-

rior to a prior mortgage lien. Crowther v. Fidelity Insur-

ance Cu., 85 Fed. 41. And as stated in 16 C. J. S., p. 87,

Sec. 815:

“Lien rights constitute property rights of which

the lienor cannot be deprived without due process of

law. Hence, any newly created lien, if given prefer-

ence over other liens vested or in existence, con-

stitutes a violation of the due process guaranty.”

FEDERAL COURTS FOLLOW STATE LAW IN

ATTACHMENT CASES.

It has been repeatedly held that Federal courts will

follow decisions of state courts on questions of general

common law or commercial law: Erie R. R. v. Tompkins,

304 U.S. 64, 84 L. Ed. 1188, overruling Swift v. Tyson, +3

Pet. 1, 10 L. Ed. 865; that they will follow decisions of

intermediate appellate courts which the Supreme Court

refused to review: West v. American Telephone Co., 311

U. S. 538, 85 L. Ed. 139, 132 A. L. R. 956, 19 O. Op. 77:

that they must apply state law as of the time judgment is

rendered; Vandenbark v. Glass Co., 311 U. S. 538, 85 L.

Ed. 327; that in controversies involving liens the Federal

court enforces the state law. Re ROCO HOMES (1942) 23

O. Op. 516; Gustin v. Sunlife Assn. (C.C. A. 6th) 154 Fed.

(2) 921; 11 O. Jur., p. 136, sec. 782 and supplement.

The rule that Federal courts follow the state law in

attachment and garnishment proceedings was followed in

the recent cases of Rernstein v. Heyghen Ferres Societe

(C. C. A. 2 1947), 163 Fed. (2) 246: Met-Woods Products

v. Sparks-Withington Corp. (D.C. Mich. 1947), 74 Fed.

Supp. 979. Rule 64, U.S.C. A. Title 28, replacing former

section 726, specifically requires Federal courts to adopt

18

the state law in attachment and garnishment cases, “in

the manner provided by the law of the state in which the

district court is held.”

PRE-EMPTION OF JURISDICTION BY STATE COURT.

There is a rule of pre-emption governing cases in

which the State and Federal Courts have concurrent juris-

diction, stated ir 14 O. Jur. p. 444, sec. 249, and supported

by numerous authorities:

“The general rule that the authority of the court first

acquiring jurisaiction, the parties being the same,

must prevail applies in the case of Federal and state

courts of concurrent jurisdiction, so that whichever

court first obtains jurisdiction may retain it for the

purpose of deciding every question in the cause. The

Federal judiciary has no control over questions, when

once the state courts have acquired jurisdiction, until

the state has finally exhausted its judicial power over

them by a final decision in its highest tribunal.”

As to property in legal custody, it is there further

stated, sec. 251:

“The general rule that when a court has once taken

into its jurisdiction a specific thing, no court, except

one havirg a supervisory control or superior jurisdic-

tion in the premises, has the right to interfere with

and change that possession applies in proceedings

where such jurisdiction is first acquired in either a

Federal court or a state court. Property in possession

of one court is not liable to seizure on process from

another court. * * * Where one of the courts has thus

secured possession or dominion of specific property,

the suit in the coordinate jurisdiction to affect the

same property should be stayed until the proceedings

in the court which first obtained jurisdiction are con-

cluded or until ample time for their termination has

elapsed.”

19

See Molton v. Missouri, 295 U.S. 97, 79 L. Ed. 1327

(State action prevailing over seizure for Federal taxes) ;

Princess Lida v. Thompson, 305 U. S. 456, 83 L. Ed. 285

(Priority of jurisdiction assumed by state court); United

States v. Bank of New York, 296 U. S. 463, 80 L. Ed. 331

(Jurisdiction assumed by state court in seizure of foreign

property); Pulliam v. Osborne, 17 How. 471, 15 L. Ed. 154

(Priority of execution of state court judgment) ; Freeman

v. Howe, 24 How. 450, 16 L. Ed. 749 (Priority of seizure

under attachment).

Relying on these authorities we contend that the

Federal Court has no jurisdiction over the controversy

after jurisdiction assumed by the state court. The proper

course is to stay or dismiss the action in the Federal Court

and to set up the government’s rights by intervention in

the state action.

CONCLUSION.

The undisputed facts developed in this case clearly

establish that by virtue of the defendant administrator’s

diligence in attempting to protect the rights of the bene-

ficiaries of his decedent’s estate——he has succeeded in

establishing a valid lien under the law of the State of

Ohio to the extent of $18,500, which is prior in time not

only to the lien of the United States provided for under the

Internal Revenue Code, but prior to any assessment and

demand made against Acri for his delinquent income taxes.

The administrator’s lien, as thus established, being prior

in time, is therefore prior in right under the established

law.

The Government is relying upon the opinion of Mr.

Justice Minton in United States v. Security Trust, supra.

Sufficeth to say that there was no appearance or briefs filed

20

on behalf of the defense in that action, the proceedings

there before the Supreme Court were absolutely ex parte.

The lien under the Ohio law is absolute and not con-

tingent upon being enforced within three years as provided

by the California Statute. To apply the California law in

the instant case would amount to a repeal and annulment,

by judicial fiat, of the Ohio statutes relating to priorities of

lien in attachment cases, contrary to the well established

principles by the decisions of both the Supreme Courts of

the United States and the Stute of Ohio. (See Conformity

Rule 64, Rules of Civil Procedure, U.S C. A. Title 28.)

In the words of the District Court Judge:

“Under Ohio law, Oravitz acquired a valid lien of

the requisite specificity on Acri’s property as of the

date of the commencement of the attachment proceed-

ing. Ohio General Code Section 11837 (RC 2715.19).

Illinois v. Campbell, supra.

The subsequent receipt of the assessment list by

the Collector and the filing of an income tax lien by

him accords the Government’s lien only second place.

26 U. S. C. Section 3671.

The case of U. S. v. Security Trust and Savings

Bank, supra, relied upon the Government, dealt with

a California statute giving no such effectivenness to

attachment proceedings and liens as does the Ohio

statute.

The Ohio courts have characterized the attach-

ment lien under Ohio law as an ‘execution in ad-

vance, Rempe & Son v. Ravens, 68 O. S. 113; Green

v. Coit, 81 O. S. 280, and accord it equal standing with

an execution lien. Shorten v. Drake, 38 O.S. 76. Thus

they treat the attachment lien as perfected at the time

the attachment is made.

In the interest of orderly administration of jus-

tice in matters of concurrent jurisdiction, this Court

should respect the state court’s characterization of the

attachment lien under Ohio law.”

21

This case differs from the case of United States v.

Gilbert Associates, 345 U. S. 361, where a specific federal

tax lien was given priority over a general town lien for

taxes in the distribution of an insolvent estate: or the

Security Trust case, 340 U. S. 47, where no lien existed

under the California law in an attachment of personal

property; or the New Britain case, 347 U. S. 81, where the

federal lien was perfected before the statutory lien of a

city, the Supreme Court in the latter case basing its deci-

sion on the principle of “‘first in time, first in right.”

Since justice must be equal to all, it would seem that

the principle should be equally applied to the attachment

lien here, perfected and lodged against specific property

long before any steps have been taken by the government

to assert its claim. The very language of Mr. Justice

Minton in the New Britain case, supra, that “a prior lien

gives a prior claim which is entitled to prior satisfaction

out of the subject it binds,” permits no other conclusion.

He further observed that “Congress had this cardinal rule

in mind when it enacted Section 3670." The Government

had neither a debt nor a lien at the time the property was

attached.

Without discussing the particularities of the collateral

appeals here stategically combined, we confine ourselves

strictly and solely te the issues and facts as developed in

our case, the Acri case, and accordingly most earnestly

urge under the authorities cited, that—

1. An attachment lien validly obtained under

the Ohio statutes on specific property creates an ab-

solute right in and to the attached property, as dis-

tinguished from a mere inchoate right, which cannot

be displaced by subsequent liens.

22

2. Such lien, duly obtained before the Govern-

ment has taken any sieps to assert its lien for income

taxes, will prevail over the Government lien under

the rule “first in time is first in right.”

3. An attachment of securities and money con-

tained in a certain safe deposit box in a bank and the

garnishment of the debtor’s savings at such bank is

a levy on specific property and gives the attaching

creditor a specific lien which will prevail over a sub-

sequent general lien.

4. Such levy made by the sheriff and due return

made by him thereof places the attached property

in custodia legis until the amount of the judgment

rendered in the action shall have been satisfied.

5. When such proceeding has been commenced

in a state court, subsequent creditors claiming liens

must assert their rights in the state court action under

the rule of preemption of jurisdiction, including the

claim of the Government for priority of lien.

6. Federal courts will follow state statutes and

decisions in matters of attachment and garnishment.

7. A statute cannot be construed to give subse-

quent liens priority over valid subsisting liens; other-

wise the constitutional guarantees of due process and

equal protection of the laws would be violated.

Respectfully submitted,

Joun A. WILLO,

Francis B. KAVANAGH,

ISRAEL FREEMAN,

Attorneys for the Administrator,

Edward Oravitz, Respondent.

23

APPENDIX A (ADDITIONAL PORTIONS OF RECORD).

DEFENDANT'S EXHIBIT A.

Judgment of Common Pleas Court in the

Case of Oravitz v. Acri.

No. 124,893.

THE COURT OF COMMON PLEAS

JHE STATE OF On10, CouNTY OF MAHONING, SS.

EDWARD ORAVITZ,

administrator of the estate of John Oravec,

a.k.a. Oravitz, deceased,

(Plaintiff },

VS.

MICHAEL ACRI,

(Defendant ).

JOURNAL ENTRY.

This day this cause came on for trial, and a jury being

orally waived in open court by the plaintiff and the de-

fendant, was submitted upon the petition of the plaintiff,

the answer of the defendant, evidence and arguments of

counsel.

On consideration thereof, and the Court being fully

advised in the premises, finds on the issue joined for the

plaintiff, and that by reason of the premises, the plaintiff

is entitled to recover damages from the defendant.

The Court further finds that the assault by the de-

fendant, upon the late John Oravec, which resulted in the

death of John Oravec, as alleged in the petition, was with-

out provocation and justification, and was wrongful, mali-

cious and unlawful.

And thereupon, the Court assesses said damages at

Eighteen Thousand Five Hundred ($18,500.00) Dollars.

24

Ir Is THEREFORE CONSIDERED by the Court, that the

plaintiff, Edward Oravitz, administrator of the estate of

John Oravec, a.k.a. Oravitz, deceased, recover from the

defendant, Michaei Acri, the said sum of Eighteen Thou-

sand Five Hundred ($18,500.(0) Dollars, together with

his costs.

THE Court FurtTHER Frnps that by an attachment

proceeding duly commenced in this action on the 6th day .

of August, 1947, the plaintiff acquired a valid lien upon

the monies, bonds, credits and other property belonging

to the defendant, particularly, the monies, bonds and

valuables contained in No. 710 box at the safety deposit

vault of the Dollar Savings and Trust Company of Youngs-

town, Ohio; that said lien is a valid and subsisting lien

upon said property, as of said 6th day of August, 1947 and

for the full payment and satisfaction of the judgment

entered herein.

H. B. Doyte,

Judge.

APPROVED By:

JoHN A. WILLO,

Attorney for Plaintiff,

W. P. Barnum,

Attorney for Defendant.

25

PLAINTIFF'S EXHIBIT 1.

Notice of Tax Lien Under Internal Revenue Laws.

No. 5619.

Unitep States INTERNAL REVENUE.

18TH District or Ouro.

November 21, 1947.

Pursuant to the provisions of Sections 3670, 3671, and

3672 of the Internal Revenue Code of the United States,

notice is hereby given that there have been assessed under

the Internal Revenue laws of the United States against the

following-named taxnayer, taxes (including interest and

penalties) which after demand for payment thereof remain

unpaid, and that by virtue of the above-mentioned statutes

the amount (or amounts) of said taxes, together with

penalties, interest, and costs that may accrue in addition

thereto, is (or are) a lien (or liens) in favor of the United

States upon all property and rights to property belonging

to said taxpayer, to wit:

Name of taxpayer Murcnaet Acrit.

Residence or place of business—1341 Oak Street.

Youngstown, Ohio.

Nature oF Tax ‘YEAR OR TAXABLE DATE ASSESSMENT AMOUNT OF

Periop Enpdep List RECEIVED ASSESSMENT

Income 1944 Wash Addl. 79,551.80 79,551.80

TOTAL 79,551.80

Tuos. M. Carey. Collector.

By: /s/ W. J. CHaMPIon,

Assistant Collector.

26

CERTIFICATE OF OFFICER AUTHORIZED By Law

To TAKE ACKNOWLEDGMENTS.

STATE OF OHIO,

County or CUYAHOGA, SS:

Before me, this day personally appeared Theos. M.

Carey, Collector, by W. J. Champion, to me well known,

and well known by me to be the person described in and

who executed the foregoing instrument as Assistant Col-

lector of Internal Revenue for the 18th Collection District

of Ohio; and he acknowledged before me that he executed

the same as such Assistant Collector of Internal Revenue,

and for the purpose herein expressed.

Witness my hand and official seal at Cleveland, in

the County and State aforesaid, this 21 day of November,

1947.

/s/ Ernet Gavan,

Ethel Gavan, Notary Public,

My Commission expires 1-16-50.

To Recorder, Mahoning County,

Youngstown, Ohio.

[Seat]

27

PLAINTIFF’S EXHIBIT 2.

Notice of Levy.

Served on: R. W. Dickey, Comptroller

Date Served: November 21, 1947

Time Served: 2.35 p. m.

Served by: /s/ Michael T. Walsh, Dep. Coll.

/s/ Arthur M. Mellott, Spec. Agent.

UnitTEpD STATES OF AMERICA,

18tH CoLLeEcTIoN DistTrRIcT,

STATE OF OHIO.

To The Dollar Savings & Trust Co.

At Youngstown, Ohio.

You are hereby notified that there is now due, owing.

and unpaid from Michael Acri to the United States of

America the sum of Seventy nine thousand five hundred

fifty one & 80/100 dollars ($79,551.80) as and for an in-

ternal revenue tax.

You are further notified that all property, rights to

property, moneys, credits, and/or bank deposits now in

your possession and belonging to the aforesaid Michael

Acri and all sums of money owing from you to the said

Michael Acri are hereby seized and levied upon for the

payment of the aforesaid tax, together with penalties and

interest, and demand is hereby made upon you for the

sum of Seventy nine thousand five hundred fifty one and

80/100 dollars ($79,551.80) of the amount now owing

from you to the said Michael Acri or for such lesser sum as

you may be indebted to him, to be applied in payment of

the said tax liability.

Dated at Cleveland, Ohio this 21 day of November,

1947.

Tuos. M. Carey, Collector,

By: /s/ W. J. CHAMPION,

Assistant Collector of Internal Revenue.

28

APPENDIX B (STATUTES).

Page’s Ohio General Code:

Sec. 11819 (RC 2715.01). Grounds of attachment.

In a civil action for the recovery of money, at or after its

commencement, the plaintiff may have an attachment

against the property of the defendant upon any one of

the grounds herein stated:

* * * * *

(10) Kas fraudulently or criminally contracted the

debt, or incurred the obligations for which suit is about to

be or has been brought; * * *

* * * * *

Sec. 11837 (RC 2715.19). When property and gar-

nishee bound. An order of attachment shall bind the prop-

erty attached from the time of service. A garnishee shall

be liable to the plaintiff in attachment for all property of

the defendant in his hands, and money and credits due

from him to the defendant, from the time he is served with

the written notice hereinbefore mentioned. But when

property is attached in the hands of a consignee, his lien

thereon shall not be affected by the attachment. (Emphasis

ours. )

California Code, Section 542 (a):

The lien of the attachment on real property attaches

and becomes effective upon the recording of a copy of the

writ, together with a description of the property attached,

and a notice that it is attached with the county recorder of

the county wherein said real property is situated. * * *

The attachment whether heretofore levied or here-

after to be levied shall be a lien upon all real property

attached for a period of three years after the date of levy

unless sooner released or discharged either as provided in

this chapter, or by dismissal of the action, or by the filing

29

with the recorder of an abstract of the judgment in the

action.

Internal Revenue Code:

Sec 3670. Property Suspsect to Lien

If any person liable to pay any tax neglects or re-

fuses to pay the same after demand, the amount (includ-

ing any interest, penalty, additional amount, or addition

to such tax, together with any costs that may accrue in

addition theretc) 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. (26 U.S. C.

1946 ed., Sec. 3670.)

Sec. 3671. Periop or Lien.

Unless another date is specifically fixed by law, the

lien shall arise at the time the assessment list was re-

ceived by the collector and shall continue until! the liability

for such amount is satisfied or becomes unenforceable by

reason of lapse of time. (26 U.S. C. 1946 ed., Sec. 3671.)

Sec. 3672 [As amended by Sec. 401, Revenue Act of

1939, c. 247, 53 Stat. 862, and Section 505, Revenue Act

of 1942, c. 619. 56 Stat. 798}. Vatiprry Acarnsr Mort-

GAGEES, PLEDGEES, PuRCHASERS AND JUDGMENT CREDITORS.

(a) Invalidity of Lien Without Notice.--Such lien

shall not be valid as against any mortgagee, pledgee. pur-

chaser, or judgment creditor until notice thereof has been

filed by the collector—

(1) Under State or Territorial Laws.—In the office

in which the filing of such notice is authorized by the law

of the State or Territory in which the property subject to

the lien is situated, whenever the State or Territory has L ,

law authorized the filing of such notice in an office within

the State or Territory; or

(2) With Clerk of District Court.—In the office of the

clerk of the United States district court for the judicial

30

district in which the property subject to the lien is situated,

whenever the State or Territory has not by !aw authorized

the filing of such notice in an office within the State or

Territory; or

(3) With Clerk of District Court of the United States

for the District of Colurnbia.—In the office of the clerk of

the District Court ~f the United States for the District of

Columbia, if the property subject to the lien is situated

in the District of Columbia. (26 U.S. C. 1946 ed., Sec.

3672.)