United States v. Speers

PETITIONER: United States
LOCATION: Juvenile Court

DECIDED BY: Warren Court (1965-1967)
LOWER COURT: United States Court of Appeals for the Sixth Circuit

CITATION: 382 US 266 (1965)
ARGUED: Oct 20, 1965
DECIDED: Dec 13, 1965

Facts of the case


Media for United States v. Speers

Audio Transcription for Oral Argument - October 20, 1965 in United States v. Speers

Earl Warren:

Number 17, the United States, Petitioner, versus Ray F. Speers, Trustee in Bankruptcy of the Kurtz Roofing Company Incorporated.

Mr. Roberts.

Richard M. Roberts:

Mr. Chief Justice and may it please the Court.

This case is before the Court on a writ of certiorari to the United States, Court of Appeals for the Sixth Circuit.

The Court of Appeals decision affirmed a holding by the District Court for the Northern District of Ohio, which it upheld a holding by the referee in bankruptcy's determination that the Trustee in Bankruptcy was a “judgment creditor” as that term is used in Title 26 of the United States Code, Section 6323.

And therefore the tax mean notice of which had not been filed prior to the petition in bankruptcy and prior to the appointment of the trustee was not had been -- not filed prior to his appointment and that he therefore had priority over the federal tax lien.

The issue involved in this case is the interpretation of the term “judgment creditor” as it is used in the Internal Revenue Code from Section 6323 and an interpretation of the powers given to the trustee under Section 70 of the Bankruptcy Act.

The facts in this case are very simple and are not in dispute as they affect the case.

On June 3, 1960, the District Director of Internal Revenue assessed withholding tax and interest in the amount of slightly more than $14,000 against the Kurtz Roofing Company.

On that same day, the District Director made demand for the taxes from taxpayer.

Seventeen days later on June 20, 1960, the Kurtz Roofing Company filed a voluntary petition in bankruptcy.

Notice for the federal tax lien had not been filed prior to the date of bankruptcy.

The trustee rule that the United States was not a secured creditor and held that the United States was an unsecured claimant entitled only to the fourth priority of payment under Section 64 (a) (4) of the Bankruptcy Act for unsecured claims for taxes legally due and owing.

As a result of this holding by the trustee, although other secured creditors were paid in full, the trustee proposed to pay on a pro rata dividend slightly over 53% on the federal tax claims.

No amounts were distributed to the general creditors or the bankrupt.

The Section 6323 of the Revenue Code of 1954 provides in part except as otherwise provided in subsection c.

The lien imposed by Section 6321 shall not be valid as against any mortgagee, pledgee, purchaser, or judgment creditor until notice thereof has been filed by the Secretary for his delegate.

Section 70 of the Bankruptcy Act provides in part subsection c, the trustee as to all property whether or not coming into a possession for control of the Court upon which a creditor of the bankrupt could have obtained a lien by legal or equitable proceedings at the time of the bankruptcy shall be deemed vested as of such date with all the rights, remedies, and powers of a creditor, then holding a lien thereon by such proceedings whether or not such a creditor actually exists.

The only issue involved in this case is whether the languages used in that Section 70 of the Bankruptcy Act makes the trustee a “judgment creditor” for purposes of Section 6323 of the Internal Revenue Code of 1954.

Potter Stewart:

Did the statute used to use the phrase “judgment creditor”?

Richard M. Roberts:

In his -- did it one time.

Yes, Your Honor.

Potter Stewart:

And it was amended to the present phraseology long ago?

It's not very important.

I wonder if there's --

Richard M. Roberts:

It was 1952.

I think it was in 1952.

Potter Stewart:

-- is there any.

There's no claim that that means anything less than a “judgment creditor” that is then been the phrase “judgment creditor” use to me is in --

Richard M. Roberts:

We make no claims with the change in language makes any difference, Your Honor.