Division of Labor Law Enforcement, Department of Industrial Relations, State of California v. United States

Acting on behalf of certain wage claimants, the Division of Labor Law Enforcement of the State of California appeals from a decision of the District Court affirming that of a Referee in Bankruptcy. We have jurisdiction under 11 U.S.C.A. § 47 .

The sole question presented is whether the United States had acquired “possession” of a liquor license, issued by the State of California to the bankrupt, before the bankruptcy. We hold that it had, and are therefore affirming.

The bankrupt’s property included a General On-Sale Liquor License issued by the State of California. The United States had acquired a tax lien “upon all property and rights to property, whether real or personal, belonging to [the bankrupt]” (See 26 U.S.C. § 6321 ). The District Director of Internal Revenue levied upon the liquor license, pursuant to 26 U.S.C. § 6331 , which provides:

The Director, on February 27,1957, issued a “Levy” (form 668-B) comparable to a writ of execution or attachment, directing a collection officer to levy upon the property of the bankrupt, and to sell it. The officer made the levy on that day by taking physical possession of the license certificate, and by mailing to the owner of the…