In the Matter of Sylvin S. Perry, Bankrupt. Franchise Tax Board of the State of California v. Curtis B. Danning, Trustee-Appellee

This case presents a question of first impression — whether the California Franchise Tax Board’s claim for unpaid California personal income taxes, recorded as provided in the California Code, is a perfected lien upon personal property of a bankrupt taxpayer, and entitled to priority under 11 U.S.C. § 107 (c)(3), or is insufficiently perfected and thus not good against the trustee or creditors under 11 U.S.C. § 107 (c)(1)(B). The referee and the district court held that the lien was not sufficiently perfected. We affirm.

The stipulated facts are as follows: The bankrupt incurred a California personal income tax liability for 1962 which was never satisfied. On December 15, 1966, some two-and-one-half months before the petition in bankruptcy was filed, the Franchise Tax Board (FTB) recorded a tax certificate with the Los Angeles County Recorder pursuant to Cal.Rev. & Tax.Code §§ 18881, et seq. (West 1970). Section 18882 of that Code provides:

We agree with the FTB that it did acquire a lien upon both the real property (if any — -here there was none), and the personal property of the taxpayer. The phrase “all property” is broad enough to cover both types of property, and…

(dissenting) :

Appellant seeks review of an order of the District Court denying its Petition for Writ of Review from an adverse decision of a Referee in Bankruptcy. The parties have filed an agreed statement of facts, and they agree that the issues presented by this appeal are: (1) whether pursuant to state law, California Revenue and Taxation Code § 18882 *87 creates a tax lien on personal property for purposes of § 67c(3) of the Bankruptcy Act [ 11 U.S.C. § 107 (c)(3)]; and (2) if § 18882 does create a lien on personal property, whether the lien is valid against one acquiring the rights of a bona fide purchaser, as required by § 67c(l)(B) of the Bankruptcy Act [ 11 U.S.C. § 107 (c)(1)(B)]. Because the bankrupt had no real property, these issues greatly affect the status of appellant’s tax claims. If, as the Referee and District Court concluded, § 18882 does not create a lien on personal property enforceable against a bona fide purchaser, appellant would be relegated to the status of a general creditor, because the tax debt involved became due more than three years preceding bankruptcy. See §§ 64a(4) [ 11 U.S.C. § 104 (a)(4)]; 17a(l) [ 11 U.S.C. § 35 (a)(1)]. But if a lien…

487 F.2d 84 In the Matter of Sylvin S. PERRY, Bankrupt. FRANCHISE TAX BOARD of the State of California, Petitioner-Appellant, v. Curtis B. DANNING, Trustee-Appellee. No. 71-1675. United States Court of Appeals, Ninth Circuit. June 8, 1973. Rehearing Denied Nov. 2, 1973. Certiorari Denied March 18, 1974. See 94 S.Ct. 1565 . Rodney Lilyquist, Deputy Atty. Gen. (argued), Evelle J. Younger, Atty. Gen., Mark W. Jordan, Philip C. Griffin, Deputy Attys. Gen., Los Angeles, Cal., for petitioner-appellant. Bruce H. Spector (argued), of Quittner, Stutman, Treister & Glatt, Los Angeles, Cal., for trustee-appellee. Before DUNIWAY and HUFSTEDLER, Circuit Judges, and ZIRPOLI, * District Judge. DUNIWAY, Circuit Judge: OPINION 1 This case presents a question of first impression-whether the California Franchise Tax Board's claim for unpaid California personal income taxes, recorded as provided in the California Code, is a perfected lien upon personal property of a bankrupt taxpayer, and entitled to priority under 11 U.S.C. Sec. 107 (c)(3), or is insufficiently perfected and thus not good against the trustee or creditors under 11 U.S.C. Sec. 107 (c)(1)(B). The referee and the district court held…