DeNNY, J.
Tbe appellees move to dismiss tbe appeal for that tbe appellant failed to serve a statement of case on appeal pursuant to tbe order entered by bis Honor on 13 December, 1950, and for tbe further reason that no notice was given tbe appellees or their attorneys of tbe bearing when tbe court adjudged that tbe record proper should constitute tbe case on appeal.
Tbe correctness of tbe judgment entered below is tbe only question posed for decision, and that is presented by tbe exception noted.
"When an error relied on by tbe appellant is presented by tbe record proper, no case on appeal is required.
Russos v. Bailey,
228 N.C. 783, 47 S.E. 2d 22. Tbis cause was beard below on tbe report of tbe Receiver, therefore it was unnecessary to serve a case on appeal.
Reece v. Reece,
231 N.C. 321, 56 S.E. 2d 641;
Privette v. Allen,
227 N.C. 164, 41 S.E. 2d 364;
Bessemer Co. v. Hardware Co.,
171 N.C. 728, 88 S.E. 867;
Commissioners v. Scales,
171 N.C. 523, 88 S.E. 868. Tbe motion to dismiss is denied.
Tbe appellant excepts and assigns as error tbe signing of tbe judgment entered below in that it directs tbe disbursement of tbe remaining assets in tbe bands of tbe Receiver in a manner contrary to tbe law governing priority of payments among creditors, and for tbe further reason that bis Honor bad no jurisdiction to reverse tbe findings of tbe Receiver in tbe absence of appropriate exceptions to bis report.
In the case of
Surety Corp. v. Sharpe,
232 N.C. 98, 59 S.E. 2d 593,
Ervin, J.,
speaking for tbe Court, sets out in a very comprehensive manner tbe duties of a receiver. It is pointed out that “tbe receiver must pass upon tbe validity and priority of tbe claims presented to him, and allow or disallow them or any part thereof, and notify claimants of bis determination. . . . G.S. 55-152. . . . When tbis is done any inter
ested person’ may except to tbe reported finding of tbe receiver as to tbe claim, and contest such finding in tbe original receivership action without any leave from court provided be files bis exceptions in apt time. . . . G.S. 55-152.”
No exception having been taken to tbe report of tbe Receiver, this appeal turns upon whether tbe United States is entitled to priority of payment on tbe findings of tbe Receiver.
Tbe Congress of the United States in 1797 enacted a statute conferring upon the government a right of priority in payment out of tbe assets of an insolvent debtor of all claims due the United States. There has been no substantial change in this statute in tbe meantime, which is now R.S. 3466, 31 U.S.C.A. 191, tbe pertinent part of which reads as follows: “Whenever any person indebted to the United States is insolvent, or whenever the estate of any deceased debtor, in the hands of the executors or administrators, is insufficient to pay all the debts due from the deceased, the debts due to the United States shall be first satisfied.”
“It is well settled that the priority statute does
not
create a lien upon the debtor’s property in favor of the United States, but merely confers upon the government a right of priority in payment out of that property in the hands of the debtor’s assignees or other representatives, under the conditions specified in the statute.” 28 Am. Jur., Insolvency, section 73, p. 819.
Bramwell v. United States Fidelity & G. Co.,
269 U.S. 483, 70 L. Ed. 368;
United States v. Emory,
314 U.S. 432, 86 L. Ed. 314; 44 C.J.S., Insolvency, section 14 (b), p. 374.
The priority of the United States, under the provisions of the above statute, attaches upon the appointment of a voluntary or involuntary receiver,
Gordon v. Campbell,
329 U.S. 362, 91 L. Ed. 348, or upon the date of debtor’s assignment for the benefit of creditors,
United States v. Waddill, Holland & Flinn,
323 U.S. 353, 89 L. Ed. 294;
United States v. Texas,
314 U.S. 480, 86 L. Ed. 356;
Price v. United States,
269 U.S. 492, 70 L. Ed. 373;
In re Mitchell's Restaurant,
.... Del. ..., 67 A. 2d 64;
Spokane Merchants’ Asso. v. State,
15 Wash. 2d 186, 130 P. 2d 373.
However, the right to priority of payment under the above statute does not give the government any lien or right that may be enforced “against any mortgagee, pledgee, purchaser, or judgment creditor until notice thereof has been filed bv the collector” in accordance with the provisions of 26 U.S.C.A. 3672.
The appellees, Ossie Bishop and Ben Israel, are creditors who attached property of the debtors prior to the appointment of the Receiver. Even so, they had not reduced their claims to judgment at the time the right of priority of payment in favor of the government arose. Hence, they cannot claim priority under the above statute. They were not mortgagees, pledgees, purchasers or judgment creditors at the time the right
to priority of payment arose in favor of tbe United States.
United States v. Texas, supra; MacKenzie v. United States
(C.C.A. 9th Cir.), 109 E. 2d 540.
Moreover, prior to tbe adoption of 26 U.S.C.A. 3670, 3671 and 3672, not even innocent pur chasers for value, holders of recorded mortgages, or of unsatisfied judgments of record were protected from an unrecorded tax lien.
United States v. Snyder,
149 U.S. 210, 37 L. Ed. 705;
MacKenzie v. United States, supra.
It is well, however, to keep in mind that priority of payment in favor of tbe government within the meaning of R.S. 3466, 31 U.S.C.A. 191, does not arise unless tbe debtor is insolvent.
Louisiana State University v. Hart,
210 La. 78, 26 So. 2d 361, 174 A.L. R. 1366;
United States v. Oklahoma,
261 U.S. 253, 67 L. Ed. 638. But where a receiver is appointed tbe insolvency of tbe debtor, at tbe time of the appointment, is clearly demonstrated when it appears bis assets when liquidated are insufficient to satisfy tbe claims of contesting creditors.
Gordon v. Campbell, supra.
Now, as to tbe appellee, State Trust Company, it is difficult to understand why tbe court below approved tbe payment of any portion of tbe funds remaining in tbe bands of tbe Receiver to this claimant. It appears from tbe record that tbe State Trust Company filed only two claims with tbe Receiver and that both of them were paid in full.
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DeNNY, J.
Tbe appellees move to dismiss tbe appeal for that tbe appellant failed to serve a statement of case on appeal pursuant to tbe order entered by bis Honor on 13 December, 1950, and for tbe further reason that no notice was given tbe appellees or their attorneys of tbe bearing when tbe court adjudged that tbe record proper should constitute tbe case on appeal.
Tbe correctness of tbe judgment entered below is tbe only question posed for decision, and that is presented by tbe exception noted.
"When an error relied on by tbe appellant is presented by tbe record proper, no case on appeal is required.
Russos v. Bailey,
228 N.C. 783, 47 S.E. 2d 22. Tbis cause was beard below on tbe report of tbe Receiver, therefore it was unnecessary to serve a case on appeal.
Reece v. Reece,
231 N.C. 321, 56 S.E. 2d 641;
Privette v. Allen,
227 N.C. 164, 41 S.E. 2d 364;
Bessemer Co. v. Hardware Co.,
171 N.C. 728, 88 S.E. 867;
Commissioners v. Scales,
171 N.C. 523, 88 S.E. 868. Tbe motion to dismiss is denied.
Tbe appellant excepts and assigns as error tbe signing of tbe judgment entered below in that it directs tbe disbursement of tbe remaining assets in tbe bands of tbe Receiver in a manner contrary to tbe law governing priority of payments among creditors, and for tbe further reason that bis Honor bad no jurisdiction to reverse tbe findings of tbe Receiver in tbe absence of appropriate exceptions to bis report.
In the case of
Surety Corp. v. Sharpe,
232 N.C. 98, 59 S.E. 2d 593,
Ervin, J.,
speaking for tbe Court, sets out in a very comprehensive manner tbe duties of a receiver. It is pointed out that “tbe receiver must pass upon tbe validity and priority of tbe claims presented to him, and allow or disallow them or any part thereof, and notify claimants of bis determination. . . . G.S. 55-152. . . . When tbis is done any inter
ested person’ may except to tbe reported finding of tbe receiver as to tbe claim, and contest such finding in tbe original receivership action without any leave from court provided be files bis exceptions in apt time. . . . G.S. 55-152.”
No exception having been taken to tbe report of tbe Receiver, this appeal turns upon whether tbe United States is entitled to priority of payment on tbe findings of tbe Receiver.
Tbe Congress of the United States in 1797 enacted a statute conferring upon the government a right of priority in payment out of tbe assets of an insolvent debtor of all claims due the United States. There has been no substantial change in this statute in tbe meantime, which is now R.S. 3466, 31 U.S.C.A. 191, tbe pertinent part of which reads as follows: “Whenever any person indebted to the United States is insolvent, or whenever the estate of any deceased debtor, in the hands of the executors or administrators, is insufficient to pay all the debts due from the deceased, the debts due to the United States shall be first satisfied.”
“It is well settled that the priority statute does
not
create a lien upon the debtor’s property in favor of the United States, but merely confers upon the government a right of priority in payment out of that property in the hands of the debtor’s assignees or other representatives, under the conditions specified in the statute.” 28 Am. Jur., Insolvency, section 73, p. 819.
Bramwell v. United States Fidelity & G. Co.,
269 U.S. 483, 70 L. Ed. 368;
United States v. Emory,
314 U.S. 432, 86 L. Ed. 314; 44 C.J.S., Insolvency, section 14 (b), p. 374.
The priority of the United States, under the provisions of the above statute, attaches upon the appointment of a voluntary or involuntary receiver,
Gordon v. Campbell,
329 U.S. 362, 91 L. Ed. 348, or upon the date of debtor’s assignment for the benefit of creditors,
United States v. Waddill, Holland & Flinn,
323 U.S. 353, 89 L. Ed. 294;
United States v. Texas,
314 U.S. 480, 86 L. Ed. 356;
Price v. United States,
269 U.S. 492, 70 L. Ed. 373;
In re Mitchell's Restaurant,
.... Del. ..., 67 A. 2d 64;
Spokane Merchants’ Asso. v. State,
15 Wash. 2d 186, 130 P. 2d 373.
However, the right to priority of payment under the above statute does not give the government any lien or right that may be enforced “against any mortgagee, pledgee, purchaser, or judgment creditor until notice thereof has been filed bv the collector” in accordance with the provisions of 26 U.S.C.A. 3672.
The appellees, Ossie Bishop and Ben Israel, are creditors who attached property of the debtors prior to the appointment of the Receiver. Even so, they had not reduced their claims to judgment at the time the right of priority of payment in favor of the government arose. Hence, they cannot claim priority under the above statute. They were not mortgagees, pledgees, purchasers or judgment creditors at the time the right
to priority of payment arose in favor of tbe United States.
United States v. Texas, supra; MacKenzie v. United States
(C.C.A. 9th Cir.), 109 E. 2d 540.
Moreover, prior to tbe adoption of 26 U.S.C.A. 3670, 3671 and 3672, not even innocent pur chasers for value, holders of recorded mortgages, or of unsatisfied judgments of record were protected from an unrecorded tax lien.
United States v. Snyder,
149 U.S. 210, 37 L. Ed. 705;
MacKenzie v. United States, supra.
It is well, however, to keep in mind that priority of payment in favor of tbe government within the meaning of R.S. 3466, 31 U.S.C.A. 191, does not arise unless tbe debtor is insolvent.
Louisiana State University v. Hart,
210 La. 78, 26 So. 2d 361, 174 A.L. R. 1366;
United States v. Oklahoma,
261 U.S. 253, 67 L. Ed. 638. But where a receiver is appointed tbe insolvency of tbe debtor, at tbe time of the appointment, is clearly demonstrated when it appears bis assets when liquidated are insufficient to satisfy tbe claims of contesting creditors.
Gordon v. Campbell, supra.
Now, as to tbe appellee, State Trust Company, it is difficult to understand why tbe court below approved tbe payment of any portion of tbe funds remaining in tbe bands of tbe Receiver to this claimant. It appears from tbe record that tbe State Trust Company filed only two claims with tbe Receiver and that both of them were paid in full. Furthermore, tbe only reference to an additional claim by this concern is found in an order signed by bis Honor 10 October, 1950, which contains tbe following statement: “Tbe court further finds that the State Trust Company has a claim in tbe amount of $1,020.00, which it claims to be a first claim prior to the three creditors set up in said report.” How this claim arose, why it was not filed with tbe Receiver, and why it should be allowed as either a preferred or common claim is not disclosed by tbe record.
Since it appears that all claims filed with tbe Receiver, which were secured and superior to the claims of tbe United States under the provisions of 26 U.S.C.A. 3670, 3671 and 3672, have been paid in full, it is our opinion, and we so hold, that the claim of tbe United States for income taxes due from the debtors, claim for which was filed with, approved and reported by tbe Receiver, is entitled to full satisfaction out of tbe assets of tbe insolvent debtors before any additional claim or charge is paid except the costs incident to tbe receivership.
Tbe judgment entered below is vacated and this cause is remanded for judgment in accord with this opinion.
Error and remanded.