BaeNHIll, J.
The appellant, without waiving its position in respect thereto, withdraws its exception to the disallowance of the small amount of penalties claimed by it, and the first exception is general in nature, presenting no question for decision.
In its appeal to the superior court and in the hearing in the court below on its exceptions to the report of the receiver, the appellant took the position that its claim for fraudulent overpayments should he classified in the fourth class along with other unsecured claims. There was no exception to the receiver’s report which presented any other contention. Even so, pending its appeal to this Court, it takes another mount and seeks to ride a different horse here. This it may not do.
It is well established that a party to a suit may not change his position, with respect to a material matter during the course of litigation.
Hill v. R. R.,
178 N.C. 607, 101 S.E. 376;
Lindsey v. Mitchell,
174 N.C. 458, 93 S.E. 955. “Especially is this so where the change of front is sought to be made between the trial and the appellate courts.”
Shipp v. Stage Lines,
192 N.C. 475, 135 S.E. 339;
Ingram v. Power Co.,
181 N.C. 359, 107 S.E. 209;
Coble v. Barringer,
171 N.C. 445, 88 S.E. 518. After he has elected to try his case on one theory in the lower court, he may not be-permitted to change his attitude with respect thereto on appeal.
Walker v. Burt,
182 N.C. 325, 109 S.E. 43, and cases cited. Instead, the appeal,.
•ex necessitate,
must follow the theory of the trial in the court below.
Hargett v. Lee,
206 N.C. 536, 174 S.E. 498, and cases cited;
Wilson v. Hood, Comr. of Banks,
208 N.C. 200, 179 S.E. 660.
It is apparent that the two claims clearly entitled to priority in payment exceed in amount the total available assets of the insolvent corporation. Therefore, the question whether this claim should be classified as an unsecured claim is, on this record, purely academic. Decision thereof should await the time when it is more clearly presented in a ease in which it is a material issue. We therefore pass the question without decision other than to say the contention of the Government, made for the first time in this Court, that it is entitled to first priority in payment may not now be considered.
As between the claims of the employees secured under the terms of G.S. 55-136 and the claim of the United States Government for taxes and interest, which is entitled to priority in payment ? This is the crux •of the controversy. The court below' answered in favor of the employees. A careful examination of the authorities leads us to the contrary view.
31 U.S.C.A. sec. 191 (R.S. 3466) provides that “whenever any person indebted to the United States is insolvent . . . the debts due to the United States shall he first satisfied . . .,” and G.S. 55-136 gives the •employees a lien on the property of their insolvent employer in this language: “In case of the insolvency of a corporation ... all persons •doing labor or service of whatever character in its regular employment have a lien upon the assets thereof for the amount of wages due to them for all labor, work, and services rendered within two months next preceding the date when proceedings in insolvency w^ere actually instituted and begun against the corporation . . . which lien is prior to all other liens that can be acquired against such assets . . .”
While the Federal statute merely uses the word “insolvent,” it is now well established that no right to priority of payment comes into being under the statute, however insolvent the debtor may be, until or unless the debtor is divested of possession of his property for the purpose of liquidation. In receivership proceedings, the receiver, in distributing the assets among the creditors, shall first pay the debts due the United States. It is a mere right of prior payment out of the general fund of the debtor in the hands of the receiver or assignee which attaches upon the appointment of a receiver or upon the date of the debtor’s assignment for the benefit of creditors.
Bishop v. Black,
233 N.C. 333.
Likewise, the lien of the employees arises upon the sequestration of the property of the insolvent for the purpose of liquidation, or rather the institution of a proceeding for that purpose. Thus the right of priority of payment of the claim of the United States Government and the lien of the employees are created and come into being contemporaneously by
virtue of one and tbe same act. Neither exists so long as the property-remains in the hands of the insolvent. Both arise when the property is. taken
in custodia legis
for the purpose of distribution among the creditors. Each is a legislative directive as to such distribution.
In the first place, however, the appellee contends that on this record the question is not presented for the reason there was no debt due the United States at the time the receiver was appointed; that since there was-no debt due at that time, no right of priority of payment exists; that the right of priority is created in respect to debts due the Government at. the time the property is segregated for the benefit of creditors and the rights and priorities of creditors are to be fixed as of that time.
U. S.
v.
Marxen,
307 U.S. 200, 83 L. Ed. 1222.
This brings us to a construction of the meaning of “debts due” as used in the Federal statute. The term does not connote a debt past due or in default. It simply means debts owed or owing; that which one contracts or is under legal obligation to pay; a legal charge, fee, toll, tribute, or the like. Webster, New Int. Die.; Black, Law Die., 3rd Ed. It denotes a. state of indebtedness.
U. S. v. The State Bank of N. C.,
31 U.S. 29, 8 L. Ed. 308;
N. J. v. Anderson,
203 U.S. 483, 51 L. Ed. 284;
Kavanas v. Mead,
171 F. 2d 195. A debt due is a debt accrued, and a debt is accrued when all events have occurred which fix and determine the liability of the debtor to the creditor.
Comr. v. Oil Co.,
148 F. 2d 671, Cert. denied 325 U.S. 881;
U. S. v. Anderson,
269 U.S. 422, 70 L. Ed. 347.
The taxes which are the subject matter of the Government’s claim -are taxes due for the year 1949. While the taxpayer was not required to report and pay the same until a later date, they accrued during the year-1949 and were payable as of the first day of January 1950. The amount thereof was readily ascertainable. The receiver was appointed 12 January 1950. So then, at that time there was a debt due the United States within the meaning of 31 U.S.C.A. sec. 191.
Bishop v. Black, supra; Price v. U. S.,
269 U.S. 492, 70 L. Ed. 373;
Ill. v. Campbell,
329 U.S. 362
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BaeNHIll, J.
The appellant, without waiving its position in respect thereto, withdraws its exception to the disallowance of the small amount of penalties claimed by it, and the first exception is general in nature, presenting no question for decision.
In its appeal to the superior court and in the hearing in the court below on its exceptions to the report of the receiver, the appellant took the position that its claim for fraudulent overpayments should he classified in the fourth class along with other unsecured claims. There was no exception to the receiver’s report which presented any other contention. Even so, pending its appeal to this Court, it takes another mount and seeks to ride a different horse here. This it may not do.
It is well established that a party to a suit may not change his position, with respect to a material matter during the course of litigation.
Hill v. R. R.,
178 N.C. 607, 101 S.E. 376;
Lindsey v. Mitchell,
174 N.C. 458, 93 S.E. 955. “Especially is this so where the change of front is sought to be made between the trial and the appellate courts.”
Shipp v. Stage Lines,
192 N.C. 475, 135 S.E. 339;
Ingram v. Power Co.,
181 N.C. 359, 107 S.E. 209;
Coble v. Barringer,
171 N.C. 445, 88 S.E. 518. After he has elected to try his case on one theory in the lower court, he may not be-permitted to change his attitude with respect thereto on appeal.
Walker v. Burt,
182 N.C. 325, 109 S.E. 43, and cases cited. Instead, the appeal,.
•ex necessitate,
must follow the theory of the trial in the court below.
Hargett v. Lee,
206 N.C. 536, 174 S.E. 498, and cases cited;
Wilson v. Hood, Comr. of Banks,
208 N.C. 200, 179 S.E. 660.
It is apparent that the two claims clearly entitled to priority in payment exceed in amount the total available assets of the insolvent corporation. Therefore, the question whether this claim should be classified as an unsecured claim is, on this record, purely academic. Decision thereof should await the time when it is more clearly presented in a ease in which it is a material issue. We therefore pass the question without decision other than to say the contention of the Government, made for the first time in this Court, that it is entitled to first priority in payment may not now be considered.
As between the claims of the employees secured under the terms of G.S. 55-136 and the claim of the United States Government for taxes and interest, which is entitled to priority in payment ? This is the crux •of the controversy. The court below' answered in favor of the employees. A careful examination of the authorities leads us to the contrary view.
31 U.S.C.A. sec. 191 (R.S. 3466) provides that “whenever any person indebted to the United States is insolvent . . . the debts due to the United States shall he first satisfied . . .,” and G.S. 55-136 gives the •employees a lien on the property of their insolvent employer in this language: “In case of the insolvency of a corporation ... all persons •doing labor or service of whatever character in its regular employment have a lien upon the assets thereof for the amount of wages due to them for all labor, work, and services rendered within two months next preceding the date when proceedings in insolvency w^ere actually instituted and begun against the corporation . . . which lien is prior to all other liens that can be acquired against such assets . . .”
While the Federal statute merely uses the word “insolvent,” it is now well established that no right to priority of payment comes into being under the statute, however insolvent the debtor may be, until or unless the debtor is divested of possession of his property for the purpose of liquidation. In receivership proceedings, the receiver, in distributing the assets among the creditors, shall first pay the debts due the United States. It is a mere right of prior payment out of the general fund of the debtor in the hands of the receiver or assignee which attaches upon the appointment of a receiver or upon the date of the debtor’s assignment for the benefit of creditors.
Bishop v. Black,
233 N.C. 333.
Likewise, the lien of the employees arises upon the sequestration of the property of the insolvent for the purpose of liquidation, or rather the institution of a proceeding for that purpose. Thus the right of priority of payment of the claim of the United States Government and the lien of the employees are created and come into being contemporaneously by
virtue of one and tbe same act. Neither exists so long as the property-remains in the hands of the insolvent. Both arise when the property is. taken
in custodia legis
for the purpose of distribution among the creditors. Each is a legislative directive as to such distribution.
In the first place, however, the appellee contends that on this record the question is not presented for the reason there was no debt due the United States at the time the receiver was appointed; that since there was-no debt due at that time, no right of priority of payment exists; that the right of priority is created in respect to debts due the Government at. the time the property is segregated for the benefit of creditors and the rights and priorities of creditors are to be fixed as of that time.
U. S.
v.
Marxen,
307 U.S. 200, 83 L. Ed. 1222.
This brings us to a construction of the meaning of “debts due” as used in the Federal statute. The term does not connote a debt past due or in default. It simply means debts owed or owing; that which one contracts or is under legal obligation to pay; a legal charge, fee, toll, tribute, or the like. Webster, New Int. Die.; Black, Law Die., 3rd Ed. It denotes a. state of indebtedness.
U. S. v. The State Bank of N. C.,
31 U.S. 29, 8 L. Ed. 308;
N. J. v. Anderson,
203 U.S. 483, 51 L. Ed. 284;
Kavanas v. Mead,
171 F. 2d 195. A debt due is a debt accrued, and a debt is accrued when all events have occurred which fix and determine the liability of the debtor to the creditor.
Comr. v. Oil Co.,
148 F. 2d 671, Cert. denied 325 U.S. 881;
U. S. v. Anderson,
269 U.S. 422, 70 L. Ed. 347.
The taxes which are the subject matter of the Government’s claim -are taxes due for the year 1949. While the taxpayer was not required to report and pay the same until a later date, they accrued during the year-1949 and were payable as of the first day of January 1950. The amount thereof was readily ascertainable. The receiver was appointed 12 January 1950. So then, at that time there was a debt due the United States within the meaning of 31 U.S.C.A. sec. 191.
Bishop v. Black, supra; Price v. U. S.,
269 U.S. 492, 70 L. Ed. 373;
Ill. v. Campbell,
329 U.S. 362, 91 L. Ed. 348.
As the Federal statute creates a right to prior payment out of the assets of an insolvent, and not a lien against his property, assessment, registration, or sequestration by levy is not required.
Bishop v. Black, supra; U. S. v. Okla.,
261 U.S. 253, 67 L. Ed. 638;
U. S. v. Chamberlain,
219 U.S. 250, 55 L. Ed. 204;
U. S. v. Ayer,
12 F. 2d 194;
Meyersdale Fuel Co. v. U. S.,
44 F. 2d 437.
Thus it appears that the respective statutes upon which the parties rely are in irreconcilable conflict. Both cannot be given full force and effect. One must yield to the other. Which takes precedence?
An Act of the Congress adopted within the field of legislative powers granted to the national Government by the Constitution is a part of the
supreme law of the land “and the judges in every state shall be bound thereby, anything in the constitution or laws of any state to the contrary notwithstanding.” U. S. Const., Art. VI, sec. 2.
Hence, the priority of payment demanded by R.S. 3466, 31 U.S.C.A. sec. 191, cannot be set aside by State legislation.
Michigan v. U. S.,
317 U.S. 338, 87
L.
Ed. 312, and cases cited;
U. S. v. Texas,
314 U.S. 480, 86 L. Ed. 356. It must be observed, notwithstanding the positive language of G.S. 55-136.
U. S. v. Emory,
314 U.S. 423, 86 L. Ed. 315.
The lien of the employees is not specific or preferred in the sense necessary to give it precedence over the claim of the Government under the provisions of 26 U.S.C.A. sec. 3672. It is not a lien that may be recorded. Neither may there be any levy upon or sequestration of property by the lienee for the satisfaction thereof. It arises only upon the institution of an action, the purpose of which is the sequestration of the property in the hands of the court for the purpose of liquidation, and the segregation of the property by the court is for the benefit of all the creditors and not the employees alone. This is not sufficient to bring the lien within the exceptive provisions of 26 U.S.C.A. see. 3672.
While the statute creates what is denominated a lien, it, in practical effect, grants to the employees of the insolvent a right of payment of the designated wages prior to the payment of any other claim, secured or unsecured.
Cf. Roberts v. Manufacturing Co.,
169 N.C. 27, 85 S.E. 45. This preference is subordinate to the right of the appellant under the provisions of R.S. 3466, 31 U.S.C.A. sec. 191.
It follows that the court below erred in directing the payment of the secured claims of the employees prior to the payment of the claim for taxes and interest filed by the appellant herein. To that extent the judgment entered is modified and, as so modified, the same is affirmed.
Modified and affirmed.