United States v. Ethel Meyer, Individually, and as of the Estate of Peter Meyer, Deceased

Second Circuit

United States v. Ethel Meyer, Individually, and as of the Estate of Peter Meyer, Deceased

309 F.2d 131, 10 A.F.T.R.2d (RIA) 5840, 1962 U.S. App. LEXIS 3845

CourtCourt of Appeals for the Second Circuit

DecidedOctober 24, 1962

Docket19, Docket 27477

StatusPublished

Cited by3 cases

This text of 309 F.2d 131 (United States v. Ethel Meyer, Individually, and as of the Estate of Peter Meyer, Deceased) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

United States v. Ethel Meyer, Individually, and as of the Estate of Peter Meyer, Deceased, 309 F.2d 131, 10 A.F.T.R.2d (RIA) 5840, 1962 U.S. App. LEXIS 3845 (2d Cir. 1962).

Pincite

Opinion

PER CURIAM.

The decedent pledged life insurance policies to a bank as collateral security for a loan. Thereafter he was assessed certain deficiencies in payment of income tax. At the time of his death both the loan and the assessments remained unpaid. Payment of the loan exhausted the cash surrender value of the policies except for an amount too small to pay the deficiency assessments. The Government seeks to recover the tax liabilities from the proceeds of the insurance policies.

As the District Court held, D.C., 202 F.Supp. 606, this case is controlled by United States v. Behrens, 230 F.2d 504 (2d Cir. 1956), cert. denied, 351 U.S. 919, 76 S.Ct. 709, 100 L.Ed. 1451, which held that

“when one creditor has a claim against two funds as security and another creditor has a claim against only one of them, the loan of the first will be marshalled against that fund which is security for his loan only.” (230 F.2d p. 507).

Appellant attempts to distinguish the Behrens case on the ground that in that case the government’s assessment was made prior to the taxpayer’s pledge of the policies, whereas here the pledge preceded the assessment. Appellant argues that the lien could attach only to the excess of the surrender value over the amount of the loan. But in Behrens, the “tax lien, not being filed, did not indeed have priority over the pledge.” (230 F.2d p. 507). In the present case by reason of the prior pledge of the policies to the bank the government’s tax lien was secondary, but it was not nugatory, and the proceeds passed to appellant subject to both claims at the taxpayer’s death. Whatever the value of the tax lien during the taxpayer’s lifetime, it could be fully satisfied out of that portion of the proceeds representing the former cash surrender value by marshalling the bank’s prior claim against the balance of the proceeds at his death.

Judgment affirmed.

Free access — add to your briefcase to read the full text and ask questions with AI

PER CURIAM.

The decedent pledged life insurance policies to a bank as collateral security for a loan. Thereafter he was assessed certain deficiencies in payment of income tax. At the time of his death both the loan and the assessments remained unpaid. Payment of the loan exhausted the cash surrender value of the policies except for an amount too small to pay the deficiency assessments. The Government seeks to recover the tax liabilities from the proceeds of the insurance policies.

As the District Court held, D.C., 202 F.Supp. 606, this case is controlled by United States v. Behrens, 230 F.2d 504 (2d Cir. 1956), cert. denied, 351 U.S. 919, 76 S.Ct. 709, 100 L.Ed. 1451, which held that

“when one creditor has a claim against two funds as security and another creditor has a claim against only one of them, the loan of the first will be marshalled against that fund which is security for his loan only.” (230 F.2d p. 507).

Appellant attempts to distinguish the Behrens case on the ground that in that case the government’s assessment was made prior to the taxpayer’s pledge of the policies, whereas here the pledge preceded the assessment. Appellant argues that the lien could attach only to the excess of the surrender value over the amount of the loan. But in Behrens, the “tax lien, not being filed, did not indeed have priority over the pledge.” (230 F.2d p. 507). In the present case by reason of the prior pledge of the policies to the bank the government’s tax lien was secondary, but it was not nugatory, and the proceeds passed to appellant subject to both claims at the taxpayer’s death. Whatever the value of the tax lien during the taxpayer’s lifetime, it could be fully satisfied out of that portion of the proceeds representing the former cash surrender value by marshalling the bank’s prior claim against the balance of the proceeds at his death.

Judgment affirmed.

Cite This Page — Counsel Stack

Bluebook (online)

309 F.2d 131, 10 A.F.T.R.2d (RIA) 5840, 1962 U.S. App. LEXIS 3845, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-ethel-meyer-individually-and-as-of-the-estate-of-peter-ca2-1962.

Opinion

Related

Cite This Page — Counsel Stack