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New York v. Seligson.

decided.: April 5, 1954.


Author: Chase

Before CHASE, Chief Judge, and FRANK and HINCKS, Circuit Judges.

CHASE, Chief Judge.

During proceedings for the reorganization of the Journal News Corporation under Chap. X of the Bankruptcy Act, 11 U.S.C.A. § 501 et seq. which followed the filing of its petition on August 31, 1951 Charles Seligson, the trustee of the debtor, sought to have three liens on real property of the debtor held null and void and discharged of record, or in the alternative, to be authorized to sell the property free and clear of the liens which would be satisfied out of the proceeds of the sale.This appeal is only from that part of the order which held one of the liens on real property in New York County invalid; ordered its discharge or record and that the property be sold free and clear of such lien. The facts only as to that lien need be stated.

On January 9, 1951, the debtor being in default in the payment of state unemployment insurance taxes for the third and fourth quarters in 1949 and the first two quarters in 1950, a warrant against it for the amount of such taxes with penalties and interest was issued by the Commissioner and sent from the office of the Industrial Commissioner in the State Department of Labor in Albany to the office of that department in New York City and received there on January 11, 1951, by the Associate Tax Collector in charge of that office, Mr. Siegel. It was issued "to

Tax Collector, New York County" and, as found below, commanded the said Tax Collector, "to file a copy thereof within five days after its receipt by him, in the office of the Clerk of the County of New York, New York, and upon receipt thereof said Clerk was directed to enter on the judgment docket the amount of the warrant against said debtor."

At, or soon after, the time Mr. Siegel received the warrant, he had the name of B. Rosenzweig, one of his subordinates, inserted in the blank spaces left in the warrant for that purpose as the person by whom it was to be filed and that was sufficient to authorize Mr. Rosenzweig then to file it. It was not, however, filed by him within five days after it was received in the New York office of the department but was turned over to him on February 27th and filed by him the next day. It was then docketed by the county clerk.

The statute pursuant to which the warrant was issued is § 573(2) of the New York Unemployment Insurance Law.*fn1 It provides that:

"In addition and as an alternative to any other remedy provided by this article and provided that no appeal or other proceeding for review provided by title eight of this article shall then be pending and the time for the taking thereof shall have expired, the commissioner may issue a warrant under his official seal, directed to the sheriff of any county, commanding him to levy upon and sell the real and personal property which may be found within his county of an employer who has defaulted in the payment of any sum determined to be due from such employer for the payment of such sum together with interest, penalties, and the cost of executing the warrant, and to return such warrant to the commissioner and to pay into the fund the money collected by virtue thereof within sixty days after the receipt of such warrant. The sheriff shall within five days after the receipt of the warrant file with the clerk of his county a copy thereof, and thereupon such clerk shall enter in the judgment docket the name of the employer mentioned in the warrant and the amount of the contribution, interest, and penalties for which the warrant is issued and the date when such copy is filed. Thereupon the amount of such warrant so docketed shall become a lien upon the title to and interest in real property and chattels real of the employer against whom the warrant is issued in the same manner as a judgment duly docketed in the office of such clerk. The sheriff shall then proceed upon the warrant in the same manner, and with like effect, as that provided by law in respect to executions issued against property upon judgments of a court of record, and for his services in executing the warrant he shall be entitled to the same fees, which he may collect in the same manner.

"In the discretion of the commissioner a warrant of like terms, force, and effect may be issued and directed to any officer or employee of the department of labor who may file a copy of such warrant with the clerk of any county in the state, and thereupon each such clerk shall docket it and it shall become a lien in the same manner and with the same force and effect as hereinbefore provided with respect to a warrant issued and directed to and filed by a sheriff; and in the execution thereof such officer or employee shall have all the powers conferred by law upon sheriffs, but he shall be entitled to no fee for compensation in excess of the actual expenses paid in the performance of such duty.

"If a warrant is returned not satisfied in full, the commissioner shall have the same remedies to enforce the amount thereof as if the commissioner had recovered judgment for the same."

The district judge construed the statute to require the warrant to be filed within five days after it had been received at the New York office of the Department of Labor. The Tax Collector there was by its terms commanded to file it within that time. Failure to file it within such five-day period was the sole ground upon which the lien was held invalid.

We are unable to agree that the filing and docketing of the warrant as here shown did not create a valid lien. In the absence of an authoritative construction of this statute by the state courts to which we can turn for the solution of the problem, we undertake to forecast as best we can how such courts would construe it and in so doing refrain from a more extensive construction than the precise issue now presented requires.

Consequently, we find it unnecessary to decide whether, had the warrant been directed to the sheriff of New York County, a valid lien would have been created if he had waited more than five days after he received it before filing it. It may be, however, that even as to a sheriff the five-day provision for filing is merely directory. Cf. Bradley v. Ward, 58 N.Y. 401. Of course non-compliance with that might affect lien priority and be decisive on the question of the liability of a sheriff charged with nonfeasance, but that question is not here.

The record shows that this warrant was made out in Albany with the exception of the blank spaces left to be filled in with the name of some "officers or employees of the department of labor" when ...

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