Before CLARK, Chief Judge, and HINCKS and WATERMAN, Circuit Judges.
This is an action brought by a trustee in bankruptcy against the Collector of Internal Revenue to require him to pay over the surplus of moneys in his hands derived from a sale of distrained property of the bankrupt. The facts have been stipulated and are as follows:
The bankrupt owed $39,627.75 in income, withholding, social security and unemployment taxes, falling within three categories as follows:
1. $12,805.34 on which tax assessments had been made and notices of lien filed prior to bankruptcy.
2. $4,932.27, the assessment lists of which had been received by the Collector, prior to bankruptcy. However, no demand for the payment of these taxes and no notice of lien to recover payment thereof had been filed prior to bankruptcy.
3. $21,890.14 which was due but not assessed prior to bankruptcy.
Pursuant to blanket warrants of distraint covering the tax indebtedness falling in category 1, the Collector prior to bankruptcy made levy on all the assets of the debtor and after bankruptcy, pursuant to stipulation with the trustee in bankruptcy, sold the same, realizing $25,553.81 from the sale.
The Collector by motion for summary judgment sought a judgment entitling him to retain the entire proceeds of the sale. The trustee, also by motion for summary judgment, although conceding that the Collector has a right to $12,805.34, which represents the amount of taxes falling in category 1, sought recovery of the remainder of the proceeds of the sale, thus leaving to the Collector only the right of an unsecured creditor to claim against the estate for unpaid taxes falling in categories 2 and 3 with such priority as the Bankruptcy Act, 11 U.S.C.A. § 1 et seq., accords to such claims.
The District Judge denied the defendant's motion and by granting the plaintiff's motion awarded the entire surplus of the proceeds in excess of $12,805.34 to the trustee. The Collector appeals from that judgment.
The Collector contends that as to the taxes falling within category 2, he had an enforceable lien as of the date of bankruptcy and is entitled to retain $4,932.27 as a secured creditor. The trustee concedes that under Section 3671 of the Internal Revenue Code of 1939, 26 U.S.C. § 3671, at least an imperfect and inchoate tax lien arose when the Collector received the assessment list, but because no notice of lien had been filed and no demand made prior to bankruptcy he contends that under Section 3672 of the Internal Revenue Code (1939), 26 U.S.C. § 3672, the lien is invalid as to him.
We think that on this issue our former opinion in United States v. Sands, 2 Cir., 174 F.2d 384, requires a holding adverse to the trustee. Here, as in that case, we hold that the Government's status as a lienor was perfected by a lawful acquisition of possession of the property on which the lien arose. Although in the case now before us there are obviously minor differences in the circumstances which gave rise to the acquisition of possession, none are significant: the basic principle of Sands is applicable. See also Goggin v. Division of Labor Law Enforcement of California, 336 U.S. 118, 69 S. Ct. 469, 93 L. Ed. 543.
Even without reliance on the Sands case as the basis of our holding as to this item, we may reach the same result by a different approach. As we observed in United States v. Kings County Iron Works, 2 Cir., 224 F.2d 232, 237, "The mere attachment of the government's lien gives it a fully perfected claim superior to all except mortgagees, pledgees, purchasers, or judgment creditors of the taxpayer", - classes excepted by § 3672. And under the doctrine of United States v. Gilbert Associates, 345 U.S. 361, 73 S. Ct. 701, 97 L. Ed. 1071 - a case decided subsequent to our Sands decision - we think a trustee ...