Claims After
Death
[54-1 USTC
¶9141]Allen McCain, et al. v. The Liberty National Bank, et al.
In
the United States District Court for the Northern District of Georgia,
Rome Division, Civil Action No. 738, September 29, 1953
Lien for taxes: Priority over state taxes: Priority of creditors.--The
husband and wife were fatally injured in an automobile accident and the
wife died shortly before the husband. Claims which had priority over the
U. S. tax were: a compromise amount in lieu of a year's support for the
decedent's minor daughter, fees and expenses of the minor daughter's
guardian, court costs, and receiver's fees and expenses including
counsel fees. After paying these claims, the remainder of the estate was
less than the U. S. tax, leaving no funds for payment of State taxes,
the wife's doctor bills and funeral expenses, claims for damages to
persons riding with the deceased at the time of the accident, or support
claims.
Henry Stewart
(Stewart and York) and E. L. Gammage, Jr., all of
Cedartown
,
Ga.
, for plaintiffs.
J. Ellis Mundy
and James W. Dorsey, United States Attorneys, Lee S. Radford, Department
of Revenue, Income Tax Unit, Atlanta, Ga., James K. Rankin and Malcolm
A. Brenner, Atlanta, Ga., W. W. Mundy, Jr., C. C. Bunn, Jr., and
Brantley Edwards, Cedartown, Ga., Marshall, Greene, Baird and Neely, and
Powell, Goldstein, Frazer and Murphy, Atlanta, Ga., Chester A. Austin,
Birmingham, Ala., J. M. Grubbs, Jr., Cedartown, Ga., John P. Stewart,
Atlanta, Ga., John W. Maddox (Matthews and Maddox) and Maddox and
Maddox, Rome, Ga., Glenn T. York, Jr., Forrest C. Oates, Jr., and James
I. Parker, Cedartown, Ga., Covington and Andrews, Rome, Ga., and Murphy
and Murphy, Bremen, Ga., for defendants.
Statement
of the Case
HOOPER,
District Judge:
This action
was removed from the Superior Court of Polk County, Georgia, where Allen
McCain, as Administrator of the Estate of J. H. Harvell, deceased (also
alleging himself equitable owner of the assets of Harvell Motor Company,
Inc.) began an action against Marion H. Allen, Collector of Internal
Revenue for
Georgia
, and others. Mr. Allen having died Charles H. Dunn was substituted as
party defendant and on his motion the action was removed to this court
pursuant to 28 United States Code, Sec. 1442(a)(1). A large number of
defendants were named and various other parties at interest intervened,
their individual claims being hereinafter discussed or disposed of in
groups. A great many hearings were had in this court but almost without
exception the questions involved were those of law, there being
practically no dispute in the evidence. Assets of defendant Harvell
Motor Company, Inc. and of the Harvell estate were sold. A great many
claims were settled by agreement, by stipulation of all parties in open
court at one of the hearings, at which hearing all parties at interest
were notified to appear. No Findings of Fact will be necessary in cases
where the amounts and priorities of the claims were stipulated. As to
other claims where priority was in dispute, Findings of Fact and
Conclusions of Law will be given below in connection with each claim.
Attached hereto and marked "Exhibit A" is a statement showing
all amounts received by Allen McCain as Executor of the Estate of J. H.
Harvell and also as Receiver for Harvell Motor Company, also
disbursements heretofore made pursuant to written orders or directions
of this Court, or stipulation of parties, and then a list of payments to
be made pursuant to this order and judgment of the court, this being a
Final Judgment and Decree in said case.
Findings
of Fact and Conclusions of Law
Claims Against the Estate of J. H. Harvell, Deceased
1. Claim of
the
United States
. This claim while originally made in a much larger sum was by
stipulation of parties to the case, made in open court and without
objection, agreed to be in the sum of $14,000.00. Although the priority
as between this claim and claims of the State of
Georgia
, and others hereinafter referred to, remained in dispute.
As a
conclusion of law this Court finds that the claim of the
United States of America
against said estate on account of taxes due and owing to the
United States
at the time of the death of the said J. H. Harvell, are superior to the
claims of the State of
Georgia
for taxes against the deceased. This ruling is predicated upon the
provisions of 31
United States
Code, Section 191, which provides that "whenever the estate of
any deceased debtor, in the hands of executors or
admin
istrators is insufficient to pay all the debts due from the deceased,
the debts due to the
United States
shall be first satisfied." The situation referred to in that
statute exists in this case, and that statute, rather than state
statutes, must control. See Michigan v. United States, 317 U. S.
338 [43-1 USTC ¶9225]; United States v. Gilbert Associates, 345
U. S. 361, decided April 6, 1953, reported in 21 Law Week, 4275 [53-1
USTC ¶9291].
The payment of
the claim of the
United States
will exhaust all funds remaining in the hands of the Receiver after
payment of various sums having priority thereto as listed on the
attached "Exhibit A."
The
United States
made no objection to the allowance of a year's support to the minor
daughter of J. H. Harvell, deceased, as shown on said Exhibit, nor the
funeral expenses of J. H. Harvell, the doctors' bills during his last
illness, the costs of
admin
istration of said estate, and the expenses of this litigation. The
United States did object, however, to the allowance of claim in behalf
of Dr. W. P. Downey who attended upon the wife of J. H. Harvell during
her last illness, and Miller Funeral Home for funeral expenses of said
Mrs. Harvell, as to which the Court will make Findings of Fact and
Conclusions of Law as follows:
[Wife's
Medical and Funeral Expenses]
2. The Court
finds that Mr. and Mrs. J. H. Harvell were injured in an automobile
accident, Mrs. Harvell dying as a result thereof a short time before Mr.
Harvell died, and that medical expenses were incurred in favor of Dr. W.
P. Downey and funeral expenses in behalf of Miller Funeral Home.
The Court
finds, however, that as a Conclusion of Law that the above claims do not
have priority as claims against the estate of J. H. Harvell to the same
extent as doctors' bills and funeral expenses in connection with the
last illness and burial of J. H. Harvell would have. Counsel for said
creditors in a comprehensive brief very ably insist to the contrary,
citing as authority for such contention, the provisions of Georgia Code
Section 113-1508, providing in part as follows:
"Claims
against the estate of a decedent shall rank in the following order: (1)
year's support for the family, (2) funeral expenses, to correspond with
circumstances of the deceased in life, including physician's bills and
expense of the last sickness."
It is insisted
that the expression "funeral expenses" covers funeral expenses
incurred by the estate of the deceased not only for burial of the
deceased, but for his next of kin. While the Court can readily
appreciate the fact that the statute in question, if construed as this
claimant contends, would be a wise and salutory statute, tending to
expedite the burial of a wife when killed in a common disaster with her
husband, this Court is not of the opinion that the statute, when
enacted, was intended to so provide.
Whether taxes
due the United States would not have priority over all the claims
enumerated in Georgia Code Section 113-1508, need not be decided for the
reason that the United States in this case has conceded that expenses of
the last illness and burial of Mr. Harvell take priority over taxes due
the United States. Such a concession by the Government is certainly in
accord with the dictates of wisdom and humanity, for it would be
unfortunate indeed if a man in his last illness could not be attended by
a physician, and in his death not be interred, without any assurance
that the doctor and the undertaker would be paid.
[Other
Claims Against Estate]
3. Annie Pearl
Daniel filed a claim in the sum of $8,400.00 based upon a contract made
with her by J. H. Harvell during his lifetime in which he recognized the
paternity of her two minor children and agreed to support them. The
Court rules that Annie Pearl Daniel under such circumstances has no
priority of payment out of such estate but ranks only with ordinary
creditors and therefore, is not entitled to participate in the
distribution of his estate.
4.
Rob
ert McCain and Mrs. Ruby McCain, riding with J. H. Harvell at the time
of his fatal accident, filed a claim for damages including $409.00
medical bills. The Court rules that these claimants would rank as
ordinary creditors and cannot participate in the distribution.
5. Mrs. Mavis
Harvell Austin expended the sum of $105.00 for the benefit of the estate
and is awarded a refund of that amount without objection.
6. The
Receiver is directed to pay to T. L. Williams for reporting evidence,
the sum of $30.00 and to the Clerk of this Court, for court costs, the
sum of $15.00.
7. The
Receiver is directed to pay the following sums incurred in connection
with this case covering fees and expenses:
To
E. L. Gammage, Jr., Guardian ad litem for Mrs. Mavis Harvell Austin, a
minor, for a compromise of her claim for year's support, the sum of
$1,500.00.
To
E. L. Gammage, Jr., fees and expenses as Guardian ad litem for Mrs.
Mavis Harvell Austin, a minor, $548.30.
To
Malcolm A. Brenner, Jr., fees and expenses as court appointed certified
public accountant for the Receiver, $1765.00.
To
Allen McCain, Receiver, for fees and expenses, $3,751.15.
To
Henry A. Stewart, Sr., fees and expenses as court appointed counsel for
Receiver, $4,585.20.
8. The above
leaves on hand the sum of $4,628.05, which Receiver is directed to pay
to the
United States of America
upon account of its tax lien stipulated to be in the sum of $14,000.00.
This leaves unpaid the claim of the State of
Georgia
for taxes in the sum of $2,889.94 and interest thereon.
The Receiver,
when the time for appeal from this Judgment and Decree is over, may pay
out the aforesaid sums.
It is further
ordered and decreed that Harvell Motor Company, Inc., a corporation of
the State of
Georgia
, be, and it is hereby adjudicated as dissolved as of this date.
EXHIBIT
A
ALLEN McCAIN, RECEIVER HARVELL MOTOR COMPANY, INC. AND J. H. HARVELL,
ESTATE SUMMARY OF FUNDS RECEIVED AND DISBURSED
