Damm v. U-Save Corp.

District Court, S.D. California · No. U-72-H · 1932-04-16 · Published

DAMM v. U-SAVE HOLDING CORPORATION

Proceeding: district
Area: civil
Panel: Hollzer (author)

Analysis

A model's reading — qwen3.8-27b, prompt own-v1, 2026-10-14T01:12Z · confidence high

The City of Pasadena applied for an order directing the receiver to pay in full its claim for taxes levied on personal property that the defendant had disposed of prior to the receiver's appointment. The court denied the application, finding that the defendant owned no property in Pasadena at the time of the receiver's appointment and that the receiver's assets were insufficient to pay unsecured creditors in full.

What the court decided	The model
Application of the City of Pasadena for an order directing the receiver to pay in full its claim for tax levied upon personal property disposed of prior to the receiver's appointment is denied. “the application of said city for an order directing the receiver to pay in full its claim for the tax levied upon personal property owned, but disposed of, by said defendant prior to the appointment of the receiver, is denied.”	agree with court The court relied on the concession that the defendant owned no property in Pasadena at the time of the receiver's appointment and the admission that assets were insufficient to pay unsecured creditors in full. Under the principle established in City of Richmond v. Bird, a tax lien on property does not attach to the proceeds of the sale of that property if the property is disposed of before the receiver is appointed, and the tax claim remains an unsecured claim. Since the assets are insufficient to pay unsecured creditors in full, the city cannot be paid in full.

What the court decided

The model

Application of the City of Pasadena for an order directing the receiver to pay in full its claim for tax levied upon personal property disposed of prior to the receiver's appointment is denied.

“the application of said city for an order directing the receiver to pay in full its claim for the tax levied upon personal property owned, but disposed of, by said defendant prior to the appointment of the receiver, is denied.”

agree with court
The court relied on the concession that the defendant owned no property in Pasadena at the time of the receiver's appointment and the admission that assets were insufficient to pay unsecured creditors in full. Under the principle established in City of Richmond v. Bird, a tax lien on property does not attach to the proceeds of the sale of that property if the property is disposed of before the receiver is appointed, and the tax claim remains an unsecured claim. Since the assets are insufficient to pay unsecured creditors in full, the city cannot be paid in full.

The order itself: sound — The court correctly applied the rule from City of Richmond v. Bird that a tax lien does not follow the proceeds of property disposed of before the receiver's appointment. The facts conceded (no property in Pasadena at appointment, insufficient assets for unsecured creditors) logically lead to the denial of the request for full payment, as the city's claim is unsecured and must share pro rata with other unsecured creditors.

How this analysis was made · dispute it

Opinion — Hollzer

HOLLZER., District Judge. .

It being conceded, at the hearing, that the defendant owned no property within the city of Pasadena at the time of the appointment of the receiver, and it being further admitted that the assets in the hands of the receiver are insufficient to pay the claims of unsecured creditors in full, the application of said city for an order directing the receiver to pay in full its claim for the tax levied upon personal property owned, but disposed of, by said defendant prior to the appointment of the receiver, is denied. An exception is allowed to- the claimant city of Pasadena. See City of Richmond v. Bird et al, 249 U. S. 174, 39 S. Ct. 186, 63 L. Ed. 543; Aetna Casualty & Surety Co. v. Bramwell (D. C.) 12 F.(2d) 307; Bignell v. Cummins, 69 Mont. 294, 222 P. 797, 36 A. L. R. 634; County of Glynn v. Brunswick Ter, Co., 101 Ga. 244, 28 S. E. 604; Edmonson v. Walker, 137 Tenn. 569; 195 S. W. 168; County Court of Calhoun County v. Matthews, 99 W. Ya. 483, 129 S. E. 399, 52 A. L. R. 751.

Cited by

Adair v. Beverly Hills Petroleum Corp. · 1932-06-03