Marine Midland Bank v. New York State Tax Comm., 42 N.Y.2d 79 (1977)

A State tax warrant, upon docketing with the county clerk, constitutes a perfected lien on the taxpayer’s property without the necessity of a further levy.

Summary

This case addresses the question of when a state tax lien becomes perfected against a taxpayer’s property in New York. The Court of Appeals held that the act of docketing a tax warrant with the county clerk creates a perfected lien, without requiring a subsequent levy on the property. The court clarified that the authorization for the Sheriff to proceed as with judgment executions applies only to the *enforcement* of the already-perfected lien, and not to its initial perfection. Because the state tax warrants were perfected liens before the federal lien, the bank’s collateral was impaired sufficiently to justify recovery.

Facts

The relevant facts are not stated in this memorandum opinion. The case concerns the priority of liens on a taxpayer’s property, specifically addressing the timing of perfection for a New York State tax warrant. The lower court held that state tax liens were perfected upon docketing but could be extinguished if a levy wasn’t made within the lifetime of a judgment execution. The Court of Appeals disagreed with this conclusion.

Procedural History

The Appellate Division’s order was affirmed. The Court of Appeals agreed with the result but clarified the reasoning regarding the perfection of state tax liens. The specific procedural history leading to the Appellate Division is not detailed in this memorandum.

Issue(s)

Whether the docketing of a tax warrant with the county clerk perfects a state tax lien on the taxpayer’s property, or whether a subsequent levy is required for perfection?

Holding

Yes, the docketing of a tax warrant with the county clerk perfects the lien because subdivision (b) of section 1141 of the Tax Law expressly states that the amount of the warrant becomes a lien upon docketing, without requiring a further levy.

Court’s Reasoning

The Court reasoned that the plain language of Tax Law § 1141(b) establishes perfection upon docketing. The statute states that “the amount of such warrant so docketed shall become a lien upon the title to and interest in real and personal property of the person against whom the warrant is issued.” The court interpreted the reference to judgment executions as pertaining only to the *enforcement* of the lien, not its perfection. This distinction is critical because it determines the priority of the state tax lien relative to other claims, such as the respondent’s security interest and a federal tax lien. The court cited other federal cases, including *Matter of United Casket Co.*, supporting the view that docketing perfects the lien. Since the state tax warrants were perfected liens prior to respondent’s interest, the respondent’s collateral was impaired.