The opinion of the court was delivered by: Mercer, Chief Judge.
This interpleader action, filed in the Circuit Court of Cook
County, Illinois, was removed to the United States District Court
for the Northern District of Illinois for trial. Subsequently,
the suit was ordered to be transferred to this Court for
The pertinent chronology of facts follows:
James Westerfield is a resident of Rock Island County. On April
14, 1961, a federal withholding tax assessment was made against
Westerfield for the fourth quarter of 1960. A notice of a federal
tax lien was filed in Rock Island County on July 26, 1961. The
sum of $3,000.00 plus interest, remains unpaid on that
On March 6, 1962, the Bank obtained a judgment against
Westerfield in the Municipal Court of Chicago in the amount of
On May 1, 1962, a deficiency withholding tax assessment was
made against Westerfield for the first quarter of 1962, and a
notice of a federal tax lien was filed in Rock Island County on
May 4, 1962. The sum of $870.62, plus interest, remains unpaid on
Garnishment proceedings against the plaintiff were instituted
by the Bank upon its judgment. Summons therein was served upon
the plaintiff on May 8, 1962.
On May 17, 1962, the District Director levied upon the fund
held by plaintiff and owed to Westerfield.
This interpleader suit was filed on August 16, 1962. On the
same date, Westerfield was adjudicated a bankrupt by this Court.
It is clear that the Bank has no assertable claim of priority
to the fund. Its judgment was not a lien upon Westerfield's
personal property in the hands of plaintiff until the garnishment
summons was served. Morris v. Beatty, 323 Ill. App. 390,
55 N.E.2d 830. Thus, its lien was not perfected until May 8, 1962. The
federal tax liens attached to the property on July 26, 1961, and
May 4, 1962, respectively, when the notices of liens were filed
in Rock Island County. There can be no question that the liens of
the United States are entitled to priority over any lien obtained
by the Bank. United States v. Acri, 348 U.S. 211, 75 S.Ct. 239,
99 L.Ed. 264; United States v. Liverpool & London & Globe Ins.
Co., 348 U.S. 215, 75 S.Ct. 247, 99 L.Ed. 268; United States v.
Security Trust & Savings Bank, 340 U.S. 47, 71 S.Ct. 111, 95
L.Ed. 53. The Bank must be held to concede that issue by its
failure to file any pleading.
As between the contesting parties, the United States and the
trustee, there is no dispute on that issue. What the trustee does
contend is that the notices of the tax liens were ineffective
because the property involved was not situated in Rock Island
County when such notices were filed. Under Illinois law, the
situs of a debt is the domicile of the creditor. Lancashire Ins.
Co. v. Corbetts, 165 Ill. 592, 46 N.E. 631, 36 L.R.A. 640. That
holding is consistent with the federal law relating to questions
of tax liens that the situs of intangible property is determined
by the domicile of the creditor. Marteney v. United States, 10
Cir., 245 F.2d 135; Investment & Sec. Co. v. United States, 9
Cir., 140 F.2d 894, 896. Westerfield was a resident of Rock
Island County, and the notices of liens filed in that County were
effective notice to third parties. Ill.Rev.Stat. 1959, 1961, c.
82, § 66.
It has been clearly decided that the service of a notice of
levy upon a debtor of a taxpayer prior to the time when such
taxpayer is adjudicated a bankrupt renders the claim of the
United States superior to any right which could thereafter be
acquired in such property by a creditor of the taxpayer or a
trustee in bankruptcy. Rosenblum v. United States, 1 Cir.,
300 F.2d 843; United States v. Eiland, 4 Cir., 223 F.2d 118. I think
there is no tenable distinction between these authorities and the
case at bar.
I hold that the liens of the United States are entitled to
priority over the ...