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UNITED STATES V. DURHAM LUMBER CO., 363 U. S. 522 (1960)
U.S. Supreme Court
United States v. Durham Lumber Co., 363 U.S. 522 (1960)
United States v. Durham Lumber Co.
Argued October 19, 1959
Decided June 20, 1960
363 U.S. 522
Certain general contractors were adjudicated bankrupts after having defaulted both on the payment of federal taxes and on the payment of amounts due to certain subcontractors on the construction of buildings in North Carolina. The owners of the buildings paid to the trustee in bankruptcy the amount remaining due under the contract, and it was agreed that the subcontractors could assert the same rights against the trustee as they could have asserted against the owners. Under §§ 6321 and 6322 of the Internal Revenue Code of 1954, the United States claimed priority for its tax lien on the "property and rights to property" belonging to the general contractors. The Federal Court of Appeals held that, under North Carolina law, the general contractors had no property interest in the amount due under the general construction contract, except to the extent that such amount exceeded the aggregate of all amounts due to subcontractors, and that, therefore, the Government could recover only so much of the construction price as would remain unpaid after deduction of a sum sufficient to pay the subcontractors.
Held: since the Court of Appeals is much closer to North Carolina law than is this Court, and since this Court cannot say that the Court of Appeals' characterization of the taxpayers' property interests under that law is clearly erroneous or unreasonable, the judgment is affirmed. Pp. 363 U. S. 523-527.
257 F.2d 570 affirmed.
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