United States v. Brosnan

363 U.S. 237, 80 S. Ct. 1108, 4 L. Ed. 2d 1192, 1960 U.S. LEXIS 1997, 1 C.B. 733, 5 A.F.T.R.2d (RIA) 1635
CourtSupreme Court of the United States
DecidedJune 13, 1960
Docket137
StatusPublished
Cited by207 cases

This text of 363 U.S. 237 (United States v. Brosnan) is published on Counsel Stack Legal Research, covering Supreme Court of the United States primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Brosnan, 363 U.S. 237, 80 S. Ct. 1108, 4 L. Ed. 2d 1192, 1960 U.S. LEXIS 1997, 1 C.B. 733, 5 A.F.T.R.2d (RIA) 1635 (1960).

Opinions

Mr. Justice Harlan

delivered the opinion of the Court.

In these two cases, the United States purports to hold federal tax liens on Pennsylvania and California real properties which are concededly junior to defaulted mortgages held on the same properties by the other parties to the suits. The basic issue in each case is whether the federal lien was effectively extinguished by state proceed[239]*239ings to which the United States was not, nor was required under state law to be, a party.

The course of proceedings giving rise to this issue was as follows: In No. 137, involving a tract of Pennsylvania land, the respondent mortgagees, under a confession-of-judgment provision of the mortgage bond, obtained an in personam judgment against the mortgagor-taxpayer, pursuant to which the property was sold under a writ of fieri jadas.1 Subsequently, the United States instituted this suit under 26 U. S. C. § 7403, seeking an enforcement of its tax lien by foreclosure and sale.2 The District Court held that the Government's lien on the property in question had been effectively extinguished by the Pennsylvania proceedings, and it entered judgment for the defendants. The Court of Appeals affirmed. 264 F. 2d 762.

In No. 183, California real and personal properties, subject to a deed of trust and two chattel mortgages, were sold by the trustee-mortgagee pursuant to powers of sale contained in the respective instruments. The United States received no actual notice of the sale. Thereafter, the mortgagee, which had bought in at the sale, brought this suit against the Government under 28 U. S. C. § 2410 to quiet its title, claiming that the exercise of the powers of sale had effectively extinguished the federal tax lien. The Court of Appeals, reversing the District Court, dismissed the suit, holding that the federal lien could be [240]*240divested “only with the consent of the United States and in the manner prescribed by Congress.” 265 F. 2d 862, 869. The Court did not reach the question of the effect which California law purports to give to the exercise of the power of sale upon junior liens.

We brought the cases here, 361 U. S. 811, because of the importance of the issue in the administration of the tax laws and the conflict between the decisions of the Third and Ninth Circuits.

I.

Federal tax liens are wholly creatures of federal statute. Detailed provisions govern their creation, continuance, validity, and release.3 Consequently, matters directly affecting the nature or operation of such liens are federal questions, regardless of whether the federal statutory scheme specifically deals with them or not. See Clearfield Trust Co. v. United States, 318 U. S. 363. Yet because federal liens intrude upon relationships traditionally governed by state law, it is inevitable that the Court, in developing the federal law defining the incidents of such liens, should often be called upon to determine whether, as a matter of federal policy, local policy should be adopted as the governing federal law, or whether a uniform nationwide federal rule should be formulated.

In determining the extent of the “property and rights to property” (§ 6321) to which a government tax lien attaches, we have looked to state law. United States v. Bess, 357 U. S. 51, 55. The mortgagees claim that the present cases are governed by the principle of Bess. They assert that since the taxpayer-mortgagors’ interests were subject to being terminated by means of the state pro[241]*241ceedings here invoked, their “property and rights to property” were limited to that extent; that under Bess, the Government’s lien attaches only to property rights created under state law; and that therefore, the Government’s interest was subject to being similarly terminated.

The fallacy of this contention is evident. In Bess, we held that a deceased’s property in insurance policies on his own life was limited to their cash surrender value and did not extend to their proceeds, which he could never enjoy. Here, however, the mortgagors owned the entire fee interests in the properties, subject only to the mortgages. This Court has repeatedly rejected the contention that because a fee owned by a taxpayer was already encumbered by a lien which enjoyed seniority under state law, the Government’s lien necessarily attached subject to that lien.4 A fortiori, the “property” to which the federal lien can attach is not diminished by the particular means of enforcement possessed by a competing lienor to whom federal law concedes priority.

II.

We nevertheless believe it desirable to adopt as federal law state law governing divestiture of federal tax liens, except to the extent that Congress may have entered the field. It is true that such liens form part of the machinery for the collection of federal taxes, the objective of which is “uniformity, as far as may be.” United States v. Gilbert Associates, 345 U. S. 361, 364. However, when Con[242]*242gress resorted to the use of liens, it came into an area of complex property relationships long since settled and regulated by state law. We believe that, so far as this Court is concerned, the need for uniformity in this instance is outweighed by the severe disclocation to local property relationships which would result from our disregarding state procedures. Long accepted non judicial means of enforcing private liens would be embarrassed, if not nullified where federal liens are involved, and many titles already secured by such means would be cast in doubt. We think it more harmonious with the tenets of our federal system and more consistent with what Congress has already done in this area, not to inject ourselves into the network of competing private property interests, by displacing well-established state procedures governing their enforcement, or superimposing on them a new federal rule. Cf. Board of Comm’rs v. United States, 308 U. S. 343.

III.

This conclusion would not, of course, withstand a congressional direction to the contrary. The Government argues that by the enactment of certain statutes relating to judicial proceedings for the enforcement and extinguishment of federal liens, Congress has, at least impliedly, so spoken.

As early as 1868, Congress had authorized a suit by the United States to enforce its own tax lien.5 A similar provision now appears as 26 U. S. C. § 7403.6 However, [243]

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Bluebook (online)
363 U.S. 237, 80 S. Ct. 1108, 4 L. Ed. 2d 1192, 1960 U.S. LEXIS 1997, 1 C.B. 733, 5 A.F.T.R.2d (RIA) 1635, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-brosnan-scotus-1960.