No. 96-1613

IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1997

UNITED STATES OF AMERICA, PETITIONER

v.

ESTATE OF FRANCIS J. ROMANI

ON PETITION FOR A WRIT OF CERTIORARI TO
THE SUPREME COURT OF PENNSYLVANIA

PETITION FOR A WRIT OF CERTIORARI

WALTER DELLINGER
Acting Solicitor General

LORETTA G. ARGRETT
Assistant Attorney General

LAWRENCE G. WALLACE
Deputy Solicitor General

KENT L. JONES
Assistant to the Solicitor General

WILLIAM S. ESTABROOK
JOAN I. OPPENHEIMER
Attorneys

Department of Justice
Washington, D.C. 20530-0001
(202)514-2217

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QUESTION PRESENTED 

    Since 1797, Congress has provided that any claim of
the United States against an insolvent estate "shall
be paid first" (31 U.S.C. 3713(a)).  Since 1913, Con-
gress has provided that a federal tax lien is not valid
against a judgment lien creditor until notice of the
tax lien has been filed (26 U.S.C. 6323(a)).
The question presented in this case is whether a
federal tax claim against an insolvent estate is to "be
paid first" when a judgment lien arose before the
notice of tax lien was filed.

(I)

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TABLE OF CONTENTS

Opinions below . . . . 1 
Jurisdiction . . . . 1
Statutes involved . . . . 2
Statement . . . . 3
Reasons for granting the petition  . . . . 8
Conclusion . . . . 21
Appendix A . . . . 1a
Appendix B . . . . 4a
Appendix C . . . . 21a

    TABLE OF AUTHORITIES

Cases:

Back  v. IRS,  445 A.2d 1057 (Md. 1982) . . . .  19
Carter v. Carter, 681 F. Supp. 323 (E.D. Va.
1988) . . . . 19 
City of Vormillion v. Stan Houston Equipment Co.,
341 F. Supp. 707  (D.S.D. 1972) . . . . 20 
Conard v. Atlantic Insurance Co., 26 U.S. (1 Pet.)
386 (1828) . . . . 10 
Durham v. United States, 545 F. Supp, 1093
(D.N.J. 1982),  aff'd without opinion, 720 F.2d 661
(3d Cir. 1983) . . . . 19 
Estate of  Berretta,  In re,  426  A.2d 1098 (Pa. 1981) . . . . 5 
Estate of Frazier v. District Director, Internal
Revenue Service, 92-2 U.S. Tax Cas. (CCH)  60,120
(N.D. Ga. 1992) . . . . 19
Estate of Silberman, 46 Cal. Rptr. 2d 610 (Ct. App.
1995) . . . . 19
Exchange Bank & Trust Co. v. Tubbs Mfg. Co.,
246 F.2d 141 (5th Cir.), cert. denied, 355 U.S. 868
(1957) . . . .  20
H.B. Agsten & Sons, Inc. v. Huntington Trust &
Savings Bank, 388 F.2d 156 (4th Cir. 1967), cert.
denied, 390 U.S. 1025 (1968) . . . .  19

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IV

Cases-Continued:              Page

Illinois ex rel. Gordon v. Campbell, 329 U.S. 362
(1946) . . . . 10
James v. United States, 366 U.S. 213 (1961)  . . . . 14
Kentucky v. United States, 383 F.2d 13 (6th Cir.
1967) . . . . 5, 8, 12, 19
Massachusetts v. United States, 333 U.S. 611
(1948) . . . . 10,12
Nesbitt v. United States, 622 F.2d 433 (9th Cir.
Cir. 1980), aff'g  445  F. Supp. 824 (N.D. Cal. 1978),
cert. denied, 451 U.S. 984 (1981) . . . . 5, 7, 8, 13,
                                                                    18, 19
New York v. Maclay, 288 U.S. 290 (1933) . . . . 10
Spira v. United States, 76-2 U.S. Tax Gas. (CCH)
 9600  (1976) . . . . 19
Spokane County v. United States, 279 U.S. 80
(1929) . . . . 10
Succession of Nobles, 684 So.2d 973 (La. Ct. App.
1996) . . . . 20
Talcott, Inc. v. Roto American Corp., 302 A.2d 147
(N.J. Ch. 1973) . . . . 20
Thelusson v. Smith, 15 U.S. (2 Wheat.) 396
(1817) . . . . 9, 11
Thor Power Tool Co. v. Commissioner, 439 U.S.
522 (1979) . . . . 9
United States v. Emory, 314 U.S. 423 (1941) . . . . 6, 8,
                                                                              11, 12
United States v. Gilbert Associates, Inc., 345 U.S.
361 (1953) . . . . 10
United States v. Key, 397 U.S. 322 (1970) . . . . 6, 8, 11,
                                                                         13, 17, 19
United States v. Kimbell Foods, Inc., 440 U.S. 715
(1979) . . . . 7, 8, 14, 15, 16
United States v. New Britain, 347 U.S. 81 (1954) . . . . 13
United States v. Randall, 401 U.S. 513 (1971) . . . . 11
United States v. Snyder, 149 U.S. 210 (1893) . . . . 17

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Cases-Continued              Page

United  States v.  Texas, 314 U.S. 480 (1941) . . . . 10, 11
United States v. Vermont, 377 U.S. 351 (1964) . . . . 10, 13
United States v. Waddill, Holland & Flinn, Inc.,
323 U.S. 353 (1945) . . . . 10, 19

Statutes:

Act of July 31, 1789, ch. 5, 21, 1 Stat. 29 . . . . 16
Act of March 3, 1797, ch. 20, 5, 1 Stat. 515 . . . . 4, 16
Act  of  March  2, 1799, ch. 22, 65, 1 Stat. 627 . . . . 16
Act of July 13, 1866, ch. 184, 9, 14 Stat. 101 . . . . 17
Act of March 4, 1913, ch. 166, 37 Stat. 1016 . . . . 4, 17
Act of November 6, 1978, Pub. L. No. 95-598, Tit. HI,
 322(a),  92  Stat. 2562 . . . . 16
Act of September 13, 1982, Pub. L. No. 97-258, Subtit.
III,  1, 96 Stat. 972 . . . . 16
Bankruptcy Act of 1898, ch. 541, $64,30 Stat. 544 . . . . 12
Federal Tax Lien Act of 1966, Pub. L. No. 89-719,
80 Stat. 1125 . . . . 17
Internal Revenue Code (26 U.S.C.):
6321 . . . . 3, 17
6323  . . . . 13, 14, 17
6323(a) . . . .  passim
31 U.S.C. 3713 . . . . 4 
31 U.S.C. 3713(a) . . . . 2, 4, 6, 10
31 U.S.C. 3713(a)(1) . . . . 4 
31 U.S.C. 3713(a)(2) . . . . 11, 13, 16
33 Hen. VIII, ch. 39,  74 . . . . 16
13 Eliz. I,  ch. 4 . . . . 16

Miscellaneous:

American Bar Association, Final Report of the Com-
mittee on Federal Liens (1959) . . . . 18
105 Cong. Rec. (1959) (Index):
p. 1030 . . . . 18
p. 1258 . . . . 18

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VI

Miscellaneous-Continued:            Page

Hearings Before the House Committee on Ways and
Means on the Priority of Federal Tax Liens and
Levies, 89 th Cong.,  2d Sess. (1959) . . . . 18
H.R. Rep. No. 1884, 89th Cong., 2d Sess. (1966) . . . . 17
H.R. Rep. No. 651, 97th Cong., 2d Sess. (1982) . . . . 16
Note, Nesbitt v. United States: Denying an Implied
Tax Lien Exception to the Federal Priority in Insol-
vency, 33 Cath.  U.L.  Rev.  741 (1984) . . . . 5
Plumb, The Federal Priority in Insolvency: Proposals
for  Reform,  70  Mich.  L. Rev. 1 (1971) . . . . 18
S. 2197, 92d  Cong.,  1st  Sess. (1971) . . . . 18
S. Rep. No. 1708, 89th Cong., 2d Sess. (1966) . . . . 17

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In the Supreme Court of the United States

OCTOBER TERM, 1997

No.

UNITED STATES OF AMERICA, PETITIONER

v.

ESTATE OF FRANCIS J. ROMANI

ON PETITION FOR A WRIT OF CERTIORARI TO
THE SUPREME COURT OF PENNSYLVANIA

PETITION FOR A WRIT OF CERTIORARI

    The Acting Solicitor General, on behalf of the
United States of America, petitions for a writ of
certiorari to review the judgment of the Supreme
Court of Pennsylvania in this case.

OPINIONS BELOW

    The opinion of the Supreme Court of Pennsylvania
(App., infra, la-13a) is reported at 688 A.2d 703. The
opinions of the Superior Court. (App., infra, 15a-20a)
and the Court of Common  Pleas (App, infra, 21a-25a)
are not reported.

JURISDICTION

    The judgment of the Supreme Court of Pennsylva-
nia was entered on January 17, 1997. The jurisdiction
of this Court is invoked under 28 U.S.C. 1257(a).

(1)

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2

STATUTES  INVOLVED

    1. 26 U.S.C. 6323(a) provides, irrelevant part:
The lien imposed by section 6321 shall not be
valid as against any purchaser, holder of a
security interest, mechanic's lienor, or judgment
lien creditor until notice thereof * * * has been
filed by the Secretary.

2. 31 U.S.C. 3713(a) provides, in relevant part:

    (1) A claim of the United States Government
shall be paid first when-

    (A) a person indebted to the Government is
insolvent and-

(i) the debtor without enough property
to pay all debts makes a voluntary
assignment of property;

(ii) property of the debtor, if absent, is
attached; or

(iii) an act of bankruptcy is committed;
or

(B) the estate of a deceased debtor, in the
custody of the executor or administrator, is not
enough to pay all debts of the debtor.
     .

(2) This subsection does not apply to a case
under title 11.

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3

STATEMENT

    1. On January 25, 1985, a judgment for $400,000 was
entered in favor of Romani Industries, Inc., against
Francis J. Romani in the Court of Common Pleas of
the Commonwealth of Pennsylvania. Romani Indus
tries did not obtain a writ of execution, or otherwise
seize any property of the debtor, in satisfaction of the
judgment. The judgment remains unpaid (App., infra,
22a).
    After the date of that judgment, the Internal Reve-
nue Service filed notices of federal tax liens on the
property of Francis J. Romani. A federal tax lien
arises by operation of law in the property of any tax-
payer who "neglects or refuses to pay the [tax] after
demand" (26 U.S.C. 6321). A notice of the federal tax
lien is filed in the office "designated by the laws of
[the] State, in which the property subject to the lien
is situated" (26 U.S.C. 6323(f)). The liens for which
notices were filed in this case were for unpaid taxes
and penalties totaling approximately $400,000 for the
years 1982, 1985,1987,1988 and 1989 (App., infra, 2a).
    Mr. Romani died on January 13, 1992. The admin-
istrator of his estate sought to transfer the only
asset of the estate-real estate having a value of ap-
proximately $53,000-to  Romani   Industries in satis-
faction of its outstanding judgment claim.  The
United States objected to that transfer and filed a
proof  of  claim  for federal taxes  and  interest  totalling
approximately $489,000 (App., infra, 2a). Because the
debts of the estate greatly exceed its assets, and the
estate is thus insolvent (ibid.), the United States
claimed first priority for payment of its claim from
the assets of the estate under what is known as the
"absolute priority" statute. That statute was first

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4

enacted in 1797 (Act of March 3, 1797, ch. 20,  5, 1
Stat. 515) and  is  now  codified  at  31 U.S.C. 3713(a). It
provides, in relevant part, that "[a] claim of the
United States Government shall be paid first when
* * * the estate of a deceased debtor, in the custody
of the executor or administrator, is not enough to pay
all debts of  the  debtor."  Ibid. 1
    Romani Industries contended, however, that the
"absolute priority" that Congress established in 31
U.S.C.  3713(a) for claims of the United States against.
insolvent  estates has been impliedly  repealed, for tax
claims,  by  2 6  U.S.C. 6323(a). That statute, which was
frost enacted in 1913 (Act of March 4, 1913, ch. 166, 37
Stat. 1016), provides that the federal tax lien "shall
not be valid as against any purchaser, holder of a
security  interest,  mechanic's  lienor, or judgment lien
credit or  until  notice  there ***  has been filed by
the Secretary." 26 U.S.C. 6323(a).   Romani  Indus-
tries claimed  that, because it became a "judgment lien
creditor" before notice of the federal tax lien" was
filed, it is  entitled  to  priority  under 26 U.S.C. 6323(a)
and that the "absolute priority" rule  of  31 U.S.C.  3713
is therefore inapplicable to this case.
    2. a. The Court of Common Pleas agreed with Ro-
mani Industries that 26 U.S.C. 6323(a) impliedly
repealed-for federal tax debts-the "absolute prior-
ity" rule of  31 U.S.C. 3713(a) (App., infra, 21a-25a).

___________________(footnotes)
                             
    1 Under this "absolute priority" statute, the claims of the
United States are also to be paid first when an insolvent debtor
"makes a voluntary assignment of property," when property of
an absent debtor is attached, or when "an act of bankruptcy is
committed" (31 U.S.C, 3713(a)(1)). In 1978, however, Congress
amended the statute to make it inapplicable to bankruptcy
cases brought "under title 11" of the United States Code (31
U.S.C. 3713(a)(2)). See note 6, infra.

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5

The court did not discuss or cite the several federal
decisions that have rejected this interpretation of
these federal statutes. See, e.g., Nesbitt v. United
States, 622 F.2d 433 (9th Cir. 1980), aff'g 445 F. Supp.
824 (N.D. Cal. 1978), cert. denied, 451 U.S. 984 (1981);
Kentucky v. United States, 383 F.2d 13, 14 (6th Cir.
1967). Instead, the court adopted the reasoning of one
of the conflicting opinions of the equally-divided court
in In re Estate of  Berretta,  426  A.2d  1098 (Pa. 1981),
which concluded that the provisions of 26 U.S. C.
6323(a) evidence a congressional intent to limit the
"absolute priority" otherwise established for the
collection of federal claims (App., infra, 24a). 2  The
court stated that this conclusion is supported by the
policy concern that application of the "absolute
priority" statute to federal tax claims could "frus-
trate legitimate commercial expectations" (id. at
23a).
    b. The Superior Court affirmed (App., infra, 15a-
20a). The court concluded that the governing princi-
ple of statutory construction is that an inconsistency
between conflicting provisions is to be resolved by
allowing the more specific provision to prevail over

___________________(footnotes)

    2 The Pennsylvania courts have long taken a narrow view
of the "absolute priority" statute, in a series of cases that are
collected and criticized in Note, Nesbitt v. United States:
Denying an Implied Tax Lien Exception to the Federal Priority
in Insolvency, 33 Cath. U.L. Rev. 741, 753-759 (1984). The
opinion from Estate of Berretta on which the court chose to
rely in this case was criticized by the opposing opinion from the
equally-divided court in Estate of Berretta because it "trans-
formed its view of what Congress should do into the presump-
tion that Congress has in fact impliedly repealed the Insolvency
Statute as to tax liens." In re Estate of Berretta, 426 A.2d at
1108 (Roberts, J.).

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6

the more general one (id. at 20a). The court stated
that 26 U.S.C. 6323(a) is the more specific provision
and  should  therefore prevail over  "the general provi-
sions of Section 3713" in any conflict between them
(App., infra, 20a).
    The Superior Court acknowledged that this Court
has held that "[o]nly the plainest inconsistency would
warrant * * * finding an implied exception to the
operation of so clear a command as that of" the abso-
lute priority statute (App., infra, 18a, quoting United
States  v. Emory,  314  U.S. 423,433 (1941)). The Supe-
rior Court concluded, however, that this exacting
standard is met-and  that  the  two  statutes  are  "most
certainly, conflicting"- because "[i]n the present
context * * * the government's relative priority as a
creditor differs depending upon which sect ion is
applied" (App., infra, 19a).
    c. The Supreme Court of Pennsylvania affirmed
(App., infra, 1a-13a). The court acknowledged that
the test applied by this Court in United States v. Key,
397 U.S. 322 (1970), governs in determing whether
26 U.S.C. 6323(a) impliedly repealed the "absolute
priority" rule of 31 U.S.C. 3713(a) for the collection of
tax debts (App., infra, 5a-6a). In Key, the Court
stated that an implied repeal of the "absolute prior-
ity" statute cannot be found unless (i) there is a facial
or "logical[] inconsistency]" between the two stat-
utes, (ii) the allegedly conflicting statute would "be
rendered redundant" if the "absolute priority" statute
applied or (iii) the `language or legislative history" of
the allegedly repealing provision reveals "a purpose
incongruous with * * *  application" of the absolute
priority rule. 397 "U.S. at 326.
    The Pennsylvania Supreme Court determined that
the two statutes are facially inconsistent because,

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7

"with respect to tax liens,  section  6323  provides  for  a
`first in time' priority while section  3713  gives  abso-
lute priority to the United States" (App., infra, 6a-7a
footnote omitted). The court concluded that the his-
tory and purpose of Section 6323(a) evidence "a con-
gressional intent that federal priorities be limited in
the tax area, regardless of whether the debtor is in-
solvent" (App., infra, 13a). 3
    The Pennsylvania Supreme Court stated that its
conclusions were reinforced by the rationale of this
Court's decision in United States v. Kimbell Foods,
Inc., 440 U.S. 715 (1979). In Kimbell Foods, this
Court held that,, in the absence of any federal statu-
tory directive, the relative priority of private liens
and consensual liens that arise from government
lending programs is to be determined under nondis-
criminatory state laws. 440 U.S. at 740. 4  This Court
noted in Kimbell Foods that commercial transactions

___________________(footnotes)

    3 Although the court sought generally to rely on the
legislative policies reflected in the Federal Tax Lien Act,
nothing in the history of that Act addresses the specific issues
presented in this case.  See Nesbitt v. United States, 445 F.
Supp. at 829. To the contrary, in enacting the Federal Tax
Lien Act (and on one later  occasion  as  well) Congress  declined
to enact a proposal to repeal the "absolute priority" statute as
applied to federal tax claims (ibid.):

    This Court cannot lightly disregard the fact that Con-
    gress has been requested on at least two occasions to
    amend  3466 in a manner which would achieve the
    result sought here by plaintiff, but it has not yet so
    amended that section.

    4 The Pennsylvania Supreme Court recognized that
"Kimbell Foods involves the priority to be accorded a federal
consensual  loan where the debtor  is solvent, and the case at bar
involves the question of the priority to be accorded a federal
tax lien where the debtor is insolvent"  (App., infra, 11a).

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8

are ordinarily formed in reliance upon state com-
mercial law and that a different rule for commercial
transactions involving the federal government could
upset ordinary business expectations. Id. at 739. The
Pennsylvania Supreme Court reasoned that this same
concern applies to the present case, for "the grant of
absolute federal priority in insolvency cases, as in
solvency cases, would be destructive of commercial
stability and would frustrate legitimate commercial
expectations" (App., infra, 13a).
    The Pennsylvania Supreme Court noted that its
holding conflicts with the decisions of the "federal
courts that have held that section 3713 provides for
absolute priority in tax lien cases" (App., infra, 12a
n.17, citing, e.g.,  Nesbitt  v. United States,  supra).  The
court stated, however, that it was "not persuaded by
the reasoning of" those decisions (ibid.).

REASONS FOR GRANTING THE PETITION

    The decision of the Pennsylvania Supreme Court
fails to honor this Court's repeated admonition that
"[o]nly the plainest inconsistency would warrant our
finding an implied exception to the operation of so
clear a command as that of [31 U.S.C. 3713]" (United
States v. Key, 397 U.S. at 324-325, quoting United
States v. Emory, 314 U.S. 423, 433 (1941). `The deci-
sion in this case directly conflicts with the decisions
of two federal courts of appeals and numerous other
federal courts. E.g., Nesbitt v. United States, 622 F.2d
433 (9th Cir.  1980),  aff'g  445  F .Supp. 824 (N.D. Cal.
1978), cert. denied, 451 U.S. 984 (1981); Kentucky v.
United States, 383 F.2d 13, 14 (6th Cir. 1967); App.,
infra, 12a n. 17. The question presented is one of re-
curring importance- to the administration of the tax
laws. Resolution of the conflict on this recurring

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9

question is needed to assure uniform treatment of
taxpayers and to "ensure as far as possible that
similarly situated taxpayers pay the same tax." Thor
Power Tool Co. v. Commissioner, 439 U.S. 522, 544
(1979).
    1. a. One hundred and eighty years ago, this Court
held that the "absolute priority" statute requires
that debts owed to the United States be paid first
from insolvent estates even if a competing creditor
had previously obtained a valid and enforceable
judgment lien. In Thelusson v. Smith, 15 U.S. (2
Wheat.) 396, 425 (1817), as in the present case, the
facts fell "precisely within" the scope of the absolute
priority statute.  The Court stated that (ibid.)
(emphasis supplied):
    
    the question still remains * * * whether this
    right of preference [under the absolute priority
    statute] can cut out a prior judgment creditor?
    The law declares "that in all cases of insol-
    vency, &c., the debts due to the United States
    shall be first satisfied * * *.  These expressions
    are as general as any which could have been
    used, and exclude all debts due to individuals,
    whatever may be their dignity. * * * The law
    makes no exception in favour of prior judg-
    ment editors; and no reason has been, or w e
    think can be, shown to warrant this court in
    making one.

The Court concluded in Thelusson that, whenever
title and possession remain in "the debtor's estate,"
the claim of the United States is to "be first satis-
fied" under the statute. Id. at 426. As Justice Car-
dozo explained for the Court more than a century
later, "[t]he ruling [in Thelusson] was that the

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10

general lien of a judgment upon the lands of an
insolvent debtor is subordinate to the preference
established by the [absolute priority] statute unless
seizure by marshal or some other equivalent act has
made the lien specific and brought about a change of
title or possession." New York v. Maclay, 2%8 U.S.
290, 293 (1933). Accord, United States v. Gilbert
Associates, Inc., 345 U.S. 361, 366 (1953); United
States v. Texas, 314 U.S. 480,485-486 (1941)!

___________________(footnotes)

    5 This Court has "repeatedly reserved the question
whether the priority given the United States by [31 U.S.C.
3713(a)] can be overcome even by a prior specific and perfected
lien." United States v. Vermont, 377 U.S. 351, 358 n.8 (1964).
The Court has never decided the issue because it has found, in
each case, that the competing lien had not divested the debtor
of title or possession and that. the lien was therefore not
sufficiently specific for the question to be squarely raised. See,
e.g., ibid.; United States v. Gilbert Associates, Inc., 345 U.S.
361,365-366 (1953);  Illinois  ex rel, Gordon  v. Campbell, 329 U.S.
362, 370 (1946); United States v. Waddill, Holland & Flinn,
Inc., 323 U.S. 353, 355-356 (1945); United States v. Texas, 314
U.S. 480, 484-486 (1941); New York v. Maclay, 288 U.S. 290, 294
(1933); Spokane County v. United States, 279 U.S. 80, 95
(1929).
    The Court has concluded that a mortgage may effect a
transfer of title, taking the property outside the estate of the
debtor and therefore beyond the reach of the absolute priority
statute. See Conard v. Atlantic Insurance Co., 26 U.S. (1 Pet.)
386, 445-446 (1828). In so ruling, the Court did "not contem-
plate that exceptions were being made" from the absolute
priority statute instead, it "conceived that the funds or
property affected, being covered by mortgage, belonged in fact
to third persons, not to the insolvent debtor." Massachusetts
v. United States, 333 U.S. 611, 634 n.38 (1948). The Court "has
been loath to expand" such an exception "to include other
types of lien." Ibid. The Court has emphasized that  none  of  its
decisions lend "support to the assumption that the doctrine of
the mortgage cases, whatever its current vitality, would re-

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11

    Recognizing that "[t]he law makes no exception in
favour of prior judgment creditors" (Thelusson v.
Smith, 15 U.S. (2 Wheat.) at 425), the Court has con-
sistently held that "[o]nly the plainest inconsistency
would wan-ant * * * finding an implied exception
to the operation" of the absolute priority statute
(United States v. Emory, 314 U.S. at 433). Under the
analysis applied by the Court in United States v. Key,
397 U.S. at 324-325, such a "plain[l inconsistency"
could be said to exist only if (i) the competing statute
is logically inconsistent with the absolute priority
statute; (ii) an unconditional application of the abso-
lute priority statute would deprive the competing
statute of any meaning; or (iii) the history and text of
the competing statute reflect an actual intent by
Congress to modify the absolute priority statute. See
also id. at 326-332?

___________________(footnotes)

quire the subordination of unsecured claims of the United
States to a specific and perfected lien." United States v.
Texas, 314 U.S. at 486.
    6 Outside of bankruptcy proceedings, which are now
expressly excepted from the coverage of the statute (31 U.S.C.
3713(a)(2)), this Court has never upheld a claim that Congress
has impliedly repealed any aspect of the absolute priority
statute. In United States v. Randall, 401 U.S. 513, 517 (1971),
the Court noted that the absolute priority statute had been
superseded, for bankruptcy cases, by the specific priorities
granted by Congress [to claims of the United States] in the
Bankruptcy Act" (401 U.S. at 517). In United States V. Key,
397 U.S. at 326-330, however, the Court emphasized that the
absolute priority statute "must apply according to its terms
except where expressly superseded, or where excluded by a
later enactment `plainly inconsistent' with it" (397 U.S. at 332).
Applying this standard, the Court concluded in Key that
bankruptcy provisions requiring "fair and equitable" treat-
ment of creditors did not justify a departure from the absolute

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12

    The test applied by this Court in determining
whether an implied exception from the statute exists
is not satisfied in this case. As the Sixth Circuit
explained in Kentucky v. United States, 383 F.2d at
14-15, the plain language of the "absolute priority"
statute refutes the contention that it has been
impliedly repealed for tax claims by 26 U. S. Cl. 6323(a):

    We at once emphasize `that, of the statutes
involved, one * * * is a priority statute, and the
other-26  U.S.C.  6323-is  a lien statute.  If we
employ a literal reading of [the absolute priority
statute], its language provides the answer to the
question before us. We requote it for emphasis:

    "Whenever * * * the estate of any deceased
debtor, in the hands of the executors or
administrators, is insufficient to pay all the
debts due from the deceased, the debts due to
the  United  States  shall  be first satisfied.

___________________(footnotes)   

priority Congress established for the claims of the United
States. Similarly, in United States v. Emory, the Court
rejected the contention that Section 64 of the Bankruptcy Act
of 1898, ch. 541, 30 Stat. 544, which gave certain wage claim-
ants priority over tax and non-tax claims of the United States,
impliedly repealed the absolute priority statute in non-
bankruptcy cases. In a holding equally applicable to the pre-
sent case, the  Court   stated  in  Emory (314 U.S. at 427):

    Neither the language of  64a nor the Congressional
    history of the legislation here involved supports the
    proposition that  64a was intended to eliminate, either
    partially or wholly, the priority of claims of the United
    States in non-bankruptcy proceedings,

See also Massachusetts v. United States, 333 U.S. 611 (1948).

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13

    The essentials for application of the statute are
    here present-the taxpayer is deceased; he was a
    debtor of the United States; his estate is insuf-
    ficient to pay all his debts.  Present these essen-
    tials, the debts owing the United States "shall be
    first satisfied."

The Ninth Circuit reached the same conclusion in
Nesbitt  v. United States, 445 F. Supp. at 828, adopted
by reference, 622 F.2d at 433: 7

  There is nothing in either the language or the
  legislative history of [26 U.S.C. 6323] to indi-
  cate that Congress intended to make tax liens
  the federal government's sole remedy for the
  collection of unpaid taxes. To the contrary,
  Congress intended tax liens to supplement
  existing means for the collection of taxes, in-
  cluding [the absolute priority statute]. There is
  therefore no basis for saying that Congress, by

___________________(footnotes)

    7 The Pennsylvania Supreme Court did not suggest that 26
U.S.C. 6323(a) would have no meaning if it did not impliedly
repeal the  absolute  priority  statute. The two statutes obviously
differ in their scope and are not logically inconsistent: the
absolute priority statute governs the priority of claims of the
United States only in insolvencies outside of bankruptcy court
(see 31 U.S.C. 3713(a)(2)); by contrast, 26 U.S.C. 6323(a) gov-
erns the validity of the federal tax lien against specific types of
security interests in cases involving solvent debtors and also in
the many insolvency situations to which the absolute priority
statute is inapplicable. This Court has often noted that Con-
gress has intentionally chosen to establish greater protection
for the United States in cases involving insolvent debtors than
in cases  "[w]here the debtor is not insolvent."  United  States v.
Vermont, 377 U.S. at 358. See also United States v. Key, 397
U.S. at 329; United States v. New Britain, 347 U.S. 81, 85
(1954).

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14

    creating federal tax liens, intended to modify
    the absolute priority statute] in any way.

    Justice Whittaker expressed the same views in his
concurring opinion in James v. United States, 366
U.S. 213,252 &  n.4 (1961), in which he concluded that
the  absolute  priority  statute  remains  applicable to tax
claims notwithstanding the enactment of 26 U.S.C.
6323. He stated that, "even though the tax claim of
the Government may be only a general lien, with
notice thereof not yet filed in the proper local office
pursuant to 26 U.S.C.  6323, we have held that it
must be accorded priority over the claims of all prior
general lienholders" and it therefore has priority in
insolvency cases "over   the  claims of others, including
`judgment  creditors."  366 U.S. at 252  &  n.4.
The Pennsylvania Supreme Court acknowledged
(App., infra, 12a n.17) that its decision in this case
directly conflicts with numerous federal decisions.
Because of these conflicting decisions, taxpayers,
creditors and the United States will receive different
treatment of identical claims solely as a result of
geographical happenstance.
    b. The Pennsylvania Supreme Court erred in
relying on United States v. Kimbell Foods, Inc., 440
U.S. 715 (1979), as guidance the policy considera-
tions that underlie the question of whether the gov-
ernment in the tax arena is-to be treated as an ordi-
nary creditor or as a creditor with super-priority"
(App., infra, 7a). The Kimbell Foods case did not in-
volve federal tax claims; nor did it involve insolvent
debtors.  Instead, it involved "the priority to be ac-
corded a federal consensual loan where the debtor is
solvent" (App., infra, 11a). The Court expressly
noted in Kimbell Foods that, when the government is

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15

an involuntary creditor of an insolvent taxpayer, an
entirely different set of statutory rules and policy
concerns becomes applicable (440 U.S. at 734):
 
    That collection of taxes is vital to the function-
ing, indeed existence, of government cannot be
denied * * * . The importance of securing ade-
quate revenues to discharge national obligations
justifies the extraordinary priority accorded fed-
eral tax liens through the  choateness and first-in-
time doctrines.  By contrast, when ,the United
States operates as a moneylending institution
under carefully circumscribed programs, its
interest in recouping the limited sums advanced is
of a different order. Thus, there is less need here
than in the tax lien area to provoke protective
measures against defaulting debtors in a manner
disruptive of existing credit markets.

As an involuntary creditor of delinquent taxpayers,
the government cannot "control the factors that make
tax collection likely." Id. at 736. As a consensual len-
der, however, the government acts "voluntarily, with
detailed knowledge of the borrower's financial status"
(ibid.).
    Recognizing the significant difference between
federal tax liens and the consensual liens created
under government loan programs, the Court stated in
Kimbell Foods that " `[a]s a quasi-commercial lender,
[the government] does not require . , . the special
priority which it compels as sovereign' in its tax
collecting capacity." 440 U.S. at 737-738, quoting 557
F.2d at 500. The Pennsylvania Supreme Court thus
plainly erred in relying on Kimbell Foods in deter-
mining the scope of the priority created by statute for
the collection of non-consensual  debts  owed  by insol-

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16

vent debtors to the United States "in its tax col-
lecting capacity" (440 U.S. at 738).
    c. The Pennsylvania Supreme Court also erred in
concluding that the legislative history of 26 U.S.C.
6323(a) reflects an intent by Congress impliedly to
repeal the absolute priority statute.
    (i) The absolute priority statute is derived from
ancient English practice, under which the Crown
asserted for itself a priority over all other creditors
of an insolvent debtor.* In the United States, this
priority of  the   sovereign  initially applied only to debts
due on bonds and for customs duties. See Act of July
31, 1789, ch. 5,  21, 1 Stat. 29.  By 1797, however, it
was  made  applicable  to  all debts due the United States
from the estate of an insolvent debtor, under a statute
whose language has since- remained substantially
unchanged. See Act of March 3, 1797, supra; Act of
March 2, 1799, ch. 22, 65, 1 Stat. 627.
    Congress has frequently amended, codified and
remodified the absolute priority statute. Indeed, it has
done so twice within the past twenty years. In 1978,
Congress amended the absolute priority statute to
make it inapplicable to bankruptcy cases.  See 31
U.S.C. 3713(a)(2); Act of November 6, 1978, Pub. L. No.
95-598, Tit. III,  322(a), 92 Stat. 2562. In 1982, Con-
gress recodified the absolute priority statute to make
minor revisions in its terminology.  See Act of Sep-
tember 13, 19827 Pub. L. No. 97-258,   Subtit.  III, 1, 96
Stat. 972. In doing so, however, Congress noted that
no substantive change in the law was intended. H.R.
Rep. No. 651, 97th Cong., 2d Sess. 2-3 (1982).
    Congress has never modified the absolute priority
statute to eliminate its application to federal tax

___________________(footnotes)
               	
8 See 33 Hen. VIII, ch. 39, 9 74; 13 Eliz. I, ch. 4.

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17

claims.  Indeed, the two most recent amendments
reflect that Congress, having repeatedly revisited the
statute, has determined to make no changes to its
scope other than those expressly enacted. As this
Court has often observed, the statute contains as
"clear a command" now as ever,  United  States  v. Key,
397 U.S. at 325.
    (ii) The legislative history of 26 U.S.C. 6323 does
not support any conclusion to the contrary. Begin-
ning in 1866, Congress established a federal tax lien
upon all property owned by a delinquent taxpayer.
See 26 U.S.C. 6321; Act of July 13,1866, ch. 184,$9, 14
Stat. 101.  In response to a decision of this Court hold-
ing that an unrecorded tax lien had priority in a
delinquent taxpayer's property even over a purchaser
for  value  without  notice  (United  States  v. Snyder, 149
U.S. 210 (1893)), the statute was amended in 1913 to
make the tax lien ineffective against a mortgagee,
purchaser, or judgment creditor whose interests
arose before notice of the tax lien was filed. Act of
March 4, 1913, ch. 166,37 Stat. 1016.
    In 1966, Congress determined to give similar pro-
tection to additional types of secured transactions.
The Federal Tax Lien Act of 1966, Pub. L. No. 89-719,
80 Stat. 1125, amended the statute to protect holders
of various additional types of commercial security
interests from an unfiled tax lien. See H. It. Rep. No.
1884, 89th Cong., 2d Sess. 1-2 (1966); S. Rep. No. 1708,
89th Cong., 2d Sess. 1-2 (1966). The legislative his-
tory of that Act, however, reflects that these amend-
ments to the tax lien statute did not intend to repeal
or modify the absolute priority statute-for Congress
declined to enact proposals that had been made at that
time for that very purpose. The American Bar Asso-
ciation, which proposed the legislation that resulted

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18

in the Federal Tax Lien Act, had also proposed that
the absolute priority statute be amended to subject
that statute to the priorities established under the
Bankruptcy Act and the Internal Revenue Code. See
American Bar Association, Final Report of the
Committee on Federal Liens 7, 124 (1959) (Final
Report), contained in Hearings Before the House
Committee on Ways and Means on the Priority of
Federal Tax Liens and Levies, 89th Cong., 2d Sess.
85, 199 (1959).9 The ABA proposal and report were
submitted to Congress, and three bills were intro-
duced containing this proposed revision of the abso-
lute priority statute. House Hearings, supra, at 75-
88, 196-201. These bills, along with the ABA proposal,
died in committee. 105 Cong. Rec. 1020, 1258 (1959)
(Index).
    In 1970, the ABA submitted to the Senate Judiciary
Committee a similar proposed amendment to the abso-
lute priority statute. S. 2197, 92d Cong., 1st Sess.
(1971); see Plumb, The Federal Priority in Insol-
vency: Proposals  for Reform, 70 Mich. L. Rev. 1, 9-10
(1971). This bill also died in committee.
Congress has thus-on at least two occasions-
declined to enact legislation-to limit  the  application of

___________________(footnotes)

    9 The ABA proposed to amend the absolute priority statute
to "preserve, ahead of the priority of non-lien federal claims,
any non-federal lien or security that would have been entitled
to priority over the claim of the United States immediately
prior to the divestment of the debtor's property" and to
"assure, contrary to the suggestions made in some decisions,
that any lien which would qualify for priority in the absence of
insolvency would continue to enjoy such priority."  Final
Report, supra, at 124. Under the ABA's proposal, the order of
priorities specified in 26 U.S.C. 6323(a) would thus have been
applicable in insolvency.

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19

the absolute priority statute to tax claims. As the
Ninth Circuit concluded in Nesbitt v. United States,
622 F.2d at 433, aff'g  445  F.  Supp. at 829, this history
reflects that Congress did not intend to change that
statute. To the contrary, by remodifying the absolute
priority statute in 1982 without making any change in
its application to tax claims, Congress reaffirmed the
broad and "clear * * * command" of the statute
(United States v. Key, 397 U.S. at 325). The words
that Congress has employed in the absolute priority
statute remain "broad and sweeping and, on their face,
admit of no exception to the priority of claims of the
United States" (United States v. Waddill Co., 323
Us. 353,355 (1945)).
    3. Whether 26 U.S.C. 6323(a) impliedly repealed
application of the absolute priority statute to federal
tax claims is a question of substantial, recurring im-
portance. The question is frequently raised, fre-
quently litigated and often placed in doubt.   See App.,
infra, 12a n.17. Many decisions have agreed that the
absolute priority statute remains applicable to tax
claims. E.g., Nesbitt v. United Slates, supra; Ken-
tucky v. United States, supra; H.B. Agsten & Sons,
Inc. v. Huntington Trust & Savings Bank, 388 F.2d
156, 160 (4th Cir. 1967) (Haynsworth, J., concurring),
cert. denied, 392 U.S. 1025 (1968); Durham v. United
States, 545 F. Supp. 1093, 1096 (D.N.J. 1982), aff'd
without opinion,  720  F.2d 661 (3d Cir. 1983); Carter v.
Carter, 681 F. Supp. 323,328 (E.D. Va. 1988); Estate of
Frazier v. District Director, Internal Revenue
Service, 92-2 U.S. Tax Cas.  (CCH)  60,120 (N.D. Ga.
1992); Spira v. United States, 76-2 U.S. Tax Cas.
(CCH)  9600 (1976); Estate of Silberman 46 Cal.
Rptr. 2d 610 (Ct. App. 1995); Back v. IRS, 445 A.2d
1057 (Md. Ct. Apec. App. 1982).

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20

    Other decisions, however, have agreed with the con-
trary view adopted by the Pennsylvania Supreme
Court in this ease. E.g., City of Vermilion v. Stan
Houston Equipment Co., 341 F. Supp. 707 (D.S.D.
1972); Talcott, Inc. v. Roto American Corp., 302 A.2d
147 (N.J. Ch. 1973); see also Exchange Bank & Trust
Co. v. Tubbs Mfg. Co., 246 F.2d 141 (5th Cir.), cert.
denied, 355 U.S. 868 (1957). The question frequently
arises in connection with estate proceedings in state
courts (e.g., Succession of Nobles, 684  So.2d  973 (La.
Ct. App. 1996). This yields an even greater potential
for disparate results than ordinarily occurs in federal
tax litigation.
    In the absence of a decision by this Court resolving
this conflict, the question whether Section 6323(a)
has impliedly repealed application of the absolute
priority statute to federal tax claims will continue to
foment recurring and wasteful litigation. Disparate
treatment of otherwise identically situated taxpayers
and creditors would occur, for the applicable rule of
priority would then depend upon geographic happen-
stance. Resolution of this recurring question by this
Court is needed to avoid continuing uncertainty and
to assure even-handed application of the revenue laws.

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21

CONCLUSION

    The petition for a writ of certiorari should be
granted.

Respectfully submitted.

WALTER DELLINGER
Acting Solicitor General

LORETTA G. ARGRETT
Assistant Attorney General

LAWRENCE G. WALLACE
Deputy Solicitor General

KENT L. JONES
Assistant to the Solicitor
General

WILLIAM S. ESTABROOK
JOAN I. OPPENHEIMER
Attorneys

APRIL 1997

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APPENDIX A

IN THE SUPREME COURT OF PENNSYLVANIA
WESTERN DISTRICT

No. 59 W.D. Appeal Docket 1995

IN RE: ESTATE OF FRANCIS J. ROMANI
        v.
APPEAL OF: THE UNITED STATES OF AMERICA

Appeal from the Judgment of Superior Court
entered at No. 1358 Pittsburgh 1994
on May 12, 1995, affirming the order of the
Court of Common Pleas,  Cambria County,
Orphan's Court Division entered July 7, 1995
     at No. 11-94-14

[Argued: Sept. 17, 1996]
[Decided: Jan. 17, 1997]

OPINION OF THE COURT

Before: FLAHERTY, C.J., and ZAPPALA, CAPPY,
CASTILLE,  NIGRO and NEWMAN, JJ.

FLAHERTY, Chief Justice.

The United States appeals a judgment of the Supe-
rior Court which affirmed an order of the Court of

(la)

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2a

Common  Pleas  of  Cambria County granting a petition
filed by the Estate of Francis J. Romani to transfer
real estate in lieu  of  execution.  We affirm.  1
    Francis J. Romani, who died on January 13, 1992,
left an insolvent estate with debts greatly exceeding
the value of the sole asset, a piece of real estate valued
at $53,001.00.  This real estate is burdened by a judg-
ment lien and a federal tax lien.  On January  25, 1985,
a judgment lien was entered and properly revived
against Mr. Romani in favor of Romani Industries,
Inc. in the amount of $400,000 Subsequent to the
entry of judgment against decedent, the Internal
Revenue Service filed notice of a federal tax lien
against the decedent for unpaid taxes and an unpaid
civil penalty that, with interest, totaled $489,720.04.
    The administrator of the Estate of Francis J. Ro-
mani filed a petition in the Court of Common Pleas of
Cambria County to transfer the real estate in lieu of
execution on behalf of the judgment creditor, Romani
Industries, Inc., and `the United States opposed the
petition. Both parties claimed priority to the pro-
perty. The lower court granted the administrator's
request for relief, holding that the status of Romani
Industries, Inc. as a first-in-time  judgment lien credi-
tor gave it priority over the government's subse-

___________________(footnotes)

    1 As the Superior Court noted, although there was no
order of final distribution in this  case, the practical  effect of
the court's order was to end the administration of  the estate
by awarding its sole asset to one of the competing creditors.
Therefore, the order is final and appealable. See Estate of
Montgomery, 367 Pa. Super. 31,532 A.2d 439 (1987).
    2 The original judgment was entered at No. 1985-205 and
it was subsequently revived on June  7, 1989.   The 1989 judg-
ment was entered at No. 1989-1311 and remains unpaid.

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3a

quently  filed  tax  lien. Order dated July 7, 1994, Court
of Common Pleas of Cambria County, G.D. No.
11-94-14. The Superior Court affirmed per curium.
In re Estate of Francis Romani, 445 Pa. Super. 637,
664 A.2d 1064 (1995). This appeal followed.

    The question presented is whether section 6323(a)
of the Tax Lien Act,3 26 U.S.C. 5 6323(a), ("section
6323"), limits the operation of section 3713(a)(l) of the
federal insolvency statute, 31 U.S.C.  3713(a)(l),
("section  3713")  as  to  tax  debts. 4 Romani Industries,
Inc. argues that its judgment lien has priority over a
tax claim of the United States because, under section
6323, the holder of a properly entered judgment lien
has priority over subsequently filed tax lien debts.
The United States disagrees, arguing that it has an
absolute priority under section 3713 to all proceeds
remaining in an insolvent estate, regardless of the
time of filing of the tax liens.
    Section 6323 provides for a "first in time" priority
to the rival lien in federal tax lien matters as follows:

___________________(footnotes)

    3 Tax Lien Act of 1966, Pub. L. No. 89-719, 80  Stat. 1125,
amending 26 U.S.C. 6323.
    4 We addressed this issue in Estate of Berretta, 493 Pa.
441, 426 A.2d 1098 (1981) where an evenly divided plurality
held that section 6323 impliedly repealed the operation of the
relevant insolvency statute, Revised Statutes $3466, 31 U.S.C.
191, with respect to tax lien debts of a decedent's insolvent
estate. Berretta dealt with the relative priority of a "first in
time" judgment creditor, a bank, and the United States to
certain proceeds remaining from the sale of two parcels of real
property included in the insolvent estate of the taxpayer.

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4a

  Validity And Priority Against Certain Persons

    (a)  Purchasers, Holders of Security Inter-
ests, Mechanic's Lienors and Judgment Lien
Creditors The lien imposed by section  6321 [a
federal tax lien] shall not be valid as against
any purchaser, holder of a security interest,
mechanic's  lienor, or judgment lien creditor until
notice thereof which meets the requirements of
subsection  (f)  has  been filed by the Secretary . . . . 5

    Tax liens have been authorized by predecessor tax
lien statutes.   See,  Act of  July  13,  1866,  ch. 184, 9, 14
Stat. 107.  It was not until 1966 with the amendment
of section 6323, however, that the statute specified
priority  rules  to resolve  conflicts  between  federal  tax
liens and rival liens}

    Section 3713 provides for an absolute priority for
federal tax claims in insolvency as follows:

  Priority Of Government  Claims
  
(a)(1) A claim of the United States  shall  be paid
first when-
    (B) the estate of a deceased debtor, in the
  custody of the executor or administrator, is
  not enough to pay all the debts of the debtor.

___________________(footnotes)

    5 Section 6321, 26 U.S.C. 6321, creates a lien in "favor of
the United States for the amount of tax that anyone has ne-
glected to pay on the property belonging to such person.

    6 Although section 6323 is undoubtedly a lien statute, it
also addresses  the  priority of federal tax liens against judgment
lien creditors. Thus, both statutes address priority of com-
peting liens.

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5a

The  predecessor  to section 3713 was Revised Statute
3466,31 U.S.C. 3191, which has been substantially
unchanged since 1797. ("section 3466"). See, Act of
March  of  [sic] March 3, 1797 ch. 20,5, 1  Stat. 515.

    The Court has not decided the question presented.
It has cautioned, however, that in considering
whether other provisions of the tax lien act operated
as implied exceptions to the insolvency statute,
"[o]nly the plainest inconsistency  would  warrant  our
finding an implied exception to the operation of so
clear a command as that of section 3466." United
States v. Emory, 314 U.S. 423, 433, 62 S. Ct. 317,
322-23, 86  L.Ed. 315,325  (1941)  United States  v. Key,
397  U.S.  322,  90  S. Ct. 1049,25 L.E d.2d 340 (1970).8  In
Key, the Court said that a reviewing court is to

___________________(footnotes)

    7 Emory  involved a federally  guaranteed  loan under the
National  Housing  Act   ("NHA").   When the debtor became in-
solvent, the United States was owed $5,988.88 as the guarantor
of the NHA loan and claimed priority under section 3466. The
nonfederal parties claimed "about $900"  for wages. The Court
held  that  Section  3466  and  the  NHA  were not plainly incon-
sistent  because  there  was  no  provision  in  the NHA that   ex-
pressly relinquished the priority of the United States with
respect to claims  arising  under  it.   314  U.S. at 430, 62 S.Ct. at
321, 86 L.Ed. at 323.
    8 Key involved a bankruptcy reorganization plan that pro-
vided  for  payment  of  claims of unsecured creditors before full
payment of the federal tax claims.  The Court found that
section 3466 prevailed because no inconsistency existed between
that  section and three relevant sections of the Bankruptcy Act
which  required  that  the  United States be paid its taxes under
a reorganization plan. The  Court  concluded  that  neither the
requirement    that  the United  States   be paid nor the require-
ment that the payment be fair and equitable conflicted with the
command of section 3466 that the United States be paid first.
397 U.S. at 328-29, 90 S. Ct. at 1053,25 L.Ed.2d at 346-47.

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6a

determine whether the statutes are facially incon-
sistent and, if so, whether the legislative history of
the competing  statute reflects a congressional intent
to modify the effect of the insolvency statute. Id. at
324,90 S. Ct. at 1051,25 L.Ed.2d at 344 (1970).9
    The first issue is whether there is a plain incon-
sistency between the priority of section 6323 and
the absolute priority granted the United States by
section 3713.  Here, the government's relative prior-
ity as a creditor differs depending on which section is
applied.  Section 6323 states that nonfederal claims
that have been duly filed prior to the filing of the
federal tax claim are valid as against federal tax
claims.  On the other hand, section 3713 gives an
absolute priority to the United States against other
creditors of insolvent debtors for tax liens regardless
of when the tax lien was filed.  We are constrained to
find a facial inconsistency because, with respect to
tax liens, section 6323 provides for a "first in time"

___________________(footnotes)

    9 We could utilize a principle of statutory construction to
resolve the conflict and conclude that section 6323 limits section
3713.  That principle is that a conflict between various statutes
is to he avoided and, if possible, the apparent conflicting pro-
visions must be construed together with the more specific
provisions prevailing over the general ones.   Busic v. United
States, 446 U.S. 398, 100 S. Ct. 1747, 64 L.Ed.2d 381 (1580);
Morton v.  Mancari, 417 U.S. 535, 94 S. Ct. 2474, 41 L. Ed.2d 290
(1974).  Here, section 6323 is the more specific provision be-
cause it applies only to federal tax liens, whereas section 3713 is
the more general provision in that it applies to any unpaid
claim of the government against an insolvent debtor.  There-
fore, applying this principle of statutory construction, the
general provisions of section 3713 are limited by the specific
provisions of section 6323.

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7a

priority  while  section  3713 gives  absolute  priority  to
the United  States. 10
    Since we have determined that the statutes are
plainly inconsistent, we next address whether the
Tax Lien Act of 1966  evidences  a  congressional intent
that federal priorities in insolvency be limited in the
tax area.  We look to United States v. Kimbell Foods,
Inc., 440 U.S. 715,99 S. Ct. 1448,59 L.Ed.2d 711 (1979)
as the most recent expression of the Court on the
policy considerations that underlie the question of
,  whether the government in the tax arena is to be
treated as an ordinary creditor or as a creditor with
super-priority.  In Kimbell Foods, the Court held that
Congress intended that the "first in time is first in
right" principle of section 6323 applied in federal
government lending cases involving solvent debtors. 11

___________________(footnotes)

    10 The United States argues, and other courts have held,
that no plain inconsistency exists between the statutes.  See,
e.g., Carter v. Carter and  T-Cas of America,  Inc., 681 F .Supp.
323, 326 (E.D. Va. 1988) where the court said that because Con-
gress was silent on the matter, the court would infer that
Congress intended the Tax Lien Act of 1966 to supplement
section 3713 and not to displace it so that in certain cases of
taxpayer insolvency, section 3713 governs, and in all other
cases, section 6323 controls.
We disagree with this conclusion and find support in other
federal cases. See note 17, infra.
    11 In Kimbell Foods, O.K. Super Markets, ("O.K.") bor-
rowed, during 1968, $27,000 from Kimbell Foods. The parties
executed security agreements containing a standard "dragnet"
clause that provided that the collateral would secure future
advances from Kimbell Foods. Kimbell Foods properly per-
fected its security interest.
In February, 1969, O.K. borrowed $300,000 from Republic
National Bank, ("bank") with the bank accepting as security
the same property specified in Kimbell Foods' 1968 agree-

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8a

The Court ruled that government lending agencies,
such as the Small Business Administration, are to be
afforded the same priority as private lenders under
non-discriminatory state laws, absent a congressional
directive to the contrary.  440 U.S. at 740, 99 S. Ct. at
1465,59 L.Ed.2d at 731.
    The Court articulated two reasons for its holding.
First, Congress, by the passage of the Tax Lien Act
of 1966, expressed its disapproval of "unrestricted
federal priority" in tax matters. 440 U.S. at 738, 99
S. Ct. at 1463, 59 L.Ed.2d at 730. See, 26 U.S.C.
6323(b), (c), (d), and (e). The Court explained that,

___________________(footnotes)

ments.  The bank perfected its security interest. The Small
Business Administration ("SBA") guaranteed 90% of this loan
under the Small Business- Act, which does not, in this situation,
specify priority rules to govern  the  SBA's   security  interests.
O.K. used the bank loan to satisfy  the  remainder  of  the 1968
obligation to Kimbell Foods and to discharge a debt for in-
ventory purchased from Kimbell Foods on open account. In
late 1970, the bank assigned its security interest to the SBA.
O.K. defaulted on the SBA-guaranteed loan shortly before mid-
January, 1971.
    Kimbell Foods continued to sell to O.K. on open account until
the debt was over 18,258.57 on January 15, 1971, when Kimbell
Foods sued O.K. to recover on its inventory debt.  The SBA
recorded the bank's assignment on January 21, 1971. The
United States honored its guarantee on the defaulted loan and
paid the bank 90% of the outstanding debt on February 3, 1971.
That  same day, O.K., with the approval of its creditors, sold its
equipment and inventory and placed the proceeds in escrow
pending the resolution of the competing claims to the funds.
    A year later, the state court entered judgment against O.K.
and awarded Kimbell Foods $24,445.37, which represented the
inventory debt  and  other  items.   Kimbell Foods then brought
suit in early 1972 in federal court to foreclose on its lien, claim-
ing it had a security interest in the escrow fund that was
superior to the SBA's interest.

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9a

prior to the 1966 law, it had formulated the "choate
lien'' test which modified the "first in time is first in
right" idea by requiring that the nonfederal lien be
sufficiently specific and perfected to overcome the
priority of the United States in insolvency cases. 440
U.S. at  720, 99  S. Ct. at  1454, 59  L.Ed.2d  at  719.12  The
practical  effect  of  the  choateness  test, the Court said,
was that rival liens were defeated because they failed
to pass its strict test. Id. 13 The Court concluded that
the Tax' Law of 1966 reflected congressional intent
to disapprove unrestricted federal priority in tax
matters'4 and to displace the "choateness" doctrine.

___________________(footnotes)

    12 The Court also stated that it applied the choateness doc-
trine in the solvency context to give federal tax liens special
priority. See United States v. Security Trust & Savings Bank,
supra, 340 U.S. at 51, 71 S. Ct. at 111, 95 L.Ed. at 53. For a
discussion of the history of the choate lien test, see Kennedy,
The Relative Priority of the Federal Government: The Perni-
cious  Career of the Inchoate and General   Lien, 63  Yale  L.J. 905
(1954). Kimbell Foods, 440 U.S. at 721 n. 8, 99 S. Ct. at 1454 n.
8, 59 L.Ed2d at 719 n. 8.
    13 We observe that the Court has not yet held that a
perfected and specific lien is excepted from the operation of
section 3466 or section 3713. Rather, the Court has raised but
avoided the issue in cases before 1966 by holding that the
asserted lien was not sufficiently perfected and specific to
qualify under any possible exception. See, United States v.
Gilbert Associates, Inc., 345 U.S. 361, 73 S. Ct. 701, 97 L. Ed.
1071 (1953); Illinois  v. Campbell, 329 U.S. 362, 67 S. Ct. 340, 91
L. Ed. 348 (1946); United States v. Waddill, Holland & Flinn,
Inc., 323 U.S. 353, 65 S. Ct. 304, 89 L. Ed. 294 (1945); United
States v. Texas, 314 U.S. 480,62 S. Ct. 350, 86 L.Ed. 356 (1941);
and, New York v. Maclay, 288 U.S. 290, 53 S. Ct. 323, 77 L. Ed.
754 (1933).

    14 The Court further explained  that
. . . Of particular relevance here, the Act added mechanic's
liens to the list of private interests already protected

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10a

440 U.S. at 720 n. 6,99 S. Ct. at  1454 n. 6, 59 L. Ed.2d at
719 n. 6. 15

    Second, the Court explained that restrictions on
federal tax lien priority are necessary to facilitate
commercial stability and to avoid the frustration of
expectations of superior lien holders. The Court
recognized that federal lien priority undercuts the
reliability of the notice filing system, which plays a
crucial role in commercial dealings. 440 U.S. at 739 n.
42,99 S. Ct. at 1464 n. 42,59  L. Ed.2d at 731 n. 42. Prior
creditors either have no trustworthy means of dis-
covering the undisclosed security interest or, if
they are aware of the federal lien, have to adjust

___________________(footnotes)

against unrecorded  tax liens.  26 U.S.C. 6323(a).  Holders
of conseneual security interests also receive priority over
unrecorded  tax liens.  Ibid.  Moreover, the Act gives
priority to many types of nonfederal liens even when the
Government had filed notice of the tax lien.  6323(b).
Included in this group are repairman's liens in personal
property,  S 6323(b)(5), . . . and  in  limited  situations, liens
securing advances.  6323(c).

440 U.S. at 738 n. 41, 99 S. Ct. at 1464 n. 41, 59 L. Ed.2d at 730
n. 41.
    15 We also note that the legislative history of the Tax Lien
Act of 1966 indicates a Congressional intent  that  priority  to the
"first in time" lien exists whether a lien was "choate" or not.
See Senate Finance Committee's Report 1708 which stated:

    [I]t is intended that, under the bill, the various types of
    interests defined in this provision are to have a priority
    over a nonfiled Federal tax lien if they come within the
    definitions of these terms [e. g., "purchaser," "judgment
    lien creditor," etc.] . . . whether or not in all other regards
    they are definite  and  complete  at  the  time  notice of the tax
    lien is filed.

U.S. Code Congressional and Administrative News, 89th Con-
gress, 2d Sess., v. 3,1966,3722,3724-25.

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11a

their lending arrangements to protect against the
stringent choateness requirements. Id. 16 Further,
the Court said, considerable uncertainty would also
result from the choateness approach because the
development of priority rules on a case-by-case basis,
depending on  the  types  of  competing  liens involved,
leaves creditors without a definite body of law they
require in structuring sound business transactions.
Id.  For  these  reasons,  the  Court concluded, Congress
intended that restrictions on federal tax lien priority
exist.
    Although  Kimbell  Foods involves the priority to be
accorded a federal consensual loan where the debtor is
solvent, and the case at bar involves the question of
the priority to be accorded a federal tax lien where
the debtor is insolvent, we believe that  Kimball Foods
and other cases 17 provide guidance as to how the

___________________(footnotes)

    16 Judge Haynsworth observed that the Tax Lien Act of
1966 would be essentially meaningless if the insolvency statute
always  prevailed.  See, the concurring opinion of Judge Hayns-
worth in H.B. Agsten & Sons, Inc. v. Huntington Trust &
Savings Bank, 388 F.2d 156, 161 (4th Cir. 1967), cert. den. 390
U.S. 1025, 88 S.Ct. 1413,20 L.Ed.2d 282 (1968):
  . . . The question of priorities [between section 6323 and
 section 3713] is wholly or largely academic, unless the
 debtor is insolvent, and the clearly stated purpose of the
 Federal Tax Lien Act of 1966 was to regulate the priority
 of federal tax claims when competing for payment out of
 the assets of an insolvent taxpayer with secured claims
 which would enjoy priority under state law.
     17 See United States v. Randall, 401 U.S. 513, 91 S. Ct. 991,
 28 L.Ed.2d 273 (1971) (specific priorities of the Bankruptcy Act
override the general priority of the United States under
section 3466). See also, United States v. S.K.A. Associates,
Inc., 600 F.2d 513 (5th Cir. 1979) (SBA lien in an insolvency
held not entitled to priority under section 3466); United States

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12a

federal courts would resolve the case at bar. 18  Here,
there  is  a  plain  inconsistency between the competing

___________________(footnotes)

v. Burlington Industries, 600 F.2d 517 (5th Cir.1979) (contest
between federal agency's security interest and a warehouseman
to be decided under nondiscriminatory state law); City of Ver-
milion, S.D. v. Stan Houston Equipment Co., 341 F. Supp. 707,
713 (D.S.D. 1972).
    Court decisions announced before the tax Lien Act of  1966
support an opposite result. While we do not disregard these
cases, we believe that Congressional enactments in the federal
tax lien area place the older cases in a less persuasive per-
spective.  See United States v. Vermont, 377 U.S. 351, 84 S. Ct.
1267, 12  L.Ed.2d 370 (1964) (in dictum: section 3466 applies to
all an insolvent's debts to the government, whether or not
arising from taxes); United States v. City of New Britain, 347
U.S. 81, 74 S.Ct. 367, 98 L. Ed. 520 (1954) (in dictum: section
3466 imposes an absolute in insolvency, but not applied
because the record did not establish that the debtor was
insolvent); United States v. Gilbert Associates, Inc., 345 U.S.
361, 73  S.Ct 701, 97 L.Ed. 1071 (1953) (United States tax lien
held to have priority under section 3466); United States v.
Security Trust and Savings Bank, 340 U.S. 47171 S.Ct. 111, 95
L. Ed. 53 (1950) (in dictum: section 3466 permits no exception
and applies to all debts of the United States whether or not
arising from taxes whether or not secured by a lien).
    We also are not persuaded by the reasoning of other federal
courts that have held that section 3713 provides for absolute
priority in tax lien cases for, we believe, those courts did not
adequately address the policy considerations weighed in
Kimbell Foods. See, e.g., Jonathan's Landing, Inc. v. Town-
send, 960 F.2d 1538 (11th Cir. 1992); Westmoreland v. West-
moreland, Executrix, and the United States, 716 F. Supp. 217
(D.S.C. 1988); Carter v. Carter and T-Cas of America, Inc., 681
F. Supp. 323 (E.D. Va. 1988) and Nesbitt v. u. S., 445 F.Supp.
824 (N.D. Cal. 1978).
    18 Since we are construing federal statutes, federal law con-
trols. A state cannot impair the standing of federal liens
without the consent of Congress. United States v. City of New

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13a

statutes.  Also, the Tax Lien Act of 1966 evidences a
congressional intent that federal priorities be limited
in the tax area, regardless of whether the debtor is
insolvent. Further, to hold otherwise would frustrate
the congressional purpose by defeating in insolvency
the very interests that were specifically protected
against federal priority in non-insolvency situations.
Finally, the grant of absolute federal priority in
insolvency cases, as in solvency eases, would be de-
structive of commercial stability and would frustrate
legitimate commercial expectations. We hold, there-
fore, that section 6323 limits the operation of section
3713 as to tax debts. 19

Order affirmed.

Messrs. Justice Castille and Nigro concur in the
result.

JUDGMENT ENTERED THIS 17TH DAY OF
JANUARY, 1997,

/s/ CANDACE FRY
CHIEF CLERK

___________________(footnotes)

Britain, 347 U.S. 81, 84, 74 S. Ct. 367, 369, 98 L.Ed. 520, 525
(1954).
    19 Finally, the United States argues that the lien of Romani
Industries, Inc. was not sufficiently specific and perfected to
displace the first priority of the United States under section
3713. Since this issue was not addressed by the lower courts, it
is inappropriate for us to consider it at this time.

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14a

APPENDIX B

SUPERIOR COURT OF PENNSYLVANIA
PITTSBURGH DISTRICT

No. 1358 PITTSBURGH 1994

IN RE: ESTATE OF FRANCIS J. ROMANI

v.

APPEAL OF: THE UNITED STATES OF AMERICA

JUDGMENT

    ON COSIDERATION WHEREOF, it is now here
ordered and adjudged by this Court that the judgment
of the Court of Common Pleas of Cambria County be,
and the same is hereby affirmed.

BY THE COURT:

/s/ ELEMYOR R. VALECHO
DEPUTY PROTHONTARY 
DATED: May 12,1995

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15a

IN THE SUPERIOR COURT
OF PENNSYLVANIA

No. 1358 PITTSBURGH 1994

IN RE: ESTATE OF FRANCIS J. ROMANI
        v.
APPEAL OF: THE UNITED STATES OF AMERICA

Appeal from the Order
Entered July 7, 1994
in the Court of Common Pleas,
Orphans Division
Cambria County, No. G.D. No. 11-94-14

[MAY 12, 1995]

MEMORANDUM

Before: CAVANAUGH, JOHNSON and SAYLOR, JJ.

    This is an appeal by the United States from an
order granting appellee's petition to transfer real
estate in lieu of execution.  We affirm.1

___________________(footnotes)

    1 Although there was no order of final distribution in this
case, the practical effect of the court's order was to end the
administration of the estate by awarding its sole asset to one of
the competing creditors.  Therefore the order is final and
appealable.  Estate of Montgomery, .367 Pa. Super. 31, 531 A.2d
439 (1987).

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16a

    Francis J. Romani, the decedent, died on January
13, 1992. Prior to his death, on January 25, 1985, a
judgment lien was entered against him in favor of
Romani Industries Inc. in the amount of $400,000.
The judgment was entered at No. 1985-205. The judg-
ment was subsequently revived on June 7, 1989. It
was entered at No. 1989-1311, and remains unpaid.
The sole asset of the decedent's estate is a piece of
real estate valued at $53,001. The estate is insolvent,
as its debts greatly exceed the value of this sole asset.
Subsequent to the entry of judgment against dece-
dent, the Internal Revenue Service filed notice of a
federal  tax lien against  the decedent for  unpaid  taxes
and an unpaid civil penalty, that with interest totaled
$489,720.04.
    The administrator of the estate filed a petition to
transfer real estate in lieu of execution on behalf of
the judgment creditor, Romani Industries, Inc. The
United States opposed the petition. A hearing was
conducted on April 141994, at which time the argu-
ments of counsel were heard.
    Romani Industries, Inc. claimed priority pursuant.
to the Federal Tax Lien Act, 26 U.S.C.  6323(a) which
provides that a federal tax lien shall not be valid
against a judgment lien creditor until notice thereof
has been properly filed.' On `the other hand, the

___________________(footnotes)
                  
    2 The Federal Tax Lien Act provides in pertinent part:

    6323. VALIDITY AND PRIORITY AGAINST CER-
TAIN PERSONS.

    (a) Purchasers, holders of security interests,
mechanic's  lienors and judgment lien creditors. - The
lien imposed by section 6321 [a federal tax lien] shall not
be valid against any purchaser, holder of a security

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17a

United States claimed priority pursuant to the
Federal Insolvency Statute, 31 U.S.C. 3713(a)(l)(B),
which provides that the United States is entitled to
first priority among creditors of an insolvent estate?
    The court granted the petition, holding that
Romani Industries' status as a first in time judgment
lien creditor gave it priority over the government's
subsequently filed tax lien.  The court based its
decision, in part, on In Re Estate of Berretta, 453 Pa.
441, 426 A.2d 1098 (1981), a case in which an evenly
divided plurality of the Pennsylvania Supreme Court
held that Section 6323 of the Federal Tax Lien Act
impliedly repealed Section 3713 of the Federal In-
solvency Statute: The present appeal by the United
States follows and requires us to determine which
statute should properly be given effect.

___________________(footnotes)

interest, mechanic's lienor, or judgment lien creditor
until notice thereof which meets with the requirements
of subsection (f) has been filed by the Secretary. 26
U.S.C. 6323(a).

    3 The Federal Insolvency Statute provides in pertinent
part:
  
3713. PRIORITY OF GOVERNMENT CLAIMS.
    (a)(1) -a claim of the United States government
  shall be paid first when-
    (B) the estate of a deceased debtor, in the custody
of the executor or administrator, is not enough to pay
all the debts of the debtor.
31 U.S.C. 3713(a)(l)(B).

    4  We are, of course, not bound by this decision, as an
equally divided plurality decision has no binding precedential
value as a ruling on the merits. Commonwealth v. Rightnour,
469 Pa. 107, 364 A.2d 927 (1976); Commonwealth v. Covil, 474
Pa. 375, 378 A.2d 841 (1977).

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18a

    We initially note that since we are construing
federal statutes, federal law controls. See United
States v. New Britain, 347 U.S. 81, 74 S. Ct. 367, 98
L.Ed. 510 (1953) (a state cannot impair the standing of
federal liens without the consent of Congress). The
United States Supreme Court has never squarely
considered the question whether Section 6323 con-
stitutes an implied exception to the Insolvency
Statute.  It has, however, had occasion to consider
whether other provisions operate as implied excep-
tions. In so doing, the Court has held that "[o]nly the
plainest inconsistency would warrant our finding
an implied exception to the operation of so clear a
command as that of [Section 3713 of the Insolvency
Statute]." United  States  v. Emory, 314 U.S. 423,433,
62 S. Ct. 317,322-23,66 L.Ed. 315 (1941).
    In United States v. Key, 397 U.S. 322,90 S. Ct. 1049,
25 L.Ed 340 (1970), a case cited by the United States
to support its argument for priority status, the
Supreme Court considered whether a "plainest incon-
sistency' existed between the Insolvency Statute and
Chapter X of the Bankruptcy Act. In deciding that no
such inconsistency existed, the Court set forth a
three part test to be used in determining whether a
"plainest inconsistency" exists sufficient. to warrant
an implied exception to federal priority in insolvency.
Applied to the present case, the test requires that
in order to establish the existence of a "plainest
inconsistency" between the statutes, it must be dem-
onstrated that 1) the Insolvency Statute and Section
6323 are facially inconsistent; or 2) an unconditional
application of the Insolvency Statute would render
Section 6323 meaningless; or 3) the legislative his-

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19a

tory of Section 6323 reflects a Congressional intent
to, modify the effect of the Insolvency Statute.
    The United States argues that none of these three
criteria are met, and that, therefore, Section 6323
contains no implied exception to the Insolvency Stat-
ute. In particular, the United States argues that, as
regards the first prong of the test, the two statutes
are not facially inconsistent.  It avers:

    Section 3713 and Section 6323 are not facially in-
    consistent. Section 6323(a) is a lien statute which
    applies regardless of the solvency of the debtor
    and protects enumerated third parties from un-
    recorded federal tax liens when the debtor conveys
    property. The Federal Insolvency Statute, on the
    other hand, is a priority statute, not a lien statute,
    and encompasses all federal claims.

    We find this argument unpersuasive. Rather, our
review persuades us that both sections clearly ad-
dress the question of the federal government's  prior-
ity as a competing creditor. Although the Federal
Tax Lien Act is undoubtedly a lien statute, Section
6323 thereof clearly addresses the priority of federal
tax liens against judgment lien creditors. Similarly,
the Insolvency Statute addresses the priority of all
federal claims against other creditors of insolvent
debtors. In the present context there can be no
dispute that the government's relative priority as
a creditor differs depending upon which section is
applied. Since this inconsistency between the respec-
tive statute sections produces conflicting results, we
are constrained to find that the statute sections in
question are arguably facially inconsistent, and are,
most certainly, conflicting.  We therefore turn to

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20a

traditional rules of statutory construction to resolve
the conflict.
    It is a familiar and time honored principle of statu-
tory construction that a conflict between various
statutes is to be avoided and if possible the apparent
conflicting provisions must be construed together
with the more specific provisions prevailing over the
general ones. Townsend v. Little, 109 U.S. 504, 3
S. Ct. 357, 27 L.Ed. 1012 (1883); Kepner v. United
States, 195 U.S. 100,24 S. Ct. 797,49 L.Ed. 114 (1904);
Bulova Watch Co. v. United States, 365 U.S. 753, 81
S.Ct. 864, 6   L. Ed.2d  72 (1961); Morton v. Mancari, 417
U.S. 535,94   S. Ct.  2474,41  L.Ed.2d 290 (1974); Busic v.
United  States,  446  U.S. 398, 100 S. Ct. 1747, 64 L.Ed.2d
381 (1980).   In  the  case  sub judice,  Section   6323  is  the
more specific provision because it applies only to
federal tax liens, whereas the Insolvency Statute is
the more general provision in that it applies to any
unpaid claim of the government against an insolvent
debtor. Therefore, the general provisions of Section
3713 of  the Insolvency  Statute must be limited by the
specific  provisions  of  Section 6323 of the Federal Tax
Lien Act. For this reason, we conclude that the
court's determination that Romani Industries, Inc.
possessed priority over the United States by virtue of
its status as a first in time judgment lien creditor
was proper.
    We affirm the court's grant of Romani Industries
Inc's petition to transfer real estate in lieu of
execution.

Order affirmed.

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21a

APPENDIX C

IN THE COURT OF COMMON PLEAS OF
CAMBRIA COUNTY, PENNSYLVANIA
ORPHANS COURT DIVISION

No. 11-94-14

IN RE: THE ESTATE OF FRANCIS J. ROMANI

APPEARANCES:

FOR ESTATE:  Lawrence L. Davis
      103 S. Center St.
      Ebensburg, PA 15931

FOR INTERNAL REVENUE SERVICE:
      Angelo A. Frattarelli
      Trial Attorney, Tax Division
      U.S. Dept. of Justice
      Washington, D.C. 20044

OPINION AND ORDER

Before: THE HONORABLE THOMAS A. SWOPE, JR.,
JUDGE OF THE FORTH-SEVENTH JUDICIAL DISTRICT OF
PENNSYLVANIA

    This matter is before the court on a Petition To
Transfer Real Estate In Lieu Of Execution filed by
the Administrator of the above captioned estate, on
behalf of the creditor, Romani Industries, Inc. The
United States opposes the Petition. A hearing was
held on April 18, 1994, at which time arguments of
counsel were heard. The court grants the Petition.

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22a

    The facts in this case are not in question. The
decedent died on January 13,1992. Prior to his death,
on January 25, 1985 a judgement was entered against
the decedent in  favor  of Romani industries, Inc. in the
amount of $400,000.  The judgement was entered to
No. 1985-205 and was subsequently revived on June 7,
1989, entered to No, 1989-1311.   No amount of the
judgement has been paid. Romani Industries, Inc. is
the first in time judgement lien creditor. The sole
known asset of the Estate is a piece of real estate
located in Portage Borough, valued at $53,001.00. The
Internal  Revenue  Service  holds a tax lien, filed after
Romani  Industries,  Inc.  perfected  its  lien.  The assets
of  the  estate  are  completely  inadequate to satisfy the
debts of the estate. 
    The issue to be resolved is "whether the United
States' tax lien has priority over the first in time
judgement lien of Romani Industries, Inc. Romani
Industries argues it has priority pursuant to the
Federal Tax Lien Act, which provides in relevant
park
    (a) Purchases, holders of security interests, me-
     chanic's lienors and judgement lien creditors 
     The lien imposed by section 6321 shall not be valid
     as against any purchaser, holder of a security
     interest, mechanic's  lienor,  or  judgement creditor
     until notice thereof which meets the requirements
     of subsection (f) has been fled by the Secretary or
      his delegate. 26 U.S.C. 6323.

Concomitantly, the United States argues that it has
priority by virtue of the Insolvency Statute, which
states in pertinent part:
  (a)(l)-a claim of the United States government
shall be paid first when-

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23a

  (B) the estate of a deceased debtor, in the
custody of the executor or administrator, is not
enough to pay all debts of the debtor. 31 U.S.C.
 3713.

    This exact issue was addressed in In re  Barretta,
493 Pa. 441 (1981), in which a plurality of the Supreme
Court held that a judgement lien creditor had priority
over a federal tax lien where the judgement lien was
first in time. The plurality concluded that a plain
inconsistency exists between the two statutes. Id. at
457. In addition, "the Tax Lien Act evidences a
Congressional intent that federal priority be limited
in the tax area," whereby the Act impliedly repeals
the absolute federal priority of the Insolvency Statute
as to tax debts owed to the United States. Id. The
court reasoned that the United States Supreme
Court had restricted federal priority in federal
lending cases for reason which are equally applicable
in tax lien cases. Id. Moreover, "to grant absolute
federal priority would be destructive of commercial
stability and would frustrate legitimate commercial
expectations." Id..
    This court adopts the reasoning of the plurality in
Barretta. As a matter of statutory construction,
specific statutory provisions should prevail over con-
flicting general provisions.    In  re Meyer's Estate, 159
Pa. Super. 296, 305 (1946). The Insolvency Statute is
a general mandate for federal priority in insolvency
situations. However, the subsequently enacted Tax
Lien Act specifically addresses the priority of federal
tax liens. In the case sub judice, a different result
would be reached depending on whether the Act or the
Statute is applied. Faced with this conflict, the Act
should be applied because it was enacted to govern tax

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24a

debts specifically, whereas the Statute references
federal debts generally.
    The court finds the argument, advanced by the dis-
sent in Baretta, that the an unconditional application
of the Insolvency Statute would not preclude the
meaningful operation of the Tax Lien Act, untenable.
Attempting to fit the Tax Lien Act into the legal gaps
in the Insolvency Statute limits the tax lien priori-
ties arbitrarily, so that they bear little relation to the
intended scope of the Act. To limit the operation of
the Tax Lien exclusively to cases involving solvent
tax debtors, would render the lien priorities meaning-
less, as the issue of priority is moot if the debtor
possessed sufficient assets to satisfy all claims.
Indeed, the question of lien priorities is significant
only when the debtor is insolvent.  Consequently,
interpreting the Tax Lien Act so as to avoid conflict
with the Insolvency Statute would effectively reduce
the Act to little more than an academic exercise.
    The effect of the Tax Lien Act is to promote
commercial stability by assuring members of the
favored classes, as set forth in the Act, such as
judgement lien creditors, that their legitimate secu-
rity interests in the property of a debtor will not be
disturbed by the existence of an unrecorded federal
tax lien. Eliminating this assurance in insolvency
cases "would undercut the reliability of the notice
filing system, which plays a crucial role in com-
mercial dealings." Barretta, 493 Pa. at 455. Other-
wise, the fundamental unfairness of denying the un-
suspecting and innocent lien holder priority over a
subsequent federal tax lien frustrates legitimate
commercial expectations, thereby preventing the
exercise of reasonable business forethought. The
Tax Lien Act by its very language is designed to

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25a

protect certain classes of creditors from the reach of
later filed tax liens and promote commercial dealings.
    ACCORDINGLY THE FOLLOWING ORDER IS
ENTERED.

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26a

IN THE COURT OF COMMON PLEAS OF
CAMBRIA COUNTY, PENNSYLVANIA
  ORPHANS COURT DIVISION

No. 11-94-14

IN RE: THE ESTATE OF FRANCIS J. ROMANI

ORDER

Before: THE HONORABLE THOMAS A.. SWOPE, JR.,
JUDGE OF THE FORTH-SEVENTH JUDICIAL DISTRICT OF
PENNSYLVANIA

    AND NOW, this 7th day of July, 1994, it is hereby
ORDERED and DECREED that the Petition To
Transfer Real Estate In Lieu Of Execution is
GRANTED.

BY THE COURT

/s/   SWOPE
THOMAS A. SWOPE, JR., JUDGE