Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-94-06044/USCOURTS-ca10-94-06044-0/pdf.json

Parties Involved:
Letha L. Burrus
Not Party
Vernon V. Burrus
Not Party
Internal Revenue Service
Appellee
The Oklahoma Tax Commission
Appellant

Document Text:

• 

Patrick Fisher 

Clerk 

UNITED STATES COURT OF APPEALS 

Office of the Clerk 

Byron White United States Courthouse 

1823 Stout Street 

Denver, co 80257 

July 14, 1995 

Elisabeth Shumaker 

Chief Deputy Clerk 

TO: ALL RECIPIENTS OF THE CAPTIONED OPINION 

RE: 94-6044, Burrus v. Oklahoma Tax Commission 

Filed July 7, 1995 by Judge McKay 

Please be advised of the following correction to the 

captioned decision: 

Page 7, last line, Section 23 has been corrected to 

read Section 231. 

Please make this correction to your copy of this 

opinion. 

Very truly yours, 

Patrick Fisher, 

Clerk 

By:~ 

Barbara Schermerhorn 

Deputy Clerk 

Appellate Case: 94-6044 Document: 01019277245 Date Filed: 07/07/1995 Page: 1 
PUBLISH 

UNITED STATES COURT OF 

TENTH CIRCUIT 

VERNON V. BURRUS and LETHA L. 

BURRUS, Husband and Wife, 

Plaintiffs, 

v. 

OKLAHOMA TAX COMMISSION, 

Defendant-Appellant, 

INTERNAL REVENUE SERVICE, 

Defendant-Appellee. 

FILED .. United States Court of Appeab APPEAL"'S" Tenth Circuit 

JUL 0 7 1995 

PATRICK FISHER 

Clerk 

No. 94-6044 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE WESTERN DISTRICT OF OKLAHOMA 

(D.C. No. CIV-93-152-T) 

Robert B. Struble, Assistant General Counsel (Stanley P. Johnston, 

Deputy General Counsel, and David Hudson, General Counsel, with 

him on the briefs), Oklahoma Tax Commission, Oklahoma City, 

Oklahoma, for Plaintiff-Appellant. 

Patricia M. Bowman, Attorney (Loretta C. Argrett, Assistant 

Attorney General; David English Carmack and Robert L. Baker, 

Attorneys, on the brief), Tax Division, Department of Justice, 

Washington, D. C., for Defendant-Appellee. 

Before HENRY and McKAY, Circuit Judges, and VRATIL,* District 

Judge. 

McKAY, Circuit Judge. 

* Honorable Kathryn H. Vratil, United States District Judge for 

the District of Kansas, sitting by designation. 

Appellate Case: 94-6044 Document: 01019277245 Date Filed: 07/07/1995 Page: 2 
This appeal presents a very narrow legal question: Do the 

Oklahoma Homestead laws, see Okla. Canst. art. XII, § 2 (1992); 

Okla. Stat. tit. 31, § 1 (1981), which prevent Oklahoma from foreclosing on the principal residence of a debtor to satisfy a state 

tax lien but do not prevent the federal government from foreclosing on the same property to satisfy federal tax obligations, 

create an exception to the general rule ("first in time, first in 

right") that a prior state tax lien which is otherwise choate 

receives priority over a subsequently filed federal tax lien? The 

district court answered this question in the affirmative. We 

reverse. 

The facts of this case are not in dispute. The Burruses owed 

taxes to both the state of Oklahoma and to the federal government. 

The Oklahoma Tax Commission filed two tax warrants with the county 

clerk in the county where the Burruses resided, one in 1986, one 

in 1988. These tax warrants became liens on all property of the 

Burruses. The IRS assessed its own penalties against Mr. and Mrs. 

Burrus in 1989, and thereby also created a lien on all of the 

Burruses' property. On December 31, 1992, the Plaintiffs sold 

their residence, netting just over $35,000.00. Oklahoma claims 

that it is entitled to satisfy its lien (roughly $13,700) from 

this sum. The IRS, denying the priority of the state lien, lays 

claim to all of the money as partial payment of the Burruses' 

federal tax debts, which exceed $55,000. 

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Appellate Case: 94-6044 Document: 01019277245 Date Filed: 07/07/1995 Page: 3 
Undoubtedly, if this case did not involve the sale of homestead property, the Oklahoma lien would be entitled to priority 

over the federal lien. United States v. Vermont, 377 U.S. 351 

(1964). State tax liens generally receive priority over federal 

tax liens if they are perfected, or choate, prior to the time the 

federal lien arises. In United States v. City of New Britain, 347 

U.S. 81 (1954), the Supreme Court set forth the general three-part 

requirement for choateness: "when the identity of the lienor, the 

property subject to the lien, and the amount of the lien are 

established." Id. at 84. There is no dispute that these three 

requirements are met in this case. The question is whether there 

is now a fourth requirement for choateness. The IRS urges that 

there exists, in addition to the tripartite test of New Britain, a 

fourth requirement of enforceability. That is, not only must a 

lien have been choate in theory, it must also have been capable of 

actual enforcement prior to the creation of the federal lien. The 

IRS argues that Oklahoma cannot meet this additional element of 

enforceability because the Homestead -Act prohibited the state from 

foreclosing on the Burruses' home to satisfy the state tax debt. 

The district court, relying on language in our decision in T.H. 

Rogers Lumber Co. v. Apel, 468 F.2d 14, 18 (lOth Cir. 1972), 

agreed. 

Oklahoma counters that the district court has misconstrued 

the language in T.H. Rogers and that our cases stand not for the 

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Appellate Case: 94-6044 Document: 01019277245 Date Filed: 07/07/1995 Page: 4 
proposition that there is an additional enforceability requirement, but rather for the principle that liens must not be contingent or unperfected. Oklahoma asserts that it had done everything necessary to perfect its liens and that its inability to 

foreclose immediately upon the filing of those liens did not make 

them inchoate. Reviewing T.H. Rogers in light of the recent 

Supreme Court decision IRS v. McDermott, U.S. , 113 S. Ct. 

1526 (1993), we agree with the Oklahoma Tax Commission. 

In finding in favor of the IRS, the district court relied 

heavily on language found in T.H. Rogers: "This requirement (of 

choateness) can be met only if the claim is final; that is, not 

subject to a judicial contest as to the amount, and also only if 

it is enforceable by summary proceedings." 468 F.2d at 18 

(emphasis added) . We believe that this language adds no additional element to the New Britain test, but merely restates the 

proposition that a lien must be perfected. That is, we interpret 

T.H. Rogers to mean not that the lien must be immediately enforceable by summary proceedings at the time of filing, but rather that 

at the time of enforcement, whenever that should occur, a lienholder may satisfy its debt by resort to a summary proceeding 

because the lien will be both choate and perfected. 

This interpretation is bolstered by the Supreme Court's 

opinion in McDermott. In McDermott, a state lien on all real 

property "owned at the time or thereafter acquired" had been filed 

prior to a similarly worded federal tax lien. The issue resolved 

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Appellate Case: 94-6044 Document: 01019277245 Date Filed: 07/07/1995 Page: 5 
by_ the Court was whether the state lien held priority over the 

federal lien with respect to property acquired after the filing of 

both liens. The Supreme Court held that the state lien had not 

been perfected prior to the federal lien because the lien could 

not have attached to property not yet in the debtor's possession 

and the property subject to the lien therefore had not been 

"established" at the time of filing. See 113 S. Ct. at 1529 n.5. 

McDermott makes clear that if there is an additional requirement 

for perfection or choateness, it is attachment to an identifiable 

piece of property rather than enforceability. See McDermott, 113 

S. Ct. at 1529 ("[A]ttachment to particular property was also an 

element of what we meant by 'perfection' in New Britain."). 

This does not end our inquiry, however, as the district court 

also held that the Oklahoma liens were incapable of attaching to 

the homestead property. The tax commission challenges this conclusion, despite the fact that Oklahoma law specifically states 

that homestead properties shall be "exempt from attachment." 

Okla. Stat. Ann. tit. 31, § 1. Concededly, a literal reading of 

the statute would seem to compel the district court's conclusion. 

However, read in context, we believe it is clear that the term 

"attachment" as used in the Oklahoma statute has a different meaning from the meaning of attachment for tax lien priority purposes. 

The law dictionaries reveal that there are two distinct meanings for the term "attachment." For example, Ballentine's Law 

Dictionary (3d ed. 1969) provides two different definitions: 

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Appellate Case: 94-6044 Document: 01019277245 Date Filed: 07/07/1995 Page: 6 
first, "A provisional remedy for the collection of a debt, which 

is incidental to an action against the debtor . . . for the purpose of having the property available in satisfaction under execution and sale upon a judgment obtained against the debtor in the 

action;" and, second, "The actual attaching, that is, the seizure 

and disposition of the debtor's property under a writ of attachment." Black's Law Dictionary (6th ed. 1990) illustrates the same 

dichotomy. One definition of attachment is: "A remedy ancillary 

to an action by which plaintiff is enabled to acquire a lien upon 

property or effects of defendant for satisfaction of judgment 

which plaintiff may obtain." Another meaning offered in Black's 

is: "The act or process of taking, apprehending or seizing 

property II Read in context, it seems clear that the 

Oklahoma statute uses the word "attachment" in this second sense 

of the word, while it is the primary meaning that is relevant in 

the tax lien context. 

The clear import of the Homestead Exemption is to prevent the 

family home from being sold out from under the family.1 Thus, 

tit. 31, § 1 states that such property shall be "exempt from 

attachment or execution and every other species of forced sale for 

the payment of debts." This statute is the codification of Okla. 

1 See Kelough v. Neff, 382 P.2d 135, 136 (Okla. 1963) ("The 

right to claim a homestead exemption is a right which the head of 

a family may assert to prevent sale . . . at any time prior to the 

sale of the premises."); Ward v. McKee, 266 P. 465, 466 (Okla. 

1928) ("It was evidently the intention of the makers of the 

Constitution and the legislators, to protect the homestead of the 

heads of families against forced sale .... "}. 

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Appellate Case: 94-6044 Document: 01019277245 Date Filed: 07/07/1995 Page: 7 
Canst. art. XII, § 2, which provides simply that "the homestead of 

the family shall be protected from forced sale for the payment of 

debts." Viewed in this context, it is plain that the Oklahoma 

statute refers to "attachment" as "a species of forced sale" -- a 

physical act of seizure. There is nothing in the homestead law 

which would suggest that the state may not "attach" a lien on the 

homestead as a "provisional remedy" subject to the future sale of 

the property which would have no immediate impact on the family 

living within. Thus, the presence of the word "attachment" in the 

statute does not, in our view, prevent the tax commission's lien 

from "attaching," within the meaning of Oklahoma Law or Supreme 

Court precedent, at the time of filing. 

This interpretation of the te:nn "attachment" is consistent 

with Tenth Circuit precedent. This circuit has previously distinguished between the ability to enforce a lien through foreclosure 

and the attachment of that lien under the Oklahoma homestead laws. 

Tillery v. Parks, 630 F.2d 775 (lOth Cir. 1980). Tillery makes 

clear that a lien can attach to homestead property in Oklahoma 

even if the homestead laws prevent the lien from being executed. 

Id. at 776-78. Although Tillery involved a federal tax lien, we 

can see no reason why the reasoning of Tillery should not apply in 

this context--both the state and federal statute purport to create 

a lien upon "all property" held by the tax debtor. Compare 26 

U.S.C. § 6321 with Okla. Stat. tit. 68, §§ 23, 234 (1981) .2 

2 The Supreme Court has endorsed the distinction between foreclosure on and attachment of a tax lien in the homestead context. 

United States v. Rodgers, 461 U.S. 677, 690-91, 702 n.31 (1983). 

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Appellate Case: 94-6044 Document: 01019277245 Date Filed: 07/07/1995 Page: 8 
We find additional support for our decision in Homestead Land 

Title Co. v. United States, 819 P.2d 660 {Kan. 1991) {interpreting 

the interaction of the Kansas homestead and lien statutes, which 

are analogous to those at issue here). The Kansas Supreme Court, 

analyzing very similar facts, held that even though a Kansas state 

tax lien might not be enforceable, it could nonetheless attach to 

homestead property. "The question of whether these tax liens 

could have been foreclosed under the Homestead Exemption . . . 

does not determine whether the lien of the Department {of Revenue) 

attached." Id. at 664. 

In the absence of any compelling precedent to the contrary, 

we believe the Oklahoma courts would follow the Tenth Circuit and 

the Kansas Supreme Court and hold that a properly filed state tax 

lien does "attach" to homestead property for purposes of determining priority in bankruptcy even though it cannot be enforced at 

the time of filing. 

Accordingly, the judgment of the district court is REVERSED, 

and the case is REMANDED with instructions to give priority to the 

lien of the Oklahoma Tax Commission. 

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