May 26, 1949 

Hpn. D. C. Greer ~ ~. .~ 

State- Hightiy engineer 

Opinion No. V-830 

T&xas..Higj$va~.. Department Re: ..The necessity for FedAustin, 'T&as~. ,. _ ._ ., era1 Income Tax Liens 

,-to be recorded on Certificates of Title to 

motor-vehicles and the 

.~ ,+tatus in relation to 

other liens. 

Dear Mr. Greer: 

I&request .anopinion on.three questions based 

]upon.the fol.lowing facts: ..~ 

7. "The. Int.ernal Revenue.Department files liens 

,.L-. against an.individual~.,.for..non-.~~~n~ off 'Income 

.~:..Taxea..~ The. indWidua...owns .one nor sever&i motor . . 

~:~ :'vehlCies.on:amidh..Elear ,Certifi.cate ofTitle has 

been issued, or perhaps such Certifioate of Tit& 

will record a lien. 

."These Federal'Liens for Income Taxes are 

,: filed'in t,he Office, of the County Clerk in'a.bo,ok 

-. ..~ ..known as the 'Federal Lien Record'." 

The.three questions referred to are: 

Should.this De rtment recognize as a 

_ prio~"~~en.this.Fsderal Een.for I~ncome Taxes 

.even though aCertificate af Title,has been is- 

~.. ~..sued.on which there.is.recorded a lien &ted 

_ ,& to-the recording df the'Federa1 Tax Lien? 

"2. Under Section3., V.P.C., 1436-1, does 

..the~.definit.ion of the term!Lien' apply to Fed- 

~eral.Income Tax Liens? . 

.: "If the answer to question 2 is in the af- 

~_.firmative~,~ must the .Federal Tax 'Liens be filed 

~.. with this Department? 

"3. What protection.~would a mortgagee have 

if hen loans money on a-motor vehicle if a clear 
418 

Hon. D. C,. Greer., Page 2 (V-8301 

Certificate~.of Title~is presented to him and it 

later .develops.that aFederal Income Tax Lien 

$Eit$;n filed against the-owner of the ve- 

. 

For-convenience of this. opinion we will answer 

your second questionfir~at., and thenthe first and third 

.in that order. 

~\ ~~Article..l43&1;. Section. 3., V.P.C.; provides: 

_ ~,~~a.term'.'lien;'means.every kind of~lease 

.~conditional sales contract,-deed..of trust, chattel 

-mortgage .trnst ~receipt,.reservation of title, or 

otherwr -1, tten instrument of whatsoever kind or 

character whereby an interest, other than absolute 

.title,. is soughtto be.held..orgiven in a motor 

vehicie,.also any l.ien:created~or given by C n- 

,s.titution. or'Statute.,"- . . : 7 

A i.ien..has been .defined...by our Courts as a 

.~to: &force.a.charge~ upon. property ofanother for the 

_~ ..ment..,or...sat.isfaction.of.~claims... IX is.. also a charge 

right 

MYupon 

.property. for.the.pay+?nt of a debt... There can be no lien 

..~without a..deht; Vaugbad~v,~ IJohn Rancock'Mutual L%f.fe'In- 

. 

. 

_ . . ._ 

i.1 - :,f,..:~:.. ._ :~’ _,~ 

.:.. . ..~.~~~.Fedei.dl...right.~.tcJ: a"&%& 'unpaid income 

&&es, aris.es,.b~.c.;virtue..of Federal%&&te. 26 U.S.C.A., 

Section _36i78~?,1aternal~Revenue Code&provides: .I 

,~ -1 .~ .,_ 

.-F.Xf .any person pliable 'ta+ay any tax neglLe~tsnpr,:yefua~es.to pay..the> '&me after demand, 

..the.amount(including~any interest, penalty, ad- 

.ditionalamount., oraddition te“snch tax, togethheit_~th,~any~Eosts thatmay'~accrue in,addi- 

_..t.ion:tihereto) shall.be a.lieri+.favor of the 

Dnited~States uponall nroperty and rights to 

propeey; whather,real or pers$nal, belonging to 

s&h~Sp&&o,n; W: .: .,_ 

~, .~,, : ;. ., 
. - 

. 

Hon. D. C. Greer, Page 3 (V-830) 

Its isapparent this type lien fits squarely.within the.LabQve court ,definition. But the Section 3..definitiQn.obviollsly contains a.restcictedapDlication.~. .It 

applieson1y.t.o. those~.liens. nsoughtto be'held or given 

in .a motors vehicle!?. Consequently:,. the statutory definition does. notapplyto a. yederal.~.,income:,tax lienif .the. 

liqp, for. example', seeks enforc~ement.against.8 personrs.," 

real~property...,However.., inthe event such a lien is'sought 

._ ,....:to ,be. enfQrc,ed. against. a motor.~vehicle.:regist.ered~~~in'~Texas, 

S.ection.3 of ~~icla,l1+36.-1.,applies.~.~T~ that etient, your 

.second. .questi.Qn is answered in the affirmative. 

~:~:Having so answered, you ask #whether such Federal 

lienmust be.filed,,with yourDepartment. 

Indeed, Congress hasby Federal Statute 

this corn&a&e. 

required 

Section 3672, ~26.U.S.C.A. Internal Rev& 

enue, Code, provides: 

-- "(a,) Such lien.shall.not 

,. gainst any mortgagee.,. pledgee, 

~. .j.ndgment creditor, until.notice. 

. . .~ filed..bythe dollector Abe valid as apurchaser, or 

thereof has been 

. "(1) In the.office in. which~the filing of 

such notic~e is. authQrized .by.the law of the State 

-1 or.Territory in which the property subject to the 

- lien issituated;.whenever the State or Territory 

has~by law.authorized.the filing of such notice 

in an office.within.the'State .or.Territory; . '. ." 

-~The..filing with. the County Clerk of,.Federal tax 

.liens~.to be enforced against.motor vehicles does not meet 

.. -Texas statutory requirements.. This is in keeping with. 

- the.established.meaning of Article. lA36.-1,~ known generally.as the Certificate.of .Title Act,. effective October 1, 

1939. The effect of.this~ Act was. to repeal and supersede 
42cl Hon,. D. C... Greer., Page 4 (V-830) 

Articles~..5490~, 5497 and~5497a,,.~V.C.S., insofar as those 

Articles~affected..the..regiatration.of chattel mortgage : 

liens onmotor vehicles., Whereas ~formerly the validity 

of a.motor..vehicle lien.as.against third parties was de- 

\~.pendent .upon the mortgage ,being,~filed with the County, 

Clerk (Articles 5490,,5497, 5497a) the Certificate of 

Title Act. made.auch..va.liditydepen~ upon a proper recording of the lienon the:certXficate~-of. title. Article 

1436-1, Sactioos.42, 44 and 46.1 This office in a prior 

op~r&n,.G-l53~ ,datsd..&v..7 .1939, so held. And in 

Commerical Cre3 3 t ,COm . . ..v.. LericanManufacturi 

~;m~,ny,.sn~,..the C%&eached the same conclu%on, 

c t ng withapproval.0.-1539..~.To the.same effect, see 

-agl;2Motor_In~..Co,.:v,. Citp'..of' HamUn; 142 -Tex. &36;"179 

278 (1944) . . 

A 

Dnder-the-facts.presented here, it is our opinion that Federal liens ~asagainstmotor vehicles must beg 

~-filad;:and recor&&with.yourDe artme& as authoriaed.by 

.-the .praaisionaaf.Article..Uc36-fl~in order to be valid as 

againat. thirdparties.. ~~.. . 

,_ ,Conc.erningyour..firstque.stion we are of the 

. ..opinion that you.. should. not.recognim .priorLty of a Federa1 taxlien properly.re.corded.undsr.$he Certificate of 

1 "Set,.: 42;,~ No l%enr one anr...motar...vehicle shall be valid 

. _ 

_ ._ ___ ,. _. ~. 

.._ _ . . . . 

. .~. .._ 

.as against.third.part,i~.ss.witbout~actllal knowledge thereof.ar enforceable.aga&st the motor vehicle of any such 

third..parties as.th.e issuance of a certificate of title 

thereof, unless.anapplication.for a newtjtle is made 

as prssc.ribe.d.-in -this-Act and ~~all..first and subseque'nt 

liens noted-by. the Department thereon.". 

%ec. 44.. No.lien onany motor vehicle to which a re- 

_ ._ ceipt .ar..certificate.of-time. has.b.een.issued shall be 

.~_ -Ipal~h.as.against.third ..parties..wd&hout ac& knowl- 

_,. adge.~h~reof,~..or.enforceable.against the motor vehicle 

., of anysuch third+art$es, Mless.the notation of said 

._ . .lIen shal&.have. beencaused to be.made on receipts and 

..c.ert~ficatea...of.title on said motor vehicle, as pro- 

..~ &Led. in this Act." 

"Sqc. 46. On&y lie& noted on a receipt or certif$cate 

of title ahall~,b.e-valid as.against creditors of the 

~~- .mortgagorFn ao farasconcerns the motor vehicle.? 
Hon. D. C. Greer, Page 5 (V-.830) :,, '., ?a2 

Title Act2 prior to the,Federallien,. ~When the Govern- 

~with the State's.statutory requireloses priority over prior 

~ In United States v,'Yatas, 204 S.W..Zd 399 

(Tex. .CLv.. App.., 1947*. .error~.re.f.~,n.r.,e.) the Court 

held:;. 

'"Raving ~.conuluded. that&he attachment lien 

of.Ear1.and.W. 0.. Yates was.sp&ifie andi'fixed 

uponthe date of..ita.lav.y.,..which date.,was prior 

to .the.date .the Governmenttied its ,lien:for un- 

..~ .paid. taxes..,...-.. the. Government% contention tbat~ 

..'th.etax,lienshould hane.priority over the attach- 

. .ment lien~fixed aga.inst..the,parsonal property of 

L..,C.~Russellis denisd and overru1ed.w 

:._ The Yates &ase,rcited..with.-approval Louisiana 

State.~JJniversity v~. 'Hart,. 2lO..Ia;.:7S.,: 174 A.L.R. 1366 

&Sg%d upon. .T&aSupremeJourt of Louisiana there 

3.61. (1946)~ whereina similar priority dispu<e 

stated: 

....eIt.has.often~ been.said that the iien of 

the..Unit.ed.Si5ates,.~under.Sections 3670 and 3671, 

_ ia~.subordinate.to a ~~priormortgage. .This.has 

been the..consi.stentruling.of the Federal courts. 

~~.DetroitBank ~.Y. United..States,. 317 U.S. 329 ,63 

;.S. Ct. 297~, 87.L.Ed. 304;..Unitsd States v. heaver 

'Run Coal Company, 3 :.CJs,,99 F.2d 16; Metropolitan 

Life Insurance Company v:..United States, 6 Cir, 

.~~ 107~F.2~d 311; Exchange National Bank of Tulsa v. 

~. Davy~ (DC)..13 ,F.Supp..226. ..This subordinate .positioa.to prior mortgagea was held to apply inthe 

~- . ..case where the.taxlien arase~ before the mortgage 

..~ 

2 "Sec. 43. All liens.on motor vehicles shall take 

priority according to~the.order...of time the same are 

recorded on ths receipt orcertificate of title~of 

.a11 ,such.racordingsto be_made,.by the Department.? 

3.. ..-!Ths Government*s.failure.to.comply with statutory 

raquirementa relative to. filingor recording notice 

-, of lienwill deprive it of priority over such claimants.! 47 C.J.S. Sec. 764, Internal.Revenue, p. 997. 
422 Hon..D. C. Greer, Page 6 (V-830) 

but was not properly recorded,until after the 

mortgage, even when the,mortgagee~had knowledge 

.of the..existentie~.of the uurecorded tax lien; 

.Unitsd .States.v..BeaverRun Coal Company,supra.n 

M&h of. what~.&e have said is also applicable to 

your.third questian, .The protection to be afforded a 

-mortgagee wha loans money .on~.s.motor vehicle where the 

.cer$.ificate.of.title presented.&0 him is clear depends 

mainly onthe da e'.of filing and.rewrding his lien with 

pour Department.1 ..Ths same.prote.ction is extended the 

Government, provided~ its-.lisn..is filed and recorded as 

. required .byArtFcle, l.43~6-?1... Filing its lien with the 

-~Coungy C1erk.i.s of.no,effeCt.as against such a,mortgagee. 

In.47.C.J.S.~ 997.,.,Internal.Revenue, Sction 764, it is 

said? 4~~. ,.... _ ,. 

"As bstween.the mortgag e or other claim- 

..~ .~.ant.apecifis& inthe..statute 3 as entitled to protection and the..government.,~.the_date of rebording 

_~ ..-l:the..tax lien..will.cQntrQl ,the tax lien being 

- .prefarradtQ subsequent..&ns and deferred to 

- .thosa~rec~rded prior.tQthe~.tax lien. . . .* 

-CPQotnote insertion.0urs.1~ 

._~ Ix%far as.motor.vehicles are concerned. the 

- . tru&i& Is:.. The..~first.r.ecorded.lien as required by 

...Article.lA36E1.is entitled tom priority. 

. . ~,. .: ..,. 

_~.~I .- 1.~ &deralinwme.taxliens sought to bs 

.% .enforced.against_a.motQr~vehi~le in Texas are 

,. . ..withinthe.meaning of the .&erm"lien" as defined 

in Section 3.of~Article.lA3&1, V.P.C. Such liens, 

~ in. order. to-be. valid~aa~ against third parties must 

--:.a~ 1.3 

..be.filed~withthe Texas Highway Department and 

. . ..duly.recorded npon the certificate of title. 'Arti&le lA36-l,.,Se&ions 42,..l+l+ and 46, V.P.C.; 

. .~ 

5 ,' -,Presumably 26 U..S.C.A., 3672,Internal Revenue Code, 

supra. 
Ron; D:~C. Greer., Page 7 (V-830) 

26 U.S.C.A.- ItiternalBRe&& Code,~Section 3672; . 

~~ Coohmercial. Credit Company v..~&nericati Manufactur- : 

_. _^.. (Tex. Cl v** A PP., 

,. ,. ‘_ 

2. Insofaras motar.vehicles are concerned, 

_... then Texas Highway.Departmant should snot give prior- 

_ ity.to.a .Federal ~inc~eetaxlisn filed in the of- 

~,~ fi.k.e.of..the~~County Clerk over a lien duly filed 

~. and recorded upon,..the...krtifikate of title to the 

_~ .mot~..vehicle~.~prior. to-the .Federal lien. Article 

_, ._. .~. l@6~l;Section.43,..V,P.C.,;..Uni.t.ed~~States v. Yates, 

294 S,K2d.399. (Tex. CttV. .App~.., 1947 error.ref. 

_.. .~ ._.. n,Le.).: louiaianaStat.e University G. Hart, 210 

_. Ls.78;&!4 AJ+R~.l3+6; 26 So&d 361 (194a . 

3. A mortgagee..who lends motiey 6n a motor 

vehi&e~where a clear.,certificate of title is pre- 

_~. .sented.to himis fullj.protectad ,against a Federal 

~:lncame.tax lianf.ilad with.the.County Clerk, provided .his. lianis ratiorded-bond the.~ certificate' of 

.~ .tltle.aa provided..byArticle 1436-l; As between 

ths Governiaent.and~,such a.martgagee, the first re- 

+orded:lien on the.certificate of-title is enti- 

.;l;d.$o-priority.. Article 1436-1, Se;tion 43, 

. . . 

Yotis very truly,' 

ATTORNEY GENERAL OF TEXAS 

.c 

Assistant 

APPROVED 

@-~~ 

FIRST ASSISTANT 

.ATTORNEP GENERAL 

CEC)lg