___________

No. 95-1185 

___________

Ann H. O'Hagan, *

*

Appellee, *

* Appeal from the United States

v. * District Court for the

* District of Minnesota.

United States of America, *

*

Appellant. *

___________

 Submitted: November 13, 1995

 Filed: June 12, 1996

___________

Before BEAM, HEANEY, and MORRIS SHEPPARD ARNOLD, Circuit Judges.

___________

BEAM, Circuit Judge.

Ann O'Hagan (Mrs. O'Hagan) filed this action pursuant to section 7426

of the Internal Revenue Code (IRC) to enjoin the Internal Revenue Service

(IRS or government) from selling her husband's (Mr. O'Hagan) interest in

real property which she owned with him as a joint tenant. After the IRS

administratively levied upon Mr. O'Hagan's property interest in an effort

to collect his delinquent taxes, the district court enjoined the IRS from

selling Mr. O'Hagan's interest. The IRS appeals, claiming that the

district court lacks jurisdiction to issue the preliminary injunction. We

affirm in part and reverse in part.

I. BACKGROUND

The facts in this case are not in dispute. The O'Hagans have been

married since 1988. They own real property, which is their
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principal place of residence, in Sunfish Lake, Minnesota (the homestead

property). The O'Hagans have owned the homestead property at all times

during their marriage as joint tenants with a right of survivorship. In

1988, the O'Hagans obtained a home equity loan in the amount of $400,000.

Mr. and Mrs. O'Hagan signed the note, obligating each of them to repay the

$400,000. The bank received a mortgage encumbering by lien each O'Hagan's

interest in the homestead property.

In the early 1990s, the government imposed an assessment against Mr.

O'Hagan for unpaid federal income tax liabilities incurred in 1986, 1987,

1989, and 1991. Although Mr. O'Hagan owes the government $747,761.69 in

unpaid taxes, Mrs. O'Hagan has not been assessed any income tax liability

and is not obligated to pay any part of her husband's taxes.

On June 8, 1994, the government seized the homestead property after

having levied upon Mr. O'Hagan's interest in that property pursuant to

section 6331 of the IRC. The government then advertised the sale of Mr.

O'Hagan's interest in the real estate, which sale was to occur on November

21, 1994. Mrs. O'Hagan filed a motion for a temporary restraining order

and preliminary injunction to enjoin the sale of Mr. O'Hagan's interest in

the homestead property. The government challenged the district court's

jurisdiction based on the Anti-Injunction Act, 26 U.S.C. § 7421. The

district court determined that it had jurisdiction, granted Mrs. O'Hagan's

motion for a preliminary injunction, and enjoined the forced sale of Mr.

O'Hagan's interest. The government now brings this interlocutory appeal

pursuant to 28 U.S.C. § 1292(a).

II. DISCUSSION

The question before us is whether the district court has subject

matter jurisdiction to enjoin the government from selling Mr. O'Hagan's

interest in the homestead property. The government
 In Enochs, the Supreme Court held that federal courts have 1

jurisdiction to hear cases brought by an allegedly delinquent

taxpayer in which the collection or assessment of taxes would be

enjoined because: (1) the government cannot prevail on the

merits even if the facts and law are examined in the light most

favorable to the government; and (2) equity jurisdiction would

otherwise exist. 370 U.S. at 7-8.

 As we have often noted, we review judgments, not the text 2

of opinions, and thus may affirm on any ground supported by the

record regardless of whether it was argued below or considered by

the district court. See, e.g., African American Voting Rights

Legal Defense Fund, Inc. v. Villa, 54 F.3d 1345, 1356 (8th Cir.

1995), cert. denied, Tyus v. Bosley, 116 S. Ct. 913 (1996);

United States v. Sager, 743 F.2d 1261, 1263 n.4 (8th Cir. 1984),

cert. denied, 469 U.S. 1217 (1985). In the present case,

however, the district court expressly recognized both the

statutory exception and the

Enochs exception and the government argued in its opening brief

that Mrs. O'Hagan did not satisfy either exception.

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contends that the district court lacks subject matter jurisdiction because

the Anti-Injunction Act precludes such an injunction and that none of the

exceptions to that Act apply in the present case. After reviewing the

litany of applicable state and federal laws, we conclude that the district

court has jurisdiction to enjoin the sale of Mr. O'Hagan's right to use and

occupy the homestead property, but cannot enjoin the government from

conveying Mr. O'Hagan's survivorship interest.

The Anti-Injunction Act (the Act) prohibits federal courts from

entertaining any action filed to restrain the assessment or collection of

taxes. 26 U.S.C. § 7421(a). The primary purpose of the Act is to

facilitate the expeditious collection of taxes by the government. See

Enochs v. Williams Packing & Navigation Co., Inc., 370 U.S. 1, 7 (1962).

The Act, however, contains several exceptions. 26 U.S.C. § 7421(a). The

district court recognized both a statutory exception, 26 U.S.C. §

7426(b)(1), and a judicially crafted exception, Enochs, 370 U.S. at 6-7,1

to the Anti-Injunction Act. Although the district court relied on the

judicially created exception set out in Enochs to support its preliminary

injunction, to the extent we affirm its decision we rely, instead, on the

statutory exception set out in section 7426.2
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The statutory exception allows a person, other than the delinquent

taxpayer, who claims an interest in or lien on the property levied upon by

the government to bring a wrongful levy action. 26 U.S.C. § 7426(a). This

action may be brought without regard to whether the property has been

surrendered to or sold by the government. Id. This statutory exception,

which expressly gives the district court jurisdiction to grant injunctive

relief, provides:

If a levy or sale would irreparably injure rights in property

which the court determines to be superior to rights of the

United States in such property, the court may grant an

injunction to prohibit the enforcement of such levy or to

prohibit such sale.

26 U.S.C. § 7426(b)(1). To satisfy this statutory exception, therefore,

Mrs. O'Hagan must demonstrate that: (1) she has a right in the levied

property superior to that of the government; and (2) her right would be

irreparably injured by the forced sale of the levied property.

A. Mr. O'Hagan's Rights in the Homestead Property

In order to analyze whether Mrs. O'Hagan has a right superior to that

of the government in the levied property, we must first determine Mr.

O'Hagan's interest in the homestead property. It is well established that

in a levy proceeding, the IRS "`steps into the taxpayer's shoes.'" United

States v. Rodgers, 461 U.S. 677, 691 n.16 (1983) (quoting 4 Boris I.

Bittker, Federal Taxation of Income, Estates and Gifts ¶ 111.5.4. at 111-

102 (1981)). The administrative levy statute only authorizes the IRS to

"levy upon all property and rights to property" belonging to the delinquent

taxpayer, except certain exempt property which is not at issue in
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the present case. 26 U.S.C. § 6331. In levying upon Mr. O'Hagan's

interest in the homestead property, however, the government could not

acquire more property rights than those already held by Mr. O'Hagan. 

We look to state law to define Mr. O'Hagan's interest in the

homestead property. United States v. National Bank of Commerce, 472 U.S.

713, 722 (1985) (stating that the IRC "`creates no property rights but

merely attaches consequences, federally defined, to rights created under

state law'") (quoting United States v. Bess, 357 U.S. 51, 55 (1958)). In

the present case, it is undisputed that Mr. O'Hagan owns the homestead

property in joint tenancy with Mrs. O'Hagan. Accordingly, we look to the

applicable state law--in this case Minnesota, where the real property is

located--to define the property rights upon which the government has

levied.

Under Minnesota law, Mr. O'Hagan has an undivided interest, as a

joint tenant with Mrs. O'Hagan, in the property. As such, Mr. O'Hagan has

a right of survivorship to Mrs. O'Hagan's interest in the joint tenancy

property, as well as a present right to use and occupy the real estate.

See generally Hendrickson v. Minneapolis Fed. Sav. & Loan Ass'n, 161 N.W.2d

688 (Minn. 1968). Moreover, a joint tenant generally has the right to

unilaterally sever the joint tenancy, so long as the joint tenant satisfies
 Under Minnesota law, a severance of a joint tenancy is 3

legally effective only when: 

(1) the instrument of severance is recorded in the

office of the county recorder or the registrar of

titles in the county where the real estate is situated;

or (2) the instrument of severance is executed by all

of the joint tenants; or (3) the severance is ordered

by a court of competent jurisdiction; or (4) a

severance is effected pursuant to bankruptcy of a joint

tenant.

A decree of dissolution of marriage severs all

joint tenancy interests in real estate between the

parties to the marriage, except to the extent the

decree declares that the parties continue to hold an

interest in real estate as joint tenants. 

Minn. Stat. § 500.19, subd. 5 (1996 Supp.).

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at least one of the statutory methods for doing so. See Wendt v. Hane,

3

401
 A joint-tenant spouse who unilaterally severs a joint 4

tenancy in homestead property, however, would nevertheless be

precluded from conveying any interest in that homestead property. 

Minn. Stat. § 500.19, subd. 4 (1996 Supp.); Minn. Stat. §

507.02. Moreover, severing the joint tenancy does not completely

destroy the other spouse's survivorship interest because

Minnesota provides statutory protection for a joint tenant's

survivorship interest in homestead property. Minn. Stat. §

525.145 (1996 Supp.).

 According to the dissent, a spouse can unilaterally convey 5

homestead property, thereby severing a joint tenancy, simply by

recording an instrument of severance pursuant to Minn. Stat. §

500.19, subd. 5. In a case strikingly similar to the one before

us, Judge Kyle expressly rejected the dissent's construction of

Minn. Stat. § 507.02. Marshall v. Marshall, 921 F. Supp. 641,

645-46 (D. Minn. 1995) ("To hold that one spouse could deprive

the other spouse of this interest by recording a deed after

having unilaterally and wrongfully sold the homestead would

defeat [the purpose of the homestead law, which is to create a

property interest that could not be conveyed without the consent

of both spouses]"), vacated on other grounds, 921 F. Supp. 647

(D. Minn. 1996). In light of the clear statutory language

prohibiting a unilateral conveyance of homestead property without

the written consent of both spouses, Minnesota case law holding

that a conveyance of homestead property without the signature of

both spouses is void, and the public policy justification for

granting extra protection to homestead property, we leave it to

Minnesota courts to adopt the dissent's counterintuitive

construction of Minn. Stat. § 507.02 if they so chose. See,

e.g., Dvorak v. Maring, 285 N.W.2d 675, 677 (Minn. 1979); Renneke

v. Shandorf, 371 N.W.2d 12, 14 (Minn. Ct. App. 1985).

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N.W.2d 457, 459 (Minn. Ct. App. 1987). Once the joint tenancy has been

severed it converts into a tenancy in common and extinguishes the other

joint tenant's right of survivorship. See Hendrickson, 161 N.W.2d at 690- 4

91.

Mr. O'Hagan, however, may not convey his interest in the homestead

property without Mrs. O'Hagan's consent. Although joint 5
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tenants are generally free to convey their interest in the joint tenancy,

Minn. Stat. § 500.19, subd. 4 (1996 Supp.), spouses who own homestead

property--as joint tenants or as tenants in common--are prohibited from

conveying their interest, except to the other spouse, without the other

spouse's consent, id.; Minn. Stat. § 507.02. Furthermore, Mr. O'Hagan

would normally have the right to unilaterally sever the joint tenancy and

devise his remainder interest subject to a life estate in Mrs. O'Hagan, see

Minn. Stat. § 525.145 (1996 Supp.); but as discussed below, Mr. O'Hagan

does not have the right to unilaterally sever the joint tenancy in this

particular case. Therefore, Mr. O'Hagan and Mrs. O'Hagan, in effect, each

have a life estate with a vested remainder interest. 

In addition to imposing limitations upon the transfer of homestead

property, Minnesota law does not provide for an absolute right to

unilaterally sever a joint tenancy. The Supreme Court of Minnesota has

expressly recognized that a joint tenant may be prevented from unilaterally

severing a joint tenancy when the other joint tenant has detrimentally

relied on its existence. Hendrickson, 161 N.W.2d at 692. As explained in

that case:

If the survivor had taken some irrevocable action in reliance

upon the creation or existence of the joint tenancy, or if some

consideration was given or received when the joint tenancy was

created, it would seem reasonable to insist that unilateral

action would not be effective to deprive the passive joint

tenant of the rights so created.

Id. Although sparse, the record in the present case, along with common

sense and Minnesota law, support our conclusion that Mrs. O'Hagan relied

upon the existence of a joint tenancy when she obligated herself to repay

the entire amount of the mortgage note. The record demonstrates that Mrs.

O'Hagan, through her attorney, argued to the district court that she signed

the mortgage note in reliance upon the existence of a joint tenancy.

Appellee's App. at 6-9. She specifically referred to the above language

in the
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Hendrickson case and provided the district court with copies of the deed

that originally created the joint tenancy and referred to the $400,000 home

equity loan, dated August 24, 1988, which was signed by Mr. and Mrs.

O'Hagan. Moreover, common sense dictates that Mrs. O'Hagan would not have

agreed to be personally liable for the full amount of the note if she

thought she might ultimately have only a one-half interest in the property

she pledged as security. At a minimum, Mrs. O'Hagan certainly relied on

the fact that it would be her husband making the decision to sever the

joint tenancy, not the government or a complete stranger.

Minnesota law also supports Mrs. O'Hagan's reliance on the existence

of a vested remainder interest. Minnesota's law on the descent of

homestead interests guarantees that Mrs. O'Hagan will inherit her husband's

interest in the homestead property if no children, or issue of deceased

children, are alive at the time of his death, regardless of how Mr. O'Hagan

devises his interest. See Minn. Stat. § 525.145 (1996 Supp.). At the very

least, Mrs. O'Hagan is guaranteed a life-estate in the homestead property.

Id. Furthermore, Mr. O'Hagan would not have been allowed to bring a

partition action under Minn. Stat. § 558.01. The Supreme Court of

Minnesota long ago held that the law will not allow a spouse with an

interest in homestead property, either as a tenant in common or a joint

tenant, to do indirectly through a suit for partition something that the

spouse could not do directly through sale or conveyance. Grace v. Grace,

104 N.W. 969, 971 (Minn. 1905).

 Therefore, under the facts of this case, Mr. O'Hagan does not have

the right to unilaterally sever the joint tenancy. Accordingly, neither

the government nor a third-party purchaser could unilaterally sever the

joint tenancy. Without the right to unilaterally sever the joint tenancy

or convey the homestead property, Mr. O'Hagan possesses: (1) a present

right to use and occupy the property; and (2) a right of survivorship to

Mrs. O'Hagan's interest. 
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B. Right to Use and Occupy the Property

We must determine next whether Mrs. O'Hagan possesses an interest

superior to that of the government in Mr. O'Hagan's right to use and occupy

the property. We conclude that she does.

At least one court, in addition to the district court in the present

case, has held that the IRS cannot convey a property right that could not

have been conveyed under the applicable state law. Elfelt v. Cooper, 485

N.W.2d 56 (Wis. 1992), cert. denied, 507 U.S. 908 (1993). In a case

factually similar to the one before us, the Wisconsin Supreme Court held

that because the tax delinquent spouse would not have been able to convey

his interest in the homestead property under Wisconsin law, "the IRS, which

merely steps into [the tax delinquent spouse's] shoes, also cannot convey

any interest of the jointly held spousal homestead without either [the

innocent spouse's] consent or court action." Id. at 62. The court

concluded that "any conveyance of that interest by the IRS without [the

innocent spouse's] consent and without court action is ineffective" and

consequently the third-party purchasers "did not obtain and do not now own

an interest" in the homestead property. Id.; see also Rodgers, 461 U.S.

at 720 n.11 (Blackmun, J., concurring and dissenting) (stating that even

if the tax lien could attach to one spouse's interest in homestead

property, "the traditional rule that the lienholder gains only those

property rights possessed by the debtor would have precluded a sale").

Similarly in the present case, the government only acquires the property

interests, as defined by Minnesota law, held by Mr. O'Hagan. See, e.g.,

National Bank of Commerce, 472 U.S. at 722. Because Mr. O'Hagan could not

have conveyed any interest in the homestead property without Mrs. O'Hagan's

consent, see Minn. Stat. § 507.02, the government cannot convey Mr.

O'Hagan's interest to a third-party purchaser. Thus, under Minnesota law,

Mrs. O'Hagan has a superior right in the property because she can prohibit

any
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conveyance of Mr. O'Hagan's interest in the homestead property simply by

withholding her consent. Id.

According to the government, it has the authority to convey Mr.

O'Hagan's interest under the applicable federal statutes in the IRC, which,

it argues, preempt contrary state law. The government relies primarily on

two federal laws that set out an exclusive list of property that is exempt

from a federal tax levy. See 26 U.S.C. § 6334; 26 C.F.R. § 301.6334-1(c).

The government also relies on our prior decision in Herndon v. United

States, 501 F.2d 1219 (8th Cir. 1974) to support its contention. The

government's reliance on these authorities, however, is misplaced for

several reasons. First, we agree with the government that Mr. O'Hagan's

interest in the homestead property is not exempt from a federal tax levy.

Therefore, neither the statute nor the treasury regulation cited by the

government apply in the present case. Second, in Herndon we held that an

Arkansas homestead law that purported to exempt homestead property from

legal process, including liens, could not be used to prevent the government

from levying upon and selling a delinquent taxpayer's interest in homestead

property. Id. In contrast, the homestead statute applicable to the

present case actually defines the nature of the property interest itself

(i.e., that it is inalienable without the consent of the other spouse).

Simply put, Mr. O'Hagan has a property right that is limited by the state's

bar against conveyance during the lifetime of his spouse, unless, of

course, she consents. Finally, the Minnesota statute that exempts

homestead property from the collection of certain debts--which is analogous

to the homestead exemption statute analyzed in Herndon--is not before us

in the present case. See Minn. Stat. § 510.01 (1996 Supp.).

 Even if the government could convey Mr. O'Hagan's interest under

federal law, Minnesota law nevertheless defines the extent of that property

right. Without the right to sever the joint tenancy or to convey his

interest in the homestead property, if lawfully
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severed, Mr. O'Hagan's right to use and occupy the property is a limited,

personal right of possession. See Elfelt, 485 N.W.2d at 62 (stating that

"the statutory requirement of spousal consent illustrates that the nature

of the property interest owned by a spouse in a jointly held homestead is

a limited interest"). Neither the government nor a third-party purchaser

would be able to exercise this limited right of possession because under

Minnesota law only the spouses have this possessory right in homestead

property. See Minn. Stat. § 507.02; see generally United States v. Certain

Real Property Located at 2525 Leroy Lane, 910 F.2d 343, 351 (6th Cir. 1990)

(stating that "the Government may properly acquire only the interest which

Mr. Marks held as cotenant by the entireties . . . [but] cannot occupy the

position of Mr. Marks in the entireties estate, since the estate is founded

on marital union, and the Government obviously cannot assume the role of

spouse to Mrs. Marks"), cert. denied, Marks v. United States, 499 U.S. 947

(1991). Therefore, Mr. O'Hagan's possessory interest in the homestead

property "wears out" when it is held by another party. This would seem to

be the precise scenario contemplated by the phrase that the government

"`steps into the taxpayer's shoes but must go barefoot if the shoes wear

out.'" Rodgers, 461 U.S. at 691 n.16 (quoting 4 Bittker, ¶ 111.5.4 at 111-

102).

During her lifetime, Mrs. O'Hagan retains the right to exclude all

people, other than Mr. O'Hagan, from the homestead property. This right

derives from the Minnesota statute addressing homestead property and would

apply equally to joint tenants and tenants in common. Minn. Stat. §

507.02. Mrs. O'Hagan's right to exclude all persons other than Mr. O'Hagan

from using or occupying the homestead property demonstrates that her right

is superior to that of the government or a third-party purchaser who would

be attempting to exercise a possessory right that is limited and personal

to Mr. O'Hagan. Therefore, Mrs. O'Hagan satisfies the first prong of the

statutory exception to the Anti-Injunction Act by demonstrating that she

has a right superior to that of the
 We emphasize that even the judicial lien foreclosure 6

proceeding set out in 15 U.S.C. § 7403--which might enable the

government to sell the entire homestead and compensate the

innocent spouse with monetary damages--allows the supervising

court equitable discretion as to whether it would authorize the

transaction. See Rodgers, 461 U.S. at 706; United States v.

Bierbrauer, 936 F.2d 373, 375 (8th Cir. 1991).

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government in Mr. O'Hagan's right to use and occupy the homestead property.

The second prong of the statutory exception to the Anti-Injunction

Act requires Mrs. O'Hagan to demonstrate irreparable injury resulting from

the forced sale of Mr. O'Hagan's interest in the homestead property.

Allowing any person other than Mr. O'Hagan to exercise his right to use and

occupy the homestead property would destroy Mrs. O'Hagan's right to exclude

all persons other than Mr. O'Hagan from the homestead property. Moreover,

as a practical matter, the sale of Mr. O'Hagan's interest would undoubtedly

diminish the value of Mrs. O'Hagan's property interest. More

fundamentally, monetary relief fails to provide adequate compensation for

an interest in real property, which by its very nature is considered

unique. See, e.g., Shaughnessy v. Eidsmo, 23 N.W.2d 362, 368 (Minn. 1946)

(stating that when an interest in land is involved, the common-law remedy

is deemed to be inadequate); Strangis v. Metropolitan Bank, 385 N.W.2d 47,

48 (Minn. Ct. App. 1986) (stating that the property owners "would suffer

irreparable harm by the foreclosure of the mortgage on their homestead

[because] [r]eal property is unique, which money damages may not adequately

compensate"). Thus, Mrs. O'Hagan would suffer irreparable injury by the 6

proposed forced sale of Mr. O'Hagan's possessory interest in the homestead

property. Accordingly, we conclude that the district court has

jurisdiction to enjoin the sale of Mr. O'Hagan's right to use and occupy

the homestead property.
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C. Right of Survivorship

We must next analyze whether Mrs. O'Hagan's interest is superior to

that of the government with regard to Mr. O'Hagan's right of survivorship.

We conclude that although Mrs. O'Hagan could probably prohibit the

conveyance of Mr. O'Hagan's right of survivorship, she cannot demonstrate

irreparable injury. Thus, the government can attempt to convey this

interest, subject to the limitations discussed below.

As earlier noted, Mrs. O'Hagan can prohibit the conveyance of an

interest in the homestead property under Minnesota law. See Minn. Stat.

§ 507.02. Mrs. O'Hagan has failed to demonstrate how the conveyance of her

husband's survivorship interest would cause her irreparable injury. We

recognize that the applicable Minnesota statutes demonstrate a public

policy in favor of protecting a spouse's continued occupancy of the

homestead. Hendrickson, 161 N.W.2d at 691 (citing Minn. Stat. §§ 507.02

& 525.145(1)). This public policy, however, "does not necessarily apply

to the remainder interest, which can be disposed of without adversely

affecting the right of the surviving spouse to continue in possession and

enjoyment for so long as she might live." Id. In the present case,

therefore, the government can levy upon and attempt to convey a single

straw from the proverbial "bundle of interests," namely, Mr. O'Hagan's

right of survivorship to Mrs. O'Hagan's interest in the homestead property.

In attempting to convey this solitary interest, however, the

government must clearly articulate the precise nature of the interest in

the notice of sale. See 15 U.S.C. § 6335(b) (stating that "[s]uch notice

shall specify the property to be sold, and the time, place, manner, and

conditions of the sale thereof"). First, the government must make it clear

that the only interest in the homestead property subject to sale is Mr.

O'Hagan's survivorship interest. The third-party purchaser, in fact, would

simply be
 Furthermore, neither the government nor a third-party 7

purchaser would acquire Mr. O'Hagan's statutorily protected right

of survivorship in the homestead property--e.g., to a life

estate--because this protection is limited to a surviving spouse. 

Minn. Stat. § 525.145 (1996 Supp.).

 This anomaly would not occur under the common-law rule, 8

which assumes that a conveyance severs a joint tenancy because

the act of conveyance destroys at least one of the four unities

(time, title, interest, or possession). In abrogating the

common-law rule, Minnesota has apparently replaced the act of

conveyance with the act of recordation as the triggering event

that severs a joint tenancy.

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gambling that Mrs. O'Hagan will predecease Mr. O'Hagan because if Mr.

O'Hagan were to die first, the right acquired by the third-party purchaser

would vanish in its entirety. 

7

Second, we emphasize, as the government must in the notice of sale,

that this solitary interest is subject to a further, and substantial

limitation. Ironically, once Mr. O'Hagan's right of survivorship is

conveyed by the government to a third-party purchaser, that interest cannot

be recorded because recordation would sever the joint tenancy, thereby

extinguishing the very right of survivorship that was acquired. See Minn.

Stat. § 500.19, subd. 5 (1996 Supp.). Moreover, as discussed above, Mr. 8

O'Hagan does not have the right to unilaterally sever the joint tenancy and

thus neither the government nor a third-party purchaser would have that

right.

Finally, we note that the third-party purchaser would acquire Mr.

O'Hagan's obligations under the mortgage if Mrs. O'Hagan were to predecease

Mr. O'Hagan. This fact must also be made clear to potential purchasers.

Therefore, it is vital that the government recognize and accurately

articulate the precise, and limited, nature of the interest it would be

conveying in the present case. See Herndon, 501 F.2d at 1223 (requiring,

as a matter of fairness under the circumstances, that the government advise

all prospective purchasers that the real property is being sold subject to

the
 Without deciding whether it is essential to this type of 9

case, we conclude that the four factors normally considered in a

preliminary injunction claim also have been satisfied regarding

the sale of Mr. O'Hagan's right to use and occupy the homestead

property. Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109,

114 (8th Cir. 1981) (en banc). In Dataphase, we held that a

court considers four factors when evaluating a motion for a

preliminary injunction: (1) whether there is a substantial threat

that the plaintiff will suffer irreparable harm if the relief is

not granted; (2) whether the irreparable harm would outweigh any

potential harm in granting the preliminary injunction; (3)

whether there is a substantial probability that the plaintiff

will prevail on the merits; and (4) the public interest. Id.

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homestead interest in the other spouse and that the government inform all

prospective purchasers about the litigation in the case). Although we

believe it is highly improbable that a fully-informed third-party purchaser

would buy such a limited property right, we acknowledge that the government

does have a valid lien on Mr. O'Hagan's survivorship interest, which, while

held by the government, provides protection for the government without

affecting Mrs. O'Hagan's interests. See William T. Plumb, Jr., Federal

Liens and Priorities--Agenda for the Next Decade II, 77 Yale L.J. 605, 638

(1968) (suggesting "that the tax lien, if and when it cannot be satisfied

from other sources, should be fastened to the property by appropriate

judicial proceedings within the period of limitations, with actual

enforcement by sale deferred until the survivorship contingency is

resolved"). 

Lastly, we are not called upon to resolve the merits of the present

case, except to the extent necessary to determine whether Mrs. O'Hagan has

satisfied the statutory exception to the Anti-Injunction Act. We conclude 9

that Mrs. O'Hagan has adequately demonstrated that the district court has

jurisdiction to issue a preliminary injunction to prevent the sale of Mr.
 Our conclusion is consistent with the Supreme Court's 10

decision in Rodgers, in which the Court held that homestead

property could be sold--pursuant to the judicial lien foreclosure

procedure under section 7403 of the IRC--to satisfy tax

obligations owed by only one spouse. The Court also

acknowledged, however, that its decision did not affect the

traditional rule that the homestead property rights of an

unindebted spouse could not be sold pursuant to an administrative

levy, such as the IRS is attempting here, to satisfy the other

spouse's tax liability. Rodgers, 461 U.S. at 702-03 n.31. 

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O'Hagan's right to use and occupy the homestead property. We do not

10

express any
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opinion as to the likely outcome of a judicial lien foreclosure proceeding

under section 7403 of the IRC. See Rodgers, 461 U.S. at 703-12; United

States v. Bierbrauer, 936 F.2d 373, 375 (8th Cir. 1991).

III. CONCLUSION

The district court has subject matter jurisdiction to enjoin the

forced sale of Mr. O'Hagan's right to use and occupy the homestead

property, but cannot enjoin the government from attempting to sell Mr.

O'Hagan's right of survivorship, subject to the limitations set forth in

this opinion. Accordingly, the district court's order granting Mrs.

O'Hagan's motion for a preliminary injunction is affirmed in part and

reversed in part.

MORRIS SHEPPARD ARNOLD, Circuit Judge, dissenting.

I respectfully dissent.

The court decides this case on a ground never presented to it,

namely, that the taxpayer's inability to alienate his interest in homestead

property without Mrs. O'Hagan's consent gives her a right in property,

superior to the government's interest, that will be irreparably damaged by

a sale of the taxpayer's property. Mrs. O'Hagan did assert below and in

this court that the taxpayer's interest was not alienable without her

consent, but not in order to demonstrate that she had an interest in the

taxpayer's property superior to the government's. Rather, she did that in

an effort to show that her right to veto, as it were, any alienation by the
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taxpayer meant that the government could not convey title to the taxpayer's

interest at a tax sale. 

In other words, her argument was that the government can by levy

acquire no more rights in property than the taxpayer had, and, since the

taxpayer could not alienate his interest without his wife's consent,

neither can the government. See, e.g., United States v. Rodgers, 461 U.S.

677, 690-91 (1983). That argument itself has a certain syllogistic appeal

and presents a nice question, but, as I understand it, it is a question

that the court does not decide today. It is, moreover, entirely irrelevant

to the case.

The district court accepted Mrs. O'Hagan's argument and granted her

motion for an injunction based on Enochs v. Williams Packing and Navigation

Company, Inc., 370 U.S. 1 (1962). That case established the principle that

an injunction against a tax levy and sale can issue if (1) the government

cannot prevail on the merits even if the facts and law are examined in the

light most favorable to the government and (2) irreparable harm to the

property owner would ensue if the sale were allowed to proceed. Id. at 6-

7. But Enochs has no application to this case. 

First of all, the benefit of Enochs may extend only to the taxpayer,

not to affected third parties. In fact, Mrs. O'Hagan conceded this

proposition at oral argument in the district court. Enochs requires,

moreover, an inquiry into whether the government can prevail on the merits

of the tax claim, not whether the taxpayer has any interest in the property

that can be levied on and sold. Id. at 7. The district court therefore

focused on the merits of the wrong issue. The relevant question under

Enochs is whether the taxpayer might conceivably owe taxes, and it does not

seem to have been controverted that the taxpayer in this case owes taxes.

The district court therefore erred in relying on Enochs as
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a way to overcome the prohibition of the Anti-Injunction Act, 26 U.S.C.

§ 7421(a). 

Because it found Enochs applicable and satisfied, the district court

did not address the question of whether 26 U.S.C. § 7426(b)(1) might

provide a basis for an injunction. Indeed, this possibility was never

mentioned until the government itself raised it in its brief filed in

response to the plaintiff's brief in support of her motion for an

injunction below. Even on appeal the plaintiff makes only one reference

in her brief to this statutory provision, and then in an attempt to

demonstrate what is plainly not so, namely, that the district court relied

on it in deciding the case. And, more to the point, the plaintiff has

never made an effort to identify what interest she had in the taxpayer's

property that was superior to the government's, much less has she ever

asserted that that very interest was the taxpayer's inability unilaterally

to convey his interest in the residence. This last is a theory that the

court constructed on its own.

The court therefore decides this case on a principle never presented

to it and without giving the government the opportunity to convince it to

the contrary. Perhaps that is partly because the government, in an effort

to rebut Mrs. O'Hagan's argument that it could not sell the taxpayer's

interest in the residence, has already advanced its best argument to the

contrary, namely, that the district court misconstrued the relevant

Minnesota statutes. But there may well be other arguments that the

government could have advanced against the court's holding, and at the

least it should have been given a chance to make them. In any case, I

suggest with respect that the court has indeed misread the applicable

Minnesota law.

In my view, Minnesota statutes do give a spouse who jointly owns

homestead property the right unilaterally to sever the joint tenancy by

conveyance. That power is conferred by the portion of
-21-

Minn. Stat. Ann. § 507.02 that allows joint owners of homesteads to make

"a severance of a joint tenancy pursuant to section 500.19," that is, by

simply recording an instrument of severance (presumably either a deed to

a third party or to the grantor) in an appropriate governmental office.

See Minn. Stat. Ann. § 500.19.5(1). Such an instrument is "valid without

the signatures of both spouses." See Minn. Stat. Ann. § 507.02. 

Section 507.02 was amended in 1979 specifically to allow such

severances, perhaps partly in response to Hendrickson v. Minneapolis

Federal Savings and Loan Association, 161 N.W.2d 688, 691 (Minn. 1968),

which had held, construing the former version of the statute, that a joint

tenancy in homestead property could not be severed by a conveyance to a

third party by one of the cotenants. The provisions of Minn. Stat. Ann.

§ 500.19.4(a) are not to the contrary, because they must be taken to refer

only to those portions of § 507.02 that require the consent of a spouse to

a conveyance. The first paragraph of § 507.02 allows unilateral severance;

it is the second paragraph that requires spousal consent to certain kinds

of conveyances. Any other construction of the relevant statutes would

render the first paragraph of § 507.02 difficult to comprehend.

Plaintiff evidently believes (and perhaps the court does too) that

§ 507.02 merely confers on a joint owner of a homestead property the power

to convert the joint tenancy into a tenancy in common. That is certainly

one way of severing a joint tenancy, or one ultimate result to which a

severance may lead. But the statute speaks generally of a right to sever,

and the Minnesota cases quite clearly recognize, as do cases from other

common-law jurisdictions, that one way to sever a joint tenancy is for one

cotenant to convey his or her interest to a third party. See, e.g.,

Application of Gau, 41 N.W.2d 444, 447 (Minn. 1950). If the legislature

had intended the scope of the statute to be as narrow as the plaintiff

urges, it could easily have said so. It did not.
-22-

The court holds that even if the taxpayer had a unilateral right to

alienate his interest in the jointly held homestead, that general right is

restrained by the principles announced in Hendrickson. But that case held,

at most, in relevant part, that the survivorship feature of a joint tenancy

could not be destroyed by the unilateral act of one joint tenant if another

tenant had somehow acted in reliance on the continuing existence of that

survivorship feature. Hendrickson, 161 N.W.2d at 692. There is a good

argument that this is only dictum: The Minnesota Supreme Court said simply

that "it would seem reasonable to insist" that this was so, id. But

assuming arguendo that the court correctly describes the holding in

Hendrickson, it is an extraordinary holding indeed. In fact, it is

evidently unique. 

The ordinary rule is that joint tenants take the risk that their

cotenant will alienate his or her interest and destroy their right of

survivorship. This circumstance alone provides some basis for believing

that the Minnesota Supreme Court might overrule this aspect of Hendrickson

if given the opportunity. Furthermore, the holding in Hendrickson was

based in part on the fact that the version of § 507.02 in effect when the

case was decided did not allow for unilateral severance of a joint tenancy

in a homestead property by deed to a third person. Since it now does, and

since it contains no exceptions to the joint tenant's power to sever, the

Minnesota Supreme Court might well hold that the legislature had rejected

the holding in Hendrickson.

Finally, an application of Hendrickson, as the court interprets it,

will not lead to the result that Mrs. O'Hagan urges. We simply do not know

whether Mrs. O'Hagan would have signed the mortgage note if she had

anticipated the destruction of the survivorship feature of her cotenancy

with her husband. There is no evidence in the record one way or the other

on this point, so there is no basis for the court's finding that Mrs.

O'Hagan acted in reliance on the continued existence of her right of
-23-

survivorship. She has the burden of proof on this issue, and it cannot be

satisfied by conjecture. In fact, there is every reason to believe that

she would have signed the note anyway, because, since the residence was

homestead, if she survives her husband, she would be entitled to at least

a life estate, and perhaps to a fee simple, even without the presence of

a survivorship feature in the ownership arrangement. See Minn. Stat. Ann.

§ 524.2-402(a). Even if she eventually received only a life estate, that

could be the near equivalent of a fee simple, depending on when Mrs.

O'Hagan became entitled to exclusive possession.

Mrs. O'Hagan therefore has no right in the taxpayer's property that

is superior to the government's. What is more, she cannot carry her burden

of showing that she will be irreparably injured by a tax sale. The court

asserts that Mrs. O'Hagan has a right to exclude anyone but Mr. O'Hagan

from the residence, and that the loss of this right occasioned by a sale

to a third party is irreparable. But that proves too much, because such

a loss is attendant upon a sale of any commonly-held property interest.

The possibility that a cotenant might sell is a risk that inheres in

coownership generally and freights the property rights of all cotenants

(except tenants by the entireties). 

The court also maintains that the sale of the taxpayer's interest

would undoubtedly diminish the value of Mrs. O'Hagan's interest. This is

a dubious proposition at best. In fact, her interest might well become

more valuable, since it is not likely that any buyer of her husband's

interest would move in with her. Mrs. O'Hagan would thus have the

exclusive use of the premises, and she could invite her husband to live

with her. Even if a sale did diminish the value of her property, that

would simply give her a right to an action for money damages under 26

U.S.C. § 7426(b)(2)(C). 
-24-

The court responds that monetary relief can never provide adequate

compensation for the loss of an interest in real property. But the court

cites only Minnesota state-law authority for this proposition, and the

relevant question is the meaning of a federal statute. No federal case is

marshaled in support of this extraordinary proposition, because none can

be. In fact, the principle that the court adopts would evidently be

applicable in every case under 26 U.S.C. § 7426 that involves a levy on

realty. This takes a greater bite out of the levy statute than Congress

could possibly have intended. Reliance on a state-law equitable aphorism

that supplies the basis for extraordinary relief in cases involving land

contracts is simply not at home in a federal tax case.

The most fundamental objection, however, to the court's holding is

that the court fails to connect Mrs. O'Hagan's alleged injuries to the

allegedly superior property interest that she has, namely, her right to

restrain the taxpayer's alienation of his interest. The injuries that the

court identifies are injuries to her right to possess and enjoy her own

interest, not to her right to withhold consent to her husband's conveyance.

Such injuries do not qualify her for relief under the statute.

For the foregoing reasons, I believe that the district court erred

in granting the injunction prayed for in this suit. I would therefore

reverse the court's judgment and direct it to dismiss the motion for

injunction for lack of jurisdiction in the district court to grant it.

A true copy.

Attest:

 CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.