Opinion ID: 779630
Heading Depth: 3
Heading Rank: 2

Heading: Context and Structure of the Bankruptcy Code

Text: 30 The Trustee responds by arguing that it is irrelevant that the term tax lien commonly refers to a statutory tax lien; the only relevant question is how Congress intended the term to be used in § 724(b). The Trustee is correct in stating that, when Congress defines a term, courts are to apply that definition in interpreting the meaning of the statute. See Stenberg v. Carhart, 530 U.S. 914, 942, 120 S.Ct. 2597, 147 L.Ed.2d 743 (2000) (When a statute includes an explicit definition, we must follow that definition, even if it varies from that term's ordinary meaning.); United States v. Yochum (In re Yochum), 89 F.3d 661, 666(9th Cir.1996) ([I]n statutes that contain statutory definition sections, it is commonly understood that such definitions establish meaning wherever the terms appear in the same Act.). 31 As noted, however, Congress failed to define tax lien in the statute, even though § 101 of the Bankruptcy Code defines a number of related terms. For example, § 101 defines a lien generally as a charge against or interest in property to secure payment of a debt or performance of an obligation. 11 U.S.C. § 101(37). A statutory lien is defined as a 32 lien arising solely by force of a statute on specified circumstances or conditions, or lien of distress for rent, whether or not statutory, but does not include security interest or judicial lien, whether or not such interest or lien is provided by or is dependent on a statute and whether or not such interest or lien is made fully effective by statute. 33 Id. § 101(53). A judicial lien means a lien obtained by judgment, levy, sequestration, or other legal or equitable process or proceeding. Id. § 101(36). Finally, a security interest is defined as a lien created by an agreement. Id. § 101(51). These definitions do not tell us directly what Congress meant when it used the term tax lien. 34 The Trustee acknowledges that the term tax lien appears seven times in § 724(b) but points out that in each instance tax lien is preceded by the word such. He asserts that such amounts to a reference throughout § 724(b) to the complete antecedent in subsection (b), namely, a lien that is not avoidable under this title and that secures an allowed claim for a tax. 11 U.S.C. § 724(b). The foregoing phrase refers only to a lien, which can include either a statutory lien or a judicial lien. Thus, he argues, Congress intended the phrase such tax lien to be defined by reference to subsection (b) and § 101(37) and thereby intended to supplant the traditional meaning of tax lien in § 724(b). 35 Although the Trustee's parsing of the section is logical, the word such will not bear so much weight in this context. In 11 U.S.C. § 724(b)(3), for example, the third payout is to the holder of the tax lien, to any extent that such holder's allowed tax claim that is secured by such tax lien exceeds any amount distributed under paragraph (2) of this subsection. (Emphasis added.) If the Trustee's interpretation were correct, the emphasized phrase such tax lien instead would read simply a lien; otherwise the repetition of tax is redundant. See United States v. Handy, 761 F.2d 1279, 1280(9th Cir.1985) (A statute should be construed so as to avoid making any word superfluous.). In the context of this subsection, at least, Congress appears to have used the term tax lien to mean a subset of the larger term lien. 36 Additionally, § 724(d) of the Bankruptcy Code states: A statutory lien the priority of which is determined in the same manner as the priority of a tax lien under section 6323 of the Internal Revenue Code of 1986 shall be treated under subsection (b) of this section the same as if such lien were a tax lien. 11 U.S.C. § 724(d). In other words, statutory liens whose priority is established in the same manner as the priority of a tax lien under § 6323 are treated as if they are tax liens. In subsection (d), the phrase tax lien at the end of the sentence refers back to a tax lien under section 6323 of the Internal Revenue Code of 1986 — a statutory tax lien. Ordinarily, such refers to an antecedent phrase. In § 724, however, only subsection (d) explains fully what a tax lien might mean. Although it is unusual grammatically, Congress may have used such tax lien in § 724(b) to refer to the kind of tax lien identified fully in § 724(d). 37 Because neither party's reading of tax lien is obviously correct, the statute is ambiguous. When a statute's text is ambiguous, we look to legislative history as an aid to discerning congressional intent. See Merkel v. Commissioner, 192 F.3d 844, 848 (9th Cir.1999) ([I]f the statute is ambiguous, we consult the legislative history, to the extent that it is of value, to aid in our interpretation. (citation and internal quotation marks omitted)); N.W. Forest Res. Council v. Glickman, 82 F.3d 825, 834 (9th Cir.1996) (Where a statute is ambiguous, we may look to legislative history to ascertain its purpose.). We turn next, then, to legislative history.