Opinion ID: 1191028
Heading Depth: 3
Heading Rank: 1

Heading: Application of Article 3-A to the United States

Text: The United States' first argument, relying primarily on Leiter Minerals, Inc. v. United States, 352 U.S. 220, 77 S.Ct. 287, 1 L.Ed.2d 267 (1957), is that Article 3-A does not apply to it because the statute lacks express words so indicating. We implicitly rejected this argument in United States v. Certified Indus., Inc., 361 F.2d 857, 862 (2d Cir.1966), where we assumed that the United States would be subject to Article 3-A's statute of limitations. We now explicitly reject the argument, joining at least one district court in our Circuit that has, in analyzing Article 3-A's representative capacity requirement, found the statute's procedural requirements to be applicable to the United States. See Quantum Corporate Funding v. Bast Hatfield, Inc., No. 5:04-cv-137, 2005 WL 1926610, -3, 2005 WL 1926610, at , 2005 U.S. Dist. LEXIS 14222, - (N.D.N.Y. June 8, 2005). As support for its argument, the government cites to a heavily qualified canon of statutory construction recognized in Leiter, which it portrays as a rule of general and wide-ranging applicability: that `statutes which in general terms divest pre-existing rights or privileges will not be applied to the sovereign without express words to that effect.' Leiter, 352 U.S. at 224, 77 S.Ct. 287 (quoting United States v. United Mine Workers, 330 U.S. 258, 272, 67 S.Ct. 677, 91 L.Ed. 884 (1947)). The canon is inapplicable to the facts of this case. Article 3-A does not divest the United States of any pre-existing rights. The rights the United States seeks to enforce are Article 3-A trust fund rights that are created by, and do not exist apart from, the statute itself. These rights therefore cannot be understood as pre-existing, and the canon therefore does not apply. [5] The government argues that applying Article 3-A would frustrate its power to collect federal taxes in federal court. Appellant's Br. at 30. This argument fails because, as discussed further below, an Article 3-A suit does not impede the government's ability to bring an action to enforce taxes owed by any party. See infra Part II(B). Even if the United States is unsuccessful in its Article 3-A suit, it may still bring a tax enforcement action against Merchant or any other party to collect unpaid employment taxes that arose out of contracts at issue here. Article 3-A does create, subject to certain procedural limitations, a right for some parties to act by lien or foreclosure against these trust fund assets. It provides that right to the United States, too. But the United States has no pre-existing right to these specific assets because, to obtain such a right, it must prevail in the Article 3-A suit, subject to Article 3-A's limitations. For this reason, we find that Article 3-A applies to the United States. [6]