Document: 374 U.S. 84 83 S.Ct. 1651 10 L.Ed.2d 770 UNITED STATES, Petitioner,v.PIONEER AMERICAN INSURANCE COMPANY et al. No. 405. Argued April 17, 1963. Decided June 10, Richard M. Roberts, Washington, D.C., for petitioner. Owen C. Pearce, Fort Smith, Ark., respondents. Mr. Justice WHITE delivered the opinion of Court. 1 The United States has sought review a decision Supreme Court Arkansas subordinating federal tax lien (26 U.S.C. § 6321) to attorney's fees included in an antecedent mortgage contract. 235 Ark. 267, 357 S.W.id 653. Because conflict between and v. Bond, 279 F.2d 837 (C.A.4th Cir.); In re New Haven Clock & Watch Co., 253 577 (C.A.2d Cir.), we granted certiorari, 371 909, 254, 9 169. 2 When taxpayers 1958 acquired their interest parcel real estate involved here, they assumed liability on note deed trust (first mortgage) securing it, which were held by respondent Pioneer American Insurance Company. obligated 'in event default herein placing this hands attorney collection, or is collected through any court proceedings, pay reasonable fee.'1 at same time executed second vendor, Development Company, subsequently, 1960, became burdened again with mechanic's favor Alfred J. Anderson. 3 October defaulted first monthly installment failed thereafter meet payments as fell due. On March 24, 1961, filed suit foreclose its sought, addition principal interest, fee. was named party defendant because two outstanding liens against November 29, January 30, 1961. admitted subordinate mortgages but claimed that superior claim Three additional subsequently 14, July 3, 1961.2 4 15, Chancery entered decree foreclosure fixed fee $1,250 determined priority various claimants. After satisfaction sale costs, accorded principal, interdst fee; Company took next under mortgage; Anderson shared his last. property sold proceeds received satisfied all claims except $3,615.28 liens.3 appealed asserting it entitled over fees,4 more should have been applied reduce unpaid taxes.5 With one judge dissenting, rejected contention sustained superiority 5 It goes unchallenged fee, arising out obligations taxpayer 1958, enforceable law contract indemnity 1960 before filing liens. Furthermore, evidence earned commenced prior crucial suit, i.e., Nevertheless, had not incurred paid could be finally amount until after filed, hold remained inchoate least date are priority. 6 provided 26 6321 created state governed common-law rule—'the right.' Britain, 347 81, 85—86, 74 367, 370, 98 L.Ed. 520. critical, therefore, determine when competing liens, whether federal- state-created, come into existence become valid purpose rule. 7 arises, according 6322, assessed, specific interests mentioned 6323(a)—mortgagees, pledgees, purchasers judgment creditors—it placed public record, insofar attaches securities, mortgagees, pledgess must actual notice lien.6 6323(c). 8 As law, depends 'on attached question choate.' supra, 86, 370; Security Trust Savings Bank, 340 47, 71 111, 95 53. Choate state-created take later supra; Crest Finance Co. States, 368 347, 82 384, 342, while do not. See Liverpool London Ins. 348 215, 75 247, 99 268; Scovil, 218, 244, 271; Colotta, 350 808, 76 82, 100 725. And matter such sufficient substance so perfected defeat later-arising later-filed lien.7 'Otherwise, State affect standing contrary established doctrine, simply causing attach some arbitrary even tax, assessment, etc., determined.' 371. rule 'perfected sense there nothing done choate lien—when identity lienor, subject lien, established.' Id., 84, 369. We reject respondents' choateness no place 6323(a) involved. predecessor 6323 enacted Congress 1912 order protect creditors secret assessed taxes postpone effectiveness these filed. H.R.Rep.No. 1018, 62d Cong., 2d Sess. section dealt only did purport local deemed arise tentative, conditional imperfect Rather, believe intended whole spectrum certain enjoy preferred status 6323, attained degree perfection required other purposes never mortgagees face less demanding test than lien. Indeed R. F. Ball Constr. 355 587, 78 442, 510, stands just contrary. There creditor, assignment he within insisted upon virtue previously assignment. A majority Court, although expressly declaring mortgage, afforded creditor protection since 'inchoate unperfected.' four dissenters thought 'completely perfected' respects While disagreeing particular there, unanimous applying those seeking 6323(a). follow lead here therefore proceed measure mortgagee's us. 11 Clearly lienholder definite equally apparent undetermined indefinite filed.8 respondents secured promissory mortgagor maker 'reasonable fee' default' 'of collection.' By subordinated courts occurred, mortgagee elected declare due payable, engaged But fee'—reasonable relation service performed attorney—had reduced liquidated amount. final set considerably below sum requested. Moreover, showing record money services 12 once provides parallel. Sums contractor-taxpayer construction assigned surety security future indebtedness contractor other. contractor, made advances complete another taxpayer, bond issued contract, thereby indebted surety. surety's unperfected' liens.9 rejects assignee's secure taxpayer-debtor. holds merely 'a caveat perfect come.' York Maclay, 288 290, 294, 53 323, 324, 77 754. Likewise, uncertain yet paid, intervening matures.10 13 But, said, amount, order11 if prevail preference given will frustrated payment net realized from mortgage. Aside fact experience reduction,12 argument would both Buffalo 228, 314, 283, denied though former recovery mortgagee.13 14 error reversed cause remanded further proceedings inconsistent opinion. 15 Reversed remanded. 16 DOUGLAS dissents. provided, addition: 'That either part (trustee) (mortgagor) shall proceeding equity reference premises conveyed, charges added then owing instrument, hereby shall, option holder, collectible. 'The * follows: 'First: To costs expenses executing trust, sums expended account litigation, fees, ground rents, taxes, insurance premiums, sold, thereon. 'Second: retain compensation, commission forth laws Arkansas. 'Third: off debt hereby, including accrued thereon, well pursuant instrument.' distribution, full. $546.68 available partial balance full amounts 17 unsatisfied. challenge distribution decree. Once borne claimants seniority among themselves law. basis present decree, share lienor eliminated mortgagee, half. 'While true may constitute case property, inequitable statute provide constitutes regards securities. For example, broker purchases customer exchange, obviously impossible him check offices duly like situation exists respect over-the-counter direct transactions An attempt enforce recorded many cases impair negotiability securities seriously interfere business transactions. adoption amendment remove existing hardship without undue loss revenue.' H.R.Rep. 855, 76th 1st (1939). effect provision collection debts always question. Hence, court's classification weight, reexamination Court.' Sav. 49—50, 53; see also, Acri, 211, 239, 264; Vorreiter, 19, 23. Thus that, becomes does inquiry time. Mortgage Powers, 278 149, 49 73 236, compels us choate, issue clause, bankruptcy where rigorous necessarily applicable. Contrast loans consummated accrual accord, Bank America National Ass'n Embry, 188 Cal.App.2d 425, Cal.Rptr. 602; attaching Christensen, 269 624 (C.A.9th advance clause transactions, Surety Sundberg, 58 Wash.2d 337, 363 P.2d 99; Rev.Rule 56—41, 1956—1 Cum.Bull. 562; cf. Peoples 197 898 (C.A.5th Hoare 294 823 Cir.). This require revitalize long relationback doctrine. 50, 113, 5, supra token rules 'unjust enrichment' violated preferring merit. Both Britain prefer having mortgagee. services, moreover, rendered benefit holding adverse them charged therefor.

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