Court Opinion

ID: 6986194
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:12:17.800316+00
Date Added: 2024-06-11T16:09:27.791018
License: Public Domain

SILER, Circuit Judge,
concurring in part and dissenting in part.
I would affirm the decision of the district court in full. Therefore, I concur in most of the conclusions made by the majority opinion, but I dissent from that part of the decision which holds that the district court erred in finding that the constructive trust was retroactive to 1978 and, therefore, was superior to the 1988 tax lien filed by the IRS.
Although, as the majority finds, there is language in cases from this court which would support a determination that the federal tax lien is superior to the interest of constructive trust beneficiaries, those cases arose under entirely different circumstances. For instance, while In re Omegas Group, Inc., 16 F.3d 1443, 1451 (6th Cir.1994), declared that a constructive trust does not exist until a judicial decision determines that it exists, it arose out of a bankruptcy proceeding. It was enforcing a bankruptcy policy under 11 U.S.C. § 541(d), as the court cited with approval the decision in The Oxford Organisation, Ltd. v. Peterson, 144 B.R. 385, 388 (1992). It related the general policy that the statute does not allow a claimant of the debtor “to take ahead of all creditors, and indeed, ahead of the trustee.” In re Omegas Group, Inc., 16 F.3d at 1451.
Similarly, in the case of United States v. Dishman Indep. Oil, Inc., 46 F.3d 523, 526 (6th Cir.1995), this court held that the federal tax lien in that case was superior to a prejudgment lien filed by the creditor of the taxpayer. It did not involve a constructive trust at all. It set out the priority of a federal tax lien under the Tax Code, which is not directly in point here, because the prejudgment lien was not the same as a judgment lien.
Instead, I would follow the decision of the district court in finding that there is no Sixth Circuit authority on the priority of a federal tax lien over a constructive trust beneficiary who has been declared a beneficiary relating back to a time prior to the filing of the tax lien. One of the cases cited by the district court, Reliance Ins. Co. v. Brown, 40 B.R. 214 (W.D.Mo.1984), appears to be in conflict with the decision of In re Omegas Group, so it is of no benefit. Another case relied upon by the district court, however, held that the IRS cannot have any better rights than a taxpayer did. See Hobson v. United States, 168 F.Supp. 117, 119 (W.D.Mich.1958). A similar conclusion was reached in FTC v. Crittenden, 823 F.Supp. 699, 704 (C.D.Cal.1993), aff'd, 19 F.3d 26 (9th Cir.1994); see also TMG II v. United States, 778 F.Supp. 37, 46 (D.D.C.1991), aff'd in part and rev’d in part, 1 F.3d 36 (D.C.Cir.1993) (IRS conceded that “tax liens do not attach to property subject to constructive trust.”)
Although the majority feels that the IRS is a party without “fault,” I would not find that it is more faultless than the condominium owners, who relied upon legal opinions that they had proper title. It was the fault of their title company, not the condominium owners themselves. One might even argue that the IRS could have gone upon the property and seen all of the construction of the condominiums, which would put some persons on notice that the Butchers no longer owned the property. Thus, I would find that neither party seems to be more at fault than the other, but that the IRS had no better rights than did the Butcher family. Their property was held through a series of fraudulent moves. If one were to accept the majority ruling here, I wonder what the result would be if the Butchers had instead purchased the real estate from the condominium owners with counterfeit money or cold checks and the IRS had filed tax liens against the Butchers before the condominium owners had discovered the fraud. Under the majority’s decision, if a court later declared a constructive trust over the realty, the federal tax lien would prevail. That would be both unfair and inequitable to the condo*913minium owners and I do not think it should be the law of this circuit.
Therefore, I would affirm the district court in full.