Court Opinion

ID: 9422004
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:00:52.484914+00
Date Added: 2024-06-11T17:22:33.935724
License: Public Domain

Mr. Justice Clark,
whom The Chief Justice, Mr. Justice Black and Mr. Justice Frankfurter join, dissenting.
I submit that the over-all purpose of Congress in the adoption of § 2410 and § 7424 was “to afford to a holder of a lien prior in time to that of the United States . . . a method of procedure for clearing the title to the property.” 1 The Committee pointed out that “there is no method whereby the lien for taxes may be discharged without payment. Although the lien may ... be valueless to the United States, it remains a cloud on the title which the prior lienor is powerless to remove.” And the House Committee stated, among other things, that real estate interests had recommended the legislation for years because a prior recorded lienholder was “in effect defeated of his own right to foreclose” and that the “simple and just method of proceeding” under the bill “is fair to the holder of the prior lien on the real estate and . . . amply and fully protects the rights of .the Federal Government. . . .” *253It declared that “equity dictates that the Government’s lien in such circumstances should have a junior status, yet under the present practice the inability of the plaintiff to bring the United States in as a party to the proceeding to foreclose or have execution and sale on a court judgment . . . ties the hands of a prior lien holder by making it impossible for him to grant a clear title to the property and thus . . . deprives him of the benefits of his security or court judgment as the case may be.” (Italics added.) Furthermore, the Congress understood and intended that foreclosure under state procedures — by court or private sale — without notice to the United States “could not possibly discharge the Government’s lien.” (Chairman Graham of the House Judiciary Committee, manager of the bill on the floor.)
The Congress first passed § 7424, which gave a mortgagee the right, after exhausting administrative remedies, to bring an action against the United States to test its lien. Thereafter in 1931 it enacted § 2410 which, without administrative remedies, permitted the United States to be named a party in a suit by a mortgagee for foreclosure of a prior mortgage lien on property or to quiet title. The Act gave consent to the filing of such actions “[u]nder the conditions prescribed,” including a one-year right of redemption, all of which requirements the Congress found to be necessary “for the protection of the United States.”
Nevertheless, the Court has brushed aside all of these protections and, without regard to the congressional mandate, has turned these acts into booby traps in which the Government has now been caught up by its own benevolence. Giving the California mortgagees in No. 183 a carte blanche to wipe out the Government’s lien by summary action at a trustee’s sale, without even giving the Government notice, the Court declares its extraordinary action to be in recognition “of long-standing state pro*254cedures.” For the same reason, the Pennsylvania mortgagees in No. 137 are permitted to bring an action in the courts of that State and to foreclose the Government's lien without making it a party or giving it any notice whatsoever. All of this it does as “a matter of federal policy.” But this is not all. The Court finds that the Pennsylvania proceeding was a judicial one culminating in a sale of property on which the United States had a lien and that “[ujnder the decisions of this Court, a judicial proceeding against property in which the Government has an interest is a suit against the United States which cannot be maintained without its consent.” Yet, even though admittedly the Government has not so consented, the Court says that since “no case in this Court, so far as we can find, has yet applied the doctrine of sovereign immunity in the precise situation before us,” it will not do so now. This is certainly less than a self-evident explanation for wiping out an interest of the Government without its authorized consent, but this anomalous ground for decision is followed by the bootstrap operation that “Pennsylvania procedure should not be considered as being an uncon-sented suit against the United States, any more than the wholly private proceeding in the California case.”
The fact about it is that the Court presupposes, wholly apart from 28 U. S. C. § 2410 and 26 U. S. C. § 7424, that the “long-standing state procedures” applicable to the extinguishment of junior private liens apply equally to junior government ones. In the light of the fact that federal law with regard to the manner in which liens of the United States may be released or extinguished has been on the books in one form or another for over 90 years, this is indeed a violent assumption. Under federal law, a prior-filed lienholder has for some 30 years enjoyed three specific remedies that he may follow to secure the release or extinguishment of a junior government lien. First, he may apply to the Secretary of the Treasury or *255his delegate to release the lien under § 6325 of the Internal Revenue Code.2 Section 6325 authorizes that official (1) to execute a release when the liability is satisfied or has become legally unenforceable or upon the furnish*256ing of a bond conditioned on the payment of the amount of the lien, or (2) to execute a partial release of the property involved where such a discharge will not jeopardize the Government’s interest. This provision, in itself, seems entirely adequate to protect moneylenders from suffering any injustice, but the Congress did not stop there. It gave such a lienholder two additional remedies. These alternative and additional methods are set out in 26 U. S. C. § 7424 and 28 U. S. C. § 2410.
Section 7424 grants the mortgagee the privilege of enforcing his prior-filed lien by civil action against the United States as provided in § 7403, which was originally passed in 1868 as a remedy available only to the Government. As a protection to the United States, § 7424 first requires that the mortgagee request the Secretary of the Treasury to authorize the filing of an action under § 7403. Upon the Secretary’s failure to authorize such an action within six months, the mortgagee may apply to the District Court for relief. Notice to all lienholders, including the United States, is required. The majority opinion emphasizes that no redemption right is given the Government in a proceeding under § 7424 and seems to place some reliance for its action on the absence of such relief. However, this policy of the Congress is entirely understandable *257when we consider that § 7424 first requires application to the Secretary. This requirement gives that official ample time before suit is filed to pay off the prior lien if advantageous to the Government. This is, of course, tantamount to a full redemption right after sale. There' would be no point in permitting such relief after suit when its equivalent was available to the Secretary for six months during the time when he was considering the mortgagee's request.
In addition to this procedure, the Congress in § 2410 gave the mortgagee an additional and separate method by which to proceed. It does not require a request to be filed with the Secretary but permits the immediate invocation of judicial remedies in state or federal courts. Its relief extends to any type of mortgage or lien claimed by the United States, whether or not for taxes. The United States, of course, must be made a party and given notice. Judicial sales may be ordered, having the same effect as they would under state law, and the United States is given one year in which to redeem. Obviously this provision was inserted to protect the Government. Unlike a § 7424 proceeding, it ordinarily has received no notice of the prior mortgage lien before the mortgagee files suit. The Congress, in fairness to the Government, gave it one year after the judgment to reimburse the lien-holder and redeem the property in protection of the Government’s interest.
Now let us take up seriatim, the grounds on which the Court disregards this carefully devised scheme for protecting the Government’s liens. It says that certain “features” of the acts make “clear” that the federal remedies are not exclusive. The first two features have to do with the use by the Congress of the word “may” in granting permission to file the suit and the phrase the court “may decree a sale” in dealing with the action to be taken in the same. But statutory interpretation must not be reduced *258to an exercise in semantology. In stating that a mortgagee “may . . . file a petition” Congress did not— because it could not — require him to do so. He “may” file suit if he wishes or he can take his chances that his title is superior, as thousands have in such matters. Likewise, in granting the privilege that “the United States may be named a party” the Congress employed the word “may” in its ordinary, familiar usage and understanding. Congressional expression, after all, must not necessarily be of Addisonian diction. Reaching the Court’s further objection to the word “may” in the congressional language that the court “may decree a sale,” it is submitted in all logic that, since other relief is available in the suit, i. e., receivership, quieting of title, et cetera, Congress could use no other word. Certainly the word “shall” would be inapplicable. It was left up to the court to decree the appropriate relief after a full hearing and if a sale was in order to fix the manner, time and condition of the same. These are details the Congress appropriately and traditionally leaves to courts.
The third “feature” of which the majority makes much is the fact that the federal Acts do not “on their face” exclude state procedures. But this is a commonplace in federal legislation, Hines v. Davidowitz, 312 U. S. 52, 67 (1941), and is by no means the test. See Pennsylvania v. Nelson, 350 U. S. 497 (1956). The majority says that, since § 2410 (a) grants specific permission to file a quiet-title suit, this “contemplates a declaration by the federal courts of previously created legal consequences.” This provision was suggested in 1941 by the then Attorney General Jackson. Being a practical lawyer with a large general practice, he knew that many titles were then clouded by government liens and that many times in the future “persons acting in good faith . . . without knowledge of the Government lien or in the belief that the lien had been extinguished” would likewise have no remedy *259under which, to clear their titles. This moved him to make the suggestion. But, being the lawyer he was, I am confident he never dreamed that his suggestion would strip the Government he was so capably representing of notice in private trustee sales and deprive it of any defense in such a quiet-title suit. Such a construction of this clause in § 2410 (a) acts as a repealer of all other provisions of these federal statutes. Why would the Congress give its consent to sue the United States as a quid'pro quo of the Government having a fair chance to test out the validity of the prior-claimed private lien, and then turn right around and let the state procedure through a trustee’s sale wipe out the government lien without notice, hearing or redemption rights? In this manner, action under state law wipes out federal procedure entirely— with the exception of the quiet-title suit and even in it the Government, according to the holding today, has none of the federal statutory protections. The trustee’s deed under the deed of trust sale has, the Court says, extinguished the inferior government lien under state law and that is binding on the Government. It cannot contest the bona fides and priority of the deed of trust, the amount due under it, the regularity, fairness or validity of the exercised power of sale, or any other infirmities in the sale, including fraud or collusion — unless allowed by state law. To be able to construe a federal statute so as to wipe out the government lien, which on the face of the statute was to be tested on specific conditions written therein “for the protection of the United States,” stretches the imagination for me beyond the breaking point.
Other than these “features” of the federal Acts, the “long-standing state procedures” and the “matter of federal policy,” the Court gives no reason for adopting state procedures in extinguishing government liens. Of course, if, as the Court holds, the principle of sovereign immunity were not applicable, and if the Congress had not acted in *260the field, the Court could “fashion the governing rule of law.” Clearfield Trust Co. v. United States, 318 U. S. 363, 367 (1943). But the adoption of local law, even in that event, would be “singularly inappropriate.” The tax liabilities involved here, as well as the liens securing the same, are all federally created and the rights arising therefrom would be governed by federal law. The enforcement of these rights, however, would be controlled by state law. Would this include the validity of the tax as assessed by the collector and asserted in the lien? While § 2410 and § 7424 do not permit the validity of the tax to be tested under their procedures, what about state' law? Certainly this would open up endless problems. But be that as it may, the procedures of enforcement themselves would vary in each State, resulting in 50 separate and different rules of procedure, entailing varying interpretations, practices and pitfalls peculiar to each jurisdiction. Would it not be better to have a uniform system in the tax collection machinery of the Nation? In Clearfield the Court concluded that:
“The issuance of commercial paper by the United States is on a vast scale and transactions in that paper from issuance to payment will commonly occur in several states. The application of state law, even without the conflict of laws rules of the forum, would subject the rights and duties of the United States to exceptional uncertainty. It would lead to great diversity in results by making identical transactions subject to the vagaries of the laws of the several states. The desirability of a uniform rule is plain.” 318 U. S., at 367.
I submit that these grounds for uniformity so forcefully spelled out in Clearfield are even more compelling here where the revenue of the United States is imperiled. The importance of uniformity in tax procedures is well illus*261trated in United States v. Gilbert Associates, 345 U. S. 361, 364 (1953), where we again emphasized its necessity in these words:
“A cardinal principle of Congress in its tax scheme is uniformity, as far as may be. Therefore, a ‘judgment creditor’ [as used in 26 U. S. C. (1946 ed.) § 3672] should have the same application in all the states.”
It is the more important that, if moneylenders having prior-filed liens are to be given the right to extinguish inferior government liens, it be done on a uniform basis applicable equally in all of the States.
However, there is an even more serious objection to the adoption of state procedures in these cases. As we have seen, the Government is left without even the protection of notice. The United States’ lien will be wiped out before its tax officials even know of the foreclosure under the prior-filed mortgage. It will be left without any protection. With thousands of trustees’ sales going on over the country each day the Government’s revenue will be seriously jeopardized.
While I would hold the federal procedures exclusive, if the Court insists that state law be made applicable would not a “just method of proceeding” at least include a rule that tax liens of the United States cannot be extinguished in any state proceeding — by trustee’s sale or through judicial process — without giving the United States notice thereof? With all of its millions of tax transactions, how else can the public treasury be protected? Nor would such a requirement “inject ourselves into the network of competing private property interests” or displace “well-established state procedures governing their enforcement.” The State could proceed as it wishes, within Fourteenth Amendment requirements, to set up and enforce its own procedures as to private lienholders. *262Only in those cases where government liens are involved would lienholders have to give notice to the United States. This would protect the public revenue and cause no. more hardship on moneylenders than they agreed to and have up until today had to bear under § 2410 and § 7424.
I would therefore reverse the judgment in No. 137 and affirm that in No. 183.

 For the sake of brevity, see note 11, pp. 247-249, of the majority opinion for references to, and citations of authorities for, these quotations.

 “Sec. 6325. Release op Lien or Partial Discharge op Property.
“(a) Release of Lien. — Subject to such rules or regulations as the Secretary or his delegate may prescribe, the Secretary or his delegate may issue a certificate of release of any lien imposed with respect to any internal revenue tax if—
“(1) Liability satisfied or unenforceable. — The Secretary or his delegate finds that the liability for the amount assessed, together with all interest in respect thereof, has been fully satisfied, has become legally unenforceable, or, in the case of the estate tax imposed by chapter 11 or the gift tax imposed by chapter 12, has been fully satisfied or provided for; or
“(2) Bond accepted. — There is furnished to the Secretary or his delegate and accepted by him a bond that is conditioned upon the payment of the amount assessed, together with all interest in respect thereof, within the time prescribed by law (including any extension of such time)-, and that is in accordance with such requirements relating to terms, conditions, and form of the bond and sureties thereon, as may be specified by such rules or regulations.
“(b) Partial Discharge of Property.—
“(1) Property double the amount of the liability. — Subject to such rules or regulations as the Secretary or his delegate may prescribe, the Secretary or his delegate may issue a certificate of discharge of any part of the property subject to any lien imposed under this chapter if the Secretary or his delegate finds that the fair market value of that part of such property remaining subject to the lien is at least double the amount of the unsatisfied liability secured by such lien and the amount of all other liens upon such property which have priority to such lien.
“(2) Part payment or interest of United States valueless. — Subject to such rules or regulations as the Secretary or his delegate may prescribe, the Secretary or his delegate may issue a certificate of discharge of any part of the property subject to the lien if—
“(A) there is paid over to the Secretary or his delegate in part satisfaction of the liability secured by the lien an amount determined by the Secretary or his delegate, which shall not be less than the *256value, as determined by the Secretary or his delegate, of the interest of the United States in the part to be so discharged, or
“(B) the Secretary or his delegate determines at any time that the interest of the United States in the part to be so discharged has no value.
In determining the value of the interest of the United States in the part to be so discharged, the Secretary or his delegate shall give consideration to the fair market value of such part and to such liens thereon as have priority to the lien of the United States.
“(c) Effect of Certificate of Release or Partial Discharge. — A certificate of release or of partial discharge issued under this section shall be held conclusive that the lien upon the property covered by the certificate is extinguished.” 68A Stat. 781, 26 U. S. C. § 6325.