UNITED STATES V. BROSNAN, 363 U. S. 237 (1960)

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U.S. Supreme Court

United States v. Brosnan, 363 U.S. 237 (1960)

United States v. Brosnan

No. 137

Argued March 21, 1960

Decided June 13, 1960*

363 U.S. 237


1. Federal tax liens on real estate which are junior to defaulted mortgages held on the same properties by other parties may be effectively extinguished by state proceedings to which the United States is not, and is not required under state law to be, a party. Pp. 363 U. S. 238-252.

(a) Since federal tax liens are wholly creatures of federal statute, matters directly affecting their nature or operation are federal questions, regardless of whether or not the federal statutory scheme deals with them specifically. Pp. 363 U. S. 240-241.

(b) Nevertheless, it is believed desirable to adopt as federal law state law governing divestiture of junior federal tax liens (except to the extent that Congress may have entered the field), since this will avoid the severe dislocation of local property relationships which would result from disregarding state procedures. Pp. 363 U. S. 241-242.

(c) By the enactment of 26 U.S. C. § 7424 and 28 U.S. C. § 2410, Congress did not intend to make the proceedings under those sections the only means by which a junior federal tax lien could be extinguished; it did not intend to exclude the application of all state procedures, whatever their existence or effectiveness might be. Pp. 363 U. S. 242-250.

2. Under Pennsylvania law, mortgagees of a tract of Pennsylvania land on which the United States held a junior federal tax lien proceeded under a confession of judgment provision of the mortgage bond to obtain an in personam judgment against the mortgagor taxpayer, pursuant to which the property was sold under a writ of fieri facias. Subsequently, the United States sued under 26 U.S.C. § 7403 to enforce its junior tax lien on the same land by foreclosure and sale.

Held: under Pennsylvania law, the sheriff's sale under a writ of fieri facias was a judicial sale; but the doctrine of sovereign immunity from unconsented suits has not yet been

Page 363 U. S. 238

applied to such proceedings, and will not be extended to them now. Therefore, the Government's junior tax lien on the property was effectively extinguished by the Pennsylvania proceedings. Pp. 363 U. S. 239, 363 U. S. 250.

3. California real estate and personal properties subject to a deed of trust and two chattel mortgages were sold by the trustee-mortgagee pursuant to powers of sale contained in the respective instruments. The United States, which had junior tax liens on the properties, received no actual notice of the sale. Thereafter the mortgagee, which had bought in at the sale, brought suit against the United States under 28 U.S.C. § 2410 to quiet its title.

Held: the doctrine of sovereign immunity from unconsented suits does not apply to such private sales without judicial proceedings. Therefore, the exercise under California law of the powers of sale conferred by the deed of trust and chattel mortgages effectively extinguished the junior federal tax liens. Pp. 363 U. S. 239-240, 363 U. S. 250-252.

264 F.2d 762 affirmed.

265 F.2d 862 reversed.

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