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.
(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.
(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.
(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.
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.
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
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.
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
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.
-240, 363 U. S.
264 F.2d 762 affirmed.
265 F.2d 862 reversed.
MR. JUSTICE HARLAN delivered the opinion of the Court.
In these two cases, the United States purports to hold federal
tax liens on Pennsylvania and California real properties which are
concededly junior to defaulted mortgages held on the same
properties by the other parties to the suits. The basic issue in
each case is whether the federal lien was effectively extinguished
by state proceedings
Page 363 U. S. 239
to which the United States was not, nor was required under state
law to be, a party.
The course of proceedings giving rise to this issue was as
follows: in No. 137, involving a tract of Pennsylvania land, the
respondent mortgagees, under a confession of judgment provision of
the mortgage bond, obtained an in personam
against the mortgagor taxpayer, pursuant to which the property was
sold under a writ of fieri facias.
] Subsequently, the United States
instituted this suit under 26 U.S.C. § 7403 seeking an enforcement
of its tax lien by foreclosure and sale. [Footnote 2
] The District Court held that the
Government's lien on the property in question had been effectively
extinguished by the Pennsylvania proceedings, and it entered
judgment for the defendants. The Court of Appeals affirmed. 264
In No. 183, California real 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 received no actual notice of the
sale. Thereafter, the mortgagee, which had bought in at the sale,
brought this suit against the Government under 28 U.S.C. § 2410 to
quiet its title, claiming that the exercise of the powers of sale
had effectively extinguished the federal tax lien. The Court of
Appeals, reversing the District Court, dismissed the suit, holding
that the federal lien could be
Page 363 U. S. 240
divested "only with the consent of the United States and in the
manner prescribed by Congress." 265 F.2d 862, 869. The Court did
not reach the question of the effect which California law purports
to give to the exercise of the power of sale upon junior liens.
We brought the cases here, 361 U.S. 811, because of the
importance of the issue in the administration of the tax laws and
the conflict between the decisions of the Third and Ninth
Federal tax liens are wholly creatures of federal statute.
Detailed provisions govern their creation, continuance, validity,
and release. [Footnote 3
Consequently, matters directly affecting the nature or operation of
such liens are federal questions, regardless of whether the federal
statutory scheme specifically deals with them or not. See
Clearfield Trust Co. v. United States, 318 U.
. Yet, because federal liens intrude upon
relationships traditionally governed by state law, it is inevitable
that the Court, in developing the federal law defining the
incidents of such liens, should often be called upon to determine
whether, as a matter of federal policy, local policy should be
adopted as the governing federal law, or whether a uniform
nationwide federal rule should be formulated.
In determining the extent of the "property and rights to
property" (§ 6321) to which a government tax lien attaches, we have
looked to state law. United States v. Bess, 357 U. S.
, 357 U. S. 55
The mortgagees claim that the present cases are governed by the
principle of Bess.
They assert that, since the taxpayer
mortgagors' interests were subject to being terminated by means of
the state proceedings
Page 363 U. S. 241
here invoked, their "property and rights to property" were
limited to that extent; that, under Bess,
lien attaches only to property rights created under state law; and
that therefore the Government's interest was subject to being
The fallacy of this contention is evident. In Bess,
held that a deceased's property in insurance policies on his own
life was limited to their cash surrender value, and did not extend
to their proceeds, which he could never enjoy. Here, however, the
mortgagors owned the entire fee interests in the properties,
subject only to the mortgages. This Court has repeatedly rejected
the contention that, because a fee owned by a taxpayer was already
encumbered by a lien which enjoyed seniority under state law, the
Government's lien necessarily attached subject to that lien.
the "property" to which the federal lien can attach
is not diminished by the particular means of enforcement possessed
by a competing lienor to whom federal law concedes priority.
We nevertheless believe it desirable to adopt as federal law
state law governing divestiture of federal tax liens, except to the
extent that Congress may have entered the field. It is true that
such liens form part of the machinery for the collection of federal
taxes, the objective of which is "uniformity, as far as may be."
United States v. Gilbert Associates, 345 U.
, 345 U. S. 364
However, when Congress
Page 363 U. S. 242
resorted to the use of liens, it came into an area of complex
property relationships long since settled and regulated by state
law. We believe that, so far as this Court is concerned, the need
for uniformity in this instance is outweighed by the severe
dislocation to local property relationships which would result from
our disregarding state procedures. Long accepted nonjudicial means
of enforcing private liens would be embarrassed, if not nullified,
where federal liens are involved, and many titles already secured
by such means would be cast in doubt. We think it more harmonious
with the tenets of our federal system and more consistent with what
Congress has already done in this area, not to inject ourselves
into the network of competing private property interests, by
displacing well established state procedures governing their
enforcement, or superimposing on them a new federal rule. Cf.
Board of Comm'rs v. United States, 308 U.
This conclusion would not, of course, withstand a congressional
direction to the contrary. The Government argues that, by the
enactment of certain statutes relating to judicial proceedings for
the enforcement and extinguishment of federal liens, Congress has
at least impliedly, so spoken.
As early as 1868, Congress had authorized a suit by the United
States to enforce its own tax lien. [Footnote 5
] A similar provision now appears as 26 U.S.C. §
7403. [Footnote 6
Page 363 U. S. 243
it was already then well established that the United States was
an indispensable party to any suit affecting property in which it
had an interest, and that such a suit was therefore a suit against
the United States which could not be maintained without its
consent. [Footnote 7
Furthermore, the laws of many States themselves required all
persons claiming an interest in property to be joined as parties to
any suit to foreclose a lien or quiet title to the property. Thus,
there was no way in which a party who held a lien on property
senior to that of the United States could get a judicial decree
extinguishing the Government's interest.
To remedy this situation, Congress, in 1924, passed the
predecessor of 26 U.S.C. § 7424, [Footnote 8
] which gives the holder
Page 363 U. S. 244
of a prior-filed lien the right to enforce it by civil action
against the United States, subject to the exhaustion of certain
administrative remedies. The court is to proceed to "a final
determination of all claims to or liens upon the property in
question" in the same manner as if the action had been brought by
the Government to enforce its lien under § 7403. The latter section
requires the court to determine the merits of all claims to the
property, and in case the United States establishes such a claim,
permits, but does not require, the court to order a judicial sale.
The details of the procedure to be followed in case of judicial
sale are not specified, nor is the United States expressly given
any right to redeem.
In 1931, Congress, for similar reasons, passed the predecessor
of 28 U.S.C. § 2410, which gives a private lienor
Page 363 U. S. 245
the right to name the United States a party in any action or
suit to foreclose a mortgage or lien or to quiet title to property
on which the United States claims any kind of mortgage or lien,
whether or not a tax lien. [Footnote 9
] The action
Page 363 U. S. 246
can be brought in a state court, but is removable to a federal
court. [Footnote 10
] If a
judicial sale is conducted in such an action or suit, it is to have
the same effect as it would have under local law, but the United
States is given one year to redeem.
These statutes, on their face, evidence no intent to exclude
otherwise available state procedures. Their only apparent purpose
is to lift the bar of sovereign immunity which had theretofore been
considered to work a particular injustice on private lienors.
Several features of the statutes make this clear:
(1) Both sections are purely permissive in tenor. A private
. . . file a petition in the district court"
under § 7424, or "the United States may
be named a party"
under § 2410. (Emphasis added.)
(2) Under neither section is there a federally imposed
requirement that there be any judicial sale at all. Nor is there
any uniformity of procedure under the statutes. Under § 7424, the
court "may decree a sale" of the property, but no guidance is given
as to the procedure to be followed. Under § 2410, a judicial sale
is to have the same effect as it would have under local law, but
nothing in the section indicates when a judicial sale is to be had.
While the Government is guaranteed a one-year right to redeem if
the plaintiff proceeds under § 2410, it is guaranteed no such right
if he proceeds under § 7424.
(3) The specific permission of § 2410(a) to institute a quiet
title suit against the United States obviously contemplates a
declaration by the federal courts of previously created legal
consequences. If § 7424 or § 2410 were invoked to extinguish a
federal lien, a subsequent suit to
Page 363 U. S. 247
quiet title obviously would not be necessary. Therefore,
Congress must have recognized the possibility that state procedures
might affect federal liens.
The Government, however, argues that the legislative history
indicates that Congress believed a suit against the United States
to be the only way in which a federal lien could be extinguished.
But the statements relied on [Footnote 11
Page 363 U. S. 248
reveal simply a recognition that competing lienors were put at
an unfair disadvantage because of inability to join effectively the
Government as a party to judicial proceedings. As to the extent of
that disadvantage, it is not
Page 363 U. S. 249
clear whether Congress thought that the Government's sovereign
immunity barred an attempt to affect a federal lien in any manner;
that a nonjudicial procedure might be effective to divest federal
liens, but that state procedures
Page 363 U. S. 250
by and large required junior lienors to be joined as parties to
judicial proceedings; or that, regardless of the existence and
effectiveness of state procedures, a cloud on the title could only
be removed conclusively by a judicial determination binding on the
United States. In any event, the basic question is not what the
existing state of the law was, or even what Congress believed it to
be, but whether Congress intended to exclude the application of all
state procedures, whatever their existence or effectiveness might
be. No such inference can be drawn from the legislative statements
The question remains whether the state procedures followed in
these cases were nonetheless ineffective to defeat the government
liens because they should de regarded as being unconsented suits
against the United States. Because no judicial proceeding was there
involved, No. 183 presents no such problem, unless we are now to
hold, beyond anything this Court has heretofore decided, that,
because the private sale of its own force was effective under
California law to extinguish all junior liens, [Footnote 12
] what was done in this instance
amounted to a "suit" against the United States. We do not think
that the doctrine of sovereign immunity reaches so far.
No. 137, however, presents a different and more difficult
question on this score. Under Pennsylvania law, the Sheriff's sale
of the mortgaged land under a writ of fieri facias
judicial sale, having the effect of extinguishing junior liens even
though their holders were not, nor required to be made, parties to
the proceedings. [Footnote
Page 363 U. S. 251
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.
Wall. 152; Minnesota v. United States, 305 U.
; United States v. Alabama, 313 U.
,. It has been suggested that this principle
applies only where the Government holds a fee interest or such
other interest in the property as to render it an indispensable
party under state law. See United States v. Cless,
F.2d 590, 592. That, however, seems a dubious distinction, since
whether or not the United States is an indispensable party to a
judicial proceeding cannot depend on state law. See Minnesota
v. United States, supra,
at p. 305 U. S. 386
Nevertheless, 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. Much can be said for the view that this Pennsylvania
procedure should not be considered as being an unconsented suit
against the United States [Footnote 14
] any more than the wholly private proceeding
in the California case. In both cases, the practical effect upon
junior liens is exactly the same.
Be that as it may, we shall not so extend the principle of
sovereign immunity. To do so would not only produce incongruous
results as between these two cases, but would trespass upon the
considerations which have led to our refusal to fashion a federal
rule of uniformity respecting the extinguishment of federal junior
liens under state procedures. It must be recognized that the
factors supporting a federal rule of uniformity in this field, and
Page 363 U. S. 252
militating against the dislocation of longstanding state
procedures, are full of competing considerations. They involve many
imponderables which this Court is ill equipped to assess, on which
Congress has not yet spoken, and which we think are best left to
that body to deal with in light of their full illumination. A wise
solution of such a far-reaching problem cannot be achieved within
the confines of a lawsuit. Until Congress otherwise determines, we
think that state law is effective to divest government junior liens
in cases such as these.
The judgment in No. 137 is affirmed, and that in No. 183 is
It is so ordered.
* Together with No. 183, Bank of America National Trust and
Savings Association v. United States,
on certiorari to the
United States Court of Appeals for the Ninth Circuit, argued March
Subsequent to the entry of judgment, but prior to the sale, the
mortgagees attempted to join the United States as a party under 28
U.S.C. § 2410. We agree with the District Court that that attempt
did not comply with the statute.
Alternatively, in the event the District Court found that the
Government had been properly joined as a party to the state
proceedings, the Government sought a decree that it had properly
exercised its right of redemption. That issue is not pressed by the
Government, and is not before us.
26 U.S.C. § 6321 (Lien for taxes); § 6322 (Period
of lien); § 6323 (Validity against mortgagees, pledgees,
purchasers, and judgment creditors); and § 6325 (Release of lien or
partial discharge of property).
United States v. Security Trust & Savings Bank,
340 U. S. 47
United States v. City of New Britain, 347 U. S.
; United States v. Acri, 348 U.
; United States v. Liverpool & London
& Globe Ins. Co., Ltd., 348 U. S. 215
United States v. Scovil, 348 U. S. 218
United States v. I. J. Colotta,
350 U.S. 808; United
States v. White Bear Brewing Co., 350 U.
; United States v. W. H. Vorreiter,
355 U. S. 15
United States v. R. F. Ball Construction Co., Inc.,
355 U. S. 587
United States v. Hulley, 358 U. S. 66
Act of July 20, 1868, c. 186, § 106, 15 Stat. 167.
"§ 7403. Action to enforce lien or to subject property to
payment of tax."
In any case where there has been a refusal
or neglect to pay any tax, or to discharge any liability in respect
thereof, whether or not levy has been made, the Attorney General or
his delegate at the request of the Secretary or his delegate, may
direct a civil action to be filed in a district court of the United
States to enforce the lien of the United States under this title
with respect to such tax or liability or to subject any property,
of whatever nature, of the delinquent, or in which he has any
right, title, or interest, to the payment of such tax or
All persons having liens upon or claiming
any interest in the property involved in such action shall be made
"(c) Adjudication and decree.
The court shall, after
the parties have been duly notified of the action, proceed to
adjudicate all matters involved therein and finally determine the
merits of all claims to and liens upon the property, and, in all
cases where a claim or interest of the United States therein is
established, may decree a sale of such property, by the proper
officer of the court, and a distribution of the proceeds of such
sales according to the findings of the court in respect to the
interests of the parties and of the United States."
In any such proceeding at the
instance of the United States, the court may appoint a receiver to
enforce the lien, or, upon certification by the Secretary or his
delegate during the pendency of such proceedings that it is in the
public interest, may appoint a receiver with all the powers of a
receiver in equity."
Wall. 152; Minnesota v. United States, 305 U.
, 305 U. S. 386
United States v. Alabama, 313 U.
, 313 U. S.
43 Stat. 253. Section 7424 now provides:
"§ 7424. Civil action to clear title to property."
"(a) Obtaining leave to file.
"(1) Request for institution of proceedings by United
Any person having a lien upon or any interest in the
property referred to in section 7403, notice of which has been duly
filed of record in the jurisdiction in which the property is
located, prior to the filing of notice of the lien of the United
States as provided in section 6323, or any person purchasing the
property at a sale to satisfy such prior lien or interest, may make
written request to the Secretary or his delegate to authorize the
filing of a civil action as provided in section 7403."
"(2) Petition to court.
If the Secretary or his
delegate fails to authorize the filing of such civil action within
6 months after receipt of such written request, such person or
purchaser may, after giving notice to the Secretary or his
delegate, file a petition in the district court of the United
States for the district in which the property is located, praying
leave to file a civil action for a final determination of all
claims to or liens upon the property in question."
"(3) Court order.
After a full hearing in open court,
the district court may in its discretion enter an order granting
leave to file such civil action, in which the United States and all
persons having liens upon or claiming any interest in the property
shall be made parties."
Upon the filing of such civil
action, the district court shall proceed to adjudicate the matters
involved therein, in the same manner as in the case of civil
actions filed under section 7403. For the purpose of such
adjudication, the assessment of the tax upon which the lien of the
United States is based shall be conclusively presumed to be
46 Stat. 1528, as amended, 56 Stat. 1026. As presently codified,
28 U.S.C. § 2410, provides:
"§ 2410. Actions affecting property on which United States has
"(a) Under the conditions prescribed in this section and section
1444 of this title for the protection of the United States, the
United States may be named a party in any civil action or suit in
any district court, or in any State court having jurisdiction of
the subject matter, to quiet title to or for the foreclosure of a
mortgage or other lien upon real or personal property on which the
United States has or claims a mortgage or other lien."
"(b) The complaint shall set forth with particularity the nature
of the interest or lien of the United States. In actions in the
State courts, service upon the United States shall be made by
serving the process of the court with a copy of the complaint upon
the United States attorney for the district in which the action is
brought or upon an assistant United States attorney or clerical
employee designated by the United States attorney in writing filed
with the clerk of the court in which the action is brought and by
sending copies of the process and complaint, by registered mail, to
the Attorney General of the United States at Washington, District
of Columbia. In such actions, the United States may appear and
answer, plead or demur within sixty days after such service or such
further time as the court may allow."
"(c) A judicial sale in such action or suit shall have the same
effect respecting the discharge of the property from liens and
encumbrances held by the United States as may be provided with
respect to such matters by the local law of the place where the
property is situated. . . . Where a sale of real estate is made to
satisfy a lien prior to that of the United States, the United
States shall have one year from the date of sale within which to
redeem. In any case where the debt owing the United States is due,
the United States may ask, by way of affirmative relief, for the
foreclosure of its own lien, and, where property is sold to satisfy
a first lien held by the United States, the United States may bid
at the sale such sum, not exceeding the amount of its claim with
expenses of sale, as may be directed by the head of the department
or agency of the United States which has charge of the
administration of the laws in respect of which the claim of the
United States arises."
28 U.S.C. § 1444.
The Senate Committee which reported the bill which became the
predecessor of § 7424 stated (S.Rep. No. 398, 68th Cong., 1st Sess.
"At the present time, in cases in which the lien prior in time
to that of the United States equals or exceeds in amount the value
of the property, there is no method whereby the lien for taxes may
be discharged without payment. Although the lien may thus be
valueless to the United States, it remains a cloud on the title
which the prior lienor is powerless to remove. The subdivision
gives the lienor a remedy in this case."
The House Committee which reported a bill designed to achieve
the same objective as § 2410 stated (H.R.Rep. No. 95, 71st Cong.,
2d Sess. 1-3):
"This legislation has been recommended for a number of years by
the American Bar Association through its committee on removal of
Government liens on real estate, the United States League of Local
Building and Loan Associations, and by numerous land title
companies, in order to relieve against the injustice with which
mortgagees are confronted under the present state of the law who
find, when it is necessary to foreclose their mortgages, that there
has been filed against the property a junior lien by the Federal
Government for some debt due the United States by the owner of the
equity in the property, and for which the mortgagee owes no
obligation, either legal or moral. In such circumstances, the
mortgagee finds himself at an impasse. It is impossible for him to
bring about a judicial sale of the property owing to the cloud upon
the title created by the Government's lien. He can not remove the
lien, as there is no method by which he may bring the United States
in as one of the parties to the foreclosure proceeding. He is,
therefore, in effect defeated of his own right to foreclose unless
he is willing to pay off the Government lien, a debt for which he
is in no way responsible, and he being a person to whom the
Government would in no event look for its payment."
"The purpose of this bill is to provide a simple and just method
of proceeding in such cases. . . ."
"* * * *"
"This bill will provide relief from a situation that has caused
a great deal of injustice to innocent holders of liens against real
estate. The number of liens filed under the revenue laws has been
steadily growing. . . . The law provides and 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 where a Government lien is found to have been placed upon
the property subsequently to the time of the plaintiff's
encumbrance ties the hands of a prior lienholder by making it
impossible for him to grant a clear title to the property, and
thus, for no just reason, deprives him of the benefits of his
security or court judgment, as the case may be."
During the debates leading to the enactment of the predecessor
of § 2410, Representative Graham, who had reported the bill from
the Judiciary Committee, explained it as follows (72 Cong.Rec.
"It is simply a provision by which, whenever a mortgagee, for
instance, holding a mortgage upon real estate, finds that a lien to
the Government has been filed . . . , the owner of that mortgage
may go into the State court and foreclose his mortgage, but this
would do him no good unless he could get the United States made a
party to the proceeding in some way so that the lien would be
relieved on the part of the Government."
Subsequently, the following colloquy took place with respect to
a provision of the bill which authorized administrative release of
questionable or worthless federal liens (72 Cong.Rec.
"Mr. BURTNESS [of North Dakota]. So that some of us may
understand a little better the relief that is suggested simply as
an administrative act and the cases to which it would apply. I
understand, for instance, it would apply to a case of this sort: in
many States, foreclosure by advertisement is permitted, with the
right of redemption. Assume that a prior lien is foreclosed, the
Government has a junior lien, the time for redemption expires, and
the purchaser at the foreclosure sale of the prior lien gets title
through the foreclosure proceedings under State laws. Presumably,
in a case of that sort, the enforceability of the Federal lien as a
practical proposition has been wiped out, but it is still a cloud
on the title. Now, in that sort of a case, could the administrative
officers give relief under the amendment that is proposed without
going into court in any way?"
"Mr. HAWLEY [of Oregon]. If, at any time, they find as a matter
of fact that the Government lien is valueless, they are authorized
to release that lien by the pending amendment."
"Mr. BURTNESS. And it may become valueless for several reasons,
for instance, depreciation in the value of the property, the amount
of prior liens foreclosed in legal proceedings, or anything
"Mr. GRAHAM [of Pennsylvania]. The foreclosure the gentleman
speaks of could not possibly discharge the Government's lien."
"Mr. BURTNESS. I understand it would not be discharged, but, of
course, the holder of the property would have been subrogated to
the rights acquired under the foreclosure of the prior lien, I take
In 1941, Attorney General Jackson sent a letter to the Chairman
of the Senate Judiciary Committee urging that the predecessor of §
2410 be amended to include suits to quiet title. The letter stated
(S.Rep. No. 1646, 77th Cong., 2d Sess. 2):
"It should be observed in this connection that, under existing
law, there is no provision whereby the owner of real estate may
clear his title to such real estate of the cloud of a Government
mortgage or lien. Welch v. Hamilton
F.(2d) 224, and U.S. v. Turner
(C.C.A.8), 47 F.2d 86."
"In many instances, persons acting in good faith have purchased
real estate without knowledge of the Government lien or in the
belief that the lien had been extinguished. In other instances,
mortgagees have foreclosed on property and have failed to join the
United States. It appears that justice and fair dealing would
require that a method be provided to clear real estate titles of
questionable or valueless Government liens. Accordingly, I suggest
that the bill be amended by inserting the phrase 'to quiet title
or' between the words 'matter' and 'for the foreclosure of' in line
4 of page 2 of the bill."
Cal.Civ.Code, § 2932; Bracey v. Gray, 49 Cal. App. 2d
, 121 P.2d 770; Sohn v. California Pac. Title Ins.
Co., 124 Cal. App.
, 269 P.2d 223; 34 Cal.Jur.2d, Mortgages and Trust Deeds
Purdon's Pa.Stat.Ann. Tit. 12, § 2447; Liss v. Medary Homes,
388 Pa. 139, 130 A.2d 137; State College Borough v.
19 Pa.Dist. & Co. 405; Moore v. Schell,
99 Pa.Super. 81; Standard Pennsylvania Practice, c. 68, § 32.
See also Commonwealth v. Keystone Graphite Co.,
249, 101 A. 766; Standard Pennsylvania Practice, c. 68, § 4, n.
If state procedures undertook to discriminate against the United
States with respect to joinder, questions of a different order
would be presented.
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." [Footnote 2/1
] 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. . . ."
Page 363 U. S. 253
It declared that
"equity dictates that the Government's lien in such
circumstances should have a junior status, yet, under the
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 lienholder 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,
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 longstanding state
Page 363 U. S. 254
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,
"[u]nder 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
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
"Pennsylvania procedure should not be considered as being an
unconsented 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 "longstanding
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
Page 363 U. S. 255
his delegate to release the lien under § 6325 of the Internal
Revenue Code. [Footnote 2/2
Section 6325 authorizes that official (1) to execute a release when
the liability is satisfied or has become legally unenforceable or
upon the furnishing
Page 363 U. S. 256
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
Page 363 U. S. 257
when 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
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 lienholder 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
Page 363 U. S. 258
to 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
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
(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
Page 363 U. S. 259
under 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
of the Government's 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
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
"longstanding 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
Page 363 U. S. 260
the field, the Court could "fashion the governing rule of law."
Clearfield Trust Co. v. United States, 318 U.
, 318 U. S. 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
"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 for
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
318 U.S. at 318 U. S. 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 illustrated
Page 363 U. S. 261
in United States v. Gilbert Associates, 345 U.
, 345 U. S. 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 state."
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
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
Page 363 U. S. 262
Only 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 at 247-249 of the majority opinion for references
and citations of authorities for, these quotations.
"§ 6325. RELEASE OF LIEN OR PARTIAL DISCHARGE OF 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.
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
"(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
"(2) Part payment or interest of United States
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 value, as determined by the Secretary or his
delegate, of the interest of the United States in the part to be so
"(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
"(c) Effect of certificate of release or partial
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.