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. 238-252.
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. 239-240, 250-252.
264 F.2d 762, affirmed.
265 F.2d 862, reversed.
[ Footnote * ] 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 22, 1960.
Daniel M. Friedman argued the causes for the United States. With him on the briefs were Solicitor General Rankin, Assistant Attorney General Rice, A. F. Prescott and George F. Lynch.
William L. Jacob argued the cause and filed a brief for respondents in No. 137.
Samuel B. Stewart argued the cause for petitioner in No. 183. With him on the brief were Kenneth M. Johnson and Eldon C. Parr.
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 [363 U.S. 237, 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 judgment against the mortgagor-taxpayer, pursuant to which the property was sold under a writ of fieri facias. 1 Subsequently, the United States instituted this suit under 26 U.S.C. 7403, seeking an enforcement of its tax lien by foreclosure and sale. 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 F.2d 762.
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 [363 U.S. 237, 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 Circuits.
Federal tax liens are wholly creatures of federal statute. Detailed provisions govern their creation, continuance, validity, and release. 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.S. 363 . 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. 51, 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 [363 U.S. 237, 241] here invoked, their "property and rights to property" were limited to that extent; that under Bess, the Government's lien attaches only to property rights created under state law; and that therefore, the Government's interest was subject to being similarly terminated.
The fallacy of this contention is evident. In Bess, we 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. 4 A fortiori, 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.S. 361, 364 . However, when Congress [363 U.S. 237, 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.S. 343 .
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. 5 A similar provision now appears as 26 U.S.C. 7403. 6 However, [363 U.S. 237, 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. 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, 8 which gives the holder [363 U.S. 237, 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 [363 U.S. 237, 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. 9 The action [363 U.S. 237, 246] can be brought in a state court, but is removable to a federal court. 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 lienor "may . . . 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 [363 U.S. 237, 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 11 [363 U.S. 237, 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 [363 U.S. 237, 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 [363 U.S. 237, 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 basis 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 referred to.
The question remains whether the state procedures followed in these cases were nonetheless ineffective to defeat the government liens because they should be 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, 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 was a judicial sale, having the effect of extinguishing junior liens even though their holders were not, nor required to be made, parties to the proceedings. 13 Under [363 U.S. 237, 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. The Siren, 7 Wall. 152; Minnesota v. United States, 305 U.S. 382 ; United States v. Alabama, 313 U.S. 274 . 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, 254. 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. 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, 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 those [363 U.S. 237, 252] militating against the dislocation of long-standing 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 reversed.
[ Footnote 2 ] 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.
[ Footnote 3 ] See 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).
[ Footnote 4 ] United States v. Security Trust & Savings Bank, 340 U.S. 47 ; United States v. City of New Britain, 347 U.S. 81 ; United States v. Acri, 348 U.S. 211 ; United States v. Liverpool & London & Globe Ins. Co., Ltd., 348 U.S. 215 ; United States v. Scovil, 348 U.S. 218 ; United States v. Colotta, 350 U.S. 808 ; United States v. White Bear Brewing Co., 350 U.S. 1010 ; United States v. Vorreiter, 355 U.S. 15 ; United States v. Ball Construction Co., Inc., 355 U.S. 587 ; United States v. Hulley, 358 U.S. 66 .
[ Footnote 5 ] Act of July 20, 1868, c. 186, 106, 15 Stat. 167.
[ Footnote 6 ] " 7403. Action to enforce lien or to subject property to payment of tax.
[ Footnote 8 ] 43 Stat. 253. Section 7424 now provides:
[ Footnote 9 ] 46 Stat. 1528, as amended, 56 Stat. 1026. As presently codified, 28 U.S.C. 2410 provides:
[ Footnote 10 ] 28 U.S.C. 1444.
[ Footnote 11 ] The Senate Committee which reported the bill which became the predecessor of 7424 stated (S. Rep. No. 398, 68th Cong., 1st Sess. 46):
[ Footnote 12 ] Cal. Civ. Code 2932; Bracey v. Gray, 49 Cal. App. 2d 274, 121 P.2d 770; Sohn v. California Pac. Title Ins. Co., 124 Cal. App. 2d 757, 269 P.2d 223; 34 Cal. Jur. 2d, Mortgages and Trust Deeds 463.
[ Footnote 13 ] Purdon's Pa. Stat. Ann., Tit. 12, 2447; Liss v. Medary Homes, Inc., 388 Pa. 139, 130 A. 2d 137; State College Borough v. Leathers, [363 U.S. 237, 251] 19 Pa. D. & C. 405; Moore v. Schell, 99 Pa. Super. 81; Standard Pennsylvania Practice, c. 68, 32. See also Commonwealth v. Keystone Graphite Co., 257 Pa. 249, 101 A. 766; Standard Pennsylvania Practice, c. 68, 4, n. 20.
[ Footnote 14 ] 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." 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. . . ." [363 U.S. 237, 253] It 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 procedures." [363 U.S. 237, 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 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 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 "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 [363 U.S. 237, 255] his 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 furnishing [363 U.S. 237, 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 entirely understandable [363 U.S. 237, 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 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 [363 U.S. 237, 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 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 [363 U.S. 237, 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 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 [363 U.S. 237, 260] the 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:
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. [363 U.S. 237, 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.
[ Footnote 1 ] 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.
[ Footnote 2 ] "SEC. 6325. RELEASE OF LIEN OR PARTIAL DISCHARGE OF PROPERTY.