United States v. Brosnan

PETITIONER: United States
LOCATION: Fleetwood Paving Co.

DECIDED BY: Warren Court (1958-1962)
LOWER COURT: United States Court of Appeals for the Third Circuit

CITATION: 363 US 237 (1960)
ARGUED: Mar 21, 1960 / Mar 22, 1960
DECIDED: Jun 13, 1960

Facts of the case


Media for United States v. Brosnan

Audio Transcription for Oral Argument - March 22, 1960 in United States v. Brosnan

Audio Transcription for Oral Argument - March 21, 1960 in United States v. Brosnan

Earl Warren:

Number 137, United States, Petitioner, versus William Brosnan.

Mr. Friedman.

Daniel M. Friedman:

Mr. Chief Justice and may it please the Court.

This case which is here on a writ of certiorari to the Third Circuit and the case which immediately follows it bring before this Court the questions whether a Government tax lien, which is admittedly junior to a previous mortgage on real property, may be divested from that real property, when the mortgagee follows state foreclosure proceedings to which the United States has not been made a party.

In each of these cases, what happened briefly was that a mortgage was given subsequently federal tax lien is attached to the property.

In this case, the mortgage was foreclosed under state procedures pursuant to a power of mortgagee to confess judgment and in the next case pursuant to power of State.

It is conceded in each case that in carrying out the foreclosure, the mortgagee fully complied with the provisions and requirements of state law.

And then under state law, the effect of this foreclosure would be to eliminate private junior liens that had attached to the property.

The Government's position simply stated in these cases is that whatever maybe the effect of this procedure on the elimination of private liens, it cannot operate to eliminate the federal tax lien that is attached to the property.

I want to emphasize here that this case has presented no question with respect to priorities of liens.

This is not a conflict basically between the Government and other groups as to which lien has priority.

The Government concedes in these cases that it has no claim against this property unless and until the prior mortgage has been fully satisfied.

Our claim basically is that when the prior mortgage is fully satisfied, we are entitled to satisfy our tax claim out of any excess that maybe produced over and above the amount of the first mortgage and as I will develop, the Congress has provided certain specified procedures designed to ensure that.

William J. Brennan, Jr.:

And this decision cuts you often times, doesn't it?

Daniel M. Friedman:

This does Mr. Justice Brennan.

William J. Brennan, Jr.:

Under the State Law, was there any equity of redemption?

Daniel M. Friedman:

As I understand not under Pennsylvania law, under California law in the next case, there will be, there is.

Now, I will refer briefly in my argument of three rather detail provisions relating to the elimination of tax liens, and I would like to just summarize it at the outset.

The first provision in Section 7403 of the Internal Revenue Code 1954, under which the instant case was brought, and this basically authorizes the United States to file a preceding to foreclose the tax lien with respect to real personal property.

In addition to that, another provision is Section 7424 of the Internal Revenue Code.

Now that is a simple matter, it gives someone who holds a prior lien prior to that of the United States or someone who purchases at a sale to foreclose that lien the right to institute himself a suit to determine the interest in the real property after going through a request to the Commissioner of Internal Revenue and that has to request to institute the other type of suit, and it's denied.

The last provision is Section 2410 of Title 28 of the United States Code.

That is a provision which authorizes the institution -- I am sorry, authorizes the United States to be made a party to a proceeding to foreclose on mortgage or the client title.

And I would like to emphasize at the outset something very significant.

Now that is the only one of these provisions which specifically provides that if the provisions there and are followed the effect of foreclosure on junior and subsidiary liens is the same as under state law.

In that one case, Congress has said that if you comply with these procedures, you look to state law to see what the effect of foreclosure is.

But in that situation where state law wipes out the lien, it does, the United States is given a year within which to redeem.

Now, the basic facts in this case are not disputed and are relative simple.

In 1948, some people in apartment purchased some real property and gave that a bond and mortgage.

The bond on defendants laying a practice is the equivalent of a promise to pay.