United States v. Buffalo Sa v. Bank Page 11

United States v. Buffalo Sa v. Bank general information

Media for United States v. Buffalo Sa v. Bank

Audio Transcription for Oral Argument - December 03, 1962 in United States v. Buffalo Sa v. Bank

John Horace Little:

There's no question about it in the past and in -- case, these sections, ordinance law of Pennsylvania are said -- are cited.

In New York, they don't have to be paid.

The property can be sold subject to them.

Of course, in those states where as in the Bank of America against the United States, the companion case to Brosnan where the foreclosure is under the exercise of a part of sale on a trustee there is no question about taxes involved.

But I would agree with you that in most states, in most states they do have to be paid as an expense of sale.

Arthur J. Goldberg:

(Inaudible)

John Horace Little:

The purchaser would acquire the title subject to those federal -- or to those state taxes and it have to pay them after the sale or lose the property.

Arthur J. Goldberg:

A foreclosure?

John Horace Little:

Yes.

In the brief of the American Bar Association, amicus curiae, they advanced a further theory on which the New York Court of Appeals' decision can be sustained.

And that is that since the federal lien attached only to the mortgagor's property interest in the mortgage property and there is no question about that.

That's been held time after time after time.

And that that property interest of the mortgagor was always subject to the annual recurring charges of the state's taxing authorities to raise the money necessary to provide essential governmental services that therefore, the federal lien attached to the diminished ownership of the mortgagor as I've just expressed it.

In any event, I believe that the important thing is to stop the federal tax collector from fording the expressed intention of Congress when it adopted these sections and that is that the prior recorded mortgage get paid before the subsequently filed federal tax lien.

And Mr. Justice White, I think it's not as important that we should have a right to advance money to pay taxes as it is that we should get back to principal that we have loaned and that is what is being threatened here.

In addition to the --

(Inaudible)

John Horace Little:

But that is something that we can see and know what will be.

But as it's cited in the amicus brief, take the situation of a $1000 mortgage on a piece of property where there's $1000 in real estate taxes against which of federal tax lien of $10,000 is filed.

The property is sold for $10,000.

The mortgagee has a $1000 put aside for him.

The Federal Government gets the remaining $9000.

There's nothing left for the states so that the $1000 heretofore set aside for the mortgagee is taken from him and given to the state.

He has nothing.

(Inaudible)

John Horace Little:

We can always know that the state taxes are levied at a certain percentage of value and we can always anticipate, find up ahead, when it's necessary to step in and protect our interest against the state taxes.

There's no right of a mortgagee that it is so important as the right to the return of the principle of the amount he loaned.

And what -- when that right is threatened, all business relationships are disrupted and long standing property interests are threatened.

Thank you.

Earl Warren:

Mr. Jones.