United States v. Buffalo Sa v. Bank Page 12

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 B. Jones, Jr.:

I have just three quick points, Mr. Chief Justice.

Let me say that examples can be multiplied and what's sauce for the goose is sauce for the gander.

If you change the amount of the liens and the example given by the Bar Association and have the large lien be the local tax lien, you'll find the Federal Government by making a grant to a modest grant of priority to a modest mortgage find itself stopped with having the local taxes in large amount paid out.

The hypothetical can be multiplied but they're certain.

And this is not to disagree with the point made by Mr. Little that there are occasions when the application of this rule will put the mortgagee with no opportunity during this but foreclose because that will have to be a result in some situations where the tax liens are large in amount and do eat up any remaining equity.

Mr. Little mentioned in the Brosnan case, I think it's important to recognize with him that there was in the record in that case a claim of this nature under New Britain which could have been made.

It was not.

Now I don't know whether that was a matter of Government strategy or Government overconfidence but there was a much more important point in the case which we thought the state procedure should not to be applied at all.

And this point was not raised of the -- at the end, the factor of the judgment was that the New Britain point did slip by.

Point is made in the reply brief that we did not -- we do not now contest this in Pennsylvania.

It's quite difficult to turn these cases up under the Brosnan rule because we have to search the record ourselves, find cases where federal interests are involved, and then they have to be ones where the value of the property exceeds that at the mortgage before this point comes up at all.

We are, however, raising the point in the Supreme Judicial Court of Massachusetts in a case involving Milton Savings Bank and that's under consideration by that Court at that time so is not in any sense conceded it.

And --

Potter Stewart:

In Massachusetts, the procedure is similar to that of Pennsylvania?

John B. Jones, Jr.:

Similar, yes.

For that (Inaudible) -- for these purposes, it's substantially similar.

And then just lastly, I have Section 71 before me and whatever maybe the practice in New York, the Section 71 did say that if he doesn't pay it, he shall be firstly liable for the tax assessed against such parcel or portion of real property.

And I think that the law in practice may diverge but there is inherent in there a personal liability for the tax.

Arthur J. Goldberg:

(Inaudible)

John B. Jones, Jr.:

Well, he can keep his mortgagor current by this escrow arrangement device so that he --

Arthur J. Goldberg:

(Inaudible)

John B. Jones, Jr.:

When he have security, he has complete security against the federal tax under 3672 except to the extent that the state cuts in with its state tax so he can't -- assuming that he's correctly judged the security of the underlying property.

He can't be hurt anymore than the state taxes.

And he can keep fairly current on those or there will be a small amount which he cannot --

Arthur J. Goldberg:

(Inaudible)

John B. Jones, Jr.:

Frankly in advance and by a suitable escrow agreement.

I'm not saying everyone will pass but that was involved in the Bond case and there was no question raised.