See, also, American Loan & Trust Co. v. Atlanta Electric Ry. Co., C.C., 99 F. 313; and 37 Am.Jur. 837. It is therefore the conclusion of this court that no redemption by the Government has been accomplished in this case.
The point is now reached in this case and is squarely presented as to whether the subordinate Federal tax lien was cut off by the foreclosure of the purchase money mortgage pursuant to the law of Pennsylvania. This foreclosure under state law was accomplished exactly as was done in United States v. Cless. It should be repeated as was stated in that decision, that it is not necessary to join the subordinate lienors in a foreclosure action, nor to give them actual notice. However, as I view this decision, the precise question now under consideration has not been decided. An authoritative decision is desirable.
Federal tax liens and their relation to the foreclosure of mortgages have recently been the subject of several articles in legal publications. Divergent views are expressed and there is no unanimity of opinion and agreement as to whether Federal tax liens are divested by the foreclosure of prior mortgages. This court finds it is on the horns of a dilemma because of two authoritative decisions. The line of cases which accepts Metropolitan Life Ins. Co. v. United States, 6 Cir., 107 F.2d 311, as authoritative, hold that the Government tax lien is not divested by the foreclosure of a prior first mortgage. The other line of authority is more recent and is typified by United States v. Boyd, 5 Cir., 246 F.2d 477, decided on June 28, 1957. The Boyd case holds that the foreclosure of mortgage under a power of sale extinguishes all liens subordinate of record to the mortgage and specifically in that case, an unpaid Federal tax lien.
In my opinion, the Metropolitan and Boyd decisions are irreconcilable. In making this decision, I must choose one or the other as the precedent. It seems to me that the Boyd case, in view of the Court of Appeals decision in the Cless case, presents the logical and reasonable answer to the problem in the instant case. Section 2410 not being mandatory, 26 U.S.C.A. § 6323(a) of the 1954 Internal Revenue Code should be given its full effect. It says:
'(a) Invalidity of lien without notice. -- Except as otherwise provided in subsection (c), the lien imposed by section 6321 shall not be valid as against any mortgagee, * * * until notice thereof has been filed * * *.'
Section 6321 of the Code gives the United States a lien against the property or rights to property of a person who neglects to pay a tax. Section 6323, however, protects the prior mortgagee. It seems to me that the Metropolitan decision detracts from and dilutes the effect of the recognition given to a mortgage by Section 6323. The logical and reasonable view of the situation appears to be that as set forth in the Boyd case, where the court said: (264 F.2d 483.)
'The result is that when a mortgage has been validly foreclosed by a non-judicial sale under a power, it is the consequence of such prior lien and the right of enforcement under it which destroys the junior encumbrance whether it be a private of Federal tax lien. The extinguishment or destruction of the junior lien comes from the nature of the superior lien and not from a later subsequent equity determination (whether under 28 U.S.C.A. § 2410, or Section 7403, or a 7424 proceeding) that this has been the effect of enforcement of the senior lien. Consequently, when the superior lien has been validly foreclosed, it cuts off all junior liens including those of the Government. Trust Company of Texas v. U.S., D.C.Tex., 3 F.Supp. 683; U.S. v. Ryan, D.C.Minn., 124 F.Supp. 1, 10; cf. Minnesota Mutual Life Ins. Co. v. U.S., D.C.Tex., 47 F.2d 942; Oden v. U.S., D.C.La., 33 F.2d 553.'
In various articles and decisions on this subject, some of the writers make a distinction or attempt to, as to the property right remaining in a mortgagor after the execution of the mortgage. In Pennsylvania this matter has been settled. See Brunn v. Wichser, 3 Cir., 75 F.2d 25, where Judge Woolley cites several pennsylvania decisions, all to the effect that in Pennsylvania the general rule is that a mortgage is a lien only and not an estate; between the mortgagor and the mortgagee, title is in the mortgagee, but as to all other persons, the mortgagor is regarded as the owner and title is in him. The Government lien in the instant case thus fastened upon a title to real property.
It a recent decision of the Court of Appeals, Judge Biggs writing the opinion, United States v. Beaver, 3 Cir., 252 F.2d 486, reiterated the principle that priority to be awarded to United States tax liens is purely a Federal question. He also said, at page 489:
'* * * Since the case of Rankin v. Scott, 1827, 12 Wheat. 177, 25 U.S. 177, 179, 6 L. Ed. 592, wherein Mr. Chief Justice Marshall enunciated the principle 'that a prior lien gives a prior claim, which is entitled to prior satisfaction out of the subject it binds,' the federal rule has been that 'the first in time is the first in right,' U.S. v. City of New Britain, 1954, 347 U.S. 81, 85-86, 74 S. Ct. 367, 98 L. Ed. 520 and this is true whether or not the property be after acquired. Glass City Bank of Jeanette, Pa. v. United States, 1945, 326 U.S. 265, 66 S. Ct. 108, 90 L. Ed. 56.'
It is noticed that the Government sought certiorari to the Supreme in the Boyd case which was denied on December 11, 1957, 355 U.S. 889, 78 S. Ct. 261, 2 L. Ed. 2d 188. In searching for authority for the Government's position, I secured and have examined the brief of the Solicitor General of the United States presented in his application for the writ of certiorari. The Solicitor General, it seems to this court, wrote a comprehensive and exhaustive brief on the subject under discussion. One of the cases he relied on is United States v. Kensington Shipyard & Drydock Corp., 3 Cir., 169 F.2d 9, but in that case it is to be noticed that the Government tax lien was the first prior lien on the property and the case is therefore distinguishable on the facts from the Boyd case. This court is aware of the rule that a denial of certiorari by the Supreme Court is not an adjudication of the issue presented to that court. But it does seem strange that if the Boyd case is not the law, considering the importance of the question and its relation to the collection of Federal taxes, that four of the Supreme Court justices should refuse certiorari. It seems to me, that to give full force and effect to that protection requires a further ruling that on foreclosure of such a mortgage the subordinate tax lien is divested. This carries to its logical conclusion the principles quoted by Judge Biggs in United States v. Beaver, '* * * that a prior lien gives a prior claim. * * *' and that '* * * the first in tim is the first in right.'
Judgment will be directed for the defendants.
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