The opinion of the court was delivered by: SHERIDAN
This is a motion to dismiss a petition by the United States to remove a proceeding from the Court of Common Pleas of Cameron County, Pennsylvania, to the United States District Court for the Middle District of Pennsylvania. The action in the State court involved the distribution of proceeds of property, sold upon foreclosure of a mortgage, on which the United States had liens for unpaid federal employment taxes totalling $ 10,875.27, plus interest.
On April 7, 1961, the Sheriff of Cameron County sold that real estate and personal property of the Hotel Warner, Emporium, Cameron County, Pennsylvania, which was owned and operated by Wilma Dolaway and others, defendants in the State court proceedings. The sale was held on an execution writ issued on a judgment entered on a mortgage bond in favor of the Emporium Trust Company. The proceeds of the Sheriff's sale totalled $ 41,170.42, which represented $ 170.42 in miscellaneous cash receipts and $ 41,000.00 received from Emporium, the purchaser at the sale. Emporium paid the Sheriff cash of $ 10,902.66 and gave a lien creditor's receipt for $ 30,097.32, the amount of Emporium's mortgage liens on the property. The United States did not receive actual notice of the foreclosure proceedings. The only notice required under Pennsylvania law is that afforded by publication. Pa.R.C.P. Nos. 3128, 3129, 12 P.S.Appendix.
The Sheriff prepared and filed in his office a schedule of distribution. The record indicates that the United States received a copy of this schedule on April 14, 1961. Under this distribution municipal tax liens and Commonwealth of Pennsylvania sales and unemployment compensation tax liens were to be paid in full. The proposed distribution to the United States was $ 2,644.35. On April 21, 1961, the United States filed objections to the distribution in which it took exception to the proposed payments to the Commonwealth and the municipal subdivisions. On April 28, 1961, the Sheriff filed his schedule of distribution with the court.
Emporium was appointed sequestrator to maintain and operate the Hotel pending completion of the foreclosure proceedings. Emporium's sequestrator account, filed on May 5, 1961, showed $ 359.04 for distribution, $ 119.68 to the United States and the balance to another creditor. Emporium proposed that this sum be distributed as a continuation of the Sheriff's distribution, and that any objections to the account be considered along with objections of the United States to the Sheriff's schedule of distribution. The United States received notice of the sequestrator's account, but did not file objections.
On May 15, 1961, the court held a hearing on the objections to the Sheriff's distribution. The United States was represented at the hearing, but there was no testimony or argument on the objections. The court fixed June 26, 1961, for further proceedings on the objections. By agreement of Emporium and the United States, the June 26 hearing was postponed to allow the United States to present its petition for removal. The petition for removal was filed on July 5, 1961. Emporium filed an answer, and moved for a dismissal of the petition.
Both the United States and Emporium agree that the question of priority for the satisfaction of federal tax liens out of the property seized is a matter over which the United States District Court has jurisdiction and is a proper subject for removal to this court. 28 U.S.C.A. 1340, 1441, 1444, 2410; City of New York v. Evigo Corp., S.D.N.Y.1954, 121 F.Supp. 748.
Emporium attacks the petition for removal on the ground that it was not filed within twenty days after service of the papers from which it could first be ascertained that the case is one which is removable, as required by 28 U.S.C.A. 1446(b), paragraph 2. In this case, the papers would be the Sheriff's schedule of distribution.
The United States contends that the petition was filed in proper time because (a) the Sheriff's schedule of distribution was not such a pleading, summons, amended pleading, motion, order or other paper, as required by 28 U.S.C.A. 1446(b), paragraph 2, which starts the twenty day period running, and (b) even if the schedule of distribution could be considered such a pleading or paper, the action came within the purview of 28 U.S.C.A. 2410 concerning actions affecting property on which the United States has a lien. This section gives the United States sixty days in which to plead, in addition to the twenty days under 28 U.S.C.A. 1446. Thus, since the dispute arose on April 21, 1961, the date on which the United States filed objections to the schedule of distribution, the United States had eighty days, or to July 10, 1961, in which to file its petition for removal.
The timeliness of the petition for removal is a matter to be determined by federal law. Stoll v. Hawkeye Casualty Co., 8 Cir., 1950, 185 F.2d 96, 99, 22 A.L.R.2d 899; Crivello v. Board of Adjustment of the Borough of Middlesex, D.N.J.1960, 183 F.Supp. 826, 828; Chicago, Rock Island and Pacific Railroad Co. v. Stude, 1954, 346 U.S. 574, 74 S. Ct. 290, 98 L. Ed. 317.
Section 1446(b) of Title 28 of the United States Code Annotated provides:
'(b) The petition for removal of a civil action or proceeding shall be filed within twenty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within twenty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.
'If the case stated by the initial pleading is not removable, a petition for removal may be filed within twenty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.'
Emporium started the State court proceeding against Wilma Dolaway et al., defendants, by entering judgment on the mortgage bond. A writ of execution for the sale of the defendants' property issued to the Sheriff. The sale was held in accordance with the Pennsylvania law as outlined by Pa.R.C.P. Nos. 3101 et seq. The United States was not a party to these proceedings. Under Pennsylvania law notice of a sheriff's sale is not given to lienholders except by newspaper publication and the posting of handbills. Pa.R.C.P. Nos. 3128, 3129. Thus, the United States at this point did not have actual knowledge of the State court proceedings.
Subsequent to the sale, the Sheriff proceeded in accordance with Pa.R.C.P. No. 3136. The pertinent ...