States is always a federal question. Hence, although a state court's classification of a lien as specific and perfected is entitled to weight, it is subject to reexamination by this Court. On the other hand, if the state court itself describes the lien as inchoate, this classification is 'practically conclusive.' (People of State of) Illinois (ex rel. Gordon) v. Campbell, 329 U.S. 362, 371 (67 S. Ct. 340, 91 L. Ed. 348).'
See also, Ersa, Inc. v. H. A. Dudley, 234 F.2d 178 (3rd Cir. 1956).
It is to be emphasized in this decision that the Court understands that in analyzing the choate lien test, so to speak, as Judge Boreman did and as other decisions have done, the government does not dispute the identity of the City of Pittsburgh as lienor in the instant case, nor the identity of the property subject to the lien, and that the amount of the claims for the various years in question were fixed and determined at the time they were assessed and billed. This is the test set forth in the New Britain case in coming to a judgment as to whether a lien is choate or inchoate. It is of some significance that counsel for each of the parties relies to some extent on the New Britain decision in support of their respective contentions. It is to be noticed in New Britain that neither of the new liens had been recorded of record in the County Clerk's Office where the property was situate. I do not regard this point, however, as being significant if, under state law, and as examined by the federal law, the lien is choate under the federal test. This test has just, as recently as December 16, 1963, in Meyer v. United States, 375 U.S. 233, 84 S. Ct. 318, 11 L. Ed. 2d 293, been reapproved by the Supreme Court. It is also to be noticed that those cases dealing with personal property have not been considered because it has been determined in the instant case that the City's claims are a lien on the real estate which had sufficient value, of course, to discharge all amounts due the City.
It is no novelty under Pennsylvania law that taxes on distribution after a judicial sale have priority over a mortgage lien. An interesting history on this subject is found in Erie v. Piece of Land, 339 Pa. 321, 14 A.2d 428 (1940). In that case it was held that taxes when duly levied become liens and on distribution are first payable. Moreover, in that case the Court said at p. 327 of 339 Pa., at p. 431 of 14 A.2d, 'Municipal liens for grading and paving streets are a species of taxation and come within the rule.' The Court was speaking of the same Act of 1923 which concerns us in the instant case and certainly water and sewage charges are in the same category as municipal liens for grading and paving. A late discussion on the subject is also found in Elmore v. Philadelphia, 179 Pa.Super. 535, 117 A.2d 765 (1955).
Thus there is no doubt that private persons investing in first mortgages in Pennsylvania have known since 1923 that municipal claims include charges for water rates and sewer rates, 53 P.S. § 7101, and that such claims have been declared by the Legislature of Pennsylvania to be liens on real property, 53 P.S. § 7106. However, only one appellate decision appears to be in the Pennsylvania law books and that is the Lower Merion case. But Common Pleas Judges have so held. Philadelphia v. Charleston. See also Borough of Red Hill v. Bitting, 4 Pa.Dist. & Co.R.2d 219, 1955; and Philadelphia v. Goetz, 71 Pa.Dist. & Co.R. 500, 1950.
Thus, having examined the subject from the federal viewpoint, that is from federal standards, the conclusion is that the City's claims for water and sewage charges incurred prior to 1992 are choate liens, and have priority in payment over the government mortgage. The same reason, of course, compels the conclusion that the claims arising thereafter, that is after April 11, 1962, are held to lack priority over the government mortgage.
And finally, the City of Pittsburgh is entitled to an Order in its favor. Counsel will agree on such an Order and present it in due course.
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