UNITED STATES
v.
BUFFALO SAVINGS BANK
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Federal tax liens have priority over subsequently accruing local real estate tax liens, even if local liens are characterized as expenses of sale.
A bank's mortgage foreclosure sale ordered local taxes paid before a federal tax lien. The New York Court of Appeals reinstated this order, deeming lo…
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Per Curiam.
In 1946, respondent Buffalo Savings Bank made a loan secured by a real estate mortgage. The United States filed notice of a federal tax lien against the mortgagor’s property in 1953. Thereafter, in 1957 and 1958, liens for unpaid real estate taxes and other local assessments attached to the property. The bank instituted foreclosure proceedings, naming the United States as a party. The trial court’s decree ordered the property sold and the payment of local real estate taxes and other assessments as part of the expenses of the sale prior to the satisfaction of the tax lien of the United States. The United States appealed and the New York Supreme Court, Appellate Division, reversed, only to be reversed in turn by the New York Court of Appeals, which reinstated the trial court’s judgment on the ground that the federal tax lien attached only to the mortgagor’s interest in the surplus after the foreclosure sale and therefore was subordinate to the local taxes as “expenses of sale.” 11 N. Y. 2d 31, 181 N. E. 2d 413.
We must reverse the judgment of the New York Court of Appeals for failure to take proper account of United States v. New Britain, 347 U. S. 81. That case rules this one, for there the Court quite clearly held that federal tax liens have priority over subsequently accruing liens for local real estate taxes, even though the burden of the local taxes in the event of a shortage would fall upon the mortgagee whose claim under state law is subordinate to local tax liens.
A similar argument based on the general character of the federal tax lien was made and specifically rejected in New Britain. Moreover, the state may not avoid the priority rules of the federal tax lien by the formalistic device of characterizing subsequently accruing local liens as expenses of sale. Cf. United States v. Gilbert Associates, Inc., 345 U. S. 361. Finally, respondent’s reliance on United States v. Brosnan, 363 U. S. 237, and Crest Finance Co. v. United States, 368 U. S. 347, is misplaced. Brosnan was concerned with foreclosure procedures, not with priorities, and in connection with the latter subject relied upon New Britain among other cases. Crest is wholly inapposite here.
The judgment is therefore reversed and the cause remanded for further proceedings not inconsistent with this opinion.
Reversed and remanded.
Mr. Justice Douglas dissents.
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United States v. First Fed. Sav. & Loan Ass'n OF ST. Petersburg, 155 So. 2d 192 (Fla. 2d DCA 1963)…t in payment of rent. While that case does not specifically hold on the question we have before us, yet it is analogous to certain of the cases cited in the briefs of the parties hereto. In the case of United States v. Buffalo Saving's Bank (1963), 371 U.S. 228, 83 S.Ct. 314, 9 L.Ed.2d 283, the United States Supreme Court discussed the rule setting forth priorities between federal tax liens and subsequently accruing liens for local real estate taxes. In that case, even though the state characterized such l…1 / 2
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In re Est. of Berlin Griffin v. Griffin, 164 So. 2d 883 (Fla. 2d DCA 1964)…mortgage. Aside from the fact that the mortgagee here will experience no such reduction, this argument would subordinate federal tax liens to inchoate liens and in both United States v. New Britain, supra, and United States v. Buffalo Savings Bank, 371 U.S. 228, 83 S.Ct. 314, 9 L.Ed.2d 283, the Court denied priority to local tax liens which were imperfect when the federal tax lien was filed even though the former had priority over the mortgage and would reduce the recovery of the mortgagee.” Until the dea…
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United States v. Pioneer Am. Ins. Co., 374 U.S. 84 (U.S. 1963)…ortgage. Aside from the fact that the mortgagee here will experience no such reduction,12 this argument would subordinate federal tax liens to inchoate liens and in both United States v. New Britain, supra, and United States v. Buffalo Savings Bank, 371 U. S. 228, the Court denied priority to local tax liens which were imperfect when the federal tax lien was filed even though the former had priority over the mortgage and would reduce the recovery of the mortgagee.13 The court below was in error and its judg…
Previewing 3 of 15 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- United States v. City OF NEW Britain, 347 U.S. 81 (U.S. 1954)
- United States v. Gilbert Assocs., Inc., 345 U.S. 361 (U.S. 1953)
- United States v. Brosnan, 363 U.S. 237 (U.S. 1960)
- Crest Fin. Co., Inc. v. United States, 368 U.S. 347 (U.S. 1961)