U.S. v. UNION CENTRAL LIFE INS. CO.
Legal provision: Internal Revenue Code
Argument of I. Henry Kutz
Chief Justice Earl Warren: Number 52, United States, Petitioner, versus Union Central Life Insurance Company.
Mr. I. Henry Kutz: Mr. Chief Justice, may it please the Court.
This is a contest between a mortgage in a federal tax lien for priority.
Under statute, under provisions of the Internal Revenue Code which I hope to discuss in more detail later on my argument, a federal tax lien in order to be valid as against the mortgage and several other classifications against the mortgagee and several other classifications must be filed in either one of two ways.
In a state office where -- which has been established in accordance with the laws of the state or authorized by the laws of the state or if the state has not authorized such an office in the office of the clerk of the District Court, the issue in brief here is whether a state has authorized such an office when it requires that the notice of lien describe particular parcels of real property in order that it may accept notice.
The State of Michigan did prescribe under its law that any notice of lien filed in the office authorized by it must state -- must describe the real property.
And since this was not considered as permitting a notice of tax lien to be filed in the form and with the efficacy of a full notice of tax lien that was filed in the office of the clerk of the District Court.
The facts are -- which are not in dispute are as follows.
In January 1954, federal income taxes were assessed against Robert and Helen Peters in the amount of some $1300 and notice and demand for payment was sent to them.
In July 1954, a notice of tax lien was filed by the Government in the clerk's office of the United States District Court, Eastern District of Washington, the notice did not contained a description of any real property owned by the tax payers.
At that time, the statute of the State of Michigan, statute which had been in this form from the 1920's on required that to set up of certain offices for the filing of federal liens but required that the property be described before the -- in such a notice.
In 5th -- 1953, the year before these events took place, the Attorney General of Michigan had ruled that the registers -- County Registers in Michigan could not accept notices of tax lien unless they did contained such a description.
In view of the fact that the county register would not accept the notice, the -- and since it was felt that this was an unwarranted condition limiting the federal tax lien, the District Director filed a notice in the clerk -- office of the clerk of the United States District Court.
Subsequent to this July when the note 54 when the notice was filed, the insurance company respondent here gave a mortgage, loan money and gave a more -- and received the mortgage from the Peters on property which say they then owned in Oakland County.
Subsequently, this was done in November 1954, subsequently the Peters defaulted on the payments on the mortgage, the present action, the action before the Court here which was one of foreclosure the mortgage was brought in the Michigan State Court and the United States was joined as a party both the trial court and the Michigan Supreme Court held that the Government had not filed an adequate notice because it had been filed in the office of the clerk of the District Court and asserting that the state had provided an office.
The Michigan Supreme Court further considered two decisions, one, by the Sixth Circuit in the Youngblood case which held that it was proper for Michigan to require that the real property be described, and the other a decision of the Ninth -- of the Eighth Circuit Court of Appeals in Rasmuson case which held to the contrary supporting on the Government's view point.
The Supreme Court of Michigan noted that this Court had not spoken on the subject and decided to follow the Youngblood case.
The nature of the federal tax lien is that it attaches upon notice and demand and assessment of the tax.
And that, it applies to all property then owned by a tax payer or after acquired.
If in order to file notices of tax lien in the state or any other office, the district directors would have to describe the property to which a notice attached, it would be necessary to have some officer of the Government either continuously search the various registers offices to determine whether a tax payer has acquired owned property at the time the notice was filed and in particular whether he acquired property later.
This would effect we believe, very seriously the efficacy of the federal tax lien as created by Congress.
We think this is an unreasonable and improper condition to the designation of an office and under these circumstances, a state has an effect not designated any office at all and therefore the Government is entitled to file its lien in the office of the United States District Court.
Now, the legislative history of the federal tax lien, we believe strongly supports this argument in this view point.
The federal tax lien in almost its present form was first established in around 1867, but at that time there was no provision at all for the filing of notices of lien.
In -- it became Section 3186 of the revised statutes in 1875 and then 1893, a case came to this Court construing that provision of the revised statute.
The -- under the facts of that case which is United States against Snyder, a taxpayer had sold real property to a bona fide purchaser but this Court held that nevertheless, the purchaser took -- subject to the tax lien.
In 1913, the first provision for notice -- filing of notices of tax lien was incorporated into the statute.
That provision required that the notice be filed in the office of the clerk of the District Court and further provided that if a state authorized a place in a county for the filing of notices of tax lien, the notice should also be filed in the state office.
In 1928, the revised statute section was further amended and it then provided that the notice would not be valid as against the mortgagee, purchaser, and judgment creditor unless a notice was filed in one of two places.
In a state office, in accordance with the laws of the state, or if the state had not provided such an office, in an office of the United States District Court, while that statute -- while the statute in that form was in effect, namely, when the words were in accordance with the laws of a state, a case arose in the Sixth Circuit, Western District of Michigan construing the very statute that we have before us which requires that the notice of lien include a description of the real property.
The case went to the Sixth Circuit which affirmed the decision of the District Court against the Government on -- for the reason stated in the opinion of the District Court, that's United States against Maniaci.
What the Court emphasized was that the statute as it then read said that the state office was to be instituted in accordance with the laws of a state and therefore the Court reasoned that since the state might by law make certain conditions.
Within a few year -- two years after the affirmance by the Court of Appeals for the Sixth Circuit of the Maniaci case, Congress then changed the law -- amended the law again to read as it does in the governing provisions here.
It changed the language from in accordance with the laws of the state to and -- ought -- as authorized by the laws of the state.
And in so doing, the Committee reports indicate quite clearly that it was the purpose to obviate, to overrule legislatively that station of the Sixth Circuit, and to prevent state offices from doing any more than designate state -- the states from doing anymore than designating offices and to denying to states the rights of setting any conditions.
Justice John M. Harlan: Do the committee reports refer to that Maniaci case?
Mr. I. Henry Kutz: Not by name, Your Honor.
I'd like to read what the Committee -- the Senate Committee reports said, it's on page 16 of our brief, that Treasury Department has consistently taken the position that Section 3672 of the Code, that's the 1939 Code, the revised statute provision have been renumbered that way, and the corresponding provisions of prior law authorized the state or territory only to designate the local office for the filing of the notice of lien.
This section of the bill which clarify Section 3672 (a) as amended is merely declaratory of the existing procedure and in accordance with the long continued practice of the Treasury Department which has been questioned in the courts.
And I think in the -- if I may add that Mr. Justice in the Rasmuson case, the Eighth Circuit construed this change made in 1942 to be intended to overrule the Maniaci case and I think --
Justice John M. Harlan: Was that decision alone among the federal courts or were there other cases (Inaudible) --
Mr. I. Henry Kutz: I don't think there are any other Court of Appeals cases.
It -- one of the few cases, the -- now, after -- after the amendment, the Ninth -- of 1942, the question the again came up in the Six Circuit in the case called Youngblood against United States which is one of the cases -- which is the case that the court below followed here.
In that case, the United States attempted to mandamus a registrar of a county in Michigan to compel him to accept the notice of lien under the amended 1942 Act without a description of the real property.
And the Government prevailed in the lower court.
The upper court, that is the Sixth Circuit reversed, and its holding, we believe, was principally that mandamus were of a state ministerial officer who was merely trying to carry out this -- the provision to the statue of his own state was improper.
And that's all as we think the case actually holds, the rest is dictum, but in that dictum which is dictum that the Supreme Court of Michigan quoted here, the Sixth Circuit stated that in its opinion the 1942 amendment did not change the situation as it had existed before, in other words the change from -- in accordance with a lot -- in office establish in accordance with the law of the state was, in its view, equivalent to statement that the -- the provision in 1942 Act that the notices must be filed in offices authorized by the laws of the state.
Subsequently, in the Eighth Circuit in United States against Rasmuson, the question arose under Minnesota law, and there, it arose in connection with property which had been registered under the Torrens System, which is optional in that's state and which also exists in about a dozen states.
The -- it was claimed that the filing by the Government was ineffectual because it wasn't filed as against the very property that was registered under the Torrens Act.
In other words, it had to file as against this particular parcel which is substantially the same as requiring a description in a notice of lien.
The lower court ruled against the Government, but the Eighth Circuit held that there was a change in the meaning of the law by the 1942 Act, that these states offices are authorized by Congress which it -- for the convenience of citizens of the state, the state may take advantage to them as it wishes.
But it cannot require any conditions to be put upon the lien which are not inherit to the lien, that in effect all that it can do is designate the office in which the notice of lien shall be filed.
Justice Hugo L. Black: May I ask you if -- if I can get my mind -- what in your judgment is the federal law required to the kind of notice that is to be given and filed in recording?
Mr. I. Henry Kutz: Well, I think it requires the name of the lienor and this is the form that has been used for many years.
The name of the lienor, his address, business or residence, the taxes -- the statement of the taxes which are assessed to him against him, and the statement -- the notice of lien as claimed.
Justice Hugo L. Black: It's the difference between you and the state that they insist that under that statute, you must describe the property on which the lien --
Mr. I. Henry Kutz: Real property.
Justice Hugo L. Black: -- is claimed?
Mr. I. Henry Kutz: Yes.
Justice Hugo L. Black: Real property?
Mr. I. Henry Kutz: Real property.
If I --
Justice Hugo L. Black: And your argument is that it's not necessary to describe the real property that you -- it's enough for the Government simply to assert that we have a lien on everything this man has.
Mr. I. Henry Kutz: In fact, our argument goes a little further if Your Honor pleases, we say that to insist as a condition that real property be described would impair the efficacy of the lien as created by Congress, because it would require -- the effect would be that the lien would not apply on after acquired property of the tax payer.
Justice Hugo L. Black: Where is the -- why have you quoted the precise language of the lien which Congress says has created?
Mr. I. Henry Kutz: Well, the Congress just says the notice of lien, but the form of the lien as it has been filed for many years --
Justice Hugo L. Black: I'm talking about now, you said Congress says there should be a lien, on what?
Mr. I. Henry Kutz: On all -- yes?
Justice Hugo L. Black: You -- cite that -- spoke that statute?
Mr. I. Henry Kutz: If Your Honor pleases, it's on page 22 of our brief in Appendix A.
If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount, including interest etcetera, shall be a lien in favor of the United States upon all property and rights to property whether real or personal, belonging to such person.
Justice Hugo L. Black: That has to be considered, I suppose, as controlled by the other section which authorizes or require whichever you wished to say, a filing of the lien under state law --
Mr. I. Henry Kutz: Yes.
Justice Hugo L. Black: -- on the state book, now, what's the precise language of that?
Mr. I. Henry Kutz: That is 3672 (a) on the same page.
Such lien shall not be valid as against any mortgage, pledgee, purchaser, or judgment creditor until notice thereof has been filed by the collector, one, under state or territorial laws in the office in which the filing of such notices authorized by the laws of the state or territory in which the property subject to the lien is situated, whenever the state or territory has by law authorized the filing of such notice in an office within the state of territory or --
Justice Hugo L. Black: Now, am I correct in thinking that the difference between you and them is they insist that as by law authorize the filing, that you are required to file it containing the precise information which the state has said shall be considered to be notice and nothing else?
Mr. I. Henry Kutz: I think that's correct.
That is the issue.
This Court -- I should say further that this Court has held in the Glass City Bank case that the lien applies to after acquired property.
I mean that is clearly the law and we say that --
Justice Hugo L. Black: Well, this was not after acquired property, wasn't it?
Mr. I. Henry Kutz: No, but we couldn't file any notice, we didn't know whether they were going to acquire property --
Justice Hugo L. Black: You used that as an argument to show that it was intended to free the Government from setting out the property owned by the person, the taxpayer in specific --
Mr. I. Henry Kutz: Yes.
Justice Felix Frankfurter: Tell me --
Mr. I. Henry Kutz: Our brief also --
Justice Felix Frankfurter: Go on.
Mr. I. Henry Kutz: -- point -- points out that in the 1954 Code, which did not apply here, though the Michigan Court cited it and quoted it, even more clearly in its legislative history, shows that the intent of Congress was merely that states might designate offices not --
Justice Hugo L. Black: Was that what you read from on page 26?
Mr. I. Henry Kutz: No, that's -- that was under the 1942 Act.
Justice Felix Frankfurter: Before you sit down, may I ask you two questions?
Is susceptible I think of a quick answer.
One, under the -- under the lien statute, if the Government files a notice of a lien, it then settle that that carries with it all after acquired property?
Mr. I. Henry Kutz: Yes, Your Honor.
Justice Felix Frankfurter: Etcetera?
Mr. I. Henry Kutz: Yes.
Justice Felix Frankfurter: By statute or by decisions?
Mr. I. Henry Kutz: Well, I think the statute says it in the Glass City --
Justice Felix Frankfurter: The statute did, not in --
Mr. I. Henry Kutz: No, I think it maybe construed --
Justice Felix Frankfurter: Alright.
Now, my next question --
Mr. I. Henry Kutz: -- on Glass City.
Justice Felix Frankfurter: -- my next question is this, if the Government files a notice to property so and so, defining the parcel of realty that is -- on which it -- for which it invokes a lien, does Michigan law say that -- the Government can say, “We file -- this is a notice of lien on property X, and all after acquired property?
Mr. I. Henry Kutz: They won't accept it.
There's an opinion of the Attorney General which we quote in Appendix C of our brief.
They just -- they said it isn't proper lien under our law.
Justice Felix Frankfurter: But that's the opinion of the Attorney General, and that is the decision of Michigan Supreme Court?
Mr. I. Henry Kutz: And that was held by -- and that applied until 1956 when Michigan changed this law and now used -- permits liens to be filed in the -- without such a description.
Justice Felix Frankfurter: So that we are dealing here with an obsolete statute with a --
Mr. I. Henry Kutz: Well, there (Voice Overlap) --
Justice Felix Frankfurter: Well, I don't mean obsolete liens but obsolete statute.
Mr. I. Henry Kutz: -- there are thousands of liens and there's almost (Voice Overlap) --
Justice Felix Frankfurter: Yes, I understand that.
Mr. I. Henry Kutz: -- in states.
Justice Felix Frankfurter: Alright.
Chief Justice Earl Warren: Mr. Butler.
Argument of H. William Butler
Mr. H. William Butler: Mr. Chief Justice, may it please the Court.
I think the important thing that we should keep in mind in considering this case is, first of all, that we undoubtedly must recognize that we're living in a commercial society within this country.
And this Court has also recognized that the plenary powers of Congress particularly in the taxing field must sometimes give way so as to maintain that fluidity of commerce.
For example if you want to take the history of this particular situation prior to the 1913 Amendment Congress had said apparently that these liens could be filed without reference to any kind of notice and many persons suffered as a result of it.
Congress recognized in this problem in 1913 amended the statute to provide for notice so as to provide some protection to commerce and to people that they -- so that they could deal freely with property.
Now, that's an overlying principle and I think that this Court has very wisely recognized that where you're going to impinge upon the fluidity of this commerce, there must be good and compelling reasons to do so.
And if we apply those principles to this case, and if we also recognize that this plenary power to interfere with the fluidity of commerce through these ill-noticed liens should be curtailed or at lease should only be allowed to the extent Congress grants it.
But I think you'll agree with us that this case should affirm the decision of the Michigan Supreme Court.
I'd like to address my argument to that phase --
Justice John M. Harlan: You don't question the Congress' power do you?
Mr. H. William Butler: No sir, not at all.
I want to make that expressed from the beginning that we do not question Congress' power and we do not question the fact that had Congress seen the fit to do so, it could go right back to the situation prior to Snyder.
We are concerned here, Mr. Justice Harlan, only with interpretation of these congressional enactments, two, a number that we accept the Solicitor General's argument, three, a number if we accept ours.
Now, let's just view the situation first of all from the actual, realistic matters that stands now.
All this argument about hardship, all this argument about the problems of the district collector, the taxing authorities are now for naught.
In 1955, this statute was amended.
So, there is no longer any question about it.
The district collector is no longer confronted with any problems such as -- were set forth here and since 1955, there's been no requirement, there's been no requirement that the description be put on because Congress in 1955 unequivocally and clearly declared what its intention was.
Justice John M. Harlan: Where do you quote that statute?
Mr. H. William Butler: That statute is the present statute sir and it's found in the appendixes, I believe of the brief of the United States, in their appendixes, yes, at Appendix B on page 25.
That is present statute and has been in effect since January 1st of 1955.
Justice Felix Frankfurter: But Mr. Butler, doesn't that bear on your -- fluidity of the argument?
Mr. H. William Butler: Not (Inaudible) -- well, sir, I think it bears on the fluidity of the argument to this extent, that the American Bar Association and others are recognizing the problem.
This is created by what Congress has done now and even now our talking sir in terms of seeking some sort of amendment.
Mr. Justice Frankfurter, for example, we have a kind of saying in Michigan, “Heaven helped the property owner named Jay Smith,” because if there is one Jay Smith who has been a little bit derelict in paying his taxes, every Jay Smith owning property now may come under question.
Justice Felix Frankfurter: All I'm suggesting is that if you draw inferences from -- as you have every right to it, do you want to hear an argument maybe referenced to general principles related to a specific case.
If you draw implications from what -- the purposes of construction, you ought to consider what Congress presumably was not unmindful of namely, we're living in a commercial society.
All I'm suggesting is that the 1955 Act would indicate that Congress seems to have been -- at least have been retrogressive in the realization of that fact.
Mr. H. William Butler: I believe that you could say very well say that although I do think that the 1955 Amendment supports exactly what we're arguing with reference or prior to it.
And I would also point out sir, that this Court, I believe in a very enlightened opinion in Brosnan has recognized that unless there is a clear intent would appear with the fluidity of commerce it should not be so extended and construed.
Chief Justice Earl Warren: Mr. Butler, when you amended your law in Michigan, you adopted a uniform law, didn't you?
Mr. H. William Butler: Yes sir.
Chief Justice Earl Warren: And how many states -- do you happen to know have the uniform law at the time of this tax lien?
Mr. H. William Butler: Mr. Chief Justice Warren, I do not know exactly how many states have the uniform law at the time of this tax lien, I can answer your question possibly and directly by saying that in 1923, Michigan adopted the statute which I believe was uniform at that time and required in most states did that the lien contained a description.
After the amendment in 1955 which obviated this problem completely, Michigan thereafter, I believe in 1956, adopted its present Act which I believe to be the uniform recording statute now.
Chief Justice Earl Warren: And that is not required -- that does not require a description of the property?
Mr. H. William Butler: After Congress expressly declared itself, Michigan went along --
Chief Justice Earl Warren: No, I'm talking about the uniform law.
Mr. H. William Butler: That's right.
Chief Justice Earl Warren: That was -- I suppose that was in existence before Congress changed its law.
Mr. H. William Butler: No.
Michigan until Congress changed its Act in 1955 had an act on its books requiring that the lien contained a legal description.
Chief Justice Earl Warren: No.
That isn't what -- that isn't what I mean.
These uniform laws are presented to all of the states of the union and they adopt them, some adopt them, a great many of them, some don't.
But here, I suppose the uniform law was in existence in some states before Michigan adopted it.
Mr. H. William Butler: I believe so sir.
Chief Justice Earl Warren: Alright.
Now, what I'm trying to find out if you know is, how many states had this uniform law at the time of these particular liens that you're talking about?
Mr. H. William Butler: I do not know.
I cannot answer that.
Chief Justice Earl Warren: You don't know whether there was a great number or very few?
Mr. H. William Butler: I believe, if you read Maniaci and if you read Youngblood and -- as I hope to develop further, the Government was confronted with this problem in many states.
In fact, until Rasmuson was decided sometime in 1958, which was after the amendment doing away with the requirement of any notice by Congress, until that time that -- I believe Your Honor was the first decision on any of the books stating that there had to be a description.
And I believe that it's a fair inference from the record that most states require that there'd be some legal description in the lien prior to 1955.
In fact, I believe I do not want to state it as axiomatic that the Michigan Act of 1923 requiring a description was equivalent to a uniform act if not the uniform act which all states had prior to 1955.
I believe that, but I am not certain.
Chief Justice Earl Warren: The reason I -- the reason I asked you that is because of what counsel read from the reports of the Committee in which Congress -- in which the Committee of Congress said that that this had been the longstanding practice of the Treasury and they were merely righting it law.
Mr. H. William Butler: Well, Mr. Chief Justice Warren, I cannot state expressly but it's my recollection and it's my belief that most states prior to 1955 --
Chief Justice Earl Warren: Yes.
Mr. H. William Butler: -- require --
Chief Justice Earl Warren: Yes.
Mr. H. William Butler: -- the description.
Chief Justice Earl Warren: That's --
Mr. H. William Butler: And that this was the frustrating experience for the Treasury Department, and as a result, Congress finally clearly expressed itself of 1955.
Chief Justice Earl Warren: Yes.
Mr. H. William Butler: And I might add that since 1955, the problem does not exist.
So, we're now concern to reach back six years in time to decide what we should do.
And I believe that based upon the concepts promulgated by this Court in Brosnan and other decisions that a recognition, the commercial fluidity sometime is equally important with the plenary power of the Government that we should observe the policy certainly of Michigan.
Now, Michigan since 1923 has required that any lien contained a legal description to be effective, we have not confined ourselves to Government tax liens but it's also the policy of Michigan that any sort of a levy, any sort of a lien against the real property to be valid must contain a legal description.
We're going to protect the 999 other Jay Smiths who may not have been the person involved.
Justice Charles E. Whittaker: On that story, I understand your statute to permit acceptance of the lien so far as personal property is concerned without any description.
Mr. H. William Butler: I cannot answer that question directly Mr. Justice Whittaker.
I believe that the Michigan policy as declared certainly has been to require some description as clear as possible of the real -- of the even personal property.
For example, our recording laws with reference to channels require a clear description of the channel.
Justice Charles E. Whittaker: But this Section 7.751 shown at Appendix A, page 23 of your brief which seems to require a description only of default land, am I wrong about that?
Mr. H. William Butler: I believe that that is the Section which -- are you referring to page 23 of our brief, Mr. --
Justice Charles E. Whittaker: Yes.
And -- oh, I beg your pardon, to the Government's brief, Appendix of the Government's brief.
Mr. H. William Butler: Page 23.
Justice Charles E. Whittaker: Appendix A, Section 7.751.
Mr. H. William Butler: I believe that this, sir, quotes only that portion of the statute Mr. Justice Whittaker, which relates to land.
My recollection is that there are other provisions which have to do with chattels.
I do not otherwise know, I cannot state that, and I cannot answer that clearly.
Chief Justice Earl Warren: Mr. Butler, may I trouble you just once -- once more, you've taken care of the Jay Smiths in the community.
Now, how about the Government where the property -- whether the property is -- the ownership of the property is undisclosed in the community, there must be a lot of real property even if the ownership for which is undisclosed or would be undisclosed if liens became ineffective unless the description of the property was recorded.
Now, how -- if a man was the undisclosed owner of certain real state, and the Government didn't file a description, how would the tax policies of the United States be carried into effect?
Mr. H. William Butler: Mr. Chief Justice Warren, I believe the -- I don't want to avoid your question but I believe the answer is best made indirectly by saying that if the ownership is undisclosed, the Government's lien is going to be much used to it at any event because it doesn't even know the ownership of the property, they'd have to bring tracing processes at which time they would have disclosure, but I believe more important, the answer to this whole situation where the Government seeks to build this up as enormous problem prior to 1955 has been answered in our brief where we point out that the only time the Government is going to have this problem is where these persons against whom the lien has been filed, either subsequently convey or subsequently mortgage, and many people against whom liens have been filed do neither.
And then it's only going to arise where a bona fide purchaser per value comes into the picture, and many of these people don't make transfers of value.
They may make these secret transfers.
Chief Justice Earl Warren: Right.
Mr. H. William Butler: But the statistics of it, we do not agree with it.
Even if it were so, if we go back these six years, we don't have the problem now.
But even so, I don't believe that -- that will became too much of a problem.
Justice Hugo L. Black: Does Michigan have a tax lien?
Mr. H. William Butler: Yes, it does Mr. Justice Black.
Justice Hugo L. Black: Does it have a general tax lien which applies to everything everybody owns?
Mr. H. William Butler: I do not believe so, Mr. Justice Black.
Justice Hugo L. Black: You don't?
Mr. H. William Butler: I do not believe it does.
Justice Hugo L. Black: Alright, could you refer to that later?
Mr. H. William Butler: I will endeavor to do so (Voice Overlaps) --
Justice Hugo L. Black: Do you have a judgment lien law?
Mr. H. William Butler: We have a law which re -- no, the judgment in Michigan Your Honor does not become a lien automatically but --
Justice Hugo L. Black: After -- after its filed, after the notice was given, do you have one?
Mr. H. William Butler: No.
After notice was given, there was a requirement that it be reduced by a process of the Court, that would be reduced to one attachment and that then the attachment be recorded with the legal description of the property.
With reference to real property, Michigan has deviated in very few respects from a requirement that the real property be completely identified.
Justice Hugo L. Black: Does the mortgage in Michigan valid or invalid?
Which simply states that the -- to secure this land, I'd give a mortgage on all the real estate I own, wherever it is?
Mr. H. William Butler: That would be an invalid mortgage in Michigan.
Justice Hugo L. Black: It has to be precise and certain under your law?
Mr. H. William Butler: It has to be precise and certain to encumber the land, Mr. Justice Black.
Justice Charles E. Whittaker: It might be good as between the parties, but not as against creditors, mortgagees, and the like.
Mr. H. William Butler: That is correct Mr. Whittaker -- Mr. Justice Whittaker.
Justice Hugo L. Black: Would it be good as between the parties?
Mr. H. William Butler: It would properly good as between the parties if there were no intervening rights of bona fide purchases or others.
Now, I don't want to burden the Court too much with the fact because I don't believe it's contradicted, that Michigan has clearly intended from 1923 on that any sort of a lien or encumbrance against property contained a proper description.
Justice Potter Stewart: Now, by a proper description, what does Michigan require, a complete metes and bounds description?
Mr. H. William Butler: Yes, it would, Mr. Justice Stewart.
It would require a complete metes and bounds description.
Justice Potter Stewart: Rather than a shorthand kind of description you find in (Voice Overlaps) --
Mr. H. William Butler: That's right, we require that there be a legal description with reference to the range, the county, and the -- there's a recorded plat, if the course is adequate and preferences made to the plat of the Michigan Plat Act, but it has to be a complete and clear description.
Justice Potter Stewart: Just as complete as is required in a deed, for example.
Mr. H. William Butler: Correct sir.
Yes, Your Honor.
Chief Justice Earl Warren: Now Mr. Butler, you had that law since 1923, have you enforced it regularly in -- against the Government since 1923?
Mr. H. William Butler: Yes, we have Mr. Chief Justice Warren.
We have the opinions of this Court going back of our courts and of the Sixth Circuit.
Going back, quite along, and if you read the Maniaci case, it is quite apparent from a reading of that since 1928.
The -- that construction have been put upon it.
We have many cases, we have cases of our Circuit Court one or two of those, Hicks versus Carpenter which is unrecorded case.
We have the United States versus Maniaci, our Attorney General made a declaration of it.
As Mr. Justice Black points out, our lien, our judgments could not become a lien but it's required that they could reduce to a description and this has been the declared policy of Michigan.
Justice Hugo L. Black: This land -- this law which is referred to on page 23, applies only to tax liens to the United States, where is the law -- state law provides this -- makes this requirement of tax lien to the state?
Mr. H. William Butler: We have not cited that in the appendix.
There are statutes on the book, the exact scope of those, I do not know, but we have not cited those neither of our -- in any of the briefs.
Justice Hugo L. Black: What title of the Michigan code we can find that under?
Mr. H. William Butler: I'm afraid I'll have to ask the Court's deference and that's to allow me to communicate with the Court the next two days giving those --
Justice Hugo L. Black: Well, I thought (Voice Overlap) --
Mr. H. William Butler: -- citations and findings.
Justice Hugo L. Black: -- and get it because I was curious to know.
Mr. H. William Butler: I do not know they all have.
Justice Hugo L. Black: What your state law -- this relates only to the Federal Government --
Mr. H. William Butler: Yes, it does --
Justice Hugo L. Black: -- (Voice Overlap) to know, what is your law with reference to tax liens of the state?
Mr. H. William Butler: I will --
Justice Hugo L. Black: Whether there's a similar requirement?
Mr. H. William Butler: I will endeavor to communicate that to the Court upon my return to Detroit if I may.
Justice Felix Frankfurter: I think you'll find most of them out on Michigan tax cases (Inaudible)?
Mr. H. William Butler: Conceivable, it's conceivable Your Honor.
Now, that being a declared policy why should it be disturbed, particularly by what must be regarded at best as rather ambiguous declarations of Congress?
Now, the Youngblood case was a clear declaration that under the very law involved in this particular case and Youngblood became the law, I believe not only the Circuit, but the law of most Circuits at that time, in 1944, that was passed.
It was a clear declaration to the effect that after all if a lien was to be asserted against real property, that lien should be recorded as the statute gave the right with the register of deeds of the county where the land was situated.
Youngblood was not dictum.
Three quarters of that decision discussed this very question.
I think it's a well-reasoned opinion.
I'm prejudiced because it holds with me, but I also believe that it's a well-reasoned opinion and properly approaches the whole problem.
Youngblood also discussed mandamus, that was the other phase of it, but it would be equally appropriate since both subject were discussed to say that the mandamus phase of it was dictum and that the discussion about the relevancy of the 44 statute was germane to the case.
I won't burden the Court with a host of citations about dictum, they were not raised in the brief of the United States, so we didn't bother to answer them, although in the brief before the Michigan Supreme Court they were raised, and our brief in reply to the Michigan Supreme Court brief contains those citations.
Now, in the few moments that I have remaining, I would like to just point out to the Court the reason why we believe that Youngblood is correct.
Please, may the Court bear in mind, that this is a question not of the power of Congress, but of the intent of Congress.
We're dealing with these statutes in 1942-1944 and earlier, did Congress intend that the state could protect the muniments of its titles by requiring that the collector, like everyone else, if he wants to file a lien, should do so by properly describing the property.
We say clear it was intended to be so.
Now, going back, the United States first brought this problem up in the case of U.S. versus Maniaci which is referred to in our brief and goes back to about 1939.
And I had the interesting experience of reading that case again this morning before I came down and it sounds as though the Government, the same learned counsel, the Government was arguing in Maniaci at that time, because in 36 F.Supp., the argument of the Government was set forth in this language.
The Government urges that the purpose of the amendment of 1928 was solely to leave to the states the power to designate by law the place of filing of notice of lien, that a law requiring a notice to set forth a description of the property is beyond the power of the state legislature and that subject provisions neither authorize nor approved by the Act of 1928, if we substitute the words 1942 for 1928, we virtually epitomize the whole position of the Government.
And the Sixth Circuit in Maniaci struck that down and refused to by -- abide by it and said that the laws of Michigan very properly state that the lien must contain a description.
And then, the Act was amended in 1942 and the Government again came back and said we're confronted with these hardships, and they argued in Youngblood, there should be no requirement that the lien be recorded with the register of deeds.
And the Sixth Circuit again in Youngblood took cognizant of all of these arguments and again said unless Congress clearly states what it intends to do, we must rely upon the statute as it reads and that statute does not require it.
Now, it's interesting to note these gyrations made in amending the statute.
From 1913 unto 1928, which became the 1939 provision of the Code, that was the old Act, the law stated that the lien would be valid, it must be valid to be valid -- it must be filed in the register of deeds when any state by appropriate legislation authorizes the filing of such notice in the office of the register of deeds.
That's the way the law stood, and in 1928, that was amended.
And 28 Act which became part of the 39 Code, struck out that language and said that the lien to be valid must be filed in accordance with the law of the state or territory -- accordance with the law of the state or territory.
Now, Solicitor General is here today arguing, in accordance with the law of the state or territory concededly means that Maniaci was probably right and that the state could say the lien must have a description.
And yet before Maniaci, this opposite position was taken and it was said this changed the law and that it was no longer necessary that the state require a levy -- the levy to contain a description because the 1913 Act required it, and now it's changed.
In other words, the Government since 1913 has been saying congressional changes mean just exactly that we no longer have to do it.
But the most significant telling part of this whole thing, it seems to me is this, in 1944 before Youngblood, the Government again came in and said, the statute has been amended again in accordance with the law has been deleted and both statute now reads in the office in which the filing of such notice is authorized.
Therefore, the state can no longer set forth the requirements for filing that only is given a place, and that's the argument, and they say Youngblood is wrong because Youngblood didn't go along with this on that and recognizes clear declaration of Congress but --
Justice John M. Harlan: What do you think the purpose of this change was?
Mr. H. William Butler: I have been practicing law long enough, sir, to realize, Mr. Justice Harlan, that it's pretty difficult to determine what Congress sometimes intends when you see the ultimate product that congressional action come up and become a part of the statute books.
I don't think it means anymore than it did in 1913 when they changed the Act and went back to what vir -- and passed what is now virtually the 1944 Act, because in 1913 the statute read, authorized the filing of such notice and the office of the registrar.
In other words, the state statute authorizes the filing, they talked of filing.
Then in 1928, or which became part of the 1939 Code, they struck that and they said in accordance with the law.
And then in 1944, which is supposed to be the one that we're confronted with now which changed all this, they go right back and virtually reenact the 1913 statute which says, in the office and which the filing of such notice is authorized by the law.
So we've gone through almost the complete cycle.
And most importantly, I would adopt in a sense the argument of the Solicitor in stating congressional direction is manifested by the 1955 Act, because in 1955 when Congress finally want to make it clear, it had no trouble.
And interestingly enough, Mr. Justice Harlan, when it didn't make the amendment, it did not go back and amend Section 6 -- 3672 which have been the troublesome one, talking about in the office were authorized or in the office designated, but it added the whole new section and didn't changed 3672 very much and added a new subsection (b) to the effect you can file this lien no matter what the state court provides.
In summation, I should simply like to restate my argument this way.
This problem since 1955, no longer exist.
The director is not confronted with these.
So you were asked not to go back six years and decide that law which arose prior to 1955 should be changed despite the fact that Youngblood was on the books and continued on the books when this mortgage was given and continued on the books until changed by congressional statute.
Maniaci was in the Circuit, our own Attorney General had made declarations and we had decisions from our courts and you're asked to change that.
Now, think for a moment of Brosnan and the mischief and the habit that may very well -- may very well-resulted as it affects the marketabilities of title and why it should be done, I do not know, because the problem since 1955 complained about by the director no longer exist.
So I would suggest to this Court that all of the arguments now made maybe interesting from the academic standpoint.
Since 1955, the problem hasn't existed and there is no reason to strike back and re-determine Youngblood which in effect is what you're asked to do.
Youngblood was never appealed from in 1942 or 1944 by anyone.
If it created all this (Inaudible) from 1944 and presage the devastation of Government liens which is now proclaimed, why was it not appealed from and why do we come to this Court now in 1961?
I believe that muniments of title of Michigan should not thus be disturbed particularly in view that since 1955, the problem hasn't existed for the Government.
Chief Justice Earl Warren: Mr. Kutz, can you tell me what the factors has been in the Treasury Department throughout the country in the light of what you read from the report of the Committee, the House Committee?
Rebuttal of I. Henry Kutz
Mr. I. Henry Kutz: It has --
Chief Justice Earl Warren: The House Committee rather?
Mr. I. Henry Kutz: It has been, Mr. Chief Justice, to file these liens claiming the completely and contrary to the Michigan practice which was exceptional.
Michigan was not the usual situation.
You have Michigan and you have these Torrens states, but in most of the states there was no such provision made.
And if I may, I'd like to send to the Court a letter in which I referred it to articles in the Michigan law review which had not come to my attention until I was preparing this, describing the situation generally.
Chief Justice Earl Warren: You may do so.
Mr. I. Henry Kutz: Now, under the 1954 Code that is the law is in effect in 1955 while as we argue in our brief, we think a fortiori, this -- the Government's position is correct, and Congress clearly intended that to be so.
It also showed that it was just clarifying the preceding practice.
Furthermore, the Michigan authorities would not accept these liens up until the chance -- that 1956 when they adopted the uniform law, that is stipulated on -- in page 10 of the transcript record.
The uniform law has been adopted in about 25 states and the problem comes up, I might say in another situation, I hope in connection with automobiles which are certified -- certificates are given by -- of title by the register of motor vehicles and in some states, they tried to insist that the Government file as against these certificates, the -- its notice of lien.
The notice of lien under the Attorney General of Michigan's construction which is quoted in the rec -- in the briefs did not apply to -- he did not claim that description was necessary as to personal property.
The -- that is clear.
Chief Justice Earl Warren: Very well.