United States v. Herman, 50

• Decision Date: 12 December 1962
• Docket Number: Docket 27381.,No. 50,50
• Citation: 310 F.2d 846
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Max HERMAN et al., Defendants, and Joseph Harris and Sadie Schwartz, Defendants-Appellants.
• Court: U.S. Court of Appeals — Second Circuit

310 F.2d 846 (1962)

UNITED STATES of America, Plaintiff-Appellee, v. Max HERMAN et al., Defendants, and Joseph Harris and Sadie Schwartz, Defendants-Appellants.

No. 50, Docket 27381.

United States Court of Appeals Second Circuit.

Argued November 8, 1962.

Decided December 12, 1962.

Ralph A. Muoio, Atty., Dept. of Justice, Washington, D. C. (John B. Jones, Jr., Acting Asst. Atty. Gen., Lee A. Jackson and Joseph Kovner, Attys., Dept. of Justice, Washington, D. C., Joseph P. Hoey, U. S. Atty., for the Eastern District of New York, and Philip Silverman, Asst. U. S. Atty., on the brief), for plaintiff-appellee.

Albert M. Goldberg, Mineola, N. Y., for defendant-appellant Sadie Schwartz.

Mildred McGinity, Mineola, N. Y., for defendant-appellant Joseph Harris.

Before MEDINA, SMITH and KAUFMAN, Circuit Judges.

J. JOSEPH SMITH, Circuit Judge.

This is an appeal from a summary judgment, without opinion, of the United States District Court for the Eastern District of New York, Matthew T. Abruzzo, District Judge, granting foreclosure of a tax lien of the United States as prior in right to tax liens on real property acquired by appellants by purchase at Nassau County tax sales. The appeal from a final decision of the District Court is properly before us under 28 U.S.C. § 1291. We hold that the federal tax lien had priority over the county and school tax liens and affirm the judgment.

The Commissioner of Internal Revenue made an assessment of income taxes for 1946 and 1947 against Max and Mattie Herman in the amount of $56,521.39. The list was received by the Collector for the Third District of New York November 20, 1947, and transferred to the Collector for the First District of New York April 29, 1949. Notice of federal tax lien was filed on May 15, 1951 with the County Clerk of Nassau County, where the property in question is located. The section and block numbers of the property were not endorsed on the notice of lien when filed. Action to foreclose the Government lien was commenced May 1, 1959, and motion for summary judgment for the plaintiff was granted as to the lien for 1946 taxes on July 27, 1960 (United States v. Herman, 186 F.Supp. 98, E.D.N.Y.). A sale was had pursuant to the judgment of October 28, 1960 on a high bid of $45,500 on January 27, 1961, the amount due on plaintiff's lien at that time being $45,457.06. A title insurance company refused to insure the title against the local taxes involved and an order was entered cancelling the foreclosure sale. Appellant Sadie Schwartz had purchased a tax lien on the property for unpaid school taxes for the year 1958-59 and for county taxes for the year 1959 on December 7, 1959 for the sum of $2,297.66. Appellant Joseph Harris had purchased a tax lien on the property for unpaid school taxes for the year 1959-60 and for county taxes for the year 1960 on December 5, 1960 for the sum of $2,465.51. Neither Nassau County nor Schwartz nor Harris were parties to the original foreclosure action. An order was obtained on May 3, 1961 vacating in part the judgment of October 28, 1960, permitting completion of service on Nassau County and permitting service of a supplemental summons and complaint on Schwartz and Harris, who appeared and answered. Thereafter the order granting summary judgment for plaintiff and directing sale free and clear of all claims including local taxes and tax liens was entered October 30, 1961, from which this appeal was taken by Harris and Schwartz.

Appellants first insist that the lien of the United States is invalid as to them as it had not been properly filed within the meaning of § 3672, I.R.C. of 1939, which provides that: "Such lien shall not be valid as against any mortgagee, pledgee, purchaser, or judgment creditor until notice thereof has been filed by the collector.¹ * * *" Appellants are plainly neither mortgagees, pledgees, nor judgment creditors. Presumably they claim to be purchasers. However, their interest was taken from Nassau County, which as lienor is not within the classifications of § 3672. United States v. City of New York, 233 F.2d 307, 308 n. 1 (2 Cir., 1956). Appellants do not show that they rise above their vendor, as might perhaps be the case when one purchases for value from a donee. The Supreme Court has stated that "a purchaser within the meaning of § 3672 usually means one who acquires title for a valuable consideration in the manner of vendor and vendee." United States v. Scovil, 348 U.S. 218, 221, 75 S.Ct. 244, 247, 99 L.Ed. 271 (1955). Appellants do not acquire title, as the term is normally understood, and have no right to possession as a result of their "purchase." See United States v. Mojac Construction Corp., 190 F.Supp. 622, 631 (E.D.N.Y. 1960). The regular yearly sales of the interests in question make it abundantly clear that what is being sold is a lien upon the land and not the land itself. This interest does not make the County a "purchaser", and that is equally true when it passes to the appellants. United States v. City of New York, supra.

In any event, the failure of the United States to place a section and block description on its notice of lien does not invalidate the lien against later-acquired interests. It was filed in the proper office, that of the Nassau County Clerk, and was easily discoverable through a search of the separate alphabetical index of federal tax liens. The state is permitted to designate the place of filing under § 3672(a) (1), and the government complied with this designation, but the state may not add...