Johnson v. Gartlan

• Decision Date: 04 November 1971
• Docket Number: Civ. A. No. 330-69-A.
• Citation: 334 F. Supp. 438
• Parties: Constance R. JOHNSON, Plaintiff, v. Joseph V. GARTLAN, Jr., et al., Defendants.
• Court: U.S. District Court — Eastern District of Virginia

334 F. Supp. 438

Constance R. JOHNSON, Plaintiff, v. Joseph V. GARTLAN, Jr., et al., Defendants.

Civ. A. No. 330-69-A.

United States District Court, E. D. Virginia, Alexandria Division.

November 4, 1971.

Mark P. Friedlander, Jr., Arlington, Va., for plaintiff.

Carrington Williams, Fairfax, Va., for defendants.

MEMORANDUM OPINION AND ORDER

OREN R. LEWIS, District Judge.

The plaintiff, the sole heir of the late James N. Johnson, brings this suit to quiet title to land taken from him by a federal tax sale.

The land in question is now titled in the name of the defendants, having been transferred to them by the assignee of the purchasers at the tax sale by special warranty deed dated March 27, 1967, recorded February 7, 1968.

The plaintiff claims the tax sale in question was not conducted in accord with the requisite federal statutes—The defendants say the sale was legal and proper in every respect—They also question the right of the plaintiff to bring this suit and seek dismissal on the ground of laches.

This is a diversity action involving more than $10,000.00—The plaintiff is the sole heir of the landowner—As such she has standing to question the validity of the tax sale in question.

This suit was filed October 3, 1969. The tax deed to Frank A. Hoss, Jr., assignee of the purchasers, was recorded among the land records of Prince William County, Virginia, on December 31, 1965—The late landowner, James N. Johnson, died April 1, 1967. The plaintiff reached her twenty-first birthday on March 28, 1968—She did not sleep on her rights—This suit was timely filed.

Whether the sale and transfer of this land was valid depends upon whether or not the Internal Revenue Service fully complied with §§ 6335 and 6337-6339 of Title 26 of the United States Code.

From the record here made, the Court finds that in 1962 the late James N. Johnson was a retired small restaurant owner and taxicab driver—He then lived at 742 Ingraham Street, Washington, D. C.—His business address was RFD 6, Box 402, Alexandria, Virginia, c/o John Gillis—He then owned some 172 acres of unimproved scrub pineland in Prince William County, Virginia—Judgments in the amount of some $4,500.00 were recorded against him in Prince William County—He then owed the federal government $486.15 for 1958 federal income taxes—Internal Revenue was having difficulty in collecting this money—It filed a federal tax lien for $586.15 in Prince William County on August 1, 1962.

The record of seizure and sale of real estate (IRS Form A-24) recites the land was seized October 26, 1962—that notice of seizure was mailed to the owner on that day—and that notice of sale was mailed to him on November 8, 1962—Although this form lists the taxpayer's Washington and Alexandria addresses, there is nothing on the form indicating where these notices were mailed.

The notice of sealed bid sale describes the property by metes and bounds and states the property will be sold in accordance with the provisions of § 6335 of the Internal Revenue Code at public sale under sealed bids which will be opened on December 3, 1962 at ten o'clock a. m. at 701 Prince Street, second floor, Room 201, Alexandria, Virginia— that only the right, title and interest of James N. Johnson in and to the property is offered for sale—that the bids must be submitted directly to Albert C. Nagle, Revenue Officer, 701 Prince Street, Alexandria, Virginia, prior to the time set for the opening of bids—and that twenty per cent of the bid or $200.00, whichever is greater, must be submitted with the bid, the balance of the purchase price to be paid on or before January 3, 1963.

The sale was advertised in the Journal Messenger, a Prince William County newspaper, on November 8, 1962.

G. P. Manderfield of Manassas, Virginia, submitted a sealed bid of $16,825.38 for himself and others—He was given a certificate of sale for the property on January 2, 1963. He assigned the certificate of sale to Frank A. Hoss, Jr., trustee—A deed to the land in question was given to him by the Director of Internal Revenue Service, Richmond District, on February 14, 1964—This deed was recorded in Prince William County on December 31, 1965.

The defendants are the daughter and son-in-law of G. P. Manderfield—He gave them his interest in this land and made arrangements for their buying out his partners for a $32,000.00 note—payable interest only for five years.

The defendants attempted to secure title insurance on this property, without success, due to infirmities in the tax sale—They have paid the real estate taxes on the land but have not paid the judgment liens which were recorded against this land prior to the date of the federal tax sale.

Someone in the Alexandria Internal Revenue office (the copy of the letter is unsigned) mailed James N. Johnson a letter dated January 7, 1963, addressed to him at Manassas, Virginia, returning his money order for $100.00 which he had previously sent them as a payment on his then delinquent income taxes— They told him in the letter that his tax liability had been satisfied by the sale of his real estate in Prince William County and that he had the privilege of redeeming his property within a year from the date of sale upon paying the buyer the purchase price plus twenty per cent interest for his venture.

Internal Revenue mailed Mr. Johnson at his Washington address a United States Treasury check in the amount of $13,636.35 dated October 30, 1964. There is nothing on this check indicating what it was for, or a covering letter stating what the money was for.

The $586.15 federal tax lien was released by the District Director and recorded among the land records of Prince William County on June 25, 1964.

Laws permitting the sale of a man's land must be strictly construed— Chief Justice Marshall so stated many years ago when he said

"That no individual or public officer can sell, and convey a good title to, the land of another, unless authorized so to do by express law, is one of those self-evident propositions to which the mind assents, without hesitation; and that the person invested with such a power must pursue with precision the course prescribed by law, or his act is invalid, is a principle which has been repeatedly recognized in this court." Thatcher v. Powell, 6 Wheat. 119, 5 L.Ed. 221.

The Fourth Circuit has gone even further. In United States v. Heffner, 420 F.2d 809 (1969), Judge Winter declared

"An agency of the government must scrupulously observe rules, regulations, or procedures which it has established. When it fails to do so, its action cannot stand and courts will strike it down."

Further, the burden of showing literal compliance with statutes governing the sale of land for taxes is upon the claimant under the tax sale. See McAndrews v. Belknap, 141 F.2d 111 (6th Cir. 1944).

The claimant here has not carried that burden.

Internal Revenue in making this sale has not complied with the requirements of § 6335(a)¹ or with the requirements of § 6335(d).²

This sale from the beginning to the end was handled by Revenue Officer Albert C. Nagle of the Alexandria office. He says he discussed the collection with his supervisor and that he was authorized to go ahead with the sale—that if it did not comply with the statute it was his fault—He says he made the seizure and that he alone made the decision to sell the land by sealed bid—and to make the sale outside the county where the land is located—It was winter and he thought it would be more convenient to receive the bids in his Alexandria office —He further stated that he never gave a thought to selling a portion of the land —He said he did not have any means of dividing it—and as far as he knew, the Internal Revenue Service always sold real estate as a whole unless it was recorded in lots or parcels. He further says he knew this land would bring considerably more than the amount due for expenses of sale and the delinquent taxes —He also stated he personally prepared the newspaper ad, the notice of levy³ and the notice of sale by sealed bid (IRS Form 2434), which he considered to be the notice of seizure—He says he mailed a copy of IRS Form 2434 to the landowner and sent the ad to the Journal Messenger in Manassas for publication —He did not go on the land or post it. He further stated that he was not personally present in Alexandria on December 3, 1962 when the sealed bids were opened.

Revenue Officer Nagle says he relied on Delegation Order No. 97 and TM 5300-10 of the Internal Revenue Manual as his authority for fixing the place of sale outside the county where the land is located.

That delegation order did not authorize a revenue officer to fix the place of sale outside of the county—It only delegated authority to place advertising orders with newspapers or other similar types of commercial advertising media in cases involving seizure and sale.

TM 5300-10 does provide "the notice of sale designating such place shall be considered to be the order made by the District Director that the sale be held in such other place." That regulation, however, does not make the recitals in the notice of sale a verity—At best they are only prima facie evidence of the purported facts stated therein. Here the direct evidence of the revenue officer who handled this sale is to the contrary —He admits that he alone made the decision requiring the sealed bids to be sent or brought to the Internal Revenue office in Alexandria—He says he did not even discuss it with the Director.

Clearly § 6335(d) provides that the place of sale shall be within the county in which the property is seized, except by special order of the Secretary or his delegate. No such special order was here given, and the Court so finds.

The Court further finds that the sealed bids were received and opened at 701 Prince Street, Alexandria, Virginia, and the tax deed was issued in Richmond,...