United States v. Hershberger

Decision Date24 January 1972
Docket NumberCiv. A. No. W-4241.
Citation338 F. Supp. 804
PartiesUNITED STATES of America, Plaintiff, v. Ralph H. HERSHBERGER et al., Defendants.
CourtU.S. District Court — District of Kansas

Robert J. Roth, U. S. Atty., Edward H. Funston, Asst. U. S. Atty., Wichita, Kan., William D. M. Holmes, Trial Atty., Tax Div., Dept. of Justice, Washington, D. C., for plaintiff.

Thomas A. Wood, Wichita, Kan., for the Hershbergers.

William L. Harris, Jr., Chief Atty., Dept. of Revenue, Topeka, Kan., Jim Lawing, Wichita, Kan., for State of Kan., Dept. of Revenue.

MEMORANDUM OF OPINION

WESLEY E. BROWN, Chief Judge.

This is a civil action in which the United States seeks to foreclose certain federal tax liens against the interest of Ralph G. Hershberger in property owned in joint tenancy by him and his wife. The wife, Esther, is resisting the foreclosure on the basis of the Kansas homestead exemption. The parties have stipulated to all the facts pertinent to the Court's decision, and the action is now before us on both parties' motions for summary judgment.

Briefly, the stipulated facts are these:

1. Defendants Ralph and Esther Hershberger are husband and wife and own as joint tenants certain described property of less than one acre in size located within the City limits of Wichita, Kansas. They occupy this property as their residence, and in addition, Esther asserts that she is the head of their household and that she occupies the property as a homestead under the Constitution and laws of Kansas.

2. On August 3, 1970, the United States obtained judgment against Ralph in the amount of $28,778.48, which represented his liability for unpaid income taxes for the years 1946 through 1957. Prior to the date of this judgment, default was entered against defendants County of Sedgwick, Kansas, and Lloyd B. Nucholls.

3. As of the date of this action, the judgment against Ralph is subject to the following stipulated priorities:

a) First Priority: United States, $16,735.76;
b) Second Priority: State of Kansas, $995.69;
c) Third Priority: United States, $7,576.73.

4. These liens attached to Ralph's property and rights to property, and specifically his undivided one-half interest in the described real property.

Under the facts here, we conclude that the property is subject to the homestead exemption claimed by Esther.

The portion of the Kansas Constitution, Article 15 brought into focus by these proceedings is as follows:

"A homestead ... of one acre within the limits of an incorporated ... city, occupied as a residence by the family of the owner ... shall be exempted from forced sale under any process of law ...; but no property shall be exempt from sale for taxes ..."

The property was occupied as a residence by Ralph and Esther and Esther may assert homestead rights. See Helm v. Helm, 11 Kan. 19 (1873); Iowa Mutual Insurance Co. v. Parr, 189 Kan. 475, 370 P.2d 400 (1962):

"The fact that the ownership in the property was by co-tenancy does not deny the co-tenants the right to claim a homestead in the property." Grant v. Mossman, 384 F.2d 496 (C. A.10, 1967); Cole v. Coons, 162 Kan. 624, 178 P.2d 997; Banner v. Welch, 115 Kan. 868, 225 P. 98.

We have concluded that Esther's and Ralph's homestead right prevents the United States and Kansas from enforcing a tax lien for income taxes on the property. The tax claims of the United States and Kansas are admitted to be only against Ralph's one-half interest in the property. Thus, to permit the United States to enforce its lien by a sale of Ralph's half would require the sale of the full interest. We believe that the Government's "Solomon" suggested alternative of cutting the "child" in half is inappropriate here.

Under the present posture of the law it is clear that state law controls the determination of what is "property or rights to property" upon which a federal tax lien can attach. It is also clear that Congress and the Supreme Court recognize and give effect to state exemption laws in enforcing federal tax liens. See United States v. Brosnan, 363 U.S. 237, 80 S.Ct. 1108, 4 L.Ed.2d 1192 (1960); Meyer v. United States, 375 U.S. 233, 84 S.Ct. 318, 11 L.Ed.2d 293.

Kansas has not spoken directly on whether or not a homestead can be subject to sale by virtue of income tax liens. The Oklahoma laws on homestead exemptions are similar to Kansas and the Court of Appeals of the Tenth Circuit has spoken in this regard. In Jones v. Kemp, 144 F.2d 478 (C.A.10, 1944) the Jones court said:

"The homestead right is a creature of the Constitution and statutes of Oklahoma. Although not an estate, it is a special and peculiar interest in land belonging to the husband and wife jointly and indivisibly—neither may be divested of his or her interest therein without the consent of both. Citations omitted. It follows therefore that a wife is granted an indivisible and vested interest in homestead property, and one which cannot be subjected to levy and sale for the satisfaction of the Federal tax liability of her husband."

In defining the homestead exemption, the Kansas court in Iowa Mutual Insurance Co. v. Parr, 189 Kan. 475, 370 P.2d 400 (1962), said,

"The Kansas Constitution and the legislature have declared a homestead to be exempt. The homestead cannot be subjected to forced sale to satisfy debts except in the following situations: (1) To pay taxes; (2) to pay obligations contracted for the purchase of the homestead; (3) to pay obligations contracted for the erection of improvements on the homestead; or (4) any process of law obtained by virtue of a lien given by the consent of both husband and wife."

The Parr case involved an unsuccessful attempt to create a lien on a homestead by virtue of a waiver of lien in an indemnity agreement. But, because there was no valid lien on the property when the waiver was made the homestead right survived. In explaining the effect of the judgment in Parr the Kansas Court said,

"Here the judgment rendered was for an amount certain. It was not rendered for taxes, or for the payment of obligations contracted for the purchase of the homestead, or for the erection of improvements on the homestead, or by virtue of a lien given by joint consent of the husband and wife. It was an ordinary money judgment, and like any ordinary money judgment, it became a lien upon the real estate of the judgment debtors from the first day of the term at which the judgment was rendered. Upon compliance with 60-3601, supra, by the trial court in this case, the judgment would remain unsatisfied until such time as the appellants receive their discharge in bankruptcy. Thereafter, the judgment would be deemed to have been fully discharged and satisfied."

The Government would have us determine that the statements in Parr require a conclusion that the Kansas Court would hold that its lien is for taxes, comes within the exemption and may be foreclosed. To carry out such a contention would require us to hold that the words, "no property shall be exempt from sale for taxes ..." includes not only taxes levied against the property itself, but all forms of taxes when unpaid.

The Government would have us follow the reasoning of United States v. Overman, 424 F.2d 1142 (C.A.9, 1970). The Overman Court held,

"In the order from which this appeal has been taken the district court decided that the Government had a valid lien on the taxpayer's undivided one-half interest in the marital community, that the lien was enforceable against the community assets as to which foreclosure was sought, and that the Government was not precluded from enforcing its lien by limitations or
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3 cases
  • Haley v. Troy
    • United States
    • U.S. District Court — District of Massachusetts
    • 2 Febrero 1972
    ... ... Defendant ... Civ. A. No. 70-61 ... United States District Court, D. Massachusetts ... February 2, 1972. 338 F. Supp. 795 ... ...
  • United States v. Hershberger
    • United States
    • U.S. Court of Appeals — Tenth Circuit
    • 13 Marzo 1973
    ...G. Hershberger in homestead property owned by him and his wife, Esther. The United States District Court for the District of Kansas, 338 F.Supp. 804, held that Esther's homestead exemption under the laws of the State of Kansas prevented the United States from enforcing its tax lien against ......
  • Homestead Land Title Co. v. U.S., 66452
    • United States
    • Kansas Supreme Court
    • 25 Octubre 1991
    ...out of the United States District Court for the District of Kansas, United States v. Hershberger, 475 F.2d 677, 681 (10th Cir.1973). In Hershberger, the United States attempted to foreclose a federal tax lien against a husband, using property owned in joint tenancy by the husband and his wi......
1 books & journal articles
  • Kansas Homestead Law
    • United States
    • Kansas Bar Association KBA Bar Journal No. 65-04, April 1996
    • Invalid date
    ...against a homestead when one spouse was not liable for the taxes, see United States v. Hershberger, 475 F.2d 677 (10th Cir. 1973), aff'g 338 F. Supp. 804 (D. Kan. 1972). [FN289]. Vining v. Willis, 40 Kan. 609, 20 P. 232 (1889). [FN290]. See supra section IV.A. [FN291]. Postlethwaite v. Edso......

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