OCTOBER TERM, 1992
Syllabus
UNITED STATES BY AND THROUGH INTERNAL REVENUE SERVICE
v.
McDERMOTT ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE TENTH
CIRCUIT
No. 91-1229. Argued December 7, 1992-Decided March 24,1993
The United States' federal tax lien on respondent McDermotts'
property applied to after-acquired property,
Glass City Bank
v.
United States, 326 U. S. 265, but could
"not be valid as against any ... judgment lien creditor until
notice thereof ... has been filed," 26 U. S. C. § 6323(a). Before
that lien was filed with the Salt Lake County Clerk, a bank
docketed a state-court judgment it had won against the McDermotts,
thereby creating a state-law judgment lien on all of their existing
or after-acquired real property in the county. After both liens
were filed, the McDermotts acquired certain real property in the
county and brought this interpleader action. The District Court
awarded priority in that property to the bank's lien. The Court of
Appeals affirmed.
Held: A federal tax lien filed before a delinquent
taxpayer acquires real property must be given priority in that
property over a private creditor's previously filed judgment lien.
Priority for purposes of federal law is governed by the common-law
principle that" 'the first in time is the first in right.'''
United States v.
New Britain, 347 U. S. 81, 85. A state
lien that competes with a federal lien is deemed to be in existence
for "first in time" purposes only when it has been "perfected" in
the sense that,
inter alia, "the property subject to the
lien [is] established."
Id., at 84. Because the bank's
judgment lien did not actually attach to the property at issue
until the McDermotts acquired rights in that property, which
occurred
after the United States filed its tax lien, the
bank's lien was not perfected before the federal filing. See id.,
at 84-86.
United States v.
Vermont, 377 U. S. 351,
distinguished. It is irrelevant that the federal lien similarly did
not attach and become perfected until the McDermotts acquired the
property, since § 6323(c)(1) demonstrates that such a lien is
ordinarily dated, for purposes of "first in time" priority against
§ 6323(a) competing interests, from the time of its filing. Pp.
449-455.
945 F.2d
1475, reversed and remanded.
SCALIA, J., delivered the opinion of the Court, in which
REHNQUIST, C. J., and WHITE, BLACKMUN, KENNEDY, and SOUTER, JJ.,
joined.
448
THOMAS, J., filed a dissenting opinion, in which STEVENS and
O'CONNOR, JJ., joined,
post, p. 455.
James A. Feldman argued the cause for the United
States.
On the briefs were Solicitor General Starr, Acting Assistant
Attorney General Bruton, Deputy Solicitor General Wallace, Kent L.
Jones, and William S. Estabrook.
T. Richard Davis argued the cause for respondents and
filed a brief for respondent Zions First National Bank, N. A.
JUSTICE SCALIA delivered the opinion of the Court.
We granted certiorari to resolve the competing priorities of a
federal tax lien and a private creditor's judgment lien as to a
delinquent taxpayer's after-acquired real property.
I
On December 9, 1986, the United States assessed Mr. and Mrs.
McDermott for unpaid federal taxes due for the tax years 1977
through 1981. Upon that assessment, the law created a lien in favor
of the United States on all real and personal property belonging to
the McDermotts, 26 U. S. C. §§ 6321 and 6322, including
after-acquired property,
Glass City Bank v.
United
States, 326 U. S.
265 (1945). Pursuant to 26 U. S. C. § 6323(a), however, that
lien could "not be valid as against any purchaser, holder of a
security interest, mechanic's lienor, or
judgment lien
creditor until notice thereof ... has been filed." (Emphasis
added.) The United States did not file this lien in the Salt Lake
County Recorder's Office until September 9, 1987. Before that
occurred, however-specifically, on July 6, 1987-Zions First
National Bank, N. A. (Bank), docketed with the Salt Lake County
Clerk a state-court judgment it had won against the McDermotts.
Under Utah law, that created a judgment lien on all of the
McDermotts' real property in Salt Lake County, "owned ... at the
time or ... thereafter acquired during the existence of said lien."
Utah Code Ann. § 78-22-1 (1953).
449
On September 23, 1987, the McDermotts acquired title to certain
real property in Salt Lake County. To facilitate later sale of that
property, the parties entered into an escrow agreement whereby the
United States and the Bank released their claims to the real
property itself but reserved their rights to the cash proceeds of
the sale, based on their priorities in the property as of September
23, 1987. Pursuant to the escrow agreement, the McDermotts brought
this interpleader action in state court to establish which lien was
entitled to priority; the United States removed to the United
States District Court for the District of Utah.
On cross-motions for partial summary judgment, the District
Court awarded priority to the Bank's judgment lien. The United
States Court of Appeals for the Tenth Circuit affirmed.
McDermott v.
Zions First Nat. Bank, N.
A.,
945 F.2d
1475 (1991). We granted certiorari. 504 U. S. 939 (1992).
II
Federal tax liens do not automatically have priority over all
other liens. Absent provision to the contrary, priority for
purposes of federal law is governed by the common-law principle
that "'the first in time is the first in right.'"
United
States v.
New Britain, 347 U. S. 81, 85 (1954);
cf.
Rankin v.
Scott, 12 Wheat. 177, 179 (1827)
(Marshall, C. J.). For purposes of applying that doctrine in the
present case-in which the competing state lien (that of a judgment
creditor) benefits from the provision of § 6323(a) that the federal
lien shall "not be valid ... until notice thereof ... has been
filed"-we must deem the United States' lien to have commenced no
sooner than the filing of notice. As for the Bank's lien: Our cases
deem a competing state lien to be in existence for "first in time"
purposes only when it has been "perfected" in the sense that "the
identity of the lienor,
the property subject to the lien,
and the amount of the lien are established."
United States
v.
New Britain, 347 U. S., at 84
450
(emphasis added); see also
id., at 86;
United
States v.
Pioneer American Ins. Co., 374 U. S. 84 (1963).
The first question we must answer, then, is whether the Bank's
judgment lien was perfected in this sense before the United States
filed its tax lien on September 9, 1987. If so, that is the end of
the matter; the Bank's lien prevails. The Court of Appeals was of
the view that this question was answered (or rendered irrelevant)
by our decision in
United States v.
Vermont, 377 U. S. 351 (1964),
which it took to "stan[d] for the proposition that a non-contingent
... lien on all of a person's real property, perfected prior to the
federal tax lien, will take priority over the federal lien,
regardless of whether after-acquired property is involved." 1 945
F. 2d, at 1480. That is too expansive a reading. Our opinion in
Vermont gives no indication that the property at issue had
become subject to the state lien only by application of an
after-acquired-property clause to property that the debtor acquired
after the federal lien arose. To the contrary, the opinion says
that the state lien met (presumably at the critical time when the
federal lien arose) "the test laid down in
New Britain that
... 'the property subject to the lien ... [be] established.''' 377
U. S., at 358 (citation omitted).2
1 As our later discussion will show, we think it contradictory
to say that the state lien was "perfected" before the federal lien
was filed, insofar as it applies to after-acquired property not
acquired by the debtor until after the federal lien was filed. The
Court of Appeals was evidently using the term "perfected" (as the
Bank would) in a sense not requiring attachment of the lien to the
property in question; our discussion of the Court of Appeals'
opinion assumes that usage.
2 The dissent cannot both grant the assumption "that the debtor
in
Vermont acquired its interest in the bank account before
the federal lien arose,"
post, at 459, n. 2, and contend
that "the debtor's interest in the bank account ... could have been
uncertain or indefinite from the creditors' perspective,"
ibid. In the same footnote, the dissent misdescribes the
"critical argument that we rejected" in
Vermont. Ibid. It
was not that "the State's claim could not be superior unless the
account had been 'specifically identified' as property subject to
the State's lien,"
ibid., but rather that the State's claim
could not be superior unless it had
451
The argument of the United States that we rejected in
Vermont was the contention that a state lien is not
perfected within the meaning of
New Britain if it
"attach[es] to
all of the taxpayer's property," rather than
"to specifically identified portions of that property." 377 U. S.,
at 355 (emphasis added).3 We did not consider, and the facts as
recited did not implicate, the quite different argument made by the
United States in the present case: that a lien in afteracquired
property is not "perfected" as to property yet to be acquired.
The Bank argues that, as of July 6, 1987, the date it docketed
its judgment lien, the lien was "perfected as to all real property
then and thereafter owned by" the McDermotts, since "[n]othing
further was required of [the Bank] to attach the non-contingent
lien on after-acquired property." Brief for Respondent 21. That
reflects an unusual notion of what it takes to "perfect" a lien.4
Under the Uniform
"attach[ed] to specifically identified portions of that
property,"
United States v.
Vermont, 377 U. S., at
355 (emphasis added).
3 The dissent claims that "the Government's 'specificity' claim
rejected in
Vermont is analytically indistinguishable from
the 'attachment' argument the Court accepts today," since "[i]f
specific attachment is not required for the state lien to be
'sufficiently choate,' then neither is specific acquisition."
Post, at 459 (citation omitted). But the two are not
comparable. Until the debtor has acquired the subject property, it
is impossible to say that "the property subject to the lien [has
been] ... established,"
United States v.
New Britain,
347 U. S. 81, 84
(1954). Judicial attachment, on the other hand (and it is important
to note that judicial attachment of the property, rather than
attachment of the lien to the property, was what the Government's
argument in
Vermont involved), merely brings into the
custody of a court property that is
already-prior to
judicial attachmentknown to be subject to the lien.
4 The dissent accepts the Bank's central argument that
perfection occurred when "there was 'nothing more to be done' by
the Bank 'to have a choate lien' on any real property the
McDermotts might acquire."
Post, at 457-458 (quoting
United States v.
New Britain, supra, at 84); see also
post, at 461. This unusual definition of perfection has been
achieved by making a small but substantively important addition to
the language of
New Britain. "'[N]othing more to be done ...
to have a choate lien'"
452
Commercial Code, for example, a security interest in
afteracquired property is generally not considered perfected when
the financing statement is filed, but only when the security
interest has attached to particular property upon the debtor's
acquisition of that property. §§ 9-203(1) and (2), 3 U. L. A. 363
(1992); § 9-303(1), 3A U. L. A. 117 (1992). And attachment to
particular property was also an element of what we meant by
"perfection" in
New Britain. See 347 U. S., at 84 ("when ...
the property subject to the lien ... [is] established"); id., at 86
("[T]he priority of each statutory lien contested here must depend
on the time it attached to the property in question and became [no
longer inchoate]").5 The Bank concedes that its lien did not
actually attach to the property at issue here until the McDermotts
acquired rights
(the language of
New Britain) becomes "nothing more to be
done
by the Bank to have a choate lien." Once one recognizes
that the dissent's concept of a lien's "becom[ing] certain as to
the property subject thereto," see
post, at 457, 461, is
meaningless, see n. 5,
infra, it becomes apparent that the
dissent, like the Bank, would simply have us substitute the concept
of "best efforts" for the concept of perfection.
5 The dissent refuses to acknowledge the unavoidable realities
that the property subject to a lien is not "established" until one
knows what specific property that is, and that a lien cannot be
anything other than "inchoate" with respect to property that is not
yet subject to the lien. Hence the dissent says that, upon its
filing, the lien at issue here "was perfected, even as to the real
property later acquired by the McDermotts, in the sense that it was
definite as to the property in question, noncontingent, and
summarily enforceable."
Post, at 457. But how could it have
been, at that time, "definite" as to this property, when the
identity of this property (established by the McDermotts' later
acquisition) was yet unknown? Or "noncontingent" as to this
property, when the property would have remained entirely free of
the judgment lien had the McDermotts not later decided to buy it?
Or "summarily enforceable" against this property when the
McDermotts did not own, and had never owned, it? The dissent also
says that "[t]he lien was
immediately enforceable through
levy and execution against all the debtors' property,
whenever
acquired." Ibid. (emphases added). But of course it was
not "immediately enforceable" (as of its filing date, which
is the relevant time) against property that the McDermotts had not
yet acquired.
453
in that property. Brief for Respondent 16, 21. Since that
occurred
after filing of the federal tax lien, the state
lien was not first in time.6
But that does not complete our inquiry: Though the state lien
was not first in time, the federal tax lien was not necessarily
first in time either. Like the state lien, it applied to the
property at issue here by virtue of a (judicially inferred)
after-acquired-property provision, which means that it did not
attach until the same instant the state lien attached, viz., when
the McDermotts acquired the property; and, like the state lien, it
did not become "perfected" until that time. We think, however, that
under the language of § 6323(a) ("shall not be valid as against any
... judgment lien creditor until notice ... has been filed"), the
filing of notice renders the federal tax lien extant for "first in
time" priority purposes regardless of whether it has yet attached
to identifiable property. That result is also indicated by the
provision, two subsections later, which accords priority, even
against filed federal tax liens, to security interests arising out
of certain agreements, including "commercial transactions financing
agreement[s]," entered into before filing of the tax lien. 26 U. S.
C. § 6323(c)(1). That provision protects certain security interests
that, like the afteracquired-property judgment lien here, will have
been recorded before the filing of the tax lien, and will attach to
the encumbered property after the filing of the tax lien, and
simultaneously with the attachment of the tax lien (i.
e.,
upon the debtor's acquisition of the subject property). According
special priority to certain state security interests
6 The dissent suggests,
post, at 458, n. 1, that the
Treasury Department regulation defining "judgment lien creditor,"
26 CFR §301.6323(h)-1(g) (1992), contradicts our analysis. It
would, if it contained only the three requirements that the dissent
describes. In fact, however, it says that to prevail the judgment
lien must be perfected, and that "[a] judgment lien is not
perfected until the identity of the lienor,
the property subject
to the lien, and the amount of the lien are established."
Ibid. (emphasis added).
454
in these circumstances obviously presumes that otherwise the
federal tax lien would prevail-i.
e., that the federal tax
lien is ordinarily dated, for purposes of "first in time" priority
against § 6323(a) competing interests, from the time of its filing,
regardless of when it attaches to the subject property. 7
The Bank argues that "[b]y common law, the first lien of record
against a debtor's property has priority over those subsequently
filed unless a lien-creating statute clearly shows or declares an
intention to cause the statutory lien to override." Brief for
Respondent Zions First National Bank, N. A., 11.8 Such a strong
"first-to-record" presumption may be appropriate for simultaneously
perfected liens under ordinary statutes creating private liens,
which ordinarily arise
7 The dissent contends that "there is no persuasive reason for
not adopting as a matter of federal law the well-recognized
common-law rule of parity and giving the Bank an equal interest in
the property."
Post, at 461, n. 4. As we have explained, the
persuasive reason is the existence of § 6323(c), which displays the
assumption that all perfected security interests are defeated by
the federal tax lien. There is no reason why this assumption should
not extend to judgment liens as well. A "security interest," as
defined in § 6323, is not an insignificant creditor's preference.
The term includes only interests protected against subsequent
judgment liens. See 26 U. S. C. §§ 6323(h)(1) and 6323(c)(1)(B).
Moreover, the text of § 6323(a) ("The lien ... shall not be valid
as against any purchaser, holder of a security interest, mechanic's
lienor, or judgment lien creditor") treats security interests and
judgment liens alike. Parity may be, as the dissent says, a
"well-recognized common-law rule,"
post, at 461, n. 4, but
we have not hitherto adopted it as the federal law of tax liens in
127 years of tax lien enforcement.
S The dissent notes that "[n]othing in the law of judgment liens
suggests that the possibility, which existed at the time the Bank
docketed its judgment, that the McDermotts would
not acquire
the specific property here at issue was a 'contingency' that
rendered the Bank's otherwise perfected general judgment lien
subordinate to intervening liens."
Post, at 460. Perhaps.
But priorities here are determined, not by "the law of judgment
liens," but by § 6323(a), as our case law has interpreted it. The
requirement that competing state liens be perfected is part of that
jurisprudence.
455
out of voluntary transactions. When two private lenders both
exact from the same debtor security agreements with
after-acquired-property clauses, the second lender knows, by reason
of the earlier recording, that that category of property will be
subject to another claim, and if the remaining security is
inadequate he may avoid the difficulty by declining to extend
credit. The Government, by contrast, cannot indulge the luxury of
declining to hold the taxpayer liable for his taxes; notice of a
previously filed security agreement covering after-acquired
property does
not enable the Government to protect itself. A
strong "first-to-record" presumption is particularly out of place
under the present taxlien statute, whose
general rule is
that the tax collector prevails even if he has not recorded
at
all. 26 U. S. C. §§ 6321 and 6322;
United States v.
Snyder, 149 U.
S. 210 (1893). Thus, while we would hardly proclaim the
statutory meaning we have discerned in this opinion to be "clear,"
it is evident enough for the purpose at hand. The federal tax lien
must be given priority.
The judgment of the Court of Appeals is reversed, and the case
is remanded for further proceedings consistent with this
opinion.
So ordered.
JUSTICE THOMAS, with whom JUSTICE STEVENS and JUSTICE O'CONNOR
join, dissenting.
I agree with the Court that under 26 U. S. C. § 6323(a) we
generally look to the filing of notice of the federal tax lien to
determine the federal lien's priority as against a competing
state-law judgment lien. I cannot agree, however, that a federal
tax lien trumps a judgment creditor's claim to afteracquired
property whenever notice of the federal lien is filed before the
judgment lien has "attached" to the property.
Ante, at
451-452. In my view, the Bank's antecedent judgment lien "ha[d]
[already] acquired sufficient substance and ha[d] become so
perfected," with respect to the McDermotts'
456
after-acquired real property, "as to defeat [the] later-filed
federal tax lien."
United States v.
Pioneer American
Ins. Co.,
374 U.
S. 84, 88 (1963).
Applying the governing "first in time" rule, the Court
recognizes-as it must-that if the Bank's interest in the property
was "perfected in the sense that there [was] nothing more to be
done to have a choate lien" before September 9, 1987 (the date the
federal notice was filed),
United States v.
New
Britain, 347 U. S.
81, 84 (1954), "that is the end of the matter; the Bank's lien
prevails,"
ante, at 450. Because the Bank's identity as
lienor and the amount of its judgment lien are undisputed, the
choateness question here reduces to whether "the property subject
to the lien" was sufficiently "established" as of that date.
New
Britain, supra, at 84. Accord,
Pioneer American, supra,
at 89. See 26 CFR § 301.6323(h)-1(g) (1992). The majority is quick
to conclude that "establish[ment]" cannot precede attachment, and
that a lien in after-acquired property therefore cannot be
sufficiently perfected until the debtor has acquired rights in the
property. See
ante, at 451-453. That holding does not follow
from, and I believe it is inconsistent with, our precedents.
We have not (before today) prescribed any rigid criteria for
"establish[ing]" the property subject to a competing lien; we have
required only that the lien
"become certain as to ... the
property subject thereto."
New Britain, supra, at 86
(emphasis added). Our cases indicate that "certain" means nothing
more than "[d]etermined and [d]efinite,"
Pioneer American,
supra, at 90, and that the proper focus is on whether the lien
is free from "contingencies" that stand in the way of its
execution,
United States v.
Security Trust &
Savings Bank, 340 U. S. 47, 50 (1950).
In
Security Trust, for example, we refused to accord
priority to a mere attachment lien that "had not ripened into a
judgment,"
New Britain, supra, at 86, and was therefore
"contingent upon taking subsequent steps for enforcing it," 340 U.
S., at 51.
457
And in
United States v.
Vermont, 377 U. S. 351 (1964), we
recognized the complete superiority of a general tax lien held by
the State of Vermont upon all property rights belonging to the
debtor, even though the lien had not "attach[ed] to [the]
specifically identified portions of that property" in which the
Federal Government claimed a competing tax lien.
Id., at
355. With or without specific attachment, Vermont's general lien
was "sufficiently choate to obtain priority over the later federal
lien," because it was "summarily enforceable" upon assessment and
demand.
Id., at 359, and n. 12.
Although the choateness of a state-law lien under § 6323(a) is a
federal question, that question is answered in part by reference to
state law, and we therefore give due weight to the State's
"'classification of [its] lien as specific and perfected.' "
Pioneer American, supra, at 88, n. 7 (quoting
Security
Trust, supra, at 49). Here, state law establishes that upon
filing, the Bank's judgment lien was perfected, even as to the real
property later acquired by the McDermotts, in the sense that it was
definite as to the property in question, noncontingent, and
summarily enforceable. Pursuant to Utah statute, from the moment
the Bank had docketed and filed its judgment with the Clerk of the
state court on July 6, 1987, it held an enforceable lien upon all
nonexempt real property owned by the McDermotts or thereafter
acquired by them during the existence of the lien. See Utah Code
Ann. § 78-22-1 (1953). The lien was immediately enforceable through
levy and execution against all the debtors' property, whenever
acquired. See
Belnap v.
Blain, 575 P. 2d 696, 700
(Utah 1978). See also Utah Rule Civ. Proc. 69. And it was
"unconditional and not subject to alteration by a court on
equitable grounds."
Taylor National, Inc. v.
Jensen
Brothers Constr. Co., 641 P. 2d 150, 155 (Utah 1982). Thus, the
Bank's lien had become certain as to the property subject thereto,
whether then existing or thereafter acquired, and all competing
creditors were on notice that there
458
was "nothing more to be done" by the Bank "to have a choate
lien" on any real property the McDermotts might acquire.
New
Britain, supra, at 84. See
Vermont, supra, at 355.1
The Court brushes aside the relevance of our
Vermont
opinion with the simple observation that that case did not involve
a lien in after-acquired property.
Ante, at 450-451. This is
a wooden distinction. In truth, the Government's "specificity"
claim rejected in
Vermont is analytically indistinguishable
from the "attachment" argument the Court accepts today. Vermont's
general lien applied to all of the debtor's rights in property,
with no limitation on when those rights were acquired, and remained
valid until the debt was satisfied or became unenforceable. See 377
U. S., at 352. The United States claimed that its later-filed tax
lien took priority over Vermont's as to the debtor's interest in a
particular bank account, because the State had not taken "steps to
perfect its lien by attaching the bank account in question" until
after the federal lien had been recorded. Brief for United States
in
United States v.
Vermont, O. T. 1963, No. 509, p.
12. "Thus," the Government asserted, "when the federal lien arose,
the State lien did not meet one
1 The Department of Treasury regulations defining "judgment lien
creditor" for purposes of § 6323(a) set forth only three specific
requirements for a choate lien (corresponding to the three
"establish[ment]" criteria of
New Britain). The judgment
creditor must "obtai[n] a valid judgment" (thus establishing the
lienor) for the recovery of "specifically designated property or
for a certain sum of money" (thus establishing the amount of the
lien), and if recording or docketing is "necessary under local law"
for the lien to be effective against third parties, the judgment
lien "is not perfected with respect to real property until the time
of such recordation or docketing." 26 CFR §301.6323(h)-1(g) (1992).
The last requirementrecording or docketing-is the only specific
requirement recognized in the regulations for establishing the real
property subject to the judgment lien. The regulations in no way
suggest that § 6323(a) imposes any "attachment" condition for
after-acquired property. Such a condition would be, in effect, an
additional recordation requirement that is not otherwise imposed by
local law.
459
of the three essential elements of a choate lien: that it attach
to specific property."
Ibid. In rejecting the federal claim
of priority, we found no need even to mention whether the debtor
had acquired its property interest in the deposited funds before or
after notice of the federal lien. If specific attachment is not
required for the state lien to be "sufficiently choate," 377 U. S.,
at 359, then neither is specific acquisition.2
Like the majority's reasoning today, see
ante, at 452,
the Government's argument in
Vermont rested in part on dicta
from
New Britain suggesting that "attachment to specific
property [is] a condition for choateness of a State-created lien."
Brief for United States in
United States v.
Vermont,
supra, at 19. See
New Britain, 347 U. S., at 86 ("[T]he
priority of each statutory lien contested here must depend on the
time it
attached to the property in question and became
choate") (emphasis added).
New Britain, however, involved
competing statutory liens that had concededly "attached to the same
real estate."
Id., at 87. The only issue was whether the
liens were otherwise sufficiently choate. Thus, like
Security
Trust (and, in fact, like all of our cases before
Vermont),
New Britain provided no occasion to consider the necessity of
attachment to property that was not specifically identified at the
time the state lien arose.
2 Even assuming, as the majority does, that the debtor in
Vermont acquired its interest in the bank account before the
federal lien arose, the critical argument that we rejected in that
case was the contention that the State's claim could not be
superior unless the account had been "specifically identified" as
property subject to the State's lien. 377 U. S., at 355. At the
time of the federal filing, the debtor's interest in the bank
account, like the McDermotts' interest in the property at issue
here, could have been uncertain or indefinite from the creditors'
perspective. Nevertheless, in both cases, the particular property
was "known to be subject to the [state] lien,"
ante, at 451,
n. 3, simply because that lien, by its terms, applied without
limitation to all property acquired at any time by the debtor.
460
Nothing in the law of judgment liens suggests that the
possibility, which existed at the time the Bank docketed its
judgment, that the McDermotts would
not acquire the specific
property here at issue was a "contingency" that rendered the Bank's
otherwise perfected general judgment lien subordinate to
intervening liens. Under the relevant background rules of state
law, the Bank's interest in afteracquired real property generally
could not be defeated by an intervening statutory lien. In some
States, the priority of judgment liens in after-acquired property
is determined by the order of their docketing. 3 R. Powell, Law of
Real Property' 481[1], p. 38-36 (P. Rohan rev. 1991) (hereinafter
Powell). See,
e. g.,
Lowe v.
Reierson, 201
Minn. 280, 287, 276 N. W. 224, 227 (1937). In others, the rule is
that "[w]hen two (or more) judgments are successively perfected
against a debtor and thereafter the debtor acquires a land
interest[,] these liens, attaching simultaneously at the time of
the land's acquisition by the debtor, are regarded as on a parity
and no priority exists." 3 Powell , 481[1], pp. 38-35 to 38-36.
See,
e. g.,
Bank of Boston v.
Haufler, 20
Mass. App. 668, 674, 482 N. E. 2d 542, 547 (1985);
McAllen State
Bank v.
Saenz, 561 F. Supp. 636, 639 (SD Tex. 1982).
Thus, under state common law, the Bank would either retain its full
priority in the property by virtue of its earlier filing or, at a
minimum, share an equal interest with the competing lienor.3 The
fact that the prior judgment lien remains effective against third
parties without further efforts by the judgment creditor is enough
for purposes of
3 Article 9 of the Uniform Commercial Code is inapposite, and
the Court's reliance on it misplaced. See
ante, at 451-452.
The technical rules governing the perfection and priority of the
special security interests in personal property created by Article
9 have no application to traditional judgment liens in real
property, see § 9-102, 3 U. L. A. 73 (1992), and should have no
bearing on the federal doctrine of "choateness." In the context of
determining the relative priority of a competing statutory judgment
lien, it is
Article 9'8 notion of perfection that is the
more "unusual."
Ante, at 451.
461
§ 6323(a), since the point of our choateness doctrine is to
respect the validity of a competing lien where the lien has become
certain as to the property subject thereto and the lienor need take
no further action to secure his claim. Under this federal-law
principle, the Bank's lien was sufficiently choate to be first in
time.4
I acknowledge that our precedents do not provide the clearest
answer to the question of after-acquired property. See
ante,
at 455. But the Court's parsimonious reading of
Vermont
undercuts the congressional purpose-expressed through repeated
amendments to the tax lien provisions in the century since
United States v.
Snyder, 149 U. S. 210 (1893)-of
"protect[ing] third persons against harsh application of the
federal tax lien," Kennedy, The Relative Priority of the Federal
Government: The Pernicious Career of the Inchoate and General Lien,
63 Yale L. J. 905, 922 (1954). The attachment requirement erodes
the "preferred status" granted to judgment creditors by § 6323(a),
and renders a choate judgment lien in after-acquired property
subordinate
4 Even if the Court were correct that attachment is the
determinative criterion of choateness, we would have a tie, since
the federal lien "did not attach [to the after-acquired property]
until the same instant the state lien attached."
Ante, at
453. That being so, there is no persuasive reason for not adopting
as a matter of federal law the well-recognized commonlaw rule of
parity and giving the Bank an equal interest in the property. See 3
Powell' 481[1]. Section 6323(a)'s requirement that the federal lien
be "filed" to be effective may determine when the lien arises for
general priority purposes, but the word "filed" provides no textual
basis for concluding that a tie goes to the Government, and simply
declaring that it does, see
ante, at 453, does not make it
so. The special exception in § 6323(c), which protects
later-arising security interests that are based on certain
preferred financing agreements, see ibid., does not imply that
judgment creditors lose out. Indeed, § 6323(c) demonstrates that
Congress
has considered the question of later-arising
property, and the absence of an analogous provision in § 6323(a)
suggests that Congress was content to let the courts apply one of
the existing background rules to determine the relative priority
(or parity) of the federal lien as against competing judgment liens
in after-acquired property.
462
to a "secret lien for assessed taxes."
Pioneer American,
374 U. S., at 89. I would adhere to a more flexible choateness
principle, which would protect the priority of validly docketed
judgment liens.
Accordingly, I respectfully dissent.
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