UNITED STATES v. ESTATE OF ROMANI ET AL.
No. 96-1613
SUPREME COURT OF THE UNITED STATES
Argued January 12, 1998—Decided April 29, 1998
523 U.S. 517
No. 96-1613. Argued January 12, 1998—Decided April 29, 1998
Patrick F. McCartan argued the cause for respondent Romani Industries, Inc. With him on the brief were Gregory G. Katsas and Lawrence L. Davis.
JUSTICE STEVENS delivered the opinion of the Court.
The federal priority statute,
I
On January 25, 1985, the Court of Common Pleas of Cambria County, Pennsylvania, entered a judgment for $400,000 in favor of Romani Industries, Inc., and against Francis
When Mr. Romani died on January 13, 1992, his entire estate consisted of real estate worth only $53,001. Because the property was encumbered by both the judgment lien and the federal tax liens, the estate‘s administrator sought permission from the Court of Common Pleas to transfer the property to the judgment creditor, Romani Industries, in lieu of execution. The Federal Government acknowledged that its tax liens were not valid as against the earlier judgment lien; but, giving new meaning to Franklin‘s aphorism that “in this world nothing can be said to be certain, except death and taxes,”2 it opposed the transfer on the ground that the priority statute (§ 3713) gave it the right to “be paid first.”
The Court of Common Pleas overruled the Government‘s objection and authorized the conveyance. The Superior Court of Pennsylvania affirmed, and the Supreme Court of the State also affirmed. 547 Pa. 41, 688 A. 2d 703 (1997). That court first determined that there was a “plain inconsistency” between
The decision of the Pennsylvania Supreme Court conflicts with two Federal Court of Appeals decisions, Kentucky ex rel. Luckett v. United States, 383 F. 2d 13 (CA6 1967), and Nesbitt v. United States, 622 F. 2d 433 (CA9 1980). Moreover, in its petition for certiorari, the Government submitted that the decision is inconsistent with our holding in Thelusson v. Smith, 2 Wheat. 396 (1817), and with the admonition that “[o]nly the plainest inconsistency would warrant our finding an implied exception to the operation of so clear a
II
There is no dispute about the meaning of two of the three statutes that control the disposition of this case. It is therefore appropriate to comment on the Pennsylvania lien statute and the Federal Tax Lien Act before considering the applicability of the priority statute to property encumbered by an antecedent judgment creditor‘s lien.
The Pennsylvania statute expressly provides that a judgment shall create a lien against real property when it is recorded in the county where the property is located.
The Federal Government‘s right to a lien on a delinquent taxpayer‘s property has been a part of our law at least since 1865.5 Originally the lien applied, without exception, to all property of the taxpayer immediately upon the neglect or failure to pay the tax upon demand.6 An unrecorded tax lien against a delinquent taxpayer‘s property was valid even against a bona fide purchaser who had no notice of the lien. United States v. Snyder, 149 U. S. 210, 213-215 (1893). In 1913, Congress amended the statute to provide that the fed-
In sum, each time Congress revisited the federal tax lien, it ameliorated its original harsh impact on other secured creditors of the delinquent taxpayer.7 In this case, it is agreed that by the terms of
III
The text of the priority statute on which the Government places its entire reliance is virtually unchanged since its enactment in 1797.8 As we pointed out in United States v. Moore, 423 U. S. 77 (1975), not only were there earlier versions of the statute,9 but “its roots reach back even further into the English common law,” id., at 80. The sovereign prerogative that was exercised by the English Crown and by many of the States as “an inherent incident of sovereignty,” ibid., applied only to unsecured claims. As Justice Brandeis noted in Marshall v. New York, 254 U. S. 380, 384 (1920), the common-law priority “[did] not obtain over a specific lien created by the debtor before the sovereign undertakes to enforce its right.” Moreover, the statute itself does not create a lien in favor of the United States.10 Given this background, respondent argues that the statute should be read as
There are dicta in our earlier cases that support this contention as well as dicta that tend to refute it. Perhaps the strongest support is found in Justice Story‘s statement:
“What then is the nature of the priority, thus limited and established in favour of the United States? Is it a right, which supersedes and overrules the assignment of the debtor, as to any property which the United States may afterwards elect to take in execution, so as to prevent such property from passing by virtue of such assignment to the assignees? Or, is it a mere right of prior payment, out of the general funds of the debtor, in the hands of the assignees? We are of opinion that it clearly falls, within the latter description. The language employed is that which naturally would be employed to express such an intent; and it must be strained from its ordinary import, to speak any other.” Conard v. Atlantic Ins. Co. of N. Y., 1 Pet. 386, 439 (1828).
Justice Story‘s opinion that the language employed in the statute “must be strained” to give it any other meaning is entitled to special respect because he was more familiar with 18th-century usage than judges who view the statute from a 20th-century perspective.
We cannot, however, ignore the Court‘s earlier judgment in Thelusson v. Smith, 2 Wheat., at 426, or the more recent dicta in United States v. Key, 397 U. S., at 324-325. In Thelusson, the Court held that the priority statute gave the United States a preference over the claim of a judgment creditor who had a general lien on the debtor‘s real property.
First, as a factual matter, in 1817 when the case was decided, there was no procedure for recording a judgment and thereby creating a choate lien on a specific parcel of real estate. See generally 2 L. Dembitz, A Treatise on Land Titles in the United States § 127, pp. 948-952 (1895). Notwithstanding the judgment, a bona fide purchaser could have acquired the debtor‘s property free from any claims of the judgment creditor. See Semple v. Burd, 7 Serg. & Rawle 286, 291 (Pa. 1821) (“The prevailing object of the Legislature, has uniformly been, to support thе security of a judgment creditor, by confirming his lien, except when it interferes with the circulation of property by embarrassing a fair purchaser“). That is not the case with respect to
Second, and of greater importance, in his opinion for the Court in the Conard case, which was joined by Justice Washington, the author of Thelusson,13 Justice Story explained why that holding was fully consistent with his interpretation of the text of the priority statute:
“The real ground of the decision, was, that the judgment creditor had never perfected his title, by any execution and levy on the Sedgely estate; that he had acquired no title to the proceeds as his property, and that if the proceeds were to be deemed general funds of the debtor, the priority of the United States to payment had attached against all other creditors; and that a mere potential lien on land, did not carry a legal title to the proceeds of a sale, made under an adverse execution. This is the manner in which this case has been understood, by the Judges who concurred in the decision; and it is obvious, that it established no such proposition, as that a specific and perfected lien, can be displaced by the mere priority of the United States; since that priority is not of itself equivalent to a lien.” Conard, 1 Pet., at 444.14
The Government also relies upon dicta from our opinion in United States v. Key, 397 U. S., at 324-325, which quoted from our earlier opinion in United States v. Emory, 314 U. S., at 433: “Only the plainest inconsistency would warrant our
The Key opinion is only one of many in which the Court has noted that despite the age of the statute, and despite the fact that it has been the subject of a great deal of litigation, the question whether it has any application to antecedent perfected liens has never been answered definitively. See United States v. Vermont, 377 U. S. 351, 358, n. 8 (1964) (citing cases). In his dissent in United States v. Gilbert Associates, Inc., 345 U. S. 361 (1953), Justice Frankfurter referred to the Court‘s reluctance to decide the issue “not only today but for almost a century and a half.” 345 U. S., at 367.
The Government‘s priority as against specific, perfected security interests is, if possible, even less settled with regard to real property. The Court has sometimes concluded that a competing creditor who has not “divested” the debtor of “either title or possession” has only a “general, unperfected lien” that is defeated by the Government‘s priority. E. g., id., at 366. Assuming the validity of this “title or possession” test for deciding whether a lien on personal property is sufficiently choate for purposes of the priority statute (a question of federal law, see Illinois ex rel. Gordon v. Campbell, 329 U. S., at 371), we are not aware of any decisions since Thelusson applying that theory to claims for real prop-
Given the fact that this basic question of interpretation remains unresolved, it does not seem appropriate to view the issue in this case as whether the Tax Lien Act of 1966 has implicitly amended or repealed the priority statute. Instead, we think the proper inquiry is how best to harmonize the imрact of the two statutes on the Government‘s power to collect delinquent taxes.
IV
In his dissent from a particularly harsh application of the priority statute, Justice Jackson emphasized the importance of considering other relevant federal policies. Joined by three other Justices, he wrote:
“This decision announces an unnecessarily ruthless interpretation of a statute that at its best is an arbitrary one. The statute by which the Federal Government gives its own claims against an insolvent priority over claims in favor of a state government must be applied by courts, not because federal claims are more meritorious or equitable, but only because thаt Government has more power. But the priority statute is an assertion of federal supremacy as against any contrary state policy. It is not a limitation on the Federal Government itself, not an assertion that the priority policy shall prevail over all other federal policies. Its generalities should not lightly be construed to frustrate a specific policy embodied in a later federal statute.” Massachusetts v. United States, 333 U. S. 611, 635 (1948).
On several prior occasions the Court had followed this approach and concluded that a specific policy embodied in a later federal statute should control our construction of the priority statute, even though it had not been expressly
The bankruptcy law provides an additional context in which another federal statute was given effect despite the priority statute‘s literal, unconditional text. The early federal bankruptcy statutes had accorded to ““all debts due to the United States, and all taxes and assessments under thе laws thereof” a preference that was “coextensive” with that established by the priority statute. Guarantee Title & Trust Co. v. Title Guaranty & Surety Co., 224 U. S. 152, 158 (1912) (quoting the Bankruptcy Act of 1867, Rev. Stat. § 5101). As such, the priority Act and the bankruptcy laws “were to be regarded as in pari materia, and both were unqualified; . . . as neither contained any qualification, none could be interpolated.” 224 U. S., at 153. The Bankruptcy Act of 1898, however, subordinated the priority of the Federal Government‘s claims (except for taxes due) to certain other kinds of debts. This Court resolved the tension between the new bankruptcy provisions and the priority statute by applying the former and thus treating the Government like any other general creditor. Id., at 158-160; Davis v. Pringle, 268 U. S. 315, 317-319 (1925).15
Even before the 1966 amendments to the Tax Lien Act, this Court assumed that the more recent and specific provisions of that Act would apply were they to conflict with the older priority statute. In the Gilbert Associates case, which cоncerned the relative priority of the Federal Government and a New Hampshire town to funds of an insolvent taxpayer, the Court first considered whether the town could qualify as a “judgment creditor” entitled to preference under the Tax Lien Act. 345 U. S., at 363-364. Only after deciding that question in the negative did the Court conclude that
The Government emphasizes that when Congress amended the Tax Lien Act in 1966, it declined to enact the American Bar Association‘s proposal to modify the federal priority statute, and Congress again failed to enact a similar proposal in 1970. Both proposals would have expressly provided that the Government‘s priority in insolvency does not displace valid liens and security interests, and therefore would have harmonized the priority statute with the Tax Lien Act. See Hearings on H. R. 11256 and 11290 before the House Cоmmittee on Ways and Means, 89th Cong., 2d Sess., 197 (1966) (hereinafter Hearings); S. 2197, 92d Cong., 1st Sess. (1971). But both proposals also would have significantly changed the priority statute in many other respects to follow the priority scheme created by the bankruptcy laws. See Hearings, at 85, 198; Plumb 10, n. 53, 33-37. The earlier proposal may have failed because its wide-ranging subject matter was beyond the House Ways and Means Committee‘s jurisdiction. Id., at 8. The failure of the 1970 proposal in the Senate Judiciary Committee—explained by no reports or hearings—might merely reflect disagreement with the broad changes to the priority statute, or an assumption that the proposal was not needed because, as Justice Story hаd believed, the priority statute does not
The actual measures taken by Congress provide a superior insight regarding its intent. As we have noted, the 1966 amendments to the Tax Lien Act bespeak a strong condemnation of secret liens, which unfairly defeat the expеctations of innocent creditors and frustrate “the needs of our citizens for certainty and convenience in the legal rules governing their commercial dealings.” 112 Cong. Rec. 22227 (1966) (remarks of Rep. Byrnes); cf. United States v. Speers, 382 U. S. 266, 275 (1965) (referring to the “general policy against secret liens“). These policy concerns shed light on how Congress would want the conflicting statutory provisions to be harmonized:
“Liens may be a dry-as-dust part of the law, but they are not without significance in an industrial and commercial community where construction and credit are thought to have importance. One does not readily impute to Congress the intention that many common commercial liens should be congenitally unstable.” E. Brown, The Supreme Court, 1957 Term—Foreword: Process of Law, 72 Harv. L. Rev. 77, 87 (1958) (footnote omitted).
In sum, nothing in the text or the long history of interpreting the federal priority statute justifies the conclusion that it authorizes the equivalent of a secret lien as a substitute for the expressly authorized tax lien that Congress has said “shall not be valid” in a case of this kind.
The judgment of the Pennsylvania Supreme Court is affirmed.
It is so ordered.
I join the opinion of the Court except that portion which takes seriously, and thus encourages in the future, an argument that should be laughed out of court. The Government contended that
That is not so, for several reasons. First and most obviously, Congress cannot express its will by a failure to legislate. The act of refusing to enact a law (if that can be called an act) has utterly no legal effect, and thus has utterly nо place in a serious discussion of the law. The Constitution sets forth the only manner in which the Members of Congress have the power to impose their will upon the country:
Second, even if Congress could express its will by not legislating, the will of a later Congress that a law enacted by an earlier Congress should bear a particular meaning is of no effect whatever. The Constitution puts Congress in the business of writing new laws, not interpreting old ones. “[L]ater еnacted laws . . . do not declare the meaning of earlier law.” Almendarez-Torres v. United States, ante, at 237; ante, at 269-270 (SCALIA, J., dissenting) (“This later amendment can of course not cause [the statute] to have meant, at the time of petitioner‘s conviction, something different from what it then said“). If the enacted intent of a later Congress cannot change the meaning of an earlier statute, then it should go without saying that the later unenacted intent cannot possibly do so. It should go without saying, and it should go without arguing as well.
I have in the past been critical of the Court‘s using the so-called legislative history of an enactment (hearings, committee reports, and floor debates) to determine its meaning. See, e. g., Conroy v. Aniskoff, 507 U. S. 511, 518-529 (1993) (SCALIA, J., concurring in judgment); United States v. Thompson/Center Arms Co., 504 U. S. 505, 521 (1992) (SCALIA, J., concurring in judgment); Blanchard v. Bergeron, 489 U. S. 87, 98-100 (1989) (SCALIA, J., concurring in part and concurring in judgment). Today, howevеr, the Court‘s fascination with the files of Congress (we must consult them, because they are there) is carried to a new silly extreme. Today‘s opinion ever-so-carefully analyzes, not legislative history, but the history of legislation-that-never-was. If we take this sort of material seriously, we require conscientious counsel to investigate (at clients’ expense) not only the hear-