United States v. Estate of Donnelly, 397 U.S. 286 (1970)

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Syllabus

Respondents Carlson made a bona fide purchase in 1960 of realty in Livingston County, Michigan, from one Donnelly against whom the Government had acquired a tax lien in 1950. Section 3672 of the Internal Revenue Code of 1939 provided that a federal tax lien became valid against a subsequent purchaser if notice of the lien had been filed (1) in a state office in which the filing of such notice was "authorized" by state law or (2) in the federal district court for the district where the property was located, if filing in a state office was not thus "authorized." Concluding that the state law, which imposed a more onerous requirement of content than federal law, did not "authorize" filing the federal notice with the state office within the meaning of § 3672, the federal tax authorities filed notice of the lien on the Livingston County land in the appropriate district court. The Government brought this action in 1966 to foreclose the tax lien on that property. The District Court granted summary judgment for the Carlsons against the Government’s contention that the case was controlled by United States v. Union Central Life Ins. Co., 368 U.S. 291 (1961), which held that the Michigan statute did not "authorize" the state filing of federal lien notices and that filing in the appropriate federal district court sufficed to give a lien priority over subsequent purchasers. The District Court held that Union Central should not be applied retroactively against a good faith purchase antedating that decision, since, at the time of their purchase, the Carlsons could have assumed from previous federal court decisions that the Michigan statute applied to the filing of federal tax lien notices. The Court of Appeals affirmed.

Held: The Government’s tax lien was properly filed in the District Court, and was thus entitled to priority. Any reliance that the Carlsons may have placed on the lower courts’ construction of § 3672 which the Government had never accepted, and which this Court rejected in United States v. Union Central Life Ins. Co.,supra, would not, on the facts of this case, foreclose applicability of that decision here. Chicot Drainage District v. Baxter State Bank, 308 U.S. 371, distinguished. Pp. 290-295.

406 F.2d 1065, reversed and remanded.