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UNITED STATES v. MEYER

November 1, 1961

UNITED STATES OF AMERICA, PLAINTIFF,
v.
PAUL MEYER, HARRY T. HARTMAN, AND ANNA L. HARTMAN, DEFENDANTS.



The opinion of the court was delivered by: Poos, District Judge.

This suit is brought by the United States to foreclose an income tax lien. The Complaint alleges that plaintiff seeks to foreclose federal tax liens on five tracts of real estate, and is brought pursuant to Sections 7401 and 7403 of the Internal Revenue Code of 1954, 26 U.S.C. § 7401, 7403. Jurisdiction is based under Title 28 U.S.C. § 1340 and 1345, and under Section 7402(a) of the Internal Revenue Code of 1954, 26 U.S.C. § 7402(a).

The further allegation is that the federal tax assessments are prior liens on five tracts of real estate which were owned by Harry T. Hartman and Anna L. Hartman until October 24, 1957, as against the rights of defendant, Paul Meyer. The veracity of this allegation depends on the construction of real estate tax laws of Illinois, because the further allegation is that the real estate involved was sold on January 18, 1955 for delinquency in general property taxes of Illinois, and its various political subdivisions of government such as the City of Venice, Illinois, school districts, commissioner of highways, and Madison County, Illinois, to defendant Paul Meyer, who, at the time of purchase at the sale, received certificates of purchase; that after the two-year redemption period granted by the Constitution and Statutes of Illinois, to Harry T. Hartman and Anna L. Hartman, had expired, tax deeds were issued to the defendant Paul Meyer. The prayer is for an adjudication, (1) that the defendant Harry T. Hartman is liable to the United States for unpaid taxes with interest and penalties assessed against him in the amount of $35,861.85 plus interest, as provided by law, and that the defendant Anna L. Hartman is jointly and severally liable to the United States for unpaid taxes with interest and penalties assessed against her in the amount of $11,331.47, plus interest as provided by law; (2) that the Court adjudicate all matters involved herein and finally determine the merits and priority of all claims to and liens upon the real estate involved, including the liens of the United States, for unpaid taxes, (3) that the Court find, determine and adjudge that the United States has valid and first liens in the total amount of $35,861.85 plus interest, (4) that the Court order the foreclosure of the tax liens on the real estate and order the distribution of the proceeds of sale first to the United States in satisfaction of its liens, and (5) that plaintiff be granted its costs and such other and further relief as to the Court seems proper.

The defendants, Harry T. Hartman and Anna L. Hartman, have been defaulted. The defendant Paul Meyer filed a sworn motion to dismiss the Complaint in which he asserts that his rights are superior to the United States in, (1) that he became a purchaser for value of the real estate in question on January 18, 1955, at which time he purchased the property at the tax sale prior to the time the assessment for income tax deficiency against the Hartman's by the District Director of Internal Revenue, (2) that the Complaint fails to allege a cause of action against defendant Paul Meyer in that it fails to assert a superior interest to that of Paul Meyer, for the reason that Paul Meyer purchased the property for delinquency in general property taxes on January 18, 1955, and three months before the District Director of Internal Revenue made any assessment for income tax deficiency against the then owner of the property, the Hartman's, by reason of which the interest of the United States in and to the described property by reason of the assessed income tax deficiency, became no greater than the interest of the Hartman's, which, under the law of the State of Illinois, was a right to redeem from the State tax sale held on January 18, 1955, and the Complaint showing on its face that the Hartman's and the United States, having failed to redeem within the two-year statutory and Illinois constitutional period, defendant Paul Meyer became the owner of the real estate described in the Complaint, and (3), that the Complaint, in so far as defendant Paul Meyer and his interest in the real estate is concerned, fails to allege facts which, if true, would establish a lien in favor of the United States under the provisions of Section 6321 and 6323 of the Internal Revenue Code of 1954, 26 U.S.C.A. §§ 6321, 6323, and (4), that by reason thereof the Complaint should be dismissed as to defendant Paul Meyer.

This defendant attaches to his sworn motion a judgment of the County Court of Madison County, Illinois, in which the County Treasurer of Madison County, Illinois, certifies that various pieces of the real estate described in the Complaint are included in the judgment. The judgment is as follows:

    "In the County Court of Madison County, Illinois,
  Monday, January 10, 1955.
    "In the matter of the application of James T.
  Callahan, County Collector of Madison County,
  Illinois, in judgment and order of sale of delinquent
  lands, lots, tracts and part of lots and tracts upon
  which the taxes, special taxes or special
  assessments, delinquent installment or installments,
  special assessment or special assessments remain due
  and unpaid.
    "And now, on the 10th day of January, A.D. 1955,
  comes James T. Callahan, County Collector of Madison
  County, Illinois, and presents proof of publication
  lists of delinquent land, lots and tracts upon which
  the general taxes, interest, penalties and costs
  remain due and unpaid for the year A.D. 1953, and
  less than eight (8) prior years as herein set forth,
  and he also presents the delinquent lists as required
  by law and prays the Court for judgment against said
  delinquent lands, lots, parts of lots, and tracts of
  land named and set forth in the Tax Judgment, Sale,
  Redemption and Forfeiture Record heretofore filed
  herein for the general taxes, interest, penalties,
  costs due and unpaid thereon for the year or years
  therein set forth, and for an order to sell said
  lands, lots, parts of lots and tracts of land for the
  satisfaction thereof.
    "Whereas, due notice has been given of the intended
  application for judgment against said lands and lots,
  and no sufficient defense having been made or cause
  shown why judgment should not be entered against said
  delinquent lands, lots, parts of lots, and tracts of
  land for the general taxes, interest, penalties and
  costs due and unpaid thereon for the year or years
  therein set forth, therefore it is considered by the
  Court that judgment be and is hereby entered against
  the aforesaid lands, lots, parts of lots, or tracts,
  (as the case may be), in favor of the People of the
  State of Illinois for the sum annexed to each, and it
  is ordered by the Court that the said delinquent
  land, lots, parts of lots and tracts of land for the
  general taxes, interest, penalties, and costs annexed
  thereto, severally be sold as the law directs.
                  "Judge Michael Kinney,
                    County Judge of County
                    Court of Madison County,
                      Illinois
    "Whereupon it is ordered by the Court that any and
  all objections that may be filed therein shall be
  filed on or before the hour of 11:59 o'clock A.M. on
  Saturday, January 15, A.D. 1955."

This is the judgment under which the lands, lots or parts of lots described in the Complaint were sold to defendant Paul Meyer on January 18, 1955, and under which certificate or certificates of purchase were issued on said date, and which certificates ripened into tax deeds on October 24, 1957, in accordance with the procedures provided for by Illinois Revised Statutes, 1953, Chapt. 120, § 747.

Section 66 provides:

    "Notices of liens for internal revenue taxes
  payable to the United States of America and
  certificates discharging such liens may be filed in
  the office of the recorder of deeds of the county
  within which the property subject to the lien is
  situated * * *. Until such notice of lien is
  registered it shall not be valid as against any
  mortgagee, purchaser or judgment creditor having or
  claiming any right, title or interest in or to, or
  lien against such registered property."

Section 67 provides:

    "The recorder of deeds of each county shall procure
  at the expense of the county a file labeled `Federal
  Tax Lien Notices' and an index book labeled `Federal
  Lien Tax Index.' When a notice of any such tax lien
  is presented to him for filing, he shall file it in
  numerical order in the file and shall enter it
  alphabetically in the Federal lien tax index. The
  entry shall show the name and residence of the
  taxpayer named in the notice, the collector's serial
  number of the notice, the date and hour of filing and
  the amount of tax and penalty imposed."

Section 70 provides:

    "This Act is passed for the purpose of authorizing
  the filing of notices of liens in accordance with the
  provisions of section 3186 of the Revised Statutes of
  the United States, as amended by the Act of March 4,
  1913, — 37 Statutes at Large, page 1016," which is
  now Sec. 6323(a) of the Internal Revenue Code of
  1954.

These sections of the Illinois Statute give the District Director of Internal Revenue authority to file Internal Revenue tax liens with the Recorder of the respective counties in Illinois, and was the authority for filing the Internal Revenue tax lien herein complained on, in Madison County, Illinois.

Thereafter on August 21, 1956, defendant Paul Meyer filed with the County Clerk of Madison County, Illinois, in Causes Numbers 740, 813 and 814, entitled, "In the Matter of Application of the County Collector for Judgment of Sale Against Said Lands and Lots Returned and Delinquent for non-payment of general taxes for the year 1953 and prior years," petitions for the issuance of tax deeds. Three petitions as above entitled were filed in Cause No. 740, two in Cause No. 813, and two in Cause No. 814. These petitions made application to the County Court in the above entitled judgment for sale proceedings for the issuance of tax deeds on all the parcels of real estate involved in this foreclosure proceedings. Notice of the application for Tax Deeds in each of the proceedings was served on the United States Attorney at Springfield, and on the District Director of Internal Revenue on the 14th day of August, 1957. This notice was addressed to "Harry T. Hartman, Cora Hartman, Anna L. Hartman, to occupants or persons in actual possession of the hereinafter described real estate, to the assessee, owner of, or parties interested in said property, including trustees and mortgagees of record, and to the unknown owners thereof", and stated:

    "Take notice: That at a sale of real estate made by
  the Collector of Madison County, State of Illinois,
  at the Court House of said County, on the 18th day of
  January, 1955,
    "Except NE 5 ft. of Lot 30, and all Lot 31, Block
  21, Knox and Smith's Second Addition, Venice
  Township, Madison County, Illinois, situated in said
  County and State,

  was sold for the general taxes levied, and assessed
  thereon, for the year 1953, and a Tax Sale
  Certificate of Purchase was duly issued.
    "The time of redemption from said sale will expire
  June 21, 1957.
    "Further take notice that the holder of this
  Certificate, on the 21st day of August, 1956, filed a
  petition in the County Court of said County in a
  proceedings entitled `In the Matter of the
  Application of the County Collector for judgment and
  sale against said lands and lots returned delinquent
  for non-payment of taxes for the year 1953, and prior
  years', being the same proceedings wherein the
  judgment of sale was entered upon which the above tax
  sale was had, praying that the Court direct the
  County Clerk to issue a tax deed conveying the above
  described real estate to him if said real estate
  shall not be redeemed from the said tax sale. Said
  petition is No. 740, and the holder of this
  Certificate, the petitioner, intends to apply to said
  County Court for an order for said tax deed on the
  24th day of June A.D. 1957, if the above described
  real estate shall not be redeemed from said tax sale.
                           "Paul Meyer,
                     "Holder of Certificate
                        of Purchase."

This notice was served on the United States Attorney and H.J. White, Director of Internal Revenue, as the mortgagee or trustee or ...


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