/* The US Supreme Court has a tendency to take at least one case from many categories each term. Tax liens is one of the them. The 1993 tax lien case follows. Tax liens befuddle even Judges. Words like "choateness" (the opposite of INCHOATE) are coined. Nevertheless the priority of such liens is an important point, and this case adds further to one of the more complicated points in the legal field. Erisa or anti-trust anyone? */
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
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 the 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. 251, 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. 2-8.
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. Thomas, J., filed a dissenting opinion, in which Stevens and O'Connor, JJ., joined.
SUPREME COURT OF THE UNITED STATES
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No. 91-1229
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UNITED STATES by and through INTERNAL
REVENUE SERVICE, PETITIONER v.
BRUCE J. McDERMOTT et al.
on writ of certiorari to the united states court
of appeals for the tenth circuit
[March 24, 1993]
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., 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).
On September 23, 1987 the McDermotts acquired titleto 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'l Bank, N.A., 945 F. 2d 1475 (1991). We granted certiorari. 504 U.S. ___ (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 & Schatzell 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 (emphasis added); see also id., at 86; United States v. Pioneer American Ins. Co., 374 U. S. 84 (1963).
/* And state law does not determine this issue. Federal law does. */
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." 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 st
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