UNITED STATES BY AND THROUGH INTERNAL REVENUE SERVICE v. McDERMOTT ET AL. 507 U.S. 447Subscribe to Cases that cite 507 U.S. 447
OCTOBER TERM, 1992
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. Mter 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.
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.
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).