B-100585 April 6, 1955

B-100585: Apr 6, 1955

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Fay: Reference is made to your letter of February 20. From the operation of a lien which it was reported in your letter of January 3. It appeared from your letter of January 3 that the Government's lien based on the fine was junior to that of a first and a second deed of trust on the property and junior to liens of the Bureau of Internal Revenue for tax indebtedness. Which tax lien were. It further appears that the first deed of trust was foreclosed and that the Commissioner of Internal Revenue granted a release of the property from the tax liens upon payment of the sum of $344.75 which latter amount represented the balance of the proceeds of the foreclosure sale after payment of the amount due under the deeds of trust.

B-100585 April 6, 1955

George Morris Fay, Require United States Attorney Washington 1, D.C.

Dear Mr. Fay:

Reference is made to your letter of February 20, 1954, file RO'D:bcb, C-768-49, enclosing a copy of a letter of January 24, 1951, from the Perpetual Building Association to your Office requesting the release by this Office of certain property located at 2013 Portner Place, N.W., in the District of Columbia, from the operation of a lien which it was reported in your letter of January 3, 1951, attached thereto in favor of the United States as the result of a fine in the amount of $1,000 imposed on January 6, 1950, against william B. Fletcher, then the owner of said property, by the District Court of the United States for the District of Columbia in Criminal Action No. 768-49.

It appeared from your letter of January 3 that the Government's lien based on the fine was junior to that of a first and a second deed of trust on the property and junior to liens of the Bureau of Internal Revenue for tax indebtedness, which tax lien were, however, junior to the deeds of trust. It further appears that the first deed of trust was foreclosed and that the Commissioner of Internal Revenue granted a release of the property from the tax liens upon payment of the sum of $344.75 which latter amount represented the balance of the proceeds of the foreclosure sale after payment of the amount due under the deeds of trust. Under such circumstances, you recommended that, under the provisions of title 28, section 2410(d), U.S. Code, of the fine. It was bold in decision of January 22, 1951, B-100584, that, for the reason stated therein, this Office was without authority to issue the releases.

In the letter of January 24, the Perpetual Building Association states that if foreclosed on the property and requests a release of the property fromt he lien based on the fine. It is further stated therein that there are no proceeds from the sale beyond the amount due that association and a small amount to apply to the releasing of a Federal income tax lien. Thus, it is understood that the Perpetual Building Association was the party secured under the first deed of trust.

However, aside from the fact that the letter of the Perpetual Building Association does not meet the procedural requirements of the statute as set forth in the decision of January 22, neither it now the record otherwise is such as to warrant this Office in issuing the release requested. While it appears that the Perpetual Building Association was the holder of a senior lien in the form of a deed of trust on the property, it is assumed that the foreclosure sale thereunder was made by a trustee or trustees named therein pursuant to a power of sale contained in it--as is customarily the case in foreclosures of deeds of trust in the District of Columbia--and was not a sale made pursuant to a court proceeding. Thus, it would appear that, upon the foreclosure under the first deed of trust, the lien on the property was extinguished and, further, that the junior lien based on the fine was also thereby extinguished insofar as the property involved in the foreclosure is concerned. Sec Huffines v. American Security & Trust Co., et al, 63 App. D.C. 224, 71 F. 2d 345.

Hence, the record does not establish that the party requesting the release held a lien on the property at the time of the request nor does it appear that the Government's lien based on the fine remained a lien based on the fine remained a lien on the property after the foreclosure under the prior deed of trust. In connection with the letter, it is understood that attention has been informally invited to the provision in section 2410(c) of title 28, U.S. Code, that "Where a sale of real estate is made to satisfy a lien prior to that of the United States, the United States shall have one year from the date of sale within which to redeem it." It is understood that it is mainly because of that provision that the release is requested.

Such right of redemption after sale is not an inherent right but exists only by reason of the statute creating it and necessarily depends on the terms of such statute. See, generally, 59 C.J.S. Mortgages, section 819. It would seem apparent from a reading of said section 2401(c), especially in conjunction with the preceding sections 2410(a) and 2410(b) 27115. Code all of which relate to the same matter and are to be construed together--that said right of redemption has no application to the present matter. The three sections clearly relate, insofar as mortgages or other liens are concerned, to actions or suits involving the foreclosure of mortgage or other liens upon property upon which the United States has or claims a mortgage or other lien and authorizes the naming of the United States as a party to such action or suit. Such sections, insofar as the foreclosure of mortgage is concerned, were no doubt enacted to meet the requirements of the law of those jurisdictions in which foreclosure is by judicial proceeding and it is necessary or desirable that the United States as a holder of a lien on the property be made a party thereto. See, generally, 59 C.J.S. Mortgages, section 627d. It is the view of this Office--at least in the absence of an authoritative judicial decision to the contrary--that the right of redemption given by said section 2410(c) relates only, insofar as foreclosure sales are concerned, to such sales made pursuant to judicial section in a judicial proceeding, and not to a foreclosure sale made under a power of sale in a deed of trust without a judicial proceeding, which, as indicated above, is assumed to be the case here.

This Office has no authority, of course, to issue a certificate of release of liens of the United States except upon the conditions stipulated in said section 2410(d). 17 Comp. Gen. 180. Accordingly, since the record does not establish that the party requesting the release held aa lien on the property at the time of the request of that the Government's lien based on the fine remained a lien after the foreclosure under the prior deed of trust, it must be concluded that this Office is without authority to issue the release requested.

Sincerely yours,

Lindsey C. Warren

Comptroller General of the United States