B-169602 June 30, 1970

B-169602 June 30, 1970

The Honorable James J.D. Lynch, Jr., Esquire Assistant Counsel Commonwealth Land Title Insurance Company 1510 Walnut Street Philadelphia, Pennsylvania 19102

Dear Mr. Lynch:

This is in reference to your letter of April 2, 1970, requesting our opinion, or at least some case law authority, concerning the right of the United States, as a junior lien holder, to expertise the one-year right of redemption provided in 28 U.S.C. 2410(c) with regard to property sold by judicial male on a lien superior to that held by the Government.

It is your understanding that the Government's right to redeem arises only in those situations in which the United States is joined as a party under section 2410(a), 28 United States Code, to the foreclosure proceedings prior to the judicial sale, or at least given notice of such proceedings.

Section 2410(a), title 28 United States Code, insofar as here pertinent, provides that the United States "may be ramed as a party in any civil action or suit in any district court, or is any State court having jurisdiction of the subject matter" to quiet title to, to foreclose a mortgage or other lien upon, to partition, to condemn, or interplead, in eases involving real property in which the United States has or claims a mortgage or other lien.

Section 2410(c) provides, in pertinent part, as follows:

"A judgement or decree in such action or suit shall have the same effect respecting the discharge of the property from the mortgage or other lien held by the United States as may be provided with respect to such matters by the local law of the place where the court is situated. However, an action to foreclose a mortgage or other lien, naming the United States as a party under this section, must seek judicial sale. * * * 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 * * *."

In connection with 28 U.S.C. 2410(c) we stated in B-100584, dated April 6, 1951, that;

"* * * It is the view of this Office--at least in the absense of an authoritative judicial decision to the countrary--that the right of redemption given by said section 2410(c) relates only, insofar as foreclosure sales are concerned, to such sales made persuant to judicial action 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." (Underscoring supplied.)

In United States v. Boyd, 246 F. 2d. 447 (1957), certionari denied 355 U.S. 889, decided subsequent to our decision cited above and involving a nonjudicial sale or foreclosure, the court stated that when a mortgage has been validly foreclosed by a nonjudicial sale under a power, it is the conseequence of such prior lien and the right of enforecement under it which destroys the junior encumbrance whether it be a private or Federal tax lien. The court then held that when the superior lien has been validly foreclosed, it cuts off all the junior liens including those of the Government. However, the court also stated--in connection with protesting the revenues of the United States--that:

"* * * And, second, the District Court read the statutes of the United States as a composite body to allow to the Government under 26 U.S.C. Sect 2410(c) a statutory right to redeem after sale within one year. This statute specifically provides 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"

* * * * *

"On an undisputed record, the court was right in holding that the foreclosure under power of sale was valid. The Government's rights have been fully preserved by the right of redemption which sometimes for the full year not counting the time it has been suspended during the pendency of this appeal, and we agree that no further action was or is now necessary."

It would appear that if 28 U. S.C. 2410(c) be considered as authorising redemption in nonjudicial sale or foreclosure cases, it could also be considered as authorizing redemption by the United States in cases involving judicial sales or foreclosures where the United States has not been made a party thereto.

We note, however, that in United States v. Bank of America Nat. Trust & B, Ass'n, 265 F. 2d 862 (1959), the United States Circuit Court of Appeals for the Ninth Circuit stated that it was "unable to reconcile the conclusion in the Boyd case (1) that the lien was extinguished and (2) that the Government still had a right to redeem under Section 2410(a)." Cr. United States v. Brosnan, 264 F. 2d 762 (1957), affirmed 363 U.S. 237 (1960). See also United States v. Class, 254 F. 2d 590 (1958). In the Brosnan case both the Federal District Court and the Court of Appeals expressly mentioned but did not pass on the question of whether the United States--where it was not made a party to the sale--had a right of redemption under 28 U.S.C. 2410(c) or otherwise.

Also, we note that in a case involving property on which the United States had a junior (tax) lien and which was advertised and sold by the trustee under a deed of trust (i.e. , a nonjudicial sale), the Supreme Court of North Carolina indicated that under 28 U.S.C. 2410(c) the United States would have one year from the date of male to redeem such property. See Roberson v. Pruden, 89 S.E. 2d. 158 (1953). Cf. Aquitable Life Insurance Soc. of United States v. Rochstein, 236 N.Y.S. 2d 993 (1964).

While the above-cited court cases may not be conclusive on the question you raise, it--as the court held in the Boyd case--the United States (with a junior lien) has right to redeem under 28 U.S.C. 2410(c) when the superior lien has been foreclosed by a nonjudicial sale, it would appear a fortiori that under 28 U.S.C. 2410(c) the United States would have a right to redeem where a judicial sale is held on a superior lien even though the United States has not been made a party to such judicial sale.

In any event, we trust the above-cited court decisions may be of some assistance to you in connection with your question.

Very truly yours,

R. R. Keller Assistant Comptroller General of the United States