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Blacklock v. United States, 208 U.S. 75 (1908)

Blacklock v. United States

No. 65

Argued December 10, 1907

Decided January 13, 1908

208 U.S. 75


A mere recital in an act, whether of fact or of law, is not conclusive unless it be clear that the legislature intended that it be accepted as a fact in the case. Kinkead v. United States, 150 U. S. 433.

The Court of Claims was not precluded by the recitals in the Act of May, 1902, 32 Stat. 207, 243, referring this case to it, from examining into the facts and determining whether the claimant's lien referred to in the act as a prior lien was or was not a prior lien, and basing its decision upon the actual facts found.

Section 106 of the Act of July 20, 1868, 15 Stat. 125, 167, providing for an action in equity by the collector of internal revenue to enforce a lien of the United States for unpaid revenue taxes did not supersede the provision of the Act of July 13, 1866, 14 Stat. 107, giving the remedy of distraint so that such lien could only be enforced by suit in equity, but it gave another and cumulative remedy in cases where, as expressed in the act, the collector deemed it expedient. Mansfield v. Excelsior Refining Co., 135 U. S. 326.

In this case, held that the lien of the government for unpaid revenue taxes on land of the delinquent was prior to that of the mortgagee bringing this action, and that the sale of the land by distraint proceeding, and not by foreclosure suit in equity, was in conformity with the Act of July 13, 1866, then in force, and vested the title in the purchasers at the sale and their grantee, subject to the right of redemption given by the statute to the owners of the land and of holders of liens thereon.

41 Ct.Cl. 89 affirmed.

This appeal brings up for review a judgment in the court

Page 208 U. S. 76

of claims dismissing a petition filed in that court against the United States.

So far as it is necessary to state the facts, the case is substantially as follows:

Smith, Ellett & Company, a firm composed of Rinaldo P. Smith and Francis M. Ellett, were engaged in business as leather and commission merchants in Baltimore from some time in 1867 or 1868 to January 1, 1870.

On the twenty-sixth of October, 1869, George J. Stephens, a distiller and tanner in Virginia, was indebted to Smith, Ellett & Company, in the sum of $7,000, already due, and in the further sum of $2,000, to become due in the course of future dealings. On the same day, a certain deed was executed between Stephens of the first part, Beazley, trustee, of the second part, and Smith and Ellett, doing business as Smith, Ellett & Company, of the third part. It recited that Stephens was indebted to Smith, Ellett & Company in the sum of $4,000, evidenced by the bond or demand note of Stephens dated October 26, 1869, and that Smith, Ellett & Company had accepted, for the accommodation of Stephens, a draft for $3,000, and had agreed to accept a further accommodation draft for $2,000. In order that said acceptances in addition to the note for $4,000 might be secured, Stephens, by deed dated October 26, 1869, conveyed to Beazley a tract of land containing about 400 acres, more or less, in Greene County, Virginia, upon which Stephens then resided, with the mansion house and all buildings thereon, including a tannery and distillery, and all things appurtenant thereto,

"in trust to secure the said bond of $4,000, and all the acceptances already made and given as aforesaid, now current and to become payable, and all acceptances to be hereafter made and given as aforesaid, and all which may be made and given for renewal of former ones, or to replace the money paid by the party of the first part in taking up former ones as aforesaid, or in any other manner as stated in the premises, so as the same shall not exceed the sum of $5,000."

The property conveyed was worth more than $3,000. The

Page 208 U. S. 77

deed was duly acknowledged and recorded on the thirtieth day of October, 1869.

When that deed of trust was executed and recorded, there was due from Stephens to the United States government internal revenue taxes which had accrued from July, 1867, to October 26, 1869, amounting to $4,000.

On the twenty-fifth of January, 1870, Smith and Ellett executed the following instrument of writing:

"Baltimore, January 25, '70. We hereby give our consent to the use of the distillery premises of Geo. J. Stephens, situated on the Harrisonburg Turnpike, about four miles from Stannardsville, and which premises contain about three acres of land, more or less, immediately surrounding the distillery building, and which building is contained thereon or comprised therein by said Geo. J. Stephens, subject to the provisions of the internal rev. law, and that the lien of the United States for taxes and penalties hereafter incurred shall have priority, to the extent of the above-mentioned premises, of a certain deed of trust executed by said Geo. J. Stephens for our benefit, and whereof Wyatt S. Beazley is trustee, and that in case of the forfeiture of the said distillery premises, or any part thereof, the title of the same shall vest in the United States, discharged from said deed of trust."

In order to satisfy the above taxes and the penalties authorized by law, the collector of internal revenue for Virginia, by his deputy, Lawson, during December, 1870, distrained the distillery building and about three acres (of the 400-acre tract) upon which the distillery stood, and advertised the property for sale. Prior to any sale, the distillery building and contents, including a quantity of whisky, were destroyed by fire. The collector thereupon, before the day of sale, extended his distraint so as to include the balance of Stephens' land, amounting in all to about 525 acres, which included the land embraced by the trust deed to Smith, Ellett & Company, and advertised all of said land for sale. Pursuant to the advertisement, the deputy collector, on January 12, 1871, offered the whole of Stephens' land for sale at public auction. Smith, being present

Page 208 U. S. 78

as a member of Smith, Ellett & Company, gave formal notice of the above deed of trust, asserting a prior lien under it to that of the government, and protesting against the sale of the land except subject to that lien. The deputy collector proceeded with the sale and the property was bid in for the government for $4,239.50, that being the amount of delinquent taxes, penalties for nonpayment thereof, and costs of distraint and sale. One year thereafter, January 12, 1872, that officer executed a deed to the United States, which was duly acknowledged and recorded on November 25, 1873.

Under the authority conferred upon the Commissioner of Internal Revenue by § 3208 of the Revised Statutes, as amended by the Act of March 1, 1879, and with the approval of the Secretary of the Treasury, the lands so purchased were sold at public auction, by order of the Commissioner, on the twelfth day of June 1888, and Miss Stephens became the purchaser at the price of $500. She died after the sale, and on October 6, 1888, the United States, by the Commissioner of Internal Revenue, executed a quitclaim deed to the devisees of the purchaser, conveying to them

"all right, title, and interest of the United States at the time of said last-named sale in the premises aforesaid, and free from any claim on the part of the United States."

By an Act of Congress of May 27th, 1902, 32 Stat. 207, 243, c. 887, it was provided:

"That jurisdiction is hereby conferred on the Court of Claims to hear and determine the claim of Rinaldo P. Smith, of Baltimore, Maryland, against the government of the United States on account of the sale, purchase, or occupation by the government, through its internal revenue office or others, of certain real estate of one George J. Stephens in Greene County, Virginia, upon which the late firm of Smith, Ellett & Company, now represented by Rinaldo P. Smith, had a prior lien, and the right of the government to plead the statute of limitations in bar of said claims is hereby waived: Provided, That said claimant file his petition within sixty days from the passage of this act, in said Court of Claims, either at

Page 208 U. S. 79

law or in equity, as he may deem the rights of his case shall require, and the government shall, upon notice served according to the rules and practice of said court, appear and defend against said suit, and the same shall proceed to final hearing and judgment, with the right of appeal to the Supreme Court of United States by either party, as provided by law."

The present action was brought in 1904 by the executor of Smith under the authority of that act.

The petition sets forth certain facts connected with the claim, and, among other things, it alleged the following:

"9. The petitioner is advised and believers, and so charges, that the proceeding and sale above recited, whereby the United States acquired the title to said land and defeated the lien of said firm, was in open violation of § 3207 of the Revised Statutes, which was then in full force and should have governed the proceeding of the United States in the premises, and that the officers of the United States, having abundant notice of the prior lien of the said Smith, Ellett & Company, should have commenced a proceeding in the United States district court for said district, in conformity with the provisions of the statute above cited, to which proceeding the said Smith, Ellett & Company should have been made parties, and whereby their prior lien should have been audited, adjusted, and paid out of the proceeds of such sale in preference to the claim of the United States, as provided by such statute, and that, by adopting the summary proceeding which was resorted to in the sale of said land, being the same authorized by §§ 3197 and 3198, Revised Statutes, in cases where no prior liens exist, the United States practically proclaimed to the whole world, just as its agent who made the sale actually did, that there was no valid prior lien on said land and that a clear title was passed by the sale."

"10. That the United States accepted the conveyance so made, and held the property by virtue thereof for many years, collecting the rents and profits, and that the first notice this petitioner had of its relinquishment of its holdings was through an official letter from Acting Commissioner of Internal Revenue Wilson,

Page 208 U. S. 80

bearing date January 7, 1895, in which it was stated that, by a conveyance made in October, 1888, the United States had divested itself of its title to said land."

"11. That, after the sale and conveyance aforesaid, the said Smith did, as the representative of his said firm, make every effort to collect the said debt from the said George J. Stephens in said Greene County, and to that end at considerable expense, retained counsel learned in the law; but he was advised that the United States, by its summary proceeding, had taken over the title to the mortgage land and defeated his lien thereon, and the said Stephens, having no other property against which he could proceed, his only recourse lay, first, in redeeming the property within one year, under the provision of § 3202, Revised Statutes, by paying to the deputy collector the full amount of $4,229.50, claimed to be due from said Stephens to the United States, or, second, in a demand of indemnity from the United States; but the said firm, being wholly unable pecuniarily to advance that large sum of money, and having serious doubts whether the mortgaged property was at that time fairly worth that amount in addition to their mortgage lien, and they were therefore unable to redeem said property, and neither the said firms nor this petitioner has ever, directly or indirectly, received any portion of said debt so due from the said Stephens as aforesaid, but the same is still due and unpaid in the full amount above stated."

"12. That, at the time of said sale and conveyance to the United States, the land of said Stephens, to which the said lien of the said Smith, Ellett & Company attached, was amply worth the amount of their said lien, and would have brought that amount and more at any fair and regular sale thereof at auction or otherwise."

"13. That on the first day of January, A.D. 1875, the partnership existing between the said Rinaldo P. Smith and the said Francis M. Ellett and a certain William F. Larrabee, who had, in the meantime, become a partner, expired by limitation in the articles of copartnership and was dissolved by mutual consent, and thereupon all the partnership assets of the old firm, including the debt due from Stephens, as aforesaid,

Page 208 U. S. 81

passed to this petitioner by authority of the firm as settling partner, with the exclusive right to collect the same and sign valid acquittance therefor, and although this petitioner has repeatedly made demand upon the proper officers of the Treasury Department for payment of his said claim, the same has never been paid, or any part thereof, but, on the contrary, allowance and payment thereof has been refused."

The relief sought was a judgment against the United States for $8,666.44, with interest thereon from January 12, 1871.

The government answered, denying all the allegations of the petition, and asking for judgment dismissing the suit.

Page 208 U. S. 82

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