United States v. Estate of Donnelly/Dissent Douglas

Mr. Justice DOUGLAS, with whom Mr. Justice BRENNAN and Mr. Justice STEWART concur, dissenting.

Respondents are bona fide purchasers of real property located in Livingston County, Michigan. Their purchase was made in August 1960 from one Donnelly, against whom the United States had acquired a tax lien in 1950. By § 3672 of the Internal Revenue Code of 1939 that lien is not valid against a purchaser until notice thereof is filed in the office 'authorized' by state law. Where state law 'authorized' no such office, notice of lien was to be filed in the office of the United States District Court for the judicial district in which the land is located. Ibid. Michigan law authorized notice of a federal tax lien containing 'a description of the land' to be filed with the register of deeds in the county where the land was located.

The United States refused to be bound by the requirement of Michigan law regarding a 'description of the land' and filed notice of lien in the District Court.

Hence a title search in the accustomed way revealed no notice of lien clouding Donnelly's title. Hence respondents purchased the land innocently and in good faith. Thereafter, on March 20, 1961, the United States filed its notice of lien with the register of deeds of Livingston County, as required by Michigan law.

On December 18, 1961, over a year after respondents' purchase, this Court held in United States v. Union Central Life Ins. Co., 368 U.S. 291, 82 S.Ct. 349, 7 L.Ed.2d 294, that 'Michigan law authorizing filing only if a description of the property was given' ran counter to the intent of § 3672, and consequently no real property filing requirement could be considered 'authorized' by Michigan law. Id., at 296, 82 S.Ct., at 352. Therefore, the Court held, a notice of lien was properly filed in the District Court.

I dissent from a retroactive application of that holding so as to injure bona fide purchasers who had relied on the prior law to make their investments. The Michigan Act had at the time of the purchase been approved both by the District Court in United States v. Maniaci, 36 F.Supp. 293, and by the Court of Appeals for the Sixth Circuit in Youngblood v. United States, 141 F.2d 912.

It seems manifestly unjust to deprive respondents of their property for the benefit of a lawless tax collector who knowingly concealed his secret lien until after the purchase was made.

It is true that later, in Union Central, we ruled that § 3672 did not require the Government to file pursuant to Michigan law. Yet this new ruling on federal preemption should not, in my view, be applied to undo everything done by those relying on the former construction, as upheld in Youngblood.

I would hold that the teaching of Chicot County Drainage District v. Baxter State Bank, 308 U.S. 371, 374, 60 S.Ct. 317, 318, 84 L.Ed. 329, as to statutes ruled unconstitutional, should be applied to the present situation:

'The actual existence of a statute, prior to such a     determination, is an operative fact and may have consequences      which cannot justly be ignored. The past cannot always be     erased by a new judicial declaration. The effect of the     subsequent ruling as to invalidity may have to be considered      in various aspects,-with respect to particular relations,      individual and corporate, and particular conduct, private and      official. Questions of rights claimed to have become vested,     of status, of prior determinations, deemed to have finality      and acted upon accordingly, of public policy in the light of      the nature both of the statute and of its previous      application, demand examination.' The majority of the Court in the present case narrowly confines that statement to the particular facts involved in Chicot County. The principle there involved, however, rooted deeply in considerations of fairness, clearly applies to the present case. I would hold that bona fide purchasers, whose purchases antedate our Union Central decision and who relied on the law as it had been previously construed, are protected in their investments. I dissent from the Court's holding to the contrary.