OffiCIAL PUBLICATION AMERIC N TITLE ASSOCIATION
VOLUME XXXVII MARCH, 1958 NUMBER 3 TITLE NEW'S 0 fficial Publication of TilE AMERICAN TITLE ASSOCIATION 3608 Guardian Building-Detroit 26, Michigan Volume XXXVII March, 1958 Number 3
Table of Contents
The Inside Story...... 2
Traveling and Entertainment Expense ...... 3 The Title Insurance Corp. of Pa.
Sample Reimbursement Voucher...... 7 American-First Title and Trust Co.
Abstracters, New Business for...... 8 Albert F. Block
A Tree Grows in the Title Company ...... 10 Howard f. Burnham
Federal Tax Liens and the Foreclosure of Mortgages...... 15 William H. Trueman
The Equitable Outlook...... 20 f. L. Bowman
Internal Revenue Documentary Stamp Information...... 22
Coming Events...... 24 THE INSIDE STORY-
We are fortunate to be able to carry this month some clarifying and help ful information regarding the recent ruling of the Internal Revenue with reference to traveling and entertainment expense. This timely article, beginning on Page 3, is supplemented with forms approved by Internal Revenue authorities.
"You scratch my back, etc." might be the supplemental thought in the article "New Business for Abstracters" by the outstanding and seasoned title man from Iowa, Mr. Albert F. Block. Mr. Block proposes a new method of including pertinent matters to a given title, the evidence of which is outside the county of the abstracter. This is thought provoking and perhaps will point the way to a solution.
One of the best public relation talks ever to reach the Association head quarters is the copy of the speech by Howard Burnham, "A Tree Grows in the Title Company". Readers will find this a fascinating and novel approach to the ramifications of the title business.
Another cOIJilprehensive treatment of federal tax liens is included here through the courtesy of William H. Trueman, attorney at law, Birmingham, Alabama, and the Lawyers Title News publication. It is redundant to say this is noteworthy for all in the title business. It brings us up to date on this constant problem.
A few years ago Mr. J. L. Bowman was President of the OklahOIJila Title Association. He wrote for his local state association a stimulating article on certain abstract practices. It is not one everyone will endorse immediately, but "The Equitable Outlook" is an approach which will likely invoke some additional thinking along this line.
To all authors of the a:bove, we express our thanks and appreciation.
-2- TRAVELING AND ENTERTAINMENT EXPENSE
The Title Insurance Corporation of Pennsylvania, Bryn Mawr, Pennsylvania, by Mr. Gordon Burlingame its President, has favored us in that he has secured and sent to us permission to carry this ar ticle in Title News. It relates to the recent position taken by the Internal Revenue Department with reference to traveling and enter taining expenses. It has been prepared by Charles S. Rockey and Company, Certified Public Accountants, 135 Walnut Street, Philda delphia. Mr. Burlingame also sent to us the form used by his company as approved by the firm's tax consultant, Mr. Leon Meltzer, 1529 Walnut Street, Philadelphia, Pennsylvania, which form was pre pared after consulations on the subject with the Internal Revenue Department of Philadelphia. On behalf of our members we express our deep thanks to all parties named in this Forward. (Ed.) In recent years much attention has keeping and reporting requirements been focused upon challenges by the beginning with 1958; (2) to suggest Internal Revenue Service of deduc means of simplifying compliance tions claimed for traveling and enter with the requirements; and (3) to taining and other promotional type indicate other areas justifying atten expenses. The subject really came tion in the field of traveling, enter into the limelight, however, with the taining and other promotional ex release of the 1957 Individual Income penses. Tax Return. This return contains a (1) Record Keeping and Reporting new line - 6 (a) - requiring that Requirements "Travel, reimbursed expenses, etc.," The more seriously you take the be specifically claimed and supported present emphasis upon the necessity as deductions. The instructions ac for providing supporting data for ex companyi"ng the return require that penses for traveling, etc., the better money paid to an individual as ex will be your chances of obtaining pense allowances or for reimburse deductions for these expenses when ment of expenses be included as your individual and business returns income on line 5 with wages, salaries are examined later. Revenue Agents and other compensation. have the right to demand reasonable As it was announced, the additional supporting data and are being in line on Form 1040 was merely carry structed to do so. The taxpayer has ing out a ruling that had been in the burden of proof to support all effect for some years. However, be claimed deductions. cause of many complaints emphasiz· What will be considered to be ade ing the extreme difficulties in at quate records will vary with individ tempting to furnish the information ual cases. Lump sum allowances or requested for 1957, it was later an purported reimbursements with no nounced that line 6 (a) need not be supporting details will undoubtedly used for 1957. At the same time tax result in extensive or total disallow payers were put clearly on notice ances of claimed expenses. There is that the information will be required no prescribed manner of keeping rec for 1958. ords, but it is believed that probably The purpose of this bulletin is the minimum acceptable record will threefold: (1) to point out the record be a diary showing the date, amount - 3 - and nature of expense or entertain able for supporting vouchers to be ment and the persons involved. It returned to and retained by the em would also be preferable to record ployee after appropriate cancellation the business relationship of the per to prevent their re-submission for sons entertained - certainly upon duplicate reimbursement. For execu questioning the reasons fo,r entertain tives in closely held corporations, ing must be shown. probably the most practical answer The Internal Revenue Service has will be for the company files to con no right to tell taxpayers how to run tain the only reports of reimbursed their businesses and cannot disallow expenses and supporting details. In expenditures simply because they are most such cases Internal Revenue what a Revenue Agent might con Service examinations will be made at sider as being too great. However, the office of the company, or the the agent has a perfect right to try data can be made readily available to to determine whether there was a the individual executive. valid business purpose behind ex (2) Suggestions for Simplifying penditures for entertaining, or wheth Compliance, etc. er in fact the taxpayer is asking the To avoid having expense items con government to bear part of the tax sidered chargeable to an employee payer's personal entertaining costs. and the consequent requirement for Many abuses by taxpayers have him to report them on his individual created the present Internal Revenue return, it may be advisable to have Service attitude. The problem of many items paid directly by the com keeping adequate records to support pany. Air travel credit cards and claimed deductions will be simpler automobile rental charge. accounts and less irritating if approached with are frequently used and can provide the viewpoint that: (1) the expendi for payment directly by the company. ture will be questioned, and (2) an Likewise railroad tickets can often appropriate record made at the time be paid for directly by the company. of the expenditure will be a valuable Diners Club charge accounts are com investment. Income tax money saved ing into widespread use and can be is in 100% dollars- you pay no fur used to provide for direct company ther taxes on .such savings. payment of hotel, restaurant, night Although it was stated above that club, auto !'ental and many other Revenue Agents cannot tell taxpay items. Telephone charge cards are ers how much is allowable fm: enter not in such general use but, in addi taining expenses, etc., it is obvious tion to serving an excellent purpose that to obtain a complete deduction regarding expenses, are wonderfully for items that appear on the surface convenient. Providing for eliminat to represent extravagant expendi ing many items from the category of tures, the taxpayer must be fortified reimbursed expenses may reduce the with relatively detailed records to total amount reportable by the indi prove that the expenditures were in vidual and thu.s direct less attention fact made and for a real business to his return. Two words of warning purpose. are pertinent, however. First, the What to do about keeping records Internal Revenue Service may at of reimbursed expenses is a problem tempt to require that the individual for both employer and employee. As report any items incurred by him on the rulings stand norw, the employee behalf of the company, even if he must be in a position, beginning with makes no disbursement for them. 1958, to support a deduction to be Second, records must be kept to in claimed, on his individual return, for dicate the purpose of the expendi reimbursed expenses. Consequently, tures. Again, presumably a carefully it appears advisable for the employee kept diary is the minimum accept to prepare a detailed expense report able record. in duplicate and to retain one copy. To avoid having the individual keep In certain instances it may be advis- records of automobile expenses per- -4- sonally, many companies purchase or Information Returns rent cars for individuals using them to file Of The employer is required extensively on company business. on Form 1099 rise to the information returns course, this may give payments to employees whether the individ· for expense question as to for which detailed expense state· cars to some extent for uals use the ments are not submitted to the em personal purposes. ployer. (3) Other uggestions on Past The Internal Revenue Service is Effect of New Records contending more than ever before Expenses that for travel and entertaining ex· It should be kept in mind that any penses to be deductible by an individ detailed records established under ual, if the company doesn't reimburse compulsion of the new directives will the expenses, there must be some probably be scrutinized by Internal directive by the company indicating Revenue Agents, in examining years that the individual is expected to before 1958, in comparison with items bear such expenses personally, on having less adequate support in the behalf of the company, out of his past. Normally, in a closely held salary. Aooount Titles corporation this provision would be in the corporate minutes regarding Perhaps in some cases a finer executives' expenses. If minutes are breakdown of accounts may be ad being written for the first time, the visable, if it is determined that the resolutions probably should confirm "Travellng and Entertaining" account a prior understanding as well as pro· has become too much of a catch-all. . viding for the future More to Come Indications are that the Internal obvious that much more will Revenue Service will attempt to ex· It is that dis be said about this subject in coming tend the idea of alleging Serv respect to months. The Internal Revenue allowed expenses with several should be not ice may change its directives stockholder employees . An attempt to the corporation times before 1958 is over only disallowed be made to simplify to the individual as divi should certainly but taxed of the problems for dends. This practice might make it administration the Internal Revenue Service advisable in some instances for the both execu and taxpayers. We look for some corporation to set stockholder from enough to in· arrangement to help exclude tive compensation high number of expenses with reporting the tremendous elude the contemplated certainly resolutions. Then if an individuals whose expenses appropriate the Internal Rev expenses are disallowed are not those that individual's ce wants to scrutinize. in part, the additional tax should be enue Servi paid only by the individual since the We will advise you of any signi corporation claimed no separate de fi cant new developments. for the expenses. duction Individual Cases If an individual uses the optional memorandum has standard deduction it would be advis Although this for all of his ex been prepared to assist clients in able, if practicable, prob reimbursed by the com their approach to a troublesome penses to be problems Allowable expenses in excess lem, there may be many pany. attention. We of the amount reimbursed must be requiring individual to be of any further claimed under "Other Deductions" on shall be pleased page 2 of Form 1040. assistance possible.
- 5- THE TITLE INSURANCE CORPORATION OF PENNSYLVANIA REIMBURSED EXPENSE S
P ERIOD FROM: . TO:
N arne of Vendor Account Name Location Code Account No. Total Cleaning and Maintenance 5431 Advertising 5801 Travel 5901 Auto Mileage 5911 Auto Rental 59 - 12 I Auto Expense I 5913 0) Entertainment I 6001 Printing, Stationery & Supplies 6101 Books & Periodicals 6102 P ostage 6111 Telephone 6112 Boards & Associations- Trade 6311 Boards & Associations- Non-T rade 6312 -- - -
PAY TO: ... APPROVED BY: ...... SAMPLE REIMBURSEMENT VOUCHER Through the courtesy of the American-First Title and Trust Company of Oklahoma City, Mr. William Gill, Sr., President, we are privileged to carry in Title News form used by the company. This form has been approved by the Oklahoma City Office of the Internal Revenue Department.-Ed. AMERICAN-FIRST TITLE AND TRUST COMPANY Reimbursed Expense Voucher NAME ...... For Period. From ...... to ...... ·- ········--- LOCAL TRANSPORTATION Taxis...... Buses...... Subway ...... Trolleys ...... Others ...... (Specify and give totals)
OVERNIGHT TRAVEL To . (List places and dates) Travelled by- Company Car ...... Own Car .... Others ...... (Check One) (List Name) Total mileage. . ... Cost ...... (Totals) Own Car-Gas ..... Lubrication ...... Oil ... Wash...... Garage ...... Others . (Specify) Hotels - ...... Amount ...... Amount ...... Amount ...... Amount ...... Room Rent ...... Amount .. Tips ...... Meals ...... Totals Totals Totals Other related expense ... ENTERTAINMENT Customers or Prospects Names, Firms & Dates Lunches...... Dinners ...... (Totals) Others...... - List items Other Information: ...... Dated.... Signed...... (Your Signature) Note: Request for reimbursement of expense will not be made unless accom panied with this form. All Expense items must be submitted at least once each month. Note: Under para. 5, form 1040, U.S. Individual Income Tax Return (Begin ning Jan. 1, 1958) all reimbursable expenses paid by your company must be shown in total as (Reimbursable Expense) under line 5. page one, as Income. Under para. 6, show this same amount as deductible expenses, i.e., (Show the cumulative totals of all expense items on one copy of A.F.T. & T. Co. form and attach to form 1040 as proof.) "EXAMPLE" Para. 5 Enter all wages, salaries, bonuses and reimbursement of expenses received in 1958 before payroll deductions. Wages, etc. American-First Title & Trust Company, Oklahoma City. Olka. $ ...... American-First Title & Trust Co. (Reimbursed Expense) $ ... .. Enter Totals Here $ ············································ Para. 6 Less: (a) Travel, reimbursed expenses, etc. $ ...... ADJUSTED INCOME ...... $ $ - 7 - NEW BUSINESS FOR ABSTRACTERS ALBERT F. BLOCK Secretary, Davenport Abstract Company, Davenport, Iowa
My purpose here is to offer a sug This kind of a deed I must abstract gestion. We know that the abstract myself. When I go to the court house business is one of constant develop to do so I find that it is a beautiful ment and improvement with a spate deed, very skillfully drawn. It de of growing pains. Just as our doctors scribes the land correctly, recites that know that the most intense physical Richard Roe was the Trustee in pains are the pressure pains- those Bankruptcy for John Doe, the jurad of childbirth, sinusitis and kidney on the acknowledgment reads "United stones - so our worst pains come States of America, Western District from the pressure of our desire to of Arkansas, Pulaski County", and improve our service against the tradi the Notary certifies that he is a tions of our past and of our abstract Notary in and for Pulaski County, examiners. Arkansas, with his seal impressed. We also know that not all of the The deed bears a certificate of Lee matters affecting the title to the land Cazort, Referee in Bankn:ptcy, that in our several counties are of record the deed and sale had been approved in the county where the land lies. by him and that the sale had been Some of the matters are of record made upon due notice to creditors. in other counties, or even in other The deed also bears the certificate of states. When we find this situation, the Clerk of the District Court of the our tradition is to put these things United States for the Western Dis of record in our own county, either trict of Arkansas, with the seal of by transcripts, certificates of one the court impressed, to the effect kind or another or by affidavits. I am that Lee Cazort was the Referee in suggesting a different solution, there Bankruptcy of said court. The deed by causing growing pains for which conveys the property free of all liens, • I shall have to take the blame, as I which means that it is a proper fore well know. closure of the mortgage held by the In order to present the problem I First National Bank. ask you to suppose a case. Suppose So I decide that this is enough and that my client, Mr. W. T. Door, comes put the deed in the abstract and de to me and says that he owns a nice liver it to the examiner. But he is a 40-acre patch in Scott County, Iowa, fiyspecker and wants to see the which he bought, because he got it bankruptcy proceedings. He is ada cheap that way, without benefit of mant and insists despite all the law any title investigation, so he has to I can show him. Now what do I do? buy an abstract. After pointing a Under the present practice I have very pointed finger at his stupidity no choice. I get a transcript from the in buying land that way, I get down clerk of the bankruptcy court, which to business, he tells me where the he is glad to furnish me just as soon land is and I order the abstract from as he has nothing else to do, and I my Davanperot Abstract Company. pay him for it. Then I pay the clerk The tract index shows that, from of my court for entering it in his the date fifty years ago•, where we records and then I can put it on the begin, the title runs very smoothly abstract and my examiner is satis until it shows a deed to John Doe fied. But my client, who has to pay about five years ago. The next instru for all of this, roars. ment is a mortgage to the First Na My suggestion is that I should tional Bank. The next instrument is have a choice. In fact, I should have a deed from Richard Roe, Trustee in the choice between two other alterna Bankruptcy for John Doe, conveying tives. Why can I not send the ab the premises to my client, W. T. Door. stract to Don Cameron to have his -8- Beach Abstract & Guarantee Com Expense in the matter ran nearly a pany, at Little Rock, put a supple tenth of the sale price of the land. ment on it which would contain noth I hope you will join me in my effort ing but his abstract of these bank to have the practice changed. Those ruptcy proceedings so far as they of you who are sincere in claiming affect my client's land? If I should that the purpose of our association do anything like that today, two is for the benefit of our customers, things would result. First, my client will be with me from the beginning. would have no unwarranted expense Unless I am drowned by a Niagara to roar about, and second, the ex of cold water from you and from the aminer would do the roaring. bar, I shall press this until it is ac Or, perhaps, I would not have to complished. send the abstract to Don. Perhaps I It will take a long time. Our most could give him the number of the frequent case will be where a man bankruptcy case and the description dies, resid~nt in one county or state, of the land and ask him to send me owning land in some other county or an abstract of the pertinent parts state. If he leaves a will the statutes and then I could adapt his abstract that require that his will be tran to my forms and include it in my scripted to the county where the land abstract and certify myself that those lies will have to be amended to be matters appeared of record in the come permissive instead of manda office of the Clerk of the District tory. Court of the United States for the But all these things we can get if WeSJtern District of Arkansas. Why we go after them, so let's endure the not? The answer to that lies in the growing pains and grow up in spite roars of the examiner. "It has never of them. Let's have methods and been done that way." practices that have caught up with Why not? Why don't we do it that today. way? Or one of those ways? There Sunday I talked to Garry Wood is only one reason why we do not do ward, at Muscatine, the lawyer in it that way-we have not yet endured charge of the Kohrs case out of the prerequisite growing pains. which this idea originated. He told Or the matter can also arise local me that he had paid me $45.00 for ly. Part of the title record to a patch telling my clerk what instruments to of land in my county could be in put in the transcript, had paid our Henry County. Why not send it to clerk $95.00 for the transcript but Harold McLeran and have him ab had not had the transcript recorded stract the record, instead of getting in Louisa County, where the land is, me a transcript to be recorded in my but instead had turned the transcript county? He would guarantee his itself over to the examiner- Charlie work to me and I would guarantee Rosenberger, who is also one of our it to my examiner. He ought to be good members. There is a discrepan content but listen to him roar! cy between the description of land, This suggestion is offered to you as contained in the mortgage and the in the hope that you will make it the foreclosure proceedings and the way general practice. I wish that some of it appears in the trustee's reports so you would tell me that it is already Charlie wants an affidavit to the being done that way in your county. effect that the intention was to de The matter came to my attention scribe the same land. t hrough a mess that a title in Louisa But Woodward makes another County, Iowa, had become involved point. He says that the resulting in because of the foreclosure of a expense is so much that he cannot mortgage by a testamentary trustee charge his client a proper fee for his appointed by the court in my county. work.
-9- A TREE GROWS IN THE TITLE COMPANY HOWARD ]. BURNHAM President, Clark County Title Compmly, V ancottver, Washingtotl
Address delivered by HOWARD J. plain and mountain and river and sea BURNHAM to the Northwest Con coast into a submissive role, and in ference of the American Savings and the extinction of t h e i r property Loan Institute. rights. With due apologies to Brooklyn * * * * my subject tonight is: "A Tre~ Other, slightly stronger, feeder Grows in The Title Company Office." roots represent the claims of various The logical laboratory for the nations to the rolling acres of the study of Plant Life is, believe it or Northwest. England, of course, was not, in the Title Company's Plant. If among the c I a i m a n t s, working rou'll visit it some time, you'll find through the instrumentalities of the 1t a veritable arboretum. You may fur trade: the Hudson's Bay Com hold- and with some small degree of pany and the Northwest Company. justification- that my remarks this Spain was there, claiming the en evening are only the fertilizer that is tire watershed of the Mississippi by such an essential requirement for virtue of the exploits of Hernando De plant health. Nevertheless, if you Soto and his hardy contemporaries have never yet delved in a Title and succesors; claiming the Ameri Plant, you have a treat in store for can Southwest by virtue of the ex you. ploration and settlement following There you will find the Family the travels of Coronado and subse Tree of each parcel of land within quent conquistadores; claiming the your county. Let's take a typical tree Pacific littoral because of Balboa's and examine its form and growth discovery of the great South Sea. pattern. This was followed by numerous ex ploratory expeditions The roots reach down along the North into the origi Pacific shore, though partially offset ~al claims of sovereignty. The myr by Iad rootlets, the capillaries Britain's claims through the voy of the ages of Drake, Cook whole circulatory system are the and Vancouver. rights of the original oc~upants of France based a claim upon the ac our land. They are comparatively complishments of Marquette and weak because the Indian considered Joliet and, on the western shore, the the earth as the mother who provides journeying of LaPerouse, while Rus food for her children. Land was not sia, pushing southward from the regarded as property but like the Alaskan archipelagoes, was also a air, as something essential 'to the life claimant. of the race, and therefore not to be The y o u n g republic capitalized appropriated by any individual or upon Robert Gray's discovery of the group of individuals to the permanent Great River of the West- although exclusion of all others. Occupancy, Don Bruno de Heceta had sighted it therefore, was the only land tenure in 1775- and upon the epochal ex recognized by the Indians. pedition of Meriwether Lewis and It mattered not, however, what William Clark. But, more important form _of land tenure was accepted by than vested rights, was the unquench the nghtful occupants of this vast able u r g e of a westering nation, land of ours. The coming of the white dreaming and thinking in terms of man brought to the Indian "the bless the whole continent. ings of Christianity"- which is an These roots are twisted by inter· other way of saying that it resulted national negotiations, bombast and in forcing the original proprietors of double-dealing and by almost inter- - 10- minable diplomatic intrigue. Napo· his last will and testament, to regu· leon's French Empire forced Spain late the lives of his survivors for a into a secret retrocession of Louisi· generation following his demise. ana. Monroe and Livingston, without Here's a little example which was constitutional authority, bought for recorded in Deschutes County, Ore the United States a territory which gon, in 1942. Mr. Gless and his wife more than doubled the nation's area. conveyed certain property to The * * * * Bend Company of Jehovah's Wit Finally, these large, gnarled roots nesses as trustee. The conveyance join in the issuance of a Patent and, states that "the property conveyed is at long last, the land has ownership. to be held in trust by the said Bend Let Europe flaunt its dukedoms, its Company of Jehovah's Witnesses for earldoms, its baronetcies-our nation Abraham, Isaac and Jacob, the pro has satisfactorily sufficed with its phets named in Hebrews, Chapter II, only titles being those to the land. of the Holy Bible, until such times The Homestead Act, the Donation as the said prophets shall return unto Land Act, Military Bounty Land War this earth." rants all promised "free land"-yet In the exercise of the power of as we look back on the trials and eminent domain, who should be listed travail of the pioneer, the heartbreak as parties defendant, and what is the ing, backbreaking battle with the last known mailing address? primeval wilderness, we can conclude * * * * that the land was fully paid for. And now the limbs spread out from For no relevant reason whatever the parent trunk. This is where your there comes to mind the experience savings and loan associations come of the grade school history teacher into the picture, for these are partial who kept little Johnny after school rights attaching to the land. Leases, and said: navigation rights, miner a 1 rights, "Johnny, you ask me why I flunked mechanics liens, and-don't smile so you in history. Let's look at your smugly-mortgages sprout out from last test paper and take, for instance, the c e n t r a 1 trunk. Many of the the question: 'Why did the pioneers branches have been pruned by re go into the wilderness?' Now, Johnny, corded satisfactions. But once in a I'm perfectly willing to admit that while, we see the trunk withered and your answer is very, very interest· dead, while a principal branch turns ing from the standpoint of sanita· upward toward the sky and becomes tion, but I still had to m ark it the main stem. That was a mortgage 'wrong'." foreclosure. * * * * Sometimes the wood shows knots The sturdy trunk stretches upward and twisted grain, mute evidence of toward the sky. In cross-section its unprobated estates, divorce, tax fore growth is shown by annular rings, closure or bankruptcy. Some of the each of which marks a further push w i e r d e s t combinations of circum ing back of the wilderness. They stances can shape a tree more radi memorialize the felling of the virgin cally than all the forces of wind and forest, the erection of the homes and weather combined. barns and fences, the tilling of the * * * * fields, the development of flower beds Let me momentarily digress with a and shaded yards. little something to demonstrate the Mayhap we descry the scar of a infinite variety of our title problems. wound occasioned when wire was Only the names have been changed twisted tightly about the youthful to exclude the possibility of libel or trunk. Time and Nature have all but slander. obliterated visual evidence of what The current classic for discussion still lies beneath the bark. That was falls into the Cherchez Ia femme file probably an unduly restrictive cove· and is in two parts. Part One, or the nant in an early conveyance, or some Prelude, was an order in connection eccentric's attempt, by the terms of with a sale by Julia DeCamp, former· -11- ly Julia Schink. Examination dis other property by Julia DeCamp. Ex closed that Julia Schink acquired amination disclosed that the record title in November, 1938, and that her owner was Doris Steelman, marital then husband, G. M. Schink, quit status unkown. claimed to her at that time. On July Mrs. DeCamp claimed that Doris 30, 1943, a deed from Julia Schink to Steelman was another alias; that her Florence Johanson, unmarried, was attorney told her she could acquire filed for record. property in the name of John Doe Thereupon, Mrs. DeCamp told us if she so desired; and that she's bring that Florence Johanson was an alias ing her predecessor in title (whom we of hers, and that she had executed a knew well and favorably) to prove deed from herself to herself so that that she was the actual purchaser. some future husband wouldn't claim The transaction was consummated an interest therein. On closer inspec on March 24, 1941, subsequent to Mr. tion was discovered that the deed was Schink's ascent to glory- and prior recorded at the request of Julia De to Mr. DeCamp becoming entangled Camp, so told her that if she could in a connubial knot. We didn't know, prove that she was, in fact, Florence however, whether some other spouse Johanson, then the conveyance only was serving out an interim appoint accomplished the transformation of ment. We could not but wonder when the property f r o m her individual the ubiquitous Julia would order title estate to commwlity property. Inci evidence re the sale of Hyde Park, dentally, we found that she had taken claiming that she acquired it under on Ray DeCamp as a life partner the alias of Eleanor Roosevelt. We in April, 1943. also wondered how far we should Finally, she dug up one Claus Free venture in this instance- what we berg, whom we had known for years must demand- or whether we'd bet and whose reputation was above re ter just call all bets off. proach. He deposed that he had lived We also learned that Mrs. DeCamp in Devils Lake, North Dakota, from was currently operating an auto 1885 to 1919; that during that time court on the Oregon coast, which she he knew Julia Florence Schimstad had just acquired in the name of who resided with her stepfather, the Julia Schink. So we asked ourselves, Rev. Carl Johanson; that she was "Why didn't Adam keep that extra commonly known as Florence Johan rib?" son; and that she was our friend, Julia DeCamp. After the gathering Then Thomas Charles, from whom of further evidence, and getting Ray "Doris Steelman" acquired the sub DeCamp to join in the conveyance, ject property, dropped in and told us we insured the title. that Julia Schink was buying under contract; that she "assigned it back So much for the Prelude. In pass to him"; that she asked him to deed ing, it might interest you to know it to her daughter, Doris Steelman; that Julia DeCamp thinks it's seven and that she was curious as to how times she's been married- she wasn't long he retained such evidence as the quite sure. Three of them, I under assigned contract. We figured that stand, have graciously shuffled off this ended the story which, as we their respective mortal coils s o on fitted the pieces, disclosed that Julia after taking out life insurance policies entered into the contract while she naming Julia as beneficiary. The was espoused to Mr. Schink, who greater portion of her accumulated shortly thereafter fell b e f o r e the assets stemmed, however, from her Grim Reaper. Final payment and industrious plying of the bootlegger's transfer took place, luckily, prior to trade throughout the dark days of the entry of Mr. DeCamp into the prohibition. realm of connubial bliss. Be that as Which brings us to the second it may, the deed purported to pass phase of our personality sketch. This title to Doris Steelman, of undeter involves the contemplated sale of mined marital status. -12- At this juncture the real estate has a daughter Doris, but denied it broker wrote to Mrs. DeCamp in this to the first broker because she want wise: ed to get out of that sale; (2) Doris that Doris was at Newport, Oregon, and she "Mr. Charles states and daughter. Why would get her to sign a deed Steelman is your couldn't the statement in send it up; and (3) No, Doris did you make she was co. office that you come up personally because the abstract reason we re Doris Steelman? ill. For some strange were anything without in in a fused to accept "Now things are really controvertible proof for every phase. If you had told me to begin mess. who had been in with that this was the case and Another broker ln a deed properly the local real estate and insurance had brought century, and his notarized from Doris Steelman business for half a the deal all wife, both evinced their willingness we could have had a it is doubtful if to depose and say that Julia had closed up. Now blonde, albstract company will want daughter Doris, a tubercular the had forgotten the insurance at all, be· whose surname they to issue husband to hus cause you didn't tell the truth. as Julia flitted from band. "It is up to you to get this out, and in a hurry There matters stood momentarily straightened a power of attorney too. Where is Doris Steelman? until we received from her in from Doris Steelmant (not Steelman) Can you get a deed in on this and to Julia DeCamp, freshly executed a hurry? Get busy to right away what San Francisco where, according let me know version, she you are doing." Julia's current revised had lived all along. We wrote to the Julia promptly replied with this attorney who had prepared the in classic billet-doux: strument and he verified the signa "Sorry but I have know daugh ture of Doris Steelman as authentic. ter Doris Steelman I just told So we immediately sat down to that to Mr. Charles but you can go through a catechism containing call the sail of as I don't oww the following interrogatories: anyeything on it and you sold it (1) there any interest, actual or less than I asked for it and Is for vested in the heirs of I did not say that the furniture presumptive, Schink? whent with the place so give Mr. G. M. J. M. Cuppy beck his hundred (2) How can we bridge the hiatus dollers and let me know how between the various spellings of much I owe you for your troubell Doris' surname, and what proof must as to her marital status? "Thanks for everything yours we require truly J. DeCamp (3) Has the genuineness of the been sufficiently "P.S. and pleace send me back power of attorney all my papers or ceep them till established? I come down." (4) Hadn't we better gather up our marbles and go home? . this time we were ready to ac By to cept a cancellation charge and step (5) Isn't there some easier way busi out of the picture. Our title problem make a living than in the title was, however, destined, like Hope to ness? rise Phoenix-like from its own ashes. Well, we collected a cancellation The redoubtable Julia straightway charge which almost defrayed the listed the property w i t h another cost of stationery. And what, you broker who procured a buyer and ask, did Julia do? She willingly paid placed an order with us. Whereupon the charge because she'd learned we regaled him with a brief synopsis what a title company demanded. She of preceding installments, with the accordingly re-revised her story for result that he induced Julia to pay the benefit of our competitor- the us a personal visit. sale was completed and title insur Her story this time was: (1) She ance was issued. -13- So endeth the Saga of Julia. to shut out the fears and cares of * * * * all the world. So, too, the change Now and then we can discern the from tent cities to massive marts of marks of a graft-proof that fraud, commerce and trade, and industrial though infrequent, is an ever-present plants furnishing both payrolls and hazard in the acquisition of a title to the ingredients for a fuller, richer land. life. Maybee, deep within the tree, are This is the consummation of that woodworms boring out their homes continuing effort down through the -a reminder of squatters and the years to achieve proprietorship, for whole field of adverse possession. ownership of land is essential in pro· And if you ever hear the triphammer viding incentive for development of of a woodpecker in the t o p m o s t land. reaches of the tree, start worrying * * * * about encroachments. Land's permanence, its indestructi • * * * bility has made it the most accept With the complexities of modern able security for lending. So, too, its existence, wherein we have to pay permanence and immovability make more and more to get government to possible its concurrent use by many do more and more-sometimes for people for many purposes. It be us, sometimes to us-we encounter comes the object of many rights, the the police power of the state, the intensity of which increases in direct widening of the functions of govern· proportion to the land's value. ment. The public interests in land That is a typical tree growing in a have been augumented from the right typical title plant. Before we leave it, to tax and condemn to the right to let us sample the fruit which it pro regulate the uses to which the land vides. This fruit is available only be· may be put in order to secure the cause of the daily, unremitting care greatest advantage to society. Zon given to each tree in the title com ing laws, building restrictions and pany's forest- to the end that you fire prevention rules, for example, and I may be furnished the evidence often create an espalier effect upon of title which protects our invest· our title tree. ments, our occupancy, our privacy In all of the Northwest, develop· and our security: The protection mentally it's springtime, and the tree which makes pride of ownership a of title puts forth rich green leaves, motivating force in our economy, and signifying the transformation of raw changes a house into a home because land into improved acreage. And with therein the occupant becomes the sov it the translation into wood and ma ereign lord of his little share of sonry of someone's dream of a home, earth.
-14- FEDERAL TAX LIENS AND THE FORECLOSURE OF MORTGAGES WILLIAM H. TRUEMAN Attorney at Law, Birmingham, Alabama (A reprinc from "Lawyers Tide News", The 1\fetropolitan Case Publication of Lawyers Tide Insurance Corporacion, Richmond, Va.) The Bureau refused to recognize the doctrine of this decision and, in THE LAW later cases, persuaded several federal For a p eriod of almost twenty courts to hold to the contrary. Prob among these years mor tgage foreclosures have ably the leading case infrequent that decisions is M etropolitan Life Ins. been so relatively be hereafter most lawyers have had little or no Co. v. U.s.,s which will practice in that field. At this time, referred to as "The Metropolitan however, the volume of foreclosures case." In that case the majority, over is increasing, and indications are that a vigorous and persuasive dissent by this trend will continue. Arant, C. J., held that a federal tax lien was not subject to extinguish During this period when the vol ment by state law, but could be re ume of foreclosures was small, there leased or removed only in the man have been significant developments ner provided by federal law, that is, with respect to the procedures for either by suit by the United States or handling subordinate federal ta:x by a lien or property holder, in the liens which should be carefully con manner provided by federal statutes,4 sidered by foreclosing mortgagees. It or by release by the Commissioner. is the purpose of this article to cover Certiorari was denied by the U.S. in a general way the legal back Supreme Court.5 The doctrine of the ground of these developments and to Metropolitan case has been followed consider what act i o ns foreclosing in U . S. v. Cox,a Miners Sav. Bank v. mortgagees should take in connection U.S.,7 and B ensiger v. Davidson.s The with such federal tax liens.1 case of Miners Sav . Bank v. U. S., Most lawyers, in the past, when supra, is one of the most carefully foreclosing u n d e r powers of sale written and considered of the cases where state law permitted, assumed in this group. However, the court's that there was no need to search for basic rationale was as simple and federal tax liens or any liens sub unadorned as that of the majority ordinate in point of time to the mort in the Metropolitan case. The court's gage, except ad valorem taxes and decision, based principally on United , and similar mat States v. Kensington Shipyard &; public assessments 9 ters, on the theory that the fore Drydock Corp., stated starkly that closure of the mortgagor's equity of the federal tax lien is immune to redemption Cor whatever property state action, and, once established it interest remained in the mortgagor may only be removed as federal laws under appropriate state law) cut off permit. all subsequent conveyances thereof Necessarily, these decisions held and all subsequent liens attaching further that at any time after fore thereto, including federal tax liens. closure of the mortgage under power This theory is illustrated by the de of sale, and within the statute of lim cision in Trust Company of T exas v. itations, the Government was en U.S.,2 in which the court held that, titled, as a matter of law, to a sub under both Federal and Texas laws, sequent foreclosure of its subordi foreclosure of a mortgage under na te tax lien. The same reasoning power of sale extinguished all liens applied to a foreclosure in state or subordinate of record to the mort federal courts to which the United gage, including federal tax liens. States had not been made a party on -15 - account of its tax lien. Most lawyers a mortgagor can validly grant the will not quarrel with the latter con power of sale, and, thereafter the clusion for obvious reasons. The for mortgagor owns nothing to which mer seems to be a definite judicial the subsequent federal lien can at invasion of property rights in states tach except the equity of redemption, whose laws recognize the grant of a foreclosure under the power, cut the power of sale and the right of ting off the equity of redemption foreclosure thereunder. There is little which was all that the federal lien or no analysis or reasoning contained attached to, extinguished the Govern in this line of decisions justifying ment's lien, not by the state action this sweeping result, and their doc· against the federal lien itself, as con trine has been adversely criticized in cluded by the court in the Metropoli articles in 53 Harvard Law Review tan case, but by state action which 888, 49 Yale Law Journal 1106, and legally forecloses upon and takes 38 Mass. Law Q. 55. In 1954 the fed· away the property or property right to which the federal lien attached. eral district court of Minnesota in U. S. v. Ryan, 124 F. Supp. 1, ap· Bare Claim proved, by way of dictum, the doc· While no legal question on which trine of Trust Company of Texas v. respected courts disagree is free U. S., supra. from difficulty, the position of the U.S. vs. Boyd Fifth Circuit seems sounder than that of the Sixth. Certainly, the The recent case of United States v. Fifth's opinion is more practical, for, Boyd, decided by the Fifth Circuit on as its opinion in the Boyd case June 28, 1957 (U. S. Tax Cases Par. points out, to recognize the Govern 9791) is squarely in point and dia ment's bare claim, made in that case metrically opposed to the holding in (and in most of the cases cited the Metropolitan case. In the Boyd above) that the Government is ab case the court had before it a bill, solutely entitled, at any time short filed by the United States under Sec of the statute of limitations, on a tion 7403 I.R.C., to foreclose subordi suit filed under Section 7403, to a nate federal tax liens. The bill was subsequent resale of property al filed while a foreclosure of the first ready disposed of under power of mortgage (deed of trust) on tax sale would lead to uncertainty of payer's real estate was in progress, titles, hardship, and confusion. and came to trial after that fore The Government has filed a peti· closure had been completed. While tion for a writ of certiorari in the the Government was apprised of the Boyd case. Since the existence of a foreclosure proceedings under the conflict between the two Circuits on power of sale, it took no part there the same matter seems clear, it may in, nor did it seek to stay them. On reasonably be anticipated that the the trial of its suit the Government Supreme Court will grant the writ. sought to have its tax lien foreclosed, If the question were controlled by and to have the property resold. It state law, such conflict would not of contended, among other things, that, itself be a reason for granting the the United States having filed suit writ. However, while there are some for foreclosure under 7403, the fed· differences in theory am on g the eral tax liens be disposed of in no states as to the nature and charac other manner. teristics of the mortgagor's "equity The court carefully reviewed all of of redemption," mainly between the the authorities, and, disagreeing em so-called "title theory" an d "lien phatically with the opinion of the theory" states, this apparently did majority of the Sixth Circuit in the not enter into the basis of the deci Metropolitan case, held that the fore sion in either case. The Metropolitan closure under the power of sale cut case came up from Michigan, and the off and destroyed the subordinate tax Boyd case came up from Mississippi. liens. The court reasoned that since Michigan is a lien state and the cases -16- indicate Mississippi is also. As noted Government's tax liens will be dis above, the decision in the Boyd case covered in due course. was grounded, not on the nature of An interesting situation has devel the mortgagor's equity of redemp oped as a result of the Bureau vic tion, but upon the fact that after his tories in the Metropolitan case and grant of the power of sale, whatever the later cases in the district courts .estate remained in him was subject which supported the Government's to divestiture by foreclosure of the view. In recent years many mort power. It is true that in Miners Sav. gagees who were preparing to fore Bank v. U. S., supra, which followed close under power of sale, discovered the doctrine of the Metropolitan case, the existence of subsequent federal the court apparently thought (see tax liens, and thereupon elected to footnote 18, p. 570 of 110 F. Supp.) foreclose by action and joined the that the contrary holding in Tru,st United States as a defendant. Many Company of Texas v. U. S., supra, other mortgagees, preparing to fore was based on the fact that Texas close by action in the normal course, was a title state. But, it seems that and who discovered subsequent fed the court was under a misapprehen eral tax liens of record, joined the sion, for Texas is, and was at the United States as a defendant as a time, a lien state. We doubt, there matter of course. fore, that it would be held that the The filing of such suits brought a conflict arises because of state law, sharp reaction from the Bureau and and it is to be hoped that the Su the Tax Division of the Department preme Court will grant the writ and of Justice, who, finding themselves settle the conflict so far as is possi faced with a flood of such future ble under the facts and issues in the litigation, announced that considera Boyd case. tion was being given to the adoption Unless and until the conflict is de· of a policy of rejecting all applica dded decisively by the U. S. Supreme tions either for "no value" discharges Court, 'it is apparent that, whatever or for release of the Government's the individual's opinion of the rela· rme year right to redeem against any tive merits of the viewpoints of the mortgagee who joined the United two Circuits may be, it is desirable States as a defendant in such pro that a mortgagee intending to fore· ceedings. (Technical Information Re close under power of sale will: (1) lease 7-10-56; TIR-10). make examination for ,:nbsequent At the same time the Government, federal tax liens, and, \2) if any are as an alternative, instituted a proce discovered, g i v e consi.derat!on to dure to alleviate the situation as whether it is desirable either ·.:o fol much as possible with the Govern· low the comparatively new release ment's view of its rights in connec procedures which have been estab tion with such liens. The same Tech lished by the Bureau, hereafter dis nical Information Release advised cussed, or to foreclose by action that, in all cases where the mort preferably under the provisions of 28 gagee discovers a subordinate fed u.s.c 2410. eral tax lien, he may apply to the In Practice District Director for the release of the lien; if the mortgagee's applica Where foreclosure is by Court ac tion shows no value, and the District tion, either as required by applicable Director, after investigation, concurs, state law, or for reasons inherent in then, within thirty days after the a particular case, it is standard pro receipt of such application, the Di cedure, in most of the states, at least, rector will issue a "Conditional Com to search the subsequent title in or mitment to Discharge Certain Prop der that all parties having or claim erty from Federal Tax Lien." As a ing an interest in, or a lien upon, the matter of practice in our District land may be joined as parties to the (Birmingham, Alabama) the release foreclosure bill. In such cases the procedures have been facilitated, and - 17- releases may be obtained in cases Section 2410 waives the Govern where no difficulties arise sooner ment's immunity to suits to quiet than the thirty day period. title or for foreclosure of a mort There was some doubt on the part gage or other lien upon real or per· of tax practioners, even under the sonal property on which the United 1954 Code, of the authority of the States has or claims a mortgage or Revenue Service to give a valid re other lien. The statute prescribes lease from a tax lien unless some certain conditions and procedures, the payment was made. In order to re· one of the chief interest here prob· move this doubt the Tax Division of ably being the provision that when the Department of Justice recom· real estate is sold thereunder to sat mended to Congress, and promptly isfy a lien prior to that of the United obtained, an amendment to the 1954 States, the United States shall have Code to make this authority clear, one year from the date of the sale to which is now embodied in the Code redeem. It should be noted that it as Section 6325 (b) (2). has been held that this statute does The outline of the release proce not confer jurisdiction on the United dures is set out in Technical Infor States District Courts (or any other mation Release; TIR-10; 7-10-56. A courts), it merely waives the immu· more complete discussion is contain· nity of the United States from suit ed in CCH Fed. Tax Rep. '57, Vol. 4, on the prescribed subject matter in Pars. 5364-6; CCH Fed. & Gift Tax cases validly filed in courts, having Rep. Vol. 1, Par 4353 et seq; PH jurisdiction of the subject matter Perm. Vol. 2-A, Pars. 19,902 and 19,· and the parties. It follows that the 902-E. statute does not require such suit to be filed in the federal courts, as has Advice for Mortgagee sometimes been indicated, as dicta, In the event that a release is de· in some cases. sired in a case in which the mort· It is apparent, therefore, that in gagee admits there is excess value those states whose laws do not pro· over the mortgage debt, the applica· vide any right of redemption after tion will so show, and, if the matter foreclosure, consideration should be is to be settled without litigation, given by the mortgagee who intends agreement must be reached as to the to foreclose by the court action to amount of the excess value with the filing a "no value" application for District Director, who will release release of the federal tax lien, and to upon payment of the agreed amount. withhold suit until the application is Where a g r e e m e n !: cannot be acted upon. reached in such a case, or in a case Even if the mortgagee recognizes where a "no value" application has excess value, if there is hope of a been filed and the question of no reasonably quick and satisfactory value disputed by the District Di· settlement with the District Director, rector, and agreement cannot be there will doubtless be many situa reached on the amount, there seems tions, particularly in states which do to be no alternative to litigation. not provide for a right of redemption, If the mortgage being in disagree in which it would be more desirable ment with the D i s t r i c t Director, to file application for release prior to elects to sue, or if, for his own rea· suit than to sue under Section 2410 sons, he elects to sue without first of Title 28 and be saddled with the resorting to the release procedure, he right of redemption. will probably elect to file suit under The mortgagee preparing to fore Section 2410 of Title 28, U.S.C., men· close under the power of sale, with tioned above. He may, of course, outstanding subordinate federal tax proceed under the provisions of Sec liens, may, since the decision in the tion 7424 of the Internal Revenue Boyd case, and particularly if the Code, but, as noted hereafter, the pro· land is located in the Fifth Circuit, visions are burdensome. be tempted to rely on that decision, -18- and to foreclose under the power in An intresting question of proce disregard of the federal liens. The dure, if suit is brought against the temptation to do so will be stronger United States under Section 2410 of if the value of the mortgaged prop Title 28, seems now to be definitely erty is less than, or no more than, settled. Section 7424 of the 1954 In the mortgage debt. No case has been ternal Revenue Code (prior Section found in which the United States, 3679) requires, stated briefly, that either on its own suit for foreclosure, any person having a lien upon or any or on counterclaim filed by it in a interest in real or personal property suit brought to quiet title or other subject to federal tax liens, shall wise extinguish subordinate tax liens, make application to the Commission· has been successful in having the er to authorize the filing of an action court order land resold where proof by the Attorney General to enforce in such subsequent suit did not show the Government's tax lien, and to that the land had a value in excess take certain other procedures if the of the mortgage debt. This was true Commissioner refuses or neglects to even in the Metropolitan case, and in do so. the cited cases recognizing the doc· trine of the Metropolitan case. There have been intimations in some of the earlier cases that com Red Tape and Confusion pliance with 7424 of the Revenue It is distressing that every year Code would be a condition precedent that passes finds the real estate law to the maintenance of a bill against yer burdened with more and more the United States to remove a tax details and red tape of every kind lien under Section 2410 of the Judi and variety, so that transactions cial Code. The most recent cases which were once simple become in hold that such action is not neces creasingly more difficult. It is sub sary where the plaintiff is a non· mitted, however, that unless and un taxpayer, that is, not the taxpayer til the Supreme Court of the United against whom the lien sought to be States holds that ordinary foreclosure removed was filed. The theory upon under power of sale, without more, which these cases is based is that the cuts off subordinate federal tax lien, Revenue Code is for the regulation such foreclosure in disregard of such of tax assessment and collection, and liens leaves open obvious and danger relates to taxpayers and not to non· ous possibilities of costly future diffi taxpayers. Gerth v. U. S., (D.C. Cal. culty. In tax districts in which the 1955) 132 F. Supp. 894; Petition of District Director has set up efficient Si lls, (D.C. N.Y. 1953) 115 F. Supp. processes to handle release applica 239; and see: Szerlip v. Marcele, tions the outlay of work and the (D.C. N.Y. 1955) 136 F. Supp. 862; delay attendant upon filing and han Miner Sav. Bank v. U.S., supra, Sec dling a release application seems tions (24-27); National Iron Bank v. good insurance against future trou Manning, 76 F. Supp. 841; CCH '57 ble. Vol 4, Section 5868; Law of Federal In passing, it should be noted that Taxation, Mertens, Vol 9, Section the court, in the Boyd case, touched 54.52. In Jones v. Tower Production on the question of appropriate notice Co., 120 F. 2d 779, the Circuit Court to the government of the sale under of Appeals for the Tenth Circuit the power, and concluded that the reached what seemed to be a con· Government had actual knowledge of trary conclusion. However, the same the time and place of the foreclosure court, in a later appeal of the same sale in that case. There is a possibil case, Jones v. Tower Production Co., ity of difficulty on this point, partic 136 F. 2d 675, explained that the re ularly in s tate s like Mississippi, sult in the prior case was reached where there is no right of redemption without consideration of 28 U.S.C. after foreclosure, and the only notice 2410 (then 28 U.S.C.A. 901) because usually given is by newspaper publi· that statute, at the time of the for cation. mer appeal, did not cover suits to - 19 - quiet title. Jones v. ·Tower PT0d1wtion Supreme Court overturns the doc Co., supra, was followed in Adler v. trine of Metropolitan Life Ins. Co. v. Nicholas, 166 F. 2d 674, 679, and, U. S., supra, it is necessary, as a while neither of these cases is as practical matter, that the foreclosing pointed on the exact question as the mortgagee recognize the status of District Court cases cited above, both subordinate federal tax liens estab are direct authorities on the proposi· lished by the rule of that case and tion that a non-taxpayer may main the later cases in harmony with it. tain the suit under Section 2410 of Title 28, without in anywise conform 1. The basic liens for federal income, estate and gift t a xes are established by ing to Section 7424, I.R.C. (See the Sections 6321, 6322 and 6324 of the In case note to 174 A.L.R. 1373, at p. ternal Revenue Code of 1954 (See CCH Fed. Tax Rep. '57, Vol. 4, Pars. 5356; and 1405 et seq.) 5358 CCH Fed. Est. & Gift Tax Rep. Vol. 1 Par. 4339.) The requirement that notice The primary purpose of this article must be filed in the appropriate state re has been to point out, and discuss cording office in order that the general lien created by Section 6321 shall prevail the possible traps into which a fore against subsequent mortgages, pledges, closing mortgagee may fall in con purch a sers and judgment creditors is con t a ined in Section 6323. ( CCH '7, 5360) nection with subordinate federal tax The basic lien for feder a l t a xes originated liens. For that reason the treatment in 1866. 2. (D. C. Texa s 1933) 3 F Supp. 638. of the legal background has been 3. (C. A. 6 Mich . 1939) 107 F. 2d 311. considerably condensed. The citation 4. I.R.C. 7403 (26 U.S.C. 7403) . 7424. (26 U.S.C. 7424), or 28 U.S.C. 2410. of numerous cases and discussion of 5. 310 U.S. 630, 84 L.Ed., 1400. various subordinate legal points has 6. (D. C. Ga. 1953) 119 F. Supp. 147. 7. ( D. C. Pa. 1953) 110 F. Supp. 563. been omitted. Perhaps the issues 8. (D. C. Cal. 1956) 147 F. Supp. 240; have been oversimplified. The justifi· (See L a w of Federal T axation, Merte ns. Vol. 9, Section 54.42, p. 608, note 14, a nd cation for such treatment is the writ s a m e in 1956 Cumula tive Supplem ent.) er's belief that, unless and until the 9. (CCA 3 1948) 169 F ed. 2d 9.
THE EQUITABLE OUTLOOK J. L. BOWMAN President, Rogers County Abstract Co., Claremore, Oklahoma Last year I heard an abstracter only feel that we are giving the cus say: "When in doubt, copy it in full." tomer a showing of the record with We all know that an abstracter's out padding his abstract. duty, or job, or both, is to show the Divorce Cases- If there is a pend record and I guess that when an ab ing divorce sase on record and these stracter shows the record in full he parties are now triyng to sell the has fulfilled his duty, or job, or both, property, it is evidence that, perhaps, and if anyone has been hurt, it is our customer, because he has paid for the divorce suit will not be completed; 's lawyer more abstract than needed. so we talk to the plaintiff to see if it can be dismissed from the It seems to me that there is a small record so it won't have to be shown in comparison here, which in legal terms the abstract. If it can't be dismissed, is called law and equity. Equity must but will be concluded after the sale, stay within the confines of law, to be we will then set up the style of the sure, but comes into play because case on one page, list the instruments of hardship or some other recognized filed, show the case pending and not legal aspect. copy any one of the proceedings. If I now want to single out some il the divorce suit has been completed, lustrations in abstracting that I think and there is on record in the office of call for an equitable outlook. I am not the County Clerk a deed from one saying that what we do in our com party to the other made at the time pany is the right way. No one has of or during the pendency of the di told us to abstract in this fashion. We vorce action, we show only the Jour- - 20 - nal Entry, together with property set record in the County Clerk's office be tlement agreement if there is one, and comes the judgment creditor in a feel that the deed passes the title and foreclosure of mortgage case, whether the divorce decree only serves to de execution is issued on that judgment cide the marital status of the party or not, so long as it is not sold and now owning the title. sale confirmed, there arises the ques have been a few times though tion of how much of the proceedings There cases here that we have been requested in an should be used. We have opinion to put in the where the judgment is paid and then attorney's title was the necessary proceedings (petition and the mortgage holder (who waiver) but this requir person paid by the judgment creditor) summons or in the is not made enough times to will file a release of mortgage ment such case we make us feel ew have compiled the County Clerk's office. In Also on all di show nothing. In this instance the abstract incorrectly. the cases that we do show, all an title examiner relies entirely on vorce without the swers, replies, cross - petitions, and release of m o r t g age type pleadings (except the pe knowledge of the judgment. If the other Coun tition and summons or waiver ( are mortgage is not released in the as filed instruments and ty Clerk's office, then we examine the only listed Entry, and if not shown in full, the exception being petition and the Journal instruments specifically they are referring to the same mort when such suf plead (in relationship to title or real gage, and the Journal Entry has and it takes that link in order fi cient information contained in it to estate) the ne for the examiner to understand the identify the mortgage without decree. e ssity of getting teh information from the petition, we show only the Determination Of Death To Termin In such cases, if the regular journal entry. ate A Joint Tenancy- The is paid and siatisfied, we most com judgment statutory form, which is show such release if it is instrument monly used, or if it is made a part of the notation of such in the form, or show a quiet title suit, we handle from the Appearance Docket, or if the usual manner. It is the third method has been put on the pudg Letters judgment set up by law, which is that docket, the release of same on a regular probate ment of Administration in the judgment docket. case will terminate a joint tenancy, that I am now discussing. If the judment does not show paid, but has become dormant for lack of When this occurs in our office, if execution, we then show no execution Wl' can determine whom the exam was issued, or if one, the date of the ining attorney will be, we ask him lats execution so that the examiner for instructions. We find sometimes can determine that the judgment is a difference exists. For instance, one now dormant. In other words, we try lawyer will say a showing of the Let very hard not to show all proceedings ters of Administration only is suffi in that foreclosure case, but only such cient; another will ask that all pro as is necessary to allow the evaminer ceedings leading up to the Letters of to determine that the mortgage has Administration be shown. We will been satisfied. Last week we had one show only the Letters of Administra examiner who took the position that tion unless otherwise instructed, and the Journal Entry must be supported except the proceedings of the probate by notice and that it had to be in the case in our certificate. The main point abstract. One case we lost on, but we being thta we do not copy the pro arent' changing our system on that bate case in full. If the Final Decree one example. should list the particular land in ques Condemnation Proceedings- In this tion and determines that the joint ten category we are referring to those ancy has ended, we will show tho e condemnation proceedings for high portions of the Final Decree affecting ways, which either cut through a our particular tract of land. man'e property or form one boundary Mortgages S u b m erg e d in Judg line of same, and not to those cases ments-If the mortgage holder on where a title ic;; dependent on the suf- -21- ficiency of condemnation proceedings. tical purposes the examiner needs to· We have both in this country. New know what caused this demarcation highways adnutnpkri caLf eb hikgb line, whether the landowner will have highways and turnpikes cutting prop access or not to his property, and the erty into tracts and mand-made lakes true description of the property line. built on condemned property. We only show the Report of Commissioners if I have written at too great length it gives a complete description of the now, but in these four examples of property condemned, even though showing court cases, I feel that we mineral rights may be left with the should have some feeling for our cus landowner. We feel that for all prac- tomer and his pocketbook.
INTERNAL REVENUE DOCUMENTARY STAMP INFORMATION
REVENUE STAMP LAWS (on 10,000 10,500 11.55- deeds) as follows: 10,500 11,000 12.1() Oct. 1, 1862 to Oct. 1, 1872; July 11,000 11,500 12.65 1, 1898 to July 1, 1902; De-c. 1, 11,500 12,000 13.20 1914 to Sept. 8, 1916; Dec. 1, 1917 12,000 12,500 13.75 to March 29, 1926; July 21, 1932 12,500 13,000 14.30 to 13,000 13,500 14.85 Present law be-came effe-ctive July 13,500 14,000 15.40 21, 1932 and as amended, provides as 14,000 14,500 15.95 follows: " ... When the consideration 14,500 15,000 16.50 or value of the interest or property 15,000 15,500 17.05 conveyed, exclusive of the value of 15,500 16,000 17.60 any lien or encumbrance remaining 16,000 16,500 18.15 thereon at the time of sale, exceeds 16,500 17,000 18.70 $100 and does not exceed $500, 55 17,000 17,500 19.25 cents; and for each additional $500 17,500 18,000 19.80 or fractional part thereof, 55 cents." 18,000 18,500 20.35 More than Not Over Tax 18,500 19,000 20.90 $ 100 $ 500 $ 0.55 19,000 19,500 21.45 500 1,000 1.10 ]9,500 20,000 22.00 1,000 1,500 1.65 20,000 20,500 22.55 1,500 2,000 2.20 20,500 21,000 23.10 2,000 2,500 2.75 21,000 21,500 23.65 2,500 3,000 3.30 21,500 22,000 24.20 3,000 3,500 3.85 22,000 22,500 24.75 3,500 4,000 4.40 22,500 23,000 25.30> 4,000 4,500 4.95 23,000 23,500 25.85 4,500 5,000 5.50 23,500 24,000 26.40' 5,000 5,500 6.05 24,000 24,500 26.95 5,500 6,000 6.60 24,500 25,000 27.50 6,000 6,500 7.15 25,000 25,500 28.05 6,500 7,000 7.70 25,500 26,000 28.60' 7,000 7,500 8.25 26,000 26,500 29.15 7,500 8,000 8.80 26,500 27,000 29.70 8,000 8,500 9.35 27,000 27,500 30.25 8,500 9,000 9.90 27,500 28,000 30.80 9,000 9,500 10.45 28,000 28,500 31.35 9,500 10,000 11.00 28,500 29,000 31.90 -22- .29,000 29,500 32.45 40,000 40,500 44.55 .29,500 30,000 33.00 40,500 41,000 45.10 30,000 30,500 33.55 41,000 41,500 45.65 30,500 31,000 34.10 41,500 42,000 46.20 31,000 31,500 34.65 42,000 42,500 46.75 31,500 32,000 35.20 42,500 43,000 47.30 32,000 32,500 35.75 43,000 43,500 47.85 32,500 33,000 36.30 43,500 44,000 48.40 .33,000 33,500 36.85 44,000 44,500 48.95 33,500 34,000 37.40 44,500 45,000 49.50 .34,000 34,500 37.95 45,000 45,500 50.05 34,500 35,000 38.50 45,500 46,000 50.60 35,000 35,500 39.05 46,000 46,500 51.15 35,500 36,000 39.60 (If upon sale of real estate :m exist- 36,000 36,500 40.15 ing mortgage is refinanced, revenue 36,500 37,000 40.70 stamps must be affixed on the basis 37,000 37,500 41.25 of the full amount of the purchase 37,500 38,000 41.80 price. If on the other hand real estate 38,000 38,500 42.35 is sold subject to an existing mort- .38,500 39,000 42.90 gage, the amount of stamps will be 39,000 39,500 43.45 determined by the sale price less the 39,500 40,000 44.00 unpaid balance of the mortgage.)
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