United States v. Union Central Life Insurance Co.

In 1952 Robert Peters and his wife failed to pay federal income taxes. In 1954 an assessment for delinquency was filed in the Detroit office of the Internal Revenue Collector. The delinquency filing created a lien on all of the Peters’ property in favor of the United States (plaintiff). Ten months later, the Peters executed a mortgage on real property to secure an indebtedness to Union Central Life Insurance Company (Union Central) (defendant). The Peters defaulted on their mortgage, and Union Central filed to foreclose, naming the United States as a party defendant because of its tax lien. Union Central claimed that its mortgage had priority over the tax lien because the tax lien was not filed in Oakland County, where the property was located, as required by Michigan law. The United States disputed Union Central’s position, asserting that the tax lien had priority because it was properly filed with the district court in Detroit prior to Union Central’s foreclosure action. The United States further noted that it could not have filed the lien in Oakland County, because the recorder would not accept documents without a description of the subject property. The tax lien was filed on a federally mandated form, and that form did not include a section for a property description. The United States contended that the filing requirements of the Internal Revenue Code superseded any conflicting state law absent congressional authority. The Michigan state courts, including the Michigan Supreme Court, held that the United States’ lien did not comply with Michigan law and, therefore, was subordinate to the Union Central mortgage. The United States filed an appeal, and the United States Supreme Court granted certiorari.