Appendix — Murray v. United States

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APPENDIX

Appendix A

UNITED STATES COURT OF APPEALS

FOR THE EIGHT CIRCUIT

No. 81-2178

James A. Murray,

Appellant,

v.

United States of America,

Appellee.

Appeal from the United States District Court tor the Dis-

trict of North Dakota

Submitted: March 12, 1982

Filed: August 26, 1982

Before ROSS, Circuit Judge, FLOYD R. GIBSON, Sen-

ior Circuit Judge, and HENLEY, Circuit Judge.*

HENLEY, Senior Circuit Judge.

This appeal arises from the district court’s’ dismissal of

"The Honorable J. Smith Henley assumed senior status on June 1,

"The Honorable Paul Benson, Chief Judge, United States District Court

for the District of North Dakota. His decision is reported as Murray

v. United States, 520 F. Supp. 1207 (D. N.D. 1981).

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appellant James A. Murray’s complaint for lack of sub-

ject matte: jurisdiction pursuant to Fed. R. Civ. P. 12

(b). Murray seeks $70,000.00 in civil damages, or, al-

ternatively, an order compelling the United States to con-

vey to him certain real property which he had attempted

to redeem following its conveyance to the United States

at a tax auction. The district court held that subject mat-

ter jurisdiction was lacking because the United States had

not waived its sovereign immunity.

We agree with the district court that upon the pleadings

and undisputed facts neither civil damage relief nor man-

damus is available to appellant. Moreover, while we do not

accept the trial court’s characterization of the action as

one to quiet title, we affirm the judgment of dismissal.

Background.

The essential facts are not in dispute. On December 20,

1978 the appellant Murray took a mortgage on real es-

tate owned by Fireside, Inc., a North Dakota corpora-

tion operating as a bar and lounge. The mortgage was

executed by Donald Paul, a large stockholder and presi-

dent of the corporation, and was duly recorded in the of-

fice of the Register of Deeds of Cass County on the same

date. The property was subject io a prior mortgage to the

Casselton State Bank on which there was owing the sum of

$92,130.07, and was subject also to IRS tax liens and

other judgment liens. The IRS filed additional tax liens

after December 20, 1978.

On April 18, 1979 the property was seized by the IRS

tor nonpayment of taxes. The property was later pur-

chased by the United States at a tax auction for the amount

of the statutory calculated bid, $301.84, pursuant to 26

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U.S.C. § 6335(e) (1). Appellant did not bid at the auction

nor does he challenge the validity of either the tax lien or

the auction sale.

On August 13 and December 9, 1979 appellant sent

letters to the IRS, enclosing a check for $320.00 (the

amount of the government’s purchase price plus some in-

terest) and asking to redeem the property. See 26 U.S.C.

§ 6337." IRS officials on both occasions refused to perinit

the redemption and returned the checks. It was the

IRS’s position that the property of the corporation had

been improperly given by a shareholder to secure an in-

dividual debt. The IRS noted that the transaction had not

been approved by the corporation’s Board of Directors,

and that the mortgage was executed without consideration

to the corporation. The Internal Revenue Service con-

cluded that the mortgage was invalid, and hence that it

was ineffective to trigger the redemption rights created by

26 U.S.C. § 6337.

On December 27, 1979 appellant filed a claim for dam-

ages with the IRS. The IRS denied this claim on April 1,

1980. The Service also sold its interest in the property to

the Casselton State Bank tor $301.84 in February, 1980.

We are informed by appellant's brief that the property was

subsequently transferred to a new purchaser on December

17, 1981.

*Section 6337 provides in pertinent part:

(b) Redemption of real estate after sale.

(1) Period. The owner of any real property sold as provided

in section 6335, their heirs, executors, or administrators, or any

person havin interest therein, or a lien thereon, or any

person in in their behalf, shall be permitted to redeem the

sold, or any particular tract of such property, at any time within 1

days after

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On September 30, 1980 appellant commenced this suit

in district court, seeking damages for the allegedly wrong-

ful refusal of his redemption offer. In the alternative,

he sought a writ of mandamus compelling the United

States’ to convey the real property to him and to void all

prior deeds it had given on the property.

Appellant asserted jurisdiction under 28 U.SC. §§ 1340

(civil action arising under Act of Congress providing for

internal revenue), 1346 (Federal Tort Claims Act), 1356

(seizure under law of the United States), 1402 (venue stat-

ute applicable to suits under Federal Tort Claims Act),

2410 (quiet title action against United States). and 1361

(petition for mandamus). The government moved to dis-

miss the complaint on the ground that the suit was barred

by the doctrine of sovereign immunity. The district court

dismissed appellant’s complaint on this grourd while ex-

pressly declining to reach the question whether appeilant’s

mortgage was valid. Murray v. United States, 520 F. Supp.

1207, 1208 n.1 (D.N.D. 1981).

(A) Damage Relief.

We approach the jurisdictional issues from the per-

spective of the relief requested by appellant. We consider

first whether Murray's prayer for damage relief is well-

founded in any of the cited statutes.

(i) Federal Tort Claims Act.

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Act, 28 U.S.C. § 1346(b) (hereinafter FTCA), which

waives the immunity of the United States with respect to

suits alleging injury or loss of property through the negli-

gent or wrongful act or omission of a United States em-

ployee.* The waiver provided by section 1346/b) is limited,

however, by a number of exceptions set forth in 28 U.S.C.

§ 2680. Two of the exceptions are said by the government

to apply here.

The government relies first on Section 2680(c), which

preserves sovereign immunity for “[a]ny claim arising in

respect of the assessment or collection of any tax.”

Appellant proposes a narrow construction of the excep-

tion, arguing that tax collection efforts were complete

when the property was conveyed to the United States at the

tax sale for the statutorily calculated minimum bid. He

points out that he has not challenged as improper the

IRS’s assessment of taxes against the Fireside, Inc. He

thus urges the conclusion that this lawsuit arises from

rights which postdate the government's collection efforts.

Allegedly, his legal action will not interfere with these ef-

forts. Appellant also argues that the exception to FTCA

jurisdiction stated in Section 2680(c) bars only taxpayer

suits. The exception allegedly does not apply ‘to suits by

third parties whose interests may be affected by tax col-

lection efforts.

*28 U.S.C. § 1346(b) provides in pertinent part:

Subject to the provisions of chapter 171 of this title, the district

have exclusive jurisdiction of civil actions on claims

lowe of property i. ~f- ~ pee 7 pod

sel or act or

omission of any “SA rt. $f ft.

pg - FU or employment, under circumstances where

the U States, if a private person, would be liable to the claim-

ant in accordance with the law of the place where the act or omis-

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The weight of authority is to the contrary. E.G., United

States v. Worley, 213 F.2d 509, 512 (6th Cir. 1954) (ex-

ception in § 2680(c) barred suit by taxpayer's wife), cert.

denied, 348 U.S. 917, 918 (1955); Broadway Open Air

Theatre, Inc. v. United States, 208 F.2d 257, 258-59 (4th

Cir. 1953) (exception barred suit by preferred stockhold-

ers of corporation where taxpayers were principal officers,

directors and shareholder); Home Indemnity Co. v. Bren-

nan, 430 F. Supp. 828 (S.D. N.Y. 1977) (exception

barred suit by contractor’s surety where taxpayer was the

contractor). In a case closely on point, Pargament v.

Fitzgerald, 272 F. Supp. 553, 556 ‘S.D. N.Y. 1967),

aff'd, 391 F.2d 934 (2d Cir. 1968), the court specifically

noted that Section 2680(c) precluded suit by a chattei

mortgagee who alleged that his rights had been impaired

by tax collection proceedings against his mortgagor. The

exception to FTCA jurisdiction clearly applies to taxpay-

ers and third parties alike.

We also cannot agree that appellant’s claim a.ises out-

side of “the assessment or collection of taxes” for purposes

of the exception to FTCA jurisdiction. When at a tax sale

property is adjudicated to the government at the statutory

minimum price, see 28 U.S.C. § 6335(e) (1), the govern-

ment in effect becomes the purchaser subject to the

ctatutory right of redemption. 28 U.S.C. § 6337(b) (1).

Capital Savings Association v. Runnels, 361 So.2d 458,

462 (La. Ct. App. 1978). The right of redemption arises

only in connection with the tax levy, and is an integral

tacet of such a levy. A claim founded on redemption

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rights is clearly a claim “arising in respect of the collec-

tion of a tax” within the meaning of Section 2680(c).”

(ii) Sections 1340, 1356.

The other statutes relied on by appellant a; grants of

jurisdiction for a damage action are equelly of little avail.

Appellant argues that his suit may be heard under 28

U.S.C. § 1340, which gives the federal district courts

“original jurisdiction of any civil action arising under

any Act of Congress providing for Internal Revenue.” It

is established, however, that this general grant of jurisdic-

tion does not constitute a waiver of sovereign immunity.

Aqua Bar & Lounge, Inc. v. United States Department of

Treasury Internal Revenue Service, 539 F.2d 935, 937

(3d Cir. 1976); Essex v. Vinal, 499 F.2d 226, 231 (8th

Cir. 1974), cert. denied, 419 U.S. 1107 (1975) (and cases

cited therein); Geurkink Farms, Inc. v. United States, 452

F.2d 643, 644 (7th Cir. 1971); Falik v. United States, 343

F.2d 38, 40 (2d Cir. 1965). There is similarly no waiver

or sovereign immunity to be found in 28 U.S.C. § 1356,

which is merely another general provision vesting jurisdic-

tion in the district courts over certain kinds of seizures."

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Van Buskirk v. United States, 206 F. Supp. 553, 555

(E.D. Tenn. 1962).

(iii) Implied Waiver of Immunity.

Moreover, we cannot agree with appellant that a waiver

of sovereign immunity must be implied where it is alleged

that the IRS has failed to comply with seizure and sale

provisions in the Internal Revenue Code. Appellant relies

primarily on the reasoning of the dissent in Aqua Bar &

Lounge, Inc. v. United States Department of Treasury In-

ternal Revenue Service, 539 F.2d at 942-43. The dissent

in this case was concerned that absent an implied waiver

of immunity, the IRS would be free to viclate Ccngression-

al mandates with impunity. Jd. at 942. While we are simi-

larly concerned that any injury which may here exist not

be without a remedy, we cannot agree that a remedy

should be provided through an implied waiver A waiver

of immunity “cannot be implied but must be unequivocally

expressed.” United States v. Mitchell, 445 U.S. 535, 538

(1980), quoting United States v. King, 395 US. 1, 4

(1969) Such a waiver, if it exists at all, should be

sought in the statute giving rise to a cause of action. Doe

v. Civiletti, 635 F.2d 88, 94 (2d Cir. 1980): May De-

partment Stores Co. v. Smith, 572 F.2d 1275 (8th Cir.),

cert. denied sub nom. May Department Stores Co. v.

Veterans’ Administration, 439 U.S. 837 (1978).

(iv) Federal Question Jurisdiction.

Appellant finally alleges that the refusal of his offer of

redemption unconstitutionally deprived him of due proc-

ess rights. The actions of government officials are said to

have raised a substantial federal question within the sub-

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ject matter jurisdiction vf the district court. 28 U.S.C.

In sum, we can find no cognizable ground for jurisdic-

tion over appellant’s damage action.’

(B) Equitable Remedies.

(i) Mandamus.

§ 1331. The existence of federal question jurisdiction,

however, does not remove the barrier of sovereign immun-

suit. Doe v. Civiletti, 635 F.2d at 94; Beale v. Blount,

461 F.2d 1133, 1138 (Sth Cir. 1972).’

ity urged by the government against proceeding with this

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compelling the Unitted States to set aside all deeds it had

given and convey the property to him. The federal man-

damus statute, however, is of no help to appellant for

several reasons.

First, it is debatab’e whether 28 U.S.C. § 1361” con-

stitutes a waiver of sovereign immunity. Doe v. Civiletti,

635 F.2d at 94 (Section 1361 is not an all-purpose waiver

of immunity); Watson v. Blumenthal, 586 F.2d 925, 935

(2d Cir. 1978); Hill v. United States, 571 F.2d 1098, 1101

n.5 (9th Cir. 1978); Essex v. Vinal, 499 F.2d at 231-32;

McQueary v. Laird, 449 F.2d 608, 611 (10th Cir.

1971): see also 14 C. Wright, Federal Practice and Proce-

dure § 3655 at 200 (1976) (“Section 1361 has not had

any direct impact on the doctrine of sovereign immunity”).

but see Vishnevsky v. United States, 581 F 2d 1249,

1255-56 (7th Cir. 1978) (doctrine of sovereign immunity

inapplicable to actions for mandamus).

Moreover, even if sovereign immunity were waived by

28 U.S.C. § 1361, no federal officials are named as de-

fendants in appellant’s amended complaint. The Manda-

mus Act does not apply to the United States ‘tself. Mor-

purgo v. Board of Higher Education, 423 F. Supp. 704,

714 (S.D. N.Y. 1976).

(ii) Action to Quiet Title, 28 U.S.C. § 2410.

Appellant’s amended complaint did not exoressly con-

tain a prayer for quiet title relief. It is clear from the rec-

ord however, that the parties and the district court con-

*28 U.S.C. § 1361 provides:

in the nature of mandamus to compel an officer or of

So Saee a & Sty cgeney Ciesees > pea 6 Cay ones

A-Tl

strued the suit as seeking such relief. 520 F. Supp. at

1209-10. The final question on appeal accordingly is

whether this suit may properly be characterized as a quiet

title action, and, if so, whether the district court had juris-

diction under 28 U.S.C. § 2410(a) (1)” in combination

with 28 U.S.C. § 1340."

We hold that appellant’s suit may not appropriately be

characterized as a suit to quiet title.

"28 U.S.C. § 1340 ts the district courts “original jurisdiction of

cup Gell cxtian edling ender eny Act of Getepen oetiine tor i>

ternal revenue.”

28 U.S.C. § 2410(a)(1) provides in pertinent part:

Under the conditions prescribed in this section and section 1444

Oe Se ts al nae coe ee

States may be a in any civil action or suit in any

district court, o or in any Stato court having juriediction of the eublew

(1) to quiet title to, . . .

real or personal on which the United States has or claims

This section has been i to waive sovereign immunity in

some circumstances. United Sand e Gravel Contractors, Inc. v.

United States, 624 F.2d 733, 738 (Sth Cir. 1980) (stating in dictum

that Section 2410 may waive immunity as to suits g owner-

ship to possessed by United States when claimant has no

more ); Hudson County Board of ms Freeholders

v. Morales, 581 F.2d 379, 382-83 (3d Cir. 1978) (Section 2410 is

basis for waiver of sovereign immunity); Aqua Bar & Lounge,

= % . United States Department of Treasury Internal Revenue Serv-

* $39 F.2d 935, 938-40 (3d Cir. 1976) (Section 2410 constitutes

of sovereign: i immunity so long as plaintiff refrains from con-

rane ome & g tax assessment); Popp v. Eberlein, 409

F.2d , 312 (7th Cir.), cert. denied, 396 U.S. (1969); United

States v. Coson, 286 F.2d 453 (9th Cir. 1961); Yannicelli v. Nash,

354 F. . 143, 150-51 (D. N.J. 1972); Little River Farms, Inc.

v. United es, 328 F. Supp. 476, 479 (N.D. Ga. 1971). Compare

United Sand & Gravel Contractors, Inc. v. og? States, 624 F.2d

at 738-40 (even if Section 2410 waives immunity, it may not be util-

ized to circumvent <tatute of limitations for third-party at-

tacks on wrongful levy under 26 U.S.C. §§ 7426, 6532(c)); Falik v.

United ! States, 343 F.2d 38 (2d Cir. 1965) (no waiver of immunity

under § 2410 for suit which attacks merits of underlying lien):

Ouinn v. Hook, 231 F. Supp. 718 (B.D. Pa. 1964), aff'd. 341 F.2d

920 (3d Cir. 1965) (Section 2410 does not waive immunity for col-

Semuh ama Gn ealilie of cen Gan an iene Gian on teas

bv Tax Court).

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Appellant’s complaint seeks two remedies: damages,

or, in the alternative, a writ of mandamus compelling the

United States to convey the property to him and to void

all prior deeds it had given. Appellant persists on appeal

in asserting that the ultimate effect of his redemption, if

permitted, wil! be to convey to him a title interest in the

property. Appellant thus eschews restoration of that in-

terest in the land which he previously held, namely an in-

ferior security interest which he may not want, and instead

seeks creation in himself of a title interest which he never

previously possessed or claimed.”

On the ground that the present action is not one to

quiet title, we affirm the district court’s ruling that juris-

diction does not exist under Section 2410. This conclusion

renders it unnecessary for us to consider the district

court’s different rationale for dismissal. namely that the

United States had sold its interest in the property at the

time suit was brought.” 520 F. Supp. at 1210.

“Appeliant’s alternative prayer is not unlike an action to quiet title

circumstances. Dudley v. Meyers, 422 F.2d 1389, 1394-95 (3d Cir.

Kirk, 414 F.2d 131, 133 (Sth Cir. 1969); (essential

to

of cause of action — on title are proof of

a> invalidity of instrument or record sought to

eliminated as a cloud).

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The district court’s order and judgment of dismissal is

affirmed for lack of subject matter jurisdiction. Our af-

firmance of the dismissal is without prejudice to any

quiet title action appellant may choose to bring against

parties other than the United States in an appropriate

state forum.” See N.D. CENT. CODE § 32-17-91 (1976

Repl.).

A true copy.

Attest:

Clerk, U. S. Court of Appeals, Eighth Circuit.

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Appendix B

James A. Murray,

Plaintiff,

v.

United States of America,

Defendant.

Civ. No. A3-80-111.

United States District Court,

D. North Dakota,

Southeastern Division.

Sept. 4, 1981.

Action was brought seeking to quiet title or in the alter-

native recovery of damages resulting from failure of the

Internal Revenue Service to permit redemption of real

property. The defendant United States claimed sovereign

immunity and subsequent lack of subject matter jurisdic-

tion. The District Court, Benson, Chief Judge, held that the

doctrine of sovereign immunity barred action.

Action dismissed.

1. United States 125(3)

Without a waiver of sovereign immunity by the United

States, jurisdiction is defective so that an action is barred.

B-2

2. United States 125(9)

Mandamus statute does not provide any waiver of sover-

eign immunity. 28 U.S.C.A. § 1361.

3. United States 125(22)

Doctrine of sovereign immunity barred an action seek-

ing to quiet title or seeking in the alternative recovery of

camages resulting from failure of the Internal Revenue

Service to permit redemption of property sold at tax auc-

tion particularly since Unitted States, having sold the prop-

erty and conveyed its interests, no longer claimed any in-

terest in the property and the owner did not challenge the

validity of the tax auction and received the required notice

and a fair opportunity to submit a bid. 28 U.S.C.A. §§

1340, 1346, 1346(b), 2410.

Armond G. Erickson, Tenneson, Serkland, Lundberg

Erickson & Marcil, Ltd., Fargo, N.D., for plaintiff.

Lynn E. Crooks, Asst. U. S. Atty., James R. Britton,

U.S. Atty., Fargo, N. D., for defendant.

MEMORANDUM AND ORDER

BENSON, Chief Judge.

This is an action seeking to quiet title or in the alterna-

tive, a recovery of damages resulting from a failure of

the Internal Revenue Service (IRS) to permit a redemption

of real property. The defendant United States, claiming

sovereign immunity and subsequent lack of subject matter

jurisdiction, moved to dismiss the complaint under Fed.

R.Civ.P. 12(b) The plaintiff asserts jurisdiction under 28

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U.S.C. §§ 1340, 2410, 1346, 1356 and 1361. For the

reasons stated below, the motion is granted.

Background

For the purposes of this proceeding, the court will as-

sume the following alleged facts to be true. On December

20, 1978, the plaintiff took a mortgage on real estate

owned by Fireside. Inc. The mortgage was executed by

Donald Paul, a large stockholder and president of the cor-

poration, and duly recorded in the office of the Register of

Deeds of Cass County on the same date.’ The property was

subject to a prior mortgage to the Casselton State Bank

on which there was owing the sum of $92,130.07 and sub-

ject also to IRS tax liens and other judgment liens. IRS

filed additional tax liens after December 20, 1978. On

April 18, 1979, taxpayer’s property was seized by the

IRS for nonpayment of taxes. The property was later pur-

chased by the United States at a tax auction for the

amount of the statutory calculated bid. $301 84, see 26

U.S.C. § 6335(e)(1). The plaintiff did not bid at the auc-

tion nor does he challenge the validity of either the tax

lien or the auction sale. On August 13 and December 9,

1979, the plaintiff sent letters to the IRS each enclosing

a check for $320.00 ‘the amount of the government’s

purchase price plus some interest) and asking to redeem

B-4

the property. See 26 U.S.C. § 6337.” IRS officials on both

occasions refused to permit the redemption and returned

the checks. On December 27, 1979, the plaintiff filed a

claim for damages with the IRS. In February 1980, the

United States sold its interest in the pronerty to the

Casselton State Bank for $301.84." The IRS denied the

claim on April 1, 1980, and this action was commenced

on September 30, 1980.

Jurisdiction

[1] It is well settled that the United States may not

be sued without its consent. Lynch v. United States, 54

S.Ct. 840, 844 78 L.Ed. 1434, 292 U.S. 571, 581-82

(1934); Bor-Son Building Corporation v. Heller, 572 F.2d

174, 177 (8th Cir. 1978); see also 2A Moore’s Federal Prac-

tice 98.17; 14 Wright & Miller & Copper Federal Practice

and Procedure: Civil § 3654. Without a waiver of sovereign

immunity by the United States, jurisdiction is defective so

that the action is barred. Jd. The plaintiff Murray pleads

waiver and district court jurisdiction under a number of

statutes. Plaintiff's claims that sections 1356 and 1361

provide a waiver of immunity in this case are without

merit and cai be disposed of without extensive discussion.

"Section 6337 provides in pertinent part:

(b) Redemption of real estate after sale.

XI Yt or ee, or any

i thet chal tract mei ned 10 redeem | a ropery sad,

"The complaint fal to s the amount of the yoy HR pusperes

security interest enh it is not necessary for the court to determine

B5

The possibility of jurisdiction based on sections 1340,

2410 and 1346 requires closer scrutiny.

Under section 1356 “district courts shall have original

jurisdiction . . . of any seizure under any law of the United

States on land or upon water not within admiralty and

maritime jurisdiction . . .” Although there has been

I:mited case !aw interpreting the application of this sec-

tion, it is evident that it has not been construed to either

confer jurisdiction or to waive immunity in fact situations

similar to those presented here. See Hunsucker v. Phinney,

497 F.2d 29 (Sth Cir. 1974), cert. denied, 420 U.S. 927 95

S.Ct. 1124, 43 L.Ed.2d 397 (1975) (section 1356 is not

applicable to confer jurisdiction in action to recover evi-

dence illegally seized by IRS); Johnston v. Earle, 245

F.2d 793 (9th Cir. 1975) (section 1356 not applicable to

confer jurisdiction in action for alleged seizure and con-

version of a tractor by IRS officers): Detwiler v. United

States, 406 F.Supp. 695 (E.D.Pa. 1975), aff'd, 544 F.2d

512 (3rd Cir. 1976), cert. denied, 429 US 1105, 97

S.Ct. 1136. 51 L.Ed.2d 557 (1977) (section 1356 not

applicable to confer jurisdiction in action for damages al-

legedly caused by improper acts of IRS agents)

[2] The plaintiff's assertion of mandamus jurisdiction

as provided under 28 U.S.C. § 1361 also must fail. It is

apparent that Congress did not intend that this section

provide any waiver of sovereign immunity. Estate of Wat-

son v. Blumenthal, 586 F.2d 925, 934-35 (2nd Cir.

1978); Hill v. United States, 571 F.2d 1098. 1101 n.5

(9th Cir. 1978)

Sections 1340 and 2410

The plaintiff argues that jurisdiction and waiver of

immunity are granted under 28 U.S.C. S$ 1340 and

B6

2410. Section 1340 states that “[t)he district courts

shall have original jurisdiction of any civil action arising

under any Act of Congress providing for internal reve-

nue.. ™ Under section 2410 Congress has waived sover-

eign immunity in suits to quiet title in real or personal

property in which the United States has or claims a

mortgage or other lien.“ In order to sustain jurisdiction

under these two sections it must be determined whether the

facts at bar will invoke section 2410 waiver of immunity

as it has been judicially construed. See United States v.

Coson, 286 F.2d 453 (9th Cir. 1961); Bank of Hawaii v.

Benchwick, 249 F.Supp. 74 (D.Hawaii 1966); Bartell v.

Riddell. 202 F.Supp. 70 (S.D.Ca!. 1962).

Generally, it is observed that an action can be charac-

terized as a section 2410 quiet title action when: (1)

the United States claims a mortgage or lien interest in the

nroperty, see, e.g., Hudson County Board of Chosen Free-

holders v. Morales, 581 F.2d 379 (3rd Cir. 1978) (IRS

tax lien challenged); Viva Lid. v. United States, 490 F.

Supp. 1002 (D.Colo. 1980); (same); Commonwealth of

Pennsylvania v. Petito, 476 F.Supp. 384 (E.D.Pa. 1979)

(same); Bartell v. Riddell, 202 F.Supp. 70 (S.D.Cal. 1962)

(property sold twice by IRS but not yet conveyed); compare

“28 U.S.C. § 2410 provides in pertinent part:

) Under the conditions prescribed in this section

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above stated cases with Trustee of the Puritan Church v.

United States, 294 F.2d 734 (D.C.Cir. 1961) (section

2410 does not waive immunity when the United States

claims title) and Zager v. United States, 256 F.Supp. 396

(E.D.Wis. 1966) (same) and Haggard v. Lancaster, 320

F.Supp. 1252 (N.D.Miss. 1970) (no waiver in action to

enjoin use of park for access to federal housing project);

cr (2) the United States no longer claims any interest in

the property but the plaintiff challenges the validity of the

tax auction sale, see, e.g., Aqua Bar & Lounge, Inc. v.

United States Department of Treasury, 539 F.2d 935 (3rd

Cir. 1976) (alleged improper procedures); Reece v. Scog-

gins, 506 F.2d 967 (Sth Cir. 1975) (alleged failure to re-

ceive notice of sale); Popp v. Eberlein, 409 F.2d 309 (7th

Cir. 1969), cert. denied, 396 U.S. 909, 90 S.Ct. 222, 24

L.Ed.2d 185 (1969) (alleged disparagement of title at the

sale); Little River Farms, Inc. v. United States, 328 F.

Supp. 476 (N.D.Ga. 1971) (alleged that sale was made on

terms in variance from those advertised).

[3] In the present action, the United States, having

sold the property and conveyed its interest, no longer

claims any interest in the property. Additionally. the plain-

tiff does not challenge the validity of the tax auction. Ap-

parently, the plaintiff received any required notice of the

auction sale and had a fair opportunity to submit a bid.

There is no indication that the plaintiff's opportunity to

acquire the property was in any way infringed. There-

fore, the availability of a fair opportunity to purchase the

property critically distinguishes this case from the cases

cited under the second criterion. In view of the lack of any

to those presented here and the prior availability of a

B-8

struction rule and finds nc waiver under section 2410.

Haggard v. Lancaster, supra at 1254-55; see also Hart &

Wechsler, The Federal Courts and The Federal System,

1351-56 (1973)

Section 1346(b)

Plaintiff alternatively seeks jurisdiction based on a suit

for damages under the Federal Tort Claims Act, 28 U.S.C.

§ 1346(b). Section 1346(b) grants the court jurisdiction

of civil actions on claims against the United States. for

money damages, accruing on and after January 1, 1945,

for injury or loss of property, or personal injury or

death caused by the negligent or wrongful act or omis-

sion of any employee of the Government while acting

within the scope of his office or employment, under cir-

cumstances where the United States, if a private person,

would be liable to the claimant in accordance with the

law of the place where the act or omission occurred.

The plaintiff alleges that the IRS acted improperly in its

failure to permit the plaintiff to redeem the real property.

The court concludes that it is not necessary to reach the

issue of whether the IRS acted properly. Under section

2680(c), Title 28, “[aJny claim arising in respect of the

assessment or collection of any tax or customs duty” is

specifically excepted from the waiver provisions of sec-

tion 1346(b). In American Association of Commodity

Traders v. Department of Treasury, 598 F.2d 1233 (ist

Cir. 1979). the plaintiff taxpayer sought damages under

section 1346(b), claiming that the IRS improperly refused

tc process the plaintiff's application for exempt status, id.

ot 1234. The court upheld the dismissal of the action ob-

B-9

serving that the alleged fault of the IRS agents was imma-

terial in that there was little doubt that the suit fell with-

in the FTCA exclusion of claims under 2680(c). Jd. at

1235. Similarly, the court in Broadway Open Air Theatre

v. United States, 208 F.2d 257, 258 (4th Cir. 1953) up-

teld a dismissal of an action brought under § 1346(b).

In Broadway, the court stated that the claim to recover

money alleged to have been wrongfully received by the

United States in payment of taxes, fell squarely within

the broad and specific terms of exception 2680(c). Id. at

259. The claim was clearly one “arising in respect of

the . . . collection of any tax,” id. The court continued,

stating that the plaintiff failed to assert that his action did

not arise as a result of successful efforts of an agency of

the United States to collect taxes. Jd. Likewise, in the

present action, plaintiff has failed to make the same asser-

tion. See also United States v. Banner, 226 F Supp. 904

(N.D.N.Y. 1963) (section 2680(c) bars action for conver-

sion against United States). Therefore, the court holds that

the action of the IRS officials in denying the plaintiff's

demand falls within the protected assessment or collection

activity defined in section 2680(c).

IT IS ORDERED that plaintiff's amended complaint

and cause of action is dismissed for lack of subject matter

C-1

Appendix C

Pueblo, Colorado

August 13, 1979

Gordon Sorum

Revenue Officer

Internal Revenue Service

P. O. Box 2461

Fargo, No. Dak. 58108

Dear Mr. Sorum:

As per our telephone conversation, enclosed find Cashiers

Check for $320.00, payable to the Internal Revenue Ser-

vice, for redemption of the Fireside at Buffalo, No. Dak.

You advised the total needed to redeem the Fireside

was $301.84 plus interest at 20% from June 8, 1979. The

amount enclosed is more than sufficient to cover the

emounrt with interest.

This redemption is being made on behalf of James A.

Murray, Joan M. Murray and Justin L. Murray. As you

know and as the records reflect, we do have a mortgage

on the property and are eligible to redeem the property.

We will expect to receive a Deed to the property shortly

after October 8, 1979, unless other redemptions are made.

I appreciate your cooperation in this matter and should

you have any questions, please contact me.

Sincerely,

James A. Murray

89 Cornell Circle

Pueblo, Colorado 81005

Phone:

(303) 566-1413 (home)

(303) 545-1836 (work)

D-1

Appendix D

Person to Contact

GORDON D. SORUM

Telephone Number

1-701-237-5771, ext. 179

Refer Reply to

COLL:FB:GS

Date

August 23, 1979

James A. Murray

£9 Cornell Circle

Pueblo, CO 81005

Dear Mr. Murray:

I am returning herewith cashier’s check number 83511

drawn on the Pueblo Bank and Trust Company in the

amount of $320.00. You sent this check to Revenue Of-

ficer Gordon Sorum on August 13 in an attempt to re-

deem the property formerly owned by the Fireside, Inc.

Mr. Sorum is on leave for two weeks and not available

to respond to your letter.

As he informed you on July 9, 1979, when you came to

this office, there was some questions as to the validity of

the mortgage you hold against the Fireside property

since it was executed in behalf of one officer of the Cor-

poration for a personal debt. We have referred the matter

to our legal staff and have not as yet received a response.

Until the matter has been resolved, it would be inappro-

priate for this office to retain your check. Mr. Sorum

D-2

will contact you as soon as we are advised regarding the

Service's position on your mortgage.

/s/ Joyce L. Gasing

Group Manager

Enclosure

Cashier’s check number 83511

E-1

Pueblo, Colorado

September 9, 1979

Gordon Sorum

Revenue Officer

Internal Revenue Service

P. O. Box 2461

Fargo, No. Dak. 58108

Dear Mr. Sorum:

Reference is made to my letter of August 13, 1979, and

the reply from your office dated August 23, 1979. regard-

ing our redemption of the Fireside at Buffalo, No. Dak.

We take a very strong position that we have a valid mort-

gage on the property and are eligible to redeem the prop-

erty. Apparently you question our right to redeem the prop-

erty based on the fact that our mortgage was only signed

by Donald Paul as President of the Corporation.

I would refer you to volume 19 of American Jurispru-

dence 2nd wherein they discuss Corporations.

Section 1040 on page 500 states a corporate mortgage is

not invalid by reason of any formal irregularities in its

execution where it is consented to by its stockholders, or

where the stockholders know of the irregularity but make

no objection thereto or acquiese therein.

Section 1041 on page 501 states there is authority that a

charter or general law requiring as prerequisite to a

corporate mortgage the giving of the consent of a certain

proportion of the stockholders is for the protection of the

stockholders, and that if they waive the formalities pre-

E-2

scribed or acquiesce in such acts when informally done,

no one else has the right to complain. For this reason a

creditor is held to have no right to object to a mortgage

of the property of a corporation because a statutory re-

ouirement of the consent of the stockholders to a mort-

gage is not strictly complied with.

This section goes on to state only the stockholders can

complain of the failure of the corporation to comply with

such a requirement.

I also refer you to Corporation in volume 19 of Corpus

Juris Secundum which takes the same position.

Section 968 on page 423 states generally transactions exe-

cuted in on unauthorized manner are voidable only, and

not invalid, and that stockholders may attack the transac-

tion.

Section 968 on page 424 states a corporate transaction or

contract which is within the corporate powers, which is

neither wrong in itself nor against public policy, but which

is defective from the failure to observe in its execution a

requirement of law enacted for the protection of a certain

class, is voidable only, and is valid until avoided, not

void until validated.

Section 1004 on page 471 states a corporation is fre-

quently held bound by acts of a person owning all or sub-

stantially all of the stock.

Section 1009 on page 480 states ordinarily authority of an

officer can be questioned only by an injured party, such

as a stockholder or creditor. In this case it should be

noted you were not injured by our mortgage.

We take the position our mortgage is valid and you have

no right to attack it. As cited above, American Jurispru-

E-3

dence 2nd and Corpus Juris Secundum supports our posi-

tion.

If you feel you have a valid reason for questioning our

mortgage, please cite your authority.

I am returning Pueblo Bank and Trust Company Cashiers

Check made payable to the Internal Revenue Service in

the amount of $320.00 for redemption of the Fireside,

end I will expect to receive a Deed to the property short-

ly after October 8, 1979.

Should you have any questions please let me know.

Sin cerely,

/s/ James A. Murray

89 Cornell Circle

Pueblo, Colorado 81005

Phone:

(303) 566-1413 (home)

(303) 545-1836 (work)

F-1

Appendix F

Internal Revenue Service

Department of the Treasury

Person to Contact

Ed Foy, Jr.

Telephone Number

237-5771, ext. 340 (if local)

Return Reply to 1-800-342-4710 (toll free)

CATS:SPS:EF

October 4, 1979

James A. Murray

89 Cornell Circle

Pueblo. Colorado 81005

Dear Mr. Murray:

Re: Fireside, Inc.

Property Seizure/Sale

Returned herewith is Cashier’s Check No. 83511, in the

amount of $320.00, dated 8/13/79, drawn on the Pueblo

Bank and Trust Company of Pueblo, Colorado.

You sent this remittance to revenue officer G. Sorum by

letter at 8/13/79, for the purpose of exercising the Right

of Redemption as a junior lienor to realty of the Fireside,

Inc. The remittance was returned to you by corres-

pondence from Joyce L. Gasing dated 8/23/79. You were

advised that there were questions as to the validity of your

mortgage on the Fireside property, that the matter had

been referred to our legal staff and that you would be con-

tacted by Mr. Sorum when we were apprised of our

counsel’s position.

F-2

You returned the remittance to Mr. Sorum by letter of

9/9/79, presenting reasons which you feel support the

validity of your mortgage. That letter was presented to

our counsel for additional evaluation.

I have now been advised by counsel that it is the position

of the Government that your lien is not valid against the

Fireside, Inc. realty. Your remittance is, therefore, being

returned.

Sincerely,

/s/ Ed Foy, Jr.

Special Procedures Officer

G-1

Appendix G

1. U.S. Const., amend V., provides as follows:

No person shall be held to answer for a capital, or other-

wise infamous crime, unless on a presentment or indict-

ment of a Grand Jury, except in cases arising in the land

or naval forces, or in the Militia, when in actual service in

time of War or public danger; nor shall any person be sub-

ject for the same offence to be twice put in jeopardy of

life or limb; nor shall be compelled in any criminal case

tc be a witness against himself, nor be deprived of life,

liberty, or property, without due process of law; nor shall

private property be taken for public use, without just com-

pensation.

2. 26U.S.C. §6337 provides as follows:

(a) Before sale-—Any person whose property has

been levied upon shall have the right to pay the amount

due, together with the expenses of the proceeding, if any,

to the Secretary or his delegate at any time prior to the

sale thereof, and upon such payment the Secretary or

his delegate shall restore such property to him, and all

further proceedings in connection with the levy on such

property shall cease from the time of such payment.

(b) Redemption of real estate after sale.—

(1) Period.—The owners of any real property sold as

provided in section 6335, their heirs, executors, or admin-

istrators, or any person having any interest therein, or a

lien thercon, or any person in their behalf, shall be per-

mitted to redeem the property sold, or any particular tract

cf such property, at any time within 120 days after the

sale thereof.

G-2

(2) Price—Such property or tract of property shall

be permitted to be redeemed upon payment to the pur-

chaser, or in case he cannot be found in the county in

which the property to be redeemed is s:tuated, then to

the Secretary or his delegate, for the use of the purchaser,

his heirs, or assigns, the amount paid by such purchaser

and interest thereon at the rate of 20 percent per annum.

(c) Record.—When any lands sold are redeemed as pro-

vided in this section, the Secretary or his delegate shall

cause entry of the fact to be made upon the record men-

tioned in section 6340, and such entry shall be evidence of

such redemption.

3. 26U.S.C. §6338 provides as follows:

(a) Certificate of sale-—In the case of property sold

as provided in section 6335, the Secretary or his delegate

shall give to the purchaser a certificate of sale upon pay-

ment in full of the purchase price. In the case of real

property, such certificate shall set forth the real property

purchased, for whose taxes the same was sold, the name

of the purchaser. and the price paid therefor.

(b) Deed to zeal property—In the case of any real

property sold as provided in section 6335 and not re-

deemed in the manner and within the time provided in

section 6337, the Secretary or his delegate shall execute

(in accordance with the laws of the State in which such

real property is situated pertaining to sales of real property

under execution) to the purchaser of such real property

at such sale, upon his surrender of the certificate of sale, a

deed of the real property so purchased by him, reciting the

facts set forth in the certificate.

G-3

(c) Real property purchased by United States.—If

real property is declared purchased by the United States at

a sale pursuant to section 6335, the Secretary or his dele-

gate shall at the proper time execute a deed therefor, and

without delay cause such deed to be duly recorded in the

proper registry of deeds.

4 26U.S.C. §6339 provides as follows:

(a) Certificate of sale of property other than real

property.—In all cases of sale pursuant to section 6335

of property (other than real property), the certificate of

such sale—

(1) As evidence.—Shall be prima facie evidence of

the right of the officer to make such sale, and concl:sive

evidence of the regularity of his proceedings in making the

sale; and

(2) As conveyances.—Shall transfer to the purchaser

all right, title, and interest of the party delinquent in and to

the property sold; and

(3) As authority for transfer of corporate stock.—If

such property consists of stocks, shall be notice, when re-

ceived, to any corporation, company, or association of such

transfer, and shall be authority to such corporation, com-

pany, or association to record the transfer on its books

end records in the same manner as if the stocks were

transferred or assigned by the party holding the same, in

lieu of any original or prior certificate, which shall be void,

whether canceled or not; and

(4) As receipts.—If the subject of sale is securities or

cther evidences of debt, shall be a good and valid receipt

G-4

to the person holding the same, as against any person

holding or claiming to hold possession of such securities or

other evidences of debt; and

(5) As autnority for transfer of title to motor ve-

hicle—If such property consists of a motor vehicle. shall

be notice, when received, to any public official charged

with the registration of title to motor vehicles, of such

transfer and shall be authority to such official to record

the transfer on his books and records in the same manner

as if the certificate of title to such motor vehicle were

transferred or assigned by the party holding the same, in

lieu of any original or prior certificate, which shall be

void, whether canceled or not.

(b) Deed of real property—In the case of the sale of

real property pursuant to section 6335—

(1) Deed as evidence.—The deed of sale given pur-

suant to section 6338 shall be prima facie evidence of the

facts therein stated; and

(2) Deed as conveyance of title—If the proceedings

of the Secretary or his delegate as set forth have been sub-

stantially in accordance with the provisions of law, such

deed shall be considered and operate as a conveyance of

all the right, title, and interest the party delinquent had

in and to the real property thus sold at the time the lien of

ihe United States attached thereto.

(c) Effect of junior encumbrances.—A certificate of

sale of personal property given or a deed to real property

executed pursuant to section 6338 shall discharge such

property from all liens, encumbrances, and titles over

which the lien of the United States with respect to which

the levy was made had priority.

G-5

(d) Cross references.—

(1) For distribution of surplus proceeds, see section

6342(b).

(2) For judicial procedure with respect to surplus pro-

ceeds, see section 7426(a) (2).

5. 28U.S.C. $1346 provides as follows:

(a) The district courts shall have original imrisdiction,

concurrent with the Court of Claims, of:

(1) Any civil action against the United States for the

recovery of any internal-revenue tax alleged to have

been erroneously or illegally assessed or collected, or any

penalty claimed to have been collected without author-

ity or any sum alleged to have been excessive or in any

manner wrongfully collected under the internal-revenue

laws;

(2) Any other civil action or claim against the

United States, not exceeding $10,000 in amount,

founded either upon the Constitution, or any Act of

Congress, or any regulation of an executive department,

or upon any express or implied contract with the United

States, or for liquidated or unliquidated damages in

cases not sounding in tort, except that the district courts

shall not have jurisdiction of any civil action or claim

against the United States founded upon any express or

implied contract with the United States for liquidated or

unliquidated damages in cases not sounding in tort

which are subject to sections 8(g)(1) and 10(a)(1) of

the Contract Disputes Act of 1978 [41 USCS §§ 607

(g)(1). 609(a)(1)]. For the purpose of this paragraph,

G4

an express or implied contract with the Army and Air

Force Exchange Service, Navy Exchanges, Marine

Corps Exchanges, Coast Guard Exchanges or Exchange

Councils of the National Aeronautics and Space Admin-

istration shall be considered an express or implied con-

tract with the United States.

(b) Subject to the provisions of chapter 171 of this

title [28 USCS §§ 2671 et seq.], the district courts, to-

gether with the United States District Court for the

District of the Canal Zone and the District Court of

the Virgir: Islands, shall have exclusive jurisdiction of

civil actions on claims against the United States, for

money damages, accruing on and after January 1, 1945,

for injury or loss of property, or personal injury or death

caused by the negligent or wrongful act or omission of

any employee of the government while acting within

the scope of his office or employment, under circum-

stances where the United States. if a private person,

would be liable to the claimant in accordance with the

law of the place where the act or omission occurred.

(c) The jurisdiction conferred by this section includes

jurisdiction of any set-off, counterclaim, or other claim

or demand whatever on the part of the United States

against any plaintiff commencing an action under this

section.

(d) The district courts shall not have jurisdiction under

this section of any civil action or claim for a pension.

(e) The district courts shall have original jurisdiction

of any civil acticn against the United States provided in

section 7426 or section 7428 (in the case of the United

G-7

States district court for the District of Columbia) or

section 7429 of the Internal Revenue Code of 1954

[26 USCS §§ 7426, 7428, 7420].

(f) The district courts shall have exclusive original

jurisdiction of civil actions under section 2409a [28

USCS § 2409a] to quiet title to an estate or interest in

real property in which an interest is claimed by the

United States.

6. 280U.S.C. §1361 provides as follows:

The district courts shall have original jurisdiction of any

action in the nature of mandamus to compel an officer or

employee of the United States or any agency thereof to

perform a duty owed to the plaintiff.

7. 280U.S.C. §2674 provides as follows:

The United States shall be liable, respecting the pro-

visions of this title relating to tort claims, in the same

manner and to the same extent as a private individual

under like circumstances, but shall not be liable for interest

prior to judgment or for punitive damages.

If, however, in any case wherein death was caused,

the law of the place where the act or omission com-

plained of occurred provides, or has been construed to

provide, for damages only punitive in nature, the United

States shall be liable for actual or compensatory damages,

measured by the pecuniary injuries resulting from such

death to the persons respectively, for whose benefit the

action was brought, in lieu thereof.

8. 28 U.S.C. §2680 provides as follows:

The provisions of this chapter and section 1346(b) of

this title shall nut apply to—

G8

(a) Any claim based upon an act or omission of an

employee of the Government, exercising due care, in the

execution of a statute or regulation, whether or not such

statute or regulation be valid, or based upon the exer-

cise or performance or the failure to exercise or perform

a discretionary function cr duty on the part of a federal

agency or an employee of the Government, whether or

not the discretion involved be abused.

(b) Any claim arising out of the loss, miscarriage,

or negligent transmission of letters or postal matter.

(c) Any claim arising in respect of the assessment

or collection of any tax or customs duty, or the deten-

tion of any goods or merchandise by any officer of cus-

toms or excise or any other law enforcement officer.

(d) Any claim for which a remedy is provided by

sections 741-752, 781-790 of Title 46, relating to claims

or suits in admiralty against the United States.

(e) Any claim arising out of an »2t or omission of

any employee of the Government in administering the

provisions of sections 1-31 of Title 50, Appendix.

(f) Any claim for damages caused by the imposi-

tion or establishment of a quarantine by the United

States.

(g) Repealed. Sept. 26, 1950, c. 1049, § 13(5), 64

Stat. 1043.

(h) Any claim arising out of assault, battery, false

imprisonment, false arrest, malicious prosecution, abuse

of process, libel, slander, misrepresentation, deceit, or

interference with contract rights: Provided, That, with

G-9

regard to acts or omissions of investigative or law en-

forcement officers of the United States Government,

the provisions of this chapter and section 1346(b) of

this title shall apply to any claim arising, on or after

the date of the enactment of this proviso, out of assault,

battery, false imprisonment, false arrest, abuse of

process, or malicious prosecution. For the purpose of

this subsection, “investigative or law enforcement officer”

means any officer of the United States who is empowered

by law to execute searches, to seize evidence, or to make

arrests for violations of Federal law.

(i) Any claim for damages caused by the fiscal oper-

ations of the Treasury or by the regulation of the mone-

tary system.

(j) Any claim arising out of the combatant activities

of the military or naval forces, or the Coast Guard, dur-

ing time of war.

(k) Any claim arising in a foreign country.

(1) Any claim arising from the activities of the Ten-

nessee Valley Authority.

(m) Any claim arising from the activities of the

Panama Canal Company.

(n) Any claim arising from the activities of a Fed-

eral land bank, a Federal intermediate credit bank, or a

bank for cooperatives.

9. N.D. Century Code §32-17-01 provides as follows:

Action to determine adverse claims.—An action may

be maintained by any person having an estate or an inter-

G-10

est in, or lien or encumbrance upon, real property, whether

in or out of possession thereof and whether such property

is vacant or unoccupied, against any person claiming an

estate or interest in, or lien or encumbrance upon, the

same, for the purpose of determining such adverse es-

tate, interest, lien, or encumbrance.