May 26, 1949
Hpn. D. C. Greer ~ ~..~ Opinion No. V-830
State-Hightiy engineer
T&xas..Higj$va~..
Department Re: ..Thenecessity for Fed-
Austin, 'T&as~.,. _ ._ .,
era1 Income Tax Liens
,-tobe recorded on Cer-
tificates of Title to
motor-vehiclesand the
.~ ,+tatus in relation to
other liens.
Dear Mr. Greer:
I&request .anopinion on.three questions based
]upon.thefol.lowingfacts: ..~
7. "The.Int.ernalRevenue.Departmentfiles liens
,.L-.
against an.individual~.,.for..non-.~~~n~
off'Income
.~:..Taxea..~
The.indWidua...owns.onenor sever&i motor ..
~:~
:'vehlCies.on:amidh..Elear
,Certifi.cate
of Title has
been issued, or perhaps such Certifioateof Tit&
will record a lien.
."TheseFederal'Liensfor Income Taxes are
,: filed'in t,heOffice,of the County Clerk in'a.bo,ok
-. ..~ ..knownas the 'Federal Lien Record'."
The.three questions referred to are:
Should.thisDe rtment recognizeas a
_ prio~"~~en.this.FsderalEen.for I~ncomeTaxes
.eventhough aCertificate af Title,has been is-
~..~..sued.on
which there.is.recordeda lien &ted
_ ,& to-the recording df the'Federa1 Tax Lien?
"2. Under Section3.,V.P.C., 1436-1, does
..the~.definit.ion
of the term!Lien' apply to Fed-
~eral.IncomeTax Liens? .
.: "If the answer to question 2 is in the af-
~_.
.firmative~,~
must the .FederalTax 'Liensbe filed
~..with this Department?
"3. What protection.~would a mortgagee have
if henloans money on a-motor vehicle if a clear
418
Hon. D. C,.Greer.,Page 2 (V-8301
Certificate~.of
Title~is presented to him and it
later .develops.that
a Federal Income Tax Lien
$Eit$;n filed against the-owner of the ve-
.
For-convenienceof this.opinion we will answer
your second questionfir~at.,
and thenthe first and third
.inthat order.
~\ ~~Article..l43&1;.
Section.
3.,V.P.C.; provides:
_ ~,~~a.term'.'lien;'means.every
kind of~lease
.~conditionalsales contract,-deed..of
trust, chattel
-mortgage .trnst~receipt,.reservationof title, or
otherwr-1,
tten instrumentof whatsoeverkind or
character whereby an interest,other than absolute
.title,.is soughtto be.held..orgivenin a motor
vehicie,.alsoany l.ien:created~orgiven by C n-
,s.titution.
or'Statute.,"-
.. : 7
A i.ien..has
been .defined...by
our Courts as a right
.~to:
&force.a.charge~upon.propertyofanother for the MY-
_~ ..ment..,or...sat.isfaction.of.~claims...
IX is..
also a charge upon
.property.
for.the.pay+?ntof a debt...There can be no lien
..~without
a..deht; Vaugbad~v,~IJohnRancock'MutualL%f.fe'In-
.
i.1 - :,f,..:~:.. ._ :~’ _,~
.:..
...~.~~~.Fedei.dl...right.~.tcJ:
a"&%& 'unpaidincome
. &&es, aris.es,.b~.c.;virtue..of
Federal%&&te. 26 U.S.C.A.,
_ .. ._Section _36i78~?,1aternal~Revenue
Code&provides: .I
,~ -1 .~ .,_
.-F.Xf
.anypersonpliable'ta+ay any tax neg-
lLe~tsnpr,:yefua~es.to
pay..the>
'&me after demand,
..the.amount(including~any interest, penalty, ad-
.ditionalamount.,oraddition te“snch tax, to-
gethheit_~th,~any~Eosts
thatmay'~accruein,addi-
_..t.ion:tihereto)
shall.be a.lieri+.favor of the
Dnited~States uponall nroperty and rights to
propeey; whather,realor pers$nal, belonging to
s&h~Sp&&o,n; W: .: .,_
~,.~,, : ;. .,
. -
Hon. D. C. Greer, Page 3 (V-830)
Itsisapparent this type lien fits squarely.with-
in the.LabQve court ,definition.But the Section 3..defin-
itiQn.obviollsly containsa.restcictedapDlication.~. ..It
applieson1y.t.o. those~.liens.
nsoughtto be'held or given
in .a motorsvehicle!?. Consequently:,.
the statutory defin-
. ition does.notapplyto a.yederal.~.,income:,taxlienif .the.
liqp, for.example',seeks enforc~ement.against.8 personrs.,"
real~property...,However..,
inthe event such a lien is'sought
._,....:to
,be.enfQrc,ed.
against.a motor.~vehicle.:regist.ered~~~in'~Texas,
S.ection.3of ~~icla,l1+36.-1.,applies.~.~T~
that etient, your
.second..questi.Qn
is answered in the affirmative.
~:~:Having
so answered, you ask #whethersuch Federal
lienmust be.filed,,with
yourDepartment.
Indeed, Congress hasby Federal Statute required
this corn&a&e. Section 3672, ~26.U.S.C.A.Internal Rev&
enue,Code, provides:
-- "(a,) Such lien.shall.notbe valid as a-
,.gainst any mortgagee.,.
pledgee, purchaser,or
~..j.ndgment
creditor,until.notice.thereof has been
.. .~ filed..bythedollector A-
. "(1) In the.office in.which~the filing of
such notic~eis.authQrized.by.thelaw of the State
-1 or.Territoryin which the property subject to the
- lien issituated;.whenever the State or Territory
has~by law.authorized.thefiling of such notice
in an office.within.the'State.or.Territory;. '. ."
-~The..filing
with.the County Clerk of,.Federal
tax
.liens~.tobe enforced against.motorvehicles does not meet
.. -Texasstatutory requirements..This is in keeping with.
- the.established.meaningof Article.lA36.-1,~
known gener-
ally.as the Certificate.of
.Title Act,.effective October 1,
1939. The effect of.this~
Act was.to repeal and supersede
42cl Hon,.D. C...
Greer.,Page 4 (V-830)
Articles~..5490~,
5497 and~5497a,,.~V.C.S.,
insofar as those
Articles~affected..the..regiatration.of chattel mortgage :
liens onmotor vehicles.,Whereas ~formerly the validity
of a.motor..vehicle lien.as.againstthird parties was de-
\~.pendent .uponthe mortgage,being,~filed with the County,
Clerk (Articles5490,,5497,5497a) the Certificate of
Title Act.made.auch..va.liditydepen~ upon a proper record-
ing of the lienon the:certXficate~-of. title. Article
1436-1, Sactioos.42,44 and 46.1 This office in a prior
op~r&n,.G-l53~ ,datsd..&v..7.1939,so held. And in
CommericalCre33 t ,COm ....v..LericanManufacturi
~;m~,ny,.sn~,..the C%&eached the same conclu%on,
c t ng withapproval.0.-1539..~.To the.same effect, see
-agl;2Motor_In~.. .Co,.:v,.
Citp'..of'
HamUn; 142 -Tex.&36;"179
278 (1944)..
A
Dnder-the-facts.presented here, it is our opin-
ion that Federal liens ~asagainstmotor vehicles must beg
~-filad;:and recor&&with.yourDe artme& as authoriaed.by
.-the .praaisionaaf.Article..Uc36-fl~in order to be valid as
againat.thirdparties.. ~~.. .
,_,Conc.erningyour..firstque.stion
we are of the
...opinionthat you..
should.
not.recognim .priorLtyof a Fed-
era1 taxlien properly.re.corded.undsr.$he
Certificateof
1 "Set,.:
42;,~No l%enroneanr...motar...vehicle
shall be valid
.as against.third.part,i~.ss.witbout~actllal
knowledge there-
. _ of.ar enforceable.aga&st the motor vehicle of any such
third..partiesas.th.eissuance of a certificateof title
_ ._ ___ ,. _. ~. thereof, unless.anapplication.fora newtjtle is made
.._ _ .. . . as prssc.ribe.d.-in
-this-Actand ~~all..first
and subseque'nt
. .~. .._ liens noted-by.the Departmentthereon.".
%ec. 44.. No.lien onany motor vehicle to which a re-
_ ._ ceipt .ar..certificate.of-time. has.b.een.issuedshall be
.~_ -Ipal~h.as.against.third..parties..wd&hout
act& knowl-
_,. adge.~h~reof,~..or.enforceable.against
the motor vehicle
.,of anysuch third+art$es, Mless.the notation of said
._ . .lIenshal&.have. beencaused to be.made on receipts and
..c.ert~ficatea...of.title
on said motor vehicle, as pro-
..~&Led. in this Act."
"Sqc. 46. On&y lie& noted on a receipt or certif$cate
of title ahall~,b.e-valid
as.against creditors of the
~~-
.mortgagorFn ao farasconcerns the motor vehicle.?
Hon. D. C. Greer, Page 5 (V-.830) :,,'., ?a2
Title Act2 prior to the,Federallien,. ~Whenthe Govern-
~withthe State's.statutoryrequire-
loses priority over prior
~ In United States v,'Yatas, 204 S.W..Zd399
(Tex..CLv..App..,1947*..error~.re.f.~,n.r.,e.)
the Court
held:;.
'"Raving~.conuluded.
that&he attachment lien
of.Ear1.and.W.0..Yates was.sp&ifie andi'fixed
uponthe date of..ita.lav.y.,..which
date.,wasprior
to .the.date.theGovernmenttied its ,lien:forun-
..~ .paid.taxes..,...-..
the.Government% contention tbat~
..'th.etax,lienshouldhane.priorityover the attach-
. .ment lien~fixedaga.inst..the,parsonal
property of
L..,C.~Russellisdenisd and overru1ed.w
:._
The Yates &ase,rcited..with.-approval
Louisiana
State.~JJniversity
v~.'Hart,. 174 A.L.R. 1366
2lO..Ia;.:7S.,:
3.61.
(1946)~whereina similar priority dispu