Cooley v. Fredinburg

EDMONDS J.,

dissenting.

The majority holds that the provisions of 28 USC § 2410(c) do not preempt the requirement in ORS 23.530(2) *540that FDIC must have asserted its lien and obtained a judgment in the foreclosure proceeding in order to effect a redemption as a creditor. The question of federal preemption is one of Congressional intent. Best v. U.S. Nat. Bank, 303 Or 557, 739 P2d 554 (1987). Federal preemption applies when federal law expressly precludes state action or, if the federal law on its face is unclear or silent, when the state law directly conflicts with the federal law, interferes with the operation or impairs attainment of federal goals or when Congress has “occupied the field.” Derenco v. Benj. Franklin Fed. Sav. and Loan, 281 Or 533, 540-41, 577 P2d 477, cert den 439 US 1051 (1978).

28 USC § 2410(c) provides, in part, that “[wjhere a sale of real estate is made to satisfy alien prior to that of the United States, the United States shall have one year from the date of the sale within which to redeem.” The next sentence in the statute provides that the “United States may ask, by way of affirmative relief, for the foreclosure of its own lien * * *.” j'jluS) the statute contemplates two separate rights of federal agencies that cannot be preempted by state law: the right to appear as a party, foreclose its lien in a state proceeding and purchase the property at the sale, and the right to redeem, even if it has not foreclosed its lien. That construction is supported by the legislative history that the one year redemption right was enacted in addition to an existing provision providing that the United States could be a party to a foreclosure proceeding in state court. Initially, the bill proposed that the government be authorized only to bid at the foreclosure sale when the property was sold to satisfy a senior lien. Congress was concerned that there would not be appropriated funds available for the agency to make the purchase. Underlying that concern was the need to protect the value of the government’s security that would otherwise be lost through the foreclosure of a senior lien. Those provisions were rejected in part and replaced when Congress adopted the provisions of section 2410(c) that provide for an absolute right of redemption for a twelve-month period. See 72 Cong Rec 1998-1999 (1930); 72 CongRec 3117-3120 (1930); 72 Cong Rec 7020 (1930); S Conf Rep, 71st Cong, 3d Sess (1930); 74 CongRec 5466-5467 (1930); 74 CongRec 5865-5866 (1930).

Congressional intent is illustrated by United States v. John Hancock Mut. L. Ins. Co., 364 US 301, 81 S Ct 1, 5 L *541Ed 2d 1 (1960). There, the state law took away the government’s right to redeem by giving the debtor the exclusive right to redeem within twelve months after the sale and thereby cut off all redemption rights of lien creditors. The purchaser of the property at the foreclosure sale argued that the Farmers Home Administration could have protected its lien by out-bidding the purchaser at the sale pursuant to its authority under another federal statute. To accept that argument would have required the Court to read into section 2410(c) a limitation of the preemptive right of redemption that would authorize “redemption ‘except where another federal statute authorizes the particular agency concerned to bid at foreclosures sales.’ ” 364 US at 307. The Court rejected the argument.

The purchaser also argued that the United States, by seeking affirmative relief in a state court, had subjected itself “to all the incidents of state law which govern other suitors.” 364 US at 308. In response, the Court noted that the United States is not subject to local statutes of limitations and that the proceedings were not initiated by the United States. The purchaser contended that, because the first sentence of section 2410(c) provided at that time that “[a] judicial sale in such action or suit shall have the same effect respecting the discharge of the property from liens * * * held by the United States as may be provided * * * by the local law of the place where the property is situated,” the right to redeem was qualified by state law. Again, the Court rejected that interpretation, noting that it would render the right of redemption in section 2410(c) “nugatory.” 364 US at 308.

In summary, the right of redemption in section 2410(c) is a right that cannot be impaired by state law, because Congress intended that the federal government not lose the value of the security for a debt owed to it through a state court foreclosure proceeding. The majority qualifies FDIC’s right of redemption under ORS 23.530(2). It makes the right dependent on whether FDIC reduced its lien to judgment in the foreclosure proceeding. It reads a requirement into the statute that is not there: i.e., that, in order to enforce a right of redemption, the redemptioner must have foreclosed its lien. That construction is inconsistent with the law of federal preemption, because it impairs attainment of *542the goal of Congress when it enacted section 2410(c). The majority errs when it fails to carry out Congress’ intent.

I dissent.