6337 Annotations: Period for Redemption- Levy

Redemption of Properly: Period for Redemption

[67-2 USTC ¶9652]Charles E. Ballard, Plaintiff v. United States of America and Woody W. Fisher, Defendants

U. S. District Court, Dist. Colo., Civil Action 67-C-193, 8/14/67

[1954 Code Sec. 6337(b)(1)]

Redemption of property: 120-day period: Fact finding.--A mortgagee could not redeem real property sold by the IRS to satisfy back taxes since the attempted redemption was made after the 120-day redemption period had elapsed.

Arthur W. Zarlengo, 428 American Nat'l Bank Bldg., Denver , Colorado , for plaintiff. Lawrence M. Henry, United States Attorney, Richard T. Spriggs, Assistant United States Attorney, Denver, Colo., for U. S.; Bayard B. Taylor, Thomas D. Smart, 500 Denver Club Bldg., Denver, Colo., for W. W. Fisher, defendants.

Memorandum Opinion and Order

ARRAJ, Chief Judge:

Each of the defendants has moved to dismiss the complaint for failure to state a claim upon which relief can be granted. Defendant Fisher has filed other Rule 12 motions.

The pertinent facts are as follows. Certain real property in Summit County , Colorado , was seized by the District Director of Internal Revenue pursuant to Section 6331 of the Internal Revenue Code for non-payment of taxes due from the record owner. The property was sold to defendant Fisher at Breckenridge , Colorado , on November 4, 19 66 pursuant to a Notice of Public Auction Sale issued by the Distict Director. Plaintiff served notice on March 6, 19 67 and tendered the purchase price and interest on March 21, 19 67 to redeem the property from that sale. He seeks to redeem as "the holder of an interest in the nature of a mortgage" on the property and asks for judgment determining that he has effected a valid redemption of the property under Section 6337 of the 1954 Internal Revenue Code.

On November 2, 19 66 Section 6337 of the 1954 Internal Revenue Code was amended by Section 104(e) Federal Tax Lien Act of 1966, P. L. 89-719, 80 Stat. 1125. This amendment changed the period of redemption by reducing it from one year to 120 days. The provisions of Section 6337 (as amended), supra, are clear and unambiguous. The relevant portion states

(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 administrators, or any person having any interest therein, or a lien thereon, or any person in their behalf, shall be permitted to redeem the property sold, or any particular tract of such property, at any time within 120 days after the sale thereof.

Whether we were to choose the date when the plaintiff gave notice of his intention to redeem or the date of the actual tender, the result would not be different. Both dates are after the end of the 120-day redemption period, 122 and 137 days respectively. Since the plaintiff did not attempt to redeem the property until after the 120 days had elapsed, he cannot maintain this action to effect a valid redemption. The Court does not have the power to extend the time period for redemption under Section 6337(b)(1) of the Internal Revenue Code. See Kelly v. Sanders, 99 U. S. 441 (1878).

Plaintiff argues that if a lienor can redeem at any time within the 120-day period he could cut off the rights of the owner or others who have an interest in the property by simply being prior in time to redeem after sale. Plaintiff is in error; such a result would not follow. See Samet v. United States [65-2 USTC ¶9520], 242 F. Supp. 214 (M. D. N. C. 1965).

Because of the conclusions reached here, the other pending motions need not be considered. It is

ORDERED that the motions of each of the defendants to dismiss for failure to state a claim upon which relief can be granted be, and the same hereby are, granted. It is further

ORDERED that the complaint and cause of action be, and the same hereby are, dismissed.

[82-1 USTC ¶9176]Thomas Howard and Margaret Howard, Plaintiffs v. Donald L. Adle, a/k/a Dudley Adle, and United States of America, Department of Treasury, Internal Revenue Service, Defendants

U. S. Dist. Court, East . Dist. Mich. , So. Div., Civil No. 80-74444, 538 FSupp 504, 1/13/82

[Code Secs. 6335 and 6337]

Seizure of property: Notice of sale: Failure to comply with notice requirements: Actual prior notice: Redemption: 120-day period: Equitable relief.--A tax sale of a parcel of real estate was not set aside because the attempted redemption occurred one day after the statutory 120-day period and the court was without equitable power to extend the period. Also the court, applying Michigan law, declined to exercise its equitable power to find the sale void even though the sale was technically defective because the notice of the sale was sent by certified mail rather than delivered as required by Code Sec. 6335. The taxpayer was not entitled to equitable relief, in this action considered in essence an action to quiet title, because he failed to act with sufficient promptness to set aside the tax sale where he had actual notice prior to the sale, he was an attorney able to appreciate the nature of the defective notice, and he had redeemed the same property the year before.

John Noel MacKinnon, Valade & MacKinnon, 2300 City National Bank Bldg., Detroit, Michigan 48226, for plaintiff. Charles A. Murphy, 27777 Franklin Road , Southfield , Michigan 48034 , for defendants.

Memorandum Opinion and Order

COHN, District Judge:

This is an action seeking to set aside a federal tax sale of a parcel of real estate on the grounds that (1) the notices of seizure and sale were defective, and (2) plaintiffs properly redeemed following the sale. Defendants are the purchaser at the tax sale, Donald Adle, and the United States in the person of the Internal Revenue Service (IRS). Jurisdiction is based on 28 U. S. C. §1340 ¹ and 28 U. S. C. §2410(a). ² Before the Court are cross motions for summary judgment by plaintiffs and the United States .

I.

[Facts]

The following facts are uncontroverted.

A. In 1972 plaintiffs purchased on land contract the parcel in question: a house and lot in Redford Township , Michigan . Prior to the seizure and sale involved in this case the parcel was seized and sold in 1979 for unpaid federal income taxes; however, plaintiffs redeemed on the final day of the redemption period.

On March 26, 1980 the parcel was again seized for unpaid federal income taxes. Notice of the seizure was personally served on plaintiffs' daughter at their residence ³ and mailed to plaintiff Thomas Howard's office. Notice that the property would be sold on May 22, 1980 was mailed to plaintiffs' residence and to Thomas Howard's office May 8, 1980 . The May 22 sale went forward but was subsequently declared void when the high bidder failed to tender the full bid price.

Thereafter, notice of a June 16, 1980 sale date was sent by certified mail on June 3, 1980 to plaintiffs' residence and Thomas Howard's office. The notice sent to Thomas Howard's office was received June 4, 1980 ; however the notice to plaintiffs' residence was returned unclaimed after several attempts at delivery. Plaintiffs had actual prior notice of the June 16, 1980 sale. ⁴ On June 16 the parcel was sold to defendant Donald L. Adle, the vendor under the land contract on the parcel.

B. In a letter dated September 30, 1980 , the Detroit District Director of the IRS notified plaintiffs of the sale and their right to redeem. The letter contained the following statement:

"Under Section 6337 of the Internal Revenue Code, as amended by the Federal Tax Lien Act of 1966, you have 120 days within which to redeem the property. The redemption period expires on the above date."

The "above date" appearing at the letter's heading was October 15, 1980 . On October 15 a Nick Zaika appeared at the Dearborn , Michigan IRS office and tendered a cashier's check payable to defendant Adle to redeem the parcel. On November 13, 1980 the IRS returned the check to plaintiffs with an explanation that the September 30 letter incorrectly stated that October 15, 1980 was the last day of the 120 day statutory redemption period but in fact the 120th and final day was October 14, 1980 .

C. On November 16, 1980 the IRS executed a deed of the parcel to defendant Adle. This action was filed November 25, 1980 .

II.

[Statutory Notice Requirements]

A. The Internal Revenue Code requirements for notice of seizure and sale of property are as follows:

"(a) Notice of seizure.--As soon as practicable after seizure of property, notice in writing shall be given by the Secretary or his delegate to the owner of the property (or, in the case of personal property, the possessor thereof), or shall be left at his usual place of abode or business if he has such within the internal revenue district where the seizure is made. If the owner cannot be readily located, or has no dwelling or place of business within such district, the notice may be mailed to his last known address. Such notice shall specify the sum demanded and shall contain, in the case of personal property, an account of the property seized and, in the case of real property, a description with reasonable certainty of the property seized.

(b) Notice of sale.--The Secretary or his delegate shall as soon as practicable after the seizure of the property give notice to the owner, in the manner prescribed in subsection (a), and shall cause a notification to be published in some newspaper published or generally circulated within the county wherein such seizure is made, or if there be no newspaper published or generally circulated in such county, shall post such notice at the post office nearest the place where the seizure is made, and in not less than two other public places. Such notice shall specify the property to be sold, and the time, place, manner, and conditions of the sale thereof. Whenever levy is made without regard to the 10-day period provided in section 6331(a), public notice of sale of the property seized shall not be made within such 10-day period unless section 6336 (relating to sale of perishable goods) is applicable."

26 U. S. C. §6335(a), (b).

B. On October 5, 1981 the Court ruled that notice of the seizure was properly given. ⁵

No claim is made that the IRS failed to comply with the publication and posting requirements for the notice of sale. Plaintiffs' sole complaint is that the notice of the June 16, 1980 sale was neither "given" to them nor "left" at their place of abode or business.

C. The United States admits that it was required to provide notice of sale to plaintiffs in compliance with the first sentence of §6335(a), but argues that the statutory language includes certified mailing. It reasons that notice of sale was left at Howard's usual place of business, albeit by a postal rather than an IRS employee. This is simply an implausible reading of the statute.

Notice must be given by "the Secretary or his delegate". The Secretary, of course, is the Secretary of the Treasury; "or his delegate" means:

"any officer, employeee, or agency of the Treasury Department duly authorized by the Secretary of the Treasury directly, or indirectly by one or more re-delegations of authority, to perform the function mentioned or described in the context."

26 U. S. C. §7701(a)(12)(A)(i).

An employee of another executive department, such as the Post Office, does not meet the definition of "delegate". ⁶ That Congress did not contemplate that mailing was synonymous with "giving" notice to an owner or "leaving" it at his home or business is apparent from the second sentence of §6335(a). Where the owner cannot be readily located or has no dwelling or business in the district, the notice "may be mailed to his last known address". The United States argues that the only difference between the first and second sentence is that the latter permits mailing to "the last known address" rather than to the usual place of abode or business. Had Congress so intended, surely it would have used the word "mailed" in both sentences, rather than requiring that notice be "left" by the Secretary or his delegate in the first sentence.

The IRS itself has, by regulation, interpreted §6335 to require delivery of the notice rather than mailing unless the owner cannot be readily located or has no place of abode or business in the district.

"As soon as practicable after seizure of the property, the district director shall give notice of sale in writing to the owner. Such notice shall be delivered to the owner or left at his usual place of abode or business if located within the internal revenue district where the seizure is made. If the owner cannot be readily located, or has no dwelling or place of business within such district, the notice may be mailed to his last known address."

26 C. F. R. §301.6335-1(b)(1) (1981).

The internal operations manual of the IRS is even more specific:

"The original notice [of sale] will be delivered to the taxpayer personally. If personal service has been attempted but could not be accomplished, the notice will be sent by Certified Mail, Return Receipt Requested to the taxpayer's last known address."

Internal Revenue Manual §5356.1(2) (1980). The United States does not claim that it attempted to serve the notice of sale personally or that plaintiffs could not be readily located within the district.

D. The Court's inquiry, however, does not end with the finding that notice of sale was not made in literal compliance with the statute. This is, in essence, an action to quiet title. Because plaintiffs seek equitable relief, they must show that they themselves have done equity. McAndrews v. Belknap, 141 F. 2d 111, 115 (6th Cir. 1944); Johnson v. Gartlan [73-1 USTC ¶9150], 470 F. 2d 1104, 1106 (4th Cir. 1973). Because the parcel is located in Michigan , Michigan law applies. McAndrews, supra; see also 28 U. S. C. §2410(c). ⁷

The general rule in Michigan is:

"Where . . . a serious defect occurs in the tax sale, it may be attacked by the owner of the premises, provided he acts promptly and does equity."

Detroit Trust Co. v. Lieberwitz, 275 Mich. 429, 436 (1936). See also Simasko v. Township of Harrison, 15 Mich. App. 534 (1969).

In Blondin v. Griffin, 133 Mich. 647 (1903), the Michigan Supreme Court declined to set aside a technically defective tax sale because of the owner's failure to act promptly on facts strikingly similar to this case.

"[Petitioner] knew that his taxes were unpaid, and that proceedings were instituted in 1901 for the sale of his land. The county treasurer had written him of the pendency of the suit, and that his land would be sold unless his taxes were paid. To this he paid no attention, did not appeal in the suit, or even at the sale, to make protest. Nearly three months after the sale and after confirmation he applies to the court to have the sale set aside for the reason that the action of the auditor general in setting aside the [prior] sales in 1895 and 1896 is invalid . . .. Petitioner was entitled to redeem from this sale by complying with Act No. 229, Pub. Acts 1897. Instead of complying with this statute, he chose to resort to this suit. We thing his conduct estops him from now insisting upon this irregularity of the auditor general."

133 Mich. at 648.

In equity there is, of course, no absolute rule as to what period of delay will bar relief; each case must be determined according to its own peculiar circumstances. Hoehn v. Crews, 144 F. 2d 665, 671 (10th Cir. 1944). Here three factors lead the Court to conclude that plaintiffs failed to act with sufficient promptness. First, plaintiffs had actual notice prior to the sale. Second, Thomas Howard is an attorney and thus particularly able to appreciate the nature of the defect in a notice and the need to act swiftly to set aside a sale. Finally, virtually the identical scenario was acted out the previous year, the only difference being that plaintiffs tendered the redemption amount on the statutory deadline in 1979 rather than being a day late as they were in 1980.

Plaintiffs did not notify either the IRS or defendant Adle during the 120 day redemption period that they considered the sale invalid. Indeed, their attempt to redeem at the last moment suggests they considered the sale valid. Cf. Johnson, supra (taxpayer ratified technically invalid sale by accepting excess proceeds of sale). Only after the IRS deeded the property to defendant Adle did plaintiffs raise a claim of invalidity by the filing of this action.

E. Plaintiffs rely on two cases for the principle that a tax sale should be set aside for failure to comply with the notice requirements of §6335. Reece v. Scoggins [75-1 USTC ¶9202], 506 F. 2d 967 (5th Cir. 1975) and Aqua Bar & Lounge, Inc. v. United States [77-2 USTC ¶9552], 438 F. Supp. 655 (E. D. Pa. 1977).

The Court finds these cases distinguishable for at least two reasons. First, both cases proceeded directly from the finding that noncompliance with the notice of sale requirements renders the sale voidable to holding the sale void without considering whether or not the taxpayer was entitled to equitable relief under the applicable state law.

Second, in neither case did the undisputed facts show that the taxpayer received prior written notice of the sale. In Reece not only was there no personal service, but notice of the sale was not mailed in time to be delivered prior to the sale date, and no notice of the adjourned sale date was mailed. Thus there was a substantial issue whether the taxpayer had been given "an opportunity to be present at the tax sale and bid on the property", the central purpose of the statutory notice requirements. 506 F. 2d at 971. The court in Aqua Bar refused to speculate as to whether mailed notice of sale had actually reached the taxpayer because the "purpose of requiring a particular method of giving notice is to prevent disputes over whether notice was received". 438 F. Supp. at 657. Here there is no dispute: plaintiffs received prior written notice. There is no claim that they were denied the opportunity to be present at the sale.

[Attempted Redemption]

III. Plaintiffs also argue that even if the tax sale is not void, the attempted redemption on October 15, 1980 should be honored. The statute provides in relevant part:

"Redemption of real estate after sale.--(1) Period.--The owners of any real property sold as provided in section 6335 . . . shall be permitted to redeem the property sold . . . at any time within 120 days after the sale thereof.

"(2) Price.--Such property . . . shall be permitted to be redeemed upon payment to the purchaser, or in case he cannot be found in the county in which the property to be redeemed is situated, then to the Secretary or his delegate . . . the amount paid by such purchaser and interest thereon at the rate of 20 percent per annum."

26 U. S. C. §6337(b).

The expiration date of the redemption period is calculated by including the date of sale. Ballard v. United States, 67-2 USTC ¶9652 (D. Colo. 1967); Guthrie v. Curnutt [70-1 USTC ¶9168], 417 F. 2d 764 (10th Cir. 1969). This Court simply lacks the power to extend the statutory period, even for powerful equitable considerations. Anselmo v. James [78-2 USTC ¶9696], 449 F. Supp. 922, 926 (D. Mass. 1978) (redemption four days late because travel restricted by state of emergency declared due to blizzard); Keely v. Sanders, 99 U. S. 441, 445-46 (1878) (citing with approval Finley v. Brown, 22 Iowa 538 (1867), which held that right to redeem could not be extended even though owner resided in a Confederate state during the Civil War). The application of the rule here is less troubling inasmuch as plaintiffs were familiar with the procedure for redemption having redeemed the same parcel in 1979 on the 120th day.

IV. Accordingly, for the reasons herein stated, plaintiffs' motion for summary judgment is DENIED and the United States ' motion for summary judgment is GRANTED.

SO ORDERED.

Judgment

This action came on for (hearing) before the Court, Honorable AVERN COHN, United States District Judge, presiding, and the issues having been duly (heard) and a decision having been duly rendered.

It is Ordered and Adjudged that plaintiffs' motion for summary judgment is DENIED, that defendants' motion for summary judgment is GRANTED and that the above action be DISMISSED.

¹ "The district courts shall have original jurisdiction of any civil action arising under any Act of Congress providing for internal revenue, or revenue from imports or tonnage except matters within the jurisdiction of the Customs Court."

² "Under the conditions prescribed in this section and section 1444 of this title for the protection of the United States, the United States may be named a party in any civil action or suit in any district court, or in any State court having jurisdiction of the subject matter (1) to quiet title to . . . real property on which the United States has or claims a mortgage or other lien". See Aqua Bar & Lounge v. U. S. Dept. of Treasury [76-2 USTC ¶9554], 539 F. 2d 935 (3rd Cir. 1976).

³ United States ' Request for Admissions to Plaintiffs (Admissions), No. 1. The request was served on July 7, 1981 and has not been answered or objected to. Plaintiffs have not moved to withdraw or amend the admissions. despite defendant's reliance on them in moving for summary judgment; nor have they denied the underlying facts. See Fed. R. Civ. P. 36.

⁴ Admissions, No. 7.

⁵ Plaintiffs had argued that Thomas Howard was separated from Margaret Howard, his wife, at the time the notice of seizure was left at the residence occupied by Margaret Howard, and therefore Thomas Howard was not properly served at his place of abode. This argument was foreclosed by Admissions No. 1, that both plaintiffs resided at the address in question during the relevant period.

⁶ The statute does provide that in Guam and American Samoa "delegate" may include an officer or employee of any other federal agency duly authorized by the Secretary. 26 U. S. C. §7701(a)(12)(B).

⁷ This statute, which confers jurisdiction over the United States as a defendant in a quiet title action, thus waiving soverign immunity, provides:

"A judgment or decree in such action or suit shall have the same effect respecting the discharge of the property from the mortgage or other lien held by the United States as may be provided with respect to such matters by the local law of the place where the court is situated."

[76-1 USTC ¶9432]Silver Bell Industries, Inc., Plaintiff-Appellant v. United States of America, Scandian Company, Inc., and Richard Donnelly, Defendants-Appellees

(CA-10), U. S. Court of Appeals, 10th Circuit, No. 74-1641, 2/19/76 , Affirming District Court decision, 74-2 USTC ¶9691

[Code Sec. 6337]

Redemption of property; 120-day period: Improper sale.--The Court of Appeals upheld the finding of the District Court that the taxpayer's attempted redemption of property, seized and sold by the government in order to satisfy its claim for back taxes, was ineffective since the payments were received by the purchasers of the property more than 120 days after the sale. The taxpayer's contentions on appeal that the sale was improper and invalid and that the redemption payment was timely made were found to be without merit.

Gene F. Reardon, Reardon, Reardon & Reardon, 2150 First Nat'l Bank Bldg., Denver, Colo., for plaintiff-appellant. Donald K. Bain, John R. Webb, Holme, Roberts & Owen, 1700 Broadway, Denver, Colo., for defendant-appellee Donnelly. Mosley, Wells & Dean, Suite 1230 , Colorado State Bank Bldg., 1600 Broadway, Denver , Colo. , for defendant-appellee, Scandian Co., Inc.

Before SETH, HOLLOWAY and MCWILLIAMS, Circuit Judges.

HOLLOWAY, Circuit Judge:

This appeal is from a judgment denying relief in a suit by the owner of mining claims to set aside tax sales of its properties and certificates of such sales issued to appellees Donnelly and the Scandian Company. ¹ The sales were made by the IRS to satisfy delinquent federal employment taxes due from appellant Silver Bell Industries, Inc.

Silver Bell essentially argues that the revenue officer who conducted the sales lacked authority to make various determinations concerning the sales procedures; that the officer had no authority to hold the sale in Denver , instead of in San Miguel County where the properties were situated; that he lacked other written authority; and that, therefore, the sales certificates were void. Silver Bell also contends it had paid all amounts due for the second quarter of 1971 prior to the filing of any lien therefor, making the seizure and sale invalid. It argues that the revenue officer, Mitchell, improperly credited payments by Silver, Bell , with the net result that Silver Bell had paid amounts in excess of its liabilities and amounts needed for timely redemption of the properties sold.

Silver Bell contends it satisfied the requirements for redemption by tender of proper amounts to the IRS and by timely mailing of checks to Dennelly and Scandian Company, Inc., the purchasers at the tax sales.

The trial court rejected all the challenges to the validity of the sales and the redemption arguments, and denied relief. 34 AFTR 2d 74-5682 [74-2 USTC ¶9691]. The court's findings and conclusions were essentially as follows:

The levy predicating the sale of Silver Bell's properties was for unpaid employment taxes amounting to $52,936.54 for calendar quarters ending June 1970, September 1970, March 1971, and June 1971. Silver Bell was given notice of seizure and sale and Donnelly and Scandian purchased the property at public auction ² on January 12, 1972 , and received certificates of sale, subsequently surrendered for deeds to the properties.

It was found that Silver Bell made no effort to redeem the properties until May 10, 1972 ; that Silver Bell then mailed checks for $5,624.43 and $1,590.98 respectively to Donnelly and Scandian, which were received on May 12, the 121st day after the sale. The court found the tender was not effective on mailing, and that it was not made within the 120 days allowed for redemption, and was untimely; that the amounts were insufficient; and that the tenders were conditional.

It was also found that the proof did not support Silver Bell's centention that it tendered an adequate amount toward redemption to the IRS; that the law required that excess tax payments by Silver Bell be credited to tax owed, and that any additional balance be refunded. The court found that the IRS complied strictly with the laws on levy, seizure and sale; that the deeds were prima facie proof of the regularity of the proceedings; and that the presumption of regularity and compliance with the law had not been overcome.

We agree with the trial court. We feel that its findings are amply supported by the record and the presumptions which apply, and that the conclusions drawn were correct. Our discussion will be confined to Silver Bell's main appellate arguments and the facts pertinent to them.

First, Silver Bell challenges the regularity of the sale in several respects. It contends initially there was no "special order" by the Secretary of the Treasury or his delegate as required by 26 USCA §6335(d). Such a defect would make the sale invalid. Johnson v. Gartlan [72-1 USTC ¶9370], 334 F. Supp. 438, 440-41 (E. D. Va.), rev'd on other grounds, [73-1 USTC ¶9150] 470 F. 2d 1104 (4th Cir.). The statute provides in part:

The place of sale shall be within the county in which the property is seized, except by special order of the Secretary or his delegate.

The criteria for such a special order are stated in 26 CFR §301.6335-1(c)(1). ³ The order is to be issued only if it appears to the Director that substantially higher bids may be obtained for the property if the sale is outside the county. The specific provisions for such a special order in §6335(d) are not insignificant technicalities and must be strictly followed. It has long been the rule that ". . . the person invested with such a power [of sale] must pursue with precision the course prescribed by law, or his act is invalid . . ." Thatcher v. Powell, 19 U. S. 54, 56. Moreover, the burden of showing literal compliance with statutes governing the sale of land for taxes rests on the claimant under the tax sale. McAndrews v. Belknap, 141 F. 2d 111, 115 (6th Cir.).

Silver Bell argues that the record shows that there was no such "special order," relying on the deposition of the revenue officer, Mr. Mitchell. He was asked whether there was such a "special order" and replied that there was a "general authorization from the District Director authorizing the sales outside the county," but that he was not aware of any special order with respect to this particular sale. ⁴ Silver Bell 's attorney asked the Assistant United States Attorney if the document could be made available, and said to her: "Well, we are looking for a special order of the Secretary." (Supp. Vol. III, 97).

There is no indication in our record of any production of such a document. By the time of trial Mitchell had retired. When questioned at trial as to why he did not then have the documents, he explained that he had retired.

It is true that no "special order" was produced and that Mitchell's testimony raised a serious question. He had handled the account of Silver Bell and the procedures before the sale and conducted the sale. And he said he had the files in his possession at the deposition (Supp. Vol. III, 15-18), and that he was aware of no "special order" concerning this sale. However, in meeting their burden the claimants under the sale, Donnelly and Scandian, produced the deeds and they recite that the lands were "sold as provided by Section 6335 . . . and the regulations promulgated thereunder . . ." The recital is prima facie evidence of the facts stated. 26 USCA §6339(b)(1). ⁵ And in conjunction with a tax sale it has been held that ". . . the law presumes that persons acting in a public office have been duly appointed, and are acting with authority, until the contrary is shown." Keely v. Sanders, 99 U. S. 441, 447.

The question is not free from doubt, because of Mitchell's deposition testimony and the files there examined. Nevertheless, he referred to a "general authorization from the District Director authorizing the sales outside the county." It was within means available to Silver Bell by the time of trial to develop whether a sufficient order existed, based on proper determinations, complying with the statute and regulations. In view of the state of the record, we cannot say the trial court erred in finding that "[t]he deeds in the Registry of the Court are prima facie proof of the regularity of the proceedings recited therein as provided in Section 6339(b) of the Code. The presumption of regularity and compliance with the law has not bee overcome by the plaintiff."

Other related arguments are made by Silver Bell that the revenue officer, Mitchell, was not shown to be authorized to select an alternative method of sale under sealed bids (see 26 USCA §6335(e)(2)), or to issue the certificates of sale (see 26 USCA §6338(a)). Silver Bell again points to failure of the revenue agent to produce the documents showing such authority and to the failure of the IRS to produce such documents despite requests for them, and says that the questions should be resolved against the parties relying on the validity of the procedures (Brief for Appellant, 15-17). We disagree. The means for pursuing the matter, and for establishing at trial whether there was a lack of delegation of authority, were available to Silver Bell. We are referred to no showing of such efforts. We agree again with the trial court's holding that the proceedings should be presumed to have been regular. See Keely v. Sanders, 99 U. S. 441, 447.

Second, Silver Bell contends that it had fully paid all amounts due for its federal employment taxes for the second quarter of 1971 prior to the filing by Mitchell of any lien therefor, and that the seizure and sale for said period were invalid (Brief for Appellant, 17-19).

Silver Bell points to the IRS tax statement for the period ended June 30, 1971 , showing that it owed $14,975.44 (Ex. 13), to its payments of $9,000 and $5,957.44 on October 1 and 8, 1971 (Ex. 9), and to its attorney's letter of October 4, 1971 , stating "we assume you will apply [the $9,000] to the account in the approximate amount of $14,000" and that with another payment of approximately $5,000 "[t]his should clear up the aforesaid quarter in the approximate amount of $14,000." (Ex. 15). Silver Bell argues that the voluntary payments should have been credited as the debtor directed, citing Revenue Ruling 58-239, 1958-1 Cum. Bull. 94, inter alia; and that this being prior to filing of a lien therefor, the seizure and sale were invalid.

The $14,975.44 paid in October, 1971, apparently was credited to the third quarter liability in 1971 (Supp. Vol. I, 169-70), instead of the second quarter. Furthermore, a payment of $14,233.61 was made on December 7, 1971, in payment of the exact amount of the third quarter tax (see Ex. 9; Supp. Vol. 1, 170). Nevertheless, the seizure and sale under 26 USCA §6331 were authorized if Silver Bell was liable for any tax that it has neglected or refused to pay within 10 days after notice and demand. 26 USCA §6331(a). The levy under which the sales were made was for $52,936.54, covering federal employment taxes for four quarters ended June 30 and September 30, 1970, and March 31 and June 30, 1971, and statutory additions. As the figures on the levy show, ⁶ applying the $14,957.44 payments made in October, 1971 as Silver Bell wished would have left some $35,227.65 ⁷ as the unpaid balance of assessments at the time of the levy on November 15. By the time of the sale on January 12, 1972, payments still had not been made which would have satisfied the levy in full, and a substantial amount covered by the levy--over $20,000--would have remained due in any event, according to our record. ⁸ Hence we agree with the finding of the trial court that "at no time prior to the sale date of January 12, 1972, had [Silver Bell] paid sufficient amounts to discharge its tax liability for the taxes for which the levy and seizure of its property were made."

Third, Silver Bell argues that it properly redeemed its properties by payment to the IRS. Specifically it says that Mitchell improperly credited payments with the net result that Silver Bell paid the IRS monies in excess of its tax liabilities and amounts needed to timely redeem. And it argues that the provisions of the redemption statute, 26 USCA §6337, were satisfied by tender of the amounts for its taxes and redemption by its March 23, 1972 , payment of $44,232.41; that its president, Sanders believed this payment was sufficient to pay all delinquent taxes and to achieve redemption; that Mitchell refused to let Silver Bell attempt to reconcile its tax accounts; and that Mitchell knew that Silver Bell had, in fact, overpaid (Brief for Appellant, 22-23). Silver Bell argues it made an effective tender, citing Guthrie v. Curnutt [70-1 USTC ¶9168], 417 F. 2d 764 (10th Cir.).

The trial court found that "[t]he evidence does not support plaintiff's contentions that its payment of $44,232.41 on March 23, 1972 , was adequate to redeem the property sold for taxes." In connection with the issue we have considered the testimony and exhibits, particularly Ex. 1, the IRS transcript of the account of Silver Bell, and Ex. 34, the March 23, 1972 , letter transmitting the $44,234.41 payment to Mr. Mitchell. We have also considered the analysis of the figures in the appendix to the brief of Appellees.

From the record and consideration of the contentions we are satisfied that the record sustains the finding that the evidence does not support plaintiff's contentions that Silver Bell's payment of $44,234.41 on March 23, 1972, was adequate to redeem the property sold for taxes. The tax liabilities and credits as a whole show no credit to Silver Bell exceeding approximately $3,800 to apply toward redemption. Redemption of all of Silver Bell's properties would have required over $10,976.80--the price paid for all of them, including some not involved in this case. ⁹ The appellees paid $6,800.80 for the properties involved herein (Brief for Appellant, 2), and the amount required by §6337(b) for redemption from appellees would thus have been over $6,800, when the interest is added. Thus even treating such $3,800 credit as applicable to redemption, the amount was still insufficient, as the trial court found. ¹⁰

Silver Bell argues that Sanders made a tender to Mitchell of the redemption money which was sufficient. It is true that Guthrie v. Curnutt [70-1 USTC ¶9168], 417 F. 2d 764, 765-66 (10th Cir.) holds that "when a party, able and willing to do so, offers to pay another a sum of money and is told that it will not be accepted, the offer is a tender without the money being produced." The trial court found, however, that "the evidence does ot support this contention of attempted tender." There is support for the finding in Mitchell's testimony (Supp. Vol. III, 65-68). The trial court heard the testimony and we cannot say the finding was clearly erroneous.

Fourth, Silver Bell contends that on May 10, 1972 , it made a timely mailing of checks to appellees and thus satisfied the redemption requirement of 26 USCA §6337(b) for payment to the purchasers within 120 days after the sale. ¹¹

One argument is that the sale did not occur until January 21, 1972 , making the May 10 mailing timely, because the offers to purchase were not accepted until January 21 by the Special Procedures Section of the IRS. The trial court found, however, that the sale occurred on January 12 and the finding is supported (Pl. Ex. 24; Def. Donnelly's Ex. E). The argument based on Mitchell's worksheet and later internal approval of the sale is not persuasive. The sale date within the meaning of §6337(b)(1) is that of the publicly conducted sale itself, of which notice is given. The interpretation suggested by Silver Bell would not be consistent with a common sense view of the event and its realities.

Silver Bell also argues that if the sale date was January 12, 1972 , then May 11, 1972 , is the 120th day after the sale and that mailing the redemption checks on May 10, 1972 , fulfilled the requirements of §6337(b), citing 26 USCA §7502(a)(1). ¹²

Section 7502 is applicable to payments required to be made to an "agency, officer, or office." Here, the May 10 payment was being attempted to individual purchasers at the tax sale. The redemption payments attempted to such purchasers were not mailed to an "agency, officer, or office" of the Government, which we feel is the intent of §7502(a)(1).

The general rule is stated in 70 C. J. S. Payment §7, p. 218: "Payment is not effectuated by sending the amount due to the creditor by mail or other public carrier until the remittance gets into the hands of the creditor, unless he expressly, or by implication directs or consents that payment be so made, or such mode of payment is according to the usual course of dealings between the parties, from which the creditor's assent can be inferred." See 39 C. F. R. §153.5(a) (1974) (Recall of mail); Fitzgerald v. W. F. Sebel, Co., 295 F. 2d 654 (10th Cir.). The trial court found that Silver Bell's checks to purchasers Donnelly and the Scandian Company (Ex. 42) were delivered on May 12, 1972 , the 121st day after the sale. Silver Bell does not challenge the fact that this was the date of delivery, and in light of the mailing rule we agree with the trial court's finding that the tender was untimely.

Silver Bell also admits that the amounts of money tendered to the purchasers for redemption were not the full amounts required (Brief for Appellant, 3, 31). It argues, however, that the de minimis rule applies, saying that in one instance the amount tendered was only $7.21 less than $1,598.19 required for redemption and in the other instance $23.36 less than $5,647.79 required (Pl. Ex. 42). ¹³ We disagree. The redemption attempted was not in "the amount paid by such purchaser and interest thereon at the rate of 20 percent per annum." 26 USCA §6337(b)(2). The general rule is that ". . . all that is due must be tendered." Cameron County Water Improvement District No. 8 v. De La Vergne Engine Co., 100 F. 2d 523, 524; see 5 A. L. R. 1226. We are not persuaded that this case comes within the maxim "de minimis non curat lex." See 5 A. L. R. 1234. We agree with the trial court's finding that the tenders were insufficient.

In sum, we are satisfied that the trial court's findings are supported by the record and that its conclusion were not in error.

AFFIRMED.

¹ The United States was named a defendant by the amended complaint, which sought to enjoin issuance of the tax deeds. A motion for summary judgment was made by the Government, but not ruled on prior to entry of the pretrial order. By agreement the deeds were prepared and deposited in the registry of the court, pending disposition of the case. The pretrial order stated that it was agreed that the United States was no longer required to be an active participant in the case. The final judgment was in favor of all defendants.

² The property was actually sold at public sale under sealed bids. See 26 USCA §6335(e)(2)(A). Silver Bell complains of the lack of authority of the revenue officer, Mitchell, to select that alternative method of sale, but we agree with the trial court that this contention lacks merit.

³ The regulation, which was in effect at all material times, provides in part:

The place of sale shall be within the county in which the property is seized, except that if it appears to the district director under whose supervision the seizure was made that substantially higher bids may be obtained for the property if the sale is held at a place outside such county, he may order that the sale be held in such other place. The sale shall be held at the time and place stated in the notice of sale.

⁴ The deposition testimony was as follows:

Q. Now, was there a special order of the Secretary of the Treasury or his delegate authorizing this sale to be held outside of San Miguel County ?

A. There is a general authorization from the District Director authorizing the sales outside the county.

Q. Now, where is that document?

A. In the District Director's office.

Q. Now, did you bring that document with you today pursuant to the notice of deposition?

A. No, sir.

MR. REARDON: Again, Carolyn, could you make that document available to us?

MRS. MC NEILL: [Assistant United States Attorney] Are you talking about a general delegation of authority?

MR. REARDON: Well, we are looking for a special order of the Secretary.

Q. Let me ask you this, Mr. Mitchell: Was there any special order with respect to this particular sale that you were aware of?

A. No, sir. (Supp. Vol. III, 96-97).

The deposition was received in evidence (Supp. Vol. I, 176).

⁵ Section 6339(b)(1) provides:

(1) Deed as evidence.--The deed of sale given pursuant to section 6338 shall be prima facie evidence of the facts therein stated;

⁶ The levy was made November 21, 1971 , and is Ex. 21. In part it states that federal employment taxes, assessed and unpaid, for the four quarters were as follows:

                           Unpaid

Tax Period    Date of     Balance of         Statutory

Ended       Assessment    Assessment         Additions         Total

9-30-70
       
4-2-71
       $16,948.11         $1,176.54     $18,124.65  
3-31-71
       
6-18-71
       14,678.97            723.28      15,402.25

6-30-70
       
4-2-71
         3,600.57            562.62       4,163.19

6-30-71
       
9-17-71
       14,957.44            277.01      15,234.45

Lien fees                                         12.00          12.00

Total Amount Due:                                            $52,936.54

The levy further states that the unpaid amount was "for internal revenue taxes for which notice and demand has been made for payment. Section 6331, Internal Revenue Code, authorizes collection of taxes by levy . . ."

⁷ From the middle column above, the total of unpaid assessments, exclusive of the $14,957.44 payments, and the statutory additions, is $35,227.65.

⁸ There was a further payment of $14,233.61 on December 7, 1971 . This was apparently the exact amount of the third quarter tax. This amount was credited to the fourth quarter (Supp. Vol. I, 170). Silver Bell says this was a misapplication to a quarter for which the return and tax were not then due. However, even if the $14,233.61 is treated as applying to the earliest liability under the rule Silver Bell relies on, this still would not have satisfied, before the sale, the $35,227.65 of unpaid assessed balances shown on Exhibit 21, (See Supp. Vol. I, 173).

⁹ The tax sale of January 12, 1972 , involved the sale of eight separate Silver Bell properties. Four of these were purchased by Donnelly for the respective amounts of $1,554.17, $870.30, $1,029.19 and $1,847.14 (Exhibit 24). One was purchased by Scandian Co. for $1,500 (Ex. 36). The total sale price of the other three parcels was $4,176 (Ex. 36). These other properties are not the subject of this lawsuit.

¹⁰ While it could be argued that the $3,800 credit was sufficient to redeem at least some of the five separate parcels of property, we find no duty on the IRS to guess which properties the taxpayer would wish to be redeemed. Furthermore, we agree with the trial court that the IRS was under no duty to apply excess tax payments towards redemption, instead of refunding the balance. See 26 USCA §3503.

¹¹ 26 USCA §6337(b) provides:

(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 administrators, or any person having any interest therein, or a lien thereon, or any person in their behalf, shall be permitted to redeem the property sold, or any particular tract of such property, at any time within 120 days after the sale thereof.

(2) Price.--Such property or tract of property shall be permitted to be redeemed upon payment to the purchaser, or in case he cannot be found in the county in which the property to be redeemed is situated, 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.

¹² §7502(a)(1) provides:

Date of delivery--If any return, claim, statement or other document required to be filed, or any payment required to be made within a prescribed period or on or before a prescribed date under authority of any provision of the internal revenue laws is, after such period or such date, delivered by United States mail to the agency, officer, or office with which such return, claim statement, or other document is required to be filed, or to which such payment is required to be made, the date of the United States postmark, stamped on the cover in which such return, claim, statement, or other document, or payment, is mailed shall be deemed to be the date of delivery or the date of payment, as the case may be (emphasis added).

¹³ The trial court found the total shortage was $32.98, which is the amount appellees rely on (Brief for Defendants-Appellees, 27). The difference is not significant for our purposes since we feel the de minimis rule does not apply.

[70-1 USTC ¶9168]Letha Cantrell Guthrie, Plaintiff-Appellee v. Finis Curnutt, Defendant-Appellant

(CA-10), U. S. Court of Appeals, 10th Circuit, No. 37-69, 417 F2d 764, 11/10/69

[Code Sec. 6337(b)]

Redemption of property: Timely and sufficient tender: Evidence.--A delinquent taxpayer who offered cash or a cashier's check to an IRS officer in an attempt to redeem seized property made a timely and sufficient tender on the last day of the redemption period. The officer had made a mistake on the deadline and the purchaser frustrated the taxpayer's efforts to locate and offer payment to him.

Kaiser Michael, Jr., McAtee, Marchiondo & Michael, 315 5th St., Albuquerque, N. Mex., for plaintiff-appellee. Kendall O. Schlenker, James M. Parker, 1st Nat'l Bank Bldg., Albuquerque, N. Mex., for defendant-appellant.

Before LEWIS, BREITENSTEIN and HOLLOWAY, Circuit Judges.

BREITENSTEIN, Circuit Judge:

Defendant-appellant Curnutt and plaintiff-appellee Guthrie each owned an undivided one-half interest in New Mexico property. The Internal Revenue Service seized the interest of the plaintiff for failure to pay delinquent federal cabaret taxes. At the subsequent sale, defendant purchased the interest and a certificate of sale was issued to him on August 22, 19 66.

The issue is whether the plaintiff satisfied the requirements of the applicable redemption statute which provides: ¹

"(b) REDEMPTION OF REAL ESTATE AFTER SALE.--

(1) PERIOD.--The owners of any real property sold as provided in section 6335 * * * shall be permitted to redeem the property sold * * * at any time within 1 year after the sale thereof.

(2) PRICE.--Such property * * * shall be permitted to be redeemed upon payment to the purchaser, or in case he cannot be found in the county in which the property to be redeemed is situated, then to the Secretary or his delegate, * * * the amount paid by such purchaser and interest thereon at the rate of 20 percent per annum."

The plaintiff desired to redeem and about August 8, 19 67, hired an attorney to help her do so. Her attorney's efforts to handle the matter with the defendant or his lawyer were frustrated by the actions and attitudes of the defendant. On the last day for redemption an agent of the plaintiff went to the office of the Special Procedures Officer of the I. R. S. in Albuquerque , New Mexico , to redeem the property. The agent had with him $10,000 in cash and $8,500 in cashier's checks. The amount needed to redeem was less than $9,000. The agent told the I. R. S. officer that he had been unable to locate the defendant and offered to pay the required amount in cash or by a cashier's check. The I. R. S. officer refused the offer and told plaintiff's agent that he would have to redeem from defendant Curnutt. On the next day, the plaintiff and her agent reached Curnutt, who told them that the redemption time had expired and that he had applied for a deed. This suit was then filed to enforce the statutory right to redeem.

After an evidentiary hearing, the trial court found that "[t]he plaintiff exerted more than a reasonable effort to locate the defendant within the county where the property was located, and her inability to do so can be traced directly to purposeful action by the defendant." This finding is sustained by substantial evidence and is not clearly erroneous. The trial court held that "the tender [to the I. R. S. officer] was timely and sufficient to effect redemption in compliance with the provisions of the Code," and ordered that plaintiff be permitted to redeem.

Reversal is sought on the ground that there was no timely and sufficient tender. Defendant says that to redeem the plaintiff, within the statutory time, had to make "an actual production of the necessary funds" and offer them to the defendant or to the I. R. S. officer. On August 22, 19 67, the agent offered cash or a cashier's check to the I. R. S. officer. He told plaintiff's agent that the redemption deadline did not expire until August 23, that he would not accept the offer, and that the agent would have to redeem from the defendant directly. The rejection of the offer was not because of the nonproduction of the required amount. The I. R. S. officer was wrong on the deadline which expired on the 22nd.

The failure of the agent to count out the cash or to present a cashier's check in the actual amount does not destroy the tender. We have held that when a party, able and willing to do so, offers to pay another a sum of money and is told that it will not be accepted, the offer is a tender without the money being produced. Shaner v. West Coast Life Ins. Co., 10 Cir., 73 F. 2d 681, 684. See also National Labor Relations Board v. Murphy's Motor Freight, Inc., 3 Cir., 231 F. 2d 654, 655; Taylor v. Mutual Ben. Health & Accident Ass'n, 8 Cir., 133 F. 2d 279, 282; and Servel v. Jamieson, 9 Cir., 255 Fed. 892, 894. The New Mexico law is in accord. See Turner v. Sanchez, 50 N. M. 15, 168 P. 2d 96, 97, and Carmichael v. Rice, 49 N. M. 114, 158 P. 2d 290, 293. We do not read Peugh v. Davis, 113 U. S. 542, 545, to require the "counting out" of the money where there is a clear refusal to accept the money.

We are convinced that the defendant purposefully avoided the plaintiff, her lawyer, and her agent, in an effort to prevent redemption. The defendant could not be found in the county where the property was located and therefore the payment could be made to the delegate of the Secretary. That officer wrongfully rejected a timely and sufficient tender. The plaintiff complied with the statute and had the right to redeem.

Affirmed.

¹ Internal Revenue Code of 1954, §6337(b), 68A Stat. 787. The statute was amended in 1966 to change the period from 1 year to 120 days. See 80 Stat. 1137. The amendment was effective after the date of its enactment, November 2, 19 66. See 80 Stat. 1146. The sale in question was before that date.

[74-1 USTC ¶9280]John L. Albrittain, Appellant v. George Shultz, Secretary of the Treasury and General Diversified Enterprises Corporation, Appellees

(CA-4), U. S. Court of Appeals, 4th Circuit, No. 73-1254, 1/30/74 , Aff'g unreported District Court decision

[Code Sec. 6337]

Redemption of property: Proper party.--Denial of taxpayer's suit for declaratory relief regarding redemption of property sold for unpaid taxes was affirmed because the taxpayer waived his right to the property by accepting the sum paid to him by the corporation which had redeemed the property..

James R. Sharp, Fred Warren Bennett, Sharp & Bennett, 1108 Sixteenth St., N. W., Washington, D. C., for appellant. Peter J. Kostik, Griffin T. Garnett, Jr., Garnett & Kostik, for General Diversified Enterprises Corp., and William D. Holmes, Department of Justice, Washington , D. C. 20530, for George Shultz, appellees.

Before WINTER, BUTZNER and FIELD, Circuit Judges.

PER CURIAM:

In a suit to have the redemption of property sold for unpaid taxes declared ineffective, the district court held that the redemption was timely and substantially in accordance with the governing statute; that plaintiff, because of his position with respect to the corporation which redeemed the property, could not be permitted to retain the property to the detriment of the corporation; and that plaintiff probably had waived his right to claim the property as his own by reason of having accepted the sum paid to redeem it. Upon the record, examination of the briefs and consideration of oral argument, we think the district court properly denied plaintiff the requested declaratory relief both because the redemption was timely and substantially in accordance with the governing statute and plaintiff's position with respect to the corporation which redeemed the property was such that he ought not be permitted to retain it.

AFFIRMED.

[78-2 USTC ¶9696]Andrew Anselmo, Francis J. DiMento and James J. Sullivan, Jr. v. Richard J. James and Dawn James

U. S. District Court, Dist. Mass., Civil Action No. 78-400-F, 449 FSupp 922, 4/24/78

[Code Secs. 6337 and 7503--result unchanged under '76 Tax Reform Act]

Redemption of seized property: 120-day period: Extension.--The Great Blizzard of 1978 did not extend the 120-day statutory period for redemption of real estate seized for nonpayment of taxes. The general rule of leniency to the owner of seized property did not apply in this situation since courts are not empowered to extend the statutory period under the law. Further, the legal holiday statute was inapplicable here because the Governor's Executive Order proclaiming a legal holiday due to the blizzard was not statewide.

Thomas C. Cameron, Di Mento & Sullivan, 100 State St., Boston, Mass. 02109, for plaintiffs. Leonard Pass , William Appel, 412 Revere Beach Parkway , Revere , Mass. , for defendants.

Opinion

FREEDMAN, District Judge:

In this action for declaratory and injunctive relief, the Court is asked to decide whether the Great Blizzard of 1978 ¹ extended the statutory period for redemption of real estate seized and sold by the Internal Revenue Service (the "IRS"). ²

The essential facts are not in dispute. On October 12, 1977, undeveloped coastal land in Revere, Massachusetts (the "Land") ³ owned by the plaintiff Anselmo ⁴ was sold at public auction by the IRS to satisfy Anselmo's tax indebtedness as transferee of his deceased father. The Land was purchased at the auction by the defendants Richard and Dawn James ⁵ who paid $3,000 ⁶ and received a certificate of sale.

Anselmo had a statutory right to redeem the Land within 120 days of the sale ⁷ by paying to the Jameses the amount paid by them for the Land plus interest at the of 20% per annum. 26 U. S. C. §6337(b). ⁸ Anselmo claims that he intended to redeem the Land on Tuesday, February 7, 1978 , but was unable to travel from his home in Winchester , Massachusetts to the James' residence in Revere because of the Blizzard.

The Court takes judicial notice of the Great Blizzard and its effects. Travel during the storm itself was nearly impossible. Coastal areas suffered from severe flooding as well as high winds and deep snow. The Governor of the Commonwealth ⁹ proclaimed a state of emergency ¹⁰ on February 7, 1978, banning all non-essential vehicular traffic. On February 9, the Governor issued Executive Order No. 142 ¹¹ entitled "State of Emergency Executive Order" which extended the earlier proclamation, declared February 7 through 12, 1978 to be legal holidays in certain counties of the Commonwealth, including those in which Winchester and Revere are located, and banned the use of private passenger vehicles. ¹² The ban in seven communities, including Revere , was extended until midnight on Monday, February 13, 1978.

Anselmo was able to reach the James' residence in Revere by public transportation on Monday, February 13. His tender of three thousand, two hundred and ten dollars ($3,210) ¹³ was refused. Anselmo then tendered the same sum to Robert E. Cuoco who, on behalf of the District Director of the IRS, also refused to accept the tender. Both attempts at tender were refused because the 120-day period provided for in section 6337(b) of the Internal Revenue Code of 1954 ¹⁴ ("Section 6337(b)") expired on Thursday, February 9, 1978 .

Plaintiffs filed this action on February 14, 1978. ¹⁵ The matter was heard before me on February 17, 1978, at which time the parties agreed to an order restraining the Jameses from tendering their certificate of sale to the IRS in exchange for a deed to the land pending this Court's decision on the merits. The parties further agreed that the sole issue presented is the timeliness of the February 13th tenders. ¹⁶ While not so labelled by the parties, the action presents itself to the Court in the framework of cross-motions for summary judgment and it will therefore be so treated. ¹⁷

The owner's right to redeem property seized by the United States for nonpayment of taxes has long been recognized. E.g., Bennett v. Hunter, 76 U. S. (9 Wall.) 326 (1869). The Supreme Court has stated that:

It is the general rule of courts to give to statutes authorizing redemption from tax sales a construction favorable to owners, particularly when they provide, as in the present case, full indemnity to the purchaser, and impose a penalty on the delinquent.

Corbett v. Nutt, 77 U. S. (10 Wall.) 464 at 474-475 (1870) (footnote omitted).

While the general rule is one of leniency to the owner, e.g., United States v. Lowe, 268 F. Supp. 190 at 192 (N. D. Ga. 1966), ¹⁸ and while I am sympathetic to plaintiffs, I cannot rule in their favor.

Plaintiffs' first argument that their tender was timely is based upon the general rule of leniency to the owner. They argue in effect that equitable considerations should persuade the Court to rule that their February 13 tender was timely even though the 120-day statutory period expired on February 9. Plaintiffs cite Guthrie v. Curnutt, 417 F. 2d 764 (10th Cir. 1969), in support of their contention. In Guthrie, the plaintiff was the owner of an undivided one-half interest in certain real property. Plaintiff's interest in the property was seized for nonpayment of taxes and was purchased at the tax sale by the defendant who owned the other undivided one-half interest in the property. The efforts of plaintiff's attorney to effect tender ". . . were frustrated by the actions and attitudes of the defendant." On the last day for redemption, ¹⁹ plaintiff's agent offered tender to an officer of the IRS who refused it and said that redemption would have to be effected the following day from the defendant himself. The defendant refused the tender on that day because the redemption period had expired. The trial court found that plaintiff's inability to redeem was the result of "purposeful action by the defendant." The tender to the IRS was therefore held to be effective under the provision in Section 6337(b) permitting tender to the IRS in the case that the purchaser cannot be found in the county in which the property to be redeemed is located. 417 F. 2d at 765. The Court of Appeals for the Tenth Circuit affirmed. Id. at 766.

The Guthrie reasoning is inapplicable to the case at bar. First, the Guthrie court's finding that the defendant could not "be found in the county in which the land was located" was premised on the conclusion that the defendant had purposefully evaded tender. Such wrongdoing on the part of the defendants at bar is conspicuously absent. Second, even assuming that defendants at bar could not "be found within the county," plaintiffs' tender to the IRS was not, like the tender in Guthrie, within the relevant statutory time period. ²⁰

The broad equitable powers of the federal courts do not include the power to extend the time for redemption under the internal revenue laws. Ballard v. United States [67-2 USTC ¶9652], (D. Colo. 1967). The Supreme Court stated in Keely v. Sanders, 99 U. S. 441 (1878):

While it may be admitted that a statutory right of redemption is to be favorably regarded, it is nevertheless true that it is a statutory right exclusively, and can only be claimed in the cases and under the circumstances prescribed. Courts cannot extend the time, or make any exceptions not made in the statute. Redemption cannot be had in equity (Mitchell v. Green, 10 Metc. ( Mass. ) 101), except as it may be permitted by statute, and then only under such conditions as it may attach. Craig v. Flanagan, 21 Ark. 319. Thus it has been held that the pendency of the civil war, and the fact that the owner resided in another State then in rebellion, cannot enlarge his right to redeem. Finley v. Brown, 22 Iowa , 538. It is enough, however, for the present case that there was no attempt or even offer to redeem.

99 U. S. at 445-446 (emphasis added).

The terms of redemption after sale are set forth in Section 6337(b). No provision for extension of the 120-day period is contained therein.

Plaintiff next argues that the case at bar falls within section 7503 of the Internal Revenue Code of 1954, 26 U. S. C. §7503 (Section 7503), which provides:

When the last day prescribed under authority of the internal revenue laws for performing any act falls on Saturday, Sunday, or a legal holiday, the performance of such act shall be considered timely if it is performed on the next succeeding day which it not a Saturday, Sunday, or a legal holiday. For purposes of this section, the last day for the performance of any act shall be determined by including any authorized extension of time; the term "legal holiday" means a legal holiday in the District of Columbia; and in the case of any return, statement, or other document required to be filed, or any other act required under authority of the internal revenue laws to be performed, at any office of the Secretary or his delegate, or at any other office of the United States or any agency thereof, located outside the District of Columbia but within an internal revenue district, the term "legal holiday" also means a Statewide legal holiday in the State where such office is located.

26 U. S. C. §7503.

Plaintiffs argue that since defendants' residence was unreachable until February 13, the Court should rule that the defendants could not be "found" within the county in which the land is situated. This would entitle plaintiffs to tender upon the IRS. That being so, the declaration of February 7 through 12 as legal holidays would, plaintiffs argue, make the February 13 tender timely. ²¹

Plaintiffs' argument is ingenious, but faulty. As noted above, the Court does not believe that defendants could not be "found" within the county in which the land is situated. ²² Assuming, however, that the defendants could not be "found" within the county and that plaintiffs were therefore entitled to tender the monies to the IRS, there remain two problems with plaintiffs' reasoning. The first is that there may be some question as to whether Section 7503 is applicable to Section 6337(b) redemptions. Cf. Silver Bell Industries, Inc. v. United States , [76-1 USTC ¶9432], (10th Cir. 1976) (mailing provisions of 26 U. S. C. §7502 not applicable to Section 6337 redemption payments where such payments are to individual purchasers). The second, and more certainly fatal problem for the plaintiffs is that even if the defendants could not be "found" in the county, and even if Section 7503 is applicable, February 7 through 12 are not of the type of legal holiday described in that section. Where tender is to be made to the IRS, ". . . the term 'legal holiday' also means a Statewide legal holiday in the State where such office is located." 26 U. S. C. §7503 (emphasis added). As is discussed earlier, the declaration of February 7 through 12 as legal holidays announced by the Governor in his Executive Order No. 142 ²³ was expressly effective in only certain counties of the Commonwealth. These holidays were therefore not "Statewide" and did not serve to extend the Section 6337(b) 120-day redemption period.

Since the plaintiffs did not redeem the Land within 120 days of its sale according to the provisions of Section 6337(b), the defendants are entitled to summary judgment in their favor. ²⁴ Defendants may exchange their certificate of sale for a deed from the IRS.

The result here is not as harsh as it may seem at first blush. It should be kept in mind that from the time of the tax sale, plaintiffs had 120 days to redeem the Land. By their own allegation, they admit having made no attempt to do so until February 7, the 118th day. Having waited so long, and taken the risk of unforeseen consequences of their own delay, they should not now be heard to complain of the Great Blizzard.

Judgment for defendants will issue.

¹ The Great Blizzard of 1978 lasted two days, February 6 and 7, 1978, and virtually closed much of the Commonwealth of Massachusetts for an entire week. Coastal areas were hardest hit by the storm.

² The redemption period set forth in section 6337(b)(1) of the Internal Revenue Code of 1954 is 120 days from the date of sale. 26 U. S. C. §6337(b)(1).

³ The Land is more fully described in Appendix A to this Opinion [Not reproduced.--CCH.].

⁴ Anselmo's ownership in the Land was subject to a mortgage he granted on May 4, 1976 to Plaintiffs DiMento and Sullivan to secure the payment of $4,000. The mortgage was recorded in the Suffolk County Registry of Deeds at Book 8865, Pages 628-633.

⁵ Herbert Mosher, District Director of the IRS, was originally named as an additional defendant. On February 24, 1978 , pursuant to Federal Rule of Civil Procedure 41(a)(1), plaintiffs dismissed the action as to Mr. Mosher.

⁶ No party disputes that the Land is worth in excess of $10,000 or that this Court has jurisdiction over the subject matter of the action under 28 U. S. C. §1331(a).

⁷ The 120-day period expired on Thursday, February 9, 1978 .

⁸ Section 6337(b) of the Internal Revenue Code of 1954, 26 U. S. C. §6337(b), provides:

(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 administrators, or any person in their behalf, shall be permitted to redeem the property sold, or any particular tract of such property, at any time within 120 days after the sale thereof.

(2) Price.--Such property or tract of property shall be permitted to be redeemed upon payment to the purchaser, or in case he cannot be found in the county in which the property to be redeemed is situated, 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.

⁹ The Honorable Michael S. Dukakis, Governor.

¹⁰ On the Governor's request, the President, by telegram dated February 10, 1978 , declared a major disaster for the State of Massachusetts because of damage due to coastal flooding. The President authorized federal relief and recovery assistance for the affected areas.

¹¹ A copy of Executive Order No. 142 is set forth in Appendix B to this Opinion [Not reproduced.--CCH.].

¹² The offices of the IRS were closed during this period in the storm affected area.

¹³ The parties agree that Anselmo was the proper party to make such redemption, that tender was in proper form and in an amount sufficient to satisfy the requirements of section 6337(b) of the Internal Revenue Code of 1954, 26 U. S. C. §6337(b).

¹⁴ 26 U. S. C. §6337(b). See n. 8, supra.

¹⁵ Plaintiffs complied with Fed. R. Civ. P. 67 by depositing $3210 with the Court.

¹⁶ The parties agreed to submit the matter to the Court on written memoranda which have now been filed.

¹⁷ As noted, the matter has been submitted on memoranda addressing the legal question of the timeliness of Anselmo's tender. There are no genuine issues of material fact.

¹⁸ See generally Annot. 12 A. L. R. Fed. 979 (1972).

¹⁹ The relevant period in Guthrie was one year. The redemption period was reduced to 120 days effective November 2, 19 66 by amendment to Section 6337(b). See 80 Stat. 1137 (1966).

²⁰ It seems clear from the face of Section 6337(b) that an owner's inability to find the purchaser within the county in which the property is situated serves only to permit payment to the IRS and not to extend the statutory time period for redemption.

²¹ The Court notes that the term legal holiday in Section 7503 includes state holidays only for those acts to be performed at an office of the IRS. Plaintiffs could not, therefore, argue that the time for tender on an individual purchaser was extended by the Governor's declaration.

²² Although plaintiffs may have been unable to reach the defendants, there is no allegation that defendants were not there or that they purposefully evaded tender. Cf. Keely v. Sanders, supra at 445-446; Guthrie v. Curnutt, supra.

²³ See Appendix B [Not reproduced.--CCH.].

²⁴ Plaintiffs are, of course, entitled to return of the $3210 they deposited with the Court under the provisions of Fed. R. Civ. P. 67.

[81-2 USTC ¶9698]Eugene C. Fitzhugh v. John A. Ryles

U. S. District Court, East. Dist. Ark. , Western Div., No. LR-C-81-46, 517 FSupp 1361, 7/20/81

[Code Sec. 6337]

Redemption of property: 120-day period: Tender of money or its equivalent: Drafts tendered.--A taxpayer's attempted redemption of property was ineffective because he did not tender the amount due in cash or its equivalent. The envelope drafts which the taxpayer tendered to the IRS did not operate as an assignment of funds because they were subject to conditions of exchange and acceptance.

Eugene C. Fitzhugh, 7200 Geyer Springs, Little Rock, Ark. 72206, pro se. William L. Owen, Gill, Skokos, Simpson, Burford & Owen, 300 Commonwealth Plaza, Little Rock, Ark. 72201, for defendant.

Memorandum Opinion

ROY, District Judge:

Plaintiff filed this action alleging that the defendant had refused to accept his tender for redemption of property as required within 120 days of the sale of the property under 26 U. S. C. §6337(b)(1). ¹ Defendant has filed a Motion for Summary Judgment. Plaintiff did not respond with a brief but filed two affidavits in support of his position.

Plaintiff had incurred a tax liability owing to the United States which was not voluntarily discharged. As a result, the Internal Revenue Service levied upon and sold his house on September 29, 1980 .

On January 23, 1981 , within the 120 day time limit which would expire on January 27, 1981 , plaintiff tendered to defendant an "envelope draft" in the amount of $14,654.11 which, it is undisputed, was an amount sufficient to cover the sale price of $13,750.00 and the interest at a rate of 20% per annum as required by 26 U. S. C. §6337(b)(2).

Defendant refused to accept the draft on the grounds that it was not cash or cash equivalent and that, due to the time needed for collection of the money through the normal channels--the draft to be paid by a bank in St. Louis , Missouri --the tender could not be timely, i. e., within the 120 days. The defendant contends that seven to ten days are required for the collection of such a draft, and the plaintiff contends that two days is realistic and that, therefore, the tender was timely.

Timeliness, however, is not the controlling issue herein. In Silver Bell Industries, Inc. v. United States, et al., 74-2 USTC ¶9691, 34 AFTR 2d 74-5682 (D. Colo. 1974), aff'd, 76-1 USTC ¶9432, 38 AFTR 2d 76-5171 (10th Cir. 1976), cert. denied, 429 U. S. 822, 97 S. Ct. 71 (1976), the Court stated:

In our view, a tender of amount due under the redemption statute must be in the full required amount, in cash or certified checks, or cash equivalent, and timely made.

Black's Law Dictionary, Revised Fourth Edition (1968), defines "cash" as "money or its equivalent; usually ready money." In order for money to be "ready," it must not, of course, be subject to conditions of exchange. The envelope drafts tendered by plaintiff carried the notations "Collection Item" and "After inspection of contents pay to the order of John A. Ryles."

Ark. Stat. Ann. §85-3-409(1) (Add. 1961) states:

A check or other draft does not of itself operate as an assignment of any funds in the hands of the drawee available for its payment, and the drawer is not liable on the instrument until he accepts it.

On the other hand, Ark. Stat. Ann. §85-3-411 (Add. 1961) states, in pertinent part:

(1) Certification of a check is acceptance. Where a holder procures certification the drawer and all prior indorsers are discharged.

(2) Unless otherwise agreed a bank has no obligation to certify a check.

In other words, the tender of the draft did not operate as an assignment of any funds to the defendant, and, unless the draft was accepted in St. Louis , there would be no such assignment. It is therefore understandable that the Court in Silver Bell Industries, supra, was given pause by the fact that the attempted redemption therein was made by personal check. The Court noted that redemption was not to be effective until the checks had cleared the bank. The drafts in the instant case are less "ready money" than the personal checks in Silver Bell Industries. The notation on the draft must be interpreted to mean that the contents of the envelope draft, presumably defendant's muniments of title, were to be inspected and approved as adequate by Don Roth or other officials of the Southern Commercial Bank of St. Louis before the draft would be honored. Such a conditional tender may not be construed as one of cash or its equivalent. While the Court recognizes that the general rule of redemption is one of leniency to the owner, Anselmo v. James [78-2 USTC ¶9696], 449 F. Supp. 922 (D. Mass. 1978), the Court must conclude that the defendant was under no obligation to accept the drafts, and the defendant's Motion for Summary Judgment is granted. The Complaint of the plaintiff is dismissed, with prejudice. Each party is to bear its own costs.

The defendant, in his Motion for Summary Judgment, has raised the issue of the effect of the Temporary Restraining Order issued in favor of the plaintiff by the Chancery Court for Pulaski County , Arkansas . Since the T. R. O. has lapsed, it is not relevant to this discussion.

¹ 26 U. S. C. §6337(b)(1) states:

Period. The owners of any real property sold as provided in section 6335, their heirs, executors, or administrators, or any person having any interest therein, or a lien thereon, or any person in their behalf, shall be permitted to redeem the property sold, or any particular tract of such property, at any time within 120 days after the sale thereof.

[89-2 USTC ¶9674] Henry and Dorothy Evans, Plaintiffs v. Internal Revenue Service, Defendant

U.S. District Court, East. Dist. N.Y., 89 C 1920, 11/17/89

[Code Secs. 6335 and 6337 ]

Levy and distraint: Real property: Notice of sale: Redemption.--The IRS properly provided adequate notice of seizure and sale prior to its lawful appropriation of delinquent taxpayers' residence and real estate for nonpayment of federal taxes. The IRS, after issuing authorized assessments, properly filed adequate liens against the property and sent its notice of seizure by certified mail. The IRS subsequently prepared and published a proper notice of public sale and competently supervised the sale of the property to the highest bidding purchaser. The taxpayers, despite full disclosure by the IRS, failed to redeem the property within the allotted time period and therefore surrendered control. Furthermore, the taxpayers brought their action contesting the sale well beyond the six-year statute of limitations.

Bruce Baron, Bruce Baron & Assoc., Brooklyn , N.Y. , for plaintiffs. Andrew J. Maloney, United States Attorney, William H. Beckerleg, Jr., Assistant United States Attorney, Brooklyn, N.Y. 11201, Merrell B. Green, Department of Justice, Washington, D.C. 20530, for defendant.

MEMORANDUM AND ORDER

NICKERSON, District Judge:

Plaintiffs, Henry and Dorothy Evans, brought this action under the Internal Revenue Code 26 U.S.C. §6335 and §6337 , alleging wrongful seizure by the Internal Revenue Service (IRS) of their real property in South Ozone Park, New York for non-payment of federal taxes assessed in the years 1975 through 1980, and inadequate notice of seizure and sale. The complaint seeks an order of the court declaring null and void a September 24, 1981 sale of their property by the IRS, an injunction barring the IRS from disturbing plaintiffs' quiet enjoyment and in the alternative $100,000 as the fair market value of the property.

For some undisclosed reason the government attorney (from the Tax Division of the Department of Justice in Washington, D.C.) treated the complaint as an "order to show cause" and, without submitting an answer to the paragraphs in the complaint, filed an "opposition to order to show cause" in the form of a statement by the government attorney, annexing photocopies of documents, some of them totally or partially illegible. Later the government submitted further photocopies of documents.

I.

The following facts appear from the papers submitted. Plaintiffs owned a residence in South Ozone Park , New York . After they failed to pay federal income taxes for the years 1974, 1975 and 1976 the IRS made assessments which resulted in liens on plaintiffs' property. Notices of lien were filed in the Register's Office for Queens in the years 1975 through 1980.

On June 6, 1980 , the IRS mailed to plaintiffs by certified mail a notice of seizure. According to a December 11, 1980 memorandum in the IRS files, plaintiffs' attorney then requested time to refinance the mortgage and pay the tax liabilities in full. As a result the IRS delayed the sale advertising. However, by December 11, 1980 the IRS, having been unable to determine the status of plaintiffs' loan application, decided to proceed with the sale advertising.

On February 2, 1981 the IRS prepared the notice of public sale for March 13, 1981 and on February 24, 1981 sent it to plaintiffs by certified mail, published it in two newspapers, the New York Times and Newsday, and posted notices at a local post office, two local realtors, and the IRS office.

On March 11, 1981 the IRS sent plaintiffs a letter enclosing a form showing the minimum bid price of $5,738 for the seized property. Plaintiffs returned the letter with plaintiff Henry Evans' handwritten note dated March 11, 1981 on the face of the letter stating he agreed with the bid price.

Since there were too few bidders on March 13, 1981 , the sale was adjourned to April 10, 1981 . On March 30, 1981 the IRS published in the same newspapers and posted in the same places.

The auction sale took place on April 10, 1981 and the property was sold to Winston Davis. On that day the IRS issued a certificate of sale to Davis , and, since plaintiffs did not redeem the property within 120 days, the IRS transferred a quitclaim deed to Davis on September 24, 1981 .

II.

Plaintiffs claim that the IRS did not provide notice of seizure or sale as required by the Internal Revenue Code, 26 U.S.C. §6335(a) and (b) , and that as a result they were denied the right to redemption under 26 U.S.C. §6337(a) and (b) , and that they were thereby deprived of their due process rights.

It seems clear that the IRS gave the requisite notices of seizure and sale up through February 24, 1981 . Indeed, plaintiff Henry Evans agreed in writing on March 11, 1981 , two days before the first sale date, that the bid price set by the IRS was appropriate. Since they never attempted to redeem the property within the statutory 120 day period from the date of sale on April 10, 1981 , they were not damaged even if they did not get formal written notice of that later sale date.

However, the court need not rest its decision on this ground. Under 28 U.S.C. §2401(a) plaintiffs were required to bring the action against the United States "within six years after the right of action first accrues."

The events precipitating this suit occurred between June 6, 1980 and at the latest September 24, 1981 . Plaintiffs did not file the complaint until June of 1989, long after the six year statute of limitations had run.

III.

The Court does not reach the parties' remaining claims and defenses. Plaintiffs' request for relief is denied, and the complaint is dismissed.

So ordered.

[96-2 USTC ¶50,692] In re Stephen R. Krawczyk, Diane A. Krawczyk, Debtors. Stephen R. Krawczyk, Diane A. Krawczyk, Plaintiffs v. United States of America (IRS) Williams Marketing Services, Inc., Defendants

U.S. Bankruptcy Court, No. Dist. Ga., Atlanta Div., 96-65682, 10/4/96 , 201 BR 589

[Code Sec. 6337 ]

Redemption of real property: Redemption after sale: Period for redemption.--

The right of Chapter 13 debtors to redeem real property terminated 180 days after the date of the tax sale, not when title to the property actually passed to the purchaser. The redemption period was not extended under 11 USC §1322(c), which provides a bright-line test for determining the period during which a debtor has the right to cure a default through a Chapter 13 plan.

ORDER

MURPHY, Bankruptcy Judge:

This adversary proceeding is before the court on Debtors' emergency motion for an expedited hearing on the issue of the application of the automatic stay of 11 U.S.C. §362(a) on the statutory period of redemption provided in 26 U.S.C. §6337 . Hearing was held September 17, 1996 and the decision and reasoning of this court were announced at the conclusion thereof.

On or about October 17, 1995 , the Internal Revenue Service ("IRS") filed in Cobb County , Georgia , a notice of tax lien against property of Debtors. The lien was in the amount of $81,696.78. On March 25, 1996 , IRS conducted a tax sale of Debtor's real property located at 2265 Mack Dobbs Road , Kennesaw , Georgia (the "Property"). Debtors allege the fair market value of the Property is $160,000 with an outstanding mortgage of approximately $40,000. At the tax sale, the high bidder to purchase the Property was Williams Marketing Services, Inc. ("Williams"). Williams paid IRS $58,628.20 and received a Certificate of Sale from IRS. On April 9, 1996 , Debtors filed this Chapter 13 petition.

Pursuant to 26 U.S.C. §6337 , Debtors are accorded 180 days from the date of the tax sale within which to redeem the Property. That 180-day period is due to expire September 21, 1996 . Debtors assert, however, that §1322(c) operates to extend the redemption period and accords Debtors the time period set forth in §1322(b)(5) within which to redeem the Property. Specifically, Debtors assert that by §1322(c), in their Chapter 13 plan, they can modify the statutory right of redemption under the Tax Code (26 U.S.C. 6337) and redeem the Property by paying the redemption amount through their Chapter 13 plan.

As §1322(c) is a new section added by the 1994 amendments to the Bankruptcy Code, very little case law interpreting the application of §1322(c) exists. Of significance are the cases of Commercial Federal Mortgage Corp. v. Smith, 85 F. 3d 1555 (11th Cir. 1996), and In re Sims, 185 B.R. 853 (Bankr. N.D. Ala. 1995).

The Smith decision involved a case filed before the effective date of the 1994 Amendments to the Bankruptcy Code. The Smith mortgagee conducted a foreclosure sale prepetition. Under the applicable state law, the Smith debtor retained a statutory right of redemption. The Eleventh Circuit Court in Smith held that the date of the foreclosure sale of the mortgaged property is a bright-line termination date of the right to cure a default through a Chapter 13 plan pursuant to §1322(b)(5). The Smith court further held that the debtor may cure a default through exercise of his statutory right of redemption but such cure must be exercised as required by state law by making a lump sum payment before expiration of the redemption period.

In footnote 3 of the Smith decision, the Eleventh Circuit signaled how it might decide a similar case arising after the 1994 Amendments:

It should be noted, however, that if we were to apply the amended version of section 1322, the foreclosure sale of Smith's property most likely would have cut off his ability to cure the default on his mortgage. See, In re Sims, 185 B.R. 853, 867 (Bankr. N.D. Ala. 1995) (holding that the amended section 1322(c)(1) unambiguously prohibits the debtor from reinstating the mortgage under a Chapter 13 plan where there has been a prepetition foreclosure sale).

The decision in the Sims case, the case cited in the footnote in the Smith case, addressed a factual situation similar to that presented in the Smith case (a prepetition foreclosure sale and Alabama statutory right of redemption), but, as Sims was filed after October 22, 1994 , the 1994 Amendments to §1322 apply.

The Sims court recognized that in §1322(c)(1), Congress adopted the date of the foreclosure sale as the termination date of a debtor's right to cure and reinstate the mortgage through the debtor's plan. As did the Smith court, the Sims court noted the debtor's only option for curing and reinstating the mortgage was by exercising the state statutory right of redemption by payment of a lump sum, which includes principal, interest and other charges.

Debtors argued that the Sims case and the Smith case are distinguishable from the instant case because both Sims and Smith dealt with mortgages. Under Alabama law, prior to foreclosure, a mortgagee holds legal title to the relevant property subject to the mortgagor's right of possession and equitable right of redemption. In the case of a tax sale by IRS, Debtors argued, prior to the sale, IRS held a statutory lien on the Property. Debtors assert that, through the operation of 26 U.S.C. §6338 and §6339 , title to real property sold at a tax sale does not pass to the purchaser until IRS delivers to the purchaser a deed. The certificate of sale which IRS provides to the purchaser at a real property tax sale does not operate to pass title. 26 U.S.C. §6339 . Debtors argued that until the deed is executed, IRS--and therefore, the purchaser--has only a lien on the real property. Pursuant to §6338 , the deed from IRS to the purchaser may not be executed until the redemption period expires and the purchaser surrenders the certificate of sale. Debtors argued that the tax sale is not "complete" until the redemption period expires and, therefore, §1322(c) allows Debtors to cure, i.e. redeem the property, under §1322(b)(5) by payments through Debtors' plan.

At the hearing, this court accepted the legal fact that the tax sale was not "complete," i.e. title to the real property did not pass to the purchaser, until the deed was executed after the redemption period expired. In the normal course of analysis (following, for example, the logic of Whiting Pools [83-1 USTC ¶9394 ], 462 U.S. 198 (1983)), the automatic stay of 11 U.S.C. §362 might ordinarily have an academic chance to extend the redemption period as Debtors argued. However, the Smith and Sims opinions read together are persuasive for two reasons, at least: legislative history of §1322(c) and §108 . Upon further review therefore, this court is convinced that the result in the instant case is governed by the principles set forth in the Smith and Sims decisions.

The legislative history shows that Congress enacted §1322(c) to create a bright-line test for the date of termination of a debtor's right to cure and reinstate. Numerous variations for the date of termination exist under applicable non-bankruptcy law. The date which Congress chose was the date of the sale, regardless of whether title actually passed before, at or after such sale. In the instant case, the tax sale which was conducted under 26 U.S.C. §6335 occurred before Debtors' petition was filed. Therefore, 11 U.S.C. §1322(c) cannot act to extend the 180-day redemption period. Only 11 U.S.C. §108 could apply to extend the redemption period, and its application would conflict with a longer period of 3-5 years if Debtors were so enabled by §1322(b)(5). Smith, 85 F.3d 1555; Sims, 185 B.R. 853. See also, Multonomah County v. Rudolph, 166 B.R. 44 (D. Ore. 1994); In re Farmer, 81 B.R. 857 (Bankr. E.D. Penn. 1988); In re Cooke, 127 B.R. 784 (Bankr. W.D. N.C. 1991). ¹ Accordingly, it is hereby

ORDERED that Debtors may redeem the Property on or before September 21, 1996 , as provided in 26 U.S.C. §6337 , by a lump sum payment to the tax sale purchaser, Williams, of the amount paid by Williams and interest thereon at the statutory rate of 20 percent per annum.

The Clerk, U.S. Bankruptcy Court, is directed to serve a copy of this order upon Debtor, Debtor's attorney, attorney for IRS, attorney for Williams Marketing Services, Inc., and the Chapter 13 Trustee.

IT IS SO ORDERED.

¹ In the instant case, the statutory redemption period was set to expire more than 60 days after the petition was filed; therefore, §108 did not act to further extend that period.