of redemption, takes a clear and unencumbered title. Cooley, Taxation, Volume 3, 4th ed., pages 2470, 2943. The general rule, however, obtains where the tax is not declared to be a paramount lien. Home Owners' Loan Corporation v. City of Phoenix, 77 P. (2d) 818 (Ariz.); Home Owners' Loan Corporation v. Mitchell, 81 P. (2d) 268 (Wash.) ; Cooley, Taxation, supra, page 2472.

With respect to the effect of a tax sale upon liens or other property interests held by the United States upon the land, however, the authorities appear to be in conflict. Thus, in Northern Pacific Railroad Co. v. Traill County, 115 U. S. 600, in considering whether land granted by the United States to the railroad was taxable by the county, the court said, page 610:

No sale of land for taxes, no taxes can be assessed on any property, but by virtue of the sovereign authority in whose jurisdiction it is done. If not assessed by direct act of the legislature itself, it must, to be valid, be done under authority of a law enacted by such legislature. A valid sale, therefore, for taxes, being the highest exercise of sovereign power of the State, must carry the title to the property sold, and if it does not do this, it is believed the assessment is void.

It follows that, if the assessment of these taxes is valid and the proceedings well conducted, the sale confers a title paramount to all others, and thereby destroys the lien of the United States for the costs of surveying these lands. [Italics supplied.]

The force of this dictum was modified by the Supreme Court in the case of Baltimore Shipbuilding Co. v. Baltimore, 195 U. S. 375, where the tax was levied only upon the interest of the owner of the fee. It was there held that while the tax was valid, the interest of the United States in the land, which was merely a condition subsequent, could not be extinguished by the State. See, also, United States v. Canyon County, Idaho, 232 Fed. 985, 990. And in City of New Brunswick v. United States, 276 U. S. 547, where the tax was assessed upon the entire interest in the land, including the mortgage interest held by the United States Housing Corporation for the benefit of the United States to secure the unpaid purchase price, it was held that the city could enforce collection of the tax by the sale of the mortgagor's interest in the property only. The court said, page 556: that the City is without authority to enforce the collection of the taxes thus assessed against the purchasers by a sale of the interest in the lots which was retained and held by the Corporation as security for the payment of the unpaid purchase money, whether as an incident to the retention of the legal title or as a reserved lien or as a contract right to mortgages. That interest, being held by the Corporation for the benefit of the United States, is paramount to the taxing power of the State and cannot be subjected by the City to the sale for taxes.

But it is plain

We conclude that, although the City should not be enjoined from collecting the taxes assessed to the purchasers by sales of their interests in the lots, as equitable owners, it should be enjoined from selling the lots for the collection

June 10, 1939

I am convinced that my former opinion is correct and should not be disturbed.

Approved:

OSCAR L. CHAPMAN,

Assistant Secretary.

EXTINGUISHMENT OF UNITED STATES LIEN ON LAND WITHIN RECLAMATION PROJECT BY REASON OF SALE FOR STATE OR LOCAL TAXES

Opinion, June 10, 1939

LOCAL TAX LIEN-PRIOR UNITED STATES LIEN UNDER WATER RIGHT APPLICATION. A lien for local taxes assessed merely upon the interest of the property owner and subsequent in point of time to the lien of the United States under a water right application, is inferior to the lien of the United States. PRIORITY OF UNITED STATES LIEN OVER LOCAL TAX LIEN WHERE NO STATE STATUTE. A local tax lien which is not given priority by State statute is subordinate to a lien of the United States which is prior in time.

PRIORITY OF UNITED STATES LIEN OVER LOCAL TAX LIEN GIVEN PRIORITY OVER ALL OTHERS BY STATE STATUTE.

Where a local tax lien has, under State statute, priority over all other liens, this Department should, nevertheless, take the position, on the authority of the case of City of New Brunswick v. United States, 276 U. S. 547, that a lien of the United States which is prior in time is paramount to such tax lien and that a purchaser at a sale of the property for the nonpayment of such taxes takes subject to the lien of the United States.

MARGOLD, Solicitor:

My opinion has been requested as to whether a sale of land within a reclamation project for State or local taxes operates to extinguish a lien on the land created in favor of the United States under a duly recorded water right application to assure the payment of construction, operation, and maintenance charges.

It is understood that the inquiry relates to land in private ownership and, for purposes of this opinion, it will be assumed that the tax, for the nonpayment of which the land has been or is about to be sold under State law, was validly assessed on the land by the State or local authority and that the lien therefor attached subsequent in point of time to the recordation of the water right application.

Generally, liens take precedence in the order of their creation and those prior in time are prior in equity. See, Portneuf-Marsh Co. v. Brown, 274 U. S. 630, 636. But tax liens, which, by statute, are given a preferred status, are superior to any mortgage or lien on the land held by a private person, even though the tax was assessed and the lien therefor attached subsequent to such private mortgage or lien, and a purchaser at a sale of the land for such taxes, in the absence

593212-45-5

of redemption, takes a clear and unencumbered title. Cooley, Taxation, Volume 3, 4th ed., pages 2470, 2943. The general rule, however, obtains where the tax is not declared to be a paramount lien. Home Owners' Loan Corporation v. City of Phoenix, 77 P. (2d) 818 (Ariz.) ; Home Owners' Loan Corporation v. Mitchell, 81 P. (2d) 268 (Wash.); Cooley, Taxation, supra, page 2472.

With respect to the effect of a tax sale upon liens or other property interests held by the United States upon the land, however, the authorities appear to be in conflict. Thus, in Northern Pacific Railroad Co. v. Traill County, 115 U. S. 600, in considering whether land granted by the United States to the railroad was taxable by the county, the court said, page 610:

No sale of land for taxes, no taxes can be assessed on any property, but by virtue of the sovereign authority in whose jurisdiction it is done. If not assessed by direct act of the legislature itself, it must, to be valid, be done under authority of a law enacted by such legislature. A valid sale, therefore, for taxes, being the highest exercise of sovereign power of the State, must carry the title to the property sold, and if it does not do this, it is believed the assessment is void.

It follows that, if the assessment of these taxes is valid and the proceedings well conducted, the sale confers a title paramount to all others, and thereby destroys the lien of the United States for the costs of surveying these lands. [Italics supplied.]

The force of this dictum was modified by the Supreme Court in the case of Baltimore Shipbuilding Co. v. Baltimore, 195 U. S. 375, where the tax was levied only upon the interest of the owner of the fee. It was there held that while the tax was valid, the interest of the United States in the land, which was merely a condition subsequent, could not be extinguished by the State. See, also, United States v. Canyon County, Idaho, 232 Fed. 985, 990. And in City of New Brunswick v. United States, 276 U. S. 547, where the tax was assessed upon the entire interest in the land, including the mortgage interest held by the United States Housing Corporation for the benefit of the United States to secure the unpaid purchase price, it was held that the city could enforce collection of the tax by the sale of the mortgagor's interest in the property only. The court said, page 556: * that the City is without authority to enforce the collection of the taxes thus assessed against the purchasers by a sale of the interest in the lots which was retained and held by the Corporation as security for the payment of the unpaid purchase money, whether as an incident to the retention of the legal title or as a reserved lien or as a contract right to mortgages. That interest, being held by the Corporation for the benefit of the United States, is paramount to the taxing power of the State and cannot be subjected by the City to the sale for taxes.

But it is plain

We conclude that, although the City should not be enjoined from collecting the taxes assessed to the purchasers by sales of their interests in the lots, as equitable owners, it should be enjoined from selling the lots for the collection

June 27, 1939

of such taxes unless all rights, liens, and interests in the lots, retained and held by the Corporation as security for the unpaid purchase moneys, are expressly excluded from such sales, and they are made, by express terms, subject to all such prior rights, liens, and interest.

*

It would seem that the case of City of New Brunswick v. United States, supra, is conclusive on the question here being considered. But cases have been found, none of which discuss the New Brunswick case, supra, in which Federal income tax liens have been held subordinate to local tax liens which were subsequent in time but which under State statute were given priority. City of Winston-Salem v. Powell Paving Co., 7 Fed. Supp. 424; In re Mt. Jessup Coal Co., 7 Fed. Supp. 603; Berrymont Land Co. v. Davis Creek Land and Coal Co., 192 S. E. 577 (W. Va.); see also, Sherwood v. United States, 5 F. (2d) 991.

On the basis of the foregoing, it is my opinion that (1) a lien for local taxes assessed merely upon the interest of the property owner and subsequent in time to the lien of the United States under a waterright application, is inferior to the lien of the United States; (2) a local tax lien which is not given priority by State statute is subordinate to a lien of the United States which is prior in time; (3) where a local tax lien has, under State statute, priority over all other liens, this Department should, nevertheless, take the position, on the authority of the New Brunswick case, supra, that a lien of the United States which is prior in time is paramount to such tax lien and that a purchaser at a sale of the property for the nonpayment of such taxes takes subject to the lien of the United States.

Approved:

HARRY SLATTERY,

Under Secretary.

W. P. MCINTOSH ET AL.

Decided June 27, 1939

GRAZING AND GRAZING LANDS-LEASE UNDER SECTION 15 OF TAYLOR GRAZING ACT "PROPER USE OF CONTIGUOUS LAND."

The contention by an appellant from an award to the appellee of a grazing lease under section 15 of the amended Taylor Grazing Act that the award is not necessary in order to permit the appellee to make proper use of contiguous land, though true, constitutes no reason to change the award where the appellee would have equal reason for making the same contention against the award to the appellant.

GRAZING AND GRAZING LANDS-FENCE OBSTRUCTING STOCK DRIVEWAY AND ENCLOSING PUBLIC AND PRIVATE LANDS.

Establishment and maintenance of a fence enclosing both public and private land and obstructing the use of land withdrawn for a stock driveway is

in violation of law against the enclosure of public land and prior use of the public land so enclosed was not by sufferance but in violation of law. TAYLOR GRAZING ACT-SECTION 15 LEASES-DEPRIVATION OF POSSESSION TO WHICH APPELLANT HAS NO EXCLUSIVE RIGHT.

In an appeal from the award of a grazing lease under section 15 of the amended Taylor Grazing Act, appellant cannot complain of injury in depriving him of possession of land to which he has no exclusive right of possession.

SLATTERY, Under Secretary:

By decision of November 1, 1938, the Commissioner of the General Land Office offered a 5-year grazing lease, Las Cruces 054913, to W. P. McIntosh and J. M. Cunningham for 1442.37 acres in Ts. 19 and 20 S., R. 35 E., and rejected the application for lease, 054871, of Herman Culp as to all lands included in said proposed lease. The proposed lease has been transmitted for execution, together with an appeal by Culp from the rejection of his application as to the N12 N2 Secs. 7, 8, 9, and 10 in said township. Upon the same date, an offer was made to Culp of 1679.84 acres in the same township and pursuant to the offer a lease was executed in his favor on December 27, 1938.

The N2 of each of the four sections above mentioned was subject to lease and applied for by both parties. The investigating agent found that the statutory preference right and the equitable rights of both parties were practically equal and therefore recommended an equal division of such area by offering the N2 N1⁄2 to Cunningham and McIntosh and the S1⁄2 N1⁄2 to Culp. It appears that there is a fence along the north boundary of the 4-mile strip in controversy, which is admitted to belong to Culp. Culp asserts that this fence is an old and long established division fence between the ranges of the parties and if the present award stands a needless expense will necessarily have to be incurred in removing the fence from its present position and rebuilding four and a quarter miles of fence a quarter of a mile further south. The appellees on the other hand allege that the east portion of the fence through sections 9 and 10 was one-half 'mile south of its present location until 1935 and was a."drift fence" used by stockmen, not for enclosure of any ranch holdings and not kept up for many years, but that after the passage of the Taylor Grazing Act it was repaired, straightened and removed to its present location by appellant. The records of the General Land Office show that the N12 Sec. 7, N1⁄2 Sec. 8, N1⁄2 Sec. 9 and NW4 Sec. 10 were withdrawn for a stock driveway November 12, 1917, and that the withdrawal was revoked November 18, 1936. The appellee points out that the fence unlawfully enclosed the driveway and contends no equities by reason of prior use of such tracts so enclosed can be predicated thereon.