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FEBRUARY 18, 1931.-Ordered to be printed
UNITED STATES TO BE MADE PARTY DEFENDANT IN CERTAIN CASES
Mr. GRAHAM, from the committee of conference, submitted the following
[To accompany H. R. 980]
The committee of conference on the disagreeing votes of the two Houses on the amendment of the Senate to the bill (H. R. 980) to permit the United States to be made a party defendant in certain cases, having met, after full and free conference, report that at the conference the Senate conferees insisted upon the Senate amendment and the House conferees refused to recede from the disagreement of the House to the Senate amendment, under which circumstances the conferees have agreed to recommend and do recommend to their respective Houses as follows: That the conferees of the respective Houses have agreed to a substitute, to follow the enacting clause, in lieu of the provisions of the House bill and the Senate amendment, as follows:
That, upon the conditions herein prescribed for the protection of the United States, the consent of the United States be, and it is hereby given, to be named a party in any suit which is now pending or which may hereafter be brought in any United States district court, including those for the districts of Alaska, Hawaii, and Porto Rico, and the Supreme Court of the District of Columbia, and in any State court having jurisdiction of the subject matter, for the foreclosure of a mortgage or other lien upon real estate, for the purpose of securing an adjudication touching any mortgage or other lien the United States may have or claim on the premises involved.
SEC. 2. Service upon the United States shall be made by serving the process of the court with a copy of the bill of complaint upon the United States Attorney for the district or division in which the suit has been or may be brought and by sending copies of the process and bill, by registered mail, to the Attorney General of the United States at Washington, District of Columbia. The United States shall have sixty days after service as above provided, or such further time as the court may allow, within which to appear, and answer, plead or demur.
SEC. 3. Any such suit brought against the United States in any State court may be removed by the United States to the United States district court for the district in which the suit may be pending. The
removal shall be effected in the manner prescribed by section 29 of the Judicial Code (title 28, sec. 72, U. S. C.), provided that the petition for removal may be filed at any time before the expiration of thirty days after the time herein or by the court allowed to the United States to answer and no removal bond shall be required. The court to which the cause is removed may, before judgment, remand it to the State court if it shall appear that there is no real dispute respecting the rights of the United States, or all the other parties shall concede of record the claims of the United States.
SEC. 4. Except as herein otherwise provided, a judicial sale made in pursuance of a judgment in such a suit shall have the same effect respecting the discharge of the property from liens and encumbrances held by the United States as may be provided with respect to such matters by the law of the State, Territory, or District in which the land is situated, provided that a sale to satisfy a lien inferior to one of the United States shall be made subject to and without disturbing the lien of the United States, unless the United States, by its attorneys, consents that the property may be sold free of its mortgage or lien and the proceeds divided as the parties may be entitled, and provided further that where a sale is made to satisfy a lien prior to that of the United States, the United States shall have one year from the date of sale within which to redeem. In any case where the debt owing the United States is due, the United States may ask, by way of affirmative relief, for the foreclosure of its own lien or mortgage and in any case where property is sold to satisfy a first mortgage or first lien held by the United States, the United States may bid at the sale such sum not exceeding the amount of its claim with expenses of sale, as may be directed by the chief of the department, bureau or other agency of the Government which has charge of the administration of the laws in respect of which the claim of the United States arises.
SEC. 5. If any person shall have a lien upon any real or personal property, duly filed of record in the jurisdiction in which the property is located, and a junior lien (other than a lien for any tax) in favor of the United States attaches to such property, such person may make a written request to the officer of the United States charged with the administration of the laws in respect of which the lien of the United States arises, to have the same extinguished. If after appropriate investigation, it appears to such officer that the proceeds from the sale of the property would be insufficient to satisfy, in whole or in part, the lien of the United States, or that the claim of the United States has been satisfied, or by lapse of time or otherwise has become unenforceable, such officer shall so report to the Comptroller General who thereupon may issue a certificate of release, which shall operate to release the property from such lien.
SEC. 6. No judgment for costs or other money judgment shall be rendered against the United States in any suit or proceeding which may be instituted under the provisions of this act. Nor shall the United States be or become liable for the payment of the costs of any such suit or proceeding or any part thereof.
GEO. S. GRAHAM,
A. J. HICKEY,
HATTON W. SUMNERS,
Managers on the part of the House.
T. J. WALSH,
C. W. WATERMAN,
Managers on the part of the Senate.
The managers on the part of the House at the conference on the disagreeing votes of the two Houses on the amendment of the Senate to the bill (H. R. 980), to permit the United States to be made a party defendant in certain cases, submit the following written statement explaining the effect of the action agreed on:
That your managers were unable to agree to the Senate amendment, striking out all after the enacting clause and inserting new language, and the conferees on the part of the Senate were unwilling to recede from the Senate amendment. Growing out of this situation a compromise was agreed to in the form of a substitute bill embodying in substance the provisions of the House bill and Senate amendment.
In explanation of the provisions of the substitute bill, we respectfully submit the following:
1. So far as concerns suits, the substitute bill agreed to by the conferees is limited to liens on real estate. There seems to be no real demand for legislation having to do with liens on personalty and that subject is so complicated and gives rise to so many different situations requiring special provisions to protect the United States that it is very difficult to deal with. The provision for voluntary releases by the United States of worthless liens does relate both to personalty and realty.
2. The House bill deals only with cases where the United States lien is a junior lien. The substitute bill also covers cases where the United States lien is a prior lien. Cases often may arise where a junior lien holder needs to be informed as to the validity, amount, etc., of a prior lien, so as to know how much to bid on foreclosure of his junior lien, and in some cases the very question for adjudication is one of priority.
3. The House bill provides that if the case is in a State court the controversy with the United States must be removed to the United States court, and that the removal is effected by the plaintiff before the United States is joined as a defendant. That procedure does not fit in very well with the law on removal of causes.
The Senate amendment provides that if brought in the State courts the suit shall remain there and the only power of review by a Federal court would be the Supreme Court of the United States reviewing the judgment of the highest court of the State. That departs from general practice that the Government only allows itself to be sued in its own courts. It also compels United States attorneys to arrange their court schedules so as to attend terms of the State courts. The substitute bill allows suits in the State courts but makes the removal by the United States optional, not mandatory. Practical experience with the subject justifies the belief that, in a large percentage of the cases, there will be no removal where liens of the United States are inferior as they may be worthless or not disputed.
4. The time allowed for the Government to answer is made 60 days and the time allowed for removal runs for 30 days thereafter. The general removal statute requires removal within the time allowed by
law for answer, but it is believed in the present case that if decision on the desirability for removal is postponed until after issue is joined, many removals may be avoided where it becomes apparent that there is no real dispute.
5. It is provided in the substitute bill that in addition to service on the United States attorney, service by registered mail shall also be made on the Attorney General. This is in accordance with existing laws in other types of cases.
6. The House bill provides that only the part of the controversy affecting the United States shall be removed, and when decided the cause shall be remanded to the State courts where the litigation shall proceed. It is doubted whether this splitting of the cause would be to the advantage of anyone. Adjudicating the validity, amount, and priorities of the lien of the United States in most cases will require in the Federal court some decision as to the rights of the other lien holders. If the case is then remanded, a second trial might be required at which some of the same ground would be covered. The split proceeding is cumbersome. It seems that time and money would be saved by having the entire proceeding in one court.
7. It was suggested by one member that to prevent useless removals where there is no real dispute affecting the United States, the United States attorney in his removal papers be required to add a certificate that there is a real controversy. There are objections to this. It is a departure from the established practice on removals, and United States attorneys are apt to overlook it and fail to bring about the proper removal. A provision has been inserted that the Federal court may remand the cause if it appears before judgment that there is no real dispute affecting the Government. The clause already referred to allowing removal after issue has been joined will also tend to prevent useless removals. These two provisions of the substitute bill seem to furnish a reasonable precaution against useless removals.
8. The Senate amendment contains a clause allowing the court to stay proceedings on sale until the expiration of the next session of Congress. This was no doubt intended to allow Congress to appropriate money to enable the United States, if a junior lien holder, to bid enough at the sale to take care of prior liens and thus protect its own. In place of that the substitute bill provides that if a junior lien holder, the United States shall have a year in which to redeem. That does away with any necessity for a delay of sale. In many States of the Union there are now laws allowing junior lien holders as well as fee owners a year in which to redeem from execution and foreclosure sale of real estate. It is true that in other States no such equity of redemption exists. However, the provision adds nothing to the present difficulties in States which allow no redemption period, as under present conditions where present lien holders can not sue the United States, the rights of the United States never are barred by foreclosure decree.
9. The substitute bill gives the United States, where it owns the first lien, authority to ask for affirmative relief in the form of foreclosure of its lien, and to bid at the sale up to the amount of its claim and expenses of sale. This is necessary for the protection of the United States. There is no general statute which allows the United States to be a bidder at its own foreclosure sale. (See title 26,
sec. 121, U. S. C., relating to sales on distraint for taxes; title 31, sec. 195, U. S. C., execution sales.)
10. The clause providing for the release of worthless junior liens in favor of the United States has been changed in the substitute bill so as to give that duty to the Comptroller General instead of the Attorney General. The Comptroller General is in a better position to know whether the facts justify the release.
11. The House bill (sec. 5) contains a provision that 'where a private person obtains a judgment and proposes to sell land on execution to satisfy it, he may, in the suit in which the judgment is obtained, have an adjudication as to the rights of the United States and how it will be affected by the execution sale. That has all been omitted in the substitute bill. The purpose of this legislation is to give private litigants the same rights against the United States as they have against others, not to put them in a better position as against the United States than in private litigation. If any citizen ob tains a judgment lien on real estate affected by a Government lien, he may before execution sale under the terms of the substitute bill bring an action against the United States to have a sale to satisfy his judgment lien and determine the rights and priorities of the United States. That should be enough. He has no greater rights against private persons.
GEO. S. GRAHAM,
HATTON W. SUMNERS,