STEPHEN B. HEINTZ, COMMISSIONER, DEPARTMENT OF INCOME MAINTENANCE
OF CONNECTICUT, PETITIONER V. UNITED STATES OF AMERICA

   No. 88-436

   In the Supreme Court of the United States

   October Term, 1988

   On Petition For A Writ Of Certiorari To The Supreme Court Of The
State Of Connecticut

   Brief For The United States In Opposition

            TABLE OF CONTENTS
   Question Presented
   Opinions below
   Jurisdiction
   Statement
   Argument
   Conclusion

                            OPINIONS BELOW

   The opinion of the Supreme Court of Connecticut (Pet. App. 1a-12a)
is reported at 207 Conn. 743.  The opinion of the Superior Court for
the Judicial District of Danbury (Pet. App. 13a-16a) is unreported.

                             JURISDICTION

   The judgment of the Supreme Court of Connecticut was entered on
June 14, 1988.  The petition for a writ of certiorari was filed on
September 12, 1988.  The jurisdiction of this Court is invoked under
28 U.S.C. 1257.

                          QUESTION PRESENTED

   Whether the Supreme Court of Connecticut correctly held that state
liens relating to public assistance payments were not perfected at the
time the federal tax liens in this case were recorded because the
state liens were contingent under Connecticut law.

                               STATEMENT

   1. This case began as a foreclosure action brought in Connecticut
state court by the Danbury Savings and Loan Association to foreclose
its mortgage on a home belonging to Colin and Valerie Delaney (Pet.
App. 2a).  The Danbury Savings and Loan named other creditors as
defendants, including the United States and the State of Connecticut,
which both held liens on the home (ibid.).

   The liens of the United States arose under 26 U.S.C. 6321 when the
Delaneys failed to pay assessments of federal income taxes, interest,
and penalties for the tax years 1978 and 1982 (Pet. App. 3a).  The
United States' lien for the 1978 taxes arose on September 21, 1981,
and a notice of that lien was filed on January 11, 1983.  The
government's lien for the 1982 taxes arose on October 23, 1985, and a
notice was recorded on September 10, 1986 (ibid.).  As of March 1987,
the United States claimed $34,410 under its tax liens (ibid.).

   The State of Connecticut's liens arise from the state's grant of
public assistance to Valerie Delaney (Pet. App. 4a).  On August 24,
1981, petitioner recorded notices of liens on the Delaneys' residence
(ibid.).  Petitioner asserts that the debt secured by its liens is
$60,248 (ibid.).

   2. The trial court ordered a foreclosure sale of the Delaneys'
residence (Pet. App. 2a).  A balance of $55,000 remained after claims
were paid to lienholders prior to the United States and petitioner.
The United States then filed a motion asserting that its tax liens
were entitled to priority over the liens held by petitioner (id. at
3a).

   The trial court ruled that the federal tax liens were entitled to
priority because petitioner's liens were not "specific, perfected and
choate" at the time the federal notices were filed (Pet. App. 4a
(footnote omitted)).  Relying on 31 U.S.C. 3713 -- the so-called
federal insolvency statute -- the trial court reasoned that a state
lien is entitled to priority over federal tax liens only if the state
lien is "reduced to possession before the attachment of the federal
liens" (Pet. App. 5a).

   3. The Supreme Court of Connecticut affirmed the judgment but
adopted a different analysis.  The court ruled (Pet. App. 6a) that 31
U.S.C. 3713 did not apply in this case because the United States did
not show that Valerie Delaney was insolvent at the time this
foreclosure proceeding was commenced.  Nevertheless, the court held
that the state liens in this case were not perfected at the time the
federal liens were recorded (Pet. App. 6a-7a).  The court observed
that, under state law (Conn. Gen. Stat. Ann. Section 17-82c (West
1975)), petitioner was not authorized to seize the Delaneys' residence
to satisfy the claim for reimbursement of public-assistance payments.
Rather, petitioner was required to bring a court action to obtain a
judgment.  The court stated that such a judgment might then be
satisfied, in "the equitable exercise of judicial discretion," by
selling the judgment-creditor's property (Pet. App. 10a).  Because
petitioner had not obtained a judgment in this case at the time the
federal liens attached, the court concluded, petitioner did not have a
prior perfected lien under the test for priorities set forth by this
Court in United States v. Equitable Life Assurance Society, 384 U.S.
323, 327-328 (1966).

                               ARGUMENT

   The decision of the Supreme Court of Connecticut is correct and
does not conflict with the decision of any other court.  Thus, no
further review is warranted.

   1. The federal rule governing the priority of federal tax liens and
liens created by state law is well settled.  A state lien has priority
only if it is "specific and perfected" at the time the federal lien is
recorded (United States v. Equitable Life Assurance Co, 384 U.S. at
327).  And a lien created by state law is "specific and perfected"
when "there is nothing more to be done . . . -- when the identity of
the lienor, the property subject to the lien, and the amount of the
lien are established" (id. at 327-328 (citation omitted)).  See also
United States v. Vermont, 377 U.S. 351, 358 (1964);  United States v.
New Britain, 347 U.S. 81 (1954).

   Here, the Supreme Court of Connecticut correctly applied the
federal rule in light of Connecticut's law governing liens for
reimbursement of public-assistance payments.  See generally United
States v. Security Trust & Savings Bank, 340 U.S. 47, 50 (1950) ("if
the state court itself describes the (state) lien as inchoate, this
classification is 'practically conclusive'" (citing Illinois v.
Campbell, 329 U.S. 362, 371 (1947)).  The Connecticut court held that
the state liens were not first perfected under the federal rule
because petitioner may enforce its liens only by obtaining a judgment
in a foreclosure action, and "such a foreclosure action, far from
being a ministerial act, invokes the equitable exercise of judicial
discretion" (Pet. App. 10a).  Until a foreclosure judgment is
obtained, therefore, it cannot be said that "there is nothing more to
be done" with respect to petitioner's liens.  Accord United States v.
Security Trust & Savings Bank, 340 U.S. at 50 (attachment lien to
satisfy potential court judgment was not perfected prior to federal
tax lien because attachment lien was subject to "(n)umerous
contingencies").

   2. Contrary to petitioner's contention (Pet. 6-12), the decision of
the Supreme Court of Connecticut does not conflict with Hoare v.
United States, 294 F.2d 823 (9th Cir. 1961), nor with American Surety
Co. v. Sundberg, 58 Wash. 2d 337, 363 P.2d 99 (1961), cert. denied,
368 U.S. 989 (1962).  In Hoare, the court noted that the chattel
mortgage at issue was perfected before a judgment of foreclosure
because, unlike this case, the foreclosure proceeding contemplated by
Washington law was solely an enforcement mechanism to enable the
mortgagee to collect a definite debt.  In this case, by contrast,
state law provides that public-assistance liens may be enforced, it at
all, only after a court proceeding subject to the "equitable exercise
of judicial discretion" (Pet. App. 10a).  Under Connecticut law, in
such a proceeding the court "has discretion * * * to withhold
foreclosure or to reduce the amount of the stated indebtedness." Hamm
v. Taylor, 180 Conn. 491, 497, 429 A.2d 946, 949 (1980).  Accordingly,
the different results in Hoare and in this case are explained by the
differences in the state laws.

   Similarly, the mortgage in American Surety Co. secured advances
that could be ascertained at any time with mathematical precision.
Thus, the amount secured by the mortgage was always clear and
knowable.  But in this case, the Supreme Court of Connecticut ruled,
as a matter of state law, that the effectiveness of petitioner's liens
(as well as the amount of the debt) is subject to equitable
considerations that would come to bear in a court action designed to
recover petitioner's claim.  Hence, under the settled federal rule of
priorities, petitioner's contingent lien under state law (Conn. Gen.
Stat. Ann. Section 17-82c (West 1975)) was not perfected at the time
the federal tax liens were recorded.

                              CONCLUSION

   The petition for a writ of certiorari should be denied.

   Respectfully submitted.

   CHARLES FRIED

      Solicitor General

   WILLIAM S. ROSE

      Assistant Attorney General

   GARY R. ALLEN

   WILLIAM S. ESTABROOK

   MICHAEL J. ROACH

      Attorneys

   DECEMBER 1988