United States v. Rodgers

UNITED STATES v. RODGERS ET AL.

Certiorari to the United States Court of Appeals for the Fifth Circuit.

No. 81-1476. Argued December 6, 1982 — Decided May 31, 1983. Together with United States v. Ingram et al., also on certiorari to the same court (see this Court's Rule 19.4).

649 F. 2d 1117, reversed and remanded; 649 F. 2d 1128, vacated and remanded.

Brennan, J., delivered the opinion of the Court, in which Burger, C. J., and White, Marshall, and Powell, JJ., joined. Blackmun, J., filed an opinion concurring in the result in part and dissenting in part, in which Rehnquist, Stevens, and O'Connor, JJ., joined, post, p. 713.

George W. Jones argued the cause pro hac vice for the United States. On the briefs were Solicitor General Lee, Assistant Attorney General Archer, Stuart A. Smith, William S. Estabrook, and Wynette J. Hewett. Wm. D. Elliott argued the cause for respondents Rodgers et al. With him on the brief was J. Michael Wylie. L. Lynn Elliott argued the cause and filed a brief for respondents Ingram et al.

The opinions occupy pages 677 through 730 of volume 461 of the United States Reports.

[461 U.S. 677] These cases present the issue whether § 7403 of the Internal Revenue Code of 1954 — which authorizes a federal district court, in a suit instituted by the Government, to decree a sale of certain properties to satisfy the tax indebtedness of delinquent taxpayers — empowers a district court to order the sale of the family home in which a delinquent taxpayer had an interest at the time he incurred his indebtedness, but in which the taxpayer's spouse, who does not owe any of that indebtedness, also has a separate “homestead” right as defined by Texas law. Under Texas statutory and constitutional provisions, each spouse — regardless of whether one or both owns the fee interest — has a separate and undivided possessory interest in the homestead, which is only lost by death or abandonment and may not be compromised by either the other spouse or his or her heirs, and which in effect is an interest akin to an undivided life estate in the property.

In the Rodgers case, the Government filed suit against respondents, the widow, children, and executor of Philip Bosco, to reduce to judgment assessments made against Philip before his death for unpaid taxes and to enforce the Government's tax liens, including one that had attached to his interest in the homestead. The District Court granted summary judgment on respondents' claim that the tax liens could not defeat the widow's state-created right not to have her homestead (which she continued to occupy) subjected to a forced sale. The Court of Appeals affirmed.

In the Ingram case, which involved tax assessments made before a divorce both against the husband alone relating to unpaid taxes withheld from employees' wages and against both spouses relating to their joint income tax liability, the residence was destroyed by fire shortly before the divorce, and the Government, as a defendant in quiet title proceedings in Federal District Court, filed a counterclaim against both spouses, seeking judicial sale of the property under § 7403. Pursuant to the parties' stipulation, the property was sold and the proceeds were deposited in the court's registry, the parties agreeing that their rights would be determined as if the sale had not taken place and that the proceeds would be divided according to their respective interests. The District Court granted summary judgment on the Government's counterclaim. [461 U.S. 678] Affirming in part, and reversing and remanding in part, the Court of Appeals agreed that the Government could foreclose its lien on the proceeds to collect for the income tax owed by both spouses jointly, but held that the Government could not reach the proceeds to collect the husband's individual liability if the wife had maintained her homestead interest in the property. The court remanded for a factual determination of whether the wife had “abandoned” the homestead by dividing the fire insurance proceeds with the husband and by attempting, before the stipulation with the Government, to sell the property and divide the proceeds with the husband.

Held:

1. Section 7403 grants power to a federal district court to order the sale of the home itself, not just the delinquent taxpayer's interest in the property. If the home is sold, the nondelinquent spouse is entitled, as part of the distribution of proceeds required under § 7403, to so much of the proceeds as represents complete compensation for the loss of such spouse's separate homestead interest. Pp. 690-702.

(a) While the Government's lien cannot extend beyond the property interests held by the delinquent taxpayer, the plain meaning of the statute authorizes sale of the entire property. Section 7403(a) provides that the Government may seek to “subject any property, of whatever nature, of the delinquent, or in which he has any right, title, or interest, to the payment of such tax or liability.” Section 7403(b) then provides that all persons “claiming any interest in the property involved in such action” shall be made parties thereto, and § 7403(c) provides that the district court should “determine the merits of all claims” to the property and if the Government's claim is established, “may decree a sale of such property . . . and a distribution of the proceeds of such sale according to the findings of the court in respect to the interests of the parties and of the United States.” Reading § 7403 to authorize sale of the entire property is also consistent with the policy of prompt and certain collection of delinquent taxes and with the history of state in rem tax enforcement proceedings, and is further bolstered by a comparison with the statutory language which limits the Government's administrative remedy, available under 26 U. S. C. § 6331, to sale of the delinquent taxpayer's interest in property. Moreover, § 7403's requirements for distribution of the proceeds of the sale provide compensation for the taking of the property interest (such as the homestead estate in Texas) of an innocent third party, thus precluding any difficulties under the Due Process Clause of the Fifth Amendment. Pp. 690-700.

(b) Nor do the special protections accorded by the exemption aspect of Texas homestead law immunize property held as a homestead by a nondelinquent third party from the reach of § 7403. No such exception appears on the face of § 7403, and the Supremacy Clause — which provides the underpinning for the Federal Government's right to sweep [461 U.S. 679] aside state-created exemptions in the first place — is as potent in its application to innocent bystanders as in its application to delinquent debtors. Pp. 700-702.

2. Section 7403, which provides that a district court “may” decree the sale of property, does not require the court to authorize a forced sale under absolutely all circumstances. Some limited room is left in the statute for the exercise of reasoned discretion. Pp. 703-712.

(a) The principle of statutory construction that the word “may” usually implies some degree of discretion can be defeated by indications of contrary legislative intent or by obvious inferences from the statute's structure and purpose. Such indications or inferences are not present here. Pp. 706-709.

(b) In determining whether to authorize a sale under § 7403 when the interests of nondelinquent third parties are involved, a district court should consider such factors as the following: (1) the extent to which the Government's financial interests would be prejudiced if it were relegated to a forced sale of the partial interest actually liable for the delinquent taxes; (2) whether the third party with a nonliable separate interest in the property would, in the normal course of events, have a legally recognized expectation that such separate property would not be subject to forced sale by the delinquent taxpayer or his or her creditors; (3) the likely prejudice to the third party, both in personal dislocation costs and in practical undercompensation; and (4) the relative character and value of the nonliable and liable interests held in the property. Pp. 709-711.

(c) In the Rodgers case, no individualized equitable balance of such factors has yet been attempted, this being a matter for the District Court in the first instance. In the Ingram case, a question remains under Texas law as to whether the divorced wife had abandoned the homestead. Assuming no abandonment, and if the wife discharges her personal income tax liability before the Government can proceed with its “sale,” the District Court will be obliged to strike an equitable balance under the relevant factors. P. 712.

[461 U.S. 680] “These consolidated cases involve the relationship between the imperatives of federal tax collection and rights accorded by state property laws. Section 7403 of the Internal Revenue Code of 1954, 26 U. S. C. § 7403 (1976 ed. and Supp. V), authorizes the judicial sale of certain properties to satisfy the tax indebtedness of delinquent taxpayers. The issue in both cases is whether § 7403 empowers a federal district court to order the sale of a family home in which a delinquent taxpayer had an interest at the time he incurred his indebtedness, but in which the taxpayer's spouse, who does not owe any of that indebtedness, also has a separate ‘homestead’ right as defined by Texas law. We hold that the statute does grant power to order the sale, but that its exercise is limited to some degree by equitable discretion. We also hold that, if the home is sold, the nondelinquent spouse is entitled, as part of the distribution of proceeds required under § 7403, to so much of the proceeds as represents complete compensation for the loss of the homestead estate.”

A. The federal collection statutes.

[461 U.S. 680] The Court set out § 7403 in full. Subsection (a) provides that where there has been a refusal or neglect to pay any tax, “the Attorney General or his delegate, at the request of the Secretary [of the Treasury], may direct a civil action to be filed in a district court of the United States to enforce the lien of the United States under this title with respect to such tax or liability [461 U.S. 681] or to subject any property, of whatever nature, of the delinquent, or in which he has any right, title, or interest, to the payment of such tax or liability.”

[461 U.S. 681] “(b) Parties. — All persons having liens upon or claiming any interest in the property involved in such action shall be made parties thereto.”

[461 U.S. 681] “(c) Adjudication and decree. — The court shall, after the parties have been duly notified of the action, proceed to adjudicate all matters involved therein and finally determine the merits of all claims to and liens upon the property, and, in all cases where a claim or interest of the United States therein is established, may decree a sale of such property, by the proper officer of the court, and a distribution of the proceeds of such sale according to the findings of the court in respect to the interests of the parties and of the United States.”

[461 U.S. 681] The lien referred to in § 7403(a) is that created by 26 U. S. C. § 6321, which makes the unpaid amount “a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.” Section 7403, “whose basic elements go back to revenue legislation passed in 1868 (§ 106 of the Act of July 20, 1868, ch. 186, 15 Stat. 167) is one of a number of distinct enforcement tools available to the United States for the collection of delinquent taxes” — the others being an ordinary suit for the unpaid amount and administrative levy under § 6331(a), which reaches only property “belonging to” the delinquent taxpayer.

[461 U.S. 683] “The common purpose of this formidable arsenal of collection tools is to ensure the prompt and certain enforcement of the tax laws in a system relying primarily on self-reporting. . . . Moreover, it has long been an axiom of our tax collection scheme that, although the definition of underlying property interests is left to state law, the consequences that attach to those interests is a matter left to federal law.”

B. The Texas homestead right.

[461 U.S. 684] “The substance of Texas law related to the homestead right may usefully be divided into two categories. . . . First, in common with a large number of States, Texas establishes the family home or place of business as an enclave exempted from the reach of most creditors” under Tex. Const., Art. 16, § 50. “Second, in common with a somewhat smaller number of States, Texas gives members of the family unit additional rights in the homestead property itself.”

[461 U.S. 685] “The effect of these provisions in the Texas Constitution is to give each spouse in a marriage a separate and undivided possessory interest in the homestead, which is only lost by death or abandonment, and which may not be compromised either by the other spouse or by his or her heirs. It bears emphasis that the rights accorded by the homestead laws vest independently in each spouse regardless of whether one spouse, or both, actually owns the fee interest in the homestead.”

[461 U.S. 686] “[I]t may be said that the homestead laws have the effect of reducing the underlying ownership rights in a homestead property to something akin to remainder interests and vesting in each spouse an interest akin to an undivided life estate in the property. . . . [T]he Texas homestead right is not a mere statutory entitlement, but a vested property right. As the Supreme Court of Texas has put it, a spouse ‘has a vested estate in the land of which she cannot be divested during her life except by abandonment or a voluntary conveyance in the manner prescribed by law.’”

[461 U.S. 686] “The two cases before us were consolidated for oral argument before the United States Court of Appeals for the Fifth Circuit, and resulted in opinions issued on the same day. United States v. Rogers, supra; Ingram v. Dallas Dept. of Housing & Urban Rehabilitation, 649 F. 2d 1128 (1981). [461 U.S. 687] They arise out of legally comparable, but quite distinct, sets of facts.”

[461 U.S. 687] A. “Lucille Mitzi Bosco Rodgers is the widow of Philip S. Bosco, whom she married in 1937. She and Mr. Bosco acquired, as community property, a residence in Dallas, Texas, and occupied it as their homestead. Subsequently, in 1971 and 1972, the Internal Revenue Service issued assessments totaling more than $900,000 for federal wagering taxes, penalties, and interest, against Philip for the taxable years 1966 through 1971. These taxes remained unpaid at the time of Philip's death in 1974. Since Philip's death, Lucille has continued to occupy the property as her homestead.” The Government sued in 1977 under §§ 7402 and 7403; the District Court granted partial summary judgment against the Government on the homestead issue, and the Court of Appeals affirmed on that issue.

[461 U.S. 688] B. In the Ingram case, assessments were made against Donald Ingram alone for taxes withheld from employees' wages, and against Donald and Joerene Ingram jointly for $283.33 of income tax. The residence was destroyed by fire shortly before their divorce; the property was sold by stipulation and the proceeds deposited in the registry of the District Court, the parties agreeing that their rights would be determined as if no sale had occurred. The Court of Appeals allowed the Government to reach the proceeds for the joint liability but not for Donald's individual liability if Joerene had maintained her homestead interest, and remanded on whether she had [461 U.S. 690] abandoned the homestead.

[461 U.S. 690] C. “The Government filed a single petition for certiorari in both these cases. See this Court's Rule 19.4. We granted certiorari, 456 U. S. 904 (1982), in order to resolve a conflict among the Courts of Appeals as to the proper interpretation of § 7403.”

A. The plain meaning of § 7403.

[461 U.S. 690] The Court of Appeals had held that where “a delinquent taxpayer shares his ownership interest in property jointly with other persons rather than being the sole owner, his ‘property’ and ‘rights to property’ . . . involve only his interest in the property, and not the entire property.”

[461 U.S. 690] “We agree with the Court of Appeals that the Government's lien under § 6321 cannot extend beyond the property interests [461 U.S. 691] held by the delinquent taxpayer. We also agree that the Government may not ultimately collect, as satisfaction for the indebtedness owed to it, more than the value of the property interests that are actually liable for that debt. But, in this context at least, the right to collect and the right to seek a forced sale are two quite different things.”

[461 U.S. 691] “We agree with the prevailing view that such a restrictive reading of § 7403 flies in the face of the plain meaning of the statute.”

[461 U.S. 692] “Section 7403(a) provides, not only that the Government may ‘enforce [its] lien,’ but also that it may seek to ‘subject any property, of whatever nature, of the delinquent, or in which he has any right, title, or interest, to the payment of such tax or liability’ (emphasis added). This clause in and of itself defeats the reading proposed by the Court of Appeals.”

[461 U.S. 693] “Section 7403(b) then provides that ‘[a]ll persons having liens upon or claiming any interest in the property involved in such action shall be made parties thereto’ (emphasis added). Obviously, no joinder of persons claiming independent interests in the property would be necessary if the Government were only authorized to seek the sale of the delinquent taxpayer's own interests.”

[461 U.S. 694] “[W]e must read the statute to contemplate, not merely the sale of the delinquent taxpayer's own interest, but the sale of the entire property (as long as the United States has any ‘claim or interest’ in it), and the recognition of third-party interests through the mechanism of judicial valuation and distribution.”

[461 U.S. 694] “Our reading of § 7403 is consistent with the policy inherent in the tax statutes in favor of the prompt and certain collection of delinquent taxes.”

[461 U.S. 700] “But that the power exists, and that it is necessary to the prompt and certain enforcement of the tax laws, we have no doubt.”

B. State-created exemptions and the Supremacy Clause.

[461 U.S. 700] The alternative ground advanced below was “that, even if § 7403 normally allows for the forced sale of property interests other than those directly liable for the indebtedness of the delinquent taxpayer, the special protections accorded by the exemption aspect of Texas homestead law . . . should immunize it from the reach of § 7403.”

[461 U.S. 701] “We disagree. If § 7403 is intended, as we believe it is, to reach the entire property in which a delinquent taxpayer has or had any ‘right, title, or interest,’ then state-created exemptions against forced sale should be no more effective with regard to the entire property than with regard to the ‘right, title, or interest’ itself. . . . No exception of the sort carved out by the Court of Appeals appears on the face of the statute, and we decline to frustrate the policy of the statute by reading such an exception into it. Moreover, the Supremacy Clause — which provides the underpinning for the Federal Government's right to sweep aside state-created exemptions in the first place — is as potent in its application to innocent bystanders as in its application to delinquent debtors.”

A. Why compensation is not always adequate.

[461 U.S. 703] “Although we have held that the Supremacy Clause allows the federal tax collector to convert a nondelinquent spouse's [461 U.S. 704] homestead estate into its fair cash value, and that such a conversion satisfies the requirements of due process, we are not blind to the fact that in practical terms financial compensation may not always be a completely adequate substitute for a roof over one's head.”

[461 U.S. 704] “[A]ny calculation of the cash value of a homestead interest must of necessity be based on actuarial statistics, and will unavoidably undercompensate persons who end up living longer than the average.”

B. “May” means may.

[461 U.S. 709] “Finally, we are convinced that recognizing that district courts may exercise a degree of equitable discretion in § 7403 proceedings is consistent with the policies of the statute: unlike an absolute exception, which we rejected above, the exercise of limited equitable discretion in individual cases can take into account both the Government's interest in prompt and certain collection of delinquent taxes and the possibility that innocent third parties will be unduly harmed by that effort.”

C. The considerations governing the exercise of that discretion.

[461 U.S. 709] “To say that district courts need not always go ahead with a forced sale authorized by § 7403 is not to say that they have unbridled discretion. We can think of virtually no circumstances, for example, in which it would be permissible to refuse to authorize a sale simply to protect the interests of the delinquent taxpayer himself or herself. And even when the interests of third parties are involved, we think that a [461 U.S. 710] certain fairly limited set of considerations will almost always be paramount.”

[461 U.S. 710] “First, a court should consider the extent to which the Government's financial interests would be prejudiced if it were relegated to a forced sale of the partial interest actually liable for the delinquent taxes. . . . Simply put, the higher the expected market price, the less the prejudice, and the less weighty the Government's interest in going ahead with a sale of the entire property.”

[461 U.S. 710] “Second, a court should consider whether the third party with a nonliable separate interest in the property would, in the normal course of events (leaving aside § 7403 and eminent domain proceedings, of course), have a legally recognized expectation that that separate property would not be subject [461 U.S. 711] to forced sale by the delinquent taxpayer or his or her creditors. If there is no such expectation, then there would seem to be little reason not to authorize the sale.”

[461 U.S. 711] “Third, a court should consider the likely prejudice to the third party, both in personal dislocation costs and in the sort of practical undercompensation described supra, at 704-705.”

[461 U.S. 711] “Fourth, a court should consider the relative character and value of the nonliable and liable interests held in the property: if, for example, in the case of real property, the third party has no present possessory interest or fee interest in the property, there may be little reason not to allow the sale; if, on the other hand, the third party not only has a possessory interest or fee interest, but that interest is worth 99% of the value of the property, then there might well be virtually no reason to allow the sale to proceed.”

[461 U.S. 711] “We do not pretend that the factors we have just outlined constitute an exhaustive list; we certainly do not contemplate that they be used as a ‘mechanical checklist’ to the exclusion of common sense and consideration of special circumstances. . . . We do emphasize, however, that the limited discretion accorded by § 7403 should be exercised rigorously and sparingly, keeping in mind the Government's paramount interest in prompt and certain collection of delinquent taxes.”

[461 U.S. 712] “In these cases, no individualized equitable balance of the sort we have just outlined has yet been attempted. In the Rodgers case, the record before us, although it is quite clear as to the legal issues relevant to the second consideration noted above, affords us little guidance otherwise. In any event, we think that the task of exercising equitable discretion should be left to the District Court in the first instance.”

[461 U.S. 712] As to Ingram, a question remained under Texas law whether Joerene Ingram had abandoned the homestead; and because she was not a “third party” as to the $283.33 joint liability, the Court saw “no reason, as long as that amount remains unpaid, not to allow a ‘sale’ of the ‘house’ . . . for satisfaction of the debt.” Were she to discharge that personal liability first, “the District Court will be obliged to strike an equitable balance on the same general principles as those that govern the Rodgers case.”

[461 U.S. 712] “The judgment of the Court of Appeals in Rodgers is reversed, its judgment in Ingram is vacated, and both cases [461 U.S. 713] are remanded with directions that they be remanded to the District Court for further proceedings consistent with this opinion.”

[461 U.S. 713] “So ordered.”

[461 U.S. 713] “The Court today properly rejects the broad legal principle concerning 26 U. S. C. § 7403 that was announced by the Court of Appeals. . . . I agree that, in some situations, § 7403 gives the Government the power to sell property not belonging to the taxpayer. Our task, however, is to ascertain how far Congress intended that power to extend. In my view, § 7403 confers on the Government the power to sell or force the sale of jointly owned property only insofar as the tax debtor's interest in that property would permit him to do so; it does not confer on the Government the power to sell jointly owned property if an unindebted co-owner enjoys an indestructible right to bar a sale and to continue in possession. Because Mrs. Rodgers had such a right, and because she is not herself indebted to the Government, I dissent from the Court's disposition of her case.”

[461 U.S. 713] Part I. “It is basic in the common law that a lienholder enjoys rights in property no greater than those of the debtor himself; that is, the lienholder does no more than step into the debtor's shoes.” Parts II and III examine the text, the 1868 origins, and the legislative history of § 7403, and the line of cases on tenancies by the entirety, from which the separate opinion concludes that Congress did not authorize the sale of an unindebted co-owner's indestructible possessory right.

[461 U.S. 729] Part IV. “The Court recognizes that Mrs. Rodgers has an indestructible property right under Texas law to use, possess, and enjoy her homestead during her lifetime, and that the delinquent taxpayer's property interests would not have enabled him to disturb that right against her will. . . . The Court recognizes that Mrs. Rodgers has no outstanding tax liability and that the Government has no lien on Mrs. Rodgers' property or property rights. Because I conclude that Congress did not intend § 7403 to permit federal courts to grant property rights to the Government greater than those enjoyed by the tax debtor, I would hold that the Government may not sell Mrs. Rodgers' homestead without her consent. To the extent the Court holds to the contrary, I respectfully dissent.”

[461 U.S. 729] Part V. “Mrs. Ingram's case, however, is materially different. Like her husband, Mrs. Ingram was liable for back taxes, and consequently the Government had a lien on her interests in property as well as on her husband's interests. Exercising both spouses' rights in the homestead, the Government is [461 U.S. 730] entitled to force a sale . . . subject only to the discretion of the District Court. . . . In Mrs. Ingram's case, therefore, I concur in the result.”

Editorial note. This record is a research edition, not a substitute for the official reporter. It reproduces the Reporter of Decisions apparatus for pages 677–679 in full, and reproduces the Court's own text in extended verbatim passages arranged under the Court's own divisions, each bracketed with the official United States Reports page on which the passage appears. Passages of the Court's text that are summarised rather than quoted are set without quotation marks and are Society prose describing the Court's reasoning; every quotation mark in this record encloses the Court's or the Reporter's words.

Editorial note. Three limitations are declared. First, the numbered footnotes of both opinions are not reproduced; the bound volume interleaves them with body text across page breaks in a way no faithful transcription can reconstruct without risk of corruption. Second, Parts I through III of the separate opinion are summarised rather than quoted at length. Third, obvious typographic and scanning defects in the digitised bound volume (for example “in rein” for “in rem”) have been silently corrected against the surrounding text; no substantive word has been altered, modernised, or paraphrased inside a quotation.

Editorial note. For any purpose requiring the complete official text, including the footnotes, consult the bound volume through the canonical source recorded with this authority.

Editorial note. In each of the consolidated cases the United States sought to enforce federal tax liens against a family home in Texas. In Rodgers the delinquent taxpayer, Philip Bosco, had died owing more than $900,000 in wagering taxes, penalties, and interest, and his widow Lucille continued to occupy the Dallas homestead they had acquired as community property. In Ingram the delinquent taxpayer's former wife owed none of his individual liability, though the two owed $283.33 jointly; the house burned shortly before their divorce and was sold by stipulation, the proceeds standing in the registry of the District Court in place of the house. Under Texas law each spouse held a separate and personal homestead right in the property, which could not be alienated or encumbered by the other spouse alone.

Editorial note. The Fifth Circuit held that § 7403 did not permit a forced sale of a homestead in which a non-liable spouse held an independent interest. The Supreme Court reversed in Rodgers and vacated in Ingram, remanding both for the district courts to exercise the limited equitable discretion the statute allows. The Court of Appeals opinion is reported under the misspelling United States v. Rogers, 649 F. 2d 1117 (CA5 1981), the name having been misspelled in the Government's complaint.

Editorial note. The question was whether § 7403 authorises a district court to order the sale of a family home in which the delinquent taxpayer held an interest when a non-liable third party — here a spouse with a state-law homestead right — also holds an interest. The Court held that it does. The statute directs the court to adjudicate all claims to the property and to decree a sale of the property, distributing the proceeds according to the respective interests of the parties; the non-liable holder is protected by complete compensation out of the proceeds rather than by immunity from sale. The Court held further that the power is permissive, and that a district court retains a limited equitable discretion to withhold a sale. The rule that follows is that federal collection may reach the whole of the encumbered property, but only through a discretionary decree that accounts for the several interests in it.

Editorial note. Justice Brennan reasoned from the text and history of § 7403, which speaks of subjecting the property rather than the taxpayer's interest in it, requires the joinder of all persons claiming an interest, and directs a distribution of proceeds according to those interests. The contrast with § 6331, which reaches only property belonging to the taxpayer, confirmed that the judicial remedy is the broader one. State law determines what interests exist; federal law determines the consequence of a lien attaching to them, so a state exemption from forced sale cannot defeat the federal decree, and the Supremacy Clause applies as forcefully to the innocent co-owner as to the debtor. Because the compensation required by § 7403 is complete compensation, the Fifth Amendment poses no obstacle.

Editorial note. The Court then declined to read the statute as compulsory. Acknowledging that money is an imperfect substitute for a home and that actuarial valuation systematically undercompensates the long-lived, it read “may” as conferring a limited discretion and identified four considerations to govern it: prejudice to the Government from a sale of the partial interest alone; the strength of the third party's legally recognised expectation against forced sale; dislocation and undercompensation suffered by the third party; and the relative character and value of the liable and non-liable interests. The discretion is to be exercised rigorously and sparingly.

Editorial note. Rodgers is the treatise's principal authority on the vulnerability of co-owned and marital interests to a creditor of one owner. It shows how a state-created form of co-ownership or occupancy right is respected in its definition yet subordinated in its consequences to a federal enforcement scheme, and it frames the partition-like remedy of sale with allocation of proceeds that recurs throughout the law of concurrent ownership. The four-factor discretion is also the Court's clearest statement that a forced sale reaching an innocent co-owner is a matter of equity as well as of power.

Editorial note. Followed and applied. United States v. Craft, 535 U.S. 274 (2002), applied the same division of labour between state and federal law in holding that a federal tax lien attaches to a delinquent taxpayer's interest in property held in tenancy by the entirety under Michigan law.

Editorial note. Read with the treatise chapters on tenancy by the entirety and on partition and the rights of co-owners.