It's going to be Susquehanna Bank versus Internal Revenue Service. And Ms. Hauser, are we hearing from you first? Good morning, Your Honor. Please the court. My name is Bethany Hauser for the United States and the Internal Revenue Service. I guess in the caption at this case. I'd like to reserve four minutes of my time for Rebo. This is a case where the federal tax line arose before the mortgage issue was executed. And the notice of federal taxing was recorded before the mortgage was recorded. We are here today because the lower courts in order to put the mortgage ahead of the federal tax line under those circumstances misread a federal statute in order to give effect to Maryland statutory relation back rule. The federal statute is Section 6323H1 of the Internal Revenue Code. It provides that the federal tax line, excuse me, provides that the creditor has a security interest that that security interest exists. That's in the present tense in the statute. Once it has become perfected against a subsequent judgment. That's in the present perfect in the statute. That grammatical construction, the use of the present tense and then the present perfect tense means that the action that's in the present perfect tense must be completed before the... I gather your argument is that at the time your lean attached, January 10th, there had not been a recorded lean by Susquehanna. Actually, you're on the federal tax line attached. No later, the last federal tax line attached in September of 2004. They attached the attached property once the pair fails to pay upon notice and demand. That's in 6321. What's the significance of January 10th? January 10th is when the government filed its notice of federal tax line. The unrequited tax line, sometimes called the secret lean, sometimes called the statutory lean, is always effective against the tax payer and all his property and rights to property. It's filed in order to be binding against Susquehanna. It needs to be filed to be binding against certain other parties and those parties are defined in the federal statute. One type of party who's protected is the holder of a security interest. But once the notice is filed, the federal tax lean trumps everything else. Why was your answer to Judge Neem has first question not simply yes. I'm sorry, I've lost track. The question he asked was whether your argument was that on January 10th, the government had a perfected lean because you've done all the notice, going to Secretary of Notice and Hope at but the bank did not. Yes, that is also. Why wasn't your answer simply yes? I suppose, Your Honor, I'm
... You're trying to get your job and argue more fully. I thank you. Thank you, sir. Also, it's a... The statutory lean is chronically... I'm trying to... Chronically forgotten. The district court here, for example, left it out of its statement of facts. So... I know, but I'm trying to get to the heart of your argument. All right. I gather the heart of your argument is that as of January 10th, when you completed the notice and the filing... Yes. And everybody's bound. The... has been... the Susquehanna's lean had not been protected as of that time
. That's correct. The argument, obviously, is you're going to state law and we have this... state law that says as of February 11 when Susquehanna recorded, its recordation related back to January 4 when it got the deed of trust. Right. And... or was signed in its favor. And your argument is that doesn't trump the federal statute which says it's what existed as of February 10th at your statutory argument. January 10th, yes. January 10th, yes. Right. Yes. Now, let's just set that aside just for one second. If you have an owner who conveys a property to a purchaser, or the contract, and then the owner, two days later, borrows from a bank $100,000 and then two days later, borrows another $100,000. And the banks record their leans after the contract, but the contract's still unexecuted because they haven't closed yet. Did the banks get a superior position? Under general law, I'm getting to the conversion, the necrotal conversion business. So the owner enters into a contract to sell property January 15th. On January 18th, the owner then borrows $100,000 from the bank, the bank records the belief. On the 20th of January, the bank loans him another $100,000 and they record the leans. Are those leans to be given effect over the contract to sale? I believe the answer under Maryland laws that the leans attached to the owner's true interest in the property, since the owner's true interest in the property is already subject to the contract, the leans are attached to the proceeds of the contract. They can't defeat the contract to sale, right? Right. And that's in every state. I mean, yes. Okay, that, to me, is the more difficult issue for you in this case. There was a contract of sale. There was a grant on January 4th to Susquehanna, Deed of Trust Grant. It was conditional. It's less than a full sale contract to sale, but it's a Deed of Trust. It's a grant, they actually grant the property to be held in trust to secure the loan. The IRS filed its lien after that on the 10th
. Now, why isn't that similar to the hypothetical I just gave you? Because under this circumstance, you're looking at the, at the bank's interest is the interest of a purchaser. And when, and asking whether it's superior to a, the first interest, the interest that Trump's is the interest of a purchaser. And under the federal statute, that's 6323H6, for the interest of a purchaser to trump the unfiled federal tax lien, it has to be superior to a subsequent purchaser without notice. This court decided that case in a case called Borgvick Crick, I think it's from 1966, but isn't it just if you're arguing that, is it the IRS just doesn't like the relation back theory that Maryland affords, not law? Congress has, by writing the statute this way, using these grammatical tenses, Congress prohibited the reliance from any, on any state law, not obviously singling out Maryland on any relation back principle. The statute could also be construed the other way. Is your regulations that you're trying to abolish the relation back theory? Well, if, if you believe the statute can be construed either way, then yes, I believe that under Chevron, the regulation should control. If the statute can be construed either way, and as we argued in our brief, we think the statute is clear that the grammar of the statute controls, but if you think the reference to local law makes the statute ambiguous, then when we have ambiguity in the statute, we would look to the gapfilling regulation, which quite clearly says that you cannot apply a state law relation back rules. Well, you know, I'm still grappling with Judge Neymar's example on the contract of sale. Ownership really has to exist before you can perfect. I mean, you can't put a deed of trust on property, you don't own, you can't do it by virtue of a sales contract, I don't think. Well, but in any event, the issue seems to turn upon perfection, and perfection really goes to the instance of it taking priority over other lanes. In this instance, the RIS-lean had been assessed before January the 10th, but it wasn't perfected until January the 10th. The deed of trust was put on the property before the end, but it wasn't recorded to after January the 10th, which is the perfection of it. And so the effect then becomes, does the relation back statute determines the priority this lean or is priority determined by federal law? And if it's determined by federal law, then which it seems like in Ray Charo says federal law, really determines priority, not state law, then you can't take a relation back statute and do that, which you didn't have in the beginning. Otherwise, there'd be no interlace. You could put a deed of trust on a property, wait two or three years and then record this thing. And for every lean that comes up, it relates back and trumps that. Even though you only had to do the simple fact to go down and record, and I don't understand why they took so long to record it, closed many real estate deals in my time, and I just don't understand why in the world would you wait after you put a deed of trust on a property going record that be the trust? But they did. So that's the problem you have here. It seems to me as the perfection of those instruments. Yes. Well, let me ask, we talk about ambiguity. What's ambiguous about looking at the statute that says the interest has become protected under local law against a subsequent judgment lean arising out of an unsecured obligation? That's clearly what it says. It's the words you just said has become protected, which means that all the actions to perfect it have to have been completed. Well under Maryland, law as I understand it, the instrument becomes protected upon the date of delivery. The Maryland relation back statute depends upon recordation. Now that's the lean. There's two theories in this case. One is the lean theory. You're claiming a lean prior to their lean. There is also a security interest protected by equitable conversion theory here. And the question that Judge Floyd is asking is when the contract, when the deed of trust is executed on January 4, a security interest is created because it's delivered at that point. It's not recorded, but it's created and it's protected
. And you acknowledge that subsequent loans after that contract don't trump the contract to sale. This is a different theory than the lean business. The lean business, you have a good argument on have been recorded and that type of thing. But the question now is, did Susquehanna have a security interest on January 4 when a deed of trust was delivered to it and fully executed? Not as the term security interest is defined in the federal statute. What's it say? How's it defined? It's defined as existing once the interest, the interest created by contract has become perfected. No, it doesn't say it has been protected, right? Has been protected, yes, I'm sorry. Has been protected. On Maryland law, I think every law in the country, when you enter into a contract to sale for real property, because real property is unique, it's enforceable specifically. And it creates an interest, an equitable interest in the property on January 4. The question, we're not talking about recorded loans now, we're talking about a security interest in the property. The question is, can you defeat that security interest just by subsequently recording your interest? And I'm talking about as of January 4. I mean, at January 10 when you recorded. If the taxpayer here had given a, had made a contract to sale to a third party. They gave a grant of all the property, there's a full grant of property to Susquehanna, the deed of trust actually conveys the property to a trustee before to secure the loan. If the taxpayer had done that again the next day to a third party, another party, not involved in this case, a hypothetical additional party. And that party had gotten to the, to record first, then, there's no recordation under Maryland law for this. This is an equitable conversion. It's based on the conveyance of the property by a contract. And you agreed with my hypothetical earlier that banks could not get loans superior to that contract to sale. If it's a contract for sale, yes, but that you're analyzing it under the purchaser segment of the federal statute. And if you, Susquehanna, is protected as of security interest, not a loan. Security interest is protected as of January 4. Let me go back. If the taxpayer had given another security interest on January 5, and that was recorded, and then Susquehanna had never recorded, yes, you would give a fact to the recorded mortgage. I'm talking about the unrecorded. This is a contract to sale. In other words, would you give it back in your scenario to the unrecorded interest of the bank here on the floor over a subsequent in your, in your example, if another bank shows up the next day or two days later, loans another million dollars, and it records it, is that does that have priority over that unrecorded one? Once it's recorded, then once they're all recorded, then they go in the date of execution. All the hypothetical, let's stick with hypothetical, follow it. The contract of sale, yes, is on January 4. Yes. On January 5, a bank lends money to the owner and records a lien. You agreed with me that lien doesn't defeat the contract to sale. The lien holder can't get more than what they, because the courts will enforce the contract to sale in favor of the purchaser
. Let me, let me try it this but my fundamental point is that the contract for sale would not defeat the prior federal tax. That prior, subsequent. Would not defeat a prior federal tax lien that was not, the notice of which was not filed until later, that's work to be correct. Does your regulation define what local law means? I mean, I don't think- A regulation, the regulation clearly states that you cannot rely on a relation back rule from local law. That principle comes right out of the legislative history and is consistent with the grammar of the statute. It's a reasonable regulation. Now let me ask you this. If your argument is I understand it, that you just made is that even though the lien is not tax lien, it's not recorded or not filed. The fact it exists will bind Susquehanna without notice on January 4. My point is that it binds the taxpayer and so- I'm talking about Susquehanna, they're the ones that got the interest on January 4. The question is, are they defeated? Until- January 4, they signed a contract. Until their interest has become protected. It's protected as of that point. Maryland law recognizes a contract when signed and delivered. An equitable interest, right? It's an equitable interest that the district court was talking about here. Is it- It's a record. Maryland law recognizes an equitable interest, but- Created by a contract to sale for real property. That equitable interest is not sufficient to trump a prior federal tax lien. That- That's- That's- That's- That's- That's- That's- Yes. How does Susquehanna know about it? They sign a contract and all of a sudden they're blindsided. The point- The- The whole point of recordation statutes is to bring everyone down to the recordation office so that everyone can be on constructive notice of all of these things. Now, 63-23 requires the federal government to comply with those rules. That's a priority of leads. I'm talking about how you defeat the equitable conversion theory. That is, contract for the sale of real property. When somebody buys real property, his interest cannot be defeated by subsequent recorded lien or other interest. But when someone has a contract for the purchase of real property and that contract is not filed and it would not trump a subsequent contract for sale of that property, it is not sufficient to trump a federal tax lien. That's the law in this circuit and in every circuit. Okay, so you're saying that if I buy real property from you- Yes. And I enter into contract with you on January 4th. Yes. My contract can be defeated by a lien which is not recorded and of which I have no notice. A tax lien
. If it's a federal tax lien, until the time you file, yes, until the time you record it. So it defeats my equitable interest? Yes. Then what's the statute do or why is the statute say as protected by local law? Because local law wouldn't say that. When we're talking about an equitable purchaser, we're under the purchaser segment of the federal statute and that says protected against a subsequent purchaser. The reason the federal tax lien and we cited the old 19th century cases at the beginning of our brief- In case you have to say an unrequited tax lien has priority over a contract to sale. Borkfee Crick and then there's a much more recent case called Regeria which followed Borkfee Crick in this circuit which held that a unrequited federal tax lien trumped the contract for sale until the contract was recorded. Okay. We'll follow up on that. I think what you're going to bring in is back up because maybe I'll move through the equitable conversion aspect of this case too quickly. But it seems to me that to even deal with the issue that sort you've got to talk about federal statutory interpretation and then mix it up with federal with state equitable principles. And I've just not seen that done before. I haven't seen anybody whole a case of this sort to be that a lien in this instance or at least in interest would be trumped by equitable conversion theory. I haven't seen another case that does that. I don't think that there is a case if you- the cases that the district court relied on and this in its opinion are all cases where the mortgages were eventually filed. Well, don't we don't we look to local law to decide when security interest is protected? We don't look at federal statutory law federal federal federal law defers to the state law, doesn't it? It doesn't give a blanket to throw. No, it says when as protected under local law. It says has become protected. It's become protected under local law. So you look to local law to see whether the Susquehanna's interest was protected as of January 4. Don't you? Well yes, I was about to say as of January 10, but the act would be the same. The act would be the same. It's better. Right. Of course. Yeah. So then the question becomes what is local law and how much are we going to reach out into case law equitable principles and matters are not even statutory here to render something on a federal statute in valid. And especially- I haven't seen a case that does that. I agree. We have one other principle controlling us actually, Jezni Maire in construing 6323 to court treats the IRS. No better or no worse than other third party leaders under state law. And you're asking to get better treatment in this case, aren't you? No, Your Honor. We're asking- we're asking to follow the statute which prohibits the relation back. And we're asking that if you look under equitable principles at the true interest that you recognize that the federal tax them was already attached to the taxpayers interest but no later than September of 2004 and the taxpayer did not have a lean free interest to convey to the bank
. If you're looking at all the facts and circumstances and doing an equitable analysis. You're all in the way back before January 10. Your argument goes that when Cessco Hanna took the deed of trust, it was taken and subject to an unrequited taxing. Is that right? That is always the case. And yes, but 6323 will exempt people from the effect of that under certain circumstances when people come between- The statute doesn't say that. You have to rely on case law because the statute says that only when you give notice will you bind third parties like Cessco Hanna. You're saying an unrequited tax lien, a free existing tax lien before January 4, will bind a purchaser of property even though he could not have discovered it by looking at the- Until he records. No, not until he records. I'm saying as of January 4, when he signed, he gets an equitable interest under state law on January 4. When he signs the contract for sale, no. So you're saying his contract to sale is taking subject to an unrequited tax lien. Is that what you're saying? That is what this court held in Rio and it relies on work-free correct. Fair enough. That's an unrequited contract for sale. Now later, there was a- But it's an unretro- But Maryland treats a contract for sale of real property. Just like every other state, you can't- It's a specific performance type of contract. A contract that- And it has- It creates an equitable conversion, equitable title in the purchaser. And you're saying that equitable title is- Under is defeated by an unrequited tax lien. If the unrequited tax lien arose before the contract for sale, then the seller did not have unencumbered title to pass. And if the person who- If the- If the purchaser under the contract wants to rely on the recordation statutes, he needs to record in order to have an interest that would trump another purchaser under local law. Of course, Maryland law doesn't require recordation to create the equitable interest. Maryland law says an equitable interest passes as of the signing and delivery of the contract. But if we're looking to equity, the seller cannot give something he does not have. Equity can't establish something in the seller he did not have. The question is once the equitable interest is recording, can it- It loses power to a subsequent recorded interest? Whereas once you record it, if- Once you have the equitable interest in the first instance, you have a deed of trust on the property to have recorded it, it is an equitable interest. But does it remain so if you don't record it? And there is a subsequently recorded interest? Does it retain this priority over? And the Maryland law does, right? You agreed with that. I believe that's Maryland, not yes. Why don't we- You have your four minutes. We've given you a little extra time, but I think we understand the argument now. Thank you, Robert. Mr. Balkanet. Good morning, Your Honours
. May it please the court? My name is Ian Balkanet. I'm here on behalf of the appellate Susquehanna Bank. The issue before the court today is whether the U.S. District Court sitting in a supellate capacity aired in affirming the priority of the appellate's deed of trust. Let me just get cut to the quick here, Dan. I just want to raise this question that's on the table because it's the most difficult for me and of course other judges may have their own questions. But if you took a title, equitable title to property on January 4, and there was an unrecorded tax lien, do you take subject to the unrecorded tax lien? No, Your Honor. Respectfully, the IRS reverses the roles of the parties. Here, the IRS is in the role of a judgment creditor. And she cited to a couple of case what's your response to those? Unfortunately, I'm not intimately familiar with the case decided by appellance counsel. However, I am firm on Maryland's law, which is that IRS sits in the role as a judgment creditor, and appellance counsel respectfully reverses the roles. It's a judgment creditor who must stand and fall by the real and not the apparent rights of the judgment debtor. Here, it's the Susquehanna Bank as the bona fide who takes as protected as insulated by the legal protections afforded a bona fide perch surle. Well, under Maryland law, it's quite clear that an unrecorded judgment debtor will not take, who's prior to the contract to sale, will not prepare the contract to sale. The contract to sale gets priority. If they recorded before, obviously, because they can be discovered. But the argument here is that the federal tax lane, which has not been recorded, but exists before the contract to sale, Trump's the contract to sale, even though Susquehanna hadn't had no notice. Respectfully, our Susquehanna bank disagrees. Obviously, the governing statutes here, 6323A, subsection A dictates that the IRS tax lane is not valid against the holder of security interest unless and until that tax lane is recorded. And so, although the appellant uses words like a rose attached and was created, those words obfuscate the true and operative date. And the only operative date for the IRS is the date they filed their notice of tax lane. And subsection H1 directs this court to look at its local law to determine when the appellese interest became protected. And the only operative date there is the date of delivery and execution of the security instrument. What about her grammatical argument that President Pence so forth creates an ambiguity in this stage? Certainly. Here, the appellant attempts to juxtapose the use of the past present tense has become protected against the language of Maryland Real Property Code 3201 which directs this court to say that the appellese interest once recorded becomes effective as of its date of delivery. And there's some confusion over the words because appellant says that the statute directs this court to protect the appellese interest once it's perfected. But that's not the wording of the statute. It's once it's become protected, not perfected. And Maryland's real property code doesn't help because it uses the word effective which again adds a little layer of confusion. But Maryland's case law is clear that once the security instrument is executed and delivered it is protected under local law on both a lean theory and an equitable theory. Well, because again, we're looking at when does there's a security interest that is recognized by courts. But I'd like you to, if that's your position, I'd like you to address the question that Floyd just raised
. It seems to me the government has the better statutory argument when it says it's lean will stand superior to any other lean that was not in existence as of the time January 10 when it recorded his lean. As of that time, there was Susquehanna had no lean. You agree with that? It had no legal correct. Okay, that's to me as a different argument than the equity, then the security interest created by a conveyance. And a unrecorded conveyance creates a security interest under Maryland law. Correct. That's not a lean. So for you to be arguing that a statute gives you a relation back when the statute said it had to exist, the lean had to exist as of the time the IRS recorded its lean on January 10. It didn't exist at that point. Respectfully, your honor, the statute doesn't say that the lean must exist has become protected. And when they record their lean, it had not become protected. Respectfully, the penalty's position is that it had become protected. Under the decisions by Maryland's courts of appeal, most recently under... Under what theory? Don't tell me the case. Certainly. Well, the theory is that... So lean, is there? You just agreed that there was no lean created by the contract to say it? Correct. But 632-3H1 doesn't ask this court to term, when is there lean? It asks when it has become protected. I'm arguing suggesting to you you should not be arguing the priority of lean on a relation back. You're going to lose. Where you have an argument to make is that you have a superior equitable interest in the land. You've been arguing that in your brief. I don't see it anywhere in your brief. You arguing what Judge Neymar is putting forth that you're this equitable interest and looks like to me, you had a ban and I thought it was wise to ban it because I hadn't seen the basis for it, but maybe it's being resurrected here. But I have a senior argument. The wonderful part about being at the podium here is we get to argue in the alternative. And so it's appellys..
. Stuff you didn't put in this brief? Well, respectfully, I believe that... I don't think where it is in a brief. I believe it's the last section of the brief. And so far as appellys would be protected, even if it did not have a statutory lean. Section dealing with ambiguity. Correct, Your Honor. In the relation back to prohibits relation back? Correct. Something like the equitable conversion argument. Well, appellys is protected under... Again, our theory is that we're protecting under both a lean theory and an equitable conversion theory. And under the... Be sure, I want to be sure. I want to go back and see if I see equitable conversion in your brief. Being argued in the fashion is being presented here today. I thought you were looking toward a lean theory here, which seems to be the basis for saying that on the local law, because Maryland has a relation back statute, you're relying upon that to say that you can relate back. Which is the first basis upon which the trial judge entered his judgment. Judge Warden, yes. Perhaps the brief is not nearly as articulate as Judge Neymire, but... The last case that's discussed, the sevens Anderson case, is it... It would be... 17. It would be near the end of the brief, and I'm not sure that the phrase equitable conversion has ever put into print. Not that I can see. And... It looked like to me if I was going to rely upon something that's a better argument than lean. I wouldn't say lean all over every page, and this brief has lean in it. But not one page has the words equitable conversion. A fault in drafting, perhaps. But respectfully, appellys position is... I thought in drafting? I have... You do, well, I don't know why you make that concession. The Anderson, Stubbins Anderson case does talk about equitable charges to the property. But you haven't reported or unrecorded. That's on page 17. And respectfully, it's not appellys position that the equitable conversion theory is a better theory. Again, because we have the privilege of arguing the alternative, appellys position is that we prevail both under a lean theory, under the language of Mary B. and under an equitable conversion theory. Well, if we get to this equitable conversion argument, we are going to have to listen to the argument that's being made here in this courtroom, and that would not go get it from your brief. And I just don't see the basis of it. I don't see what you've argued. Again, it's appellys position that the Stubbins Anderson case that is discussed in the brief. Yeah, if you cite a case, and then in that case is discussing it, but that's not the basis of you cited that for. It was a relation back basis. Again, respectfully, this court is able to hold appellys prevails under two different theories. We are able to go back and sort of even though the trial just gave two basis, you don't argue it up here in your brief. You're saying now we can go back and like we're doing summer judgment, just find a reason to support this. Respect. You don't rely upon that reason
. It would be near the end of the brief, and I'm not sure that the phrase equitable conversion has ever put into print. Not that I can see. And... It looked like to me if I was going to rely upon something that's a better argument than lean. I wouldn't say lean all over every page, and this brief has lean in it. But not one page has the words equitable conversion. A fault in drafting, perhaps. But respectfully, appellys position is... I thought in drafting? I have... You do, well, I don't know why you make that concession. The Anderson, Stubbins Anderson case does talk about equitable charges to the property. But you haven't reported or unrecorded. That's on page 17. And respectfully, it's not appellys position that the equitable conversion theory is a better theory. Again, because we have the privilege of arguing the alternative, appellys position is that we prevail both under a lean theory, under the language of Mary B. and under an equitable conversion theory. Well, if we get to this equitable conversion argument, we are going to have to listen to the argument that's being made here in this courtroom, and that would not go get it from your brief. And I just don't see the basis of it. I don't see what you've argued. Again, it's appellys position that the Stubbins Anderson case that is discussed in the brief. Yeah, if you cite a case, and then in that case is discussing it, but that's not the basis of you cited that for. It was a relation back basis. Again, respectfully, this court is able to hold appellys prevails under two different theories. We are able to go back and sort of even though the trial just gave two basis, you don't argue it up here in your brief. You're saying now we can go back and like we're doing summer judgment, just find a reason to support this. Respect. You don't rely upon that reason. Respectfully know, you're on. Again, the position is not that we didn't argue it, and we're bringing it up now. The position is it is argued. Certainly. But if we're going to do it today, I just want to be clear that's what's happening here today. And to be clear, appellys position is it prevails under both theories. So both theories are being positive and advanced by the appellys. I'm not seeing that's wrong. What I'm saying is I'm looking at your brief and it may be both theories, but you're not really arguing both theories. It's really the lean and it seems like to me that's the basis. And I understand you're coming to court and you're here to argument going in certain ways. It's kind of like oops, maybe we should have kicking a few more pages on this here said something more than just quote a case. But that's all you did. There's nothing there. It may be a more tangential argument than we would have preferred, but that is what was submitted in the brief yesterday. Except the burden's not on you because the district court relied on equitable conversion and ruled against the IRS and the IRS appealed to that issue and argued it in its brief. Yes, sure. Have length. And it seems to me you're passing reference to say the district court was correct on that. That's all you would have to say. I agree, Your Honor. You didn't say that. You just say that if this court was correct in it, I don't, anywhere in this brief. Yes, I believe the last few paragraphs say that there's an alternative basis for affirming judge Hollander's decision. And that alternative basis, of course, is the equitable theory. Of course, the issue is before it's not based on your brief, but on the IRS who challenged that ruling. Yes, Your Honor. Yes, Your Honor. Returning to the more substantive issues at hand, Maryland's local law is clear. There's no dispute that the local law incorporated here is Maryland's. And Maryland's courts of appeal since 1871 have made clear that a previously unrecorded mortgage or deed is protected even against subsequently perfected judgments, even if it is recorded later. And that's the simple chronology we have here. We have a previously unrecorded deed, then a subsequently acquired and perfected judgment, and then recordation happing afterwards
. Respectfully know, you're on. Again, the position is not that we didn't argue it, and we're bringing it up now. The position is it is argued. Certainly. But if we're going to do it today, I just want to be clear that's what's happening here today. And to be clear, appellys position is it prevails under both theories. So both theories are being positive and advanced by the appellys. I'm not seeing that's wrong. What I'm saying is I'm looking at your brief and it may be both theories, but you're not really arguing both theories. It's really the lean and it seems like to me that's the basis. And I understand you're coming to court and you're here to argument going in certain ways. It's kind of like oops, maybe we should have kicking a few more pages on this here said something more than just quote a case. But that's all you did. There's nothing there. It may be a more tangential argument than we would have preferred, but that is what was submitted in the brief yesterday. Except the burden's not on you because the district court relied on equitable conversion and ruled against the IRS and the IRS appealed to that issue and argued it in its brief. Yes, sure. Have length. And it seems to me you're passing reference to say the district court was correct on that. That's all you would have to say. I agree, Your Honor. You didn't say that. You just say that if this court was correct in it, I don't, anywhere in this brief. Yes, I believe the last few paragraphs say that there's an alternative basis for affirming judge Hollander's decision. And that alternative basis, of course, is the equitable theory. Of course, the issue is before it's not based on your brief, but on the IRS who challenged that ruling. Yes, Your Honor. Yes, Your Honor. Returning to the more substantive issues at hand, Maryland's local law is clear. There's no dispute that the local law incorporated here is Maryland's. And Maryland's courts of appeal since 1871 have made clear that a previously unrecorded mortgage or deed is protected even against subsequently perfected judgments, even if it is recorded later. And that's the simple chronology we have here. We have a previously unrecorded deed, then a subsequently acquired and perfected judgment, and then recordation happing afterwards. And we're arguing who gets priority based on that simple chronology. And Maryland's courts of appeal iterated in the Mary B decision, the Taylor electric decision. And again, by the U.S. District Court and W.C. Holmes makes indelibly clear that notwithstanding the chronology of recordation, it's the deed under Maryland Real Property 3201 that receives priority and is protected. And that goes to get, you also have the Chicago Tidal Insurance case and Angelo's, you know, one of those cases recorded two years later. Certainly. And the court of appeal still says protected. Certainly. In the W.C. Holmes case, decided in 2010 by the U.S. District Court, it was a five-year gap. And if we're looking to the relative equities of the parties, here the bank recorded some 31 days later. The banks... Which is inexplicable. The attorney go that day. That's my experience and record. Well, Your Honor's in putting the practical context of a loan settlement. Once that instrument is submitted for recording by the clerks, it depends on the county, it depends on the holiday schedule, it depends on the season. That matter in this instance. Certainly. And then in another year, in our S. and Lean, it's been perfected, would be in a good based upon the argument that's being presented here, unethical, conversant. So why would it... why recorded it at all? Well
. And we're arguing who gets priority based on that simple chronology. And Maryland's courts of appeal iterated in the Mary B decision, the Taylor electric decision. And again, by the U.S. District Court and W.C. Holmes makes indelibly clear that notwithstanding the chronology of recordation, it's the deed under Maryland Real Property 3201 that receives priority and is protected. And that goes to get, you also have the Chicago Tidal Insurance case and Angelo's, you know, one of those cases recorded two years later. Certainly. And the court of appeal still says protected. Certainly. In the W.C. Holmes case, decided in 2010 by the U.S. District Court, it was a five-year gap. And if we're looking to the relative equities of the parties, here the bank recorded some 31 days later. The banks... Which is inexplicable. The attorney go that day. That's my experience and record. Well, Your Honor's in putting the practical context of a loan settlement. Once that instrument is submitted for recording by the clerks, it depends on the county, it depends on the holiday schedule, it depends on the season. That matter in this instance. Certainly. And then in another year, in our S. and Lean, it's been perfected, would be in a good based upon the argument that's being presented here, unethical, conversant. So why would it... why recorded it at all? Well... That's not equitable. I'm interested in it. That no subsequent lean that's been perfected can take priority over. Your Honor, you record because you are insulated against subsequent judgment creditors, even if you're on recorded, but you're only insulated against bona fides if you record. And here, that's where there's some confusion. The appellant attempts, like Mary B. did in the Chicago Title Case, to crowbar themselves into a more favorable position. They argue that they're bona fide, which is why appellant's counsel advanced to Judge Nehmeyer, that the bank took subject to this unrecorded interest. But she confuses the roles of the party, the roles of the parties. Here, it's the bank who is the bona fide, and it is the IRS that is a subsequent judgment creditor who must... What's the effect of the January 10th perfection of the federal lean? What's the effect of that? The effect of that is security instruments would become subject to that lean as of that day under 632-3A and 632-3H1 directs this court as to the timing element. When did the security interest become perfected under local law? If the IRS... You didn't need the relation back statute based upon what you're saying here today in order to have a prior to lean interest... The interest at all, I guess, from an equitable conversing. You don't need the relation back to prevail here. No, because we're bona fide, and the IRS is not correct. So are you today abandoning the lean argument and adopting this equitable conversion argument? Absolutely not. Apele's position is that we... It sounds like too many people on your side on the lean. Just lean eyes not on your side. It doesn't sound like I'm on your side on the lean. So if you don't have the lean argument, then you were just embracing this equitable conversion argument that you really did not. I'm embracing both arguments, Your Honor
... That's not equitable. I'm interested in it. That no subsequent lean that's been perfected can take priority over. Your Honor, you record because you are insulated against subsequent judgment creditors, even if you're on recorded, but you're only insulated against bona fides if you record. And here, that's where there's some confusion. The appellant attempts, like Mary B. did in the Chicago Title Case, to crowbar themselves into a more favorable position. They argue that they're bona fide, which is why appellant's counsel advanced to Judge Nehmeyer, that the bank took subject to this unrecorded interest. But she confuses the roles of the party, the roles of the parties. Here, it's the bank who is the bona fide, and it is the IRS that is a subsequent judgment creditor who must... What's the effect of the January 10th perfection of the federal lean? What's the effect of that? The effect of that is security instruments would become subject to that lean as of that day under 632-3A and 632-3H1 directs this court as to the timing element. When did the security interest become perfected under local law? If the IRS... You didn't need the relation back statute based upon what you're saying here today in order to have a prior to lean interest... The interest at all, I guess, from an equitable conversing. You don't need the relation back to prevail here. No, because we're bona fide, and the IRS is not correct. So are you today abandoning the lean argument and adopting this equitable conversion argument? Absolutely not. Apele's position is that we... It sounds like too many people on your side on the lean. Just lean eyes not on your side. It doesn't sound like I'm on your side on the lean. So if you don't have the lean argument, then you were just embracing this equitable conversion argument that you really did not. I'm embracing both arguments, Your Honor. And under the lean... You don't embrace both. Do you understand what I just said? If it is appearing that you're not going to prevail on the lean, there's not much embracing you can do there. You must now embrace this equitable conversion aspect of it. Certainly. And again, I think we're very strong in the equitable conversion, but I have four and a half minutes, and I think I can discuss with you quite knowledgeably the lean theory and explain why under Mary B, which is the Chicago... I don't know how you don't take the judge's hints and argue the case with strong. Certainly. Well, the bank does prevail. But in any brief, so you better argue it up here. Because what Judge B, the email is arguing for you, you need to help an argument along with it. Because it's not in your brief. What would happen if this thing had been recorded after the bankruptcy? Well... That changed the game? The... It certainly would, because the question is, when you're recording, you're securing your interest in what? And if the property doesn't exist anymore, has been subsequently conveyed, it does change the game. You're right. But standing here today, we did record. And that hypothetical, you know, albeit illustrative, is not applicable here. We did record. And again, under 6-3-2-3-H1, the pivotal question, there's no dispute that the property existed. There's no dispute that a Susquehanna bank parted with money or money's worth. The only issue is when did its lean, or when did security interest become protected under local law? And it became protected as soon as there was ink fresh on the page on that deed of trust. Equitable title, vested in Susquehanna bank, and from that date, it became abonified. And the IRS was defeated because they did not record. And
. And under the lean... You don't embrace both. Do you understand what I just said? If it is appearing that you're not going to prevail on the lean, there's not much embracing you can do there. You must now embrace this equitable conversion aspect of it. Certainly. And again, I think we're very strong in the equitable conversion, but I have four and a half minutes, and I think I can discuss with you quite knowledgeably the lean theory and explain why under Mary B, which is the Chicago... I don't know how you don't take the judge's hints and argue the case with strong. Certainly. Well, the bank does prevail. But in any brief, so you better argue it up here. Because what Judge B, the email is arguing for you, you need to help an argument along with it. Because it's not in your brief. What would happen if this thing had been recorded after the bankruptcy? Well... That changed the game? The... It certainly would, because the question is, when you're recording, you're securing your interest in what? And if the property doesn't exist anymore, has been subsequently conveyed, it does change the game. You're right. But standing here today, we did record. And that hypothetical, you know, albeit illustrative, is not applicable here. We did record. And again, under 6-3-2-3-H1, the pivotal question, there's no dispute that the property existed. There's no dispute that a Susquehanna bank parted with money or money's worth. The only issue is when did its lean, or when did security interest become protected under local law? And it became protected as soon as there was ink fresh on the page on that deed of trust. Equitable title, vested in Susquehanna bank, and from that date, it became abonified. And the IRS was defeated because they did not record. And... Do you determine, do you, on a state law, or is it federal law when a lean is protected? It's federal law, which determines the priority, but here federal law does not defer, but incorporates all of Maryland law. And it's the Appellance Council who asks you to incorporate most, but ignore some of local law. So is it federal law? Is it state law that determines when a judgment lean is protected? It's state law that determines when and security interest is protected. And again, I want to make sure the language is clear, because there's... You were perfected. When is it perfected? Is it state law? Is it federal law that determines when a judgment lean is protected? It's state law. State law determines when it's perfected. If you're right here in Enre's Chirauro, must be wrong. It is federal law, not state law that defines when a judgment lean is protected. The Enre... Must be wrong, then. The Enre Charco case, I believe. It's just reading what that one statement is right there. Certainly. That case dealt with the West Virginia statute and a battle between two parties who are both themselves subsequent judgment creditors. Here we have parties who are in much different roles. Here, the bank is not a subsequent judgment creditor. It is the holder of security interest and a bona fide. And it's competing for priority against the IRS, who didn't record their interest until after equitable title had passed on January 10th. So the right... The right... The right.
... Do you determine, do you, on a state law, or is it federal law when a lean is protected? It's federal law, which determines the priority, but here federal law does not defer, but incorporates all of Maryland law. And it's the Appellance Council who asks you to incorporate most, but ignore some of local law. So is it federal law? Is it state law that determines when a judgment lean is protected? It's state law that determines when and security interest is protected. And again, I want to make sure the language is clear, because there's... You were perfected. When is it perfected? Is it state law? Is it federal law that determines when a judgment lean is protected? It's state law. State law determines when it's perfected. If you're right here in Enre's Chirauro, must be wrong. It is federal law, not state law that defines when a judgment lean is protected. The Enre... Must be wrong, then. The Enre Charco case, I believe. It's just reading what that one statement is right there. Certainly. That case dealt with the West Virginia statute and a battle between two parties who are both themselves subsequent judgment creditors. Here we have parties who are in much different roles. Here, the bank is not a subsequent judgment creditor. It is the holder of security interest and a bona fide. And it's competing for priority against the IRS, who didn't record their interest until after equitable title had passed on January 10th. So the right... The right... The right... The right... The right... The right... January 4th. Yes, Your Honor, I'm sorry, my dates got crossed. The back, are you, is you best, are you? I believe they're both wonderful arguments, Your Honor. I believe that under the... The precedent set by the Chicago title, the Angelo's... See, the dangers of arguing the relation back, you have the federal government, you have the Congress expressing it in statute, in regulation, and in legislative history. Now, whether we can use those or not depends on whether the statute's unclear. But they all are against a notion that was going to defeat the has been protected as of the time the IRS filed. In other words, when the IRS filed on January 10th, Susquehanna had not recorded anything. That's correct. And so it seems to me the question is, what Susquehanna's interest protected as of January 10th? That's the issue. Yes, Your Honor. To argue relation back is just like kicking a dead horse, I'm going to tell you. Well, in that case, I mean, in that case, we are protected under equitable theories. I mean, Maryland case law is clear that the bank is protected as of January 10th. And for those reasons, this court must affirm the holding of Judge Hollander in the US District Court. Absent any further questions? I'll see my time. Thank you, Your Honor. Ms
.. The right... The right... The right... January 4th. Yes, Your Honor, I'm sorry, my dates got crossed. The back, are you, is you best, are you? I believe they're both wonderful arguments, Your Honor. I believe that under the... The precedent set by the Chicago title, the Angelo's... See, the dangers of arguing the relation back, you have the federal government, you have the Congress expressing it in statute, in regulation, and in legislative history. Now, whether we can use those or not depends on whether the statute's unclear. But they all are against a notion that was going to defeat the has been protected as of the time the IRS filed. In other words, when the IRS filed on January 10th, Susquehanna had not recorded anything. That's correct. And so it seems to me the question is, what Susquehanna's interest protected as of January 10th? That's the issue. Yes, Your Honor. To argue relation back is just like kicking a dead horse, I'm going to tell you. Well, in that case, I mean, in that case, we are protected under equitable theories. I mean, Maryland case law is clear that the bank is protected as of January 10th. And for those reasons, this court must affirm the holding of Judge Hollander in the US District Court. Absent any further questions? I'll see my time. Thank you, Your Honor. Ms. Hauser. I'm still wrestling with the argument you've made with respect to the fact that an unrecorded tax lien will trump a conveyance on recorded contract to sale. And you say your tax lien existed before January 4th. And I'm just looking at 26, 63, 23A, which says the lien imposed shall not be valid as against any purchaser or holder of security interest until notice there over meets the requirements of subsection F. And of course, subsection F is the recording section. It seems to me, Congress has made it pretty clear that you don't get rights against bonafide receivers of security interests like Susquehanna until you record. You claim the relation back to? We don't get rights against parties who fall within the terms defined by the federal statute. But an unrecorded contract for sale does not bring a party into the federal statute. Well, it says that you don't get it as against the holder of a security interest. And then a security interest is defined by reference to state law. And state law, it says a security interest protected when the deed is signed and delivered. Not recorded. Now, I don't understand how you're going to get a federal law to trump what the federal law differs to state law. If you were referring to the state statute, the state statute, okay, you're referring to the equitable conversion there. Well, I'm looking at the notion that how do you defeat a contract to sale? The equitable conversion, which is an equitable interest in the property. Because the equitable conversion cases, and I think it's Stebans Anderson, spells this out, that they look to the true interests in the property. And the tax payers true interest in the property is already encumbered with the federal tax law. Now, yes, the tax lane didn't, the tax lane didn't defeat a bona fide purchaser for value. Perhaps it, perhaps it would be clearer. It's not recorded. And the statute says that actually. The tax lane will defeat a bona fide purchaser for value until that person has a interest under state law sufficient to trump a subsequent bona fide purchaser. The federal statute doesn't say that. The federal statute says you don't get a lien ahead of a state created security interest. I don't talk about a lien, and it doesn't talk about recordation. It talks about the when a security interest is created. I thought we were talking about purchases, you're on it. Where the security interest comes. I mean, it says purchaser too, but I mean, it seems to me, Susquehanna is both a purchaser and a security interest, the whole security interest. It's a limited purchaser. The purchaser and security interests are both terms defined by the federal statute, and they have to come in within the terms of the federal statute under whichever definition they're attempting to meet. Per, I have 20 seconds. I'll just ask the court to reverse the district court and uphold the federal regulation
. Hauser. I'm still wrestling with the argument you've made with respect to the fact that an unrecorded tax lien will trump a conveyance on recorded contract to sale. And you say your tax lien existed before January 4th. And I'm just looking at 26, 63, 23A, which says the lien imposed shall not be valid as against any purchaser or holder of security interest until notice there over meets the requirements of subsection F. And of course, subsection F is the recording section. It seems to me, Congress has made it pretty clear that you don't get rights against bonafide receivers of security interests like Susquehanna until you record. You claim the relation back to? We don't get rights against parties who fall within the terms defined by the federal statute. But an unrecorded contract for sale does not bring a party into the federal statute. Well, it says that you don't get it as against the holder of a security interest. And then a security interest is defined by reference to state law. And state law, it says a security interest protected when the deed is signed and delivered. Not recorded. Now, I don't understand how you're going to get a federal law to trump what the federal law differs to state law. If you were referring to the state statute, the state statute, okay, you're referring to the equitable conversion there. Well, I'm looking at the notion that how do you defeat a contract to sale? The equitable conversion, which is an equitable interest in the property. Because the equitable conversion cases, and I think it's Stebans Anderson, spells this out, that they look to the true interests in the property. And the tax payers true interest in the property is already encumbered with the federal tax law. Now, yes, the tax lane didn't, the tax lane didn't defeat a bona fide purchaser for value. Perhaps it, perhaps it would be clearer. It's not recorded. And the statute says that actually. The tax lane will defeat a bona fide purchaser for value until that person has a interest under state law sufficient to trump a subsequent bona fide purchaser. The federal statute doesn't say that. The federal statute says you don't get a lien ahead of a state created security interest. I don't talk about a lien, and it doesn't talk about recordation. It talks about the when a security interest is created. I thought we were talking about purchases, you're on it. Where the security interest comes. I mean, it says purchaser too, but I mean, it seems to me, Susquehanna is both a purchaser and a security interest, the whole security interest. It's a limited purchaser. The purchaser and security interests are both terms defined by the federal statute, and they have to come in within the terms of the federal statute under whichever definition they're attempting to meet. Per, I have 20 seconds. I'll just ask the court to reverse the district court and uphold the federal regulation. Thank you. I would like to know, because I'm trying to put my mind around it, what is the relationship between an equitable purchaser and a, the priority of a security interest on the federal law? I mean, there's a lot of mixing here to get there, you've got to deal with the priority, the security interest on the federal law, and then bring in local law on an equitable purchaser. So what is that relationship? To be a purchaser under federal law, you need to fall within the federal definition of a purchaser. An equitable purchaser on a state law. Yes. What is that relationship with a priority or security interest on a federal statute? I mean, I'm not sure, Anna. I just don't see the relationship between the two. I mean, it looks to me like that, two different things. Yes, that would be. As far as I don't see what exactly the relationship with a priority or security interest, I'm just having a difficult time reaching that. I am with you, Your Honor, precisely because the equitable purchaser theory looks to the true interests and the property. And when we're looking to the true interests, we look to the, then in fact, the federal tax link has already attached. One way to think of it might be that on January 4, the federal government had an unrecorded tax lien and the bank had an unrecorded mortgage. And at that point, we just have a race to the court house, a race to record. So if you're assuming that recordation is the criterion and it is for the government's position, but it's not for the taxpayers. I mean, for Susquehannis. Oh, I would dispute that. If they're trying to come in as a purchaser, recordation is essential. If they're trying to come in. It does not require a recordation under the statute. Under the state statute, the relation, back principle requires recordation. Yes. That's on the line, but I'm talking about this federal definition of a security interest does not require a recordation. It just says when the security interest is protected under local law. Yes, that's what it says. Oh, yes. And then you look to local law, which happens to be marijuana in this case. And you ask when did Susquehannis security interest become protected? And your argument has to be it became protected only when recorded, which is not what the state cases say. I believe the state cases look to the true interests in the property. Okay. Thank you. Thank you. We'll come down in Greek Council and then proceed on to the next case
. Is that okay with you? Is that okay with you