liability is satisfied or becomes unenforceable by reason of lapse of time. The bill also makes it clear that the Government's right to collect taxes due by administrative levy action is neither curtailed nor expanded by the judgment.

N. CONSENT OF UNITED STATES TO BE JOINED IN CERTAIN PROCEEDINGS

(SEC. 201 OF THE BILL AND SECS. 2140 (a), (b), (c), and (d) of title 28)

This section relates to judicial proceedings affecting property on which the United States has or claims a mortgage or other lien. Under present law the Government may be brought into a judicial proceeding as a party to quiet title to property or to foreclose a mortgage or other lien on property; it may not, however, be joined as a party in certain other judicial proceedings. The result is that where parties attempt to join the Government in cases other than the types previously described, the Government must move to dismiss the motion to join and, where it wants to assert its interest, it must petition to intervene or initiate a new proceeding.

Present law sets forth the pleading requirements for those actions where the Government may be joined as a party. This is so the Government will have notice of the reason it is being joined. Similarly, the statute spells out under what circumstances the relief granted to private parties in actions where the Government is joined is to affect the Government's interest. Thus, where a judicial sale is ordered in the proceedings, it is specified that the sale is to have the same effect on the Government's interest as local law provides with respect to similar matters. The statute also gives the Government the right to redeem the property sold at the sale for reasons previously discussed in this report. It does not, however, contain rules for determining the redemption price.

Your committee believes the Government's consent to being joined as a party should be broadened to include those cases where experience has shown it is desirable for the Government to be a party in order to assert its interests. This also requires changing the present pleading requirements to be sure the Government will be informed of the reasons for its being joined in these actions. Similarly, in these new actions, a judicial sale may not always be the appropriate remedy. Experience has also shown that in order to obtain uniformity a rule for determining the amount the Government must pay where it exercises the right of redemption needs to be provided. In accord with the reasons given above, the Government's consent to be sued is broadened to include "partition" and "condemnation" suits and "interpleader" suits and suits "in the nature of interpleader." Partition suits are those where persons with undivided interests in a parcel of property seek to have their undivided interests in the whole divided into separate interests in portions of the parcel. Condemnation suits are those brought by governmental (and quasigovernmental) units to acquire private property for the purpose of converting it to public use. Interpleader actions are those brought by persons holding property for the purpose of determining who is entitled to the property held.

The bill also makes two changes in present law with respect to the pleading requirements in those actions where the Government has

consented to be joined as a party. The first change makes it clear that any pleading which attempts to join the Government as a party must refer to the Government's interest in the suit. Under present law the statute provides that only the complaint must refer to the Government's interest. The second change specifies the type of information (such as the name of the taxpayer whose tax liability gives rise to the Government's interest in the action, the district director's office involved, etc.) which must be contained in the pleading seeking to join the Government in actions involving liens under the internal revenue laws.

The bill provides that, generally, in suits where the Government is joined as a party, the judgment of the court is to have the same effect with respect to the discharge of the Government's interest as applicable local law provides with respect to similar matters. An exception is made where a sale is ordered to satisfy a lien junior to the Government; here, the Government's interest cannot be discharged without its consent, even if local law provides otherwise.

Under this provision, in the new types of suits in which the Government has consented to be sued, and in a quiet title action as well, the person bringing the suit does not have to request a judicial sale for the judgment of the court to have the effect of discharging the property from the Government's interest where local law so provides. In an action to foreclose a mortgage or other lien, on the other hand, the person must seek a judicial sale.

Changes are also made regarding the Government's rights where property is sold in actions where the Government is joined. First, where the lien arises under the internal revenue laws, the provision cuts the period in which the Government may redeem the property from 1 year to 120 days or, if longer, the period allowed by applicable local law. This gives the Government a sufficient time to determine whether redemption is desirable. The second change the bill makes here is to add to the judicial code the exceptions to the right of redemption presently contained in separate Federal acts (such as the Housing Act of 1950). The last change the provision makes is that it authorizes the head of a department to delegate his authority to bid on property sold at one of these proceedings to satisfy a prior lien of the Government.

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The bill also provides a formula for determining the price the Government must pay where it redeems property sold in proceedings where the Government is joined as a party (under this section), and where it is sold in foreclosures other than plenary judicial proceedings. The redemption price is to be the amount paid by the purchaser at the foreclosure sale plus interest at the statutory rate (6 percent) from the date of sale. Where the purchaser at the sale is the person whose lien is being foreclosed, the amount paid by him includes the amount of the debt underlying his lien to the extent that the lien is satisfied by the sale. Where the lien is fully satisfied, the purchaser is not to receive less than the amount due him at the time of sale. Where the lien attaches to other property, however, or where, after the sale, the purchaser still has the right to sue for the unpaid balance of the amount due him, the amount paid does not include this unpaid balance.

In addition to the price paid by the purchaser plus interest, in order to redeem property, the Government must pay, as part of the redemp

tion price, the excess, if there is any, of any expenses incurred after the foreclosure sale in maintaining the property over the income from the property during this period. Where the property is not rented out but is used by the purchaser, the income includes the reasonable rental value of the property.

0. JURISDICITION AND VENUE IN CERTAIN CASES AGAINST UNITED STATES

(SEC. 202 OF THE BILL AND SECS, 1346(e) AND 1402(c) OF TITLE 28)

Under present law, the Government cannot be sued where it wrongfully levies upon property, or in actions involving surplus proceeds or substituted sale proceeds. Therefore, present law contains no provision giving the Federal courts jurisdiction over actions of this type. Similarly, there are no venue provisions determining in what judicial district these actions may be brought.

Since under other provisions of this bill wrongful levy actions, and actions involving surplus proceeds and substituted sale proceeds, may be brought, courts must have jurisdiction over them and venue rules must be provided.

Your committee's bill, therefore, confers jurisdiction on the Federal courts over wrongful levy actions, and actions involving surplus proceeds and substituted sale proceeds. The Federal district courts have original jurisdiction over these actions.

As to venue, the bill provides that wrongful levy actions, and actions involving surplus proceeds and substituted sale proceeds, are to be brought only in the judicial district where the property levied on is situated at the time of levy. Where the action does not arise out of a wrongful levy (such as in certain cases involving substituted sale agreements) the action is to be brought where the event giving rise to the lawsuit occurred.

P. EFFECTIVE DATE (SECS. 114 AND 203 Of the bill)

The bill provides, as a general rule, that the amendments made by the bill are to apply after the date of enactment. This is true regardless of when a lien or a title of the United States arose or when a lien or interest of any other person was acquired. However, the bill provides certain exceptions to this general rule as to the effective date for the provisions of the bill. They are as follows:

(1) The amendments made by the bill are not to apply in any case where the Government has, in effect, completed enforcement of its interest arising under a lien. Thus, the amendments are not to apply where the enforcement proceeding has reached the stage of a civil action or suit which has become final by judgment, sale, or agreement, before the date of enactment.

(2) The amendments are not to apply to any case where they would impair a priority of any person holding a lien or interest prior to the date of enactment; increase the liability of any person; or, shorten the time for bringing suit with respect to any transaction occurring before the date of enactment.

(3) The amendments imposing a liability on third persons who pay wages of employees of another or supply funds for the specific purpose of paying wages of the employees of another, are

to apply only with respect to wages paid on or after January 1, 1967.

(4) The amendment requiring performance bonds on public works contracts to provide for the payment of withholding are to apply only to contracts entered into pursuant to invitations for bids made by the Government after June 30, 1967.

(5) Where a person has commenced a civil action to clear title to property under the present law (sec. 7424 which, in effect, is repealed by this bill), the action is to be determined in accordance with that section without regard to this bill.

III. CHANGES IN EXISTING LAW

In the opinion of the committee, it is necessary, in order to expedite the business of the Senate, to dispense with the requirements of subsection 4 of rule XXIX of the Standing Rules of the Senate (relating to the showing of changes in existing law made by the bill, as reported).