Armstrong v. United States
In Armstrong v. United States, 364 U.S. 40, 80 S.Ct. 1563, 4 L.Ed.2d 1554 (1960), the Court held that state-created materialmen's liens which attached to, but had not been enforced against, a privately owned vessel under construction for the government, remained valid after title to the vessel vested in the government under its contract with the shipbuilder.
The Armstrong court relied on its earlier holding in United States v. Alabama, 313 U.S. 274, 61 S.Ct. 1011, 85 L.Ed. 1327 (1941), that a state tax lien on real property, though inchoate, remained valid as against the United States, which later took title to the property. In United States v. Alabama, supra, the Court reaffirmed the principle that lands owned by the United States cannot be taxed by a state. That principle, however, was held not to apply to the prior state tax liens:
Our present inquiry is whether, assuming the validity of the state statute creating a lien as of October 1, 1936, as against subsequent purchasers, it should be deemed invalid as against the United States. The question is not whether such a lien could be enforced against the United States. The fact that the United States had taken title and that proceedings could not be taken against the United States without its consent would protect it against such enforcement. But that immunity would not be predicated upon the invalidity of the lien. . . .
. . . (W)e perceive no reason why the United States, albeit protected with respect to proceedings against it without its consent, should stand, so far as the existence of the liens is concerned, in any different position from that of other purchasers of lands in Alabama who take conveyances on and after the specified tax date. It is familiar practice for grantees who take title in such circumstances to see that provision is made for the payment of taxes and the Government could easily have protected itself in like manner. . . .313 U.S. at pp. 281, 282, 61 S.Ct. at p. 1014.
In Armstrong the Court flatly rejected the argument that the government's contract with the shipbuilder affected the validity of the materialmen's liens:The Government also seems to suggest that because the contract between Rice and the United States expressly gave the Government the option of requiring a conveyance of title upon default, petitioners' liens attached subject to that limitation.
Petitioners, however, were not parties to the contract.
Furthermore, their liens attached by operation of law and nothing in the record indicates that the scope of such liens is affected by contractual arrangements into which the owner of the property may have entered. 364 U.S. at pp. 45-46, 80 S.Ct. at 1567.
In Armstrong v. United States, supra, because the United States already had possession of the vessel, the doctrine of sovereign immunity prevented the materialmen from enforcing their liens. Thus, while the liens were legally valid, in fact the United States' immunity from suit rendered the liens inoperative.
The Court held that the United States had destroyed the liens and must compensate the materialmen for their value.