World Marketing, Ltd., a Corporation v. Ronald Hallam and Does I Through X

Plaintiff World Marketing Corporation appeals from an order of the United States District Court for the Southern District of California denying remand to the Superior Court of California and dismissing with prejudice a quiet title action against defendant Ronald Hallam. The district court denied remand because it considered 26 U.S.C. § 7426 (1976) as the exclusive remedy for recovery of property wrongfully seized and sold by the United States. Jurisdiction is conferred on this court by 28 U.S.C. § 1291 (1966). We reverse and remand.

I. FACTS

James W. Philbee transferred ownership of a sailing vessel, the Whirlwind II, to plaintiff World Marketing Corporation (World) in September 1976. On November 2, 1976, the Internal Revenue Service (IRS) seized the vessel for Philbee’s non-payment of taxes. Pursuant to 26 U.S.C. § 6335 (1976), the IRS sold the ship to Wayne Terry, who subsequently transferred the vessel to defendant Hallam. World did not accept this state of affairs. Litigation commenced.

The plaintiff filed two suits in federal court prior to this action. The first commenced on February 28, 1977. World brought suit in the United States District Court for the Southern…