Summary
In United States v. City of Buffalo, 2 Cir., 54 F.2d 471, this distinction is acknowledged in the following excerpt from page 473: "But the establishment of its taxable status according to law and the creation of a lien upon the property for any taxes assessed upon it are not the same or equivalent things and do not put into being the same rights and liabilities."
Summary of this case from United States v. Certain Lands, Etc.Opinion
No. 68.
December 7, 1931.
Appeal from the District Court of the United States for the Western District of New York.
Suit by the United States against the City of Buffalo. From a decree dismissing the complaint, the plaintiff appeals.
Reversed.
On December 1, 1919, the Curtiss Aeroplane Motor Corporation, a private corporation, owned a tract of improved land located on North Elmwood avenue in the city of Buffalo, N.Y. The United States of America, with the consent of the state of New York, afterwards purchased this property and took title to it by deed dated April 16, 1920, which was duly filed for record in the office of the clerk of Erie county on April 21, 1920. The consideration for the deed was paid and delivery made on April 20, 1920. The government owned the property from that time until August 7, 1923, when it contracted to sell it to the American Terminal Warehouse Corporation. No question as to taxes on this property due the city of Buffalo arose until after the government's contract to sell was made. Then it was thought that there might be some charge against the property for taxes due the defendant for the fiscal year beginning July 1, 1920, and this suit was brought to free it from such liability. The District Court dismissed the complaint, and the cause is here on appeal from a decree to that effect.
The following extracts are from the charter of the city of Buffalo:
"§ 100. The fiscal year shall begin on the first day of July."
"§ 102. The council, on or before a date prior to May first of each year, * * * shall adopt an estimate of the amount necessary to be raised by general tax to carry on the city government, and to meet all the expenses and liabilities of the city, for the next fiscal year. * * * The sum total of the adopted estimate shall be raised by general tax."
"§ 105. As soon after the adoption of any estimate as shall be practicable, the assessor shall apportion said tax upon the taxable property within the city, as set down in the assessment-rolls of the year filed with him; and shall set down in a column, to be prepared for that purpose in said rolls, opposite to the several sums set down on said rolls as the valuation of real and personal estates, the respective sums in dollars and cents to be paid as a tax thereon. He may correct any clerical errors in said rolls. He shall enter thereon, in a column to be prepared for that purpose, opposite to each lot of land, the aggregate amount of all unpaid local assessments thereon with the additions."
"§ 115. The Assessor shall prepare annual assessment-rolls, which shall consist of two parts. The first part shall contain the valuations of all the taxable lands of each tax section, and in it the Assessor shall set down:
"1. The names of the owners of the taxable lands, so far as the same can be ascertained.
"2. A brief description of said lands by reference to the Assessor's maps and surveys, and such further description as the Assessor may deem proper.
"3. The full and true value of said lands, exclusive of improvements.
"4. The full and true value of the improvements on said lands.
"5. The total value of said lands and improvements.
"* * * He shall complete the rolls on or before the first day of December in each year and immediately thereupon publish a notice in the official paper, twice a week for two weeks, that said rolls have been completed, and may be seen and examined at his office during said month of December. The rolls shall be opened to public inspection during such time. * * *
"§ 116-a. The taxable status of all persons and property assessable for taxation in the City of Buffalo shall be fixed each year on the first day of December for the following fiscal year."
"§ 117. On or before the first day of March in each year the rolls shall be carefully reviewed, corrected and finally completed by the Assessor. * * * He shall retain one copy of each roll in his office and on one of the first three days of March shall publish in the official paper a notice that such assessment-rolls have been finally completed and may be seen and examined at his office during the period of ten days and immediately following said publication."
"Sec. 106. On the first day of June or as soon thereafter as practicable, the assessor shall give notice by publishing the same in the official paper, that the payment of local assessments returned on the general tax rolls as provided herein, and one-half of the general city tax upon the general tax rolls may be made to the treasurer at any time before the expiration of one month from the date of said publication without additions; that the payment of the final one-half of the general city tax upon the general tax rolls may be made to the treasurer prior to January first following, without additions. * * * All taxes and assessments, together with interest thereon as provided by law, shall be liens upon the lands upon which they are assessed from the time of the publication of the notice by the Assessor required by this section until paid, and shall be preferred in payment to all other charges."
The defendant complied with all the formalities and requirements of law to charge this property with a lien for taxes for the fiscal year beginning July 1, 1920, provided such steps as were necessarily taken after the government took title to it were effectual to that end.
Richard H. Templeton, U.S. Atty., of Buffalo, N.Y. (Joseph J. Doran, Asst. U.S. Atty., of Rochester, N.Y., and Harold B. Ehrlich, Asst. U.S. Atty., of Buffalo, N.Y., of counsel), for plaintiff-appellant.
Charles L. Feldman, of Buffalo, N.Y. (Herbert A. Hickman, of Buffalo, N.Y., of counsel), for defendant-appellee.
Before L. HAND, SWAN, and CHASE, Circuit Judges.
No time need be spent to show that property purchased by the United States with the consent of the state in which it is located is beyond the reach of state or municipal taxation unless the United States consents. U.S. Const. art. 1, § 8. No claim is made that it is. Moreover, property of the United States is expressly made exempt in New York by section 4 of the Tax Law of that state (Consol. Laws N.Y. c. 60).
On December 1, 1919, the property was, however, owned by a private corporation and was then taxable. It is equally clear that under the charter of the city of Buffalo its status as taxable property as of that date was fixed by the acts of the officials of the defendant. But the establishment of its taxable status according to law and the creation of a lien upon the property for any taxes assessed upon it are not the same or equivalent things and do not put into being the same rights and liabilities.
For the purposes of this case, we may assume arguendo that the owner of the property on December 1, 1919, was, when its taxable status became fixed, personally liable for taxes assessed upon it either before or after April 20, 1920, which were for the fiscal year of such taxable status and were due and payable the following July 1st. But that does not necessarily mean that the property itself was liable for such taxes after it had ceased to be the property of that owner. This would depend upon whether the taxing power had any lien or claim for taxes upon the property itself apart from that to which it could be subjected in the event of its ownership by one subject to taxation and liable for the tax at the time payment of the tax could be enforced. When it became the property of another its only liability for unpaid taxes would, of course, be due to some lien against the property itself as of the time the new ownership came into being.
Regardless of what had been done before the government took title April 20, 1920, there was yet to be taken certain vital steps to create such a lien. Section 106 of the defendant's charter, above quoted in part, provides for the publication of a notice by the assessor on the 1st day of June or as soon thereafter as practicable and further provides that all taxes and assessments, together with interest thereon, shall be liens upon the lands upon which they are assessed from the time of the publication of such notice until they are paid. By the defendant's charter, therefore, the publication of this notice was made a condition precedent to the creation of a lien on the property for these taxes. As the notice could not be published until June 1st, there could have been no valid lien on April 20th when the government took title. Furthermore, the assessment of December 1, 1919, was but a valuation of the property for purposes of taxation. In re Donner-Hanna Coke Corporation, 212 App. Div. 338, 340, 209 N.Y.S. 62. The assessment for taxation is another distinct step, Matter of Freund, 143 App. Div. 335, 337, 128 N.Y.S. 48; and no lien is created on the property by the act of assessment for valuation, Barlow et al v. St. Nicholas National Bank, 63 N.Y. 399, 401, 20 Am. Rep. 547; Lathers v. Keogh, 109 N.Y. 583, 17 N.E. 131. See, also, Buckhout v. City of New York, 176 N.Y. 363, 68 N.E. 659. Accordingly, we entertain no doubt that when the United States took title, the property was unincumbered by any lien for taxes.
After that date the same immunity from new taxation which made it thereafter exempt protected it from being subjected to any new lien for prior taxes. See United States v. Pierce County (D.C.) 193 F. 529; Bannon v. Burnes et al. (C.C.) 39 F. 892. Some confusion seems to have resulted from the failure to distinguish the difference between the status of property which is exempt from state or municipal taxation solely by reason of the voluntary surrender by state law of the right to tax, and property which is immune from state or municipal taxation because it is owned by the United States. See Ft. Leavenworth Railroad Co. v. Lowe, 114 U.S. 525, 5 S. Ct. 995, 29 L. Ed. 264. The important reason no such lien could come into being without the consent of the federal government after it took title lies in the fact that taxation of the property of the United States depends wholly upon the will of its owner. Van Brocklin v. Tennessee, 117 U.S. 151, 155, 6 S. Ct. 670, 29 L. Ed. 845. As the whole is inclusive of all its parts, so immunity from taxation which rests upon the sovereign right of the federal government to hold property tax free includes freedom from all taxation not fixed and final as a charge against the property itself when the government acquires it. Since the right here invoked does not rest primarily or necessarily upon state grace, the exemption statute of New York, above cited, and section 54 of the state law, which provides for the exoneration and discharge of certain property from all taxes, assessments, and other charges, need not be considered.
Decree reversed.
I agree in the result but for other reasons than my brothers. The question appears to me wholly one of state law, with which the sovereignty of the United States has nothing to do, although of course I agree that no state may tax property of the United States. On the other hand I do not understand it to be disputed that when the United States takes over property, it takes it subject to whatever liens are upon it, tax liens like the rest. If the law of a state were that all taxes should be liens as of March first, the time of the assessment, but might be computed, levied and extended on the rolls before July first, I see no reason why they should not be a lien upon land conveyed to the United States on March second. The act of liquidating and formally imposing the tax would not in my judgment be in defeasance of the sovereignty of the United States. I cannot agree with the contrary ruling in U.S. v. Pierce County (D.C.) 193 F. 529. Bannon v. Burnes (C.C.) 39 F. 892, contains a dictum in accord, but it was altogether unnecessary to the result. The levy and extension on the rolls are not adversary proceedings against the United States, like an arrest or seizure of its property; they do no more than fix the amount of a charge already imposed, and the liquidation does not depend upon questions in which the United States is interested except as all other owners of property. They are not directed against it individually, as is a suit, or a condemnation.
By the law of New York the exemption of charitable or ecclesiastical property under section 4 of the Tax Law dates from the completion of the assessment rolls. Association of Colored Orphans v. Mayor, 104 N.Y. 581, 12 N.E. 279; Sisters of St. Francis v. Mayor, 51 Hun, 355, 3 N.Y.S. 433, affirmed on opinion below, 112 N.Y. 677, 20 N.E. 417; In re American Fine Arts Society, 6 App. Div. 496, 39 N.Y.S. 564, affirmed 151 N.Y. 621, 45 N.E. 1131; People ex rel. Barnard College v. Wells, 46 Misc Rep. 13, 89 N.Y.S. 847, affirmed, 92 App. Div. 622, 87 N.Y.S. 1143; Id., 179 N.Y. 524, 71 N.E. 1136. If that were all, I should be disposed to treat the exemption of the United States under the same section as dating from the same time. However, though with some doubt, I give to section 54 of the state law a wider scope. It came much later in the legislative history of the state and its language at least admits, if it does not require, a construction forbidding the levy, stricti juris, of any tax upon United States property. I read the words distributively "taxes * * * levied" and "assessments or other charges * * * imposed." "Assessments" means, I think, charges for public improvements which are distributed among the property benefited; it does not refer to the assessment of value for ordinary tax purposes. If so, we are entitled to take the word "levied" as a term of art, especially in dealing with a subject-matter where for long the terminology has been nice and technical. The doctrine easily yields to any contrary legislative expression (American Bible Society v. Commissioners, 142 N.Y. 348, 37 N.E. 116), and there is some antecedent reason to make a distinction between the property of charitable or ecclesiastic bodies, and that of the United States. The first is subject to the general power of the state, and is exempted as matter of grace; the second is without its jurisdiction. There is good ground for avoiding the appearance of any exercise of power over the property of another sovereign, even by means of an earlier reservation which would be lawful, if express. Formally the tax is imposed upon that property, though it involves no executive action, directed against it as such; in such a setting the words of a tax statute may well be taken strictly. Forced to an interpretation without the aid of any decision of the Court of Appeals — which I should take as authoritative — I believe that under section 54 the levy was unlawful, and there certainly was no tax without a levy.