United States v. City of Milwaukee

• Decision Date: 20 January 1944
• Docket Number: No. 8333.,8333.
• Citation: 140 F.2d 286
• Parties: UNITED STATES et al. v. CITY OF MILWAUKEE et al.
• Court: U.S. Court of Appeals — Seventh Circuit

140 F.2d 286 (1944)

UNITED STATES et al. v. CITY OF MILWAUKEE et al.

No. 8333.

Circuit Court of Appeals, Seventh Circuit.

January 20, 1944.

Walter J. Mattison, Omar T. McMahon, James J. Kerwin, O. L. O'Boyle, and C. Stanley Perry, all of Milwaukee, Wis., for appellants.

B. J. Husting and E. J. Koelzer, both of Milwaukee, Wis., Norman M. Littell, Vernon L. Wilkinson, and Thomas L. McKevitt, Department of Justice, all of Washington, D. C., for appellees.

Before EVANS, SPARKS, and MAJOR, Circuit Judges.

MAJOR, Circuit Judge.

This is an appeal from a judgment entered April 17, 1943, in a suit instituted by the United States and the Federal Public Housing Authority to obtain a declaratory judgment establishing the tax exempt status of property owned by plaintiffs and used as a site for a low-cost housing project. Injunctive relief was also sought to prevent the threatened collection of past and future tax assessments. Both sides moved for judgment on the pleadings, and the judgment appealed from provided the relief sought by plaintiffs.

The essential allegations of the complaint are: (1) ownership by the plaintiffs of certain real estate designated as Parklawn, situated in the city of Milwaukee; (2) the property's tax immunity status; (3) the existence of tax assessments against the land on the tax rolls of defendants, and (4) defendants' intention to enforce such taxes. Defendants, by answers, admitted plaintiffs' title to the property and the absence of an adequate remedy at law. As a defense to the relief sought, they alleged in substance: (1) the acquirement of title in 1935 by the United States Government from private individuals or corporations which for many years prior thereto had paid taxes upon such property; (2) the use of such property by plaintiffs since 1937 as a housing project; (3) the furnishing by defendants of services, such as fire and police protection, hospital facilities and an educational system by the city and state to the occupants of the project; (4) the state laws concerning the taxation of real property, particularly c. 86, Wis.Laws 1941, specifically excluding from the tax exempt list property of the United States or its instrumentalities used for residential income producing purposes; (5) the absence of exclusive federal jurisdiction over the property concerned; and (6) certain negotiations between the city of Milwaukee and the United States Housing Authority in connection with proposed payments in lieu of taxes.

It is further disclosed that the property involved was purchased pursuant to the authority of Title II, Sec. 203 of the National Recovery Act of June 16, 1933, 48 Stat. 202, 40 U.S.C.A. § 403. Thereafter, the United States, first through the Federal Emergency Administrator of Public Works and later through the United States Housing Authority, constructed on the land so acquired 518 separate family residential units as a low-cost housing project. On September 1, 1937, Congress passed the so-called "United States Housing Act of 1937," 50 Stat. 888, 899, 42 U.S.C.A. §§ 1401-1430. To effectuate the purpose of the Act, Congress created a wholly-owned corporation, to be known as the United States Housing Authority. By executive order dated February 24, 1942, the name of such Authority was changed to the Federal Public Housing Authority (title of instant plaintiff). This Authority was specifically described, Sec. 1403, as an agency and instrumentality of the United States. It was also provided, Sec. 1404(d), that all previous slum clearance projects, such as the instant one, constructed under the authority of earlier acts of Congress, should be transferred to and administered by the newly created United States Housing Authority. The Authority was given power to administer existing projects, Secs. 1404(d), 1412(e), and also to transfer the actual administration of such projects to state housing agencies, Sec. 1412(a).

Thus the issue for decision is whether land owned by the United States, through the Federal Public Housing Authority, and used as a site for a low-cost housing project, is subject to taxation by the political subdivisions of the state of Wisconsin.

Defendants advance a forceable and appealing argument that property of the Federal Government and its agencies, used for purposes such as in the instant case, was not intended by the makers of the Constitution to be exempt from local taxation. Persuasive as the argument may be, however, it comes fifty and perhaps one hundred years too late. Substantially every contention, and certainly the ultimate question for decision, was decided in favor of the government in Van Brocklin v. Tennessee, 117 U.S. 151, 6 S.Ct. 670, 29 L.Ed. 845, wherein the court reversed a decision of the Supreme Court of Tennessee, which had held taxable real property of the United States acquired by tax foreclosure. In that case, the court placed great stress upon McCulloch v. Maryland, 4 Wheat. 316, 4 L.Ed. 579. It was in the Tennessee case, however, that the reasoning of the McCulloch case was first applied to taxes on real property, title of which was held by the Federal Government. Defendants recognize the controlling force of this case, but argue that the Constitution was improperly construed and that the holding should not be followed. This, to say the least, is a novel suggestion. Tempting as such invitation might be on some occasions, we are bound to decline it in the present instance as well as all others. Furthermore, Van Brocklin v. Tennessee is not an isolated case, the doctrine of which has been permitted to slumber untouched during the intervening years. In fact, it has often been cited and quoted with approval. In Lee et al. v. Osceola & Little River Road Improvement District, 268 U.S. 643, 645, 45 S.Ct. 620, 69 L.Ed. 1133, the court stated: "It was settled many years ago that the property of the United States is exempt by the Constitution from taxation under the authority of a State so long as title remains in the United States. Van Brocklin v. State of Tennessee, 117 U.S. 151, 180, 6 S.Ct. 670, 29 L.Ed. 845."

In the recent case of Mayo et al. v. United States, 319 U.S. 441, 447, 63 S.Ct. 1137, 1141, 87 L.Ed. 1504, the court in a footnote stated: "A state cannot tax land of the United States situated within the state even though the state has not ceded sovereignty to the United States. Van Brocklin v. Tennessee, 117 U.S. 151, 177, 6 S.Ct. 670, 684, 29 L.Ed. 845."

See, also, Mullen Benevolent Corp. v. United States, 290 U.S. 89, 91, 54 S.Ct. 38, 78 L.Ed. 192; Graves v. New York ex rel. O'Keefe, 306 U.S. 466, 477, 59 S.Ct. 595, 83 L.Ed. 927, 120 A.L.R. 1466.

Defendants press their...