Bancroft Inv. Corp. v. City of Jacksonville

• Decision Date: 15 January 1946
• Parties: BANCROFT INV. CORPORATION v. CITY OF JACKSONVILLE et al.
• Court: Florida Supreme Court

27 So.2d 162

157 Fla. 546

BANCROFT INV. CORPORATION v. CITY OF JACKSONVILLE et al.

Florida Supreme Court

January 15, 1946

On Rehearing July 30, 1946.

Appeal from Circuit Court, Duval County; DeWitt T. Gray, judge.

C D. Towers, W. Raymond Blackard, and Rogers, Towers &amp Bailey, all of Jacksonville, for appellant.

Austin Miller, for appellee.

Howell, McCarthy Lane & Howell, Charles Cook Howell, Edward McCarthy, Jr., and Charles Cook Howell, Jr., all of Jacksonville, amici curiae.

SEBRING, Justice.

This is an appeal from a decree dismissing a bill of complaint in a suit brought to enjoin the City of Jacksonville, Fla., from enforcing an ad valorem tax on real property, the legal title to which is in the United States of America. The facts of the case are shown by the pleadings and a stipulation between the parties.

The property in question was purchased by the United States from a private owner in 1888. From that time until September 17, 1940, it was used exclusively for governmental purposes and was carried on the tax books of the City of Jacksonville as 'tax exempt' property. On April 13, 1940, the government published an invitation for bids for the purchase of the property and Hogan & Adams Corporation, a Florida corporation, became the successful bidder. In due course a contract of sale agreeable to the parties was executed, the down payment was made, and the purchaser was let into possession. By the terms of the contract the purchase price for the property was fixed at $350,129.00, one-fifth payable in cash and the balance in five equal annual installments with interest on deferred payments; the United States to retain title to the property until full payment of the purchase price and full performance of the contract by the purchaser, the seller thereupon to execute and deliver to the purchaser or its nominee a quit claim deed to the property. The contract further provided that upon failure of the purchaser to comply with all of the terms and conditions of the contract the United States might terminate the contract retain installments of purchase money already paid, resume immediate possession of the premises, resell the same and recover from the defaulting purchaser any deficiencies in price resulting in such resale. On September 7, 1940, Hogan & Adams Corporation assigned its interest in the contract to Bancroft Investment Company, the plaintiff in this suit, and on or about September 17, 1940, the plaintiff was put into possession of the property and has used the same since for purely private purposes.

In 1941 the City of Jacksonville attempted to tax the property, assessing the property as follows: 'To whom assessed, Bancroft Investment Corporation, a corporation; description of property, Lot 4, Block 37, Hart's Map of Jacksonville; valuation of real estate not claimed as homestead, $85,000.00.' By City ordinance dated November 24, 1942, the assessment was changed to read: 'To whom assessed, Bancroft Investment Corporation, a corporation; Description of Property, Lot 4, Block 37, Hart's Map of Jacksonville (all rights, liens and interests in said property retained and held by the United States of America as security for the unpaid purchase monies are hereby expressly excluded from this assessment, and this assessment, is hereby made subject to all such prior rights, liens and interests): Valuation of real estate not claimed as homestead, $85,000.00.' In 1942 the City of Jacksonville again assessed the property against Bancroft Investment Company, using virtually the same wording as that used in the assessment for 1941, except that the valuation was raised from $85,000 to $215,000 because of the erection of a five-story department store building on the property. Bancroft Investment Company thereupon filed suit in equity to enjoin the enforcement of the tax upon the ground that inasmuch as title to the property was still vested in the United States of America--all installments of the purchase money not having been paid because not at the time due and payable--the property was immune and exempt from taxation by the City of Jacksonville. At final hearing the chancellor entered a decree which sustained the views of the plaintiff. Upon a rehearing the chancellor reversed his previous position--largely, we take it, because of later court decisions bearing on the question which were not available at the time of the first hearing, and which, consequently, were not brought to his attention and entered a decree finding the land to be taxable against Bancroft Investment Company, subject, however, to a prior lien in the United States for the unpaid balance of the purchase price. This appeal is from the decree entered at rehearing.

The question is whether the City of Jacksonville may tax lands which have been sold by the Federal Government to a private purchaser under an installment contract whereby title to the lands is retained by the government until the purchase price is paid and other conditions performed, where before the time for full performance of the contract and execution of the deed the purchaser is let into possession and thereafter uses the property for private purposes.

The appellant maintains that under federal and state law the property is immune and exempt from such taxation, because it remains property of the United States until a deed of conveyance is given or until the purchaser has fully complied with all conditions entitling him to a deed. The appellee submits that when the contract of purchase was executed and possession delivered, the conditional purchaser became the real beneficial owner of, and acquired the complete equitable title to, the property, the government thereafter retaining only the bare legal title in trust for the purchaser and as security for the balance of the purchase price; and that such beneficial interest of the purchaser may be taxed and the tax enforced against the land subject to the right, lien or interest retained by the government as security for the unpaid purchase money.

Except in states which allow the taxation of separate interests in real property, or in cases where immunity from state taxation has been waived, it seems to be the general rule of both federal and state decisions that where land once owned by the United States for governmental purposes is sold to private purchasers under contract whereby title is retained in the government until complete performance of the contract by the vendee, such land is not taxable under state taxation statutes even though the vendee has been let into possession, until the deed of conveyance has been delivered, or the vendee has acquired a complete equitable title to the property by the performance of all conditions precedent entitling him to a deed. See City of New Brunswick v. U. S., 276 U.S. 547, 48 S.Ct. 371, 72 L.Ed. 693; U. S. v. Allegheny County, 322 U.S. 174, 175, 64 S.Ct. 908, 88 L.Ed. 1209; U. S. v. City of Milwaukee, 100 F. 828; Port Angeles Western R. Co. v. Clallam County, D.C. 20 F.2d 202; Pac. Spruce Corp. v. Lincoln County, D.C. 21 F.2d 586; Lincoln County v. Pac. Spruce Corp., 9 Cir., 26 F.2d 435; Railway Co. v. Prescott, 83 U.S. 603, 16 Wall. 603, 21 L.Ed. 373; Railway Co. v. McShane, 89 U.S. 444, 22 Wall. 444, 22 L.Ed. 747; Wisconsin Central Railroad Co. v. Price County, 133 U.S. 496, 10 S.Ct. 341, 33 L.Ed. 687; Irwin v. Wright, 258 U.S. 219, 42 S.Ct. 293, 66 L.Ed. 573; U.S. v. Rickert, 188 U.S. 432, 23 S.Ct. 478, 47 L.Ed. 532; Copp v. State, 69 W.Va. 439, 71 S.E. 580, 35 L.R.A.,N.S., 669; ABR Corporation v. City of Newark, 131 N.J.L. 147, 35 A.2d 473; Id., 133 N.J.L. 34, 42 A.2d 296; Mint Realty Co. v. City of Philadelphia, 218 Pa. 104, 66 A. 1130, 11 Ann.Cas. 388; People ex rel. Donner-Union Coke Corporation v. Burke, 204 A.D. 557, 198 N.Y.S. 601, aff. 236 N.Y. 650, 142 N.E. 320. See also Mundee v. Freeman, 23 Fla. 529, 3 So. 153, which sustains the theory that upon payment of the purchase price for lands from the State of Florida, the purchaser becomes possessed of a complete equitable title to the property and consequently has such an interest as will authorize a tax against the land, even though a deed had not been given; the state, after payment of the purchase price, being a mere trustee of the bare legal title.

Appellee has cited decisions which it contends are authority for the proposition that the tax may be imposed, even though the legal title to the property still remains in the United States and the vendee has not become entitled to a deed. We have studied the cases carefully and do not feel that we can follow them.

City of New Brunswick v. United States, 276 U.S. 547, 48 S.Ct. 371 72 L.Ed. 693, for example, was a case in which the United States Housing Corporation as an instrumentality of the federal government acquired title to property in the City of New Brunswick during the First World War. After the war Congress authorized the Housing Corporation to sell the property but provided that no sale or conveyance on credit should be made without the reservation of a lien for the unpaid purchase price. Housing Corporation entered into contracts for sale with private purchasers, which provided for the purchase price to be paid in monthly installments and that upon payment of ten per cent. of the purchase price a deed would be issued to the purchasers upon the purchasers giving back a note and mortgage to secure the balance of the purchase price. The purchasers went into possession of the property, paid the ten per cent. of the purchase price and demanded a deed, which was refused because in the meantime the city had assessed taxes against the property. While the Housing Corporation continued to hold the legal title to the property and before the issuance of a deed, the city again...