Boeing Airplane Co. v. Board of Com'rs of Sedgwick County

• Decision Date: 31 December 1947
• Docket Number: 36950.
• Citation: 164 Kan. 149,188 P.2d 429
• Parties: BOEING AIRPLANE CO. v. BOARD OF COUNTY COM'RS OF SEDGWICK COUNTY et al.
• Court: Kansas Supreme Court

188 P.2d 429

164 Kan. 149

BOEING AIRPLANE CO. v. BOARD OF COUNTY COM'RS OF SEDGWICK COUNTY et al.

No. 36950.

Supreme Court of Kansas

December 31, 1947

Appeal from District Court, Sedgwick County; I. N. Williams, Judge.

Action by Boeing Airplane Company against the Board of County Commissioners of the County of Sedgwick and others, for a declaratory judgment. From a judgment of dismissal, plaintiff appeals.

Appeal dismissed.

BURCH WEDELL and HOCH, JJ., dissenting.

Syllabus by the Court.

1. In an action brought against taxing officials under the declaratory judgment act by a lessee obligated to pay taxes lawfully assessed upon the leased real estate to determine whether the taxes were lawfully assessed by such officials the court did not acquire jurisdiction because in this state such officials could not properly contend that the lessee was obligated to pay the taxes.

2. There must be at least two parties who can assert rights which have developed or will arise against each other before an actual controversy can exist which is justiciable under our declaratory judgment act.

George Siefkin, of Wichita (Robert C. Foulston, Andrew F. Schoeppel Samuel E. Bartlett, George B. Powers, Carl T. Smith, John F. Eberhardt, Stuart R. Carter and Thomas E. Woods, all of Wichita, on the brief), for appellant.

Lewis A. Hasty, of Wichita, for appellees.

BURCH Justice.

The appeal in this case if from a declaratory judgment of the district court and involves the question whether that court had jurisdiction to determine the possible liability of the Boeing Airplane Company for the payment of taxes upon real property owned by the Reconstruction Finance Corporation and leased by the airplane company.

The company brought the action for the purpose of having the court declare that real property owned by the Reconstruction Finance Corporation, hereinafter called RFC, is property exclusively owned by the United States and therefore exempt from taxation under the laws of this state; that the company was not liable for the payment of such taxes because the taxes were not lawfully taxed as required by a lease entered into between RFC and the company, which lease provided that the company should pay certain taxes which were at any time lawfully assessed against the leased property. A demurrer was filed to the third amended petition. Such demurrer asserted that the court had no jurisdiction and that the petition did not state facts sufficient to constitute a cause of action. The district court held that it had jurisdiction but sustained the demurrer on the second ground. On appeal the appellees contend that the demurrer should have been sustained on the first ground as well as the second; that no actual controversy was pleaded which was justiciable under the declaratory judgment act; that the district court, therefore, had no jurisdiction; consequently this court, on appeal, has no jurisdiction and the appeal should be dismissed.

If the company's third amended petition does not present an actual controversy justiciable under out statutes pertaining to declaratory judgments, the appeal must be dismissed because it is the duty of this court to determine whether the district court had jurisdiction even in the absence of a cross-appeal. If appellees' contention is sound, this court cannot reach decision upon any other question presented. Consequently, we must first analyze the petition to determine whether the district court had jurisdiction of the controversy.

The allegations of the petition essential to decision and comprehension of the problem presented are summarized as follows:

The Boeing Airplane Company, herein called 'Company', which brought the action as plaintiff, is a foreign corporation authorized to do and doing business at Wichita, Kansas. Three defendant appellees are members of the board of county commissioners of Sedgwick County; another one is the county treasurer; another is the acting county clerk and still another is the acting county assessor. All of such defendants were sued in their representative capacities. The remaining defendant, the RFC, is a corporation created pursuant to 15 U.S. Code, Section 601 of the laws of the United States of America, 15 U.S.C.A. § 601. Such corporation succeeded to the rights of the Defense Plant Corporation, with which the company entered into the lease. A copy of the lease is attached as an exhibit to the petition. The lease grants the company an option to purchase the property; provides for the renting thereof by the company, and contains a provision which requires the company to 'pay to the proper authority, when and as the same become due and payable, except to the extent included in the Construction Program, all taxes, assessments, and similar charges (other than local improvement assessments) which at any time during the term of this lease or any extension thereof may be lawfully taxed, assessed or imposed upon Defense Corporation or Lessee with respect to or upon the Plant and the enlargement thereof, or the Machinery, or any part thereof, or upon the occupier thereof or upon the use of the Plant and the enlargement thereof or the Machinery; * * *.' The petition further alleges that the RFC as an arm, agency and instrumentality of the United States government is the owner of the involved real property and the improvements thereon; that the defendant county assessor entered the property upon his books as the property of the company, notwithstanding that it is owned by the RFC, for the years 1944, 1945 and 1946 upon the assumption that taxes should be levied and collected thereon in the same manner as on other real estate in Sedgwick County, Kansas, and caused said taxes to be entered upon the tax rolls in the office of the defendant county clerk and defendant county treasurer in the same manner as against privately-owned property; that the company protested against the assessment and collection of the taxes on the property to the defendant members of the board of county commissioners; that the protest was denied; that application for relief from such tax assessment to the state commission of revenue and taxation was likewise denied and that the property remains on the tax rolls of Sedgwick County, Kansas, with unpaid taxes shown thereon for the years hereinbefore designated and that the defendant officials are contending that the taxes can be collected, together with the interest and penalties. The petition continues by alleging that the defendant RFC has contended an still contends that under the terms and provisions of the lease the company is liable for the payment of any taxes lawfully assessed or imposed upon the involved real estate. The petition also alleges that an actual controversy exists between the plaintiff and the defendant officials of Sedgwick County, Kansas, as to the interpretation which should be given to the provisions of paragraph 20 of the lease and as to whether the property owned by the defendant RFC is subject to taxation by the taxing officials of Sedgwick County, Kansas. (Paragraph 20 referred to is the paragraph hereinbefore quoted.) The petition also alleges that '* * * plaintiff contends that under the Admitting Act of Kansas, Section 3, Paragraph 6 [Act Jan. 29, 1961, 12 Stat. 127], and the Joint Resolution of the Legislature of the State of Kansas accepting the admittion of the State of Kansas into the Union of the United States of America [Laws 1862, c. 6], and paragraph 5, General Statutes of Kansas for 1935, 79-201, taxes may not be lawfully levied, assessed, or collected against property owned, used by, and belonging exclusively to the United States of America. That the defendant officials of Sedgwick County, Kansas, and each of them, contend that the real estate owned by the Reconstruction Finance Corporation when leased under the Agreement for Lease attached as Exhibit 'A' is subject to state and local taxation by virtue of an Act of Congress permitting taxation of property belonging to the Reconstruction Finance Corporation.' The petition concludes by alleging that the plaintiff is willing to pay all taxes lawfully assessed against or collectible from it, but contends that the property in question, being property owned and used exclusively by and for the United States government, is expressly and specifically exempt from taxation by the defendant officials and that no lawful taxes can be assessed thereon or collected from the plaintiff or the property, and that the agreement to lease does not impose any obligation on the company to pay taxes on the property. In addition the petition alleges that the matter is one of immediate and of public interest; that the controversy between the parties is an actual one concerning which the court is given cognizance under the provisions of the declaratory judgment act of the state of Kansas, Gen.St.1935, 60-3127 et seq.

In support of the contention that the petition does not present an actual controversy under the declaratory judgment act, counsel for the appellees contends that the local taxing authorities have not levied or assessed any taxes against the company; that such authorities claim no relationship, contractual or otherwise, with the company by reason of which they seek to recover any money from the company; that the taxes complained of were levied and assessed in the only manner known to law, to-wit: upon the real property to which the company has no title, legal or equitable, because it is owned outright by the RFC.

At the time the demurrer was argued the defendant RFC had filed an answer which consisted merely of an admission of every allegation of fact contained in the plaintiff's petition. It is, therefore, contended by counsel for the appellees that the petition does not show...