City of Portland v. Multnomah County

• Decision Date: 03 March 1931
• Citation: 296 P. 48,135 Or. 469
• Parties: CITY OF PORTLAND v. MULTNOMAH COUNTY ET AL.
• Court: Oregon Supreme Court

296 P. 48

135 Or. 469

CITY OF PORTLAND v. MULTNOMAH COUNTY ET AL.

Supreme Court of Oregon

March 3, 1931

In Bank.

Appeal from Circuit Court, Multnomah County; Louis P. Hewitt, Judge.

Suit by the City of Portland, a municipal corporation of the county of Multnomah, against Multnomah County, a political subdivision of the state of Oregon, and others. Decree for plaintiff, and defendants appeal.

Affirmed.

Charles S. Cohn, of Portland (Stanley Myers, Dist Atty., and Francis T. Wade, Deputy Dist. Atty., both of Portland, on the brief), for appellants.

Frank S. Grant, City Atty., and Willametta McElroy, Deputy City Atty., both of Portland, for respondent.

BELT J.

This suit was instituted for the purpose of determining whether certain real property owned by the city of Portland and used for corporate purposes is subject to taxation. Title to the three parcels of real property was acquired by the city after the taxes had been assessed on March 1st, but before any levy had been made. In other words, the property in question was in private ownership on the "tax day," but not at the time of the levy of the tax.

The trial court sustained a general demurrer to the answer of the defendants, and, upon their refusal further to plead, entered a decree in favor of the plaintiff, holding that the real property involved is nontaxable.

Defendants concede that, if the property had been acquired by the city on or before March 1st, it would be nontaxable, by virtue of subdivision 2 of section 69-104, Oregon Code, 1930, which provides the following exemptions: "All public or corporate property of the several counties, cities, villages towns, school districts, irrigation districts and drainage districts, ports, tunnel districts, water districts, and all other municipal corporations in this state used or intended for corporate purposes, except lands belonging to such public corporations held under a contract for the purchase thereof." It is their contention, however that, since the property was, on the above date, in private ownership, the tax lien thereupon attached and could be satisfied only by payment. Defendants rely upon section 69-722 of the Oregon Code, 1930, which provides: "* * * The taxes assessed upon real property shall be a lien thereon from and including the first day of March in the year in which they are levied until the same are paid. * * *"

The city's theory is thus summarized in its brief: (1) Where property is acquired by a municipality after March 1st and before the tax levy is made, no levy can be made, hence no tax lien matures thereon. (2) The moment property is acquired by a subdivision of the state developing tax proceedings are arrested. (3) The property of a subdivision of the state is not subject to general tax laws. (4) Such property is not subject to sale for taxes.

It is clear that the state, in the exercise of its sovereign power may tax property belonging to it or to any of the subordinate branches of the government, but, unless there is a clear legislative declaration of its intention so to do, such property is not taxable. The above statute exempting from taxation public property owned by a city, which is "used or intended for corporate purposes" is, in the main, merely declaratory of the common rule. As stated in City of Eugene v. Keeney (Or.) 293 P. 924, 925: "Where such public corporations are involved, exemption is the rule and taxation the exception. As to private ownership of property, the rule is reversed." The reason for the rule is thus expressed in Portland v. Welch et al., 126 Or. 293, 269 P. 868, 869, wherein Mr. Justice Rand, speaking for the court, said: "Under our system of taxation public revenues are derived from the taxation of property privately owned, and, in the absence of an express legislative declaration to that effect, it is unreasonable to suppose that the Legislature intended that property belonging to the public should be taxed. No benefit to the public could arise from such taxation."

It would be analogous to taking money out of one pocket and putting it into another. Furthermore, if public property could be sold for delinquent taxes, it might result in defeating the very purpose of the governmental agencies. It may, therefore, be said that it is against public policy to tax such property when devoted to a public use. In Cooley on Taxation (4th Ed.) § 621, it is said: "Some things are always presumptively exempted from the operation of general tax laws, because it is reasonable to suppose they were not within the intent of the legislature in adopting them. Such is the case with property belonging to the state and its municipalities, and which is held by them for public purposes. All such property is taxable, if the state shall see fit to tax it; but to levy a tax upon it would render necessary new taxes to meet the demand of this tax, and thus the public would be taxing itself in order to raise money to pay over to itself, and no one would be benefited but the...