District of Columbia v. Sussman, 18275

• Decision Date: 26 July 1965
• Docket Number: 18276.,No. 18275,18275
• Citation: 352 F.2d 683,122 US App. DC 207
• Parties: DISTRICT OF COLUMBIA, Appellant, v. Samuel SUSSMAN et al., Appellees. DISTRICT OF COLUMBIA, Appellant, v. ARTHUR INVESTMENT CO., Inc., et al., Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

122 US App. DC 207, 352 F.2d 683 (1965)

DISTRICT OF COLUMBIA, Appellant, v. Samuel SUSSMAN et al., Appellees.

DISTRICT OF COLUMBIA, Appellant, v. ARTHUR INVESTMENT CO., Inc., et al., Appellees.

Nos. 18275, 18276.

United States Court of Appeals District of Columbia Circuit.

Argued October 19, 1964.

Decided July 26, 1965.

Petition for Rehearing Denied November 9, 1965.

Mr. Henry E. Wixon, Asst. Corp. Counsel for District of Columbia, with whom Messrs. Chester H. Gray, Corp. Counsel, Milton D. Korman, Principal Asst. Corp. Counsel, and Robert E. McCally, Asst. Corp. Counsel, were on the brief, for appellant.

Mr. Henry H. Brylawski, Washington, D. C., who was on the brief for appellees in No. 18,275, argued for all appellees.

Mr. Charles Bechhoefer, Washington, D. C., was on the brief for appellee Arthur Investment Co., Inc., in No. 18,276. Mr. Daniel H. Margolis, Washington, D. C., also entered an appearance for appellee Arthur Investment Co., Inc., in No. 18,276.

Messrs. Ramsey Clark, Roger P. Marquis and S. Billingsley Hill, Washington, D. C., entered appearances for the United States.

Before BAZELON, Chief Judge, and WASHINGTON and McGOWAN, Circuit Judges.

Petition for Rehearing En Banc Denied November 9, 1965.

McGOWAN, Circuit Judge:

These two cases present the same issue. It is this: When the Federal Government takes possession of real estate in the District of Columbia, may the condemnation court prorate the prior owner's liability to the District for real estate taxes assessed the preceding July 1, with the effect of relieving the property of such taxation for that part of the year succeeding the seizure? We say no. In allowing the District Government's appeals to reverse the District Court, we do not, however, see the issue in quite the same light as it has been presented to us by the parties. Our differences in this regard can become manifest only in the setting of the events of record and the respective contentions as to their legal consequences.

I

On July 26, 1963, the United States of America filed a complaint in condemnation and a declaration of taking in respect of Lot 814 in Square 379, owned by Samuel and Etta Sussman and located in the City of Washington. It simultaneously deposited in the registry of the court $200,000, representing its estimate of the just compensation required by the Fifth Amendment. As provided by law, the United States thereupon acquired the right to immediate possession of the property. On August 9, 1963, an order was entered directing the Clerk to draw a check to the Sussmans for the deposited sum, but with a further direction that the check was to be delivered to a title company with instructions to apply its proceeds to, among other things, "the payment of all taxes and assessments, due or exigible on said real property at the date of said declaration of taking * * *," with the balance to be paid to the Sussmans. They shortly thereafter moved the court for an order requiring the title company to pay to them the sum of $3,000, representing a portion of the proceeds which had been escrowed for payment of District real estate taxes assessed in that amount for the year beginning July 1, 1963. The District filed a memorandum in opposition to this motion, as did the United States, although counsel for the District assures us in his brief, without dissent from appellees, that the latter memorandum "is not pertinent to the issues raised on this appeal."

After oral argument, the District Court filed, on October 1, 1963, a memorandum opinion in which it characterized the District's position as "unfair and inequitable," and stated its view to be that property owners "should not be responsible for taxes upon their property except for the period when it was under their control and when their properties were available for their use." It directed the title company to withhold only 8.33 per cent of District property taxes assessed for the year beginning July 1, 1963, noting that this computation reflected the July 26, 1963, date of taking. It subsequently vacated its earlier order and entered a new one on October 16, 1963, the immediately relevant ordering provisions of which are set forth in the margin.¹ The appeal before us is by the District from this order.²

II

A great deal of the argument before us was devoted to the question of whether taxes can be said to be "due," within the meaning of the District Court's original orders of distribution, when the payment dates preceding default have not yet arrived. Since the orders in question appear from the record to have been wholly vacated, this inquiry had a somewhat unreal aspect. The other arena of disputation was defined by the issue of whether, as of the date of taking, the District tax was a "lien" upon the property, the point of departure here also being whether a claim can be said to be a lien before the date upon which it must be paid. Our own approach has been to let the formulation of abstract legal issues wait upon a close look at the orders appealed from.

The orders do two things. They tell the escrow agent to pay to the District of Columbia only a prorated part of the taxes levied in respect of the year beginning July 1, 1963; and they direct the District of Columbia to accept those payments as being in full satisfaction and discharge of the taxes levied. A power in the courts to relieve against property taxes lawfully assessed under explicit legislative authority is, at the least, not a familiar weapon in the judicial arsenal; and in this context a clear Congressional dispensation must surely be an essential foundation for the action taken. Although we find no express reference to it anywhere in the proceedings in the District Court, we assume from the court's use in its opinion of the phrase "unfair and inequitable" that it was resting upon an authority conceived by it to reside in Section 16-628, D.C.Code (1961). This statute, which is a part of the scheme provided by Congress for the condemning of land in the District of Columbia by the Attorney General for the use of the United States, says in part that, in connection with a declaration of taking, the "court shall have power to make such orders in respect of encumbrances, liens, rents, taxes, assessments, insurance, and other charges, if any, as shall be just and equitable." The statutory prescription for condemnations by the District of Columbia of land within its confines contains an identical provision (now 16 D.C.Code § 1316), as does the provision made by Congress for federal condemnation outside the District (40 U.S.C. § 258a).

In construing this last-mentioned statute, several courts of appeals have held that a District Court cannot prorate state property taxes on land taken by the United States, at least where such taxes have ripened into a lien on the property.³ In Collector of Revenue within and for the City of St. Louis, Mo. v. Ford Motor Co., 158 F.2d 354 (8th Cir. 1946), the Eighth Circuit ruled that state property taxes on seized land may not be relieved against by a federal condemnation court in the absence of some local law expressly authorizing this to be done. Of the critical language in Section 258a, on the basis of which, together with "general equitable principles," the District Court had purported to act, the court said:

This statute does not purport to give power to a Federal court to fix the amount of taxes due when the proper authorities of the state have made that decision through the administrative machinery adopted by the state for that purpose * * *.⁴

We think this view of Section 258a of the U. S. Code is equally applicable to the same words as used by Congress in Section 628 of the D. C. Code. Of course, since Congress legislates for the District of Columbia, there is no constitutional obstacle of the kind foreshadowed in the Ford case, where the taxing authority was the State of Missouri. But the District has many resemblances to the states, and in no aspect more than in its need for revenue to sustain and support the municipal functions that have been assigned to it by Congress. If that body had in fact intended the District Court to have the power to relieve local real estate — or the cash into which it is transmuted by virtue of a declaration of taking⁵ — of liability for taxes already validly assessed against it, it could have made that plain in a way that it has not done thus far. And we would suppose that it would require the clearest and most explicit of declarations before we would be warranted in discerning a Congressional purpose to shift a burden of this kind from the taxpayers of the United States generally, to the taxpayers of the District in particular.

For these are really the contending interests when a problem of this kind arises in the condemnation for federal use of land in the District of Columbia. An examination of the District's system of real estate taxation suggests the difficulty: (1) assessments of all non-exempt real estate are to be made annually by the first Monday in January; (2) from that day until the first Monday in April, assessments are subject to correction and equalization by a board constituted for that purpose, which task must be completed by the first Monday in May; (3) the valuations so arrived at must be approved by the Commissioners not later than July 1, and, when so approved, "shall constitute the basis of taxation for the next succeeding year;" and (4) on the basis of the approved valuation the Commissioners fix the rate needed to bring in the required revenue, and such rate is automatically levied by statute. No change in the ownership of property after July 1 affects its answerability for the tax liability fixed as of that date; and only the property itself, as distinct from the personal obligation of the record owner on the day of assessment, is subject to being levied upon to satisfy the liability. The tax itself is payable in equal installments in September and...