Moses Lake Homes, Inc. v. Grant County
| Decision Date | 17 March 1960 |
| Docket Number | No. 16234.,16234. |
| Citation | 276 F.2d 836 |
| Parties | MOSES LAKE HOMES, INC., Appellant, v. GRANT COUNTY, Appellee and Cross-Appellant, Larsonaire Homes, Inc., Larson Heights, Inc., and Moses Lake Homes, Inc., Cross-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
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Lycette, Diamond & Sylvester, Lyle L. Iverson, Seattle, Wash., for appellant and cross-appellees.
Paul A. Klasen, Jr., Pros. Atty., Grant County, Ephrata, Wash., Felix & Abel, Jennings P. Felix, Spec. Coun., Seattle, Wash., for appellee and cross-appellant, Grant County.
Abbott M. Sellers, Acting Asst. Atty. Gen., Grant Wiprud, Lee A. Jackson, Myron C. Baum, Mark S. Charwat, Attys., Dept. of Justice, Washington, D. C., Dale M. Green, U. S. Atty., Spokane, Wash., for the United States.
Before BARNES, HAMLEY, and JERTBERG, Circuit Judges.
This proceeding is collateral to a federal condemnation action now pending in the district court. It involves the claim of Grant County, Washington, to a substantial part of the sums deposited in court by the government as estimated compensation. The claim, resisted by the three condemnees, is for unpaid personal property taxes assertedly levied against the leaseholds which are being condemned.
The federal district court entered a judgment granting the county's claim in part. Moses Lake Homes, Inc., one of the condemnees for whom the sums were deposited, has appealed. Grant County has cross-appealed against all three condemnees.1
The questions here presented are whether the tax liens on which the county relies are valid under state law and if so what part, if any, of the taxes thereby secured may be collected in view of the restrictions imposed by section 511 of the Housing Act of 1956.2
The condemnees, in addition to Moses Lake, are Larsonaire Homes, Inc., and Larson Heights, Inc. All three were sponsors of Wherry Act housing projects on Larson Air Force Base in Grant County, Washington. As sponsors they entered into separate leases with the United States pursuant to sections 801 to 809 of Title VIII of the National Housing Act, 12 U.S.C.A. §§ 1748, 1748a to h. The Moses Lake lease was entered into on May 31, 1950, the Larsonaire lease on August 6, 1953, and the Larson Heights lease on August 2, 1954.
By the terms of each lease the respective lessees were to erect, maintain, and operate on the military reservation a housing project for a period of seventy-five years unless sooner terminated by the government. The projects were financed by F.H.A. insured loans. The housing units were to be leased to military and civilian personnel assigned by the military commander.
Under the terms of these leases the buildings and improvements, as completed, became real estate and property of the United States. Upon expiration of the leases or their earlier termination all such improvements were to remain the property of the government without further compensation. Since the completion of the buildings and improvements and until March 1, 1958, the respective sponsors operated the rental housing projects in the manner contemplated by the leases.
In June 1954 the assessor of Grant County listed the physical improvements placed upon the land by Moses Lake Homes, Inc., on his "Detail and Assessment List," for 1955 taxes. Moses Lake brought an action in the Superior Court of the State of Washington for Grant County to enjoin the levy of any taxes on its housing units for the year 1955 or thereafter. An injunction as prayed for was entered, and Grant County and the State of Washington appealed to the state supreme court. In a decision rendered on June 28, 1956, the supreme court reversed and remanded the case for a new trial because the trial court had not permitted the State of Washington to intervene. Moses Lake Homes, Inc. v. Grant County, 49 Wash.2d 182, 299 P.2d 840.
Following the second trial, a judgment enjoining Grant County from levying any taxes on the housing units of Moses Lake for the year 1955 or thereafter was again entered. Grant County and the State of Washington once more appealed. In its second decision, the Washington Supreme Court held that in view of Offutt Housing Co. v. County of Sarpy, 351 U.S. 253, 76 S.Ct. 814, 100 L.Ed. 1151, a tax on the leasehold could be measured by the value of the buildings. The judgment enjoining the levying of such taxes for 1955 and subsequent years was accordingly reversed. Moses Lake Homes, Inc. v. Grant County, 51 Wash.2d 285, 317 P.2d 1069, decided November 14, 1957. The injunction was dissolved in December 1957.
Thereafter and before the end of 1957, Grant County levied on the Moses Lake property for 1955 taxes pursuant to the assessment previously made. Before the end of 1957 the county also listed and levied upon the Wherry Act property of Moses Lake for the years 1956, 1957, and 1958. At the same time it listed and levied upon the Wherry Act property of Larsonaire for the years 1956, 1957, and 1958, and upon the like property of Larson Heights for the years 1957 and 1958.3 The listing was done on detail lists of personal property as omitted property for those years, pursuant to Revised Code of Washington 84.40.080.
On January 21, 1958, the county treasurer issued distraint and tax sale notices describing the improvements on the Wherry Act housing projects operated by the three companies in question.4 On March 1, 1958, the United States instituted a condemnation suit in the United States District Court for the Eastern District of Washington, seeking to acquire the described leasehold interests of Moses Lake, Larsonaire, and Larson Heights. At the same time a declaration of taking was filed, in connection with which the government deposited $253,000 in the registry of the court as estimated compensation.5
On March 12, 1958, the government applied for and obtained an order temporarily restraining Grant County from proceeding with the tax sale referred to above. This restraining order was superseded on March 28, 1958, by a preliminary injunction to the same effect.
Petitions on behalf of the condemnees were filed with the district court on March 26, 1958, requesting orders directing payment to them of the respective amounts deposited in the registry of the court. On April 8, 1958, Grant County petitioned the district court for an order directing payment to it of most of the $253,000 which had been deposited by the government.6
The hearing on these counterclaims led to entry on July 3, 1958, of the judgment here under review.7 As before noted, the tax claims were denied except as to Moses Lake for the years 1955 and 1956. The petitions of the condemnees were granted in full except for a deduction in the case of Moses Lake sufficient to pay 1955 taxes in the sum of $21,150, and 1956 taxes in the sum of $32,925, together with interest.
Appeal of Moses Lake Homes, Inc.
We first consider the appeal of Moses Lake from that part of the judgment which allowed the tax claims against it for the years 1955 and 1956. Appellant contends that for either one of two reasons the court erred in allowing the county's claim for those years. The first such reason, according to appellant, is that no tax was validly levied for 1955 or 1956 upon the Moses Lake property taken in the condemnation proceeding.
The condemnation action is one to condemn leasehold interests, together with associated easements and contract rights. The government is not condemning physical improvements on the military reservation. Under the terms of the lease it already owns those improvements. It follows that if Grant County has an enforceable claim against the deposited sums for 1955 and 1956 taxes it must be based on a valid levy against the leasehold interest of Moses Lake for those years and a tax lien arising therefrom.
Appellant argues that Grant County did not undertake to levy taxes against the leasehold interest of Moses Lake for 1955 or 1956 taxes. Instead, it is asserted, the county made an attempt to levy a tax for those years upon the physical improvements which Moses Lake constructed on the leasehold. This attempt was abortive, it is contended, because the improvements became the property of the government as soon as they were completed, and so Moses Lake had no interest therein which could be taxed.8
In support of this argument appellant points to RCW 84.40.020, which provides that all personal property subject to taxation shall be listed and assessed every year.9 It is provided in RCW 84.40.050 that the tax commission shall prescribe suitable forms of detail and assessment lists or schedules to be used by assessors for the listing, assessment, and equalization of property for tax purposes.
In listing and assessing the property here in question for 1955 and 1956 taxes, the county assessor apparently used the forms prescribed by the tax commission pursuant to RCW 84.40.050. However, he made no entry on these forms under item 28 entitled "Leaseholds." Instead, the listing was made under item 27 entitled "Improvements upon land the fee of which is vested in the United States, the state, or any political subdivision thereof."10 At no stage in the subsequent taxing procedure with respect to these years was any reference made to leasehold interests. As before noted, the distraint proceedings later instituted were purportedly directed against the physical improvements and not the leasehold interest of Moses Lake.
Grant County argues that the doctrine of res judicata precludes Moses Lake from attacking the validity of the 1955 and 1956 levies on the ground referred to above, or on any other ground. The county points out that in the prior state court proceedings referred to above Moses Lake unsuccessfully attacked the validity of these levies.
In the first appeal in the state court action challenging these levies, Moses Lake contended that the county was...
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