Offutt Housing Company v. County of Sarpy Nebraska

• Decision Date: 28 May 1956
• Docket Number: No. 404,404
• Citation: 76 S.Ct. 814,100 L.Ed. 1151,351 U.S. 253
• Parties: OFFUTT HOUSING COMPANY, a Corporation, Petitioner, v. COUNTY OF SARPY and Robert M. Eby, Treasurer of the County of Sarpy, NEBRASKA
• Court: U.S. Supreme Court

351 U.S. 253

76 S.Ct. 814

100 L.Ed. 1151

OFFUTT HOUSING COMPANY, a Corporation, Petitioner,

v COUNTY OF SARPY and Robert M. Eby, Treasurer of the County of Sarpy, NEBRASKA.

No. 404.

Argued April 26, 30, 1956.

Decided May 28, 1956.

Mr. Robert L. Stern, Chicago, Ill., for petitioner.

Messrs. Dixon G. Adams and Orville Entenman, Papillion Neb., for respondents.

Mr. Justice FRANKFURTER delivered the opinion of the Court.

This suit was brought by petitioner against respondent county and its treasurer for a declaratory judgment that petitioner was not required to pay certain state and county 'personal property' taxes and for an injunction against the levy of such taxes on that property. The controlling facts are not in dispute. Petitioner is a Nebraska corporation organized primarily to provide housing for rent or sale. On January 18, 1951, petitioner entered into a contract with the Secretary of the Air Force to lease 63 acres of land and to build a housing project on Offutt Air Force Base in respondent county in accordance with specifications submitted to the Department of the Air Force and to be approved by the Federal Housing Commissioner.

The lease was for 75 years at a rental price of $100 per year. It provided that the 'buildings and improvements erected by the Lessee, constituting the aforesaid housing project, shall be and become, as completed, real estate and part of the leased land, and public buildings of the United States, leased to Lessee * * *' and further provided that 'upon the expiration of this lease, or earlier termination, all improvements made upon the leased premises shall remain the property of the Government without compensation * * *.' Petitioner was to lease all the units of the project to such military and civilian personnel at the Base as were designated by the Commanding Officer on terms specified in the contract and at a maximum rent approved by the Federal Housing Administration and the Air Force. The Government was to provide fire and police protection to the project on a reimbursable basis. Petitioner had the right to permit public utilities to extend water, gas, sewer, telephone, and electric power lines onto the leased land in order to provide those services. Petitioner agreed to insure the buildings at its own expense, to permit Government inspection of the premises, and to comply with regulations prescribed by the Commanding Officer for military requirements for safety and security purposes, consistent with the use of the leased land for housing. Petitioner could not assign the lease without the written approval of the Secretary of the Air Force.

The preferred stock of petitioner was held by the Commissioner of the Federal Housing Administration which, acting under Title VIII of the National Housing Act (the Wherry Military Housing Act), 63 Stat. 570, 12 U.S.C.A. § 1748 et seq., insured a mortgage on the project after receiving a certificate from the Department of the Air Force that a housing project was necessary to provide adequate housing for civilian or military personnel. After the singing of the contract and the insurance of the mortgage, construction proceeded forthwith. Petitioner filed no county tax return, although the Attorney General of Nebraska had ruled that its interest in the project, including all of the 'personal property' used therein, was taxable as 'personal property.' On June 23, 1952, the county assessor of Sarpy County filed a schedule on behalf of petitioner, listing a taxable total of $825,685, itemized as 'Furniture & Fixtures—Tools & Equipment'; 'Household Appliances'; and 'Improvements on Leased Land.' Petitioner never paid the resulting county and state taxes, and after the county treasurer threatened to issue the usual distress warrant to collect the taxes, petitioner brought this suit.

The District Court of Sarpy County held that, since title to the buildings and improvements was in the United States, Nebraska and Sarpy County could not tax them. The Supreme Court of Nebraska reversed, holding that Congress had given Nebraska the right to tax petitioner's interest in the property and that for tax purposes, under Neb.Rev.Stat. Reissue 1950, § 77—1209, petitioner was in fact and as a matter of law the owner of the property sought to be taxed. 160 Neb. 320, 70 N.W.2d 382. Petitioner's attack on the Nebraska judgment raises serious questions of state-federal relations with respect to taxation of private housing developments on Government-owned land, and therefore we granted certiorari. 350 U.S. 893, 76 S.Ct. 153.

This is another in a long series of cases in this Court dealing with the power of the States to tax property in private hands against a claim of exempt status deriving from an immunity of the Federal Government from state taxation. Offutt Air Force Base falls within the scope of Article I, § 8, cl. 17 of the United States Constitution, providing that the Congress shall have power

'To exercise exclusive Legislation in all Cases whatsoever, over such District (of Columbia) * * * and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings * * *.'

The course of construction of this provision cannot be said to have run smooth. The power of 'exclusive Legislation' has been held to prohibit a state tax on private property located on a military base acquired pursuant to art. I, § 8, cl. 17. Surplus Trading Co. v. Cook, 281 U.S. 647, 50 S.Ct. 455, 74 L.Ed. 1091. On the other hand, the State may acquire the right to tax private interests within such a location by permission of Congress, see e.g., the Buck Act, 54 Stat. 1059, 4 U.S.C.A. §§ 104—110 (permitting state sales, use, and income taxes), and we have also held that the State may tax when the United States divests itself of proprietary interest over the area on which the tax is sought to be levied. S.R.A., Inc., v. State of Minnesota, 327 U.S. 558, 66 S.Ct. 749, 90 L.Ed. 851; see also Baltimore Shipbuilding & Dry Dock Co., v. City of Baltimore, 195 U.S. 375, 25 S.Ct. 50, 49 L.Ed. 242.

The line of least resistance in analysis of our immediate problem is to ascertain whether Congress has given consent to the type of state taxation here asserted. The applicable congressional statutes are the Military Leasing Act of 1947 and the Wherry Military Housing Act of 1949 (adding Title VIII to the National Housing Act). The Military Leasing Act provides:

'That whenever the Secretary of War or the Secretary of the Navy shall deem it to be advantageous to the Government he is authorized to lease such real or personal property under the control of his Department as is not surplus to the needs of the Department within the meaning of the Act of October 3, 1944 (58 Stat. 765), and is not for the time required for public use, to such lessee or lessees and upon such terms and conditions as in his judgment will promote the national defense or will be in the public interest. Each such lease shall be for a period not exceeding five years unless the Secretary of the Department concerned shall determine that a longer period will promote the national defense or will be in the public interest. * * * Each such lease shall contain a provision permitting the Secretary of the Department concerned to revoke the lease at any time, unless the Secretary shall determine that the omission of such provision from the lease will promote the national defense or will be in the public interest. In any even each such lease shall be revocable by the Sec- retary of the Department concerned during a national emergency declared by the President. * * * The authority herein granted shall not apply to oil, mineral, or phosphate lands. * * *

'Sec. 6. The lessee's interest, made or created pursuant to the provisions of this Act, shall be made subject to State or local taxation. Any lease of property authorized under the provisions of this Act shall contain a provision that if and to the extent that such property is made taxable by State and local governments by Act of Congress, in such event the terms of such lease shall be renegotiated.' 61 Stat. 774—776, 5 U.S.C.A. §§ 626s—3, 626s—6.

Two years later, the Wherry Act provided:

'Whenever the Secretary of the Army, Navy, or Air Force determines that it is desirable to lease real property within the meaning of the Act of August 5, 1947 (61 Stat. 774), to effectuate the purposes of this title, the Secretary concerned is authorized to lease such property under the authority of said Act upon such terms and conditions as in his opinion will best serve the national interest without regard to the limitations imposed by said Act in respect to the term or duration of the lease, and the power vested in the Secretary of the Department concerned to revoke any lease made pursuant to said Act in the event of a national emergency declared by the President shall not apply. * * *' 63 Stat. 570, 576.

These two Acts interlock and must be read together. The reasonable relationship between them has been thus delineated by the Court of Appeals for the Third Circuit:

'In our view this provision of the National Housing Act (the 1949 Act) merely permits leasing for military housing purposes, already covered by the general authorization of the 1947 Act, to be accomplished without regard to specified restrictions of the 1947 Act, when the elimination of these restrictions would serve the purposes of the Housing Act. Other provisions of the 1947 Act, including the language of Section 6 subjecting the lessee's interest to local taxation, apply to leases made under the authority of both Acts.

'We have not overlooked the argument for a narrower view of the scope of the 1947 Act based upon legislative history indicating that the primary purpose of that Act was to provide for the leasing of standby defense plants. But the language of the Act...