Peninsula Drainage Dist. No. 2 v. City of Portland

• Decision Date: 15 January 1958
• Citation: 212 Or. 398,320 P.2d 277
• Parties: PENINSULA DRAINAGE DISTRICT NO. 2, a public corporation, Appellant, v. CITY OF PORTLAND, a municipal corporation, and State of Oregon, Respondents.
• Court: Oregon Supreme Court

Page 277

320 P.2d 277

212 Or. 398

PENINSULA DRAINAGE DISTRICT NO. 2, a public corporation, Appellant, v. CITY OF PORTLAND, a municipal corporation, and State of Oregon, Respondents.

Supreme Court of Oregon, In Banc.

Argued and Submitted Sept. 26, 1957.

Decided Jan. 15, 1958.

Robert L. Myers, Portland, for appellant. With him on the brief were Winfree, McCulloch, Shuler & Sayre, and William C. McCulloch, Portland.

Marian C. Rushing, Deputy City Atty., Portland, for respondent, City of Portland. With her on the brief was Alexander G. Brown, City Atty., Portland.

Charles C. M. Peterson, Portland, for respondent State. With him on the brief were Robert Y. Thornton, Atty. Gen., and C. W. Enfield, Asst. Atty. Gen., and Chief Counsel for the Oregon State Highway Commission.

BRAND, Justice.

This is a suit by the plaintiff Peninsula Drainage District No. 2 for the foreclosure of certificates of delinquency issued and held by the plaintiff district. The defendants are the City of Portland and the State of Oregon. The certificates were issued on account of purported assessments levied against a tract of land which at the time of the levy was owned by the United States of America. Subsequent to the making of the assessments the tract against which the assessments were made was acquired by the defendants severally. Parcel 'A' of said tract described in the complaint became the property of the City of Portland, and Parcels 'B' and 'C' as described, became the property of the State of Oregon. All three tracts were within the territorial area of the plaintiff Drainage District. The learned circuit court entered a decree in favor of the defendants. Plaintiff appeals.

Title to part of the tract was acquired by the United States on 12 January 1943 and title to the balance was acquired on 7 January 1944. The assessments against the tract were made for the year July 1, 1946-June 30, 1947, and for the ensuing three years, and certificates of delinquency were issued on 16 February 1948, 15 March 1949, 15 March 1950, and 15 March 1951 on account of the nonpayment of the four assessments respectively. The United States continued to be the owner of the tract during the four tax years in suit and refused to pay the assessments. The assessments were all levied against the United States and the certificates of delinquency in each case show the United States as the owner of the tract.

The tract in question is generally known as the East Vanport Project which was instituted by an agency of the United States and which was terminated and completed by an instrument described as a 'Program Action, Public War Housing' effective 28 February 1946. Thereafter the property was sold to the city and state. Suit to foreclose was filed on 21 May 1952 against the defendants as owners.

The pleadings are heavily encumbered by conclusions of law, but from them we find the following issues presented. Plaintiff is organized under ORS 547.005 et seq. It contends that it was required by state law to make the assessments which are in issue and relies upon two provisions of our statutes, which read as follows:

'(1) The board of supervisors shall each year make a computation of the whole amount of money to be raised by the district through assessments for the ensuing year for any purposes whatsoever in carrying out the provisions of the Drainage District Act, including maintenance and operation and estimated delinquencies on assessments. This amount when determined by the board shall constitute an assessment upon all the land included in the district and shall be apportioned by the board in accordance with the report of the commissioners as confirmed or amended by the court as provided for in ORS 547.235.

'(2) Any land owned by any person totaling less than one acre shall be assessed as one acre.

'(3) Any land, the title to which is vested in the state, or state lands sold under contract in any drainage district, shall be subject to taxation by the district, and the full amount of assessment due against such lands shall be paid to the district at the same times and in the same manner as other drainage district assessments are paid.

'(4) The tax collector shall receive any past due bond of the drainage district or any past due interest coupon from any bond of the district in payment of any assessment made for the purpose of paying bonds or bond interest of the district, and shall receive in payment of assessments levied for operation and maintenance purposes any warrants drawn upon the operation and maintenance fund, such warrants received in payment of assessments to be in order of issuance.' ORS 547.455.

'The certificate of delinquency and all receipts for assessments, charges or tolls paid by the irrigation or drainage district subsequent thereto shall be prima facie evidence in the suit that the real estate described in the certificate and receipts was located in the irrigation or drainage district and was subject to be assessed or charged by the district for district purposes, and that the assessments, tolls or charges were regularly levied as provided by law, and were not paid except by such irrigation or drainage district.' ORS 548.655.

Plaintiff contends that the liens and certificates of delinquency were valid prior to and at the time the defendants acquired the property from the United States and remained valid against the defendants. In its reply brief plaintiff states the issue as follows:

'* * * The issue is * * * whether or not the drainage district, having at the time of its organization included within its boundaries land in private ownership, which are thereafter acquired by the United States, can continue to assess said lands during their ownership by the United States their proportionate share of the costs of the original construction of the protective works and the continued maintenance thereof. We submit that this is a very real and vital distinction which must be drawn in this case. We are not in this litigation concerned with the problem of whether lands owned by the United States can be forced by a state or political subdivision thereof into an improvement district without the United States' consent and then subjected to assessment for the benefits which follow. The question is rather whether or not the benefits, in effect having been 'built into' the lands prior to their acquisition by the United States in such a manner that they are continuing and impossible of removal, can be enjoyed by the United States without its land being subjected to assessments.'

The defendants contend that under the Constitution and laws of the United States and the laws of Oregon, the United States is exempt from taxation by any state or its subdivision; that the special assessments constituted taxes and that the United States had never given its consent to be so taxed. The conclusion suggested is that since the assessment was void when made, the subsequent acquisition of title by the defendants could not breathe life into a void assessment.

The defendants have presented other affirmative defenses which need not now be considered. In plaintiff's brief it states that it 'did not attempt to enforce by adversary proceedings [against the United States] collection of the assessments in suit.' Any such attempt, they concede, 'would have been futile, solely because the national government is not amenable to the process of Oregon's courts.'

Concerning the admitted fact that the United States acquired the tract in question by condemnation and that the plaintiff District was a party defendant in those proceedings, plaintiff contends that the United States did not profess by said suits to acquire from the plaintiff the right to levy assessments against the land in the District and that such right continued unimpaired during all the time when the United States was the owner of the tract. Our question on this phase of the case is not whether the United States acquired by condemnation the right of the District to levy assessments, but is rather whether the District had any such right regardless of the method by which the United States acquired the land.

At the threshold of inquiry we observe that the plaintiff does not rely upon any consent by the United States to be sued either on a claim in personam or in rem. Plaintiff pleads that it is not informed whether the United States 'never consented to be taxed or assessed * * * and therefore denies said matters.' This is not proper plea that consent was given and we find no evidence of any express consent.

We now address ourselves to the question whether the assessments made during the ownership of the tract by the United States were valid or void. The federal statute admitting the State of Oregon into the Union imposed upon the state the condition that 'the said State shall never tax the lands or the property of the United States in said State.' 11 Stat. 383 (1859), 5 ORS page 1080. The conditions imposed by that act were accepted by the State of Oregon. Laws 1859 (First Extra Session page 29); 5 ORS page 1081. Even prior to the admission of Oregon to the Union the law provided:

'The following property shall be exempt from taxation:--(1) All property real and personal of the United States and of this state.' Laws 1854, Deady's Code, page 894.

By the laws of 1907 the exemption was changed to read:

'1. All property, real and personal, of the United States and this State, except land belonging to this State held under a contract for the purchase thereof.' General Laws of Oregon, 1907, Chapter 268, page 486.

This provision remained unchanged until 1945 when the exemption was amended to read:

'(1) All property, real and personal, of the United States, its agencies or instrumentalities, except where taxation of any such property by this state is authorized or permitted by the United States.' Oregon Laws 1945, Chapter 296, page 440.

The next and only further amendment was made in 1953 when the statute pro...