Petition of S. R. A.
| Citation | 219 Minn. 493,18 N.W.2d 442 |
| Decision Date | 13 April 1945 |
| Docket Number | No. 33952.,33952. |
| Parties | Petition of S. R. A., Inc. |
| Court | Supreme Court of Minnesota (US) |
Appeal from District Court, Ramsey County; James C. Michael, Judge.
Proceeding in the matter of the petition of S. R. A., Inc., for a determination of its claim that certain property was tax exempt for the year 1940, opposed by the State of Minnesota and another. From an adverse judgment, petitioner appeals.
Affirmed.
Otis, Faricy & Burger, of St. Paul, for appellant.
J. A. A. Burnquist, Atty. Gen., George B. Sjoselius, Deputy Atty. Gen. and James F. Lynch, Co. Atty., and Andrew R. Bratter, Asst. Co. Atty., both of St. Paul, for the State.
This is an appeal from a judgment of the district court determining that the equitable title to certain real estate in St. Paul was on May 1, 1940, vested in the petitioner, S.R.A. Inc., and that the legal title thereto was then vested in the United States in trust for said petitioner as security for the payment of the balance of the purchase price, and further determining that said premises were not exempt or immune from the 1940 taxes assessed and levied on said date. Pursuant to the original petition filed for a review of the taxes for the year 1940 as provided by Minn.St. 1941, § 278.01, Mason St.1940 Supp. § 2126-1, hearing was had thereon which resulted in findings of fact and conclusions of law in favor of the petitioner. Upon appeal, the order of the lower court was reversed and the matter was remanded for retrial, as appears from our former decision in In re Petition of S. R. A., Inc., 213 Minn. 487, 7 N.W.2d 484, and upon such retrial the aforesaid judgment was entered. The only question now raised is whether our former decision denying tax exemption for said premises is the law of the case and controlling on this appeal in the light of the recent decision of the United States Supreme Court in United States v. County of Allegheny, 1944, 322 U.S. 174, 64 S.Ct. 908, 88 L.Ed. 1209, and certain other decisions cited by petitioner.
For convenience on this appeal, we shall summarize the facts, a more complete statement of which may be found in our former opinion. On May 26, 1939, the petitioner, as vendee, entered into an executory sales contract with the United States, as vendor, for the purchase of the old post-office building in St. Paul for $121,101, to be paid, in addition to a down payment, in annual installments of $9,500 each during the succeeding nine years, and upon the making of the final payment on May 26, 1949, the United States agreed to convey a marketable title to said premises to the petitioner by quitclaim deed. Upon execution of the contract the petitioner took full possession, razed the old building, erected a new one for commercial rental, and otherwise entered into the full beneficial use of the premises. On May 1, 1940, Ramsey county assessed the premises upon the same basis as other like property, listing it for taxation as being owned by S.R.A. Inc. "subject to fee title remaining in the United States of America." Instead of paying the taxes so levied, petitioner brought these proceedings. The issue as to the full and true valuation of said premises was determined by stipulation.
The decision of United States v. County of Allegheny, 322 U.S. 174, 179, 64 S.Ct. 908, 912, 88 L.Ed. 1209, hereinafter designated as the Mesta case, is in our opinion not controlling. Mesta Machine Company was engaged in the manufacture of large field guns for the national government under a cost-plus-and-fixed-fee contract in which taxes levied against Mesta "upon the transaction of this purchase of guns" was a reimbursable cost item. Mesta owned a plant with certain machinery. Additional machinery, belonging to the United States, was leased to Mesta and affixed to the realty so as to be removable without injury to the premises. Allegheny county levied a real property ad valorem tax against Mesta's mill and in valuing the real estate for taxation specifically included the value of the machinery owned by the federal government. The Pennsylvania supreme court (Appeal of Mesta Machine Co. 347 Pa. 191, 32 A.2d 236) held that the tax was levied on the mill as an entity; that, since the record title to the land was in Mesta regardless of who owned the machinery, its value was properly included as part of the real-estate valuation; and that, although the machinery was included in the valuation, the assessment was not against the United States or its property, but only against Mesta and its realty holdings. Upon appeal by Mesta, with the United States intervening, the United States Supreme Court held the assessment invalid as a violation of the federal constitution insofar as it purported (322 U.S. 192, 64 S.Ct. 918, 88 L.Ed. 1209) "to authorize taxation of the property interests of the United States in the machinery in Mesta's plant, or to use that interest to tax or to enhance the tax upon the Government's bailee." This decision involves facts and issues entirely different from the instant S.R.A. case and is to be distinguished in the following particulars: (1) Both the legal and the equitable title to the machinery, valued as part of the assessed tax valuation, were in the United States; (2) the entire plant, of which the machinery was an essential part, was by contract employed as a means to discharge the important national function of waging war; (3) the inclusion of the value of the machinery enhanced the burden of the lien on the underlying land, and if, by reason of this enhancement, it became necessary to collect the tax by selling the land, the result would be as disastrous to the war effort as if the machinery itself were sold; (4) Mesta as a bailee of the machinery was under a duty to assert the defense of tax immunity to protect the property interests of its bailor, the United States, from unlawful burdens.
Other decisions cited by the petitioner are hereinafter distinguished in our consideration of the land-grant doctrine.
1. Petitioner contends that the instant case is controlled by the decision of Irwin v. Wright, 258 U.S. 219, 42 S.Ct. 293, 66 L.Ed. 573. We submit that this decision, and all the land-grant cases in general, are not in point. There is little if any similarity between the interest of an entryman as a beneficiary of a land grant and the vendee in a contract of purchase and sale. In the former, the entryman acquires neither the equitable title nor the legal fee until he has completely fulfilled the conditions which entitle him to a patent, but in the case of the vendee the equitable title vests at once although the bare legal title remains in the vendor as security for the payment of the purchase price.
An examination of the land-grant acts in general reveals that the equitable title was purposely withheld from the entryman until he had complied with all conditions necessary for obtaining a patent, and this was done as a matter of congressional intent to insure that the public domain would be given only to stable citizens who had actually demonstrated that they were desirous and capable of establishing permanent homes. Similar considerations governed grants for the construction of railroads. In other words, we have a special statutory creation designed for developing the public domain. Obviously, the disposal of public lands was not a matter of sale at all but rather of a gift on condition, and this gift on condition was not according to the common-law concept, but according to certain statutory conditions designed to satisfy a special need. Missouri, K. & T. Ry. Co. v. Kansas Pac. Ry. Co., 97 U.S. 491, 24 L.Ed. 1095. As a unique statutory creation, it has had nothing in common with a written contract for the sale of land except that it ultimately effected a transfer of title. In some respects, however, the interests of the entryman under this statutory creation may be compared to that of a donee under a parol gift of land under the statute of frauds.1
An examination of the Homestead Act in particular (see, 43 U.S.C.A. §§ 161-302), anent which most of our land-grant decisions have been made, indicates that congress has thereby created a set of legal and equitable relationships between the homestead entryman and his government which bear very little resemblance to the legal and equitable principles governing a vendor and vendee. The act constitutes the government's standing offer to donate and convey a limited portion of the public domain to certain natural, though unidentified, persons who are able to qualify themselves to accept the offer by complying with specified conditions precedent. As a preliminary to qualifying himself to accept the offer, the entryman must identify himself and the homestead premises he desires by an act of registration or entry. Until he has qualified himself for acceptance of the offer by complying with the residential, improvement, cultivation, and other statutory requirements, he has no vested right against the government. Unlike the vendee under a contract of purchase, he has no devisable estate, no right of alienation except for specified public purposes, no right to change his residence, no right to declare himself a trustee of the land for another, and, with certain statutory exceptions, he may not even intermarry with an entrywoman. Unlike the vendor, the government as offering donor on condition has no right of specific performance and no right to damages for breach of condition; in fact, there is no binding contract. The entryman is free at all times, without penalty or liability of any kind, to abandon his efforts to qualify himself for acceptance of the government's offer to convey by patent.
In Hall v. Russell, 101 U.S. 503, 25 L.Ed. 829, we have a typical land-grant case involving the construction of the Oregon Donation Act to determine the congressional intent and the property rights resulting thereunder. One Loring, a single man, in 1852 settled on the land...
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