Spokane County v. Air Base Housing, Inc., 16235.

• Decision Date: 28 May 1962
• Docket Number: No. 16235.,16235.
• Citation: 304 F.2d 494
• Parties: SPOKANE COUNTY, Appellant, v. AIR BASE HOUSING, INC., Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

304 F.2d 494 (1962)

SPOKANE COUNTY, Appellant, v. AIR BASE HOUSING, INC., Appellee.

No. 16235.

United States Court of Appeals Ninth Circuit.

May 28, 1962.

John J. Lally and Donald N. Olson, Spokane, Wash., for appellant.

J. K. Cheadle and T. David Gnagey, Spokane, Wash., Louis F. Oberdorfer, Asst. Atty. Gen., H. Eugene Heine, Jr., Sp. Asst. Atty. Gen., Lee A. Jackson, Myron C. Baum, John J. Crown, Attys., Dept. of Justice, Washington, D. C., and Dale M. Green, U. S. Atty., Spokane, Wash., for appellee.

Before STEPHENS, POPE and HAMLIN, Circuit Judges.

POPE, Circuit Judge.

The controversy which led to the judgment here under review arose in a condemnation proceeding in the court below. The United States was seeking condemnation of the right, title and interest of appellee Air Base Housing, Inc. under certain so-called "Wherry Act Leaseholds" upon certain tracts within the boundaries of the Fairchild Air Force Base in Spokane County, Washington. With its Declaration of Taking, the United States deposited the sum of $200,000 as the estimated amount required as just compensation for the taking. Spokane County filed with the court a verified statement reciting that it had assessed and levied taxes against the property sought to be taken in the condemnation proceedings, which created liens thereon, and asking that any award made for the property be applied to the payment of the liens for such taxes, the amounts of which were set out. They were stated to total $135,120.79. Air Base Housing, Inc. then filed a petition asking rejection of the County's claim.

This petition for rejection of the County's claim was based upon the provisions of § 511 of the Housing Act of 1956, which, in the manner hereafter mentioned, placed certain limitations upon the amount of State or local taxes which might be levied or assessed against the interest of a holder of a Wherry Act leasehold. Such leaseholds, authorized under the Military Leasing Act of 1947, (61 Stat. 774-776), and the Wherry Military Housing Act of 1949, (63 Stat. 570, 576), 12 U.S.C.A. § 1748 et seq., which added Title VIII to the National Housing Act, were held subject to State and local taxation in Offutt Housing Co. v. Sarpy County, 351 U.S. 253, 76 S.Ct. 814, 100 L.Ed. 1151, decided May 28, 1956.

Air Base Housing, Inc., obtained its Wherry Act leases in 1950 and 1951, and thereafter constructed housing thereon, financing the same through insured mortgages as provided for in Title VIII. Through 1955, Spokane County assessed these leaseholds upon a certain basis, (which is not shown in the record). But after the decision in the Offutt case, supra, and on June 12, 1956, the County Assessor made an assessment based upon the full value of the buildings and improvements. In October, 1956, as required by statute, the Spokane County Commissioners, on the basis of this assessment, made a tax levy for taxes payable in 1957, amounting to $83,796.19. Air Base Housing, Inc. paid $39,751.85 of this sum under protest in April, 1957. Its suit in the state courts to recover that amount was unsuccessful, and the judgment of the superior court dismissing the action was affirmed by the Washington Supreme Court on August 25, 1960, (Air Base Housing, Inc. v. Spokane County, 56 Wash.2d 642, 354 P.2d 903), which was after this appeal had been argued in this court.

In the year 1957, in assessing for taxes payable in 1958, the assessor made a similar assessment, and in October 1957, the County Commissioners made a levy for taxes payable in 1958 amounting to $90,894.22.

In resisting payment of the sums claimed by Spokane County in the court below Air Base Housing, Inc. asserted that these tax levies were invalid by reason of the provisions of § 511 of the Housing Act of 1956, (70 Stat. 1110) approved August 7, 1956.¹ It was shown that the designee of the Secretary of Defense had determined that the payments and expenditures of the federal government for the purposes mentioned in § 511, and required to be deducted from the taxes above mentioned for the years 1957 and 1958, exceeded the levies for those years. Spokane County contended that the taxes for, and payable in 1957, were not subject to the deductions for these federal expenditures, since the assessment made on June 12, 1956, resulted in the taxes for 1957 "encumbering such property or interest prior to June 15, 1956."

The trial judge, relying on Puget Sound Power & Light Co. v. Cowlitz County, 38 Wash.2d 907, 234 P.2d 506, held that these taxes "could not have become a valid or effective lien * * * until the tax levy was made * * * in October, 1956." It followed, he held, that the lien arose after the effective date (June 15, 1956) of the provisos of § 511; hence the taxes claimed by the County were invalid and the County's claim was "rejected in its entirety". The court inserted in its judgment the finding that there was "no just reason for delay" and this appeal was filed.

After the case had been argued here this court learned that Air Base Housing, Inc. v. Spokane County, supra, was pending in the Washington Supreme Court and involving the same question presented in the court below. Accordingly we ordered submission of this case suspended awaiting that decision. When it came down it overruled the decision in Puget Sound Power & Light Co. v. Cowlitz County, supra, upon which the court below based its decision holding both the 1957 and 1958 taxes invalid. Since the Washington Supreme Court there held that the 1957 taxes became a lien as of the date of the assessment on June 12, 1956, we filed an opinion dated September 19, 1960, reversing the decision as to the 1957 taxes. When it was called to our attention that our judgment failed to deal with the 1958 taxes, we vacated and withdrew that decision on October 7, 1960. On October 10, 1960, the Supreme Court granted certiorari directed to this court granting review of this court's decision in Moses Lake Homes, Inc. v. Grant County, 9 Cir., 276 F.2d 836, limiting the review to the question, "May a state tax which discriminates against persons holding leaseholds from the United States be enforced in a United States court against a deposit of estimated compensation in a condemnation of such leasehold?" 364 U.S. 814, 81 S.Ct. 59, 5 L.Ed.2d 45. Because of the possibility of the Supreme Court's decision in that case having a bearing upon this one we withheld further decision awaiting the opinion in the Moses Lake case. When that case was decided on April 17, 1961, Moses Lake Homes, Inc. v. Grant County, 365 U.S. 744, 81 S.Ct. 870, 6 L.Ed.2d 66, the parties herein addressed communications to this court, appellee affirming and appellant denying that such case was a controlling authority here. We requested the parties to brief this question, to which we now address ourselves.

From what has here been said it is apparent that apart from any consideration of the decision in the Moses Lake Homes case, the decision of the Washington court in Air Base Housing, Inc. v. Spokane County, supra, would require a reversal of the court below so far as the 1957 taxes are concerned; they would have to be held valid because their lien preceded the effective date of the provisos in § 511, supra. Appellee argues that upon the record in this case it may be demonstrated that these 1957 taxes are invalid because they are discriminatory against the appellee in precisely the same manner in which the taxes in the Moses Lake Homes case were discriminatory and void. Appellant asserts that this contention may not be urged here since this point was not presented or decided in the trial court. Appellee argues that the judgment may be affirmed upon a ground differing from that relied upon by the trial court. Reliance is upon the statement in Helvering v. Gowran, 302 U.S. 238, 245, 58 S.Ct. 154, 82 L.Ed. 224: "In the review of judicial proceedings the rule is settled that if the decision below is correct, it must be affirmed, although the lower court relied upon a wrong ground or gave a wrong reason."

For this reason appellee argues that Moses Lake Homes v. Grant County, supra, requires a holding that the 1957 tax here in question was void because the valuation of the leasehold which produced that tax was pursuant to a construction of the Washington tax laws which operated to discriminate against the holders of the Wherry Act leaseholds as compared with the holders of other similar leaseholds. Thus it is said that this discrimination renders the tax based upon an assessment of the property at "the full value of the buildings and improvements" invalid for discrimination against the Government or those with whom it deals. Appellee contends that if we apply the rule laid down in the Moses Lake Homes v. Grant County case, the result reached by the district court must be approved here even though it be for a different reason than that assigned by the trial judge.

The rule above quoted from Helvering v. Gowran, supra, is one generally recognized and one which has been often approved and restated in this court.² Of course this rule relates to affirmance on new grounds or grounds not relied upon in the trial court. There is no such general rule authorizing an appellate court to reverse on grounds other than those urged in the trial court.

We are satisfied therefore that if the record here is sufficient to warrant the application of the Moses Lake Homes rule concerning discrimination to the case before us, then we ought to affirm on that ground. As stated in United States v. O'Connor, 2 Cir., 237 F.2d 466, 471, "We think that we are required to apply the latest rules of law formulated by the Supreme Court to all cases coming before us in which those rules are relevant, irrespective of the relative dates of trial."

In First National Bank in Wichita v. Luther, 10 Cir., 217 F.2d 262, 266, the court said: "* * * The issue on appeal is the correctness in ultimate effect of an order or judgment, not the reason or...