U.S. v. City of Adair

• Decision Date: 10 August 1976
• Docket Number: No. 75-1608,75-1608
• Citation: 539 F.2d 1185
• Parties: UNITED STATES of America, Appellee, v. CITY OF ADAIR, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1185

539 F.2d 1185

UNITED STATES of America, Appellee, v. CITY OF ADAIR, Appellant.

No. 75-1608.

United States Court of Appeals,

Eighth Circuit.

Submitted Feb. 13, 1976.

Decided Aug. 10, 1976.

Curt L. Sytsma, Des Moines, Iowa, for appellant; Robert H. Helmick, Des Moines, Iowa, on the briefs.

Michael A. McCord, Atty., Appellate Section, U. S. Dept. of Justice, Washington, D. C., for appellee; Walter Kiechel, Jr., Asst. Atty. Gen., Washington, D. C., Allen L. Donielson, U. S. Atty., James R. Rosenbaum, Asst. U. S. Atty., Des Moines, Iowa, Edmund B. Clark and Jacques B. Gelin, Attys., Dept. of Justice, Washington, D. C., on the briefs.

Before BRIGHT and HENLEY, Circuit Judges, and REGAN, ^* District Judge.

HENLEY, Circuit Judge.

The City of Adair, Iowa, hereafter referred to as the City, appeals from a summary judgment for the United States on the question of the immunity of the Commodity Credit Corporation, hereafter referred to as the CCC, from special assessments levied against its real property located within the City.

The facts are undisputed. Property owned by the CCC is within a special improvement district of the City and the City levied special assessments against property within the district in full compliance with the laws of Iowa. The total assessment against the CCC's property was $5,032.00 and in 1973 the CCC paid the City one-tenth of that amount, $503.20. Subsequently the United States government made demand for a refund and the City refused. The government sued in behalf of the CCC for a judgment of $503.20 plus costs and the City counterclaimed for the balance of the assessment. There were cross motions for summary judgment and the government prevailed.

The district court found for the government on two grounds. First, it found that the laws of the State of Iowa ¹ proscribe taxation of property "owned by the United States" and that the property in question is within that category. The court distinguished an earlier decision of the Iowa Supreme Court on grounds that the property in that case, a bridge, was not "owned by the United States" merely because of a federally created bridge commission. See City of Dubuque Bridge Commission, 232 Iowa 112, 5 N.W.2d 334, cert. denied, 317 U.S. 686, 63 S.Ct. 259, 87 L.Ed. 549 (1942).

The second basis for the district court's holding was that the CCC enjoys governmental immunity from special assessments despite a congressionally imposed waiver of immunity from property tax. ² This ruling was based upon the holding in Board of Directors of Red River Levee Dist. No. 1 of Lafayette County, Ark. v. Reconstruction Finance Corp., 170 F.2d 430 (8th Cir. 1948), wherein this court, interpreting language in the Reconstruction Finance Corporation Act identical to that waiving the CCC's immunity from real property tax, held that the waiver did not extend to special assessments. The district court did concede that if it were addressing the question as one of first impression, it would be inclined to extend this congressional waiver of real property taxation to special assessments. The court reasoned that since special assessments are imposed as a result of improvements which have enhanced the value of the property, they are not "burdensome" as are ordinary taxes.

The district court ordered the City to refund the installment paid on the assessment and the City appeals. We affirm.

Immediately it seems that if the district court correctly found that Iowa law does not permit such a special assessment to be levied against the CCC's real property, it is unnecessary to reach the question whether the Red River holding is dispositive. However, we note that in their Agreed Statement as the Record on Appeal, the parties recognize that if federal law permits such a special assessment, then Iowa law permits it. In Van Brocklin v. State of Tennessee, 117 U.S. 151, 6 S.Ct. 670, 29 L.Ed. 845 (1886), the United States Supreme Court discussed similar statutes in other states which proscribe state and local taxation of property "owned by the United States." These provisions were conditions for admission of these states to the union, and the Court noted that they "are equivalent to each other" and that "they are but declaratory, and confer no new right or power upon the United States." 117 U.S. at 167, 6 S.Ct. at 679.

We characterize the primary issue in this appeal as being whether the holding in Red River is dispositive and find that it is. In that case the levee district, in compliance with Arkansas law, levied an assessment for special improvements against a pipeline owned by the Reconstruction Finance Corporation and filed suit in rem for enforcement of a lien against the RFC's pipeline when the assessment was not paid. The RFC filed a motion to dismiss on grounds that its pipeline property was exempt from special assessments. The district court granted the motion and was affirmed on appeal.

The Red River panel reasoned that the state could not tax "property of the United States or any of its instrumentalities" without the consent of Congress. 170 F.2d at 431. It further held that congressional consent to such taxation "should clearly and unequivocally confer the privilege." Id. at 433. Determining that the pipeline constituted "real property" within the meaning of Arkansas law, and noting that the Reconstruction Finance Corporation Act exempted the RFC from all state taxation except real property taxes to the extent that other real property is taxed, this court held that congressional consent to real property taxation did not extend to special assessments. ³ This reasoning was based upon the long recognized distinction between taxation and special assessments, discussed in Illinois Central R.R. v. Decatur, 147 U.S. 190, 13 S.Ct. 293, 37 L.Ed. 132 (1893). ⁴

The City has submitted several arguments why the holding in Red River should not be controlling. Among its contentions are that issues presented to us for consideration were never before the Red River panel and, therefore, that decision should set no precedent.

The City further points out that even though the result it urges is the same as that urged by the levee district in Red River, the legal theories it relies upon, such as the distinction between taxation and special assessments, were not relied upon by the levee district. We have considered all the arguments submitted by the City as reasons for disregarding Red River as precedent and find them unpersuasive.

I.

The City points out that there is a line of authority which existed prior to the holding in Red River, but which allegedly was not considered by that panel, to the effect that governmental immunity is not necessarily implied where Congress has not granted express consent. This line of cases includes R.F.C. v. Menihan Corp., 312 U.S. 81, 61 S.Ct. 485, 85 L.Ed. 595 (1941); Keifer & Keifer v. R.F.C., 306 U.S. 381, 59 S.Ct. 516, 83 L.Ed. 784 (1939); United States v. Edgerton & Sons, 178 F.2d 763 (2d Cir. 1949); Asheville Mica Co. v. Commodity Credit Corp., 239 F.Supp. 383 (S.D.N.Y.1965), aff'd, 360 F.2d 931 (2d Cir. 1966), all cited by the City.

The City urges that absent a showing of burden on the United States no immunity will be implied ⁵ and it asserts that there is no burden on the CCC because the special assessments are levied for improvements or benefits that have enhanced the value of the property. Illinois Central R.R. v. Decatur, supra.

None of the foregoing cases directly supports the position that immunity from real property taxation or special assessments should not be implied from the Constitution where Congress has not granted express consent. Keifer & Keifer, Menihan and Asheville Mica all concern amenability of government instrumentalities to suit or to the incidents of suit. Edgerton & Sons concerned an interpretation of the CCC charter as a Delaware corporation and did not concern immunity from real property taxation or special assessments. Graves v. N. Y. ex rel. O'Keefe, 306 U.S. 466, 59 S.Ct. 595, 83 L.Ed. 927 (1939), involved the question of taxation of the income of a federal employee.

The position that immunity from taxation and special assessments is implied is supported by a number of cases on sovereign immunity from taxation, the first of which was McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316, 4 L.Ed. 579 (1819). See also, e. g., United States v. Allegheny County, 322 U.S. 174, 64 S.Ct. 908, 88 L.Ed. 1209 (1944); Mayo v. United States, 319 U.S. 441, 63 S.Ct. 1137, 87 L.Ed. 1504 (1943); Penn Dairies v. Milk Control Com'n., 318 U.S. 261, 63 S.Ct. 617, 87 L.Ed. 748 (1943); Van Brocklin v. State of Tennessee, supra.

Moreover, congressional consent must be clear, express and affirmative. See, e. g., United States v. Allegheny County, supra, 322 U.S. at 177, 64 S.Ct. 908; Mayo v. United States, supra, 319 U.S. at 448, 63 S.Ct. 1137; Kern-Limerick, Inc. v. Scurlock, 347 U.S. 110, 122, 74 S.Ct. 403, 98 L.Ed. 546 (1954). And congressional waivers from tax exemptions must be strictly construed. See Oklahoma v. Barnsdall Corp., 296 U.S. 521, 56 S.Ct. 340, 80 L.Ed. 366 (1936). See also Rohr Aircraft Corp. v. San Diego County, 362 U.S. 628, 80 S.Ct. 1050, 4 L.Ed.2d 1002 (1960), and R.F.C. v. State of Texas, 229 F.2d 9 (5th Cir.), cert. denied, 351 U.S. 907, 76 S.Ct. 695, 100 L.Ed. 1442 (1956).

We do not agree that the question of immunity here turns on a determination of the burdensome or beneficial nature of the assessment. Any authority possessed by the state to tax property owned by the CCC is derived from congressional consent to waive immunity. Cf. Maricopa County v. Valley Bank, 318 U.S. 357, 361, 63 S.Ct. 587, 87 L.Ed. 834 (1943). The immunity enjoyed by the United States "grows out of the supremacy of the Federal Government and the necessity that it be able to deal with its own property free from any interference or embarrassment that state taxation might impose." West v. Oklahoma Tax Commission, 334 U.S. 717, 723, ...