United States v. 68,716 SQUARE FEET OF LAND, ETC.

• Citation: 79 F. Supp. 438
• Parties: UNITED STATES v. 68,716 SQUARE FEET OF LAND IN CITY OF NEW YORK, BOROUGH AND COUNTY OF BRONX NEW YORK et al.
• Decision Date: 26 August 1948
• Court: U.S. District Court — Southern District of New York

79 F. Supp. 438

UNITED STATES v. 68,716 SQUARE FEET OF LAND IN CITY OF NEW YORK, BOROUGH AND COUNTY OF BRONX NEW YORK et al.

District Court, S. D. New York.

August 26, 1948.

Harry T. Dolan, Sp. Asst. to the Atty. Gen. of the United States (John A. Jordan, Sp. Atty. Department of Justice, of New York City, of counsel), for plaintiff.

John P. McGrath, Corporation Counsel, of New York City (William F. Murphy, Morris Handel and Ira Wollison, all of New York City, of counsel), for defendants.

MEDINA, District Judge.

The controversy presented by the Government's petition for a declaratory judgment and the cross motion of the City of New York to dismiss for lack of jurisdiction and for failure to state a claim for relief, centers upon the legality of the action of the City authorities in determining on January 25, 1944 that the new hospital of the Lebanon Hospital Association of the City of New York on the Grand Concourse in the Bronx was no longer tax exempt by reason of its seizure by the Government in the above entitled condemnation proceeding. The hospital was taken over on July 7, 1943, and the War Department vacated the premises and returned them to the Lebanon Hospital Association on January 4, 1946, the estate condemned having been solely one of possession and exclusive use and occupancy. In the interval the hospital was used by the Government solely for hospital purposes for the benefit of the Armed Forces. Exclusive of interest and penalties, the taxes thus assessed by the City of New York, during the period of government occupancy, amount to $92,300.00.

In order to avoid unnecessary litigation and expense, a stipulation was entered into between the Government and Lebanon Hospital Association on June 26, 1945 which provided for the amounts to be paid by the Government and this stipulation in substance provided that the Government should be liable for real estate taxes, such as those involved in this controversy, and that the Lebanon Hospital Association would not be liable; it was also provided that the validity of such taxes would "be contested by the petitioner" and that the hospital would give any necessary assistance and cooperation. Accordingly, an interlocutory order was made by Judge Bright on June 30, 1945 implementing the terms of the stipulation and providing that all questions relating to real estate taxes be disposed of as provided in the stipulation. The condemnation proceeding is still open and no final adjudication has been made.

The substance of the prayer for relief is that it be adjudged that the taxes levied against the property by the City of New York are illegal and void, that the United States is not required to pay any part of said taxes as an element of just compensation to the Lebanon Hospital Association for its use and occupancy of the property, that the tax liens be expunged from the records and that a permanent injunction issue against the City of New York, restraining it from attempting to enforce or foreclose the liens and collect the amount of the taxes or any part thereof.

The crux of the claim of lack of jurisdiction is that 28 U.S.C.A. ß 41(1), as amended in 1937, 50 Stat. 738, provides: "Notwithstanding the foregoing provisions of this paragraph, no district court shall have jurisdiction of any suit to enjoin, suspend, or restrain the assessment, levy, or collection of any tax imposed by or pursuant to the laws of any State where a plain, speedy, and efficient remedy may be had at law or in equity in the courts of such State."

There is here no specific reference to the United States nor does there seem to be any reason of policy or justice to support the view that the District Courts of the United States are or should be wholly without jurisdiction to pass upon the validity or legality of state taxes at the suit or upon the petition of the United States. So to rule would be to announce a new and mischievous doctrine which would seem inevitably to point toward unnecessary complications and embarrassment. For, if the District Courts lack jurisdiction to issue injunctions in such cases, it seems that they could scarcely with propriety make a declaration of rights, which would bind the parties and have precisely the same effect as an injunction. Collier Advertising Service v. City of New York, D.C.S.D.N. Y.1940, 32 F.Supp. 870, 872; 3 Moore, Federal Practice 3216 (1938). But see Morrison-Knudsen Co. v. State Board of Equalization, D.C.Wyo.1940, 35 F.Supp. 553.

The legislative history of the 1937 amendment, Sen.Rep.No.1035, 75th Cong., 1st Sess.(1937); H.R.Rep.No.1503, 75th Cong., 1st Sess.(1937); 81 Cong.Rec.1415-17 (1937), indicates that Congress made this change to prevent large corporations from using federal injunctions to hinder the collection of state taxes. There is nothing whatever in the committee reports or in the debates to indicate that it was the intention of Congress to limit or restrict the granting of relief to the United States as a plaintiff in its own courts.

Substantially the same question was before the Supreme Court in United States v. United Mine Workers of America, 1947, 330 U.S. 258, 67 S.Ct. 677, 91 L.Ed. 884. There also the terms of the statute were broad and general; but, despite the fact that it divested pre-existing rights or privileges, it contained no express words making it applicable to the sovereign. The rule of construction had been so often discussed and reaffirmed, in the absence of extraneous and affirmative reasons for believing that the sovereign should be deemed subject to the restrictive statutes involved, that the Court found that Congress must be deemed to have had it in mind when the statute was passed. 330 U. S. 272, 273, 67 S.Ct. 685. Furthermore, in the present case as in that of the United Mine Workers there are "no evident affirmative grounds for believing that Congress intended to withhold an otherwise available remedy from the Government as well as from a specified class of private persons." 330 U.S. 270, 67 S.Ct. 684. Indeed, the legislative background and all the attendant circumstances indicate that there was no such intent.

Accordingly, on the question of jurisdiction I conclude that United States v. United Mine Workers of America, 1947, 330 U.S. 258, 67 S.Ct. 677, 91 L.Ed. 884, is controlling; and I follow those dicta, Board of Comm'rs of Pawnee County, Oklahoma v. United States, 10 Cir., 1943, 139 F.2d 248, 250; City of Springfield v. United States, 1 Cir., 1938, 99 F.2d 860, 862, and holdings, United States v. Woodworth, D.C.W.D.N.Y.1945, 60 F.Supp. 844; United ed States v. Okaloosa County, D.C.N.D. Fla.1945, 59 F.Supp. 426, which do not construe 28 U.S.C.A. ß 41(1), as amended, 50 Stat. 738 (1937), to deprive this Court of jurisdiction to issue injunctions at the suit of the United States.

The City's motion to dismiss for lack of jurisdiction is denied.

Though the Court has jurisdiction, it may in its discretion decline to render a declaratory judgment. Brillhart v. Excess Insurance Co. of America, 1942, 316 U.S. 491, 494, 495, 62 S.Ct. 1173, 86 L.Ed. 1620; ?tna Casualty and Surety Co. v. Quarles, 4 Cir., 1937, 92 F.2d 321, 323, 324; Borchard, Declaratory Judgments 312-314 (2d ed. 1941).

"The scrupulous regard for the rightful independence of state governments which should at all times actuate the federal courts," Matthews v. Rodgers, 1932, 284 U.S. 521, 525, 52 S.Ct. 217, 219, 76 L.Ed. 447, has rendered them hesitant to interfere with a state's carrying out of its domestic policy, Burford v. Sun Oil Co., 1943, 319 U.S. 315, 317, 318, 63 S.Ct. 1098, 87 L.Ed. 1424; Pennsylvania v. Williams, 1935, 294 U.S. 176, 185, 55 S.Ct. 380, 79 L. Ed. 841, 96 A.L.R. 1166; Matthews v. Rodgers, supra, and weighs heavily in the discretionary denial of a declaratory judgment as to the validity of state taxes. Great Lakes Dredge & Dock Co. v. Huffman, 1943, 319 U.S. 293, 63 S.Ct. 1070, 87 L.Ed. 1407.

The considerations in favor of the Court's discretionary allowance of a declaratory judgment are these. The United States is constitutionally bound to compensate the Lebanon Hospital Association for the use and occupancy of its property, U.S.Const. Amend. V, which, as the records of the Tax Assessor of the City of New York show, led to its restoration to the tax rolls. Therefore, regardless of the stipulation between the United States and the Lebanon Hospital Association, the United States must compensate for the increased tax burden, provided that it is properly laid. The District Court, which has jurisdiction of condemnation suits, 40 U.S.C.A. ß 257, determines what compensation is just. It is entirely proper that, when the amount of compensation is disputed, the United States, by a petition for a declaratory judgment, should invoke that Court's aid in ascertaining what it is bound to pay. The United States may thus rightfully ask whether...