United States v. City of Glen Cove, Long Island, NY

• Decision Date: 07 January 1971
• Docket Number: No. 70-C-1188.,70-C-1188.
• Parties: UNITED STATES of America, Plaintiff, v. CITY OF GLEN COVE, LONG ISLAND, NEW YORK; Andrew J. DiPaola, Marvin L. Sutton, David Quient, County of Nassau, "John Doe" and "Mary Roe," Defendants.
• Court: U.S. District Court — Eastern District of New York

322 F. Supp. 149

UNITED STATES of America, Plaintiff, v. CITY OF GLEN COVE, LONG ISLAND, NEW YORK; Andrew J. DiPaola, Marvin L. Sutton, David Quient, County of Nassau, "John Doe" and "Mary Roe," Defendants.

No. 70-C-1188.

United States District Court, E. D. New York.

January 7, 1971.

Edward R. Neaher, U. S. Atty., E.D. N.Y., Brooklyn, N. Y., by James D. Porter, Jr., Bruce F. Smith, Cyril Hyman, Asst. U. S. Attys., and Bruno A. Ristau, Chief, Foreign Litigation Unit, Dept. of Justice, of counsel, for plaintiff.

Morrison, Paul & Beiley, New York City, by Elkan Abramowitz, New York City, of counsel, Jerrad Siegel, Deputy County Atty., County of Nassau, Mineola, N. Y., for defendants.

MEMORANDUM OF DECISION

JUDD, District Judge.

In this action, tried to the court without a jury, the United States seeks to enjoin the defendants from assessing any taxes against certain property owned by the Union of Soviet Socialist Republics (USSR) in the City of Glen Cove, or proceeding with any tax sales of such property, and to require that any tax liens be discharged of record. In addition to the City, the defendants include the Mayor, Finance Commissioner and City Attorney. The complaint is based on the assertion that the property is exempt from taxation under Article 21 of the 1968 Consular Convention between the United States and the USSR. 14 U.S.T. 4 5108, TIAS 6503. No cause of action was established against the County of Nassau, and no summons was served on "John Doe" or "Mary Roe."

The defense is based on questions of jurisdiction, standing, and the sufficiency of proof of the exempt use of the property, plus an assertion that the tax lien attached before the treaty became effective. A counterclaim in defendants' answer seeks a declaratory judgment that the United States must compensate the City of Glen Cove for its loss of taxes.

Facts

The property in question comprises a 37-acre parcel in the City of Glen Cove, known as Killenworth, improved with a 45-room house, and described in the complaint as a residence of the Permanent Representative of the USSR to the United Nations (UN) and his deputies. It is conceded that the property has been owned by USSR since 1955.

Killenworth was on the tax rolls of the City of Glen Cove from 1960 to 1966, and the taxes assessed against it then were ultimately paid by the USSR. In 1966, it was removed from the tax rolls by voluntary action of the City of Glen Cove, presumably in recognition of the exemption granted under New York Real Property Tax Law, McKinney's Consol.Laws, c. 50-A, § 418. In 1968, the new Commissioner of Assessment and Taxation removed the exemption and placed the property on the tax roll for the 1969 city tax and the 1969-70 school tax. He notified the USSR by letter dated June 14, 1968 that the exempt status had been terminated, and testified that no protest was received before the statutory grievance day, June 18th.

The taxes not having been paid, the city declared them delinquent on May 20, 1970 and scheduled a tax sale of Killenworth to be held on June 26, 1970. The sale was postponed by voluntary action until September 28, 1970, and has been further deferred by a temporary restraining order entered with the consent of the parties on September 23, 1970, and continuing until the final determination of plaintiff's motion for a preliminary injunction.

The hearing on the preliminary injunction was consolidated with the trial on the merits.

The tax roll was completed on May 21, 1968 and was open for public inspection for three weeks thereafter. There is no statutory obligation to notify a property owner of the assessment or a change in exempt status. The tax roll is certified by the Commissioner of Taxation and Assessment to the Commissioner of Finance within thirty days after the June 18th grievance day. The total value of taxable property on the tax roll is used in determining the real estate tax rate, after the budget has been adopted on or before October 10th of each year. The city taxes became due on December 1, 1968 and the school taxes on August 1, 1969, and became liens on those dates.

The only proof that the property was used as a residence of USSR diplomats consisted of three certificates from the United States Department of State. The first transmitted an official translation of a note from the Permanent Representative of the USSR to the UN handed to Ambassador Charles W. Yost, Chief of Mission of the United States to the UN, on June 5, 1970 in New York; this note asserted that the real property was used exclusively as a residence for the Permanent Representative of the USSR to the UN and his deputies, and requested the assistance of the United States Mission in putting an end to the claims of Glen Cove.

The second was a copy of a translation of a note from the Ministry of Foreign Affairs of the USSR to the American Embassy in Moscow dated July 21, 1970. This second note repeated that

said property is used as a residence of the Permanent Representative of the USSR to the UN and Deputies of the Permanent Representative with the rank of Ambassadors and Ministers of the Union of Soviet Socialist Republics.^*

After referring to the agreement between the United Nations and the United States regarding the headquarters of the United Nations, Section 418 of the New York Real Property Tax Law, and Article 21 of the Consular Convention, the note concluded:

the Ministry insists that the U. S. Government take steps to put an end to the unfounded claims of the Glen Cove city authorities against the property of the USSR Mission to the UN.

The third note was a letter dated October 16, 1970 from U. Alexis Johnson, Under Secretary of State for Political Affairs, to Attorney General John N. Mitchell, to be inserted in the record in this case, and stating,

The Department of State accepts as true the diplomatic representations of the Government of the Union of Soviet Socialist Republics that the real property owned by it in the City of Glen Cove is used as a residence of its Permanent Representative to the United Nations and his deputies having the rank of Ambassador or Minister of the Union of Soviet Socialist Republics and has been so used during the period following the City's recognition of the property's tax exempt status in 1966.

The United States in this action relies only on the Consular Convention and not on the UN Headquarters Agreement or the New York Tax Law.

The Commissioner of Assessment and Taxation testified that his revocation of exemption was not based on any change in the use of the property.

The only other fact which need be set forth, because of its bearing on the counterclaim, is that the taxes in issue amount to over $15,000.

Treaty Provision

Article 21 of the Consular Convention of 1968, 14 U.S.T. 4 5108, TIAS 6503, provides:

1. Immovable property, situated in the territory of the receiving state, of which the sending state or one or more persons acting in its behalf is the owner or lessee and which is used for diplomatic or consular purposes, including residences for personnel attached to the diplomatic and consular establishments, shall be exempt from taxation of any kind imposed by the receiving state or any of its states or local governments other than such as represent payments for specific services rendered.

The treaty took effect on July 13, 1968.

It is not disputed that the treaty is binding on the defendants as "the supreme Law of the Land" by virtue of Article VI of the United States Constitution.

Discussion of Law

1. Jurisdiction and Standing

Jurisdiction is based on 28 U.S.C.A. § 1345, which gives district courts original jurisdiction of all civil actions commenced by the United States.

Defendants assert that Section 1345 does not apply because the United States lacks any pecuniary interest in the subject matter and therefore is not the real party in interest.

It has been long established that the United States need have no pecuniary interest in order to have standing to sue. In re Debs, 158 U.S. 564, 15 S.Ct. 900, 39 L.Ed. 1092 (1894). In the exercise of its constitutional responsibility for the conduct of foreign affairs, the United States may sue to prevent state action which would violate a treaty obligation of the United States. United States v. Minnesota, 270 U.S. 181, 46 S. Ct. 298, 70 L.Ed. 539 (1926); Sanitary District v. United States, 266 U.S. 405, 45 S.Ct. 176, 69 L.Ed. 352 (1925).

The conduct of foreign relations would be hampered and embarrassed if the United States Government were powerless to require units of local government to comply with treaty obligations, and if a treaty could be enforced only by the foreign government making itself a party to litigation before state or federal courts.

Defendants assert a further bar to jurisdiction on the basis of 28 U.S.C.A. § 1341, which forbids injunctions against state taxes. Section 1341 provides that:

The district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State.

However, Section 1341 has been held to be no bar to jurisdiction of suits instituted by the United States. See United States v. Arlington County, 326 F.2d 929 (4th Cir. 1964); United States v. Bureau of Revenue, 291 F.2d 677 (10th Cir. 1961); United States v. Woodworth, 170 F.2d 1019 (2d Cir. 1948).

The absence of any pecuniary interest of the United States does not make it subject to the bar of Section 1341 in this case. A suit to enjoin collection of a state tax from an individual member of the armed forces, as a violation of Section 514 of the Soldiers and Sailors Civil Relief Act of 1940, was sustained in the Arlington County case, where the court said (326 F.2d at 932-933):

The right of the federal government to bring suit to enforce its policies and programs even in the absence of immediate pecuniary interest has been upheld in numerous

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