United States v. City of Philadelphia

• Decision Date: 07 January 1944
• Docket Number: 8404.,No. 8354,8354
• Parties: UNITED STATES v. CITY OF PHILADELPHIA et al.
• Court: U.S. Court of Appeals — Third Circuit

140 F.2d 406 (1944)

UNITED STATES v. CITY OF PHILADELPHIA et al.

Nos. 8354, 8404.

Circuit Court of Appeals, Third Circuit.

Argued October 22, 1943.

Decided January 7, 1944.

Robert T. McCracken, of Philadelphia, Pa. (William H. Lathrop, Samuel Fessenden, Robert McCay Green, City Sol., and Michael D. Hayes, Asst. City Sol., all of Philadelphia, Pa., on the brief), for appellants.

S. Billingsley Hill, of Washington, D.C., (Norman M. Littell, Asst. Atty. Gen., Gerald A. Gleeson, U. S. Atty., of Philadelphia, Pa., and Vernon L. Wilkinson, Atty., Department of Justice, of Washington, D. C., on the brief), for appellee.

Before JONES, GOODRICH, and McLAUGHLIN, Circuit Judges.

JONES, Circuit Judge.

On motion under Rule 56 of the Rules of Civil Procedure, 28 U.S.C.A. following section 723c, the District Court summarily entered judgment for the plaintiff on the pleadings. The defendants have severally appealed. The questions involved are (1) whether a material issue of fact was raised by the pleadings and, if not, (2) whether the well pleaded averments of the complaint and the amendment justify the action taken by the court below.

The judgment appealed from eventuated in a suit instituted by the United States in behalf of the United States Housing Corporation against the City of Philadelphia, the School District of Philadelphia and the Receiver of Taxes of the City of Philadelphia, the latter being an officer of the City who also functioned for the School District in its collection of taxes. The suit had for its purpose the procurement of a decree or order adjudging and declaring that certain real estate in the City of Phildelphia, owned by the Housing Corporation, was free and clear of all taxes, interest, penalties and tax liens imposed or attempted to be imposed by the municipal defendants with respect to such properties, that the taxes, interest and penalties levied against the properties did not constitute liens thereon and that the defendants and each of them should cancel the liens of said taxes, interest and penalties and remove the properties from the tax rolls.

The complaint showed that in 1919 the United States Housing Corporation, an instrumentality of the federal government, incorporated and organized under certain Acts of Congress,¹ in order to effectuate the direction of Congress to provide housing for those engaged in the national defense during World War I, purchased and improved with moneys furnished by the United States certain identified properties in the City of Philadelphia, the legal title whereto was taken and held by the Housing Corporation exclusively for the public purposes as defined and prescribed by Congress.

The complaint also averred that during the Housing Corporation's ownership of the properties above referred to and particularly between the years 1920 and 1942 inclusive, the defendants, the City of Philadelphia and the School District of Philadelphia, being public corporations of the Commonwealth of Pennsylvania, had levied taxes, interest and penalties against said properties, that the municipal defendants have purported to impress the taxes, interest and penalties, so levied, as liens against the Housing Corporation's properties, that the defendants were maintaining upon the tax records entries purporting to evidence the existence of liens and that they had thereby created clouds upon the Housing Corporation's title to said properties and had rendered impossible a sale of the properties free from encumbrances.

The plaintiff filed an amended complaint averring that after the Housing Corporation's original acquisition of the properties, it had entered into agreements "for the sale of said properties to private persons but the legal title to said properties remained in the Corporation" and that because of the purchasers' failure to comply with the terms of sale, the "agreements were properly cancelled pursuant to provisions contained therein." The amended complaint further averred that the plaintiff had instituted suits in the District Court to foreclose the equitable interests of the defaulting purchasers of the properties and that a judgment had been entered against each of the defaulting purchasers barring and forever enjoining them from making any claim or asserting any right, title or interest of any kind in or to said properties or from interfering in any manner with the Housing Corporation's possession thereof.

The matter which the defendants stress as having been put in issue by their answers is the averment in the amended complaint that the agreements for the sale of the properties to private purchasers were properly cancelled pursuant to provisions contained therein. As to that, the defendants deny any knowledge and demand proof. In their brief they hint at possible collusion between the Housing Corporation and the defaulting purchasers to the end that a large number of the latter (213 out of a total of 298), represented by the same attorney, severally suffered judgments of foreclosure to be entered against them by default and, as it later developed, are now in possession of the respective premises under use and occupancy agreements with privileges of purchase. While the agreements were not a formal part of the...