United States v. COUNTY OF HUMBOLDT, CALIFORNIA

• Decision Date: 09 February 1978
• Docket Number: No. C-77-1749-CBR.,C-77-1749-CBR.
• Citation: 445 F. Supp. 852
• Court: U.S. District Court — Northern District of California
• Parties: UNITED STATES of America, Plaintiff, v. COUNTY OF HUMBOLDT, CALIFORNIA, Raymond J. Flynn, Humboldt County, California, Tax Assessor, and Stephen A. Strawn, Humboldt County, California, Treasurer and Tax Collector, Defendants.

445 F. Supp. 852

UNITED STATES of America, Plaintiff, v. COUNTY OF HUMBOLDT, CALIFORNIA, Raymond J. Flynn, Humboldt County, California, Tax Assessor, and Stephen A. Strawn, Humboldt County, California, Treasurer and Tax Collector, Defendants.

No. C-77-1749-CBR.

United States District Court, N. D. California.

February 9, 1978.

G. William Hunter, U. S. Atty., John M. Youngquist, Asst. U. S. Atty., San Francisco, Cal., M. Carr Ferguson, John J. McCarthy, Jr., William L. Shraberg, Attys., Tax Div., U. S. Dept. of Justice, Washington, D. C., for plaintiff.

Raymond W. Schneider, County Counsel, John L. Cook, Deputy County Counsel, Eureka, Cal., for defendants.

MEMORANDUM OF OPINION

RENFREW, District Judge.

This is an action instituted by the United States seeking a declaratory judgment that the County of Humboldt, California (the "County"), and officials thereof are barred from imposing a tax on active-duty military personnel by virtue of such personnel's occupancy of Government-owned military housing, situated in the County, to which such personnel are assigned, and injunctive relief enjoining the defendants from proceeding to collect or further assess such a tax. The County has moved to dismiss or, in the alternative, for summary judgment. The Government has also moved for summary judgment. Arguments on the motions were heard on December 15, 1977. Having carefully considered the arguments of counsel and the legal memoranda filed in support of and in opposition to the motions, the Court concludes that there is no genuine issue as to any material fact and that the United States is entitled to summary judgment in its favor as a matter of law.¹

I. FACTUAL BACKGROUND

This action arises out of the County's attempt to assess and collect ad valorem taxes on the possessory interests allegedly held by various military personnel in their assigned quarters at the United States Naval Facility Centerville Beach, Ferndale, California (the "Ferndale Facility"). On or about September 14, 1976, the Commander of the Ferndale Facility received a letter from the County's Tax Assessor wherein it was stated that the County would be assessing as of March 1, 1976, for the fiscal year beginning July 1, 1976, and ending June 30, 1977, possessory interest taxes against military service personnel by virtue of such personnel's occupancy of Government-owned military housing situated within the County (the "Ferndale military housing").² During November of 1976, five military service members, each of whom occupied a unit of the Ferndale military housing as of March 1, 1976, received from the County "Unsecured Tax Statements," each of which indicated that taxes were due from each of the addressees listed thereon for the County's 1976-1977 fiscal year. On or about June 22, 1977, the Commander of the Ferndale Facility received a letter from the County's Treasurer and Tax Collector wherein it was indicated that if the taxes due from the five military service members to whom the "Unsecured Tax Statements" were sent were not paid by August 31, 1977, "summary judgments" would be filed against the addressees.³

The Commander of the Ferndale Facility received 19 additional "Unsecured Tax Statements" on or about July 12, 1977. These statements were addressed to military service members assigned to units of the Ferndale military housing as of March 1, 1976, and each statement indicated that taxes were due from each of the addressees listed thereon for the County's 1976-1977 fiscal year. These tax statements were forwarded by Navy Department employees to the addressees' then known forwarding addresses. On or about July 26, 1977, the Commander of the Ferndale Facility received a second letter from the County's Treasurer and Tax Collector wherein it was indicated that if the taxes due from these service members were not paid by August 31, 1977, "summary judgments" would be filed against them also.

The Government filed this lawsuit on August 9, 1977, seeking both declaratory and injunctive relief. The Government contends that the County's tax on military personnel assigned to the Ferndale military housing is unlawful for the following reasons: (1) the tax constitutes a direct interference with the operations of the United States and is therefore constitutionally prohibited; (2) the tax is barred by § 511 of the Housing Act of 1956, 42 U.S.C. § 1594 note; and (3) the tax is barred by § 574 of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended, 50 U.S.C. Appendix § 574. The Court does not reach the merits of the Government's contentions, however, since the tax assessed by the County is not authorized under California law and can be declared invalid on that ground.⁴

II. TAXABLE POSSESSORY INTERESTS

Under California law,

"a possessory interest includes the right of a private individual or corporation to use government owned tax exempt land or improvements, and this right is considered a private interest taxable by the state and its taxing agencies. Citations omitted. But not all occupancies or uses of tax exempt government owned lands or improvements by private individuals are taxable as possessory interests. To give rise to a taxable possessory interest, the right of possession or occupancy must be more than a naked possession or use; it must carry with it, either by express agreement or tacit understanding of the parties, the degree of exclusiveness necessary to give the occupier or user something more than a right in common with others, or, in the case of employment, something more than the means for performing his employer's purpose, so that it can be said, realistically, that the occupancy or use substantially subserves an independent, private interest of the user or occupier. Citations omitted." United States v. County of Fresno, 50 Cal. App.3d 633, 123 Cal.Rptr. 548, 550-551 (1975), aff'd on other grounds, 429 U.S. 452, 97 S.Ct. 699, 50 L.Ed.2d 683 (1977).

In United States v. County of Fresno, supra, the California Court of Appeal held that the United States Forest Service employees had "taxable possessory interests" in governmental dwelling units they were occupying in portions of national forests, finding that "the dwellings in question subserved, primarily, an independent, private purpose." 123 Cal.Rptr. at 551. The employees' occupancy and use of the dwelling units was not simply a means for performing the Forest Service's purpose; "while government business was sometimes conducted from the units, the business was completely incidental to the main use of the property." Ibid. The military personnel's occupancy of assigned quarters is clearly distinguishable from the Forest Service employees' occupancy of dwelling units. Thus, although no California court has yet decided whether military personnel have a taxable possessory interest in their assigned quarters, it is clear to the Court that California courts, if confronted with the issue, would hold that military personnel do not have such an interest.

Under the standards set forth by the California Courts of Appeal in United States v. County of Fresno, the military personnel have a taxable possessory interest only if their occupancy of assigned quarters is "something more than the means for performing their employer's purpose, so that it can be said, realistically, that the occupancy or use substantially subserves an independent, private interest." 123 Cal. Rptr. at 551. California courts would undoubtedly look to federal law in determining whether military personnel have a private interest in their assigned quarters.⁵ And, under federal law, the quarters furnished to military personnel are recognized as being solely for the benefit of the United States, not for the benefit of the personnel. See Jones v. United States, 60 Ct.Cl. 552, 569 (1925).⁶ The reason why assigned quarters are recognized as being solely for the benefit of the United States was well stated by the Court of Claims:

"Public quarters for the housing of enlisted men and officers is as much a military necessity as the procurement of implements of warfare or the training of troops. Congress has appropriated vast sums of money to establish permanent military posts and stations throughout the country, and in not one but all Army appropriations provision is of course made for the erection of barracks, officers' quarters, and every other necessary building to maintain, house, and properly care for the enlisted men and officers of the post or station. We need not assert that an officer's duties require his physical presence at his post or station; his service is continuous day and night; his movements are governed by orders and commands, by military law; troops are to be trained, discipline is to be enforced, and more than one exigency of the military service requires the officer to live with his command. In addition to what has been said, many officers may be and are required to keep and render a variety of official reports, perform certain prescribed military duties during both day and night. All these and many more considerations, of which we confess an unfamiliarity, make it imperative upon the part of the Government to provide housing facilities for troops and officers of the Army if an army is to be maintained at all. Therefore it seems to us that military quarters for both the enlisted men and officers of the Army are no more than an integral part of the organization itself. They are, so to speak, units of the military plant, the

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