United States v. State of Alabama

• Decision Date: 26 May 1941
• Docket Number: O,No. 12,12
• Citation: 85 L.Ed. 1327,313 U.S. 274,61 S.Ct. 1011
• Parties: UNITED STATES v. STATE OF ALABAMA. riginal
• Court: U.S. Supreme Court

313 U.S. 274

61 S.Ct. 1011

85 L.Ed. 1327

UNITED STATES

v STATE OF ALABAMA.

No. 12, Original.

Argued April 28, 1941.

Decided May 26, 1941.

Messrs. Robert H. Jackson, Atty. en., and Norman W. Littell, Asst. Atty. Gen., for complainant.

[Argument of Counsel from pages 275-276 intentionally omitted] Messrs. J. Edward Thornton and John W. Lapsley, both of Montgomery, Ala., for defendant.

Mr. Chief Justice HUGHES delivered the opinion of the Court.

The United States brought this suit to quiet its title to land in Macon County, Alabama. The complaint alleges that the State of Alabama is asserting liens as attaching to the land on October 1, 1936, for state and county taxes for the tax year 1937; and further that the State claims an interest in the land by reason of tax sales and the issue to the State of certificates of purchase. The Government asks a decree declaring the liens, tax sales and certificates of purchase to be invalid and enjoining the State from asserting its claims. The case was heard on bill and answer.

There are three tracts involved, which were conveyed by the owners to the United States on October 1, 1936, December 10, 1936, and March 10, 1937, respectively.

The applicable statute of Alabama¹ provides that 'From and after the first day of October of each year when property becomes assessable the State shall have a lien upon each and every piece or parcel of property owned by any taxpayer for the payment of all taxes which may be assessed against him * * * which lien shall continue until such taxes are paid'. The county is to have a like lien for taxes assessed by it. These liens are made superior to all other liens and may be enforced by sale as provided in the Act.

Under the statute, the process of assessment for the tax year 1937 began on October 1, 1936. The grantors in the above mentioned conveyances, as the respective owners on that date, made their returns and in due course the tax assessor listed and valued the several tracts.² His valuations were certified as provided by the statute to the county board of review, which by virtue of its authority to fix valuations, made the definitive assessments. ³ It appears that the board of review met on March 8, 1937, and adjourned on March 20, 1937. It also appears that the rate for state taxes had been fixed by the statute,⁴ and the rate for county taxes was set on February 8, 1937, under the authority given o the court of county commissioners.⁵ The school district tax was approved by the electors of the school district at an election held on June 14, 1937. The taxes for the year 1937 became payable on October 1, 1937, and became delinquent on January 1, 1938.⁶ Proceedings were then instituted in the county court for the sale of the lands, and under its decrees the sales took place on June 12, 1939. The lands were sold to the State and certificates of purchase were issued accordingly.

First.—The Government, invoking the principle that lands owned by the United States cannot be taxed by a State (Van Brocklin v. Tennessee, 117 U.S. 151, 6 S.Ct. 670, 29 L.Ed. 845) contends that the asserted liens are without validity because at the time the tracts were acquired by the United States the amount of the taxes had not been ascertained, as the values had not then been assessed and the rates of taxation had not been fixed. Therefore it is said that the taxes had not then been imposed. The argument is that the Alabama tax statute does not 'impose taxes' but 'secures their payment' and that unless taxes are imposed the statute has no effect. The lien, it is urged, becomes 'fixed and final' only when the taxes have been ascertained 'by completion of levy and assessment'.

There is no question however, as the Government concedes, that the state statute purports to impose a lien as of October 1, 1936, for the taxes which by the process of assessment were to become payable for the tax year 1937. October first is fixed as the tax day, and as of that day owners are to make their returns, values are to be fixed and the taxes laid. There is no question that the State thus undertakes to create an inchoate lien upon the lands as of the tax day, a lien which is to be effective for the amount of the taxes for the ensuing year as these are fixed by the defined statutory method. This lien by the state law is made effective not only as against the owners on the tax day but also as against subsequent mortgagees and purchasers. 'It follows the land in the hands of the vendee, all persons being chargeable with a knowledge of its existence'. Driggers v. Cassady, 71 Ala. 529, 534. See, also, Swann v. State, 77 Ala. 545; State v. Alabama Educational Foundation, 231 Ala. 11, 16, 163 So. 527. We find nothing in the Federal Constitution which invalidates such a statutory scheme. Subsequent lienors and purchasers have due notice of the tax liability imposed as of the tax day and of the process of assessment, and that liability, when its amount is definitely ascertained, relates back to the day specified. We recognized the validity of such a provision in New York v. Maclay, 288 U.S. 290, 292, 53 S.Ct. 323, 324, 77 L.Ed. 754, where we observed that a tax lien created in a similar manner under a statute of New York 'is effective for many purposes, though its amount is undetermined. It is notice to mortgagees or purchasers, who are held to loan or purchase at their own risk if they take their mortgages or deeds before the tax has been assessed or paid'. The precise decision in that case allowing priority to the United States under R.S. § 3466, 31 U.S.C.A. § 191, for debts due by an insolvent corporation over claims of the State for franchise taxes due but not assessed or liquidated until after a receivership, in no way detracted from the recognition of the effectiveness of the state law creating a lien as against mortgagees and purchasers. As the court said 'Against mortgagees and purchasers a lien perfected afterwards may take effect by relation as of the date of the inchoate lien through which mortgagees and purchasers become chargeable with notice'. 288 U.S. page 293, 53 S.Ct. 324, 77 L.Ed. 754. See also, Osterberg v. Union Trust Co., 93 U.S. 424, 425, 428, 23 L.Ed. 964; People v. Commissioners, 104 U.S. 466, 468, 26 L.Ed 632. Compare Shotwell v. Moore, 129 U.S. 590, 598, 9 S.Ct. 362, 364, 32 L.Ed. 827. The lien in such a case, though inchoate on the day specified, and maturing when the extent of liability is ascertained by the statutory process, is similar in that respect, as the court said...