Summary
In International Business Machines Corporation v. Ott (S.Ct., 1956), 230 La. 666, 89 So.2d 193, there was involved a question of whether or not the State could levy ad valorem taxes on certain business machines owned by the plaintiff, but leased to the Federal Government, and situated at a site over which jurisdiction had been ceded to the United States.
Summary of this case from Natural Gas and Oil Corporation v. WaggonnerOpinion
No. 41687.
November 7, 1955. On Rehearing June 11, 1956. Rehearing Denied June 29, 1956.
APPEAL FROM CIVIL DISTRICT COURT, PARISH OF ORLEANS, STATE OF LOUISIANA, HONORABLE WALTER B. HAMLIN, J.
Henry B. Curtis, City Atty., H. L. Dufour Woolfley, Asst. City Atty., Louis B. Porterie, New Orleans, for defendants-appellants.
Ashton Phelps, Donald L. King, Phelps, Dunbar, Marks, Claveris Sims, New Orleans, for plaintiff-appellee.
These consolidated suits are for the recovery of taxes paid the City of New Orleans and the State of Louisiana under protest.
The cases were tried on stipulation of facts and decided in favor of plaintiff, International Business Machines Corporation; recovery being granted against the defendant, Lionel G. Ott, Commissioner of the Department of Public Finance and Tax Collector for the City of New Orleans, in the sum of $4,491.17, and against the defendant, George Montgomery, State Tax Collector for the City of New Orleans, in the sum of $1,899.12. Defendants have appealed from these judgments.
The basic question posed is — Can the State of Louisiana, or a subdivision thereof, levy an ad valorem tax on personal property located on sites over which exclusive jurisdiction has been ceded to the United States?
The two subsidiary questions raised by the City and the State deal with the taxability of property on sites leased to the United States, and on sites acquired by the United States subsequent to the passage of the Federal Act of 1940, 40 U.S.C.A. § 255.
There must be ever present in our judicial conscience the consequences and results of our decisions. The application of the principle which grants or denies the right of the State to tax requires the observance of close distinctions in each case. Under our dual system of government, we must maintain the freedom of each sovereignty. However, we must be ever mindful of the principle that the National Government must be free from such interference by the City or State as would impair its effective use of property acquired for Federal purposes. James Stewart Co., Inc., v. Sadrakula, 309 U.S. 94, 60 S.Ct. 431, 84 L.Ed. 596; United States v. Unzeuta, 281 U.S. 138, 50 S.Ct. 284, 74 L.Ed. 761; S. R. A., Inc., v. State of Minnesota, 327 U.S. 558, 66 S.Ct. 749, 90 L.Ed. 851. Therefore, the State or a municipality cannot levy nor assess a tax which interferes with a Federal function.
International Business Machines Corporation leased to the United States Government certain electrical appliances, which were placed on the following property acquired by the United States:
1. The New Orleans Port of Embarkation, acquired on August 24, 1928 from the City of New Orleans and the Public Belt Railroad Commission. Here is located the United States Department of Commerce Weather Bureau.
2. The New Orleans Port of Embarkation is also occupied by the Finance Officer of the United States Army.
3. The Customs House Building, New Orleans, Louisiana, title having been acquired by the United States by donation on January 27, 1848. Here is located the U.S. Civil Service Commission, Tenth Civil Service Region.
4. The United States Navy Repair Base, Algiers, Louisiana, title having been acquired by judgments of expropriation in 1903.
5. A portion of ground at the Foot of Prytania Street, New Orleans, Louisiana, occupied under an agreement with the Board of Levee Commissioners of the Orleans Levee District in 1914, which permits occupancy without cost. The property is presently used as the United States Engineering Depot.
Plaintiff contends that the State of Louisiana has yielded "exclusive jurisdiction" over the above properties and has agreed that the same shall be exempt from all taxation, assessments or charges levied under the authority of the State, as shown by the following:
The United States Constitution, Article I, § 8, Clause 17, provides:
"The Congress shall have Power * * * To exercise exclusive Legislation in all Cases whatsoever, over such District * * * and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings".
Section 2 of Act 12 of Louisiana's Legislature for the year 1892 provides:
"The United States may enter upon and occupy any land which may have been, or may be purchased or condemned, or otherwise acquired, and shall have the right of exclusive jurisdiction over the property so acquired during the time that the United States shall be or remain the owner thereof for all purposes, except the administration of the criminal laws of said State, and the service of civil process of said State therein, and shall hold the same exempt from all State, parochial, municipal or other taxation." (Italics ours.)
Title 40 of the United States Code Annotated, § 255, reads:
"* * * Notwithstanding any other provision of law, the obtaining of exclusive jurisdiction in the United States over lands or interests therein which have been or shall hereafter be acquired by it shall not be required; but the head or other authorized officer of any department or independent establishment or agency of the Government may, in such cases and at such times as he may deem desirable, accept or secure from the State in which any lands or interests therein under his immediate jurisdiction, custody, or control are situated, consent to or cession of such jurisdiction, exclusive or partial, not theretofore obtained, over any such lands or interests as he may deem desirable and indicate acceptance of such jurisdiction on behalf of the United States by filing a notice of such acceptance with the Governor of such State or in such other manner as may be prescribed by the laws of the State where such lands are situated. Unless and until the United States has accepted jurisdiction over lands hereafter to be acquired as aforesaid, it shall be conclusively presumed that no such jurisdiction has been accepted." (Italics ours.)
It would be a brutum fulmen to apply this section to movables leased to the United States (in this case), which is in effect the obtaining of the consent of the State to lease the property involved for its public purposes.
Our LSA-Revised Statutes of 1950, 52:1, read:
"The United States, in accordance with the seventeenth clause, eighth section of the first article of the Constitution of the United States, may acquire and occupy any land in Louisiana required for the purposes of the federal government. The United States shall have exclusive jurisdiction over the property during the time that the United States is the owner or lessee of the property. The property shall be exempt from all taxation, assessments, or charges levied under authority of the state.
"The state may serve all civil and criminal process issuing under authority of Louisiana on the property acquired by the United States."
Act 31 of Louisiana's Legislature of 1942 amended Act 12 of 1892. It reads:
"Section 1. Be it enacted by the Legislature of Louisiana, That the consent of the State of Louisiana is hereby given, in accordance with the seventeenth clause, eighth section, of the first article of the Constitution of the United States, to the acquisition by the United States, by purchase, condemnation or otherwise, of any land in this State required for sites for forts, magazines, arsenals, dockyards, and other needful buildings, or for any other purposes of the Government of the United States. (Italics ours.)
"Section 2. That the United States may enter upon and occupy any land in the State of Louisiana which it has heretofore acquired, or may hereafter acquire, by purchase, condemnation, lease or otherwise, required for sites for forts, magazines, arsenals, dockyards, and other needful buildings, or for any other purposes of the Government of the United States, and shall have the right of exclusive jurisdiction over the property so acquired, during the time that the United States shall be or remain the owner or lessee thereof, for all purposes, except that the State retains the right to serve therein all civil and criminal process issuing under authority of the said State, and all lands so held and title to which is vested in the United States shall be and remain exempt from all state, parochial, municipal or other taxation, assessment or other charges which may be levied or imposed by or under authority of this State."
From the constitutional and statutory provisions above referred to, it is clear that the property located on land acquired by the United States in these proceedings is no longer subject to assessment for state and local taxes.
The next question presented is the status of the privately owned machinery located on this tract of land during the year 1948, with respect to its assessment for such taxes. This identical point was passed on by the United States Supreme Court in the case of Surplus Trading Co. v. Cook, 281 U.S. 647, 50 S.Ct. 455, 458, 74 L.Ed. 1091, a suit by the Sheriff and Collector of Taxes of Pulaski County, Arkansas, to enforce payment by the Surplus Trading Company of state and local taxes on certain personal property owned by it. The company resisted payment of the taxes on the ground that the property on which the assessment was laid was located within Camp Pike, an army mobilization, training and supply station of the United States located on land purchased by the United States with the consent of the Legislature of Arkansas. The property attempted to be taxed consisted of a large quantity of woolen blankets which the defendant, a New York concern, purchased from the United States at an advertised sale a few days before the day fixed by the state law for listing personal property for taxation, and which in much the greater part was on that day in the army storehouses within Camp Pike awaiting shipment therefrom.
In discussing the liability of this personal property to assessment for state and local taxes, the court quoted from the case of Ft. Leavenworth R. Co. v. Lowe, 114 U.S. 525, 5 S.Ct. 995, 29 L.Ed. 264, as follows:
"'When the title is acquired by purchase by consent of the legislatures of the states, the federal jurisdiction is exclusive of all state authority. This follows from the declaration of the constitution that congress shall have "like authority" over such places as it has over the district which is the seat of government; that is, the power of "exclusive legislation in all cases whatsoever." Broader or clearer language could not be used to exclude all other authority than that of congress.'
"* * * 'These authorities are sufficient to support the proposition, which follows naturally from the language of the constitution, that no other legislative power than that of congress can be exercised over lands, within a State purchased by the United States with her consent for one of the purposes designated; and that such consent, under the constitution, operates to exclude all other legislative authority.'"
The conclusions of the Court on this point are concisely expressed in the syllabus, from which we quote as follows:
"Private personal property located within an Army camp, the lands for which were acquired by the United States with the consent of the legislature of the state in which such lands are situated, cannot be subjected to state taxation, in view of the provisions of article 1, § 8, cl. 17, of the Constitution, giving Congress exclusive legislative authority over places so acquired."
The City and State have cited tax cases, gross receipt tax cases, and unrelated cases, but the indisputable fact is that the Cook case, supra, has never been overruled and is the law of today. The Cook case is this case, and the cases cited by the defendants are the other cases. See also, Coleman Bros. Corporation v. City of Franklin, D.C., 58 F. Supp. 551, certiorari denied, 328 U.S. 844, 66 S.Ct. 1026, 90 L.Ed. 1618.
The City of New Orleans contends that the case of Silas Mason Company v. Tax Commission of State of Washington, 302 U.S. 186, 58 S.Ct. 233, 82 L.Ed. 187, is decisive of its position. The Silas Mason case and the present case are about as far apart as the poles of the earth.
The Silas Mason case and the case of Murphy Corporation v. Fontenot, 225 La. 379, 73 So.2d 180, are affiliated circumstances. We cannot make a distinction between these two cases in principle. If we attempted to do so, the distinction would be one without a difference.
In the Silas Mason case Congress of the United States expressly ratified the agreement of the parties, and by such ratification, as stated by the Court, it consented and acquiesced in the State levying and collecting the tax.
In the Murphy case the same principle is invoked as to non-interference of any governmental function. The property was not needed or used for governmental purposes, and the lease was expressly made and confected. The Government separated the property from its property and gave the lessee full dominion and control to explore the land for fugitive oil. Naturally we recognized under those circumstances, as the Court did in the Silas Mason case, the right of the State to tax.
Site Number Six, on which these leased machines were used, is a portion of ground on Franklin Avenue and Lake Pontchartrain, New Orleans, Louisiana, which was acquired by the United States by fee simple title in 1942 for use by the War Assets Administration of the United States Government. The City and State contend that under 40 U.S.C.A. § 255, supra, the Federal Government has never accepted jurisdiction of this site. The defendants have lost sight of Act 31 of 1942, supra, which cedes jurisdiction to the United States.
Site Number Seven, on which the leased machines were used, relates to space occupied by the United States Department of Agriculture in the Masonic Temple, under an unrecorded lease with the Masonic Temple. We do not have the lease before us. We do not know whether it is written or. verbal, nor do we know any of its terms. Out of an abundance of precaution, this case, insofar as it relates to this particular site, should be remanded to the district court in order to get the available information.
A law prescribes for the future. It usually has no retrospective operation, nor can it impair the obligations of a contract. We are admonished by the LSA-Civil Code of Louisiana to make no interpretation in any suit that would bring about absurd consequences.
If, in the future, the City and State could obtain judgments allowing the tax, they would then have the power to execute their judgments on the property taxed. This would mean the seizing and the selling of the property in the hands of the United States Government and would lead to absurd consequences; in that, it would be contrary not only to express law, but to the natural law that the lesser sovereignty is superior to the greater.
Since the appeal of the State Tax Collector does not involve an amount exceeding $2,000, it must be transferred to the Court of Appeal for the Parish of Orleans, under the ruling in the case of State Farm Mutual Automobile Insurance Company v. Ott, 221 La. 1061, 61 So.2d 872.
For the reasons assigned, the judgment of the trial court, in the case of International Business Machines Corporation v. Lionel G. Ott, Commissioner of the Department of Public Finance and Tax Collector for the City of New Orleans, No. 284-307 of the Docket of the Civil District Court for the Parish of Orleans, is affirmed as to the six sites first enumerated; and, as to the seventh site, the case is remanded to the Civil District Court for the Parish of Orleans for further evidence in accordance with the views herein expressed.
The appeal in the case of International Business Machines Corporation v. George Montgomery, Jr., State Tax Collector for the City of New Orleans, No. 287-900 of the Civil District Court for the Parish of Orleans, is ordered transferred to the Court of Appeal for the Parish of Orleans, pursuant to the provisions of Act No. 19 of 1912, LSA-Revised Statutes 13:4441; the records to be filed in the Court of Appeal for the Parish of Orleans within thirty days from the date on which this decree shall become final, otherwise, the appeal is to stand dismissed.
HAWTHORNE, J., concurs in the decree.
McCALEB, SIMON, and HAMITER, JJ., dissent in part.
On Rehearing
When these consolidated cases were before us on original hearing we found that, for lack of the jurisdictional amount, we were without appellate jurisdiction of plaintiff's suit against George Montgomery, State Tax Collector, and transferred the latter's appeal to the Court of Appeal for the Parish of Orleans; and with respect to plaintiff's suit against Lionel G. Ott, the Tax Collector for the City of New Orleans, it was decided by a divided court to affirm the judgment of the Civil District Court ordering a refund to plaintiff of personal property taxes for the year 1948 paid to the City under protest, the said taxes having been levied on certain of plaintiff's electrical appliances and machinery which had been leased to agencies of the federal government and were located on six separate sites within the City of New Orleans either owned or occupied by the United States, the majority of the Court having subscribed to the view that the case of Surplus Trading Co. v. Cook, 281 U.S. 647, 50 S.Ct. 455, 74 L.Ed. 1091, had passed on the identical question presented herein and was therefore controlling. The further point was made, with respect to one of the sites the ownership of which had been acquired by the United States subsequent to the 1940 amendment to 40 U.S.C.A. § 255, and the objection that the federal government had never accepted jurisdiction as therein required, that under the provisions of Louisiana Act 12 of 1892, all jurisdiction was ceded and relinquished by the State of Louisiana to the United States.
The decree in the case of International Business Machines Corporation v. George Montgomery, State Tax Collector, was not disturbed on application for rehearing, and that judgment has become final.
Three members dissented, a fourth concurred in the decree.
A seventh site on which the leased machines were used was space occupied by an agency of the Federal government in the Masonic Temple under an unrecorded lease of which there was no copy in the record, so, as to the taxes on plaintiff's machines located on that site, the case was remanded to the district court for further evidence.
That case held that, in view of Article 1, § 8, cl. 17 of the U.S. Constitution, private personal property located within any army camp, the lands for which had been acquired by the United States with the consent of the Legislature of the State in which the lands are situated, cannot be subjected to state taxation.
Act 12 of 1892, as amended by Act 31 of 1942 (the source, in the Revised Statutes of 1950, of LSA-R.S. 52:1), declares, in pertinent part: "That the United States may enter upon and occupy any land in the State of Louisiana which it has heretofore acquired, or may hereafter acquire by, purchase, condemnation lease or otherwise, required for sites for forts, magazines, arsenals, dockyards, and other needful buildings, of or any other purposes of the Government of the United States, and shall have the right of exclusive jurisdiction over the property so acquired, during the time that the United States shall be or remain the owner or lessee thereof, for all purposes, except that the States retains the right to serve therein all civil and criminal process issuing under authority of the said State, and all lands so held and title shall be and remain exempt from all to which is vested in the United States state, parochial, municipal or other taxation, assessment or other charges which may be levied or imposed by or under authority of this State."
The provision of the United States Constitution stressed by the plaintiff is found in Article 1, § 8 — Clause 17 of which provides: "The congress shall have Power * * * To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the Acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings; * * *." Also pertinent to a decision in this case is a portion of U.S. Code Annotated, Title 40, § 255, as amended by the Act of February 1st, 1940, requiring an express acceptance by the United States of jurisdiction, exclusive or partial, over lands or interests acquired subsequent to 1940.
Title 40 U.S.C.A. § 255, as amended, provides in pertinent part: "Notwithstanding any other provision of law, the obtaining of exclusive jurisdiction in the United States over lands or interests therein which have been or shall hereafter be acquired by it shall not be required; but the head or other authorized officer of any department or independent establishment or agency of the Government may, in such cases and at such times as he may deem desirable, accept or secure from the State in which any lands or interests therein under his immediate jurisdiction, custody, or control are situated, consent to or cession of such jurisdiction, exclusive or partial, not theretofore obtained, over any such lands or interests as he may deem desirable and indicate acceptance of such jurisdiction on behalf of the United States by filing a notice of such acceptance with the Governor of such State or in such other manner as may be prescribed by the laws of the State where such lands are situated. Unless and until the United States has accepted jurisdiction over lands hereafter to be acquired as aforesaid, it shall be conclusively presumed that no such jurisdiction has been accepted."
In the year 1948, when the subject personal property taxes were levied and paid under protest by the plaintiff, the locations occupied by the governmental agencies wherein the plaintiff's business machines were used fall into three categories: (a) properties, title to which was acquired by the federal government prior to February 1, 1940, and held by the government in full ownership — i. e., the Port of Embarkation, the Customs House, and the Naval Repair Base (Algiers); (b) properties, title to which was acquired subsequent to the February 1, 1940 amendment to 40 U.S.C.A. § 255 — i. e., property at Franklin Avenue and the Lakefront; and (c) lands or buildings not owned by the United States, but occupied by the government under a lease or without cost — i. e., office space in the Masonic Temple building and the U.S. Army Engineer Depot, located at the foot of Prytania Street and owned by the Orleans Levee Board.
The Port of Embarkation was acquired by purchase from the Board of Commissioners and by quit claim from the City of New Orleans and the Public Belt Railroad in 1928. The Customs House was acquired by donation from the City of New Orleans in 1848. The Naval Repair Base at Algiers occupies land which was expropriated by the United States in 1903. The property at Franklin Avenue and the Lakefront is a portion of ground which was acquired by the United States in full ownership by judgment dated August 10, 1942, and March 19, 1945. The office space in the Masonic Temple Building is leased to a governmental agency by the owners, the Grand Lodge of Louisiana. The U.S. Army Engineer Depot, located at the foot of Prytania Street, is being occupied without cost for 100 years from 1914, by agreement with the owners, The Board of Levee Commissioners of the Orleans Levee District.
In his application for rehearing, the defendant-appellant contends that this Court erred in its construction of the U.S. constitutional and statutory provisions referred to above, and the interpretation placed on decisions of the United States Supreme Court, particularly that of Surplus Trading Co. v. Cook, supra; he denies that the plaintiff is granted immunity from state and municipal taxation under those laws; argues that, unless the federal laws can be interpreted so as to give immunity to plaintiff, the laws of Louisiana cannot be said to grant such immunity; and contends that even if they could be so construed, the result would be violative of the Constitution of this State, which sets forth exactly which property, "and no other," is exempt from taxation, Article X, § 4.
On the other hand, counsel for plaintiff-appellee in brief on rehearing, after stating that no new issues are presented submit that the matters forming the basis of divergence between the majority and dissenting opinions are (a) acceptance by the United States of exclusive jurisdiction over the sites involved, (b) the constitutional validity of Act 31 of 1942, and (c) effect of Section 255 of Title 40, U.S.C.A. Counsel argue, as to (a), that such acceptance will be presumed in the absence of evidence of a contrary intent; as to(b), that a sovereign may, by ceding to another sovereign its jurisdiction over certain locations, divest itself of the right to exercise further jurisdiction therein; and as to (c), that it is therefore immaterial whether or not the United States has, in fact, accepted jurisdiction under Section 255 of Title 40, U.S.C.A., as amended.
In their original brief counsel phrased the legal question in these words: "Can the State of Louisiana or a subdivision, levy an ad valorem property tax on personal property located on a site over which exclusive jurisdiction has been cede to the United States?"
While a State has no power to cede away its territory to a foreign country, yet it can transfer jurisdiction to the general government; such was the holding of the Supreme Court of the United States in the cases of Fort Leavenworth R. Co. v. Lowe, 114 U.S. 525, 5 S.Ct. 995, 29 L.Ed. 264, and Chicago, R. I. P. R. Co. v. McGlinn, 114 U.S. 542, 5 S.Ct. 1005, 29 L.Ed. 270. In the opinion in the first case, the Court observed: "* * * As instrumentalities for the execution of the powers of the general government, they [forts, arsenals, and other buildings for public uses] are * * * exempt from such control of the states as would defeat or impair their use for those purposes; and if, to their more effective use, a cession of legislative authority and political jurisdiction by the state would be desirable, we do not perceive any objection to its grant by the legislature of the state," 114 U.S. 525, 5 S.Ct. 1004, 29 L.Ed. at page 270; and in the second case the Court interpreted its ruling in the former to have "held that it is competent for the legislature of a state to cede exclusive jurisdiction over places needed by the general government in the execution of its powers * * *" 114 U.S. 542, 5 S.Ct. 1006, 29 L.Ed. at page 271. Although those cases did not involve the provision of the U.S. Constitution here invoked since there was not, within the terms of Article 1, § 8, a purchase of the tract by the consent of the Legislature of the State, the opinions did hold, as pointed out approvingly in the later case of Benson v. United States, 146 U.S. 325, 13 S.Ct. 60, 36 L.Ed. 991, which also involved a cession of jurisdiction by the State that "* * * although it did not appear that any application had been made therefor by the United States, Yet, as it conferred a benefit, acceptance of the cession was to be presumed," 146 U.S. 325, 13 S.Ct. 61, 36 L.Ed. at page 994.
In the Benson case the defendant, accused of a murder committed on the Fort Leavenworth military reservation, unsuccessfully raised a plea to the jurisdiction of the U.S. Circuit Court for the District of Kansas, by which he had been convicted and sentenced to be hanged. The reverse situation was presented more than 70 years before (1819) to General Sessions, New York, when a defendant, indicted for assault and battery on a deputy sheriff in the execution of his office — the offense having been committed on Governor's Island which the Legislature of New York had declared "shall hereafter be subject to the jurisdiction of the United States" — sought by plea to exclude the jurisdiction of the Sessions, which plea was overruled and the defendant ordered to answer since there was no showing "* * * that the United States have accepted the act of this state respecting Governor's Island, nor that they have exercised the power of exclusive legislation * * *." People v. Lent, 2 Wheeler, Cr.Cas., N.Y., 548.
The view of presumed acceptance of ceded jurisdiction, which was followed in certain cases, was subjected to a thorough re-examination in two suits presented to the Court in the term beginning October, 1937: James v. Dravo Contracting Company, 302 U.S. 134, 58 S.Ct. 208, 82 L.Ed. 155, and Silas Mason Co. v. Tax Commission, 302 U.S. 186, 58 S.Ct. 233, 82 L.Ed. 187. In the Dravo case, immunity from a West Virginia "annual privilege tax" based on gross receipts was sought by a Pennsylvania contractor with respect to sums collected under contracts with the United States for the building of structures within West Virginia, one of the issues being the territorial jurisdiction of the State to impose the tax as to work done on property acquired by the federal government. Questions were presented concerning the construction and effect of the consent, given by State statute, to the acquisition by the United States of lands, as to which "Concurrent jurisdiction" was "ceded to the United States for all purposes * * *." In the course of its opinion the Court, after noting that "The tax is not laid upon the government, its property, or officer", nor "upon an instrumentality of the government", nor yet "upon the contract of the government", made the following pertinent observations: "The application of the principle which denies validity to such a tax has required the observing of close distinctions in order to maintain the essential freedom of government in performing its functions, without unduly limiting the taxing power which is equally essential to both nation and state under our dual system." 302 U.S. 134, 58 S.Ct. 216, 82 L.Ed. at page 167; emphasis ours. And in the Silas Mason case, supra, where the appellant questioned the validity of a similar tax, one of the issues presented was whether certain of the areas in which the contractors' work was performed were within the exclusive jurisdiction of the United States, in view of acquisition by the U.S. and the provisions of the State statute. The Court found no violence done to a Federal right nor frustration of Federal intent by the State court's construction of its statute, i. e., that it did not apply to the Federal acquisitions involved, but also found that, even if the State statute should be construed to apply, the government was not compelled to accept nor had it accepted a transfer of exclusive jurisdiction, and " The mere fact that the Government needs title to property within the boundaries of a State * * * does not necessitate the assumption by the Government of the burdens incident to an exclusive jurisdiction." 302 U.S. 186, 58 S.Ct. 244, 82 L.Ed. at page 202; emphasis ours. On the facts, it was found that the continued jurisdiction of the State had been fully recognized by compliance with various State laws and regulations, and that the State had territorial jurisdiction to impose the tax.
People v. Mouse, 203 Cal. 782, 265 P. 944. certiorari denied 278 U.S. 614, 49 S.Ct. 19, 73 L.Ed. 538; appeal dismissed 278 U.S. 662, 49 S.Ct. 13, 73 L.Ed. 569; State v. Seymour, 78 Miss. 134, 28 So. 799.
In the decade preceding 1937, claims based on inter-governmental tax immunity had come to be examined with a critical eye. There was denial of immunity from Federal income tax as to gain derived from the sale of municipal securities, Willcuts v. Bunn, 282 U.S. 216, 51 S.Ct. 125, 75 L.Ed. 304, and from Federal excise tax to a state enterprise of a private character, i.e., sale of spiritous liquors. Ohio v. Helvering, 292 U.S. 360, 54 S.Ct. 725, 78 L.Ed. 1307. The claimed immunity of a state or its agencies from Federal taxation was subjected to a more rigid interpretation, and commodities sold to a state were held not to be embraced within the immunity doctrine with respect to federal taxes on their transportation, Wheeler Lumber Bridge Supply Company v. United States, 281 U.S. 572, 50 S.Ct. 419, 74 L. Ed. 1047, on their importation, Board of Trustees of the University of Illinois v. United States, 289 U.S. 48, 53 S.Ct. 509, 77 L.Ed. 1025, and on their manufacture, Liggett Myers Tobacco Co. v. United States, 299 U.S. 383, 57 S.Ct. 239, 81 L.Ed. 294.
The views of the government on the issues in the case were invited, and were presented upon re-argument and in brief. The United States disclaimed all interest in the immunity sought by its contractors and urged the Court to sustain gross receipts taxes on public contractors. In its opinion the Court noted that, "As the Solicitor General has pointed out, a transfer of legislative jurisdiction carries with it not only benefits, but obligations, and it may be highly desirable, in the interest both of the national government and of the state, that the latter should not be entirely ousted of its jurisdiction. The possible importance of reserving to the state jurisdiction for local purposes which involve no interference with the performance of governmental functions is becoming more and more clear as the activities of the government expand and large areas within the states are acquired. There appears to be no reason why the United States should be compelled to accept exclusive jurisdiction or the state be compelled to grant it in giving its consent to purchases." 302 U.S. 134, 58 S.Ct. 215, 82 L.Ed. at page 166.
Section 8108 of Remington's Revised Statutes of Washington, which is quoted in the margin of the Court's opinion, gives the consent of the State of Washington to the acquisition by purchase or condemnation by the United States of land within the State, "the consent herein and hereby given being in accordance with the seventeenth clause of the eighth section of the first article of the Constitution of the United States, and with the acts of congress in such cases made and provided; and the jurisdiction of this state is hereby ceded to the United States of America over all such land or lands as may have been or may be hereafter acquired by purchase or by condemnation, or set apart by the general government for any or either of the purposes before mentioned * * *." (Providing that there be concurrent jurisdiction for service of civil or criminal process.)
We think the views expressed in those opinions are decisive insofar as exclusive Federal jurisdiction is here claimed for the sites acquired by the United States prior to February 1, 1940. The fact that the Legislature of a State has ceded exclusive jurisdiction is not the controlling consideration; reference must be had to the circumstances of the case, which may well be evidence of intention on the part of the United States not to accept the grant. In the instant case it was shown that various services (fire protection, sewerage, water and drainage facilities, police traffic regulation) furnished by the City of New Orleans were used by the various locations, and that the United States has failed to indicate an intention to exercise control in those respects; in fact, the acceptance of such services manifested a contrary intent on the part of the Federal Government. Silas Mason Co. v. Tax Commission of Washington, Supra. We think, upon further analysis and study, that the rule of Surplus Trading Co. v. Cook, 281 U.S. 647, 50 S.Ct. 455, 456, 74 L.Ed. 1091, it not to be applied to the instant factual situation. In that case the U.S. Supreme Court was careful to point out that Camp Pike came directly within the words "forts, magazines, arsenals, dockyards, and other needful buildings'" of the constitutional provision, which decreed "'exclusive legislation in all cases whatsoever' over a place so purchased for such a purpose."
With respect to properties, title to which was acquired by the United States subsequent to February 1, 1940, there is no merit in plaintiff's claim that its machines located thereon are not subject to the State and municipal tax; the United States has not accepted jurisdiction, either exclusive or partial, according to the requirements of Title 40 U.S.C.A. § 255, as amended on that date, requiring the indication of acceptance by the United States — lacking which "it shall be conclusively presumed that no such jurisdiction has been accepted." In Adams v. United States, 319 U.S. 312, 63 S.Ct. 1122 1123, 87 L.Ed. 1421, it was held that the Federal court had no jurisdiction of a prosecution for an alleged offense which occurred within the confines of Camp Claiborne, Louisiana, since the Government had not accepted jurisdiction in the manner required by Title 40 U.S.C.A. § 255, and "In this view it is immaterial that Louisiana statutes authorized the government to take jurisdiction * * *."
The Court took occasion to mention that the amendment to Title 40, U.S.C.A. § 255, followed its decisions in James v. Dravo Contracting Co. and Silas Mason Co. v. Tax Commission, observing that "These cases arose from controversies concerning the relation of federal and state powers over government property and had pointed the way to practical adjustments. The bill resulted from a cooperative study by government officials, and was aimed at giving broad discretion to the various agencies in order that they might obtain only the necessary jurisdiction. The Act created a definite method of acceptance of jurisdiction so that all persons could know whether the government had obtained 'no jurisdiction at all, or partial jurisdiction, or exclusive jurisdiction.'" 319 U.S. 314, 63 S.Ct. 1123, 87 L.Ed. at page 1423.
Plaintiff's claim for freedom from taxation of its machines located on lands and buildings not owned by the United States, but occupied under a lease or without cost, must necessarily fail since its claim is based entirely on the provision of the State statute.
We know of no authority, nor has any been cited, to support the argument of counsel for plaintiff that the Legislature of Louisiana, by ceding jurisdiction to the United States, has deprived the State and its subdivisions of exercising any jurisdiction, "and particularly any tax jurisdiction;" and we think it is wholly without merit.
For the reasons assigned, the judgment of the District Court in International Business Machines Corporation v. Lionel G. Ott, Commissioner of Finance, City of New Orleans, is reversed and set aside and plaintiff's suit is dismissed.
On Rehearing
These consolidated cases present the question whether the State of Louisiana and the City of New Orleans may levy personal property taxes upon business machines owned by appellee and leased by it to the Federal Government. The machines in question are located upon the following sites:
1. A portion of ground located at Franklin Ave. and the Lakefront, acquired by the United States in fee simple title by judgment dated August 10, 1942 and March 19, 1945.
2. The U.S. Army Engineer Depot, located at the foot of Prytania Street, occupied without cost for 100 years from 1914 by agreement with the owners, The Board of Levee Commissioners, Orleans Levee District.
3. Office space in the Masonic Temple Building, leased by the owners, the General Lodge of Louisiana.
4. Port of Embarkation, acquired by purchase from the Board of Commissioners and by quitclaim from the City of New Orleans and the Public Belt Railroad in 1928.
5. Customs House, acquired by donation from the City of New Orleans in 1848.
6. Naval Air Base, Algiers, Louisiana, for which land was expropriated by the United States in 1903.
The State and City contend that the United States does not exercise exclusive jurisdiction over the aforementioned property and, therefore, their authority to levy and collect the taxes in question has not been divested.
Conversely, appellee maintains that, since its machines are located on property either owned or leased by the United States, the latter is vested with exclusive jurisdiction over them in virtue of Clause 17, Section 8 of Article I of the Federal Constitution, which precludes the levy of the taxes by the State or its subdivisions.
Since some of the aforementioned properties or sites are different in their nature, they will be grouped and discussed separately in the category in which they fall.
1. Property at Franklin Ave. and the Lakefront.
It is clear that the United States does not have exclusive jurisdiction over this site as it was acquired subsequent to the enactment of the 1940 amendment to 40 U.S.C.A. § 255 (which is partially quoted in the main opinion) and the federal government has not accepted jurisdiction, either exclusive or partial, in the manner provided therein.
Appellee's contention that the State of Louisiana, by virtue of Act 31 of 1942, has waived its right of taxation has no merit at all. This asserted waiver of the right of taxation resulting from legislative relinquishment of exclusive jurisdiction in favor of the federal government amounts to naught without the acceptance of the latter. The State cannot, by its consent, force acceptance of exclusive jurisdiction on the Federal Government when it has failed to accept jurisdiction in accordance with its own laws. This has been squarely decided in Adams v. United States, 319 U.S. 312, 63 S.Ct. 1122, 1123, 87 L.Ed. 1421. In that case, the defendants were convicted of rape under the Federal law, the crime having been perpetrated at Camp Claiborne, Louisiana, which had been acquired by the United States subsequent to the 1940 amendment to 40 U.S.C.A. § 255. In holding that the Federal Court was without jurisdiction of the case, the United States Supreme Court said:
"Since the government had not accepted jurisdiction in the manner required by the Act, the federal court had no jurisdiction of this proceeding. In this view it is immaterial that Louisiana statutes authorized the government to take jurisdiction, since at the critical time the jurisdiction had not been taken." (Italics mine.)
Obviously, then, since the cession of the State without acceptance was ineffective, the majority holding that such cession constituted a waiver of the State's right of taxation produces an unconstitutional result as the Legislature has no right to exempt property within the jurisdiction of the State from taxation. See Section 4, of Article 10 of the State Constitution.
(2) and (3), Prytania Street Property and Office space under lease in the Masonic Temple building.
It is also manifest that the Federal Government does not have exclusive jurisdiction over these sites. The basic reason for this is that it does not own them and, therefore, they could not come within the scope of Clause 17, Section 8 of Article I of the United States Constitution which relates solely to land acquired in fee.
Nor can the legislative acts, Act 31 of 1942 and R.S. 52:1, upon which the majority rely, effect a transfer of exclusive jurisdiction to the Federal Government for, as above pointed out, it is difficult to perceive how Louisiana may compel the United States to accept such jurisdiction. Further than this, the power of Congress to accept jurisdiction over this type of property may well be doubted as Clause 17 of Section 8 of Article I of the United States Constitution confers power on Congress to exercise legislation "over all Places purchased by the Consent of the Legislature of the State * * *" and not over lands occupied in any other manner except as owner. Indeed, it does not appear that Congress has ever attempted to exercise exclusive jurisdiction over properties leased by it. If there be such a law, appellee has not brought it to our attention.
(4), (5) and (6) Port of Embarkation, Customs House and Algiers Naval Repair Base.
These sites present a different problem, as they were acquired prior to the 1940 amendment to 40 U.S.C.A., § 255, and are owned by the Government under fee simple titles. At the outset of a discussion of this question, it is apt to observe that, in order for Congress to become vested with exclusive jurisdiction under Clause 17 of Section 8 of Article I of the Federal Constitution over properties purchased by the Government within the confines of nay State, three distinct acts are essential: (1) acquisition under a fee simple title, (2) consent of the State Legislature for such purchase and cession of jurisdiction over same and (3) an acceptance by the United States of the ceded jurisdiction.
Respecting the properties now under scrutiny, the State and City, while acknowledging that the first two requirements for the vesting of exclusive federal jurisdiction have been met, maintain that there has been no acceptance in fact of jurisdiction by the United States.
Surplus Trading Company v. Cook, 281 U.S. 647, 50 S.Ct. 455, 74 L.Ed. 1091, decided in 1929, which the majority concludes to be controlling of these cases, involved asserted State taxation of blankets located at Camp Pike, a military reservation in Arkansas. The court there presumed, and justifiably so in view of the very nature of the federal site, that the government had accepted exclusive jurisdiction which had been ceded to it by the Legislature of Arkansas. Indeed, prior to the decision in 1937 in James v. Dravo Contracting Co., 302 U.S. 134, 58 S.Ct. 208, 82 L.Ed. 155, the jurisprudence of this country was that acceptance of a State's cession of jurisdiction over territory within its borders would ordinarily be presumed since the State's act of cession is to be deemed beneficial to the Federal Government. See Benson v. United States, 1892, 146 U.S. 325, 13 S.Ct. 60, 36 L.Ed. 991 and Annotation in 74 L.Ed. 761, at pages 770 and 771.
However, following the decision in the Dravo case, a new concept of the matter of acceptance has been entertained by the Supreme Court of the United States. The Court in the later cases seems to be of the opinion (as I read the decisions) that acceptance of exclusive jurisdiction by the United States is a question of fact and that examination will be made of the nature of the governmental operations and the acts of the officials in charge thereof in determining whether exclusive jurisdiction has been accepted and that acceptance may be presumed only in the absence of evidence showing a contrary intent. See Silas Mason Co. v. Tax Comm. of Washington, 302 U.S. 186, 58 S.Ct. 233, 82 L.Ed. 187; Collins v. Yosemite Park Curry Co., 304 U.S. 518, 58 S.Ct. 1009, 82 L.Ed. 1502, and Atkinson v. State Tax Commission of Oregon, 303 U.S. 20, 58 S.Ct. 419, 420, 82 L.Ed. 621.
Of course, all of these cases apply to property acquired by the Federal Government prior to the amendment of 1940 of 40 U.S.C.A. § 255, which makes the presumption of non-acceptance conclusive if the officer in charge of the governmental department or agency has not filed a notice of acceptance with the Governor of the State or in such manner as may be prescribed by the laws of the State where the lands are situated. It is interesting to note in this connection that the Supreme Court remarked in Adams v. United States, supra, that its decisions in the Dravo Contracting Co., Silas Mason and Collins cases prompted Congress in 1940 to amend the law, respecting acceptance of jurisdiction conceded by the State to it of properties acquired with the consent of the State, so that there could be a practical adjustment of controversies concerning the relationship of Federal and State powers over government property.
In the last cited case, the Court observed:
"In Silas Mason Company v. Tax Commission [ 302 U.S. 186, ante, 187, 58 S.Ct. 233, 82 L.Ed. 187], supra, we said that as a transfer of exclusive jurisdiction rests upon a grant by the state, it follows, in accordance with familiar principles applicable to grants, that the grant may be accepted or declined. Acceptance may be presumed in the absence of evidence of a contrary intent. But we found no constitutional principle 'which compels acceptance by the United States of an exclusive jurisdiction contrary to its own conception of its interests.' The mere fact that the Government needs title to property within the boundaries of a state does not necessitate the assumption by the Government of the burdens incident to an exclusive jurisdiction.'"
If the above stated principle is applied to the cases at bar, I entertain considerable doubt that there has been an acceptance by the Federal Government of exclusive jurisdiction over any of the three places enumerated as (4), (5) and (6). The evidence shows without contradiction that the City of New Orleans has, throughout the years, supplied police and fire protection to the Port of Embarkation, the Customs House and the Algiers Naval Repair Base and these properties also utilize the drainage and sewerage facilities furnished by the Sewerage Water Board of New Orleans. I can find no good reason, in fact or in law, to believe that the federal authorities, although vested with full power to take exclusive jurisdiction of these sites, desired to do so or would have done so except to such extent as the enforcement of State laws would necessarily interfere with or burden the federal operations.
I agree that this court is without appellate jurisdiction of appellee's suit against the State Tax Collector. Other than this, I respectfully dissent.
To me it does not appear that the United States Government has ever accepted, either expressly or impliedly, exclusive jurisdiction over any of the six sites in question. Therefore, in my opinion, the authority of the State of Louisiana and of the City of New Orleans to levy the disputed taxes has not been divested.
I agree that the Court of Appeal, Orleans Circuit, has appellate jurisdiction of the action against the State Tax Collector.
The question now posed is: Can the City of New Orleans levy an ad valorem tax on personal property actually installed and used by the Government in locations owned or leased by it, when the State of Louisiana, through its Legislature, has ceded exclusive jurisdiction?
The District Court and the Supreme Court of Louisiana answered this question in the negative.
A rehearing was applied for in the Supreme Court and granted, and on rehearing the original opinion was reversed.
Precedent and authority supports the contentions of the plaintiff:
1. The Constitution of the United States, Article I, § 8, Clause 17.
"The Congress shall have Power * * To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the Acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings."
2. Act 31 of the Louisiana Legislature for the year 1942, amending Act 12 of 1892.
"Section 1. Be it enacted by the Legislature of Louisiana, That the consent of the State of Louisiana is hereby given, in accordance with the seventeenth clause, eight section, of the first article of the Constitution of the United States, to the Constitution by the United States, by purchase, condemnation or otherwise, of any land in this State required for sites for forts, magazines, arsenals, dockyards, and other needful buildings, or for any other purposes of the Government of the United States. "Section 2 That the United States may enter upon and occupy any land in the State of Louisiana which it has heretofore acquired, or may hereafter acquire, by purchase, condemnation, lease or otherwise, required for sites for forts, magazines, arsenals, dockyards, and other needful buildings, or for any other purposes of the Government of the United States, and shall have the right of exclusive jurisdiction over the property so acquired, during the time that the United States Shall be or remain the owner of lessee thereof, for all purposes, except that the State retains the right to serve therein all civil and criminal process issuing under authority of the said State, and all lands so held and title to which is vested in the United States shall be and remain exempt from all states, parochial, municipal or other taxation, assessment or other charges which may be levied or imposed by or under authority of this State."
3. An unreversed decision of the United States Supreme Court — the Surplus Trading Company v. Cook, 281 U.S. 647, 50 S.Ct. 455, 74 L.Ed. 1091. This decision is as reliable as the attraction of gravity; there is not shadow of turning.
In the Cook case the Court held that private personal property located within an Army Camp, the lands for which were required by the United States with the consent of the Legislature of the state in which such lands are situated, could not be subjected to state taxation in view of the provisions of Article 1, § 8, Clause 17 of the Constitution giving Congress exclusive legislative authority over the places so acquired.
4. An opinion from the Office of the Attorney General of Louisiana, whose views expressed are persuasive.
5. The reasonableness of the position taken by reason of the natural law that the creature cannot be Lord of its creator. The word, "reasonableness", is used in a sense that from the calm sea level of common sense applied to the whole situation of the law and the facts is not illegitimate to the views herein expressed.
We must remember that the United States is a Government, whose authority extends over the whole territory of the Nation, acting upon all of the States and all of the people of the States.
The International Business Machines Corporation, who is the owner of the leased installation, does not sell these appliances, This was the only property owned by them in this jurisdiction. The modus operandi in such cases is for the City to seize the Personal property (the installations made in the Government buildings) and sell it at public auction, the proceeds of which is used to satisfy the tax levied. In order to prevent such an unusual situation and in order not to stop the actual using by the Government of the property in these utilities, the International Business Machines Corporation paid the amount under protest, reserving the sacred right to obtain remedy or redress through the Courts.
In opposition, the City has cited license tax cases, gross receipt tax cases, and miscellaneous unrelated cases.
The twistifications, the dexterity of the City to reconcile the law, and even the opinion on rehearing, hold that the Surplus Trading Company, supra, does not apply because of the facts. The Surplus Trading Company case was a suit by the Sheriff and Collector of Taxes of Pulaski County, Arkansas, to enforce payment by the Surplus Trading Company of state and local taxes on certain personal property owned by it. The Company resisted payment of the taxes, on the ground that the property on which the assessment was laid was located within Camp Pike, an army mobilization, training and supply station of the United States located on land purchased by the United States with the consent of the Legislature of Arkansas. The property attempted to be taxed consisted of a large quantity of woolen blankets which the defendant, a New York concern, purchased from the United States at an advertised sale a few days before the day fixed by the state law for listing personal property for taxation, and which in much the greater part was on that day in the army storehouses within Camp Pike awaiting shipment therefrom.
In the Surplus Trading Company case, supra, the Court held that private personal property located within an army camp, the lands for which were acquired by the United States with the consent of the legislature of the States in which such lands are situated, cannot be subjected to state taxation, in view of the provisions of Article I, § 8, Clause 17, of the Constitution, giving Congress exclusive legislative authority over places so acquired.
In the Surplus Trading Company case, supra, only one utility was involved — Camp Pike. In the instant case, there are six utilities of equal dignity and importance as Camp Pike.
In the case of Surplus Trading Company, supra, the blankets stored were not used by the Government for its Public purposes. They had been sold, but a part of them was stored in the Government storehouses. In the instant case, the property has been leased and installed in all of the six locations, and are in actual use by the Government for its public purposes.
It is urged that the fact that these facilities located here in New Orleans, Louisiana, use water, sewerage and drainage, and avail themselves of police protection, is indicative of the fact that the Government was not assuming jurisdiction in this respect. In cases on this subject, where the Government put in its own services of water, sewerage and drainage, etc., the utilities were far removed from big cities. We cannot condemn the Government for using these services on the payment of a small fee.
The case of Offutt Housing Company v. County of Sarpy, 160 Neb. 320, 70 N.W.2d 382, affirmed 76 S.Ct. 814, is easily distinguishable, because there it was stipulated in the agreement that the Government gave the State the right to tax. Such is not the facts in the instant case.
We submit that on grounds of judicial comity the Court always bows to its own decisions.
I respectfully dissent.