Petition for a Writ of Certiorari — City of Milwaukee v. United States

IN THE

Supreme Court of the United States

Ocroser TERM, 1943.

No. ™

CITY OF MILWAUKEE; J. J. KRUEGER, Crry Treas-

URER OF THE City or MitwavuKkee; COUNTY OF MIL-

WAUKEE; anv C. M. SOMMERS, County Treasurer

or MitwavKeEeE County,

Petitioners,

vs.

UNITED STATES OF AMERICA anp FEDERAL

PUBLIC HOUSING AUTHORITY,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

CIRCUIT COURT OF APPEALS FOR THE SEVENTH

CIRCUIT AND SUPPORTING BRIEF.

WALTER J. MATTISON, JAMES J. KERWIN,

City Attorney. District Attorney.

OMAR T. McMAHON, OLIVER L. O’BOYLE,

Assistant City Attorney. Corporation Counsel.

801 City Hall, C. STANLEY PERRY,

Milwaukee 2, Wisconsin, Asst. Corporation Counsel.

Counsel for Petitioners, City 901 North 9th Street,

of Milwaukee and J. J. Milwaukee 3, Wisconsin,

Krueger. Counsel for Petitioners,

County of Milwaukee and

C. M. Sommers.

THE GUNTHORP. WARREN PRINTING COMPANY, 210 WEST JACKSON, CHICAGO

INDEX.

PAGE

Petition for Writ of Certiorari...............00.+.- 1

oe eS | ree eee ere err ces 2

Bee oe se ee oe ee ee eee sa

Statement of the Matter Involved......... ie iu oe

Cette PRIOR 6 ike cc 5 os bie ewer 7

Reasons for Allowance for the Writ............ 7

oe ee a ser ra Pe gre 12

OTE TET E ETC ERT EE 12

PU hig cdwet cad ea RR SRE ww eee a eae 12

UL. os cnc Ree hk) 6 EARS Aka eer 12

pO EGER TE CR SET TOP Te LECT ee CeCe TS 13

See. 70.11(1) Wis. Stats. as amended in 1941,

providing for taxation of Federally-owned

residential income producing real estate, is

OU i is Sh FFs has eA ees 18

The United States Constitution does not ex-

pressly or impliedly grant tax immunity to

the United States over lands held by it in

Sib DRVOUEE WENGON 65k 4 sorte Ki ree eweass 13

United States inumunity can be obtained only

with the consent of the state as provided in

Art. I, See. 8, U. S. Constitution.......... 14

Tax exemptions must be clear and unambigu-

Ses tun kaha Ode 6 kes oc pk Aas me 15

The Supremacy Clause of the United States

Constitution Article VI, does not expressly

or impliedly grant tax immunity to the

SE IE rns awn His we oN ces a.” 16

ll

The Tenth Amendment to the United States

Constitution reserved to the states and the

people the power to grant or deny tax im-

munity to the United States.............. 17

Consent of the state is a condition precedent

to United States tax immunity and United

States did not procure the consent of Wis-

consin in reference to the Parklawn Housing

eg gO er errr rec re rier cr 19

Exclusive jurisdiction from the state over the

lands is essential before Congress can exer-

cise the power by Federal Statute to provide

for tax freedom or payments by the Federal

Housing Administrator in lieu of taxes.... 21

Van Brocklin v. Anderson, ¢ al., 117 U.S.

151 (Tenn. 1886), holding United States

lands to be immune from taxes in the ab-

sence of state consent to exclusive jurisdic-

tion is not well founded under the United

States Constitutional provisions applicable

properly construed and the case at bar is

distinguishable from that case or the Van

Brocklin case should be overruled......... 24

The District Court and the Court of Appeals

below erred in holding that the nominal offer

in lieu of taxes made by the Federal Hous-

ing Administrator was beyond interference

by the courts and in failing to hold that |

offer is so arbitrary, unfair, unreasonable,

inadequate and inequitable and in violation

of the plain purpose of the Federal Statute

in question as to be ample grounds for de-

nial of the equitable relief sought by re-

MIS Sieh 28 oa. eh adata aun do uk eee’ .. 26

ee ahs Sa LN TO EG

ill

Cases CiTeEb.

Causey v. United States, 240 U. S. 399.............. 29

Columbus Metropolitan Housing Authority v. Thatcher,

42 N. EB. (2d) 437 (Ohio) at 442.................. 24

Heckman v. United States, 224 U.S. 413............. 29

Madden v. Kentucky, 309 U. S. 83.................. 16

Markley v. Village of Mineral City, 51 N. E. 28 (Ohio) 27

M’Culloch v. Maryland, et al., 4 Wheat. 316.......... 7, 25

Olmstead v. United States, 277 U. S. 488............ 29

Pan American Petroleum & Transport Co. v. United

NL UE es Oss bo cen eben ce ode Wade okies 29

Pollak v. Farmers’ Loan.& T. Co., 157 U. S. 439...... 15

Ryan v. State, 61 P. (2d) 1276 (Wash.).............. 23

Ee RE - eee 15

State v. City of Des Moines, 65 N. W. 818 (Ia.)....... 28

State of Iowa v. Carr, 191 Fed. 257................ 27, 29

State Tax Comm. of Utah v. Aldrich, et al., 316 U. S.

ius Misting baw Sicd aly ean es bowie waa eis 18

United States v. Brown, Clerk of Ct. Flagler Co. Fla.,

ee RC haut hia 8G au Se duW caro nue 24

United States v. Certain Lands in Louisville, 78 Fed.

RNIN das Op halted Wh CRE Os ae ekg wt Gy. ees a oes 25

Cnited States v. Chandler-Dunbar Water Power Co.,

ay RRR RSID idee See OA RO Se Dean ee 28

United States v. Cornell (Fed. Cas. No. 14,867)....... 23

United States v. LaFranea, 282 U. S. 568............ 16

United States v. Stinson, et al., 197 U.S. 200......... 29

United States v. Strang, 254 U. S. 491, 41 S. Ct. 165,

Eee aS Reet ee eg cn exonerate 24

iv

United States v. Trinidad Coal & Coking Co., 187 U.S.

Deen noe ee oe ee a ea eeu iel Lwin hin aN alk we 3s4

United States v. 1749.06 Acres of Land, et al.........

Village of Cedar Springs v. Schlick, et al., 45 N. W.

Eres en ee ar re pha Vien ee Ea

Van Brocklin v. Anderson, et al., 117 U. S. 151 (Tenn.

NN oee cedor ox din als kA ON WRK LAL OK Be

CONSTITUTIONAL PROVISIONS.

U.S. Constitution.

Me Se RS eae Peco e ears hada eee

Ie Be a I RE si eh obs ce ec ¥ha kaa vecass

BE es I a ds yg Akg berate xls ae Oa ee aa

eS RE ee ks Aaa ae aw RRS EOE ARR

pg DERRY DEL SECM crate ier l ieee SOL ep ee Ee ERI RS Ge

Tenth Amendment to U. S. Constitution

Art. II, See. 2

U.S. Srarures Crrep.

See. 240(a) Judicial Code (U. S. C. A. Title 28, See.

PEE aA eens Oee eehcas tase er eee ete eeeea

Rh We Oe A, Se Oe Oe BS id kes seu d eh ceucers

U. 8. C. A. Tithe 40, Bec. 255, Chap. 3......... 0.0.05

U.S. C. A. Title 40, Sees. 421 to 423, Chap. 8

1937 Housing Act No. 412, 75th Congress, Approved

Sept. 1, 1937

Public Act No. 837, 74th Congress, Section 2, Approved

June 29, 1936

2k Sak Ee Oe OE CE SS BS OLE Se 6 OS 8 676 © RS 6 Oe ES C

23

Vv

Wisconsin Statures Crrep.

peeenemt ila Beew. TOAT Biate oi ilccc ved ddd ete

uN OE Sra cig Pere mace RN ge rc Wr

IRON a ange aire ae ice ha Ee ns te ue root SS

EU Loney ee peat Perth ee eee ean tL

OPINIONS OF THE ATTORNEY GENERAL.

Men ee, MUNIN ARN I gnc l Soa ou on GS odd baeiieee kcnked

es es WIND IE A RUINED «oie so ks 6 ACR cok wive Wa¥ne dann

Texts CIrep.

Madison’s Journal of the Constitutional Convention

Edited by K. H. Scott, Spee. Ed. pub. in 1893......

Supreme Court of the United States

OcrosBeR TERM, 1943.

anata

| CITY OF MILWAUKEE; J. J. KRUEGER, Crry Treas-

URER OF THE City or Minwavkee; COUNTY OF MIL-

WAUKEE; anv C. M. SOMMERS, County Treasurer

oF MitwavukEE County,

PUBLIC HOUSING AUTHORITY,

Respondents.

To the Chief Justice and Associate Justices of the Supreme

Court of the United States:

PETITION FOR WRIT OF CERTIORARI.

The petitioners above named respectfully pray for a

Writ of Certiorari to the United States Cireuit Court of

Appeals for the Seventh Circuit, to review a judgment of

that court entered January 20, 1944. The certified copy of

transcript of record in the case, including the proceedings

of the Cireuit Court of Appeals, has been filed herewith in

accordance with Rule 38 of this Court.

Petitioners,

vs

UNITED STATES OF AMERICA ann FEDERAL

2

History of the Litigation.

The suit was instituted by the respondents in the United

States District Court for the Eastern District of Wisconsin

to enjoin petitioners from assessing, levying and collecting

eeneral ad valorem taxes upon the Federally-owned Park-

lawn low-cost housing premises located in the City and

County of Milwaukee; to have the 1941 taxes (before Dis-

trict Court judgment 1942 taxes were levied) declared null

and void; and for declaration that the lands are exempt

from taxation while owned by the Government.

The cause was heard upon motions of the parties for

judgment on the pleadings. The District Court in written

opinion (T. R. 37-42), 49 Fed. Supp. 436, ordered judgment

in favor of respondents, which was duly entered (T. R. 42-

43).

Upon appeal the Circuit Court of Appeals affirmed such

judgment January 20, 144 (iT. R. 61-65).

The petitioners now seek to have reviewed by this court

the novel and undeniably important questions of law in-

volved.

Jurisdiction.

Jurisdiction of this court is invoked pursuant to Section

240 (a) of the Judicial Code as amended by Act of Congress

of February 18, 1925 (U.S. C. A., Title 28, See. 347), and

Rule 38, 5(b) in that the courts below decided an important

question of Federal law which has not been, but should be,

settled by this court, and that there is drawn in question

the validity of a Wisconsin Statute, Section 70.11 (1), as

amended by Chapter 86, Laws of Wisconsin for 1941, which

by its terms took away from the United Scates exemption

from taxation for improved residential income-producing

property, and the courts below held such 1941 amendment

to be repugnant to the United States Constitution.

Statement of the Matter Involved.

This is a case of first impression. This court has never

expressly passed upon the tax immunity of a rental income-

producing public low-cost housing project in respect to

which the United States and one of its instrumentalities

acts as a landlord in a proprietary capacity and receives

from tenants annual rentals of approximately $155,000 and

offers to the State, County and City $6,970 per annum in

lieu of general real estate taxes on the 40-acre traet and

improvements levied at approximately $44,066 for the city

and $23,591.95 for the county, as per 1941 and 1942 assess-

ments and levies.

By reason of motions of all parties for judgments in

their respective favor, the material facts are all admitted

and undisputed.

The United States acquired title to the Parklawn prem-

ises In 1935. Dwelling houses to accommodate 518 families

were constructed and completed ready for occupancy about

September 1, 1937; after the enactment of the 1941 amend-

ment to the Wisconsin Statutes the local taxing authorities

assessed and levied taxes for the city and county in the

respective sums above mentioned. The petitioners de-

manded payment of the taxes and assert that the taxes

were valid and enforceable. The project was established

pursuant to the General Welfare Clause of the United

States Constitution and certain provisions of the National

Industrial Recovery Act approved June 6, 1935, as amended

June 29, 1936, with funds appropriated by Congress, Title

40, Chap. 8, Sees. 421 to 428, U. S.C. A. (49 Stat. 2026) ;

the lands were purchased by the United States in 10 sepa-

rate parcels from the then owners, private individuals or

corporations that for many prior vears had paid the taxes

(T. R. 5, 23-24).

4

The Government does not have any public office and

never performed on the premises a governmental function,

excepting only as the local manager handled the renting of

the houses to tenants; the houses have been almost fully

occupied by rent-paying tenants since 1937; among the resi-

dents are several hundred minors aged 4 to 19 who attend

the public schools of the city erected and maintained at

the expense of the local taxpayers; no school has ever been

erected on the premises by the Government; the city oper-

ates and maintains numerous services for the benefit of the

owners of real estate and all residents within the city by

laying out, maintenance and repair of streets and alleys;

sewage disposal; other sanitary, public health, hospital and

clinie services; fire and police protection; garbage collee-

tion and disposal; and public educational and other serv-

ices, at an annual cost as applied to Parklawn lands and

resiceuts alone of about $130,000, derived from general

taxes. special taxes, state and county aids, license and per-

mit fees, and other sources; the Government pays the city

only for the water service (T. R. 6, 24-25).

The county furnishes services by way of administration

of justice and law enforcement, maintaining courts of ree-

ord, public institutions for the care of the mentally handi-

capped and orphaned minors, general and emergency hos-

pitals and clinies for the treatment of ill and injured per-

sons unable to pay for the same, by way of support of the

unemployables and unemployed, by maintenance of public

park and recreational facilities, and other substantial serv-

ices for which the county annually expends large sums of

money derived from the levy of general taxes.

The state renders numerous services for the benefit of all

real estate and all residents in the state by maintaining

public educational, penal, hospital, sanitarium, judicial, law

enforcement and other institutions, and in the administra-

tion of the state government, and expends annually large

5

sums of money therefor, derived in part from the state-

wide general tax levies; and the state and county annually

contribute substantial sums of money to the city, derived

from state income and gasoline taxes and other sources,

for the support of the city schools and city government.

The United States and its Housing Authority became a

landlord and engaged in business for gain and profit and

competes with the taxpaying private owners of rented and

rentable apartment and other dwelling houses. The Park-

lawn dwellings are not needful buildings as mentioned in

Section 8 of Art. I, U. S. Const.

The Government never owned and never contemplated

owning, in Wisconsin or elsewhere, at the time of the adop-

tion of the U. S. Const., or at any time thereafter up to

about 1933, nor in 1846 to 1848, at the time of admission

of Wisconsin into the Union, and the adoption of the Wis-

consin Const., any residential income-producing real estate

similar to Parklawn.

Up to May 9, 1941, Section 70.11 Wis. Statutes, provided

exemption from taxation for property ‘‘owned exclusively

by the United States.’’ Effective May 9, 1941, this exemp-

tion statute was amended by Chapter 86 of the Laws of

1941, so as to repeal the exemption provision as related to

Kederally-owned residential income-producing property.

In 1941 the Parklawn lands were assessed at $139,000

and the improvements at $1,623,500. The 1941 taxes were

unpaid within the time prescribed by the statutes and the

City Home Rule charter ordinance applicable, and the city

became the owner of the tax sale certificates for the city

taxes, and the county in due time became the owner of the

tax sale certificates for the county taxes (T. R. 9, 10, 28).

The Federal authorities prior to the acquisition of the

lands and the construction of the dwellings, never applied

for or received from the Governor of Wisconsin pursuant

6

to Section 1.03 Wisconsin Statutes, a certificate of consent,

and no such certificate was ever issued (T. R. 14, $2).

The petitioners set up as an alternative defense that the

respondents should be denied the equitable relief they seek

unless and until the Federal agency administering the

property enters into an agreement with the state, county

and city for the payment, in lieu of taxes, of a fair, reason-

able and adequate sum of money, in reasonable proportion

to and based upon the costs of the public and municipal

services supplied for the benefit of the Parklawn premises

and tenants; that no such agreement was ever made; and

that in negotiating for such agreement the Housing Admin-

istrator under date of March 29, 1938, made an offer to

the city alone (T. R. 21-22, 34-46), to pay to the state,

county and city in lieu of taxes, the sums of $1,109 for 1937

and $6,970 per annum for the four succeeding years, such

amounts to be divided among them as they should agree;

and on September 28, 1940, the Housing Administrator

renewed said offer without increasing the amounts; and the

city declined to accept such offer; and the petitioners

asserted that said offers were wholly inadequate, unreason-

able, arbitrary and not in keeping with the provisions and

intent of the Federal statute applicable (T. R. 15, 32-33).

Petitioners further asserted that the Federal authorities

were obliged to do equity, failed to do equity, and therefore

should be denied any equitable or other relief as demanded

in their complaint.

Pending the trial in the District Court the petitioners in

1942 made similar assessments and levies on fhe Parklawn

premises. These 1942 taxes were likewise held invalid by

the courts below.

~

Questions Presented.

1. Whether the Wisconsin taxation exemption statute

as amended in 1941 is unconstitutional as applied to United

States-owned income-producing real estate administered

for the Government by its Federal Public Housing Author-

ity in a proprietary capacity for gain and profit, in the

absence of state consent to acquisition and exclusive fed-

eral legislation?

2. Whether the offer of the Federal authorities to pay

the annual sums in lieu of taxes was so unfair, unreason-

able, inadequate, inequitable and not in keeping with the

Federal statute applicable, as to constitute a mere arbitrary

offer, and be grounds for the denial of the equitable relief

sought by respondents?

Reasons Relied On for the Allowance of the Writ.

This controversy presents serious questions, not merely

affecting the parties hereto and the particular premises

involved, but also important to all the several states and

local municipalities. The courts below have relied upon

the decision of M’Culloch v. Maryland, et al., 4 Wheat. 316,

wherein taxation on income-producing real estate was not

involved; and on Van Brocklin v. Anderson, et al., 117 U.S.

151 (Tenn. 1886), where likewise taxes on income-producing

real estate were not involved. M°Culloch v. Maryland left

open the question of taxation on government-owned real

estate. The rule in Van Brocklin vy. Anderson is founded

upon the supremacy clause of the U. S. Constitution, Art.

VI, which holding we respectfully request this court to

reconsider.

It is true that Van Brocklin v. Anderson has stood for

the general constitutional provision of tax immunity of

United States-owned lands, regardless of the nature or use

8

thereof or state consent thereto for over 00 years. Peti-

tioners contend, however, that if the United States is to

have unconditional tax immunity, it must be grounded upon

the separate provision of the U. S. Constitution relating

to the acquisition of lands by the U. S. Government in the

several states, Art. I, See. 8, which provides for exclusive

legislation by Congress over its lands only upon the con-

dition precedent that the United States shall have acquired

consent of the state legislature.

So far as we can discover, the real meaning of the phrase

‘‘exclusive legislation’’ as used in that constitutional pro-

vision as related to real estate taxation, has never been

clarified by this court or the inferior courts of the United

States. The petitioners contend that this ‘‘exclusive legis-

lation’? power includes the power to enact tax immunity

statutes only when the lands are acquired with consent of

the state. The Government contends that Congress has

the tax immunity power under the supremacy clause and

that the Government in order to have tax immunity on its

lands need not have prior state consent and the ‘‘exclusive

legislation’? power under Art. VI.

Petitioners contend further that the United States does

not have tax immunity even by a liberal construction of the

supremacy clause and that the exclusive legislation power

with consent of the state is the express power which limits

the United States and is the controlling constitutional pro-

vision in the premises.

The Van Brocklin case has been cited with approval many

times and recently, but in none of such cases was the land-

lord proprietary capacity for gain and profit element pres-

ent. The eases cited by respondents holding that the Gov-

ernment has tax immunity under the supremacy clause, in

which the Van Brocklin decision is cited as authority there-

for, involved taxes sought to be imposed by the several

9

states on United States Bank shares, Federal Land Bank

stock, U. S. Bonds, Home Loan Mortgages and as Sales

Taxes, and in the latter type of cases the United States

court decisions are not wholly uniform.

The law on tax immunity, we respectfully submit, should

be settled by this court for rental, income-producing hous-

ing projects, because the United States has recently estab-

lished numerous such housing projects in the several states

and it may continue to do so in the future.

If the Van Brocklin decision is unsupported by a proper

construction of the constitutional provisions applicable, it

should not be permitted to stand further as an invasion of

the sovereign rights of the several states in which the

United States has built or will build similar income-pro-

ducing enterprises in respect to which the state legislatures

are unwilling to grant tax exemption.

The absence of an authoritative final decision of this

court on this issue of tax immunity and the resulting con-

fusion in the minds of the Federal authorities on the one

hand, and state and local municipal authorities on the

other hand, require clarification of this important issue so

that Federal, State and loeal authorities can be guided

accordingly.

While Wisconsin may at this time be the only state which

has enacted a statute making Federal housing property

taxable, the enactment of such a statute may be under con-

sideration in other states and the clarification of the con-

stitutional law involved will be helpful to all concerned.

While the United States will present its own side of this

controversy to this court, perhaps by brief in opposition to

this petition, it seems to us that the United States authori-

ties should be glad to have this issue settled finally by this

court e* that they may be governed accordingly in deter-

10

mining whether or not to continue in or embark further

upon Federal housing projects.

The decisions of the courts below both state rather

plainly that the brief of the petitioners made an appealing

and persuasive argument in support of their contention

that the United States could not have tax immunity with-

out state consent. Apparently there was, as there should

be, hesitation on the part of these lower courts to overrule

Van Brocklin v. Anderson, or to distinguish that case from

the ease at bar. It may well be, however, that if the Van

Brocklin decision had not been made, these lower courts

would have held with the petitioners in this case.

The District Court held that the amount of the offer in

lieu of taxes was solely for determination by the Public

Housing Authority and the amount of the offer, even

though very small, was beyond the interference of the

court, and further that there was not in the record suffi-

cient evidence upon which it could pass upon the adequacy

or inadequacy of the offer. Petitioners contend that the

undisputed facts applicable constituted ample evidence

upon which the court could pass upon that issue.

The Cireuit Court of Appeals on that issue held the

authority of the administrator was permissive only and

his failure to make more than an arbitrary offer ‘‘in lieu

of taxes’’ should not prohibit the injunctional relief.

Petitioners contend further that Congress in the statute

relating to payments ‘‘in lieu of taxes’’ intended a fair,

reasonable, adequate, equitable sum and not a mere nom-

inal and arbitrary sum.

While the case at bar is an action for declaratory relief,

it is also and predominantly an action for equitable relief,

and the Government must do equity to obtain equity, and

it ought not to have the relief it seeks and the relief the

courts below gave it, unless and until in keeping with the

11

statute in question, it does equity by offering a fair, ade-

quate and reasonable sum.

The question as to whether the United States must do

equity and to what extent it must do equity in acting under

a statute like the one in question has not, so far as we are

aware, been passed upon by this court; the decisions we

have been able to find coming entirely from inferior Fed-

eral courts and State courts.

Wuererore, it is respectfully prayed that a Writ of Cer-

tiorari be issued out of and under the seal of this Honor-

able Court, directed to the Cireuit Court of Appeals for

the Seventh Circuit, commanding that court to certify and

send to this court for its review and determination the full

and complete transcript of the record and all proceedings

in the ease at bar, and that the judgment of the courts

below may be reversed by this Honorable Court, and that

your petitioners may have such other and further relief in

the premises as may be just and proper; and your petition-

ers will ever so pray.

Dated at Milwaukee, Wisconsin, this 20th day of March,

1944.

Respectfully submitted,

CITY OF MILWAUKEF and COUNTY OF MILWAUKEE and

J. J. KRUEGER. Cc. M. SOMMERS,

Petitioners, Petitioners,

By WALTER J. MATTISON, By JAMES J. KERWIN,

City Attorney. District Attorney.

OMAR T. MeMAHON, OLIVER L. O'RBOYLE.

Asst. City Attorney. Corporation Counsel,

SOL City Hall, C. STANLEY PERRY,

Milwaukee 2, Wisconsin. Asst. Corp. Counsel,

901 North 9th Street.

Milwaukee 3, Wisconsin.