Petition for Writ of Certiorari — Fort Dix Apartments Corp. v. Borough of Wrightstown

Supreme Court brief1956

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Text

INDEX

PAGE

Reference to Opinions Belo“uk lk. 2

D hha eee LGAs Linas ᷣ —— be he Wee 2

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,,,, ̃²ĩ ¹ . ͤ ¶ 3

.,. ˙ÜO m9 3

Basis for Federal Jurisdiction in the United States

r, ̃ ˙TrTrkrt.. 6

Reasons for Allowance of Writ 7

// bes td bedeeteaeeewens halieaane 28

/ ˙ ceed doled gaeen Gas cte dew seas wees 29

A. Opinion, United States District Court District of

%%% 29

B. Judgment, United States District Court, District

r TTT 49

C. Opinion and Dissenting Opinion of United States

Court of Appeals for the Third Circuit. 51

D. Judgment, United States Court of Appeals for the

EE ²˙ II.. rcacnssdadeake>s 57

E. ie yg Involved:

1. Act of August 8, 1949, 63 Stat. 570, 12 U. S. C.

77)... reer yt: frei eer 8 58

2. Act of August 5, 1947, 61 Stat. 774, 10 U. S. C.

NE Abu Bhs abe kdncuseedambdekha) bax cuan 61

3. Housing Amendments of 1955, Public Law No.

345, Ch. 783, 84th Cong., Ist Sess., Approved

C TK 64

INDEX

CITATIONS

CASEs: PAGE

Board of Supervisors of Harrison County v. Military

Housing, Inc., Keesler AFB Project, U. S. D. Ct.,

S. D. Miss., S. Div., Civil No. 1381............- 25

Brookley Manor, Inc. v. State of Alabama, pending

on appeal, No. 547, First Div., Sup. Ct., Alabama 25

Buena Vista Homes, Inc. v. Board of County Com-

missioners, Dist. Ct., Dona Ana County, New

Mexico, No. 13,213, 19534444. 25

Conley Housing Corp. v. Coleman, pending on appeal,

No. 19001, Sup. Ct., Georgia, September 12, 1955 25

Curry v. McCanless, 307 U. S. 357, 83 L. Ed. 1339, 59

Sup. Ct. 900 (19390)h);U:ũ 24

Fort Hamilton Manor v. Boyland, pending on appeal,

No. 12252, N. V. App. Div., 2nd Dept.........- 25

Frick v. Pennsylvania, 268 U. S. 473, 69 L. Ed. 1058,

45 Sup. Ct. 603 (1925˙0))))0᷑ :!: 23

Indian Territory Illuminating Oil Company v. State

of Oklahoma, 240 U. S. 522, 36 Sup. Ct. 453, 60

„„ eee 17

Likins-Foster Biggs Corp. v. Deason, Tax Assessor,

U. S. D. Ct., W. D. Tex., El Paso Div., Civil No.

Um —. ³oÄ³·AÄÜ1rU AA 25

Meade Heights, Inc. v. State Tax Commission of

Maryland, 202 Md. 20, 95 A. (2d) 280 (1953)... 24

Moses Lake Homes, Inc. v. Grant County, Super. Ct.

for Grant County, Washington, No. 8095...... 25

Northwest Airlines, Inc. v. Minnesota, 322 U. S. 292,

88 L. Ed. 1283, 64 Sup. Ct. 950 (1943).......... 24

Offutt Housing Company v. County of Sarpy and

Robert M. Eby, Treasurer of Sarpy, Nebraska,

160 Neb. 320, 70 N. W. 2d 382 (1955)........... 25

PAGE

Oklahoma ex rel. Oklahoma Tax Commission, et al.

v. Barnsdall Refineries, Inc., et al., 296 U. S. 521,

56 Sup. Ct. 340, 80 L. Ed. 366 (1936): 17

Ott v. Mississippi Valley Barge Line Co., 336 U. S.

169, 93 L. Ed. 585, 69 Sup. Ct. 432 (1946) 24

Patrick Gardens v. Nash, Tax Collector, Cir. Ct. 9th

Jud. Cir., Brevard County, Florida, No. 13852... 25

Renel Heights, Inc. v. Gibbs, Treasurer, 7th Jud. Cir.

So. Dak., filed April 29, 1955................. 25

eo ewew es eew ee ⁶ ũ ʃ 2

The Pennsylvania Company for Insurance on Lives

and Granting Annuities, et al. v. Kelly, 134 N. J.

Eq. 120, 34 A. (2) 538 (N. J. Prerog. Ct. 1943)... 24

Thomason Park, Inc. v. County of Prince William,

Cir. Ct. of Prince William County, Virginia, de-

cided January 5, 1955, appeal pending......... 25

Union Refrigerator Transit Co. v. Kentucky, 199 U. S.

194, 50 L. Ed. 150, 26 Sup. Ct. 36 (1905)....... 22

United States of America and Mesta Machine Com-

pany, Appellants v. County of Allegheny, Penn-

sylvania, 322 U. S. 174, 64 Sup. Ct. 908, 88 L. Ed.

0 Daw nc m ĩ ick 17

Westover Development Corp. v. Asselin, Super. Ct.

Hampden County, Mass., No. 74569, January 21,

99—!.!. y ³A¹ rok becat Sooo k 25

ee „„ „6

STATUTES:

Act of Feb. 1, 1928, C. 15, 45 Stat. 54, 16 U. S. C.

5457

Act of Jun

6290

5 66» 20: 0066 6 6 6 606 06 06 066 6 606060

PAGE

Act of July 30, 1947, C. 389, 61 Stat. 641, 55104, 105

bb 15

Act of August 5, 1947, 61 Stat. 774, 10 U. S. C.

SES ie NE he A REP GY Be PeTy 3, 8, 9

Act of Jan. 22, 1932, C. 8, 47 Stat. 5, as amended

August 23, 1935, C. 614, 49 Stat. 704 as amended

June 30, 1947, C. 166, 61 Stat. 202, as amended,

May 25, 1948, C. 334, 62 Stat. 261, 15 U. S. C.

SNE iu CCCP 16

Act of June 25, 1948, C. 646, 62 Stat. 928, 28 U. S. C.

. csentesi sp chsipaeees 2

Act of June 25, 1948, C. 645, 62 Stat. 683, 18 U. S. C.

SCFVVPTVTVCVVCCVTVTCCCCTCVTTTVV se 15

Act of August 8, 1949, 63 Stat. 570, 12 U. S. C.

fe 3, 7, 8, 10

Oprmnions or STATE Arronxxvs GENERAL AND OTHER

OFFICIALS:

Colorado, letter from Atty. Gen. Jno. W. Metzger to

L. B. Arnold, Vice-President, Industrial Federal

Savings, Denver, Colo., October 9, „ 26

Connecticut, letter from Atty. Gen. George C. Con-

way to Hon. William F. Connelly, Tax Commis-

sioner, Hartford, Conn., October 15, 1952....... 26

Florida, letter from Atty. Richard W. Ervin, Office

of the Attorney General, to Board of County

Commissioners, Hillsborough County, July 25,

J cab en Ren babwsd pedbe ͤ peete tes 26

Georgia, letter from Atty. Gen. Eugene Cook to Hon.

J. Archie Johnson, Tax Collector, Chatham

County, August 11, 195ᷣꝶ/k3;F .. 26

Maine, Memorandum from Asst. Atty. Gen. Boyd L.

Bailey to State Tax Assessor, March 16, 1953. 26

Michigan, letter from Atty. Gen. Frank G. Millard to

D. Hale Brake, Treasurer of Michigan, January ‘

16, 11ùù— 4 4

PAGE

New Mexico, letter from Atty. Gen. Joe Martinez to

N. R. Reese, District Attorney, Roswell, New

Mexico, December 10, 1951................... 26

New York, informal opinion letter from Atty. Gen.

Nathaniel L. Goldstein to Dept. of the Air Force,

c ͤ ᷣł M by Rho hg 26

Ohio, letter from Atty. Gen. Wm. ONeill to

M. H. Heck, Prosecuting Attorney, Montgomery

. „ IES) ok 26

Oregon, letter from State Tax Commission Attor-

ney S. B. Stewart to District Public Works

Office, 13th Naval District, U. S. Naval Receiv-

ing Station, Seattle, Washington, March 6, 1952 26

South Dakota, letter from Atty. Gen. Ralph A. Dun-

ham to Col. Hubert Miller, Rapid City Air Base,

) — ͤ A ³²˙¹o¹AA˙¹—ÜjʃßVłu 26

Texas, letter from Atty. Gen. Price Daniel to Hon.

Stewart W. Hellman, Criminal District Attor-

ney, Tarrant County, August 22, 1951.......... 26

Utah, opinion of Atty. Gen. E. R. Callister to Davis

County, Attorney, April 30, 1955.............. 26

5 Washington, letter from Atty. Gen. Smith Troy to

Hugh H. Evans, Prosecuting Attorney, Spokane

County, March 20, ie 26

Pf.. ðͤ ß ick emed obese 26

6 MISCELLANEOUS:

Hearing before Senate Committee on Armed Serv-

ices on S. 1198 (H. R. 3471) 80th Cong., Ist sess. 16

Senate Report No. 626, 80th Congress, First Session.. 10

House Report No. 854, 81st Congress, First Session.. 10

Senate Report No. 404, 84th Cong., First Session.. 27

Letter, Comptroller General of the United States to

6 Hon. Harry F. Byrd, April 18, 1955............ 19

_—

SUPREME COURT OF THE UNITED STATES.

October Term, 1955.

No.

Fort Dix Apartments Corp., a corporation,

Petitioner,

vs.

BoroucH or WRIGHTSTOWN, a municipal corporation and

I. Haines CrosHaw, Collector of Taxes for the Borough

of Wrightstown,

New Hanover TownsHip Boarp or EDUCATION,

County or BuRLINGTON,

Respondents.

No.

SHERIDANVILLE, INC., a corporation,

Petitioner,

vs.

BoroucH or WrIGHTsTOWN, a municipal corporation and

I. Hatnes Crosuaw, Collector of Taxes for the Borough

of Wrightstown,

TOWNSHIP OF SPRINGFIELD, a municipal corporation, and

R. J. Beaztey, Collector of Taxes for the Township of

Springfield,

New Hanover Townsuip Boarp or Epucarion,

County or BuRLINGTON,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

THIRD CIRCUIT.

Petitioners, Fort Dix Apartments Corp. and Sheridan-

ville, Inc., pray that a writ of certiorari issue to review the

judgments of the United States Court of Appeals for the

Third Circuit entered in the above-entitled cases.

REFERENCE TO OPINIONS BELOW.

The two above-entitled cases were consolidated for trial

and argument in the United States District Court for the

District of New Jersey. The opinion of that Court is re-

ported in 125 F. Supp. 743, and is printed in Appendix A,

infra, at page 29. The opinion of the United States

Court of Appeals for the Third Circuit, and the dissenting

opinion, which are as yet unreported, are printed in Ap-

pendix C, infra, at page 51.

— ( —

JURISDICTION.

The judgments of the United States Court of Appeals for

the Third Circuit were entered on August 23, 1955. The

jurisdiction of this Court is conferred by the Act of June

25, 1948, C. 646, 62 Stat. 928, 28 U. S. C. 51254 (1).

QUESTIONS PRESENTED.

Petitioners each have constructed apartment projects on

a military reservation under the exclusive jurisdiction of

the United States, on lands leased to them by the Secretary

of the Army. In one case, title to the buildings is in the

United States; in the other, in the lessees. The normal

municipal services are supplied by the United States, not

the municipalities within whose limits the leased lands al-

legedly lie. The overall question presented is whether the

municipalities may collect taxes on the leasehold interests

of petitioners. This involves the questions whether Con-

gress has retroceded its exclusive jurisdiction, whether Con-

gress has consented to the taxes, and whether the taxes are

constitutionally valid where all normal services are sup-

plied not by the local taxing authorities but by the United

States of America and are paid for by the plaintiffs,

STATUTES INVOLVED.

The statutes principally involved are the Act of August

8, 1949, 63 Stat. 570, 12 U. S. C. $1748 and the Act of August

5, 1947, 61 Stat. 774, 10 U. S. C. $1270, and are quoted in

Appendix E, infra, at page 58.

STATEMENT OF THE CASE.

These are separate suits which were consolidated for trial

in the United States District Court. Except for certain

points of difference, summarized hereinafter, the facts and

issues in both cases are similar. Separate records exist as

to each case, and references to both records are made. For

convenience, the transcript of the Fort Dix Apartments

Corp. record is referred to as “Tr. F.” and of the Sheridan-

ville, Inc. record as “Tr. S.”

The principal facts in each case were agreed to by stipu-

lation. Plaintiffs each have constructed an apartment proj-

ect on the Fort Dix Military Reservation, on lands leased

to them by the Secretary of the Army (Tr. F5a; Tr. S20a).

These leases were for 75 years and required each of plain-

tiffs to erect, maintain and operate a housing project on the

leased land (Tr. F7a; Tr. S20a). The projects have been

constructed and financing has been secured under provi-

sions of the National Housing Act (Tr. F8a; Tr. S20a).

Under the terms of the lease to plaintiff Fort Dix Apart-

ments Corp., title to the buildings is in the United States,

and the said plaintiff has no right to remove them (Tr.

F20a). The lease to Sheridanville, Inc., does not contain

this provision, but provides that title to improvements is in

lessees during the term of the lease (Tr. S28a). Both proj-

ects must be rented to persons designated by the Command-

ing Officer of Fort Dix and presently, all of the units of both

projects are leased to military personnel stationed on Fort

Dix Military Reservation (Tr. F8a; Tr. S23a). Originally,

the rents prescribed by the Federal Housing Administration

did not contemplate taxes on the project. The Borough of

Wrightstown has assessed both projects for taxes, and the

Township of Springfield has also assessed the Sheridanville,

Inc. project for taxes. Because of these taxes, there has

been granted a rent increase to plaintiff Fort Dix Apart-

ments Corp., to cover the amount of the taxes assessed, and

under the terms of the agreement providing for the rent

increase, the sums collected by the plaintiff, Fort Dix Apart-

ments Corp., from the tenants are held in escrow until the

determination of the validity of the taxes assessed, and if

the taxes are declared to be invalid, the sums held in escrow

will be returned to the individual tenants (Tr. F9a). There

has been no increase granted as to Sheridanville, Inc., and

no such escrow agreement exists as to it.

All of the normal services and benefits, such as water

and sewer facilities, garbage and trash collections, fire ar-

police protection, and snow and road maintenance are sup-

plied not by the Borough of Wrightstown, but by the mili-

tary authorities at Fort Dix Military Reservation and these

services are paid for by the plaintiffs (Tr. F8a; Tr. S28a).

Schooling is furnished by the Pemberton Township Board

of Education and Federal aid is paid to Pemberton Town-

ship in this regard. Five children from the projects attend

local schools in Wrightstown (Tr. Fl0a, F66a, F68a; Tr.

818a, S43a, S45a).

The stipulation states the question of the right to vote is

a legal question and each party reserved its right to argue

this point (Tr. F10a; Tr. $19a). Plaintiffs contend that the

residents of the projects cannot vote and in fact the civilian

Superintendent of the Fort Dix Apartments Corp., project

and his wife, were so advised by the Burlington County

Board of Elections (Tr. F100a; Tr. S87a).

Plaintiffs each commenced suit to restrain collection of

the taxes assessed and for other relief. In both cases New

Hanover Township Board of Education and County of Bur-

lington intervened as interested parties. In the Sheridan-

ville, Inc. case the project is in both the Borough of Wrights-

town and the Township of Springfield, and for that reason

the Township of Springfield and its tax collector are defend-

ants but are not in the Fort Dix Apartments Corp. case.

After a hearing on the stipulations of facts, briefs and

arguments of counsel, Chief Judge Forman filed an opinion

ordering a dismissal of the complaints (Tr. F76a; Tr. S88a).

On motion for a stay of collection of taxes pending ap-

peal, Chief Judge Forman granted such an injunction on

the condition that plaintiffs deposit the amounts of the taxes

with the Clerk of the United States District Court (Tr.

F100a; Tr. S88a). This was done, and plaintiffs each there-

after appealed from the final judgment dismissing both

complaints.

The United States Court of Appeals, by a two to one

decision, affirmed the judgment of dismissal. By consent

— —

order, the injunction against collection of the taxes pending

the determination of the petition for certiorari has been

continued on the condition that the amounts of the taxes

and interest be deposited with the District Court Clerk as

they become due.

In summary the material factual differences in the two

cases are:

(1) Springfield Township and its tax collector are defend-

ants in the Sheridanville, Inc. case, as well as Borough of

Wrightstown and its tax collector, because that project is

partly in that Township and partly in the Borough of

Wrightstown. The project of Fort Dix Apartments Corp.

is entirely within the limits of Borough of Wrightstown.

(2) The lease to Fort Dix Apartments Corp. provides

that as the buildings are constructed, title passes to the

United States of America. The lease to Sheridanville, Inc.

does not so provide, title remaining in the lessee.

(3) Fort Dix Apartments Corp. has received a rent in-

crease because of the taxes assessed and there is an escrow

agreement regarding same. Sheridanville, Inc. has not se-

cured such an increase.

BASIS FOR FEDERAL JURISDICTION IN THE UNITED

STATES DISTRICT COURT.

The Federal question as to whether the United States

Constitution and statutes preclude the taxes in question is

the issue in the case and is the basis for Federal Jurisdic-

tion. The question was presented in the Complaint and

was decided by the United States District Court and the

United States Court of Appeals for the Third Circuit.

— ala NE — —

REASONS FOR ALLOWANCE OF WRIT.

The projects in question were built under the Wherry

Act, which was passed to provide much needed housing

for military personnel and “at rentals comparable to or

lower” than those which many of them were paying for

inadequate quarters. There are many such projects in the

United States, and the question of the right to tax the lease-

hold is a nationwide question. If the taxes are valid, they

result in higher rentals for the military, as the rentals al-

lowed by the Federal Housing Commissioner are based upon

the costs of the projects. So, in the Fort Dix Apartments

Corp. case there is in effect an escrow agreement whereby

the tenants pay the increase in the rental due to the taxes,

and it is placed in an escrow account pending the final de-

termination of this litigation.

Yet, for these taxes, the municipalities are not furnish-

ing any services to the projects. Chief Judge Forman,

United States District Court of New Jersey, although rul-

ing against petitioners, made the following comments on

the application for an injunction pending appeal: *

“You see basically, counsellor, this is a matter that

should have careful reconsideration by an appellate

court. Basically this will be something of a technical

windfall, if we examine the facts carefully, to the citi-

zens of these communities.

“Now I have decided in their favor, very true, but

they are not spending any money for sewage or gar-

Act of August 8, 1949, 63 Stat. 570, 12 U. S. C. 61748. Appendix E,

infra, page 58.

Page 8 of transcript of hearing on motion, November 1, 1954.

SOLE LES SILLS d AOL EE OP IRENE GN

bage collection or many of the normal services that

would be actual money laid out by them. I consider

it a technical situation in the law that makes them

entitled to these taxes, but when considering equities

that also has to be taken into consideration.

“Just why the tax rate should be sixteen dollars a

hundred under these circumstances I wouldn’t know.

You can only estimate from that that nearly half of

the taxes are going to come from these two apartment

houses. That is a neat situation.”

Petitioners urge the allowance of the writ for the follow-

ing reasons, which we will present in further detail here-

after.

(1) As to one of the two statutes which have been urged

as permitting the taxes (the 1947 Act) the United States

District Court and the United States Court of Appeals for

the Third Circuit have rendered conflicting interpretations.

Both the District Court Judge and the dissenting Judge in

the Circuit Court interpreted the 1947 Act as not permitting

the taxes. The two judges concurring in the majority opin-

ion of the Circuit Court interpreted it as permitting the

taxes.

(II) As to the other of the two statutes which have been

urged as permitting the taxes (the 1949 Act), the United

States District Court Judge interpreted it as permitting the

taxes and the dissenting Judge in the Circuit Court inter-

preted it as not permitting the taxes. The Judges render-

ing the majority opinion of the Circuit Court did not state

what their interpretation was.

3 Act of August 5, 1947, 61 Stat. 774, 10 U. S. C. 61270. Appendix E.

infra, page 61.

III. The opinion of the United States Court of Appeals

for the Third Circuit does not recognize the distinction

urged by Petitioners between a retrocession of exclusive

jurisdiction and a mere consent to tax property owned by

the United States in non-exclusive jurisdiction areas. Also

the opinion fails to analyze the absence of services and bene-

fits as a constitutional bar to the taxes.

(IV) The question is nationwide in importance. The dis-

senting Judge in the Circuit Court stated well the impor-

tance of the matter as follows (Appendix C, infra, page

56):

“Without sound basis under either statute the major-

ity decision is doubly unfortunate in greatly weaken-

ing as it does the fine inducement to remain in the

armed services given by the 1949 Act to experienced

married service men by supplying them with housing

they can afford and thus enabling them to have normal

married lives within the military establishment.”

We wish now to present these reasons in further detail.

I and II. The 1947 and 1949 Acts and the conflicting

interpretations.

In 1947, there was passed an Act to permit the leasing of

standby facilities of the Government. This is the Act of

August 5, 1947, 61 Stat. 774, 10 U. S. C. 61270. we refer

to it as the 1947 Act. Pertinent provisions are printed in

Appendix E, infra page 61. Section 6 of this Act reads

as follows:

“The lessee’s interest, made or created pursuant to

the provisions of this Act, shall be made subject to State

or local taxation.”

The Senate Report on this legislation (No. 626), U. S.

Code Cong. Service, 80th Congress, First Session, 1947, page

1592 revealed the purpose was primarily to authorize the

leasing to responsible companies of stand-by facilities

which had been financed by the Government.‘

In 1949, to provide much needed housing for military per-

sonnel, there was passed the Act of August 8, 1949, 63 Stat.

570, 12 U. S. C. 51748. We refer to it as the 1949 Act, or

the Wherry Act.

The House Report on this Act, No. 854, 81st Congress, Ist

Session, U. S. Code Cong. Service, 1949, page 1757, makes

clear that its purpose was to encourage the construction by

private enterprise of rental housing for military personnel

at rentals comparable to or lower than those which many

of them were paying for inadequate quarters. It was recog-

he purpose of this bill, +s amended, is to broaden and make

uniform the authority of the War and Navy Departments, to lease

Government property and to permit the transfer of certain plants,

machinery and equipment to their custody without reimbursement to

the Reconstruction Finance Corporation or the War Assets Administra-

tion. The necessity for the proposed legislation arises primarily out

of the facilities stand-by program of the War and Navy Departments,

under which these Departments among other things, will retain title

for an indefinite period to a selected group of plant facilities. These

plants were financed by the Government during the emergency, at

tremendous expense and were built for the manufacture of such items

as proximity fuses, ammunition, explosives, etc. While all of these

plants may not be adaptable to peace time uses, as many as possible

will be leased to responsible companies which can operate them with-

out making such changes as to prevent their being rapidly put back

into operation in the event of emergency. All leases made under this

section are revocable in time of national emergency * * *; and if the

plant is no longer needed in the stand-by program, the leases could

be revoked and the property declared surplus.” * * *

“Section 6 provides that the interest a lessee holds under this act

shall be subject to State or local taxes. In the event of States, not

presently having legislation permitting the taxing of such property,

enacting such laws subsequent to the negotiation of a lease under

this act, this section provides that the lease can be renegotiated.”

nized that this was essential to attract and hold highly

trained men in the military services.

The purpose of the bill (12 U. S. C. A. $1748) is to encourage

private enterprise to construct rental housing to serve the needs of

personnel at military installations primarily through (1) the provision

of a special form of mortgage insurance designated to meet the par-

ticular problems involved (2) the leasing of sites by the Military Es-

tablishment free from the right of revocation and (3) the provision

of utility services by the Military Establishment on a long-term basis.”

“Under existing legislation there is no specific authority which per-

mits the Federal Housing Administration to assist in the financing of

housing to serve the personnel at military installations on any different

basis than other housing not related to military personnel.”

* 0 * * * = * * * * *

“The provisions of the bill would authorize the Military Establish-

ment to lease or sell lands * * *. In the case of leases of building

sites, the leases * * * could be made without regard to the existing

limitation with respect to right of revocation by the Government in

the event of the declaration of a national emergency * * *. The

leasing of such sites by the Military Establishment at nominal con-

siderations would further make possible the achievement of lower

rentals for the personnel of the establishment.

As noted above, however, any utility or related service pro-

vided and sold under this authority shall not be so provided unless

it is determined that the utility or related service is not at the time

of such sale or contract to sell, available from a private or other

public source, and that the furnishing thereof is in the interest of the

national defense.”

s 0 s 0 a * 0 1 * *

“Representatives of the three branches of the National Military Es-

tablishment, appearing before your committee, strongly urged the

enactment of this measure. * * They made it abundantly clear that,

to attract and hold the highly trained, experienced and technical per-

sonnel now required * * * it is essential that this personnel be af-

forded an opportunity to live comfortable and normal lives

The fact that most of them do not now have this privilege is a major

contributing factor to the existence of a morale problem that bears

on the effectiveness of our armed forces, to the difficulties in recruit-

ing able men, and to the large percentage of trained men who are

failing to re-enlist at the expiration of their enlistment terms.”

lower than those which many of them are now paying for inadequate

quarters

It is significant that nowhere in this House Report is

there a mention that the lessee’s interest is to be taxable,

as was mentioned in the Senate Report on the 1947 legis-

lation.

The only reference to taxation in this 1949 Act is the

following, which is contained in Section 807 of the Act and

is found in 12 U. S. C. §1748f:

“Nothing in this title shall be construed to exempt

any real property acquired and held by the Commis-

sioner under this title from taxation by any State or

political subdivision thereof, to the same extent, ac-

cording to its value, as other real property is taxed.”

12 U. S. C. §1748f.

The District Court of New Jersey held that the 1947 legis-

lation was not effective as to leases under the 1949 Act, and

that the taxes could not be sustained under Section 6 of

the 1947 Act. In this respect the District Court opinion

said (Appendix A, infra, page 42):

“It is the defendants’ contention that this recognition

is carried from the 1947 to the 1949 legislation and con-

stitutes a recession by the United States to the State of

New Jersey and its subdivisions of the right to tax

property leased under the Military Housing Insurance

Act. This contention cannot be approved since it ap-

pears that the reason for the reference in the 1949 legis-

lation to the 1947 legislation was to define the types of

property which the Secretaries could use for the pur-

pose of the Military Housing Insurance Act and that

was such property as was described in the 1947 legis-

lation as was ‘under the control of his Department

within the meaning of the Act of October 3, 1944 (58

Stat. 765), and is not for the time required for public

use, *“**”

_—

We submit that this is the proper interpretation of the

1949 Act. The dissenting Judge in the Circuit Court agreed

saying (Appendix C, infra, page 55):

“I am unable to see how these seventy-five year apart-

ment house leases can be brought within the 1947 Act

which gave authority to lease defense plants to private

industry for not more than five years. The plain reason

for the reference in the 1949 statute to the 1947 law was

to define the types of property which the Secretaries

could use for the purpose of the Military Housing In-

surance Act (the 1949 Act) as the district judge held.”

The majority of the Circuit Court held otherwise, saying

that the 1947 Act was applicable to the leasing of property

generally and not limited to stand-by defense plants; and

that accordingly Section 6 of the 1947 Act applied to leases

under the 1949 Act.

As to the 1949 legislation, the District Court J udge found

a consent to tax in 12 U. S. C. 1748 f (Appendix A, infra,

page 44).° The dissenting opinion in the Circuit Court dis-

“The foregoing statutory provision would appear to evidence the

agreed (Appendix C, infra, page 56), and the majority

of the Court did not discuss the section.

In substance therefore, two Judges have held that the

1947 Act supports the taxes, and two have held otherwise.

One Judge has held the 1949 Act allows the taxes and one

has held otherwise.

With such equal divergence of opinion, it is difficult to

comprehend how either of the Acts in question can be said

to contain a clear consent to tax which is necessary to sup-

port the right to tax.

III. The opinion of the United States Court of Appeals for

the Third Circuit does not recognize the distinction

urged by Petitioners between a retrocession of exclu-

sive jurisdiction and a mere consent to tax property

owned by the United States in non-exclusive jurisdic-

tion areas. Also the opinion fails to analyze the absence

of services and benefits as a constitutional bar to the

taxes.

Petitioners believe that the following arguments on these

points are fundamental in any consideration of the issues

involved.

7 The dissenting opinion stated (Appendix C, infra, page 56):

“Nor is there anything in the 1949 Act itself which will support

this attempted taxation. The language of the Act relied on by

the municipalities reads ‘Nothing in this title shall be construed

to exempt any real property acquired and held by the Com-

missioner under this title from taxation and by any State or

political subdivision thereof, to the same extent, according to its

value, as other real property is taxed.’ That clause means here

as it does in other titles of the National Housing Act that where

property mortgaged under the National Housing Act is acquired

by the Commissioner it is not exempted from taxation merely

because of the new ownership by an agency of the United States.”

(A) THE EXCLUSIVE JURISDICTION OF THE LANDS INVOLVED

HAD NOT BEEN RETROCEDED BY THE UNITED STATES.

It is fundamental that lands within the exclusive juris-

diction of the United States of America are beyond the tax-

ing power of the State.* The State has no jurisdiction to

tax, and before a State can validly tax, Congress must first

retrocede exclusive jurisdiction. In those situations where

Congress must consent in order to give the State jurisdic-

tion in a Federal Area, over which the United States has

exclusive jurisdiction, we find that clear and unequivocal

language is used by Congress. Examples of the type of

language which is used for the purpose of effecting a retro-

cession of exclusive jurisdiction in Federal Areas may be

found in the Buck Act of July 30, 1947, C. 389, 61 Stat. 641,

4 U. S. C. §§105 and 106; the Motor Fuel Taxes Act of July

30, 1947, C. 389, 61 Stat. 641, 4 U. S. c. $104; the Assimilated

Crimes Act of June 25, 1948, C. 645, 62 Stat. 683, 18 U. S. C.

§13; Workmen’s Compensation Laws, Act of June 25, 1936,

C. 822, 49 Stat. 1938, 40 U. S. C. 9290; Wrongful Death Stat-

utes, Act of Feb. 1, 1928, C. 15, 45 Stat. 54, 16 U. S. C. §457.

We submit that Section 6 of the 1947 Act did not effect

nor intend to effect a retrocession of exclusive jurisdiction

in Federal Areas such as the Fort Dix reservation. Peti-

tioners believe that an examination of the legislative his-

tory of the 1947 Act, as well as the language employed

therein, will make clear that the Congress had no intention

to retrocede any portion of the exclusive jurisdiction of the

United States over Federal Areas by virtue of Section 6

of said Act.

The purpose of the 1947 Act was primarily to permit the

* Surplus Trading Co. v. Cook, 281 U. S. 647, 74 L. Ed. 1091, 50 Sup.

Ct. 455 (1930).

transfer of certain defense plants which had been acquired

by the Defense Plant Corporation or the Reconstruction

Finance Corporation in accordance with the authority con-

tained in the Reconstruction Finance Corporation Act (see

Act of Jan. 22, 1932, C. 8, 47 Stat. 5, as amended, August

23, 1935, C. 614, 49 Stat. 704, as amended, June 30, 1947,

C. 166, 61 Stat. 202, as amended, May 25, 1948, C. 334, 62

Stat. 261, 15 U. S. C. 6601-617) to the War Department

or the Navy Department; and to permit the War Depart-

ment or the Navy Department to lease these plants to pri-

vate industry for a limited period of time and subject to

certain conditions including the right to revoke the lease in

the event of national emergency.

The legislative history of the 1947 Act shows that Con-

gress had in mind these defense plants which were to be

leased to private companies, when the consent to taxation

was included. And it further appears that Congress was

simply confirming the right of the State to tax a leasehold

interest in property owned by the United States. See Hear-

ing before Senate Committee on Armed Services on S. 1198

(H. R. 3471), goth Cong., Ist Sess., a bill to authorize loans

of real or personal property by the War and Navy Depart-

ments, pp. 30-32.“ Some doubt as to the right to tax had

Senator Tydings: No. First of all, you would have to set up on

the assessment books w the company actually owned. What he

would own would be a lease. He would not own the property. Your

gfe

1115

885

2 8

FE LE

7 8

been expressed previously in Court decisions. But we fail

to find anywhere in the Congressional discussions any con-

templation of a retrocession of exclusive jurisdiction by the

inclusion of Section 6, and we submit that Congress had no

such intention.

In this connection, it should be noted that the Recon-

“Mr. Kenney: Your State could make the leasehold interest itself

taxable, which I think should be all that could be taxable.

“Senator Tydings: That is right. Say the lease was for 5 years.

You could take up the value of the lease, which would be an in-

finitesimal part of the value of the property.”

“Senator Tydings: As a matter of fact, if the Government leases

subject to local or state taxation. That would help.

“Senator Tydings: Upon the lessee?

and the 1947 Act further authorized the leasing of these

plants to private companies. We submit that the intention

of Congress was to eliminate any claim of tax exemption

by the private lessee because the plants were United States

property, and that they were not even considering the pos-

sibility of tax exemption because a plant might be on lands

under the exclusive jurisdiction of the United States, and

consequently certainly never intended to retrocede any such

exclusive jurisdiction by the inclusion of Section 6.

Opposing counsel in their briefs in the Circuit Court,

argued that in the instant case there had been a retroces-

sion by the 1947 Act and that the burdens of providing the

normal municipal services had been thereby shifted to the

municipalities. Yet, if such were the effect of the 1947 Act

on the present lease, it would have had a similar effect on

any lease of a defense plant on a Federal enclave, even

though such leases were, by the terms of the 1947 Act for

a period of not over 5 years, except in certain circumstances,

and were revocable in time of national emergency. To con-

clude that such was the intention of Congress, we submit,

is completely beyond any Congressional discussions or re-

ports that we have been able to find.

It should be noted that the 1955 Amendments to the Hous-

ing Act have changed the leasing paragraph, and have elimi-

nated the reference to the 1947 Act. Appendix E, infra,

page 65. Also, the Government operates the projects.

But the prior Wherry Act is left applicable to projects cer-

tified prior to June 30, 1955. Presumably, as to such later

projects, the possibility of the 1947 Act being said to allow

the taxes is eliminated.

Although the Circuit Court held that the taxes were valid

because of the consent to tax in the 1947 Act, the opinion

did not analyze the question of exclusive jurisdiction in that

regard. This very case had been referred to by the Comp-

troller General of the United States in April, 1955, as pre-

senting that very question, whether a leasehold on lands

in the exclusive jurisdiction of the United States could be

taxed. And, while the court’s holding in effect resolves

11 See letter, Comptroller General of the United States, Washington,

April 18, 1955, to Hon. Harry F. Byrd, Chairman, Joint Committee on

Reduction of Nonessential Federal Expenditures, Congress of the

United States, made a part of the Congressional Record, Senate, May

2, 1955, page 4485. Pertinent excerpts from said letter are as follows:

“You have also expressed interest in the right of local com-

munities to tax Wherry projects, particularly as that right may

be affected by the provisions of the lease under which Govern-

ment-owned land for a project is made available to a sponsor. The

specific question you have raised in this connection is whether

title to the buildings and other improvements placed on the Gov-

ernment-owned land by the sponsor should be vested in the Gov-

ernment or in the sponsor during the term of the lease * * *

“Considerable discussion was had during the legislative history

of the bill which became the Leasing Act of 1947 as to local taxa-

tion of the plants to be leased * * *

“The hearings on the bill * * * indicate that it was assumed the

plants to be leased could not be taxed locally, and the military

departments intended to charge correspondingly high rentals to

prevent lessees from securing a competitive advantage through

freedom from local taxes * * *

“During the course of the Senate hearings the question of State

taxation of the lessee’s possessory or leasehold interest was dis-

cussed. It was stated to be the view of the War Department that

property used for commercial purposes in any State should be

taxed by the local authorities even though title to the property was

in the United States * * *

“During the legislative history of the Wherry Act there was

some discussion of the problem of local taxation but no significant

conclusions were reached. It is, however, interesting to note the

following comments on Wherry projects contained in the com-

mittee report on the 1950 school aid bill, Public Law 874, 81st

Congress (64 Stat. 1100—House Committee on Education and

Labor, Rept. No. 2287 on H. R. 7940, 81st Cong. June 20, 1950, p. 25):

The term “Federal Property” is defined in Section 9 (1) to

mean real property owned or leased by the United States which

is not subject to taxation by any State or political subdivision.

The term includes real property leased from the Secretary of

the Army, Navy or Air Force under Section 805 of the National

Housing Act, as amended, for the purpose of title VIII of such

act. * This is the so-called Wherry-Spence housing recently

authorized by Congress which is intended to play an important

role in providing housing to military and civilian personnel

connected with Federal activities in areas suffering acute hous-

ing shortage. The State and local tax status of the federally-

owned lands involved and of the housing to be constructed

upon them under this section of the National Housing Act is not

clear at this time, the situation being complicated by the fact that

the program contemplates a lease of the land to private con-

cerns to construct and manage the housing built on the land. If

all or most of the real property values involved should turn out

to be fully subject to State or local taxation, the inclusion of

such property as Federal property under the bill would not be

necessary. Pending settlement of this question, the bill includes

this type of property.

“In our consideration of the proper construction to be given

section 6 of the Leasing Act we have also studied the views of the

Department of Defense as reflected in a letter to you under date of

February 23, 1955 from Mr. Wilber M. Brucker, General Counsel

of the Department. As is pointed out in that letter, it is by no

means certain that the vesting of title to the buildings and other

improvements in the sponsor (lessee) of a Wherry project would

permit local authorities to tax such property because of the ex-

clusive Federal jurisdiction over many of the areas involved. It

is noted that the same point was mentioned by Assistant Attorney

General Morton in his letter to you of January 18, 1955.

“The first sentence of section 6 of the Leasing Act specifically

deals with local taxation of the lessee’s ‘possessory interest’ under

a lease. However, the property contemplated for leasing under

this statute consisted of certain defense plants and machine tools,

and the question of exclusive Federal jurisdiction over such prop-

erty did not exist. Thus, the legality of imposing local possessory

interest taxes * * * against a possessory interest in property such

as a Wherry project which is located within exclusive Federal

jurisdiction is not free from doubt. This precise question is now

before the United States Court of Appeals for the Third Circuit

in the appeal from the decision in Sheridanville, Inc. v. Borough

of Wrightstown (125 F. Supp. 743) which was argued last month.

“It should also be noted that the porperty which was to be

leased under the Leasing Act was already in existence and be-

longed to the United States. Since title to the property to be

leased was already in the Government, it obviously was not con-

templated that section 6 would compel the Government to transfer

its title to the lessee in order to subject him to local taxation

“In view of the legislative history of section 6 of the Leasing

Act of 1947, it is not believed that the drafting of leases to vest

title to Wherry Act improvements in the Government rather than

in the sponsor can be considered illegal. We are of the opinion,

and the Defense Department undoubtedly would agree, that local

communities should not be required to furnish municipal services

to Wherry projects without reimbursement. On the other hand, if

the greater part of such services are furnished to the sponsor of a

the question, nevertheless the opinion fails to analyze the

point.

Accordingly, we submit that the most that the provisions

of Section 6 can be said io mean is that the lessee’s interest

in property within the territorial jurisdiction of a State is

subject to taxation despite the fact that the United States

Government continues to own the said property. Congress

was explicitly consenting to the tax so that private industry

could not escape taxation on said plants by contending that

they were non-taxable because they were leased from the

United States Government.

(B) NEITHER THE 1947 Acr NOR ANY OTHER ACT PROVIDES THE

STATE OR ITS SUB-DIVISIONS WITH THE CONSTITUTIONAL

BASIS FOR TAXATION, BECAUSE THE LOCAL TAXING AUTHOR-

ITY PROVIDES NONE OF THE SERVICES NORMALLY SUPPLIED

BY A MUNICIPALITY.

All of the services normally furnished by the state,

county and municipality are supplied by the United States

Government on a reimbursable basis. Water and sewage

facilities, garbage and trash collection, fire protection, snow

removal and road maintenance are all provided by the mili-

tary authorities at the Fort Dix Military Reservation and

are charged to petitioners, pursuant to a contract between

the United States and petitioners. Electric service is pro-

vided by Public Utility corporations and charged to peti-

Wherry project by the Government on a reimbursable basis, there

appears to be no justification for subjecting the property to taxa-

tion at full value.

“Because of the complicated legal problems involved, we be-

ieve that adjustment of the respective equities of the local com-

munities and the Government can best be accomplished by legisla-

tion.” * * *

— ares

tioners. Street lighting within the project has been erected

and is operated and maintained exclusively by petitioners.

Neither the state, county or municipality in which the lands

are located furnish any such services and are not obligated

to furnish any such services. In fact, the Secretary of the

Army of the United States has determined that the services

were not available from the state. The children residing

in the apartments of petitioners cannot attend the local

schools on a free basis as do the children residing in the

municipalities. The persons residing in said apartments

cannot vote in any state, county or municipal elections.

Accordingly, even if Section 6 of the 1947 Act could be

technically construed as covering property located on Fed-

eral Areas, it fails to provide any constitutional basis on

which the state could levy a tax such as that levied in the

instant cases.

Examining the law as to the basis of taxation, we find it

to be fundamental that the right of taxation depends upon

benefits and protections available to the taxpayer from the

taxing authority. If such benefits and protections are not

available, the “tax” is an “extortion” and violates the due

process clause. This was the decision of the United States

Supreme Court in Union Refrigerator Transit Co. v. Ken-

tucky, 199 U. S. 194; 50 L. Ed. 150, 26 Sup. Ct. 36 (1905),

where a tax by the State of Kentucky on all the rolling

12 The contract for utilities and other services between the United

States and Fort Dix Apartments Corp., recites (Tr. F.37a, F.38a):

“Whereas certain utilities and related services required to main-

tain and operate such housing project are not available from local

private or public sources, but the government has facilities avail-

able at said military installation, and

“Whereas, the Secretary of the Army has determined that the

utilities and related services which are the subject of this con-

tract, are not at the date hereof available from a local private or

other public source and that the furnishing thereof is in the in-

terest of national defense.”

stock of a corporation, some of which were in Kentucky, and

some not, was held unconstitutional. The Court said (p.

202):

“The power of taxation, indispensable to the exist-

ence of every civilized government, is exercised upon

the assumption of an equivalent rendered to the tax-

payer in the protection of his person and property, in

adding to the value of such property, or in the creation

and maintenance of public conveniences in which he

shares, such, for instance, as roads, bridges, sidewalks,

pavements, and schools for the education of his chil-

dren. If the taxing power be in no position to render

these services, or otherwise to benefit the person or

property taxcd, and such property be wholly within the

taxing power of another state, to which it may be said

to owe an allegiance and to which it looks for protec-

tion, the taxation of such property * * * partakes rather

of the nature of an extortion than a tax, and has been

repeatedly held by this Court to be beyond the power

of the legislature and a taking of property without due

process of law.

“* * * But notwithstanding the rule of uniformity

lying at the basis of every just system of taxation, there

are doubtless many individual cases where the weight

of a tax falls unequally upon the owners of the prop-

erty taxed. * * * In other words, a general tax cannot

be dissected to show that, as to certain constituent

parts, the taxpayer receives no benefit. * * *

“Subject to these exceptions, the rule is that in

classifying property for taxation some benefit to the

property taxed is a controlling consideration. * * * It

is often said protection and payment of taxes are cor-

relative obligations.” ™

18 Expression of the same general doctrine is found also in Frick v.

Pennsylvania, 268 U. S. 473, 69 L. Ed. 1058, 45 Sup. Ct. 603 (1925);

Considering the location of these apartment projects on

lands of the Fort Dix Military Reservation and the absence

of benefits or services from the municipality and in the ab-

sence of the right to free school education and the right

to vote, it is hard to comprehend how a municipality could

be said to have the right to levy a tax. This is particularly

so where the net effect of the tax has been to increase the

rents due from the military personnel occupying the apart-

ments where the principal purpose of the construction of

the apartments was to furnish much needed housing and

lower rentals for them.

IV. The question is nationwide in importance.

The Department of the Air Force has advised that there

are 259 Wherry Act projects, containing 67,767 housing

units, in the country. Of these, 203 of the projects em-

ployed a form of lease giving title to the improvements to

the United States, and the others, the earlier ones, give

title to the lessees. 159 projects containing 53,339 units

are on lands over which the United States has exclusive

jurisdiction.

The question of taxability has arisen in a number of

states. The Court of Appeals of Maryland, on a lease giv-

ing lessee title to the improvements, has held the lessee’s

Commission of Maryland, 202 Md. 20, 95 A. 2d 280 (1953).

Alabama, Georgia and New York courts have ruled like-

wise.

The Supreme Court of Nebraska, reversing the District

Court of Sarpy County, Nebraska, has also held the lessee’s

interest taxable, on a lease giving title to the United States.

Offutt Housing Company v. County of Sarpy and Robert

M. Eby, Treasurer of County of Sarpy, Nebraska, 160 Neb.

320, 70 N. W. 2d 382 (1955). A petition for certiorari has

already been filed in that case with the United States Su-

preme Court as of October Term, 1955.

Trial courts have held the lessees not taxable on the value

of the improvements in Virginia, Massachusetts, New

Mexico and Washington.” Similar litigation is pending in

Texas, Mississippi, South Dakota, Missouri and Florida.

Attorneys General and other officials of 11 states have given

'* Brookley Manor, Inc. v. State of Alabama, now on appeal, No.

547, First Div. Sup. Ct., Alabama; Fort Hamilton Manor v. Boyland,

pending on appeal No. 12,252, New York App. Div., 2nd Dept.;

Conley Housing Corp. v. Coleman, No. 19001, Sup. Ct. Georgia, Sept.

12, 1955.

‘® Thomason Park, Inc. v. County of Prince William, Cir. Ct. of Prince

William County, Virginia, decided January 5, 1955, appeal pending;

Westover Development Corp. v. Asselin, Super. Ct. Hampden County,

Mass., No. 74569, decided January 21, 1952; Buena Viste Homes, Inc.

v. Board of County Commissioners, Dist. Ct., Dona Ana County, New

Mexico, No. 13,213, 1954; Moses Lake Homes, Inc. v. Grant County,

Super. Ct. for Grant County, Washington, No. 8095, opinions of

October and December 1952 (not taxable after United States acquired

title to buildings and improvements, taxable before).

‘© Likins-Foster Biggs Corp. v. Deason, Tax Assessor, U. S. D. Et.

W. D. Tex., EI Paso Div., Civil No. 1562; Board of Supervisors of

Harrison County v. Military Housing, Inc., Keesler AFB Project,

U. S. D. Ct., S. D. Miss., S. Div., Civil No. 1381; Renel Heights, Inc. v.

Gibbs, Treasurer, 7th Jud. Cir. So. Dak., filed April 29, 1955; State v.

Personnel Housing Inc., Cir Ct., St. Louis County, Mo., No. 206031,

Div’n 6; Patrick Gardens v. Nash, Tax Collector, Cir. Ct, 9th Jud.

Cir., Brevard County, Florida, No. 13,852.

—

opinions that such projects are not taxable. Attorneys

General of two more states have ruled that the leasehold

interest is taxable, but not the value of the buildings, and

the Attorneys General of two more states have ruled that

leasehold interests are taxable except where the United

States has exclusive jurisdiction.” These opinions are re-

ferred to in the petition for certiorari in the Offutt Housing

Company case (pages 14 and 15), supra, and are collected

in the office of the Chief, Management Branch, Family

Housing Division, Directorate of Facilities Support, United

States Department of the Air Force.

17 Connecticut, Letter from Attorney General George C. Conway

to Hon. William F. Connelly, Tax Commissioner, Hartford, Conn.,

October 15, 1952; Colorado, letter from Attorney General John W.

Attorney General Boyd L. Bailey to State Tax Assessor, March 16,

1953; Michigan, letter from Attorney General Frank G. Millard to

D. Hale Brake, Treasurer of Michigan, January 16, 1951; New Mexico,

letter from Attorney General Joe Martinez to N. R. Reese, District

Attorney, Roswell, New Mexico, December 10, 1951; New York, in-

formal opinion letter from Attorney General Nathaniel L. Goldstein

to Department of the Air Force, May 1, 1952; Ohio, letter from At-

torney General William O’Neill to M. H. Heck, Prosecuting Attorney,

County, May 21, 1952; South Dakota, letter from At-

Air Base, April 7, 1952; Wyoming, letter from Assistant Attorney

General Jack D. Froggatt to Walter B. Phelan, County and Prosecuting

Attorney, Cheyenne, Wyoming, May 15, 1951; Oregon, letter from

State Tax Commission Attorney S. B. Stewart to District Public Works

Office, 13th Naval District, U. S. Naval Receiving Station, Seattle,

Washington, March 6, 1952.

16 Utah, opinion of Attorney General E. R. Callister to Davis County

Attorney, April 30, 1955; Florida, letter from Attorney Richard W.

Ervin, Office of the Attorney General, to Board of County Commis-

sioners, Hillsborough County, July 25, 1950.

19 Washington, letter from Attorney General Smith Troy to Hugh H.

Evans, Prosecuting Attorney, Spokane County, March 20, 1951; Texas,

—

Thus in 17 states, courts or officials have reached a con-

clusion contrary to that of the Court below.

The legislative history of the Wherry Act shows its pur-

pose was to provide adequate housing at lower rentals for

military personnel to help keep skilled men in the military

services. This is still true, as is shown by the legislative

comment as to the 1955 Amendments to the Housing Act.”

Yet, the effect of the imposition of these taxes is to pass

on to these very military personnel an increase in rent

based on the amount of these taxes.

We accordingly submit that the case is sufficiently im-

portant for review by this Court because of the nationwide

importance and effect of the taxes, and because of the wide

divergence of opinion in the various states as to the proper

solution.

* The Senate Report (No. 404, 84th Cong. Ist Sess., p. 19) on the

Housing Act Amendments of 1955 states:

CONCLUSION.

This case involves important questions with respect to

the power of the states to impose taxes on leasehold inter-

ests in property of the United States located in areas under

the exclusive jurisdiction of the United States. The deci-

sion weakens the fine inducement to remain in the armed

services given by the 1949 Act to experienced married serv-

ice men. The problem is nationwide and has met different

solutions in the different states.

For these reasons, we submit that this petition for cer-

tiorari should be granted.

Respectfully submitted,

JOSIAH E. DuBOIS, IR.,

MADISON S. DuBOIS,

Attorneys for Petitioner,

Fort Dix Apartments

Corp.

ALEXANDER FEINBERG,

Attorney for Petitioner,

Sheridanville, Inc.

APPENDIX.

A. OPINION OF UNITED STATES DISTRICT COURT.

FORMAN, C. J.:

Plaintiffs, Sheridanville, Inc., and Fort Dix Apartments

Corporation, are New Jersey corporations, Each leased land

from the United States for the purpose of constructing an

apartment house project on its reservation at Fort Dix,

Burlington County, New Jersey. After the structures were

completed the Borough of Wrightstown, a municipal cor-

poration, through its tax collector, I. Haines Crowshaw, and

the Township of Springfield, through its tax collector, R. J.

Beazley, in the case of plaintiff, Sheridanville, Inc., sought

to collect municipal taxes from it and in the case of plain-

tiff, Fort Dix Apartments Corp., the said Borough of

Wrightstown and its collector likewise sought to collect

taxes. Thereupon each corporation filed a complaint in this

court against the respective municipalities and collectors

above named, which and who sought taxes from it.

The complaint of Sheridanville, Inc. is in two counts. In

the first count it alleges, among other things, that on March

30, 1951, the then Secretary of the Army (now Secretary

of Defense) of the United States, through his agent exe-

cuted a lease agreement with it wherein there was leased

to it approximately 35 acres of land for a term of 75 years

at an annual rental of $1,150, and by the terms thereof it

was required to erect and maintain a housing project of 300

units on a site at Fort Dix within the exclusive jurisdiction

of the United States; that pursuant to the said agreement

it applied for a mortgage under the provisions of subchapter

VIII of Title 12 of the National Housing Act of August 8,

1949, 12 U. S. C. $1748 et seq., and after constructing the

housing project leased the apartments to military and

civilian personnel as designated by the Commanding Offi-

cer of the Fort Dix Military Reservation; that the land

leased to it was formerly mainly in the Township of New

Hanover, and partly in the Township of Springfield, but

pursuant to the provisions of the laws of the State of New

Jersey that portion of the land lying within the boundaries

of the Township of New Hanover was annexed to the Bor-

ough of Wrightstown, N. J. Laws of 1951, c. 182; that no

municipal benefits, services or utilities for the project are

furnished by the defendant municipalities; that certain

facilities are furnished by the military authorities at Fort

Dix, electric service is furnished by private public utility

corporations and the education of the children of the tenants

of the housing project is provided by the Board of Educa-

tion of the Township of Pemberton, which is fully reim-

bursed by the United States pending the provision of

facilities in the future by the Federal Security Agency, De-

partment of Education of the United States; that the Com-

missioner of Education of New Jersey has denied the said

children admission to local schools upon the grounds that

the occupants of the project do not reside in the local school

district within the provisions of the laws of New Jersey

and the occupants of the housing project have been denied

the right to vote because of their military status and non

residence within the jurisdiction of the State of New Jer-

sey; that there have been sought to be collected by the de-

fendant municipalities the following taxes:

Borough of Wrightstown—Assessment on

Land Buildings Total Tax

1952 $5,250 $307,500 $312,750 $15,704.55

Township of Springfield—Assessment on

Personalty ' Tax

$19,500 $1,415.70

that similar taxes have been levied by the said defendant

municipalities for the year 1953; that plaintiff has paid to

the defendant Borough of Wrightstown $10,559.29 under

protest and additional moneys for assessments in 1952 and

1953; that the executions of said taxes are illegal and void

and the plaintiff seeks recovery of the moneys paid and an

injunction restraining the collection of any other moneys

alleged by the municipalities to be due and of any other

future assessments or taxes.

In Count 2 of the complaint levelled at the Borough of

Wrightstown and its tax collector plaintiff, Sheridanville,

Inc., among other things alleges that it leased apartment

units to military and civilian employees at rental rates

governed and determined by the Commissioner of the Fed-

eral Housing Administration and approved by the military

authorities at Fort Dix; that by the terms of its agreement

with the then Secretary of the Army its lease is for the im-

proved land described therein and plaintiff did not lease

the improvements which are now erected thereon because

they were not in existence at the time of the execution of

the lease, by the terms of which they are not a part of the

leasehold estate, but title to them is expressly vested in the

plaintiff; that the plaintiff is a mere licensee of the United

States and because of the limitations imposed upon plain-

tiff under its agreement it is in effect a management agree-

Later corrected by judgment of Burlington County Tax Board of

November 14, 1953, to a real estate assessment in the sum of $27,375.

ment not subject by taxation by the defendants; that by

collateral agreements the plaintiff is entitled to a propor-

tionate increase in the maximum rental rates to offset in-

creases in the operating costs of said housing units and the

burden of taxes imposed by the Borough of Wrightstown

will fall directly on the tenants of said housing project and

plaintiff prays for relief against the Borough of Wrights-

town similar in nature to that requested in Count 1.

The complaint of the Fort Dix Apartments Corp. is in

one count and is similar to that of Sheridanville, Inc. De-

tails of its agreement vary in that its lease was alleged to

have been executed April 24, 1952 for approximately 28

acres of land at a yearly rental of $100; that title to the

buildings which have been constructed remain in the

United States and plaintiff owns neither land nor buildings

on which the taxes have been levied for the year 1953 in

the total sum of $18,150.72, representing an assessment on

the land of $4,050 and on improvements for $306,750.

The County of Burlington and the New Hanover Town-

ship Board of Education sought and were granted permis-

sion to intervene in each case. They and the defendants

filed answers and the issues joined came to trial upon stipu-

lations of facts signed by all of the parties and oral testi-

mony offered at a hearing.

Pertinent portions of stipulations filed by the parties in

both suits follow:

“For the purpose of alleviating the acute housing

shortage which existed at the Fort Dix Military Reser-

vation at Fort Dix, New Jersey, and to increase rental

housing accommodations available to military and

civilian personnel at said military reservation, the Sec-

cretary of the Army (now Secretary of Defense) of

the United States of America, through his duly author-

ized agent on March 30, 1950 [as to Sheridanville, Inc.,

and on April 24, 1952 as to Fort Dix Apartments Corp.]

executed a lease agreement, pursuant to authority

under the Act of August 5, 1947, Chapter 493, Section

1 and Section 6, 61 Stat. 774 and 61 Stat. 775, 10 U. S. C.

1270 and 1270d, and also Subchapter VIII of Title 12

of the National Housing Act of August 8, 1949, 12 U. S.

C. 1748 &c., with the plaintiffs wherein the United

States of America, among other things, leased to the

plaintiff the following described lands:”

* * * * * * * * *

The above described lands are all within the terri-

torial limits of the Fort Dix Military Reservation at

Fort Dix, New Jersey.“ Paragraph 2 in each stipula-

tion) ?

“The agreement, a copy of which is attached hereto

as Exhibit A, leased to the plaintiff said lands for a

term of 75 years from the date thereof at the annual

rental of $1,150.00, [in the case of Sheridanville, Inc.,

and $100 in the case of Fort Dix Apartments Corp.]

and required the plaintiff, among other things, to erect,

maintain and operate a housing project, consisting of

approximately 300 units, to be located on the Fort Dix

Military Reservation at Fort Dix, New Jersey. (Para-

graph 3 in each stipulation)

“Pursuant to the terms of said Agreement. the plain-

tiff applied for a mortgage under the provisions of Sub-

chapter VIII of Title 12 of the National Housing Act

of August 8, 1949, 12 U. S. C. 1748 &c., and thereafter

erected and constructed a housing project consisting of

approximately 300 units, and after completion thereof,

leased said apartment units to such military and civil-

ian employees as designated by the Commanding Offi-

2 The last sentence appears only in the stipulation in the case of

Sheridanville, Inc.

cer of the Fort Dix Military Reservation. At the

present time all of said 300 units are leased to military

personnel stationed on Fort Dix Military Reservation,

and the said units are occupied by the said military per-

sonnel and their families.” (Paragraph 4 of Sheridan-

ville, Inc. stipulation and Paragraph 8 of Fort Dix

Apartments Corp. stipulation.) *

“The land leased to the plaintiff was formerly situ-

ate mainly in the Township of New Hanover, County

of Burlington, and State of New Jersey, and partly in

the Township of Springfield, County of Burlington and

State of New Jersey, but pursuant to the provisions of

the laws of the State of New Jersey, Laws of 1951,

Chapter 182, that portion of the land lying within the

boundaries of the Township of New Hanover was an-

nexed to the Borough of Wrightstown.” (Paragraph 5

of Sheridanville, Inc. stipulation and Paragraph 9 of

the Fort Dix Apartments Corp. stipulation, in which,

however, no reference is made to the Township of

Springfield.”

“Title to all or a portion of said lands was acquired

by the United States of America by condemnation pro-

ceedings in the District Court of the United States for

the District of New Jersey entitled United States of

America v. Wilbur G. Davis, et al., No. M130a, wherein

judgment on the Declaration of Taking was entered on

October 16, 1940 and recorded in the Office of the Clerk

of Burlington County in Deed Book 926, Folio 446.

Judicial notice of said proceedings may be taken by the

Court. (Paragraph 6 in each stipulation)

“By letter dated December 31, 1941 Honorable Henry

L. Stimson, then Secretary of War, notified Honorable

3 The last sentence appears only in the Fort Dix Apartments Corp.

stipulation.

Charles Edison, then Governor of New Jersey, that the

United States accepted jurisdiction over the said lands

acquired by condemnation proceedings effective as of

January 8, 1942 at 10:00 A. M. which letter stated that

the transfer of such jurisdiction had been authorized

by virtue of the provisions of the Act of Legislature of

New Jersey appearing as Sections 1, 2 and 3 of Title 52,

Chapter 30, Revised Statutes of New Jersey, 1937. By

endorsement dated January 2, 1942, Honorable Charles

Edison, then Governor of New Jersey, acknowledged

receipt of the said letter. (Paragraph 7 in each

stipulation)

“Water and sewerage facilities, garbage and trash

collections, snow and road maintenance are provided

by the military authorities at the Fort Dix Military

Reservation and charged to the plaintiff on the basis

of actual cost; fire protection is provided by the military

authorities at the Fort Dix Military Reservation and

charged to the plaintiff at a nominal cost, police pro-

tection is provided without charge by the United States

Army; electric service is provided by public utility cor-

porations and is charged to plaintiff at prevailing rates;

street lighting within the project has been erected and

is operated and maintained exclusively by the plain-

tiff. Said services are not furnished by the Borough of

Wrightstown. The said Borough of Wrightstown or

Township of Springfield has not been requested to fur-

nish any such services. The Township of Springfield

and or, Intervener, New Hanover Township Board of

Education reserve the right to offer proof of instances

where services have been rendered to plaintiff, and

plaintiff shall have the right to rebut any such proof.”

(Paragraph 8 in Sheridanville, Inc. stipulation and

Paragraph 10 in Fort Dix Apartments Corp. stipula-

tion)

“In 1951, the defendant, Borough of Wrightstown,

through its agent, I. Haines Crowshaw, Collector of

Taxes, for the Borough of Wrightstown, levied a real

estate assessment for 1952 against the plaintiff on real

estate purportedly owned by the plaintiff and located

within the Borough of Wrightstown; the defendant,

Borough of Wrightstown, through its tax assessors,

evaluated land purportedly owned by the plaintiff for

the sum of $5,250.00 and evaluated buildings owned by

the plaintiff for the sum of $307,500.00, for a total valu-

ation of land and improvements in the sum of $312,-

750.00; the total tax assessment by the defendant, Bor-

ough of Wrightstown on the property of the plaintiff

amounts to the sum of $15,074.55 for the year 1952; said

defendants in 1952 levied a similar assessment under

similar circumstances on real property of the plaintiff

for the year 1953 for a total tax assessment of $18,-

264.60.” [The total tax assessment against Sheridan-

ville, Inc. for 1953 amounted to 818,150.72] (Paragraph

9 in Sheridanville, Inc. stipulation and Paragraphs 11

and 14 in Fort Dix Apartments Corp. stipulation)

“The plaintiff has paid to the defendant, Borough of

Wrightstown, the sum of $10,559.29, under protest, for

the tax assessment for 1952, and upon the representa-

tion by said defendant that said taxes were valid, the

plaintiff has also paid additional moneys under similar

circumstances for tax assessments for both 1952 and

1953.“ (Paragraph 10 of Sheridanville, Inc. stipula-

tion)

“In 1951, the defendant, Township of Springfield,

through its agent, R. J. Beazley, Collector of Taxes for

the Township of Springfield, levied an assessment on

personal property owned by the plaintiff in the hous-

ing project for the year 1952 and has evaluated the per-

sonal property at the sum of $19,500.00; the total tax

assessment by said defendants amounts to the sum of

$1,415.70 for the year 1952. Said defendants have levied

a similar tax against the personal property of the plain-

tiff for the year 1953, in the sum of $1,388.40, but the

plaintiff has made no payment toward either of said

personal property taxes.” (Paragraph 11 of Sheridan-

ville, Inc. stipulation)

“The land upon which the housing project of the

plaintiff is located is situated mostly within the bound-

aries of the Borough of Wrightstown and partly within

the boundaries of the Township of Springfield.” (Para-

graph 12 of Sheridanville, Inc. stipulation )

“The payments made by the plaintiff to the Borough

of Wrightstown were made under protest.” (Paragraph

13 of the Sheridanville, Inc. stipulation)

“A rent increase has been authorized by the Federal

Housing Commissioner and an agreement concerning

said increase has been executed between plaintiff, the

Federal Housing Commissioner, and Camden Trust

Company, mortgagee, a true copy of which agreement

is hereto attached as Exhibit ‘E’.” (Paragraph 13 of

Fort Dix Apartments Corp. stipulation)

“Plaintiff maintains no offices in the Borough of

Wrightstown.” (Paragraph 14 in Sheridanville, Inc.

stipulation and Paragraph 12 in Fort Dix Apartments

Corp. stipulation)

“The facts contained in two letters by Donald C.

DeHart, Field Representative, Department of Health,

Education and Welfare, Regional Office, Region II, 42

Broadway, New York 4, New York, dated January 20,

1954, and January 27, 1954, copies of which are attached

hereto and designated as Exhibits ‘B’ and ‘C’, [in Sheri-

danville, Inc. and ‘F’ and G' in Fort Dix Apartments

Corp.] are correct insofar as concerns the number of

pupils, where they come from and where they attend,

and the amounts of monies paid and to whom paid.

Anything by way of legal conclusions in said letters

are not stipulated. * * * Intervener, New Hanover

Township Board of Education reserves the right to offer

proof regarding the school problem concerning plain-

tiff’s project and the history of the transition of school

arrangements for the Fort Dix personnel from the New

Hanover Township Board of Education to the Pember-

ton Township Board of Education and plaintiff shall

have the right to rebut any such proof.” (Paragraph

15 in each stipulation)

“The question of the right of the residents of the

apartment units in question to vote is a legal question

and all parties reserve the right to argue the question

of law.” (Paragraph 16 in each stipulation)

“The taxes collected by the Borough of Wrightstown

from the plaintiff are disbursed approximately in the

proportions of 5% for local purposes, 45% for school

purposes and 50% to the County of Burlington.” (Para-

graph 17 in each stipulation)

“A true and correct copy of the Budget of the County

of Burlington as amended for the year 1953 is attached

hereto as Exhibit ‘D’ [in Sheridanville, Inc. and ‘H’ in

Fort Dix Apartments Corp.].” (Paragraph 18 in each

stipulation)

The principles involved in these two cases are identical

and they will be treated as one case in the following dis-

cussion.

The New Jersey Statute under which the defendants and

interveners claim the taxation is authorized is an Act of

the Legslature passed in 1949 and is as follows:

“When real estate exempt from taxation is leased to

another whose property is not exempt, and the leasing

of which does not make the real estate taxable, the

leasehold estate and the appurtenances shall be listed

as the property of the lessee thereof, or his assignee,

and assessed as real estate.” N. J. L. 1949, c. 177, p.

566, §1, N. J. S. A. 54: 4-2.3.

While broad in its language it would appear from the

statement of purpose attached to New Jersey Senate Bill

No. 148,“ from which the Act originated that property of

the kind under discussion here was in mind at the time of

the adoption of the legislation.

But where the lands are within the exclusive jurisdiction

of the United States, under Article I, Section 8, Clause 17

of the Federal Constitution,’ they are immune from taxa-

tion by a state and even private property located thereon

‘It is as follows:

“STATEMENT

“The purpose of this Act is to permit Municipalities to levy and

assess taxes on exempt property when the same is leased for private

use. In many Municipalities the Federal government leases its exempt

property to business and industry while the same remains exempt

from taxation.

“The first section of this Act is taken from the Illinois Annotated

Statutes (Chapter 120, Section 507). It has been upheld by the Courts

of Illinois.

owned by the United States is not considered as a tax on the United

States (see 23 A. L. R., page 248).”

zines, Arsenals, dock-Yards, and other needful Buildings;—” U. S.

Const. Art. I, $8, cl. 17.

is not subject to taxation by a state. Surplus Trading Co.

v. Cook, 281 U. S. 647.

Since the lands in question in this case are indubitably

within the exclusive jurisdiction of the United States a close

application of the foregoing principle would make invalid

any effort upon the part of the state or its subdivisions to

reach the plaintiffs’ properties by taxation. Therefore it

becomes necessary to ascertain whether the United States

has relinquished its exclusive jurisdiction over these prop-

erties to the extent sufficient to give the right to tax them.

Each lease contained the following statement concerning

the authority upon which it was purported to be based:

“THAT, under authority of the Act of August 5, 1947

(10 U. S. C. 1270) and Title VIII of the National Hous-

ing Act, as amended (12 U.S. C. 1748-1748h), the Sec-

retary of the Army has determined that the lease of

the hereinafter described premises will effectuate the

purposes of the said Title VIII, * * *”

Of course that mere recital in the lease is not conclusive

as to the extent of the statutory authority referred to

therein and it is necessary to examine the legislation itself

to determine the nature of the power that was granted.

The authority for the Government’s contracts with the

plaintiffs is derived from the Military Housing Insurance

Act of August 8, 1949 (known as the Wherry Act), 63 Stat.

p. 570, 12 U. S. C. §1748. This was an amendment adding

Chapter VIII to the National Housing Act, 48 Stat. 1246, 12

U. S. C. §1701, et seq. It provided, among other things, for

the Secretaries of the Armed Forces to grant leases for land

for Military housing purposes on or adjacent to military

reservations. This was to be done to effectuate the pur-

pose of a scheme for financing the construction thereof

through the insurance by the Commissioner of the Federal

Housing Administration of mortgages made by the lessees

to private financial institutions up to 90% of the cost of

construction. A fund for such purpose was to be created

out of premiums paid for such insurance and means were

provided for the temporary operation of the fund. There is

in this legislation a reference to an earlier federal statute

wherein the Secretaries of the Armed Forces were author-

ized in 1947, among other things, to grant leases for real

and personal property in the way of plants and equipment

that had been used in the manufacture of war essentials, to

private parties for periods of not more than five years,

where the use of the plant and its machinery would not be

materially altered so that should it again be required it

could quickly revert to its original purpose of manufactur-

ing war necessities. This reference in the Military Hous-

ing Insurance Act is as follows:

“Whenever the Secretary of the Army, Navy, or Air

Force determines that it is desirable to lease real prop-

erty within the meaning of the Act of August 5, 1947

(61 Stat. 774), to effectuate the purposes of this title,

the Secretary concerned is authorized to lease such

property under the authority of said Act upon such

terms and conditions as in his opinion will best serve

the national interest without regard to the limitations

imposed by said Act in respect to the term or duration

of the lease, and the power vested in the Secretary of

the Department concerned to revoke any lease made

pursuant to said Act in the event of a national emer-

gency declared by the President shall not apply. * —

63 Stat. 576, 12 U. S. C. §1748d.

The 1947 legislation above mentioned commences with

the following language:

“That whenever the Secretary of War or the Secre-

tary of the Navy shall deem it to be advantageous to

the Government he is authorized to lease such real or

personal property under the control of his Department

as is not surplus to the needs of the Department within

the meaning of the Act of October 3, 1944 (58 Stat.

765), and is not for the time required for public use,

* * *” 61 Stat. 774, 10 U. S. C. §1270.

See the legislative histories of these 1947 and 1949 Enact-

ments respectively in the U. S. Code of Congressional Serv-

ice, 80th Congress, First Session 1947, p. 1592 and 81st Con-

gress First session 1949, p. 1757.

The 1947 legislation contains the following direct recog-

nition of the liability of property leased under it for taxes

assessed by state or local authorities as follows:

“The lessee’s interest, made or created pursuant to

the provisions of sections 1270-1270b, 1270d of this title,

shall be made subject to State or local taxation. Any

lease of property authorized under the provisions of

said sections shall contain a provision that if and to the

extent that such property is made taxable by State and

local governments by Act of Congress, in such event

the terms of such lease shall be renegotiated.” 10 U. S.

C. §1270d.

It is the defendants’ contention * that this recognition is

carried from the 1947 to the 1949 legislation and constitutes

a recession by the United States to the State of New Jersey

and its subdivisions of the right to tax property leased

under the Military Housing Insurance Act. This conten-

tion cannot be approved since it appears that the reason for

the reference in the 1949 legislation to the 1947 legis-

The separate contentions of the defendants and interveners will

be considered collectively as applying to all and will be referred to

herein as “defendants’” contentions or arguments.

lation was to define the types of property which the Secre-

taries could use for the purpose of the Military Housing In-

surance Act and that was such property as was described

in the 1947 legislation as was “under the control of his De-

partment as is not surplus to the needs of the Department

within the meaning of the Act of October 3, 1944 (58 Stat.

765), and is not for the time required for public —_m °° oe

While no direct provision for the payment by lessees of

local taxes appears in the Military Housing Insurance Act,

as in the enactments authorizing the leasing of standby

facilities, there is the following provision:

“Nothing in this subchapter shall be construed to ex-

empt any real property acquired and held by the Com-

missioner under this title from taxation by any State

or political subdivision thereof, to the same extent, ac-

cording to its value, as other real property is taxed.”

12 U. S. C. §1748f.

And the leases in suit here contain the following provi-

sion:

That the Lessee shall pay to the proper authority,

when and as the same becomes due and payable, all

taxes, assessments, and similar charges which, at any

time during the term of this Lease, may be taxed, as-

sessed or imposed upon the Government or upon the

Lessee with respect to or upon the leased premises. In

the event any taxes, assessments or similar charges are

imposed with the consent of the Congress of the United

States upon the interest of the Government in the

leased premises (as opposed to the leasehold interest

of the Lessee therein), this Lease shall be renegotiated

So as to accomplish a reduction in the rental provided

above, which reduction shall not be greater than the

difference between the amount of taxes, assessments or

similar charges and the amount of any taxes, assess-

ments or similar charges which were imposed upon

such Lessee with respect to his leasehold interest in

the leased premises prior to the granting of such con-

sent by the Congress of the United States and which

shall not in any event be more than 50 per cent of the

rental provided above. * * *” (Paragraph 8 of the

Fort Dix Apartments Corp. lease attached to the stipu-

lation, which is similar to paragraph 8 of the Sheridan-

ville lease, likewise attached to the stipulation in that

case).

The foregoing statutory provision would appear to

evidence the intent of the Government to manifest a relin-

quishment of this property from insulation from local tax-

ation equally with what was legislated in the act authoriz-

ing the leasing of standby facilities. As was argued by the

defendants certainly it could not have been the intention of

the Congress that the Commissioner of the Federal Housing

Administration in the event that he should be obliged to

capture the property would be in a less preferred position

with regard to local taxation than a private corporation

such as either of the plaintiffs. While of course the lessees

cannot bind the Government to a surrender of its immunity

to local tax nevertheless they do show at least an acceptance

of the eventuation of such a circumstance and they arrange

to place the burden of its cost on the ultimate consumer—

the lessees’ tenants.

However, the plaintiffs argued that even though it should

be granted that the exclusive jurisdiction of the United

States was limited to the extent that local taxation was to

be permitted the taxes have no justification here because

the municipalities afforded no services as consideration for

the taxes they sought to impose. The plaintiffs contended

that services ordinarily afforded by municipalities were

here provided by the United States or by private sources

pursuant to the leases and that residents of the leased areas

were not permitted to vote.

It is a fact that the Government supplies water and sewer

facilities, garbage and trash collections, fire and police pro-

tection and snow and road maintenance and that the fed-

eral Government subsidizes the cost of the education of

children in the local schools or provides educational facili-

ties.

Of the taxes paid to the municipalities 5% is retained for

local needs, 45% for school purposes and 50% to the County

of Burlington. Admittedly the plaintiffs’ tenants do not

take advantage of those which duplicate the services ren-

dered by the Government, but the defendants insist that

there are many benefits that the inhabitants of the plain-

tiffs’ projects enjoy, such as the maintenance of roads and

law and order in the community in which the occupants of

the projects must live, the services of the courts, the county

clerk and law enforcement agencies, eligibility (after

achieving residence qualification) for treatment at the

tuberculosis hospital, mental hospital, welfare house, bene-

fits of the child welfare, old age assistance, county exten-

sion service office, library, mosquito extermination com-

mission, etc.

Some point was made of the charge by the plaintiffs that

their tenants would not be permitted to vote. An attempt

was made to prove this at the hearing, but it proved abor-

tive. However, while the military personnel may not vote

under New Jersey law, it has not been shown that the eli-

gible members of the family of military personnel and other

civilians housed in the projects, otherwise qualified, will

be deprived of voting.

While it is true that there must be the rendition of serv-

ice to support a tax, the failure to take advantage of pro-

tection furnished out of the proceeds of tax funds is no

reason for declaring the tax void when the protection is

available. Rainier National Park Co. v. Martin, W. D.

Washington 1937, 18 F. Supp. 481, and taxes otherwise law-

ful are not invalidated by the fact that the resulting bene-

fits are unequally shared, Thomas v. Gay, 1898, 169 U. S.

264; Wagoner v. Evans, 1898, 170 U. S. 588. Nor need the

benefits of taxation be direct and tangible, Morton Salt Co.

v. City of South Hutchinson, 10 Cir. 1947, 159 F. 2d 897.

See also Kiker v. City of Philadelphia, 346 Pa. 624, cert.

denied 320 U. S. 741.

Plaintiffs also rely upon an opinion of the Attorney Gen-

eral of the State of New Jersey (Formal Opinion 1951—

No. 37) holding that the local authorities were without

power to tax the properties in suit here and that the chil-

dren living thereon are not residents in the local school dis-

trict within the meaning of N. J. S. A. 18: 14-1; and upon

4 an opinion of the Burlington County Court in the case of

ö Borough of Wrightstown v. George Abbott (File No. 1142)

on appeal from the judgment of the Municipal Court of the

Borough of Wrightstown, which largely followed the afore-

said opinion of the Attorney General and held that the Bor-

} ough of Wrightstown had no power to apply its building

2 code requirements to one of the buildings in these suits.

4 Neither this opinion nor the opinion of the Attorney Gen-

eral is persuasive for there was no consideration in them

of the implication of surrender by the Government of its

insulation against taxation implicit in the Military Housing

Insurance Act and the circumstances surrounding the use

‘

the SS aS

7 Public schools shall be free to the following persons over five

and under twenty years of age;

“(a) Any person who is domiciled within the school district;”

* — — *

“Nonresidents of the school district, if otherwise competent, may

be admitted to the schools of the district with the consent of the

board of education upon such terms as the board may prescribe.”

N. J. S. A. 18:14-1.

. S

of the buildings by private interests as has been here dis-

cussed,

It is significant that the United States has itself sought

no intervention in this case. At most the plaintiffs suggest

that it is interested because these projects were encouraged

by the Government to fill a need for housing of families of

military and civilian personnel employed at Fort Dix and

vicariously, so to speak, becomes a military purpose not to

be regarded as subject to state or local taxation. The fact

is that in no case will the burden of this tax fall upon the

United States. Indeed, in the light of the terms and con-

ditions of the plaintiffs’ leases the title of the Government

to these properties is only a paper one and to all intents

and purposes they may well be considered the properties

of the private corporate plaintiffs herein, in view of the

fact that their complete dominion over the properties ex-

tends for a period of seventy-five years—obviously a goodly

life term for them. Furthermore, the tax will not fall upon

the plaintiffs for it is noteworthy to observe that the ar-

rangements call for tenants to absorb the burden by re-

turning to the plaintiffs their proportionate share of any

levy, escrow funds of the tenants’ money being already es-

tablished to indemnify the plaintiffs for any payments they

have made or will make if they are ultimately upheld as

valid taxes,

The plaintiffs proffer the argument that their rental

charges are rigidly controlled by the Commissioner of the

Federal Housing Administration, but this hardly seems rele-

vant since ultimately the taxes under no circumstances will

come out of their corporate pockets. Of course even though

that were the case it is nothing unusual for owners of

properties whose incomes are governmentally controlled,

such as public utilities corporations, to be liable to state

and local taxes nevertheless,

It is likewise provided in the leases that in the event that

— nnn

the military authorities do not exercise their prerogative

to nominate military or civilian personnel and their families

as tenants the plaintiffs shall have the right to rent apart-

ments to tenants of their own choosing. Again, in view of

the length of the leasing, such a completely private interest

in the Government property may well come into being.

So we find that if the tax is sustained it will be a burden

upon the individual tenants. Since taxes are accepted as

an inevitable universal burden there would seem to be no

reason why simply by the circumstances of governmental

employment they should enjoy immunity.

Though by a different route I arrive at the same conclu-

sion as did the Court of Appeals of Maryland in the case

of Meade Heights, Inc. et al. v. State Tax Commission, 1953,

95 A. 2d 280, when it was confronted by a problem similar

to the cases at bar. There the court applied the statutory

declaration of relinquishment of immunity from taxation

contained in 10 U. S. C. §1270d directly to taxation levied

upon a housing project of the same nature as these, a theory

with which I cannot agree. As set forth herein I have found

that Congress contemplated the equivalent thereof concern-

ing projects authorizec by the Military Housing Insurance

Act, 12 U. S. C. $1748, and that the plaintiffs’ property taxes

by the defendants constitute private interests in Govern-

ment property susceptible of taxation under the law of the

State of New Jersey.

Plaintiffs cannot prevail in their actions and judgment

must be awarded in favor of the defendants and denying

the relief for which plaintiffs have prayed.

Orders for judgment should be submitted or settled by

the defendants in accordance herewith.

rr rr ee ee, ee,

B. JUDGMENT OF UNITED STATES DISTRICT COURT

AND INJUNCTION PENDING APPEAL.

This motion having heretofore come on to be tried before

the Court upon an agreed stipulation of facts, with briefs

of the parties and arguments of counsel; and the Court hav-

ing made and filed its findings of fact and conclusions of

law;

It is on this 16th day of November, 1954, Adjudged

and Ordered that this action be and it is accordingly hereby

dismissed and that the defendants, Borough of Wrights-

town, a municipal corporation; I. Haines Croshaw, Collec-

tor of Taxes for the Borough of Wrightstown; Township of

Springfield, a municipal corporation; and R. J. Beasley, Col-

lector of Taxes for the Township of Springfield, recover of

the plaintiff, Sheridanville, Inc., a corporation and Fort Dix

Apartments Corp., plaintiff, their costs as taxed.

And it is further Ordered that the Borough of Wrights-

town, I. Haines Croshaw, The Township of Springfield, R. J.

Beasley, County of Burlington and New Hanover Township

Board of Education be and they are hereby enjoined from

taking any steps to collect the taxes assessed against the

properties of plaintiffs, and specificelly are enjoined from

advertising or selling any tax liens against said properties,

or filing any receivership action based on said taxes, or from

proceeding in any other manner authorized by law for the

collection of taxes, until the appeal from this judgment has

been decided by The Circuit Court of Appeals.

And it is further Ordered that Sheridanville, Inc., plain-

tiff, and Fort Dix Apartments Corp., Plaintiff, shall

promptly cause to be deposited with the Clerk of this Court

the amount of the escrows held by the mortgagees for 1953

and 1954 taxes, and shall further provide a bond with ap-

proved corporate surety or additional cash for whatever

additional sum is necessary to pay the 1953 and 1954 taxes

and interest presently due, and shall further cause to be

deposited with the Clerk of this Court the amount of

escrows held by the mortgagees for taxes that later come

due pending the appeal, and shall further provide a bond

with approved corporate surety or additional cash for what-

ever additional sum is necessary to pay the said later taxes

and interest, said additional deposits to be made on or before

the date said later taxes are due. All of said moneys de-

posited shall be held by the Clerk of this Court until the

determination of the appeal, and thereafter distributed by

order of this Court to be entered at that time.

FORMAN,

Chief Judge, United States

District Court.

We hereby consent to the

form of the above order.

ALFRED M. BITTING,

Attorney for Borough of

Wrightstown.

MARTIN L. HAINES,

Attorney for Township

of Springfield, and

R. J. Beazley.

WILLIAM H. WELLS,

Attorney for County of

Burlington, Inter-

vener.

PARKER, McCAY and

CRISCUOLO,

Attorneys for New Han-

over Township

Board of Education,

Intervener.

ALEXANDER FEINBERG,

Attorney for Sheridan-

ville, Inc., Plaintiff.

MADISON S. DuBOIS,

Attorney for Fort Dix

Apartments Corp.,

Plaintiff.

C. OPINION OF UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT.

By HASTIE, Circuit Judge.

These appeals raise the question whether the leasehold

interests of two private corporations in apartment housing

projects operated by them on the Fort Dix Military Reser-

vation can be taxed by state authorities. It is clear and not

disputed that the land on which the projects are located

was an area within the exclusive jurisdiction of the United

States when appellants entered the picture. Both appel-

lants acquired the tracts in question from the United States

on 75 year leases, conditioned upon their providing housing

thereon for military and civilian personnel of the armed

services. The leases recite that they were executed under

the authority of the Act of August 5, 1947, 61 Stat. 774, 10

U. S. C. §1270, providing for the lease of property by the

Secretary, and the National Housing Act, 1949, 63 Stat. 570,

12 U. S. C. 51748, providing for the construction and financ-

ing of military housing. The Fort Dix Apartment Corp.

lease provides that any buildings erected upon the leased

premises become, upon completion, the property of the

United States, leased to the corporation. Sheridanville’s

lease, on the other hand, provides that title to any improve-

ments constructed on the leased premises remains in

Sheridanville during the life of the lease, and vests in the

United States on termination of the lease only if Sheridan-

ville fails to remove the improvements at that time.

The Fort Dix Apartments project lies within the bound-

aries of the Borough of Wrightstown, New Jersey, and the

Sheridanville project within this borough and the Township

of Springfield, New Jersey. The borough has levied real

estate taxes for 1953 on the Fort Dix Apartment Corp.,

based on an assessment of $4,050 for 28 acres of land and

$306,750 for the improvements consisting of 300 apartment

units. On Sheridanville, Inc. the borough has levied real

estate taxes for 1952 and 1953, based on an assessment of

$5,250 for 35 acres of land and $307,500 for 300 apartment

units. Sheridanville has paid some of the taxes levied by

the borough. The Township of Springfield has also levied

real estate taxes on Sheridanville. These suits by the two

corporations, consolidated on appeal, contest the power of

the appellees, the taxing authorities, to collect any of these

taxes, because of the jurisdiction of the United States over

the project sites. The District Court sustained the taxing

power asserted by the New Jersey municipalities.

Appellees agree that in surrendering to the United States

exclusive jurisdiction over the military reservation, New

Jersey lost all power to tax land and buildings on the reser-

vation. See Surplus Trading Co. v. Cook, 1930, 281 U. 8.

647. They contend, however, that Congress has receded

the right to tax such property as appellants’ apartment

projects, and that New Jersey has made appropriate provi-

sion for the imposition of the contested taxes. To support

appellees’ view, it is urged that the United States has con-

sented to this taxation in the very statutes on which appel-

lants’ leases are based.

The Act of Aug. 5, 1947, authorizing leasing of Defense

Department property, provides in part:

SPORE r OED ˙ n Den n

“Whenever the Secretary of War or the Secretary

of the Navy shall deem it to be advantageous to the

Government he is authorized to lease such real or per-

sonal property under the control of his Department as

is not surplus to the needs of the Department within

the meaning of the Act of October 3, 1944 (58 Stat.

765), and is not for the time required for public use,

to such lessee or lessees and upon such terms and con-

ditions as in his judgment will promote the national

defense or will be in the public interest. Each such

lease shall be for a period not exceeding five years

unless the Secretary of the Department concerned shall

determine that a longer period will promote the na-

tional defense or will be in the public interest.

Each such lease shall contain a provision permitting

the Secretary of the Department concerned to revoke

the lease at any time, unless the Secretary shall deter-

mine that the omission of such provision from the lease

will promote the national defense or will be in the pub-

lic interest. In any event each such lease shall be

revocable by the Secretary of the Department con-

cerned during a national emergency declared by the

President. * * * The authority herein granted shall

not apply to oil, mineral, or phosphate lands.

„„ „

Sec. 6. The lessee's interest, made or created pur-

suant to the provisions of this Act, shall be made sub-

ject to State or local taxation. * * 61 Stat. 774, 775,

10 U. S. C. 51270, 1270d.

The National Housing Act, concerned primarily with the

insuring of mortgages for the construction of military hous-

ing, provides in part:

“Whenever the Secretary of the Army, Navy, or

Air Force determines that it is desirable to lease real

Dy TF A PF we

property within the meaning of the Act of August 5,

1947 (61 Stat. 774), to effectuate the purposes of this

title, the Secretary concerned is authorized to lease

such property under the authority of said Act upon

such terms and conditions as in his opinion will best

serve the national interest without regard to the limi-

tations imposed by said Act in respect to the term or

duration of the lease, and the power vested in the Sec-

retary of the Department concerned to revoke any lease

made pursuant to said Act in the event of a national

emergency declared by the President shall not apply.

* * *” 63 Stat. 570, 576, 12 U. S. C. §1748d.

In our view this provision of the Natio:.al Housing Act

merely permits leasing for military housing purposes, al-

ready covered by the general authorization of the 1947 Act,

to be accomplished without regard to specified restrictions

of the 1947 Act, when the elimination of these restrictions

would serve the purposes of the Housing Act. Other pro-

visions of the 1947 Act, including the language of Section 6

subjecting the lessee’s interest to local taxation, apply to

leases made under the authority of both Acts.

We have not overlooked the argument for a narrower

view of the scope of the 1947 Act based upon legislative

history indicating that the primary purpose of that Act

was to provide for the leasing of stand-by defense plants.

But the language of the Act extends the leasing authority

to all non-surplus property under the control of the De-

fense Department except oil, mineral, or phosphate lands

(an exception which would be unnecessary if the Act ap-

plied only to defense plants). An additional indication

that the 1947 Act encompasses the leasing of property gen-

erally is found in Section 2 which repeals the prior author-

ity for the leasing of War Department property generally,

27 Stat. 321. The Senate Report expresses the reporting

committee’s understanding that this prior leasing statute

was being “entirely superseded”. Sen. Rep. No. 626, 1947,

80th Cong. Ist Sess.

In our opinion the 1947 Act effectively expresses the

consent of the United States to the taxation of the lessee’s

interest in the property leased here, and the National Hous-

ing Act leaves this consent unchanged. See Meade Heights,

Inc. v. State Tax Comm’n, 1953, 202 Md. 20, 95 A. 2d 280.

It is true that the congressional consent applies only

to the lessees’ interest, and not to any interest which the

United States may have retained. However, appellants

here have not shown, as in law they must to prevail, that

the challenged local taxes were levied on the interest of the

United States, rather than on their leasehold interest. See

Siegfried v. Raymond, 1901, 190 Ill. 424, 60 N. E. 868.

Beyond congressional permission to tax, it is also neces-

sary to the validity of the local taxes here that, pursuant

to such permission, the state have granted the municipali-

ties the power to levy the tax in question. We agree with

the analysis made by the District Court showing that this

has been accomplished here by a New Jersey statute ' pro-

viding for the taxation as real estate of leasehold interests

in property tax-exempt to the owner.

The judgment will be affirmed.

McLAUGHLIN, Circuit Judge, dissenting.

I am unable to see how these seventy-five year apart-

ment house leases can be brought within the 1947 Act which

—

When real estate exempt from taxation is leased to another whose

property is not exempt, and the leasing of which does not make the

real estate taxable, the leasehold estate and the appurtenances shall be

listed as the property of the lessee thereof, or his assignee, and assessed

a real estate.” N. J. L. 1949, c. 177, p. 566, $1, N. J. S. A. 54:4-2.3.

gave authority to lease defense plants to private industry

for not more than five years. The plain reason for the

reference in the 1949 statute to the 1947 law was to define

the types of property which the Secretaries could use for

the purpose of the Military Housing Insurance Act (the

1949 Act) as the district judge held.

Nor is there anything in the 1949 Act itself which will

support this attempted taxation. The language of the Act

relied on by the municipalities reads “Nothing in this title

shall be construed to exempt any real property acquired

and held by the Commissioner under this title from taxa-

tion by any State or political subdivision thereof, to the

same extent, according to its value, as other real property

is taxed.” That clause means here as it does in other titles

of the National Housing Act that where property mort-

gaged under the National Housing Act is acquired by the

Commissioner it is not exempted from taxation merely be-

cause of the new ownership by an agency of the United

States.

The premises involved are within the Fort Dix military

reservation and under the exclusive jurisdiction of the

United States. They are occupied by military personnel

stationed at Fort Dix. They were erected for the purpose

of relieving the acute housing shortage at the Reservation

and to increase rental housing accommodations there avail-

able to military and civilian personnel. All of the various

facilities are provided by the Reservation authorities on a

basis of actual cost. There are no services furnished by

the municipalities.

Without sound basis under either statute the majority

1 Title II of the National Housing Act, Act of June 27, 1934, Chapter

847, $208, 48 Stat. 1252, 12 U. S. C. $1714; also in Title VI, Act of March

28, 1941, Chapter 31, $1, 55 Stat. 61, 12 U. S. C. $1741; and in Title VII.

Act of August 10, 1948, Chapter 832, Title IV, $401, 62 Stat. 1281, 12

U. S. C. 61747.

decision is doubly unfortunate in greatly weakening as it

does the fine inducement to remain in the armed services

given by the 1949 Act to experienced married service men

by supplying them with housing they can afford and thus

enabling them to have normal married lives within the

military establishment.

I would reverse the district court judgment.

A true Copy:

Teste:

Clerk of the United States Court of

Appeals for the Third Circuit.

X 7 & 8 oe &

a F 8

D. JUDGMENT OF UNITED STATES COURT OF

APPEALS FOR THE THIRD CIRCUIT.

This cause came on to be heard on the record from the

United States District Court for the District of

New Jersey and was argued by counsel.

On consideration whereof, it is now here ordered and

adjudged by this Court that the judgment of the said Dis-

trict Court in this case be, and the same is hereby affirmed,

with costs.

= A &B TFse 2&8

Attest:

HARRIET G. HUMPHRYS,

Deputy Clerk.

August 23, 1955.

* NN

E. STATUTES INVOLVED.

1. The pertinent provisions of the Act of August 8, 1949,

63 Stat. 570, 12 U. S. C. §1748, which added Title VIII

Military Housing Insurance to the National Housing Act,

read as follows:

“Sec. 803. (a) In order to assist in relieving the

acute shortage of housing which now exists at or in

areas adjacent to military installations because of

uncertainty as to the permanency of such installations

and to increase the supply of rental housing accommo-

dations available to military and civilian personnel at

such installations, the Commissioner is authorized,

upon application of the mortgagee, to insure mort-

gages (including advances on such mortgages during

construction) which are eligible for insurance as here-

inafter provided, and, upon such terms as the Com-

missioner may prescribe, to make commitments for so

insuring such mortgages prior to the date of their

execution or disbursement thereon: Provided, That

the aggregate amount of principal obligations of all

mortgages insured under this title shall not exceed

$500,000,000 except that with the approval of the

President such aggregate amount may be increased to

not to exceed $1,000,000,000: And provided further,

That no mortgage shall be insured under this title

after July 1, 1951, except (A) pursuant to a commit-

ment to insure issued on or before such date, or (B)

a mortgage given to refinance an existing mortgage

insured under this title and which does not exceed the

original principal amount and unexpired term of such

existing mortgage.

“(b) To be eligible for insurance under this title

a mortgage shall meet the following conditions:

“(1) The mortgaged property shall be held by a

mortgagor approved by the Commissioner. The Com-

missioner may, in his discretion, require such mort-

gagor to be regulated or restricted as to rents or sales,

charges, capital structure, rate of return, and methods

of operation. The Commissioner may make such con-

tracts with, and acquire for not to exceed $100 stock

or interest in, any such mortgagor, as the Commis-

sioner may deem necessary to render effective such

restriction or regulation. Such stock or interest shall

be paid for out of the Military Housing Insurance Fund,

and shall be redeemed by the mortgagor at par upon

the termination of all obligations of the Commissioner

under the insurance.

“(2) The mortgaged property shall be designed for

rent for residential use by civilian or military per-

sonnel of the Army, Navy, Marine Corps, or Air Force

(including Government contractors’ employees) as-

signed to duty at the military installation at or in the

area of which such property is constructed. Notwith-

standing the provisions of any other law, preference

or priority of opportunity in the occupancy of the

mortgaged property for such personnel and their im-

mediate families shall be provided under such regu-

lations and procedures as may be prescribed by the

Commissioner. No mortgage shall be insured under

this title unless the Secretary of Defense or his desig-

nee shall have certified to the Commissioner that the

housing with respect to which the mortgage is made

is necessary to provide adequate housing for such

personnel, that such installation is deemed to be a

permanent part of the Military Establishment, and

that there is no present intention to substantially

curtail activities at such installation.

Tree K

. 1

“(3) The mortgage shall involve a principal obliga-

tion in an amount—

“(A) not to exceed $5,000,000; and

“(B) not to exceed 90 per centum of the amount

which the Commissioner estimates will be the replace-

ment cost of the property or project when the pro-

posed improvements are completed; and

“(C) not to exceed an average of $8,100 per family

unit for such part of such property or project as may

be attributable to dwelling use, except that where the

Secretary of Defense or his designee in exceptional

cases certifies and the Commissioner concurs in such

certification that the needs would be better served by

single-family detached dwelling units the mortgage

may involve a principal obligation not to exceed $9,000

per family unit for such part of such property as may

be attributable to such dwelling units.

7 . * + + * * * *

„Sec. 805. Whenever the Secretary of the Army,

Navy, or Air Force determines that it is desirable

to lease real property within the meaning of the Act

of August 5, 1947 (61 Stat. 774), to effectuate the pur-

poses of this title, the Secretary concerned is author-

ized to lease such property under the authority of said

Act upon such terms and conditions as in his opinion

will best serve the national interest without regard to

the limitations imposed by said Act in respect to the

term or duration of the lease, and the power vested in

the Secretary of the Department concerned to revoke

any lease made pursuant to said Act in the event of

a national emergency declared by the President shall

not apply. Whenever the Secretary of the Army, Navy,

or Air Force determines it to be in the interest of

national defense, he is hereby authorized to sell, trans-

fer, and convey at fair value (as determined by him),

—

for use under this title, all or any right, title, and in-

terest in any real property under his jurisdiction, not-

withstanding any limitations or requirements of law

with respect to the use or disposition of such property.

The authority conferred by this section shall be in addi-

tion to and not in derogation of any other power or

authority of the Secretary of the Army, Navy, or Air

Force.

* * * * * * — * 9

Sec. 807. Nothing in this title shall be construed to

exempt any real property acquired and held by the

Commissioner under this title from taxation by any

State or political subdivision thereof, to the same ex-

tent, according to its value, as other real property is

taxed.”

2. The pertinent provisions of the Act of August 5, 1947,

61 Stat. 774, 10 U. S. C. 51270, read as follows:

Section 1] * * * whenever the Secretary of War

or the Secretary of the Navy [or the Secretary of the

Air Force] shall deem it to be advantageous to the

Government he is authorized to lease such real or per-

sonal property under the control of his Department as

is not surplus to the needs of the Department within

the meaning of the Act of October 3, 1944 (58 Stat. 765),

and is not for the time required for public use, to such

lessee or lessees and upon such terms and conditions

as in his judgment will promote the national defense

or will be in the public interest. Each such lease shall

be for a period not exceeding five years unless the

Secretary of the Department concerned shall determine

that a longer period will promote the national defense

or will be in the public interest. The Secretary of the

Department concerned may include, among other terms

‘

and conditions in the lease, a right of first refusal in

the lessee to purchase the property in the event of the

revocation of the lease in order to permit sale thereof

by the Government, but this section shall not be con-

strued as authorizing the sale of any property unless

the sale thereof is otherwise authorized by law. Each

such lease shall contain a provision permitting the

Secretary of the Department concerned to revoke the

lease at any time, unless the Secretary shall deter-

mine that the omission of such provision from the lease

will promote the national defense or will be in the pub-

lic interest. In any event each such lease shall be

revocable by the Secretary of the Department con-

cerned during a national emergency declared by the

President. Notwithstanding section 321 of the Act of

June 30, 1932 (47 Stat. 412; U. S. C., title 40, sec. 303b),

or any other provision of law, any such lease may pro-

vide for the maintenance, protection, repair, or restora-

tion by the lessee, of the property leased or of the entire

unit or installation where a substantial part thereof is

leased, as a part or all of the consideration for the lease

of such property. In the event utilities or services shall

be furnished by the Department concerned to the lessee

in connection with any lease, payments for utilities or

services so furnished may be covered into the Treasury

to the credit of the appropriation or appropriations

from which the costs of furnishing any such utilities or

services to the lessee was paid. Except as otherwise

hereinabove provided, any money rentals received by

the Government directly under any such lease shall

be deposited and covered into the Treasury as mis-

cellaneous receipts. The authority herein granted shall

not apply to oil, mineral, or phosphate lands. The

Secretary of War or the Secretary of the Navy, as the

case may be, shall submit to the Congress on the Ist

day of January and the Ist day of July of each year,

following the enactment of this law, a report of all

leases entered into in accordance with the provisions

of this Act.

* * * * * * * * *

“Sec. 5. (a) Whenever in the opinion of the Secre-

tary of War or the Secretary of the Navy, as the case

may be, the interests of national defense require assur-

ance of the continued availability for war-production

purposes of the industrial capacity of shipyards, plants,

and equipment which are surplus to the needs of their

respective Departments or of the Reconstruction Fin-

ance Corporation within the meaning of the Surplus

Property Act of 1944, they are authorized to direct the

imposition of such terms, conditions, restrictions, and

reservations in the disposition of such property by the

disposal agency under said Act as will in the opinion

of the Secretary concerned be adequate to assure such

continued availability.

(b) In the event the disposal agency is unable to dis-

pose of any such industrial plants and equipment sub-

ject to such terms, conditions, restrictions, or reserva-

tions as have been imposed, within a reasonable time

and after such property shall have been offered for

sale and reasonable efforts made to dispose of the same,

the Department imposing such terms, conditions, re-

strictions, or reservations shall (1) modify them to the

extent necessary to permit the sale or lease of such

property, (2) withdraw the property from surplus, or,

in the case of Reconstruction Finance Corporation

property, request a transfer thereof in the manner pro-

vided in sections 3 (a) and 4 of this Act, or (3) elimi-

nate and waive the requirement for the imposition of

any terms, conditions, restrictions, or reservations made

under the authority of this section.

“Sec, 6. The lessee’s interest, made or created pur-

suant to the provisions of this Act, shall be made sub-

ject to State or local taxation. Any lease of property

authorized under the provisions of this Act shall con-

tain a provision that if and to the extent that such prop-

erty is made taxable by State and local governments

by Act of Congress, in such event the terms of such

lease shall be renegotiated.”

3. Housing Amendments of 1955, Public Law No. 345,

Ch. 783, 84th Cong. Ist Sess., Approved August 11, 1955.

Title VIII of the National Housing Act was amended to

read as follows:

“Sec, 803. (a) In order to assist in relieving the

acute snortage and urgent need for family housing

which now exists at or in areas adjacent to military

installations because of uncertainty as to the perma-

nency of such installations and to increase the supply

of necessary family housing accommodations for per-

sonnel at such installations, the Commissioner is au-

thorized, upon application of the mortgagee, to insure

mortgages (including advances on such mortgages dur-

ing construction) which are eligible for insurance as

hereinafter provided, and, upon such terms as the

Commissioner may prescribe, to make commitments

for so insuring such mortgages prior to the date of

their execution or disbursement thereon: Provided,

That the aggregate amount of principal obligations of

all mortgages insured under this title shall not exceed

$1,363,500,000: And provided further, That the limita-

tion in section 217 of this Act shall not apply to this

title. And provided further, That no mortgage shall

be insured under this title after September 30, 1956,

except pursuant to a commitment to insure issued

before such date.

* * * * * * *

Sec. 805. Whenever the Secretary of the Army,

Navy, or Air Force determines that it is necessary to

lease any land held by the United States on or near

a military installation to effectuate the purposes of this

title, he may lease such land upon such terms and

conditions as will, in his opinion, best serve the na-

tional interest. The authority conferred by this section

shall be in addition to and not in derogation of any

other power or authority of the Secretary of the Army,

Navy, or Air Force.

Sec. 807. The Commissioner is authorized and

directed to make such rules and regulations as may

be necessary to carry out the provisions of this title.

In the performance of, and with respect to, the func-

tions, powers, and duties vested in him by this title,

the Commissioner, notwithstanding the provisions of

any other law, shall appoint a Special Assistant for

Armed Services Housing for Mortgage Insurance, and

provide the Special Assistant with adequate staff, whose

whole responsibility will be to expedite operations

under this title and to eliminate administrative obstacles

to the full utilization of this title under the direction

and supervision of the Commissioner.”

The 1955 statute contains the following savings provision:

“Sec. 408. Notwithstanding the provisions of sec

tion 401 of this Act, the provisions of title VIII of the

„„ —

National Housing Act in effect prior to the enactment

of the Housing Amendments of 1955 shall continue in

full force and effect with respect to all mortgages in-

sured pursuant to a certification by the Secretary of

Defense or his designee made on or before June 30,

1955, and a commitment to insure issued on or before

June 30, 1956 or pursuant to a certification by the

Atomic Energy Commission or its designee made on or

before June 30, 1956, except that the maximum dollar

amount for each such mortgage shall be $12,500,000.”

TABLE OF CONTENTS

, e 8

D ũõͥů ... pie renevassoeses

Sh c ˙ dn

I. The 1947 and 1949 Acts and their interpretations

II. The distinction between a retrocession of exclu-

sive jurisdiction and a mere consent to tax prop-

erty owned by the United States not in exclusive

jurisdiction areas, and the absence of services as

a constitutional bar to taxation................

A. The retrocession of exclusive jurisdiction, or

part thereof, by the United States...........

B. Services supplied by the municipalities and

the necessity thereof for the support of taxa-

— . deel . ave uns

III. The nationwide importance of the question

r AAA ⁵³· AA dk}

Cases:

Brooklyn Manor, Inc. vs. Alabama, now in Appeal

No. 547, First Div. Sup. Ct., Ala...............

Conley Housing Corp. vs. Coleman, No. 19,001 Sup.

r ̃ VWA

Dayton Development Fort Hamilton vs. Boyland, 133

%%% WAꝛꝛ cues

——ũ—— — — |

‚· ihm ꝛqjmnmw—— 9b — —

TABLE OF CONTENTS

PAGE

Kiker vs. City of Philadelphia, 346 Pa. 624, Cert.

Denied, 320 U. S. 741 (1943) ))))

Offutt Housing Co. vs. Sarpy, 160 Neb. 320, 70 N. W.

/ AAA

Meade Heights, Inc. vs. State Tax Commission, 202

Md. 20, 95 A. 2 280 (1953))))))))))))) :

Morton Salt Co. vs. City of South Hutchinson, 159 F.

Rainear National Park Co. vs. Martin, 18 F. Supp. 481

(D.C. f. W. KD....

Thomas vs. Gay, 169 U. S. 264 (1898)..............

STATUTES:

Act of August 5, 1947, 61 Stat. 774, 10 U. S. C. 1270. 3

Act of August 8, 1949, 63 Stat. 570, 12 U. S. C.,

ö A bbb

Laws of New Jersey (1907), Ch. 199999.

Laws of New Jersey (1938), Ch. 345, p. 885.

r e abatdeddbknswsetessaed

QUESTIONS PRESENTED.

Petitioners have constructed Wherry Apartment projects

on the Fort Dix Military Reservation in Burlington County,

New Jersey, on lands leased to them by the Secretary of

the Army. Certain services normally supplied by munici-

palities are supplied to these projects by the United States.

Many other normal services are supplied by the munici-

palities and the County of Burlington, either directly or

indirectly.

The question here is whether or not Congress has con-

sented to the taxation of the leasehold interest of the Apart-

ment Operators by the municipalities in which they are

situate.

STATEMENT OF THE CASE.

The facts set forth in Petitioners’ Brief are substantially

accurate; however, their statement that all of the normal

municipal services and benefits are supplied by the United

States, and not by the municipalities, is disputed. The fact

is that the municipalities have many services available to

the plaintiffs and the residents of their apartments. Some

of these are used and some are not. Some of the services

available to, and used by the defendants are the maintenance

of roads, the services of the Courts, the maintenance of law

and order in the community in which the apartment resi-

dents live, the facilities of hospitals, a welfare home, old age

assistance, and child welfare. The defendants also have

available to the plaintiffs fire and police protection, some

water and sewer facilities, and garbage and trash collec-

tion. Normally, plaintiffs do not avail themselves of these

services (Tr. F93a).

—

Some point is made of the plaintiffs’ contention that resi-

dents of the projects cannot vote. This fact was not proved

at the hearing and there was no showing that eligible per-

sons residing in the housing projects could not vote by way

of absentee privileges, or otherwise (Tr. F93a).

ARGUMENT.

We are here concerned with two housing projects built

under the Wherry Act.' The question succinctly stated is

whether or not this Act permits the taxation by local munici-

palities of leasehold interests created thereunder, and

whether or not this question requires the interpretation of

this Court. The United States Court of Appeals for the

N Third Circuit has decided the question against the peti-

a tioners.”

Petitioners have argued the question on four separate

points. For the sake of clarity, the same arrangement will

be followed by the defendants.

I. The 1947 and 1949 Acts and their interpretations.

It is admitted that the United States had exclusive juris-

diction over the lands upon which the apartment projects

in question are now situate. It is our position that this ex-

clusive jurisdiction, or that part thereof relating to taxa-

tion, was retroceded to the State of New Jersey insofar as

the right to tax a private leasehold interest is concerned.

i The possibility of retrocession was considered by New Jer-

: — —

1 Act of August 8, 1949, 63 Stat. 570, 12 U. S. C., Sec. 1748.

2 225 Fed. (and) 473.

sey when the military reservation was ceded to the United

States. The Cession Act provided that exclusive jurisdic-

tion should continue only so long as the United States should

retain ownership of the lands.“

The Act of August 8, 1949, 63 Stat. 570, 12 U. S. C., Sec.

1748 referred to herein as the 1949 Act, or the Wherry Act,

provided “whenever the Secretary of the Army, Navy or Air

Force determines that it is desirable to lease real property

within the meaning of the Act of August 5, 1947 (61 Stat.

774), to effectuate the purposes of this title, the Secretary

concerned is authorized to lease such property under the

authority of said Act upon such terms and conditions as

in his opinion will best serve the national interest without

regard to the limitations imposed by said Act in respect to

the term or duration of the lease, and the power vested in

the Secretary of the Department concerned to revoke any

lease made pursuant to said Act in the event of a national

emergency declared by the President shall not apply. * * *”

63 Stat. 576, 12 U. S. C. 1748d.

Section 1748f further provides:

“Nothing in this title shall be construed to exempt

any real property acquired and held by the Commis-

sioner under this title from taxation by any State or

political subdivision thereof, to the same extent, ac-

cording to its value, as other real property is taxed.”

12 U. S. C. 1748f.

Section 1270d of the Act of August 5, 1947, 61 Stat. 774,

10 U. S. C. 1270 provides:

“The lessee’s interest, made or created pursuant to

the provisions of sections 1270-1270b, 1270d of this title

Laws of New Jersey (1907), Ch. 19; N. J. S. A. 52:30-2. See also,

Laws of New Jersey (1938), Ch. 345, p. 885.

—_— — ORY A SO ta arr

shall be made subject to State or local taxation. Any

lease of property authorized under the provisions of

said sections shall contain a provision that if and to the

extent that such property is made taxable by State and

local governments by Act of Congress, in such event

the terms of such lease shall be renegotiated.”

The leases in question recited that they were made under

the authority of the 1947 and 1949 Acts (Tr. F12a; Tr. S20a).

It seems clear that the basic authority for the petitioner’s

leases resides in the 1947 Act as carried by reference into

the 1949 Act. The legislative history of both Acts supports

this conclusion.“ There is no reference in the Congressional

discussion of the 1949 Act to any anticipated tax exemption

for Wherry Housing projects. The purpose of the 1949 Act

was to encourage the private construction of rental housing

for military personnel through special mortgage insurance

and cheap government leases. The 1949 legislation was also

necessary to remove two restrictions from the 1947 Act,

namely, the time limitation on leases and the limitation on

leasing for the purpose of housing. The absence of any

discussion of tax savings is significant. Congress apparently

assumed that the projects were taxable by virtue of the

1947 Act. Further weight is added to this assumption by

the provision in the 1949 Act that the lessees should not be

entitled to have utilities and related services provided by

the United States unless it was determined that these serv-

ices were not available from a private or other public source.

Surely, if such projects used these municipal services, as

must be the case with some projects other than those before

the Court, it would be extremely unfair to prohibit taxation.

The Congressional intention in passing the 1949 legisla-

U. S. Code, Cong. Serv. goth Cong., First Session 1947, p. 1592;

U. S. Code, Cong. Serv. 81st Cong., First Session 1949, p. 582.

are? 5

tion is reflected by the following passage found on page

1764 of the House Report:

“Section 805 would authorize the Secretaries of the

military services to lease property under the authority

of the Act of August 5, 1947 Stat. 774 for Housing * * *” ;

The 1955 amendment of the 1949 Act eliminating the

reference to the 1947 Act is no proof of Congressional intent

in 1947.

One object of the 1949 Act was to provide housing for

military personnel at rentals comparable to, or lower than, '

those which many were paying for inadequate quarters.

Petitioners rely heavily upon this purpose in their argu- ö

ment, claiming the taxation of the projects defeats this ob-

ject. The record, however, is devoid of any proof that the

rentals (including taxes) paid by military personnel at the .

projects in question were, in fact, higher than rentals for

comparable housing.

It is also significant that provision is made for the rental

of apartments in the projects to civilians after military

priorities are exhausted.

II. The distinction between a retrocession of exclusive

jurisdiction and a mere consent to tax property owned

by the United States not in exclusive jurisdiction areas,

and the absence of services as a constitutional bar to

taxation.

a ey

A. THE RETROCESSION OF EXCLUSIVE JURISDICTION, OR PART

THEREOF, BY THE UNITED STATES.

Congress has clearly stated in the 1947 Act that the lessee’s

interest created by the Secretary of War under that Act

shall be subject to local taxation. The Act is the only gen-

2 Rye ees et *

eral act giving the Secretary power to lease real property

under his jurisdiction. It covers all property under his

jurisdiction and consequently military bases are included.

Since, by the Act, the Secretary must find that the leased

lands are not required for public use, it is not strange that

the lessee’s interest is made taxable.

The court below clearly recognized that the lands were

under the exclusive jurisdiction of the United States.

B. SERVICES SUPPLIED BY THE MUNICIPALITIES AND THE

NECESSITY THEREOF FOR THE SUPPORT OF TAXATION.

Plaintiffs, throughout their petition, insist that the de-

fendants do not supply services to them. This simply is not

the case, as the record will show. While it is true that the

military authorities provide water and sewerage facilities,

garbage and trash collection, fire protection, snow removal

and road maintenance within the project area, there are

many, many services which they do not and cannot supply,

and which are supplied at municipal or county expense.

These services are both direct and indirect. The main-

tenance of law and order in the community by the enforce-

ment of local ordinances by local police, and other author-

ities, is of great importance to the apartment residents. The

operation of the Court system, fire protection, the welfare

program, library facilities, and the maintenance of roads

and streets leading to the projects are all illustrative of the

benefits conferred upon the plaintiffs in this matter. These

services are all performed at municipal or county expense.

They are specifically referred to in Judge Forman’s opinion

(Tr. $80a; Tr. F93a). It is nota fact, as stated by plaintiffs

(Pet. 22) that children residing in these apartments can-

not attend the local schools on a free basis. It is a fact that

five children from the projects now attend the local schools

in Wrightstown (Tr. F68a; S45a; Pet. 5). Further, there is

no proof, as claimed in the petition (Pet. 22) that persons

residing in the apartments cannot vote in any State, County

and Municipal elections. On the contrary, plaintiffs’ proofs

on this point failed (Tr. F93a; Tr. S80a). In addition, it

should be noted that families of military personnel, residing

on the projects, have the usual rights provided by various

States, of absentee voting.

It also appears that many of the services now supplied

by the United States are available to the plaintiffs if they

desire to use them, and would necessarily be supplied by

the municipalities if the National government refused, or

neglected, to furnish them.

Plaintiffs have no cause for complaint on the question of

services supplied. Their failure to use all of the services

of the municipalities does not permit them to avoid the pay-

ment of taxes.

III. The nationwide importance of the question.

We concede the fact that there are many Wherry Housing

projects throughout the country, all of which are interested

in whether or not they are required to pay taxes; however,

the mere fact of nationwide interest should not recommend

this matter to this Court where the answer to the question

is clear.

Plaintiffs cite many cases, some reported, some unre-

ported, and many official opinions to show that there is great

confusion concerning this issue. However, an analysis of N

Seer

*Rainear National Park Co. vs. Martin, 18 F.

W. D. Wash. S. D.); Thomas vs. Gay. 169 U. S.

Salt Co. vs. City of South Hutchinson, 159 F.

1947); Kiker vs. City of Philadelphia, 346 Pa.

U. S. 741 (1943).

these citations indicates that the upper courts are unanimous

in holding that the Wherry Act permits the taxation of the

leasehold interest. Thus, the United States Circuit Court of

Appeals for the Third Circuit, in the instant case, and the

Supreme Court of Nebraska, the Court of Appeals of Mary-

land, the Supreme Court of Alabama, the Supreme Court of

Georgia, and the Supreme Court of New York, are in accord

on this question.

The cases cited to the contrary deal with taxation of the

improvements as distinguished from the leasehold interest.

The Attorney General’s opinions to the contrary cited by

petitioners were rendered prior to 1953, the year of the de-

cision of Meade Heights, Inc. v. State Tax Commission of

Maryland, the first decision on the question.

peal No. 547, First Div. Sup. Ct., Ala.; Conley Housing Corp. vs. Cole-

man, No. 19,001 Sup. Ct. Ca. Sept 12, 1955.

CONCLUSION.

The case involves a question unanimously resolved by the

upper Courts throughout the country against the petitioners.

The answer to the question is clear; the judgment of the

United States Court of Appeals for the Third Circuit is cor-

rect, and does not warrant further review of this case by

this Court.

Respectfully submitted,

DIMON, HAINES & BUNTING,

Attorneys for Respondents, Town-

ship of Springfield and R. J.

Beazley, Collector of Taxes for

the Township of Springfield,

By MARTIN L. HAINES.

PARKER, McCAY & CRISCUOLO,

Attorneys for Respondents, Bor-

ough of Wrightstown, and I.

Haines Croshaw, Collector of

Taxes for the Borough of

Wrightstown, New Hanover

Township Board of Education,

By ALBERT McCAY.

WILLIAM WELLS,

Attorney for County of Burlington.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.