B-168287, NOV. 9, 1970

B-168287, NOV. 9, 1970

FEDERAL PROPERTY - STATE TAXES - SEWAGE ASSESSMENT REAFFIRMING DECISION OF FEBRUARY 12, 1970, DENYING CLAIM REPRESENTING BENEFIT ASSESSMENT CHARGE AGAINST FOREST PRODUCTS LABORATORY, DEPT. OF AGRICULTURE, AND VETERANS ADMINISTRATION HOSPITAL, BOTH AT MADISON, WISCONSIN, FOR PRO RATA CONSTRUCTION COSTS OF AN INTERCEPTOR SEWER ON THE BASIS THAT SUCH COSTS ARE INVOLUNTARY ASSESSMENTS FROM WHICH THE FEDERAL GOVERNMENT IS IMMUNE UNDER THE CONSTITUTION. HOWEVER, THE CLAIM COULD BE PRESENTED ON BASIS OF QUANTUM MERUIT FOR VALUE OF SERVICE RECEIVED.

TO PETERSEN, AXLEY, BRYNELSON & HERRICK:

YOUR LETTERS OF AUGUST 24, 1970, TO SENATOR NELSON AND SENATOR PROXMIRE, IN EFFECT, REQUEST RECONSIDERATION OF OUR DECISION OF FEBRUARY 12, 1970, B -168287, WHICH DENIED THE CLAIM OF YOUR CLIENT, THE MADISON METROPOLITAN SEWERAGE DISTRICT (DISTRICT), FOR $3,692.22. THE CLAIM REPRESENTS A BENEFIT ASSESSMENT CHARGE AGAINST THE FOREST PRODUCTS LABORATORY, FOREST SERVICE, DEPARTMENT OF AGRICULTURE, MADISON, WISCONSIN, FOR PRO RATA CONSTRUCTION COSTS OF AN INTERCEPTOR SANITARY SEWER. IN ADDITION YOUR INSTANT LETTERS, IN EFFECT, MAKE CLAIM ON THE SAME BASIS AGAINST THE VETERANS ADMINISTRATION HOSPITAL IN OR NEAR MADISON, WISCONSIN, FOR $700.47, ON ACCOUNT OF CONSTRUCTION OF THE INTERCEPTOR SEWER.

THE FACTS, AS SET OUT IN OUR DECISION OF FEBRUARY 12, 1970, GIVING RISE TO THE DISTRICT'S CLAIM ARE AS FOLLOWS:

"THE MADISON METROPOLITAN SEWERAGE DISTRICT, AN INSTRUMENTALITY OF THE STATE OF WISCONSIN, ASSESSED LANDS THROUGHOUT THE AREA SERVED BY THE WEST INTERCEPTOR SANITARY SEWER. THAT AREA INCLUDES THE SITE OF THE FOREST PRODUCTS LABORATORY. THE LEVY WAS NONRECURRENT AND ON A SQUARE FOOTAGE BASIS ($3.82 PER THOUSAND FEET), AND WAS AUTHORIZED BY SECTION 66.206(1) OF THE WISCONSIN STATUTES, WHICH PERMITS COMMISSIONS OF A METROPOLITAN SEWERAGE DISTRICT 'TO MAKE A SPECIAL ASSESSMENT AGAINST PROPERTY WHICH IS SERVED BY AN INTERCEPTING SEWER, OR A MAIN SEWER *** .' IT IS ASSUMED THAT THE PROCEEDS ARE USED ONLY FOR THE PAYMENT OF ADDITIONS TO THE WEST INTERCEPTOR AND THAT THE BENEFITS ACCRUE ONLY TO THOSE LANDS ASSESSED. THE ASSESSMENT AGAINST THE GOVERNMENT AMOUNTED TO $3,692.22."

WE DISALLOWED THE CLAIM THEN PRESENTED ON THE BASIS THAT THE PROPERTY OF THE UNITED STATES IS EXEMPTED BY THE CONSTITUTION FROM STATE AND LOCAL TAXATION AND THAT ASSESSMENTS FOR LOCAL IMPROVEMENTS ARE INVOLUNTARY EXACTIONS AND, IN THAT RESPECT, STAND ON THE SAME FOOTING WITH ORDINARY TAXES. WE STATED THAT:

"IT IS WELL SETTLED THAT LANDS OWNED BY THE UNITED STATES CANNOT BE TAXED BY A STATE OR ANY OF THE POLITICAL SUBDIVISIONS OF A STATE. VAN BROCKLIN V TENNESSEE, 117 U.S. 157 (1886); UNITED STATES V POWER COUNTY, IDAHO, 21 F. SUPP. 684 (1937). THIS RULE APPLIES WITH EQUAL FORCE WHERE THE TAX IS A SPECIAL TAX OR ASSESSMENT FOR LOCAL IMPROVEMENTS AS WELL AS IN THE CASE OF A GENERAL PROPERTY TAX AGAINST LANDS OWNED BY THE UNITED STATES. LEE V OSCEOLA AND LITTLE RIVER ROAD IMPROVEMENT DISTRICT, 268 U.S. 643 (1925); MULLEN BENEVOLENT CORPORATION V UNITED STATES, 290 U.S. 89 (1933). SPECIAL ASSESSMENT IS A TAX WITHIN THE RULE PRECLUDING A STATE FROM TAXING LENDS OWNED BY THE UNITED STATES, BECAUSE IT IS AN EXERCISE OF THE SOVEREIGN POWER OF TAXATION AND, LIKE OTHER TAXES, IS AN INVOLUNTARY EXACTION. SEE UNITED STATES V ANDERSON COTTONWOOD IRRIGATION DISTRICT, 19 F. SUPP. 740 (1937); HAGER V RECLAMATION DISTRICT, 111 U.S. 701 (1884).

YOU CONTEND THAT NOT ALL ASSESSMENTS AGAINST PROPERTY MAY BE CONSIDERED TAXES, AND IN SUPPORT OF THIS POSITION, QUOTE EXTENSIVELY FROM 90 A.L.R. 1137, THAT:

"'IN A BROAD SENSE, SPECIAL ASSESSMENTS ARE TAXES, AND THE RIGHT TO IMPOSE ASSESSMENTS HAS ITS FOUNDATION IN THE TAXING POWER OF THE GOVERNMENT, AND YET IN PRACTICE, AND AS GENERALLY UNDERSTOOD, THERE IS A BROAD DISTINCTION BETWEEN THE TWO TERMS. TAXES, AS THE TERM IS GENERALLY USED, ARE PUBLIC BURDENS IMPOSED GENERALLY ON THE INHABITANTS OF THE WHOLE STATE, OR SOME CIVIL DIVISION THEREOF, FOR GOVERNMENTAL PURPOSES, WITHOUT REFERENCE TO PECULIAR BENEFITS TO PARTICULAR INDIVIDUALS OR PROPERTY. ASSESSMENTS HAVE REFERENCE TO IMPOSITIONS FOR IMPROVEMENTS WHICH ARE SPECIALLY BENEFICIAL TO PARTICULAR INDIVIDUALS OR PROPERTY AND WHICH ARE PROPOSED IN PROPORTION TO THE PARTICULAR BENEFITS SUPPOSED TO BE CONFERRED. THEY ARE JUSTIFIED ONLY BECAUSE THE IMPROVEMENTS CONFER SPECIAL BENEFITS, AND ARE JUST ONLY WHEN THEY ARE DIVIDED IN PROPORTION TO SUCH BENEFITS.

"'IT IS A GENERAL RULE, TO WHICH THERE ARE BUT FEW EXCEPTIONS, THAT A CONSTITUTIONAL OR STATUTORY EXEMPTION FROM TAXATION IS TO BE TAKEN AS AN EXEMPTION FROM ORDINARY TAXES ONLY, AND DOES NOT INCLUDE SPECIAL ASSESSMENTS FOR LOCAL IMPROVEMENTS. *** '"

OUR DECISION OF FEBRUARY 12, 1970, HOWEVER, CONTAINED THE FOLLOWING QUOTATION TAKEN FROM THE SAME ANNOTATION (90 A.L.R. 1140):

"IN THE ABSENCE OF AN ACT OF CONGRESS ALLOWING THE LANDS OF THE UNITED STATES TO BECOME SUBJECT TO ASSESSMENT, IT HAS BEEN UNIFORMLY HELD THAT SUCH LANDS ARE NOT LIABLE FOR SPECIAL ASSESSMENTS FOR LOCAL IMPROVEMENTS." SEE ALSO WISCONSIN RAILROAD CO. V PRICE COUNTY, 133 U.S. 496, 504 (1890). ACCORDINGLY, WE MUST AFFIRM OUR DECISION OF FEBRUARY 12, 1970, DISALLOWING PAYMENT OF THE DISTRICT'S CLAIM AS PRESENTED SINCE THE ASSESSMENT, HAVING BEEN CALCULATED ON A SQUARE FOOTAGE BASIS, MUST BE CONSIDERED A TAX LEVIED AGAINST FEDERAL PROPERTY FROM WHICH THE GOVERNMENT IS CONSTITUTIONALLY IMMUNE.

IN A SOMEWHAT SIMILAR CASE INVOLVING THE REHABILITATION OF A DRAINAGE DITCH - BY A DRAINAGE DISTRICT - WHICH SERVED GOVERNMENT PROPERTY, WE HELD THAT A SPECIAL ASSESSMENT MADE AGAINST THE GOVERNMENT PROPERTY ON A BENEFIT BASIS - COMPUTED IN THE SAME WAY AS THE AMOUNTS (TAX) LEVIED AGAINST NONFEDERAL PROPERTY - WAS A TAX THAT COULD NOT BE COLLECTED FROM THE UNITED STATES BY CALLING IT AN INVOICE OR STATEMENT FOR SERVICES. STATED IN THAT CASE THAT WHILE THE GOVERNMENT HAD RECEIVED A SERVICE FOR WHICH IT MIGHT PROPERLY MAKE PAYMENT, THE METHOD BY WHICH THE CHARGE FOR THAT SERVICE WAS COMPUTED DID NOT APPEAR TO BEAR ANY PARTICULAR RELATIONSHIP TO THE SERVICE RENDERED. HOWEVER, WE FURTHER HELD THAT WHILE PAYMENT OF THE CLAIM AS PRESENTED WOULD NOT BE AUTHORIZED, WE SAW NO OBJECTION TO THE PRESENTATION ON A QUANTUM MERUIT BASIS OF A CLAIM FOR AN AMOUNT REPRESENTING THE FAIR AND REASONABLE VALUE OF THE SERVICES ACTUALLY RECEIVED BY THE UNITED STATES. SEE 49 COMP. GEN. 72 (1969), COPY ENCLOSED.

THE RATIONALE OF 49 COMP. GEN. 72 WOULD APPEAR EQUALLY APPLICABLE TO THE INSTANT CASE. THAT IS TO SAY, WHILE PAYMENT OF THE CLAIM AS PRESENTED - AND COMPUTED - WOULD NOT BE AUTHORIZED, WE SEE NO OBJECTION TO THE PRESENTATION ON A QUANTUM MERUIT BASIS OF A CLAIM FOR AN AMOUNT REPRESENTING THE FAIR AND REASONABLE VALUE OF THE SERVICES ACTUALLY RECEIVED BY THE UNITED STATES.

COPIES OF THIS LETTER ARE BEING TRANSMITTED TO SENATOR NELSON, SENATOR PROXMIRE, THE SECRETARY OF AGRICULTURE, AND THE ADMINISTRATOR OF VETERANS AFFAIRS.