B-73599, SEPTEMBER 22, 1949, 29 COMP. GEN. 139

B-73599: Sep 22, 1949

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1949: REFERENCE IS MADE TO LETTERS DATED MARCH 14 AND 17. WHICH WAS OCCUPIED BY THE THIRD AIR FORCE. THE CLAIM WAS DISALLOWED IN THE SETTLEMENT FOR THE STATED REASONS THAT (1) REAL ESTATE TAXES ON THE PROPERTY ARE NOT REIMBURSABLE UNDER THE TERMS OF THE PERMIT OF JULY 1. (2) SINCE THE CONSTITUTION OF LOUISIANA SPECIFICALLY EXEMPTS ALL PUBLIC PROPERTY FROM TAXATION PAYMENT OF THE TAXES HERE INVOLVED WAS NOT REQUIRED IN THE ABSENCE OF AN AUTHORITATIVE JUDICIAL DETERMINATION SUSTAINING THE LEGALITY OF THE ASSESSMENTS. IT IS STATED ALSO THAT IT DOES NOT APPEAR THAT A LEASING OF PRIVATELY OWNED PROPERTY BY A FEDERAL AGENCY FOR ITS OFFICIAL USE WOULD OPERATE AUTOMATICALLY TO EXEMPT SUCH PROPERTY FROM VALID LOCAL TAXATION FOR THE DURATION OF SUCH USE AND THAT THE CORPORATION IS NOT INFORMED OF ANY OTHER CASE IN WHICH THIS OFFICE HAS DENIED PAYMENT BY A GOVERNMENT DEPARTMENT OR AGENCY OF RENTAL WHICH INCLUDED AN AMOUNT FOR REAL ESTATE TAXES ASSESSED AGAINST THE PROPERTY SO USED AND ALLOCABLE TO THE PERIOD OF SUCH OCCUPANCY.

B-73599, SEPTEMBER 22, 1949, 29 COMP. GEN. 139

TAXES - REAL ESTATE - REIMBURSEMENT BY ONE AGENCY TO ANOTHER REAL ESTATE TAXES PAID BY THE DEFENSE PLANT CORPORATION ON PROPERTY IN LOUISIANA AND OCCUPIED BY A GOVERNMENT AGENCY UNDER A PERMIT REQUIRING IT TO PAY ALL COSTS IN CONNECTION WITH THE USE OF THE PROPERTY, BEING A COST IN PROTECTION OF THE TITLE TO THE LAND AND NOT IN CONNECTION WITH ITS USE, NEED NOT BE REIMBURSED TO THE RECONSTRUCTION FINANCE CORPORATION, AS SUCCESSOR, IN VIEW OF THE PROVISION OF THE LOUISIANA LAW PLACING THE BURDEN OF ALL REAL CHARGES UPON THE LESSOR UNLESS THERE BE A STIPULATION TO THE CONTRARY. WHILE SECTION 10 OF THE RECONSTRUCTION FINANCE CORPORATION ACT, AS AMENDED, WAIVES ALL CONSTITUTIONAL AND STATUTORY IMMUNITIES BY WHICH REAL PROPERTY OF THE CORPORATION OTHERWISE WOULD BE EXEMPT FROM TAXATION, REAL ESTATE TAXES PAID BY THE DEFENSE PLANT CORPORATION ON PROPERTY IN LOUISIANA AND OCCUPIED BY A GOVERNMENT AGENCY NEED NOT BE REIMBURSED TO THE RECONSTRUCTION FINANCE CORPORATION, AS SUCCESSOR, IN VIEW OF THE PROVISION IN THE LOUISIANA STATE CONSTITUTION THAT ALL PUBLIC PROPERTY SHALL BE EXEMPT FROM TAXATION, WHICH PROVISION, IN THE ABSENCE OF AN AUTHORITATIVE HOLDING BY THE HIGHEST STATE COURT TO THE CONTRARY, CONSTITUTES A MANDATORY RESTRICTION UPON THE STATE TAXING AUTHORITIES.

COMPTROLLER GENERAL WARREN TO THE CHAIRMAN, RECONSTRUCTION FINANCE CORPORATION, SEPTEMBER 22, 1949:

REFERENCE IS MADE TO LETTERS DATED MARCH 14 AND 17, 1949, FROM MR. JAMES L. DOUGHERTY, GENERAL COUNSEL, REQUESTING ON BEHALF OF THE RECONSTRUCTION FINANCE CORPORATION, REVIEW AND RECONSIDERATION OF OFFICE SETTLEMENT OF AUGUST 27, 1948, DISALLOWING THE CLAIM OF THE CORPORATION, AS SUCCESSOR OF THE DEFENSE PLANT CORPORATION, FOR REIMBURSEMENT BY THE UNITED STATES OF THE PRO-RATA SHARE OF 1944 AND 1945 REAL ESTATE TAXES PAID ON THAT PART OF THE LAFAYETTE SCHOOL OF AERONAUTICS, PLANCOR 905, NEAR LAFAYETTE, LOUISIANA, WHICH WAS OCCUPIED BY THE THIRD AIR FORCE, UNITED STATES ARMY, DURING THE PERIOD JULY 1, 1944, TO OCTOBER 15, 1945, UNDER A PERMIT DATED JULY 1, 1944.

THE CLAIM WAS DISALLOWED IN THE SETTLEMENT FOR THE STATED REASONS THAT (1) REAL ESTATE TAXES ON THE PROPERTY ARE NOT REIMBURSABLE UNDER THE TERMS OF THE PERMIT OF JULY 1, 1944, AND (2) SINCE THE CONSTITUTION OF LOUISIANA SPECIFICALLY EXEMPTS ALL PUBLIC PROPERTY FROM TAXATION PAYMENT OF THE TAXES HERE INVOLVED WAS NOT REQUIRED IN THE ABSENCE OF AN AUTHORITATIVE JUDICIAL DETERMINATION SUSTAINING THE LEGALITY OF THE ASSESSMENTS.

THE LETTER OF MARCH 14 ASSERTS IN PERTINENT PART THAT THE CORPORATION FAILS TO FIND A BASIS IN THE CONSTITUTION OF THE STATE OF LOUISIANA FOR THE CONCLUSION THAT THE MERE USE OF PROPERTY AS DISTINGUISHED FROM OWNERSHIP BY A DEPARTMENT OR AGENCY OF THE UNITED STATES AUTOMATICALLY EXEMPTS SUCH PROPERTY SO USED FROM THE ASSESSMENT AND COLLECTION OF TAXES OTHERWISE VALID. IT IS STATED ALSO THAT IT DOES NOT APPEAR THAT A LEASING OF PRIVATELY OWNED PROPERTY BY A FEDERAL AGENCY FOR ITS OFFICIAL USE WOULD OPERATE AUTOMATICALLY TO EXEMPT SUCH PROPERTY FROM VALID LOCAL TAXATION FOR THE DURATION OF SUCH USE AND THAT THE CORPORATION IS NOT INFORMED OF ANY OTHER CASE IN WHICH THIS OFFICE HAS DENIED PAYMENT BY A GOVERNMENT DEPARTMENT OR AGENCY OF RENTAL WHICH INCLUDED AN AMOUNT FOR REAL ESTATE TAXES ASSESSED AGAINST THE PROPERTY SO USED AND ALLOCABLE TO THE PERIOD OF SUCH OCCUPANCY.

THE QUESTION AS TO WHETHER THE CORPORATION IS ENTITLED TO RECEIVE REIMBURSEMENT OF THE TAXES INVOLVED MUST DEPEND IN THE FIRST INSTANCE UPON THE TERMS OF THE AGREEMENT BETWEEN THE PARTIES. THE PERTINENT CLAUSE OF THE PERMIT OF JULY 1, 1944, WHICH IS RELIED UPON TO SUSTAIN THE CLAIM FOR REIMBURSEMENT IS AS FOLLOWS:

THE THIRD AIR FORCE, UNITED STATES ARMY AIR FORCES, AGREES TO PROVIDE, AT ITS OWN EXPENSE, ALL PROTECTION, MAINTENANCE, REPAIRS, UTILITIES AND ALL OTHER COSTS IN CONNECTION WITH ITS USE OF SAID PROPERTY. IN SUBMITTING THE CLAIM, THE DEPARTMENT OF THE ARMY ADMINISTRATIVELY REPORTED THAT IT WAS NOT INTENDED BY THAT DEPARTMENT TO INCLUDE TAXES IN THE PERMIT REFERRED TO; THAT THE CLAUSE ,COSTS IN CONNECTION WITH ITS USE OF SAID PROPERTY" AS USED IN THE PERMIT WAS INTENDED MERELY AS A GENERALIZATION USED IN THE SAME SENSE AS THE SPECIFICALLY ENUMERATED ITEMS,"MAINTENANCE, REPAIRS, AND UTILITIES; " THAT THIS CLAUSE REQUIRES THE PAYMENT OF COSTS IN CONNECTION WITH THE USE OF THE PROPERTY AND NOT IN PROTECTION OF THE TITLE TO THE LAND; AND THAT IN ANY LEASE PERMIT OR LICENSE OBTAINED BY THE GOVERNMENT THE OWNER OF THE PROPERTY PAYS THE TAXES, IN THE SAME MANNER AS IS DONE IN PRIVATE TRANSACTIONS UNLESS THE LEASE CONTAINS SPECIFIC PROVISIONS REQUIRING THE LESSEE TO PAY TAXES.

CLEARLY, REAL ESTATE TAXES DO NOT CONSTITUTE A COST IN CONNECTION WITH THE USE OF REAL PROPERTY. THEY ACCRUE, WHEN LEGALLY ASSESSED, IRRESPECTIVE OF THE USE OF THE PROPERTY. FURTHERMORE, REAL ESTATE TAXES ON LEASED PROPERTY GENERALLY ARE NOT PAYABLE BY A LESSEE IN THE ABSENCE OF A SPECIFIC PROVISION IN THE LEASE TO THAT EFFECT. 32 AM. JUR., LANDLORD AND TENANT, SECTION 287, AND CASES THEREIN CITED. AND, SO FAR AS CONCERNS THE PAYMENT OF SUCH TAXES IN THE STATE OF LOUISIANA, ARTICLE 2702, LOUISIANA CIVIL CODE, SPECIFICALLY PROVIDES:

THE LESSOR, AND NOT THE LESSEE, UNLESS THERE BE A STIPULATION TO THE CONTRARY, MUST BEAR ALL THE REAL CHARGES WITH WHICH THE THING LEASED IS BURDENED. THUS HE HAS TO PAY THE TAXES, RENTS AND OTHER DUES IMPOSED UPON THE THING LEASED. IT APPEARS TO BE AMPLY CLEAR THAT THE TERMS OF THE PERMIT ABOVE STATED DO NOT CONTAIN "A STIPULATION TO THE CONTRARY" WITHIN THE MEANING OF THE SAID LAW SO AS TO REQUIRE REIMBURSEMENT BY THE AIR FORCES OF THE PRORATED PORTION OF THE TAXES PAID BY THE RECONSTRUCTION FINANCE CORPORATION ON THE PROPERTY.

INASMUCH AS THAT CIRCUMSTANCE ALONE IS SUFFICIENT TO SUPPORT THE DISALLOWANCE OF THE CLAIM FOR SUCH REIMBURSEMENT, IT WOULD APPEAR UNNECESSARY TO CONSIDER THE CORPORATION'S SECOND CONTENTION THAT SECTION 10 OF THE RECONSTRUCTION FINANCE CORPORATION ACT, AS AMENDED, 55 STAT. 248, WAIVES ALL CONSTITUTIONAL AND STATUTORY IMMUNITIES BY WHICH REAL PROPERTY OF THE CORPORATION WOULD OTHERWISE BE EXEMPT FROM TAXATION. MAY BE STATED, HOWEVER, THAT WHILE THE SAID STATUTORY PROVISION WAIVES THE IMPLIED CONSTITUTIONAL IMMUNITY OF THE FEDERAL GOVERNMENT FROM TAXATION, AS TO THE REAL PROPERTY OF THE CORPORATION IT SEEMS APPARENT THAT THE MANDATE CONTAINED IN ARTICLE 230 OF THE CONSTITUTION OF 1921 OF THE STATE OF LOUISIANA, THAT ALL PUBLIC PROPERTY SHALL BE EXEMPT FROM TAXATION, SHOULD BE REGARDED AS PRECLUDING AN EXACTION OF THE TYPE HERE INVOLVED UNLESS AND UNTIL THE HIGHEST COURT OF THE STATE CONCLUDES THAT SUCH AN ASSESSMENT IS LEGALLY VALID UNDER STATE LAW. AS THE SUPREME COURT SAID IN STATE TAX COMMISSION, ET AL. V. VAN COTT, 306 U.S. 511, 515, AFTER ABROGATING A PRIOR HOLDING OF IMMUNITY FROM STATE TAXATION OF THE SALARIES PAID BY FEDERAL INSTRUMENTALITIES:

* * * SALARIES OF EMPLOYEES OR OFFICIALS OF THE FEDERAL GOVERNMENT OR ITS INSTRUMENTALITIES ARE NO LONGER IMMUNE, UNDER THE FEDERAL CONSTITUTION, FROM TAXATION BY THE STATES. WHETHER THE UTAH INCOME TAX, BY ITS TERMS, EXEMPTS RESPONDENT, CAN NOW BE DECIDED BY THE STATE'S HIGHEST COURT APART FROM ANY QUESTION OF CONSTITUTIONAL IMMUNITY * * *.

THERE APPEARS TO BE NO AUTHORITATIVE HOLDING BY ANY LOUISIANA COURT OF RECORD THAT ARTICLE 230 OF THE LOUISIANA CONSTITUTION IS MERELY DECLARATORY OF THE IMMUNITY OF THE FEDERAL GOVERNMENT FROM STATE TAXATION AND DOES NOT CONSTITUTE A MANDATORY RESTRICTION UPON LOUISIANA TAXING AUTHORITIES. IN THE ABSENCE OF SUCH A HOLDING, THE PAYMENT OF TAXES HERE IN QUESTION CAN ONLY BE REGARDED AS A PAYMENT VOLUNTARILY MADE.

IN VIEW OF THE FOREGOING, THE SETTLEMENT OF AUGUST 27, 1948, MUST BE, AND IS, SUSTAINED.