27 So. 2d 162 | Fla. | 1946
Lead Opinion
This is an appeal from a decree dismissing a bill of complaint in a suit brought to enjoin the City of Jacksonville, Florida, from enforcing an ad valorem tax on real property, the legal title to which is in the United States of America. The facts of the case are shown by the pleadings and a stipulation between the parties.
The property in question was purchased by the United States from a private owner in 1888. From that time until September 17, 1940, it was used exclusively for governmental purposes and was carried on the tax books of the City of Jacksonville as "tax exempt" property. On April 13, 1940 the government published an invitation for bids for the purchase of the property and Hogan and Adams Corporation, a Florida corporation, became the successful bidder. In due course a contract of sale agreeable to the parties was executed, the down payment was made, and the purchaser was let into possession.
By the terms of the contract the purchase price for the property was fixed at $350,129.00, one-fifth payable in cash and the balance in five equal annual installments with interest on deferred payments; the United States to retain title to the property until full payment of the purchase price and full performance of the contract by the purchaser, the seller thereupon to execute and deliver to the purchaser or its nominee a quit claim deed to the property. The contract further provided that upon failure of the purchaser to comply with all of the terms and conditions of the contract the United States might terminate the contract, retain installments of purchase money already paid, resume immediate possession of the premises, resell the same and recover from the defaulting purchaser any deficiencies in price resulting in *548 such resale. On September 7, 1940 Hogan and Adams Corporation assigned its interest in the contract to Bancroft Investment Company, the plaintiff in this suit, and on or about September 17, 1940 the plaintiff was put into possession of the property and has used the same since for purely private purposes.
In 1941 the City of Jacksonville attempted to tax the property, assessing the property as follows: "To whom assessed, Bancroft Investment Corporation, a corporation; description of property, Lot 4, Block 37, Hart's Map of Jacksonville; valuation of real estate not claimed as homestead, $85,000.00" By City ordinance dated November 24, 1942 the assessment was changed to read: "To whom assessed, Bancroft Investment corporation, a corporation; Description of Property, Lot 4, Block 37, Hart's Map of Jacksonville (all rights, liens and interests in said property retained and held by the United States of America as security for the unpaid purchase monies are hereby expressly excluded from this assessment, and this assessment is hereby made subject to all such prior rights, liens and interests): Valuation of real estate not claimed as homestead, $85,000.00."
In 1942 the City of Jacksonville again assessed the property against Bancroft Investment Company, using virtually the same wording as that used in the assessment for 1941, except that the valuation was raised from $85,000.00 to $215,000.00 because of the erection of a five story department store building on the property. Bancroft Investment Company thereupon filed suit in equity to enjoin the enforcement of the tax upon the ground that inasmuch as title to the property was still vested in the United States of America — all installments of the purchase money not having been paid because not at the time due and payable — the property was immune and exempt from taxation by the City of Jacksonville. At final hearing the chancellor entered a decree which sustained the views of the plaintiff. Upon a rehearing the chancellor reversed his previous position — largely, we take it, because of later court decisions bearing on the question which were not available at the time of the first hearing, and which, consequently, were not brought to his attention — and entered *549 a decree finding the land to be taxable against Bancroft Investment Company, subject, however, to a prior lien in the United States for the unpaid balance of the purchase price. This appeal is from the decree entered at rehearing.
The question is whether the City of Jacksonville may tax lands which have been sold by the Federal Government to a private purchaser under an installment contract whereby title to the land is retained by the government until the purchase price is paid and other conditions performed, where before the time for full performance of the contract and execution of the deed the purchaser is let into possession and thereafter uses the property for private purposes.
The appellant maintains that under federal and state law the property is immune and exempt from such taxation, because it remains property of the United States until a deed of conveyance is given or until the purchaser has fully complied with all conditions entitling him to a deed. The appellee submits that when the contract of purchase was executed and possession delivered, the conditional purchaser became the real beneficial owner of, and acquired the complete equitable title to, the property, the government thereafter retaining only the bare legal title in trust for the purchaser and as security for the balance of the purchase price; and that such beneficial interest of the purchaser may be taxed and the tax enforced against the land subject to the right, lien or interest retained by the government as security for the unpaid purchase money.
Except in states which allow the taxation of separate interests in real property, or in cases where immunity from state taxation has been waived, it seems to be the general rule of both federal and state decisions that where land once owned by the United States for governmental purposes is sold to, private purchasers under contract whereby title is retained in the government until complete performance of the contract by the vendee, such land is not taxable under state taxation statutes even though the vendee has been let into possession, until the deed of conveyance has been delivered, or the vendee has acquired a complete equitable title to the property by the performance of all conditions precedent entitling *550
him to a deed. See City of New Brunswick v. U. U.,
Appellee has cited decisions which it contends are authority for the proposition that the tax may be imposed, even though the legal title to the property still remains in the United States and the vendee has not become entitled to a deed. We have studied the cases carefully and do not feel that we can follow them.
City of New Brunswick v. United States,
Whatever weight should be given to the City of New Brunswick case as authority for the proposition that a property interest in land less than the legal title is taxable subject to a property lien in favor of the vendor for unpaid purchase money, it certainly is not authority for taxing the property interest of the vendee in the case at bar; it clearly appearing from the record before us that Bancroft Investment Company has not performed all conditions entitling it to a deed from the vendor conveying the legal title — as was the case in the cited decision.
Hence v. City of New Brunswick, (N.J.), 46 7 N.J. Misc 610 A. 673, appears to support appellee's position, but its persuasive quality is destroyed, we think, when consideration is given to the fact that it is a decision by an inferior court of New Jersey, which has apparently been overruled by the later case of ABR Corporation v. City of Newark,
City of Philadelphia v. Myers,
Ken Realty Company v. Johnson,
Appellee leans heavily on Petition of S. R. A. Inc.,
As we read the S. R. A. cases, and the statutes cited in connection therewith, the Minnesota court bottoms its conclusion that the property interest of the vendee may be taxed and the tax imposed against the res, upon two propositions: First, under the Minnesota statute relating to general property taxes, real estate, for taxation purposes, includes "the land itself," all "structures and improvements" upon it, "all rights and privileges" belonging or appertaining to the land, and "all mines, minerals, quarries, fossils, and trees on or under same." See Minn. St. 1941, Sec.
It will be noted that the first proposition rests squarely upon the Minnesota court's construction of its own local taxing statutes. And though we have difficulty in following the line of reasoning by which the court arrived at its conclusion on the point — section
On the second proposition, we think it sufficient to say that we do not hold to the view that "The character or status of the owner of the equitable title and not that of the holder of the legal title determines whether the equitable estate is subject to taxation." Under Florida taxing statutes the levy and assessment is on the realty itself, at its full cash value, regardless of the existence of estates in it, Wolfson et al. v. Heins et ux.,
That this is the rule of the Florida decisions is indicated *557
by Rain v. Roper,
While it must be confessed that some of the Florida decisions have likened the relationship between such a vendor and his vendee to that of mortgagee and mortgagor, we think that in one vital particular, at least, the analogy breaks down: In the mortgagor-mortgagee relationship the mortgagee's lien for the debt is against the complete legal and equitable title of the mortgagor in and to the lands. In the vendor-vendee relationship the vendor's lien does not extend to the legal title at all (for that remains in the vendor until a deed *558
is given) but is against only such equitable interest in the property as the vendee has acquired by reason of his partial payment of the purchase price; which interest may be sold and the vendee's equity extinguished by a proceeding in equity in the nature of a strict foreclosure should the vendee default in his contract — the proceeding being one to enforce the terms of the contract. See Schmidt v. Kibben,
Moreover, in dealing with the problem of the taxation of the property it must not be overlooked that the State of Florida was admitted into the Union in 1845 upon the express condition that it should never interfere with the primary disposal of the public lands lying within its boundaries, "nor levy any tax on the same whilst remaining the property of the United States."
Whether the legislature may change its statutes so as to extend the provisions of the tax exemption laws only to such real and personal property of the United States as may be actually "owned, held, used and occupied" exclusively for governmental purposes, or may so amend same as to authorize the taxation of separate interests in property, is a question not before us. But so long as our statutes remain in force and effect in their present form we think it perfectly plain that no authority exists from the taxation of the equitable interest of Bancroft Investment Company in and to the real estate, the legal title of which rests in the United States; there being no lawful authority under the laws of Florida for splitting property interests in land for the purpose of determining the incidence of taxation.
The decree appealed from should be reversed.
It is so ordered.
BROWN, BUFORD and THOMAS, JJ., concur.
CHAPMAN, C. J., TERRELL and ADAMS, JJ., dissent.
Dissenting Opinion
On petition for rehearing granted we are asked to recede from our former majority opinion filed January 15th, 1946, and to hold that the property involved in this litigation is subject to ad valorem taxation by the City of Jacksonville. It is urged by the appellee in this behalf that no judgment other than an affirmance can now be entered in view of an opinion by the United States Supreme Court filed since the original hearing in this cause, holding that such property is susceptible to state taxation. See S. R. A. Inc., Petitioner v. State of Minnesota, cases 254 and 255, filed March 25, 1946.
Our original opinion in this case was bottomed on two propositions: (1) the property involved, as to which the United States held legal title, was immune from state or municipal *565 ad valorem taxation under the Federal decisions; (2) The property involved was exempt from state or municipal ad valorem taxation, under Florida statutes.
We are of the view that the recent decision of the United States Supreme Court, cited above, now makes it clear that the property involved is not immune from State or municipal taxation, as was held in our former opinion. However, we do not consider that the decision has affected the question whether or not property as to which the United States has legal title isexempt from state or municipal taxation under prevailing Florida law.
We hold, therefore, on authority of S. R. A. Inc., Petitioner v. State of Minnesota, supra, that we must now recede from our former holding that under the facts of the case the property isimmune from state or municipal taxation; and in this particular the former opinion is modified. We adhere to our former view, however, that the property involved is exempt from state or municipal taxation so long as the legal title thereto remains in the United States, or until the vendee under the contract for purchase has acquired a complete equity in the lands or has otherwise become entitled to a deed to the whole property interest.
From the conclusions reached, it is our view that the decree appealed from should be reversed.
THOMAS, J., concurs.
Addendum
Appellant brought suit against appellees to enjoin the collection of ad valorem taxes on Lot 4, Block 37, Hart's Map of Jacksonville. The trial court dismissed the bill of complaint, and, on appeal, this court reversed that judgment in a divided opinion filed January 15, 1946, wherein a full statement of the *560 salient facts is detailed. A rehearing was granted to review that decision.
The opinion of January 15 was grounded on two postulates: (1) The property in question was immune from state taxation under federal law; (2) the property in question was exempt from state taxation under the Florida statutes. Since this opinion was filed, the Supreme Court of the United States, in S. R. A. Inc. v. State of Minnesota, decided March 25, 1946, has settled the first question contrary to our holding. It held that when the vendee enters into possession of the real estate under contract of purchase it becomes subject to the jurisdiction of the state for tax purposes.
So the only question that we are required to review on rehearing is whether or not the property in question is exempt from taxation for state and municipal purposes under the Florida statutes. Counsel for appellant insists that this question requires a negative answer because the tax imposed is, in effect, a tax on an interest in land which is not authorized under Florida law.
Considerable space in the briefs is devoted to the effect of Sections
A brief analysis of the factual picture will be helpful. It is admitted that the lands in question were purchased by the United States in 1888 and that they were used as a post office and court house by the Federal Government until 1940, when they were sold to private parties and, through mesne conveyances, acquired by appellant. The contract of sale *561 provided for immediate delivery to the purchaser and the payment of a consideration of $350,129, one-fifth of which was payable in cash and the balance in five equal annual installments with interest on deferred payments. The contract also provided that the seller execute a quitclaim deed to the purchaser and retain title until the contract was fully performed. The purchaser took possession at once and constructed a five-story department store on the premises, which he is now leasing for that purpose. The Federal Government released all control and dominion to the purchaser and is not a party to this litigation.
In 1941, the City of Jacksonville imposed an assessment on the property in the sum of $85,000. In 1942, this assessment was raised to $215,000, because of the erection of the five-story department store, which was alleged to have cost one-half million dollars. Appellant filed suit in equity to enjoin collection of the tax, on the theory that the property was immune from taxation under federal law and was exempt from taxation under state law because title was still vested in the United States, all installments not having been paid.
Under this state of facts, is the property in question exempt from the payment of state and municipal taxes under state law? As we stated in the forepart of this opinion, the question of immunity under federal law was foreclosed by S. R. A. Inc. v. State of Minnesota, decided by the Supreme Court of the United States, March 25, 1946, not yet reported. In our view, the question of exemption, like that of immunity, requires a negative answer.
Counsel have complicated the question by approaching it through a labyrinth of technical dialectics, attempting to demonstrate that the tax imposed was a "separate interest" in the rem, or some other interest in the rem, rather than on the rem, itself. S. R. A. Inc. v. Minnesota is a complete answer to this contention, but we approach the question on other and what appears to us irrefutable grounds. We approach it on the premise that this is a democracy in which every parcel of property is expected to bear its due portion of the burden of government, unless exempted by the Legislature in the manner provided by Section 1, Article IX of the *562 Constitution. Courts have no more important function than to direct the current of the law in harmony with sound democratic theory.
Exemptions from taxation are authorized for the purposes enumerated in Section 192.06, Florida Statutes 1941, the pertinent part of which is as follows:
"(1) All property, real and personal, of the United States and of this State . . ."
Is the property in question property of the United States, entitled to exemption from state and municipal taxes under this provision of law? The theory on which lands are exempted from taxation is that they are held and used for municipal, educational, scientific, literary, religious, or charitable purposes. Not one of these elements can be attached to the use of the lands in question. The United States sold and transferred them to appellant, and they are being used in private enterprise. True, they were sold under executory contract, but the United States executed its quitclaim deed to them, it released dominion over them, it claims no interest whatever in them, and it has turned them over to appellant, who has had complete use and occupancy of them from the date the contract was executed. They are enjoying police protection and every other service the city furnishes; the appellant or its assigns is using them in legitimate business surrounded by and in competition with other businesses which are bearing their part of the burden of government; the United States is not a party to this suit, is not here complainant, and has completely abandoned the property. Under this state of facts, we find no basis in law or reason why the lands in question should enjoy exemption from taxation.
Appellant rests its thesis on a literal interpretation of the quoted statute defining exemptions, but this court is not limited to that. It is authorized to look through form to fact and substance to answer the question of tax exemption or tax liability. 5 Am. Jur. Sec. 409. If the positive law (constitution or statute) does not give a direct answer to the question, the court is at liberty on the factual basis to indulge the rule of reason to reach a result consonant with law and justice. *563
If I abandon my homestead, it loses its right of exemption from taxation as soon as abandoned. We think the rule is general; that property dedicated to municipal, educational, religious, or other purposes that exempt it from taxation, reverts to its original status and becomes subject to state and municipal taxes as soon as it is abandoned for the purpose that fixes its exemption status. We think what we have said concludes the question, but Section
In S. R. A. v. State of Minnesota, the Supreme Court of the United States held, in terms that the equity of a purchaser under an executory contract of sale is, in fact, the realty and that such legal title as the United States held was held only as security. This holding is consistent with the holding of this court in Porter v. Carrol,
This reasoning is supported by City of New Brunswick v. U.S. et al.,
The real question here is the application of the quoted exemption statute to the facts recited. We never decide such questions in isolation, but we lay the statute beside the facts and deduce what appears to be the rational result. If a court is not permitted to look through the letter of the statute and apply it to facts as they exist, then the legislative declaration of a falsehood may, in many cases, amount to the judicial declaration of a truth. In this case it amounts to selecting one taxpayer in one of the most desirable business areas in Jacksonville and placing him in a privileged class. To so interpret the exemption statute does not square with reason or justice.
We, therefore, conclude that appellant is the owner of the taxable interest in the property in question, that the United States has abandoned such use of it as gave it an exemption status, and that it is now amenable to taxation under the law of Florida. It follows that our former opinion is receded from, and the judgment appealed from is affirmed.
CHAPMAN, C. J., BUFORD and ADAMS, JJ., concur.
BROWN, THOMAS and SEBRING, JJ., dissent.