Opinion · Court of Appeals for the Second Circuit

United States v. City of New York

United States v. City of N.Y., 175 F.2d 75 (2d Cir. 1949)

Type: Opinion
Court: Court of Appeals for the Second Circuit
Jurisdiction: Federal
Date: 1949-05-27
Topic: general

How later courts describe this case

“The question of the validity of a state or municipal tax is one which the state courts are peculiarly fitted to answer and which, therefore, a federal court should not consider.” (footnote omitted)

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Authority status: pending
Cited by: 17 opinions

UNITED STATES v. CITY OF NEW YORK,175 F.2d 75(2nd Cir. 1949)

UNITED STATES v. CITY OF NEW YORK.

No. 231, Docket 21291.

United States Court of Appeals, Second Circuit.

May 27, 1949.

Page 76

Appeal from the United States District Court for the Southern District of New York. Condemnation proceedings by the United States of America against the City of New York, wherein the United States filed a petition for a declaratory judgment as to the validity of city taxes against the property condemned. From an order declaring the taxes invalid, the City of New York appeals.

Order reversed with directions to dismiss declaratory judgment petition.

A. Devitt Vanech, Washington, D.C., Harry T. Dolan, Brooklyn, N Y, Roger P. Marquis and John C. Harrington, Washington, D.C., for United States.

John P. McGrath, New York City (William F. Murphy, Benj. A. Hartstein, Nathaniel L. Goldstein, Albany, N.Y., Morris Handel and Ira Wollison, New York City, of counsel), for City of New York.

The United States, on July 7, 1943, brought condemnation proceedings in the court below to acquire a leasehold interest in the hospital property of Lebanon Hospital Corporation. The property is in New York City. The City was made a party to those proceedings, was duly served, and entered its appearance on October 13, 1943. By an order of court entered July 8, 1943, the United States obtained possession for one year ending June 30, 1944, with provision for extensions for yearly periods. It retained possession until January 4, 1946, maintaining the property as a hospital for the care and treatment of sick and disabled soldiers. On June 26, 1945, the United States agreed with Lebanon Hospital Association to pay as compensation for the use of the property the sum of $125,000 per year and the taxes legally levied on that property during the occupancy by the United States. This agreement was approved by the district court on June 30, 1945. The City of New York levied taxes on the property for the tax years 1944-1945 and 1945-1946. On May 28, 1948, the United States filed in the condemnation proceedings a petition for a declaration that those taxes were invalid. The City moved to dismiss the petition for lack of jurisdiction of the subject matter. The district court denied this motion and, on August 26, 1948, entered an order declaring the taxes invalid, on the ground that the property was exempt from taxes under the State Tax Law. The City has appealed from that order.

Section 4, subdivision 6 of the Tax Law of the State of New York, Consol.Laws, c. 60, provides that the following property shall be exempt from taxation: "The real property of a corporation or association organized exclusively for * * * charitable, benevolent, * * * hospital, infirmary * * * purposes, * * * or for two or more such purposes, and used exclusively for carrying out thereupon one or more of such purposes. * * * The real property of any such corporation not so used exclusively for carrying out thereupon one or more of such purposes but leased or otherwise used for other purposes, shall not be exempt * * * provided, however, that a lot or building owned and actually used for hospital purposes, by a free public hospital, depending for maintenance and support upon voluntary charity, shall not be taxed as to a portion thereof leased or otherwise used for the purposes of income,Page 77when such income is necessary for, and is actually applied to the maintenance and support of such hospital, * * *."

Before L. HAND, SWAN and FRANK, Circuit Judges.

FRANK, Circuit Judge.

In United States v. Woodworth, 2 Cir.,170 F.2d 1019, we held that 28 U.S.C.A. § 1341 does not bar a suit in the federal courts by the United States to obtain an injunction against the collection of a state or city tax. Accordingly, the district court had jurisdiction of the subject matter. As the United States could have instituted a separate suit seeking the relief sought by its petition, we treat the filing of that petition as such a suit. True, in such a suit, it would have been necessary to serve the City. But the City, already a party to the condemnation proceedings, did not object, in the district court, to lack of new service upon it. Consequently, that court had jurisdiction of the "person" of the City.

However, the existence of jurisdiction is not enough. Whether the tax is valid is by no means clear under the state-court decisions.¹The question of the validity of a state or municipal tax is one which the state courts are peculiarly fitted to answer and which, therefore, a federal court should not consider.²See Matthews v. Rodgers,284 U.S. 521, 52 S.Ct. 217, 76 L.Ed. 447; Stratton v. St. Louis, etc. Ry. Co.,284 U.S. 530, 52 S.Ct. 222, 76 L.Ed. 465; Great Lakes Dredge Dock Co. v. Huffman,319 U.S. 293, 63 S.Ct. 1070, 87 L.Ed. 1407; Meredith v. Winter Haven,320 U.S. 228, at page 235, 64 S.Ct. 7, 88 L. Ed. 9.

It is not denied by the United States that, after the levy of the taxes, a wholly adequate remedy was open to it, directly or through Lebanon, in the state courts. Whether, because of delay, that remedy is not now available is not material, for the United States should never have sought relief in a federal court.

For the foregoing reasons, we reverse the order of August 26, 1948, and direct the dismissal of the petition.

See Pratt Institute v. New York,183 N.Y. 151,75 N.E. 1119, 5 Ann.Cas. 198; People ex rel. Unity Congregational Society v. Mills,189 Misc. 774,71 N.Y.S.2d 873; Matter of Syracuse Young Men's Christian Association,126 Misc. 431, 213 N.Y.S. 35; Congregation Emanu-El v. City of New York,150 Misc. 657, 270 N YS. 6, affirmed243 App. Div. 692, 277 N.Y.S. 955. ↩
The situation would be different, if the state courts had previously answered that question unequivocally. ↩