195 U. S.

Argument for Plaintiff in Error.

BALTIMORE SHIPBUILDING AND DRY DOCK COMPANY v. BALTIMORE.

ERROR TO THE COURT OF APPEALS OF THE STATE OF MARYLAND.

No. 39. Argued November 2, 3, 1904.-Decided November 28, 1904.

A State may tax different estates in land to the different parties thereto and sell only the interest of the party making default.

A State may tax the interest of a company owning a dry dock in land conveyed to it by the United States not withstanding there is a condition subsequent the nonfulfillment whereof would result in forfeiture and reversion to the United States and the United States has a continuing right to use the dry dock for certain purposes.

THE facts are stated in the opinion.

Mr. E. P. Keech, Jr., and Mr. Leon E. Greenbaum, with whom Mr. Archibald H. Taylor was on the brief, for plaintiff in error:

Congress authorized the conveyance of the property to the Dry Dock Company on several conditions, and upon the happening of any one of the contingencies the property, with all its privileges and appurtenances, will revert to and become the property of the United States. Any possible right of state taxation would thereby be destroyed. For a description of such an estate and incidents see Nor. Pac. R. R. Co. v. Townsend, 190 U. S. 267.

While these interests or estates of the United States and of plaintiff in error are not "property" in the sense of things material, as land itself or a horse is, they are "property" according to the more usual legal meaning of "a right or interest which a man has in lands and chattels to the exclusion of others." Austin's Jurisprudence (Campbell's notes), vol. 2, § 1051; Bouvier's Law Dict. (1897), "Property," vol. 2, 780; Anderson's Law Dict. (1889), "Property," 835.

Argument for Plaintiff in Error.

195 U. S.

All "property" is not of necessity taxed by the State of Maryland. The provision of Art. I, § 15, Declaration of Rights, is not violated by certain express exemptions. Buchanan v. County Commissioners, 47 Maryland, 286.

Certain classes of "property" and rights, highly valuable in themselves, are not the subject of taxation at all. Baltimore City v. Johnson, 96 Maryland, 737, 746; Balto. &c. Turnpike Co. v. The Appeal Tax Court, Balto. Daily Rec., May 7, 1903.

A State has no power to tax the property of the United States, including land in which the United States has an interest or estate. Maryland Code of Public General Laws, Title, "Revenue and Taxes," sub-title, "Exemptions," art. 81, § 4 (as amended by act of 1897, Ch. 120).

This is but legislative recognition of a fundamental doctrine of our law. Black on Tax Titles, 1893, § 35; Cooley on Taxation, 3d ed., 135; Howell v. State, 3 Gill. 14; McCulloch v. Maryland, 4 Wheaton, 316; Van Brocklin v. Tennessee, 117 U. S. 151; Wis. Cent. R. R. Co. v. Price Co., 133 U. S. 496. So as to any land in which the United States has any interest. Carroll v. Safford, 3 How. 441; Witherspoon v. Duncan, 4 Wall. 210.

Land of the United States lying within a State is not taxable by the State. If such land has been bought or taken up by an individual, it is not subject to state taxation, so long as something remains to be done by the individual to perfect his right to a patent from the United States. Kansas Pac. Ry. Co. v. Prescott, 16 Wall. 603; Union Pac. R. R. Co. v. McShane, 22 Wall. 444; Tucker v. Ferguson, 22 Wall. 527; Forbes v. Gracey, 94 U. S. 762; Colorado Co. v. Commissioners, 95 U. S. 589; Northern Pac. Ry. Co. v. Traill Co., 115 U. S. 600; Hussman v. Durham, 165 U. S. 147.

The assessment in this case is laid upon the land, as such, and not upon the interest of the plaintiff in error therein. Such an assessment, i. e., upon the land itself, without regard to the various estates of those having interests in it—is

195 U. S.

Argument for Plaintiff in Error.

the only form of assessment for which provision is made by the statutes of the State of Maryland. §§ 145, 164, art. 4, Code of Public Laws, amended by Baltimore City Charter, Ch. 123, acts of 1898.

The Dry Dock Company's property is assessed, and the resultant taxes are levied against and constitute a lien upon it, and the payment of them is enforceable, if by no other means, through a sale of the property, the res itself. Cooley on Taxation, 3d ed., 721 et seq.; Baltimore v. Canton Company, 63 Maryland, 218, 234; Mayor v. Boyd, 64 Maryland, 10; Cooper v. Holmes, 71 Maryland, 20, 30. As to this feature see 843-48, Baltimore City Charter.

The provision of § 48 is that after the conditions of the sale have been complied with and the required formalities observed, "the purchaser shall have a good title to the property sold,"

A purchaser at a tax sale in Baltimore city, has the right to demand, and, e converso, the city collector may offer for sale only, a fee simple title to the land levied upon, free from conflicting rights, claims, interests and estates of other parties, and free from all incumbrances, liens and conditions. Cooper v. Holmes, 71 Maryland, 20; Cooley on Taxation, 3d ed., 960; Black on Tax Titles (1893), §§ 419, 422; Burroughs on Taxation (1877), 346; Textor v. Shipley, 86 Maryland, 424, 438; Northern Pacific R. R. Co. v. Traill Co., 115 U. S. 600; Heffner v. N. W. Mut. Life Ins. Co., 123 U. S. 747; Emery v. Boston Terminal Co., 178 Massachusetts, 172.

If the assessment can only be made on the land and not on the several estates therein this assessment is but a step in the attempted taxation of property of the United States and is necessarily void. Moriarty v. Boone County, 39 Iowa, 634.

A State may not tax the interest of a private party in lands in which the United States also have an interest, without the consent of the United States. Kansas Pac. Ry. Co. v. Prescott, 16 Wall. 603; Union Pac. R. R. Co. v. McShane, 22 Wall. 444; Wisconsin Cent. Ry. Co. v. Price Co., 64 Wisconsin, 579;

Argument for Defendants in Error.

195 U. S.

Wisconsin Cent. Ry. Co. v. Taylor Co., 52 Wisconsin, 37. And see 22 Wall. 571; 24 Stat. 143; Cent. Pac. R. R. Co. v. Nevada, 162 U. S. 512; Northern Pac. Ry. Co. v. Myers, 172 U. S. 589; Cooley on Taxation, 3d ed., 137.

The land with the dry dock on it is a Federal agency, actually used by the United States, in the exercise of its Constitutional powers, and hence is not subject to state taxation. McCulloch v. Maryland, 4 Wheaton, 316, 436; Cooley's Const. Lim., 7th ed., 45, 678; Cooley on Taxation, 3d ed., 129; Black on Tax Titles, 1893, § 5; cases cited supra and Grand Trunk R. R. Co. v. Richardson, 91 U. S. 454, 468; Northern Pac. Ry. Co. v. Smith, 171 U. S. 261, 275; Osborn v. Bank, 9 Wheat. 867; Thompson v. Union Pac. R. R. Co., 9 Wall. 579; Union Pac. R. R. Co. v. Peniston, 18 Wall. 5, distinguished.

The tract, of which the land is a part, was acquired by the United States from its owners with the express and unconditional consent of the State, and Congress is vested with exclusive legislative jurisdiction over it, and the State has no legislative or other power over it, except as expressly permitted by Congress. United States v. Cornell, 2 Mason, 60; Commonwealth v. Glary, 8 Massachusetts, 72; Fort Leavenworth R. R. Co. v. Lowe, 114 U. S. 525; Railroad Co. v. McGlenn, 114 U. S. 542; Bannon v. Burns, 30 Fed. Rep. 892; Martin v. House, 39 Fed. Rep. 694.

Where the State's consent has been given upon condition, and in certain cases falling under acts of Congress, conferring special jurisdiction on the States, a limitation of the rule has been permitted. See Acts of March 5, 1795, Rev. Stat. § 4662; Act of March 5, 1903, 32 Stat. 1220; and see also Chauvenet v. Commissioners, 3 Maryland, 259.

Mr. Edgar Allan Poe, with whom Mr. W. Cabell Bruce was on the brief, for defendants in error:

The interest of the Dock Company in the land and dry dock is not exempt from assessment because under $ 2 of the act of Congress there is a possibility that said land and dry dock

195 U.S.

Argument for Defendants in Error.

may revert to, and become the absolute property of, the United States. It is simply the conditional interest or estate of the plaintiff in error in the land and dry dock which is assessed and taxed. If it should ever become necessary for the State or city to sell the property for the non-payment of taxes, nothing more could be sold than its conditional estate in the land and the permanent improvements thereon, subject to all of the rights of the United States therein. In Maryland taxes are not levied on things, but on the owner of things; the value of the things owned merely fixing the measure of the owner's liability to contribute in taxes towards the support of the government. Monticello Co. v. Baltimore, 90 Maryland, 425; Carstairs v. Cochran, 95 Maryland, 500; see art. 50, Baltimore City Code; Mayor v. Whittington, 78 Maryland, 232. The decision of the state court is binding on this court. Carstairs v. Cochran, 193 U. S. 10; Northern Pac. Co. v. Townsend, 190 U. S. 270.

The property has a situs within the territorial limits of Baltimore, and plaintiff in error has been in full possession and enjoyment of said property for over twenty-five years, under a legal title, during that entire period, falling within the definition of a "base fee," or a fee simple title defeasible upon a condition subsequent. As such owner, its interest in said property has been assessed for taxes. No attempt has been made to assess or to tax the contingent interest of the United States Government. The act of Congress in question, and the deed executed by the Secretary of War in pursuance of said act, made no attempt to exempt from taxation the interest acquired by the dock company, and, by the imposition of the tax, there manifestly has been no impairment of the efficiency of the grant or the use and enjoyment of the property by the grantee. Union Pacific R. R. v. Peniston, 18 Wall. 5.

Plaintiff in error being in possession and full enjoyment of very valuable property, some cogent reason must be shown by it why its said property should not bear its fair proportion of taxation for the benefit of the state and city governments.