City of Cleveland v. United States
323 U.S. 329 (1945)

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U.S. Supreme Court

City of Cleveland v. United States, 323 U.S. 329 (1945)

City of Cleveland v. United States

No. 8

Argued December 6, 1944

Decided January 2, 1945*

323 U.S. 329

APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES

FOR THE NORTHERN DISTRICT OF OHIO

Syllabus

1. Under § 266 of the Judicial Code, the jurisdiction of a district court of three judges was properly invoked to hear and determine a suit to restrain county and municipal officials from assessing and collecting allegedly unconstitutional taxes where such officials were acting in the interest of the State and pursuant to a state law of statewide application. P. 323 U. S. 332.

2. The United States Housing Act of September 1, 1937, providing for the use of federal funds and credit to improve housing conditions, was a valid exercise of the power of Congress to provide for the general welfare. Const., Art. I, § 8, cl. 1. P. 323 U. S. 333.

3. It was within the power of Congress to exempt from state taxation property acquired and owned by the United States, or an instrumentality thereof, pursuant to the United States Housing Act. P. 323 U. S. 333.

52 F.Supp. 906 affirmed.

143 Ohio St. 251, 55 N.E.2d 265, reversed.

Appeals in Nos. 68 and 69 from a decree of a district court of three judges enjoining assessment and collection of state taxes and, in No. 388, from a judgment sustaining the denial of an application for exemption from a state tax.

Page 323 U. S. 330

MR. JUSTICE ROBERTS delivered the opinion of the Court.

These appeals present the same question of substantive law, and will be dealt with in a single opinion.

In No. 68, the appellees sought an injunction against the taxing officials of Cuyahoga County, Ohio, and those of the City of Cleveland, to restrain them from attempting to assess and collect taxes, pursuant to the laws of Ohio, on lands acquired by condemnation and owned by the appellees in the city and county. A preliminary injunction was issued but, pursuant to stipulation, the court proceeded at once to hear the case on the merits, and entered a final injunction. [Footnote 1]

Page 323 U. S. 331

The lands involved were acquired by the United States by condemnation under the National Recovery programme for low-cost housing projects. The Federal Public Housing Authority then erected low-cost dwelling units which were leased to Cleveland Metropolitan Housing, a Ohio authority. The latter has sublet the units to tenants for residence purposes.

The appellant contended that the United States Housing Act of September 1, 1937, [Footnote 2] is unconstitutional because Congress has no power under the Constitution to establish low-cost housing projects.

A majority of the court below held the federal statute authorized by the Constitution. [Footnote 3] Its reasoning was that, even though the evils of bad housing are local in their origin, their effect may become so widespread as to create a menace to the national welfare, and that Congress is empowered to deal with the subject in that aspect. The dissenting judge was of the view that the project amounted merely to an embarkation by the federal Government in a private business, and that the Government could not do this in such a way as to immunize the property employed from normal state taxation to support local police and other services required by the community of which the housing project forms a part.

In No. 69, the appellees sought and were awarded an injunction against the collection of local taxes under like circumstances.

In No. 388, the United States Housing Authority applied for exemption from local property taxes pursuant to the law of Ohio [Footnote 4] in respect of a housing project in Cincinnati. The real estate had been purchased by the United States and devoted to a low-cost housing project pursuant to the

Page 323 U. S. 332

federal statute. [Footnote 5] The application was denied. Appeal was taken to the Supreme Court of Ohio. [Footnote 6] The denial was affirmed on the grounds that no exemption was permitted by the Constitution and statutes of the State, and that refusal of the claimed exemption was consistent with the federal Constitution. [Footnote 7] An appeal to this court was perfected.

Nos. 68 and 69 were heard and decided by a District Court of three judges pursuant to § 266 of the Judicial Code. [Footnote 8] The appellants insist that they do not act as officers of the State in the enforcement or execution of any state statute in collecting the taxes in question, and that § 266 therefore confers no jurisdiction on a three-judge court to hear the cause. We overrule this contention.

The section is inapplicable to suits challenging local ordinances or statutes having only local application. [Footnote 9] But these cases involve state law, the application of which is statewide. [Footnote 10] If the taxing officials were, in these instances, though acting under such a law, doing so as local officials and on behalf of the locality and not as officers of the state, the section is inapplicable to suits to restrain them. [Footnote 11] Here, however, the officials were enforcing state laws embodying a statewide concern and in the State's interest, and in such a case, Section 266 is applicable. [Footnote 12] The jurisdiction of a court of three judges was properly invoked.

Page 323 U. S. 333

Little need be said concerning the merits. Section 1 of the Housing Act [Footnote 13] declares a policy to promote the general welfare of the Nation by employing its funds and credit to assist the States and their political subdivisions to relieve unemployment and safeguard health, safety, and morals of the Nation's citizens by improving housing conditions. Section 5 [Footnote 14] provides in part,

"The Authority, including but not limited to its franchise, capital, reserves, surplus, loans, income, assets, and property of any kind, shall be exempt from all taxation now or hereafter imposed by the United States or by any State, county, municipality, or local taxing authority."

Section 13 authorizes agreements by the Authority to pay annual sums, not exceeding taxes which would otherwise be paid, in lieu of taxes. [Footnote 15]

Challenge of the power of Congress to enact the Housing Act must fail. [Footnote 16] And Congress may exempt property owned by the United States or its instrumentality from state taxation in furtherance of the purposes of the federal legislation. This is settled by such an array of authority that citation would seem unnecessary. [Footnote 17]

Nos. 68 and 69 affirmed.

No. 388 reversed.

* Together with No. 69, Boyle, County Treasurer of Cuyahoga County, et al. v. United States et al., also on appeal from the District Court of the United States for the Northern District of Ohio, argued December 6, 1944, and No. 388, Federal Public Housing Authority (formerly United States Housing Authority) v. Guckenberger, Auditor, Hamilton County, et al., on appeal from the Supreme Court of Ohio, argued December 6, 7, 1944.

[Footnote 1]

52 F.Supp. 906.

[Footnote 2]

42 U.S.C. 1401 et seq.

[Footnote 3]

Art. I, § 8, Cl. 1.

[Footnote 4]

Ohio General Code, §§ 5616, 5570-1.

[Footnote 5]

Supra,note 2

[Footnote 6]

Pursuant to §§ 1464, 1464-1 Ohio General Code (1942 Supp.)

[Footnote 7]

Federal Public Housing Authority v. Guckenberger, 143 Ohio St. 251, 55 N.E.2d 265.

[Footnote 8]

28 U.S.C. § 380.

[Footnote 9]

Ex parte Collins,277 U. S. 565; Ex parte Public National Bank,278 U. S. 101; Rorick v. Board of Commissioners ,307 U. S. 208.

[Footnote 10]

See Ohio General Code §§ 5328, 5351.

[Footnote 11]

Ex parte Collins, supra; Ex parte Public National Bank, supra.

[Footnote 12]

Spielman Motor Sales Co. v. Dodge,295 U. S. 89; Rorick v. Board of Commissioners, supra,307 U. S. 212.

[Footnote 13]

13 42 U.S.C. § 1401.

[Footnote 14]

42 U.S.C. § 1405(e).

[Footnote 15]

42 U.S.C. § 1413.

[Footnote 16]

United States v. Butler,297 U. S. 1, 297 U. S. 64-67; Steward Machine Co. v. Davis,301 U. S. 548, 301 U. S. 586; Helvering v. Davis,301 U. S. 619, 301 U. S. 640.

[Footnote 17]

See, e.g., Van Brocklin v. Tennessee,117 U. S. 151; Pittman v. Home Owners' Loan Corp.,308 U. S. 21; Federal Land Bank v. Bismarck Lumber Co.,314 U. S. 95.

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