S.R.A., Inc. v. Minnesota
327 U.S. 558 (1946)

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U.S. Supreme Court

S.R.A., Inc. v. Minnesota, 327 U.S. 558 (1946)

S.R.A., Inc. v. Minnesota

Nos. 254 and 255

Argued January 3, 1946

Decided March 25, 1946

327 U.S. 558

Syllabus

Real estate, which had been acquired by the United States for public purposes with the consent of a State and over which the United States had exercised exclusive legislative jurisdiction pursuant to Art. I, § 8, cl. 17 of the Constitution, was sold to a private party under a contract of sale giving the purchaser possession but retaining legal title in the United States until payment of the balance of the purchase price in installments. The contract contained no express provision retaining sovereignty in the United States; there was no express retrocession by Congress to the State, and the original act of cession contained no requirement for return of sovereignty to the State when the property was no longer used for federal purposes. While much of the purchase price was still not due and unpaid, the State levied taxes on the property "subject to fee title remaining in the United States." Under the state law, as construed by the Supreme Court of the State, the equitable interest alone could be sold for taxes, leaving the fee of the United States in its position of priority over any interests which might be transferred by the tax sale.

Held:

1. The contract transferred the equity in the land to the purchaser, leaving in the United States only a legal title as security -- the equivalent of a mortgage. Pp. 327 U. S. 565, 327 U. S. 569.

2. When the purchaser took possession of the property, it became subject to the territorial jurisdiction of the State. P. 327 U. S. 565.

3. The construction by the state supreme court of the law of the State as to the effect of a tax sale of the purchaser's interest on the interest of the United States is binding on this Court. P. 327 U. S. 565.

4. The property is not immune from taxation by the State. Van Brocklin v. Tennessee,117 U. S. 151, distinguished; New Bunswick v. United States,276 U. S. 547, followed. Pp. 327 U. S. 566-569.

5. The tax is not invalidated by the inclusion of the interest of the United States in the valuation of the land, since its interest is for security purposes only, and is not beneficial in nature. P. 327 U. S. 570.

219 Minn. 493, 517; 18 N.W.2d 442, 455, affirmed.

Page 327 U. S. 559

Minnesota levied taxes on certain real estate under contract of sale from the United States to a private party, the legal title being in the United States, but the assessment was expressly made "subject to fee title remaining in the United States." A state trial court held that the property was exempt from state taxation. The Supreme Court of Minnesota reversed the judgment. In re S. R. A., Inc., 213 Minn. 487, 7 N.W.2d 484. On retrial, the lower court held the property liable for the tax and declared a lien

"upon such parcel of land as against the estate, right, title, interest, claim, or lien, of whatever nature, in law or equity, of every person, company, or corporation, subject however, to the prior rights, liens and interests of the United States of America."

This judgment was affirmed on appeal. In re S. R. A., Inc., 219 Minn. 493, 517, 18 N.W.2d 442, 455. This Court granted certiorari. 326 U.S. 703. Affirmed, p. 327 U. S. 570.

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