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 notwithstanding 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.
Page 195 U. S. 380
MR. JUSTICE HOLMES delivered the opinion of the Court.
This is a writ of error to the Court of Appeals of the State of
Maryland, brought to reverse a judgment sustaining a tax upon
certain land. The plaintiff in error filed a petition and appeal
from an assessment by the Appeal Tax Court of Baltimore in the
Baltimore City Court, alleging that its land was not subject to
taxation, and, if subject, was taxed too high. The City Court
reduced the tax, but held the land liable, and its judgment was
affirmed by the Court of Appeals. 97 Md. 97. The land in question
formerly belonged to the United States, being part of the property
known as Fort McHenry, and is admitted not to have been taxable at
that time. Under an Act of Congress of June 19, 1878, 20 Stat. 167,
it was conveyed to the plaintiff in error on March 26, 1879. By the
terms of the deed, following the requirements of the act, the
consideration of the conveyance and the condition upon which it was
made was that the dock company should construct a dry dock upon the
land as specified, which it did, and that it should
"accord to the United States the right to the use forever of the
said dry dock at any time for the prompt examination and repair of
vessels belonging to the United States, free from charge for
docking, and if at any time said property hereby conveyed shall be
diverted to any other use
Page 195 U. S. 381
than that herein named, or if the said dry dock shall be at any
time unfit for use for a period of six months or more, the property
hereby conveyed, with all its privileges and appurtenances, shall
revert to, and become the absolute property of, the United
States."
This condition is relied upon as still keeping the land outside
the taxing power of the state.
It is argued that the United States has such an interest in the
land as to prevent the tax, and also that the land is an agency of
the government by the terms of the grant. It is noted that this tax
originally was levied upon the land, not upon the dock company's
interest, and although the language of the final judgment was "the
property concerned in the appeal in this case," that is supposed to
mean the same thing.
We will deal with the argument drawn from the last consideration
first. It is true that commonly taxes on land create a lien
paramount to all interest, and that a tax sale often has been said
to extinguish all titles, and to start a new one.
Hefner v.
Northwestern Life Ins. Co., 123 U. S. 747,
123 U. S. 751;
Textor v. Shipley, 86 Md. 424, 438;
Emery v. Boston
Terminal Co., 178 Mass. 172, 184. Perhaps it was assumed that
this always was the effect of tax sales, in
Northern Pacific
Railroad v. Traill County, 115 U. S. 600. But
it needs no argument to show that a state may do less. It may tax a
life estate to one and a remainder to another, and sell only the
interest of the party making default. With regard to what the State
of Maryland has done and what are the purport and attempted effect
of the tax in this case, we follow the Court of Appeals. That court
treated the tax and the lien as going only to the dock company's
interest in the land, although, probably by an oversight, it
neglected to modify the judgment according to its own suggestion so
as to show the fact. That only the company's interest was taxed is
shown by the reduction of the assessment on account of the
condition. Of course, it does not matter what form of words the
judgment employs when its meaning is thus declared by the court
having the matter under its control.
Page 195 U. S. 382
In the next place, as to the interest of the United States in
the land. This is a mere condition subsequent. There is no easement
or present right
in rem. The obligation to keep up the
dock and to allow the United States to use it carries active
duties, and is purely personal. The property is subject to
forfeiture, it is true, if the obligation is not fulfilled. But it
is only by forfeiture that the rights of the United States can be
enforced against the
res. It would be a very harsh
doctrine that would deny the right of the states to tax lands
because of a mere possibility that they might lapse to the United
States. The contrary is the law. The condition cannot be
extinguished by the state, but the fee is in the dock company, and
that can be taxed and, if necessary, sold, subject to the
condition.
See Northern Pacific Ry. v. Myers, 172 U.
S. 589,
172 U. S. 598;
Maish v. Arizona, 164 U. S. 599,
164 U. S.
607-609;
Central Pacific R. Co. v. Nevada,
162 U. S. 512,
162 U. S. 525.
The title of the dock company was not inalienable, as that of the
railroad was held to be in
Northern Pacific Ry. v.
Townsend, 190 U. S. 267.
Finally, we are of opinion that the land is not exempt as an
agency of the United States. The dock company disclaimed that
position for itself as a corporation, but asserts it for the land.
The position is answered technically, perhaps, by what we have said
already. The United States has no present right to the land, but
merely a personal claim against the corporation, reinforced by a
condition. But, furthermore, it seems to us extravagant to say that
an independent private corporation for gain, created by a state, is
exempt from state taxation, either in its corporate person or its
property, because it is employed by the United States, even if the
work for which it is employed is important and takes much of its
time.
Thomson v. Pacific
Railroad, 9 Wall. 579;
Railroad Company v.
Peniston, 18 Wall. 5.
Judgment affirmed.