1. An assessment for state taxation of lands owned by the United
States is void. P.
290 U. S.
91.
2. Bonds issued under authority of statutes of Idaho providing
for the creation of local improvement districts (Idaho Comp.Stats.,
1919, §§ 3999 4151) have no general lien on the lands in the
district and, save through the assessment, no special lien on any
tract. P.
290 U. S.
94.
3. The acquisition by the United States of lands in local
improvement districts created under authority of statutes of Idaho
(
supra), frustrating the replenishment, by a reassessment,
of the assessment fund, which was the sole source of payment of
bonds issued to finance the improvements -- no lien remaining on
the lands when the purchases by the United States were consummated,
and a reassessment thereafter being ineffective to create one --
was not a taking of the bondholder's property, and the District
Court was without jurisdiction under the Tucker Act of a suit to
recover the amount remaining due on the bonds. P.
290 U. S.
94.
4. The acts of the Government's agents in withholding a portion
of the purchase money pending an investigation of the possibility
that the realty would be liable for a reassessment did not give
rise to an implied contract on the part of the Government to pay
any balance remaining due on the bonds if no lien existed at the
date of acquisition. A purpose to pay only valid subsisting
liens
Page 290 U. S. 90
negatives an agreement to pay something which had no such
character. P.
290 U. S.
95.
63 F.2d 48 affirmed.
Certiorari, 289 U.S. 721, to review a judgment reversing a
judgment against the United States in a suit under the Tucker
Act.
MR. JUSTICE ROBERTS delivered the opinion of the Court.
This action was brought in the District Court for Idaho (40 F.2d
937), under the Tucker Act (24 Stat. 505), to recover a balance due
on improvement district bonds issued by the village of American
Falls, Idaho, for sidewalk and sewer construction. The theory of
the petitioner, holder of the securities, was that the liability of
the United States arose out of its acquisition of land in the
districts for the construction of the American Falls reservoir
under the authority of the Reclamation Act of June 17, 1902, c.
1093, 32 Stat. 388. The Circuit Court of Appeals (63 F.2d 48)
reversed a judgment in petitioner's favor, and the case was brought
here by certiorari.
In 1915 and 1916, the village (now city) of American Falls duly
created local improvement districts Nos. 1 and 2 for the
construction of sewers, and local improvement district No. 8 for
the laying of sidewalks, authorized bond issues to finance the
work, and levied against the several parcels of land in the
districts assessments totaling an amount calculated to suffice for
the payment of principal and interest of the bonds. All of the
bonds of the three
Page 290 U. S. 91
districts were purchased from the village by J. K. Mullen, who,
in 1925, transferred to the petitioner certain of the bonds of each
district. Beginning in 1920, the respondent acquired all the real
property within the three districts for the construction of the
reservoir. In some cases, title passed by condemnation, but in most
instances by deeds from the then owners. The acquisition was
completed prior to January 1, 1927. As title to each lot was
obtained, the United States paid or caused to be paid all existing
assessments against the lot. There was general knowledge prior to
1927 that the total of the assessments would be insufficient to pay
all the bonds. The petitioner asserts, and we may assume, that
statutory authority exists, in case of a deficiency arising from
causes shown by the record, to reassess the property within the
districts for the amount of the deficiency. By ordinances enacted
July 3, 1928, and proceedings pursuant to them, the city reassessed
all the land within the districts. But, as the land was then owned
by the United States, the assessment was a nullity.
Van
Brocklin v. Tennessee, 117 U. S. 151. At
some time between 1920 and January 1, 1927, the agents of the
government responsible for the acquisition of the reservoir site
learned that the original assessments were insufficient to pay the
outstanding bonds. This knowledge led them to require vendors to
leave part of the purchase price on deposit with the United States
pending determination of the government's liability for probable
reassessments. Subsequent to the institution of the present suit,
these officials, apparently upon advice that assessments made after
the conveyances could not affect the title of the United States,
caused the moneys so withheld to be paid to the vendors. The total
so retained and ultimately paid over was in excess of the amount
due upon the petitioner's bonds.
The petitioner argues that the bonds were property, and were
taken by the respondent and, in the alternative, that
Page 290 U. S. 92
they were liens, actual or inchoate, on the realty, and, as the
lien could not be foreclosed against lands owned by the United
States, the respondent's acquisition of the lots destroyed the
value of the securities and gave rise to an implied promise to pay
the sums remaining due to the bondholders. The respondent replies
that the bonds were not taken, were not liens upon the real estate
acquired, but only upon the existing assessments, or to the amount
of these assessments, all of which were cleared from the land at
the time of the conveyances to the government; the United States
recognized no lien of the bonds upon the tracts in question, and
made no contract, express or implied, to pay the bonds or any
future assessments; suit was not brought within the time limited by
the Tucker Act; the cause of action, if any, was in Mullen, the
owner of the bonds at the time title passed to the United States,
and R.S. § 3477 forbids assignment to the petitioner. An
understanding of the status of the bonds and the rights of their
owner as respects the real property in the improvement districts is
necessary to a solution of some of the questions presented.
The Idaho statutes provide for the creation by municipal action
of improvement districts for constructing public works of the
character with which we are here concerned (Idaho Compiled Statutes
1919, §§ 3999-4151, inclusive
*). The first step
is an ordinance declaring the intention to create the improvement,
describing the section to be improved, estimating the cost, and
declaring that the cost is to be assessed against the contiguous
property (§ 4003). Protests may be made and are to be heard and
considered, and thereafter an ordinance is passed creating the
district and providing for the improvement and for taxation and
assessment of the cost
Page 290 U. S. 93
upon all parcels of land within the district in proportion to
benefits (§ 4005). "Whenever any expense or cost of work shall have
been assessed on any land, the amount of said expenses shall become
a lien upon said lands. . . ." (§ 4007). The municipality may
provide for payment by installments instead of levying the entire
assessment at one time, and, in that case, may issue in the name of
the municipality improvement bonds of the district payable in
installments within ten years (§ 4014). Provision is made for
annual levies to meet installments and interest (§ 4017), for the
form of the bonds (§ 4018), and for the redemption of their lots by
the respective owners. If so redeemed the property affected is not
thereafter to be liable for further special assessments for the
same improvement except as in § 4024 provided (§ 4019).
Reassessment on all the property in the district is permitted by §
4024
"whenever, for any cause, mistake, or inadvertence, the amount
assessed shall not be sufficient to pay the cost of the improvement
made and enjoyed by owners of property in the local assessment
district where the same is made. . . ."
It was under this section that the reassessments were made in
the instant case.
The municipality is not liable for the amount of the bonds (§
4026). Its only duty is to collect the assessments and place them
in a separate fund set apart for payment of principal and interest.
In fulfillment of this obligation, the city may bring suit to
recover out of each lot the amount of any assessment against it (§
4007), and, if the municipality fails or neglects to collect, the
bondholder may proceed to do so in his own name, and may foreclose
the lien of the assessment (§ 4023). The section provides that the
bonds
"shall transfer to the . . . owner or holder, all the right and
interest of such municipality in and with respect to every such
assessment, and the lien
Page 290 U. S. 94
thereby created against the property of such owners
assessed,"
and shall authorize the holder "to receive, sue for and collect,
or have collected such assessment embraced in any such bond. . . ."
The bonds are to provide that the principal sum and interest is
payable out of the local improvement fund created for the making of
the improvement by assessment, and not otherwise (§ 4018), and "the
holder of any such bond shall look only to the fund provided by
such assessment for the principal or interest of such bond" (§
4025). The lot owner is not personally liable for the
assessment.
The bondholder is, in equity, the owner of the assessment fund,
and, as the real party in interest, may, in event of the city's
default in collection, enforce the city's right to collect the
assessment out of the land. The bonds have no general lien upon the
lands in the district, and, save through the assessment, no special
lien on any tract.
New First Nat. Bank v. Weiser, 30 Idaho
15, 22, 166 P. 213.
The petitioner insists that the bonds are property, and were in
legal effect taken by the respondent. The argument is that the sole
source of payment was a reassessment upon the lots in the
improvement districts, and, as the action of the respondent
rendered such procedure vain, the United States as effectually
destroyed the chose in action as if it had seized the instruments
evidencing the right. But the bonds were not taken. At the date of
acquisition by the government, the real estate was subject to be
assessed in the future for sundry taxes, amongst them taxes in the
nature of reassessments for sewers and sidewalks. It is true these
could not thereafter be levied on property which had passed to the
United States, but this does not mean that the government
appropriated the right to assess them
in futuro, nor that
it took the benefit which might accrue to bondholders consequent on
such future levies. By purchase of the lands, the United
States,
Page 290 U. S. 95
at most, frustrated action by the city to replenish the
assessment fund to which alone the bondholder must look for payment
of his bonds. But this was not a taking of the bondholder's
property.
Omnia Commercial Co. v. United States,
261 U. S. 502.
What has been said shows that the respondent did not take or
destroy any lien belonging to the petitioner. None remained upon
the land when the purchases were consummated. The reassessments
were the result of proceedings begun thereafter. They were
ineffective to create a lien upon lands owned by the government.
United States v. City of Buffalo, 54 F.2d 471.
The respondent did not expressly contract with the petitioner to
make good any unpaid balance on the outstanding bonds. Can an
implied contract of that nature be spelled out of the acts of the
government's agents? We think not. Care was taken to free the lands
of all liens, including the assessments then unpaid. The vendors
were under no legal liability at the date of transfer for any
future reassessments.
United States v. City of Buffalo, supra;
Brown v. Silverton, 97 Or. 441, 190 P. 971;
Beezley v.
Astoria, 126 Or. 177, 184, 269 P. 216. The withholding of a
portion of the purchase money pending an investigation of the
possibility that the realty would be liable for a reassessment
falls far short of indicating that the government intended to pay
the bondholders if it should develop that no lien existed at the
date of acquisition. A purpose to pay only valid subsisting liens
negatives an agreement to pay something which had no such
character.
Compare Tempel v. United States, 248 U.
S. 121;
Alabama v. United States, 282 U.
S. 502.
These views render unnecessary discussion of the contentions
with respect to the timeliness of the suit and the assignability of
the cause of action.
The judgment is
Affirmed.
* Reference will be made only to the sections dealing with
sidewalks, etc., since those applicable to sewers are of similar
import.