Rohr Aircraft Corp. v. County of San Diego
Headline: Property declared surplus and handed to federal disposal agencies is immune from state and local property taxes, the Court rules, even when the record title remained in the Reconstruction Finance Corporation.
Holding: The land declared surplus and transferred to federal disposal control became United States property and was immune from state and local taxation despite record title remaining in the Reconstruction Finance Corporation.
- Makes surplus federal property immune from local property taxes after federal transfer.
- Prevents taxing based on record title alone when federal agencies control the property.
- Directs courts to treat practical ownership, not bare title, in tax disputes over federal property.
Summary
Background
A private lessee occupied land that had been owned by the Reconstruction Finance Corporation (RFC). In 1946 the RFC declared the land surplus under the Surplus Property Act of 1944 and the War Assets Administration (later the General Services Administration) took control to store and dispose of the property. The land was leased in 1949, taxes were assessed for 1951–1955, the lessee paid and sued for refunds, and California’s high court held the land taxable because record title stayed in the RFC.
Reasoning
The Court asked whether property declared surplus and placed under a federal disposal agency remained “real property of the Corporation” subject to taxation under §8 of the Reconstruction Finance Corporation Act. The Court concluded Congress intended the tax waiver to apply only while the RFC was using property in its financial functions. Once the property was declared surplus and control passed to the federal disposal agency, beneficial ownership rested with the United States and the property became immune from state and local property taxes, despite the bare record title remaining in the RFC.
Real world impact
The decision prevents local governments from taxing federal surplus property after it is transferred for federal disposal, even if legal title remains in a federal instrumentality. It reverses the California decision and returns the matter for proceedings consistent with this ruling. The opinion also notes a later 1955 statute addressing transfers and payments in lieu of taxes.
Dissents or concurrances
Two Justices (Black and Douglas) dissented; the published opinion does not set out their reasons.
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