Opinion by
Mr. Justice Elkin,
This is a proceeding in equity to restrain the city of Philadelphia from the collection of taxes levied against the appellee company for the years 1902 and 1903. The-appellee is a private corporation and has entered into an article of agreement for the purchase of the old Mint site from the United States government. The legal title to the property is in the United States, and will remain there until the final' payments are [110] made and all the precedent conditions are performed. The general rule is that real estate, the title to which is in the United States, is not subject to taxation for state and local purposes. It is familiar law that in dealing with the taxation of real estate belonging to the United States, the decisions of the federal courts are final and conclusive in all jurisdictions. Starting, then, with the conceded fact that the title to the property attempted to be taxed in this case is in the United States, and therefore ordinarily not subject to municipal taxation, the appellants must show that they come within some exception to the general rule in order to give them any standing to assert a claim for taxes against the appellee company. The attempt is made to take this case out of the general rule by showing that the United States, by article of agreement, had sold and agreed to convey the property to the appellee, and this company being in possession, receiving rents and exercising all rights of ownership, has such an equitable title as to subject the property to taxation in its name. This contention would be perfectly sound if the rule of taxation applicable thereto could be determined by Pennsylvania law. The difficulty, however, is that in the present case our state law has no application, and it becomes necessary to look to the decisions of the federal courts in order to determine the rights of the parties.
The rule which denies the right of a state or municipality to tax the property of the United States is founded on the principle which inheres in every independent government, that it must be free from any such interference of another government as may tend to destroy its powers or impair their efficiency: Wisconsin Central Railroad Company v. Price County, 133 U. S. 496. The power to tax implies the power to divest the title by a tax sale when there is default in the payment of the taxes levied. Hence the federal government has most carefully guarded its property from the vigilance of the local tax gatherer. There is, however, an exception to the general rule recognized by the federal courts, and that is, where congress has prescribed the conditions upon which portions of the public domain may be alienated, and provided that upon the performance of the conditions, a patent of the United States shall issue to the purchaser, and all such conditions have [111] been complied with, the land alienated being distinctly defined, it only remaining for the government to issue its patent, and until such issue holding the legal title in trust for the vendee, who has gone into possession and is exercising the-rights of ownership therein, the purchaser will be treated as the beneficial owner of the land, and the same may be subjected to taxation for local purposes. The appellants rely upon this exception to the general rule to support their contention in the present case. It must not be overlooked, however, that this exception is only recognized where congress has prescribed the conditions upon which portions of the public domain may be alienated, and directed that upon the performance of these conditions a patent shall issue. In these exceptional cases, the federal courts have distinctly held that all of the precedent conditions must have been complied with so that nothing remains on the part of the purchaser to be done before he is entitled to the legal title in order to subject the property to local taxation : Railway Company v. Prescott, 83 U. S. 603; Central Pacific Railroad Co. v. Nevada, 162 U. S. 512; Northern Pacific Railroad Co. v. Myers, 172 U. S. 589. In other words, even in these exceptional cases, it has been uniformly held, that if any part of the purchase money remains unpaid, or anything remains to be done by the purchaser, or any precedent condition has not been performed, the right to subject the property to local taxation does not exist.
Let us see, then, whether the case at bar comes within the exception to the general rule as defined by the federal courts. The purchaser, the vendee company here, has agreed to pay the United States for the property the sum of $2,000,000, on which it had only paid at the time of the filing of this bill $250,000, leaving a balance unpaid of $1,750,000, so that all of the money has not yet been paid. Then, again, under the terms of the agreement the government expressly reserved the right to declare a forfeiture of the contract as well as of all moneys paid on account thereof, if all of the conditions contained were not performed by the purchaser, so that if the balance of the purchase money is not paid, or if any of the conditions are not performed, the purchaser will forfeit his equitable interest in the property. Clearly, therefore, the facts of this case do not bring it within the exception to the general rule.
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Opinion by
Mr. Justice Elkin,
This is a proceeding in equity to restrain the city of Philadelphia from the collection of taxes levied against the appellee company for the years 1902 and 1903. The-appellee is a private corporation and has entered into an article of agreement for the purchase of the old Mint site from the United States government. The legal title to the property is in the United States, and will remain there until the final' payments are [110] made and all the precedent conditions are performed. The general rule is that real estate, the title to which is in the United States, is not subject to taxation for state and local purposes. It is familiar law that in dealing with the taxation of real estate belonging to the United States, the decisions of the federal courts are final and conclusive in all jurisdictions. Starting, then, with the conceded fact that the title to the property attempted to be taxed in this case is in the United States, and therefore ordinarily not subject to municipal taxation, the appellants must show that they come within some exception to the general rule in order to give them any standing to assert a claim for taxes against the appellee company. The attempt is made to take this case out of the general rule by showing that the United States, by article of agreement, had sold and agreed to convey the property to the appellee, and this company being in possession, receiving rents and exercising all rights of ownership, has such an equitable title as to subject the property to taxation in its name. This contention would be perfectly sound if the rule of taxation applicable thereto could be determined by Pennsylvania law. The difficulty, however, is that in the present case our state law has no application, and it becomes necessary to look to the decisions of the federal courts in order to determine the rights of the parties.
The rule which denies the right of a state or municipality to tax the property of the United States is founded on the principle which inheres in every independent government, that it must be free from any such interference of another government as may tend to destroy its powers or impair their efficiency: Wisconsin Central Railroad Company v. Price County, 133 U. S. 496. The power to tax implies the power to divest the title by a tax sale when there is default in the payment of the taxes levied. Hence the federal government has most carefully guarded its property from the vigilance of the local tax gatherer. There is, however, an exception to the general rule recognized by the federal courts, and that is, where congress has prescribed the conditions upon which portions of the public domain may be alienated, and provided that upon the performance of the conditions, a patent of the United States shall issue to the purchaser, and all such conditions have [111] been complied with, the land alienated being distinctly defined, it only remaining for the government to issue its patent, and until such issue holding the legal title in trust for the vendee, who has gone into possession and is exercising the-rights of ownership therein, the purchaser will be treated as the beneficial owner of the land, and the same may be subjected to taxation for local purposes. The appellants rely upon this exception to the general rule to support their contention in the present case. It must not be overlooked, however, that this exception is only recognized where congress has prescribed the conditions upon which portions of the public domain may be alienated, and directed that upon the performance of these conditions a patent shall issue. In these exceptional cases, the federal courts have distinctly held that all of the precedent conditions must have been complied with so that nothing remains on the part of the purchaser to be done before he is entitled to the legal title in order to subject the property to local taxation : Railway Company v. Prescott, 83 U. S. 603; Central Pacific Railroad Co. v. Nevada, 162 U. S. 512; Northern Pacific Railroad Co. v. Myers, 172 U. S. 589. In other words, even in these exceptional cases, it has been uniformly held, that if any part of the purchase money remains unpaid, or anything remains to be done by the purchaser, or any precedent condition has not been performed, the right to subject the property to local taxation does not exist.
Let us see, then, whether the case at bar comes within the exception to the general rule as defined by the federal courts. The purchaser, the vendee company here, has agreed to pay the United States for the property the sum of $2,000,000, on which it had only paid at the time of the filing of this bill $250,000, leaving a balance unpaid of $1,750,000, so that all of the money has not yet been paid. Then, again, under the terms of the agreement the government expressly reserved the right to declare a forfeiture of the contract as well as of all moneys paid on account thereof, if all of the conditions contained were not performed by the purchaser, so that if the balance of the purchase money is not paid, or if any of the conditions are not performed, the purchaser will forfeit his equitable interest in the property. Clearly, therefore, the facts of this case do not bring it within the exception to the general rule.
[112] The appellants, however, rely upon one of the latest decisions of the supreme court of the United States to support their contention that the rule of the earlier cases hereinbefore cited has been modified or changed. In Baltimore Shipbuilding, etc., Company v. Baltimore, 195 U. S. 315, it was held that the real estate of the shipbuilding company was subject to taxation by the city of Baltimore. After a careful consideration of that case we have failed to discover that the rule of the earlier cases has been changed, either in express terms or by necessary implication. In that case, however, it must not be overlooked that the title to the property was not in the United States, but in the shipbuilding company. There was a duty on the part of the company to allow government vessels to put into dry dock for repairs, and there was a condition subsequent of defeasance, and these were the distinguishing features of that case clearly pointed out by the court in rendering the decision. The legal title was in the shipbuilding company, and therefore under the law of the state it would be subject to local taxation just like the property of any other private corporation or individual unless entitled to exemption for some sufficient reason. It undertook to evade the payment of local taxes on the ground that the United States had an equitable interest in the title to the property, and therefore claimed that the case came within the general rule of taxation of property belonging to the federal government. The court very properly held that under such circumstances the shipbuilding company could not be permitted to avoid its share of the burdens of local taxation because it had entered into an agreement with the United States providing that if the conditions thereof were not kept and performed a defeasance would result. Another ground upon which the right to impose the tax in that case was predicated was that under the laws of the state of Maryland even an equitable interest in the title to real estate may be taxed, and in default of payment thereof a tax sale would only divest the equitable interest against which the tax was assessed. The answer to this position is that in Pennsylvania this is not now, and never was, the law. In this state the rem is taxed, and if a tax sale results from default in the payment of the taxes levied, the title to the rem is sold. It is true that in our state a vendee of [113] land purchased by article of agreement may be assessed for the full taxable value of the land, although he has only paid a portion of the purchase price. Indeed, this very frequently happens, but the right to do so is founded on the principle that the tax is against the rem, and it is a matter of no importance whether the tax is assessed in the name of the legal or equitable owner, so long as it is assessed against the whole title to the land. Some confusion about this matter may have arisen because our courts have always recognized the right to impose a tax upon the holder of the legal title to different strata within the boundaries of a particular tract of land. As, for instance, it frequently happens that the legal title to the surface is in one owner, the title to the coal in another, and the title to the ores in still another. In such a case, the surface is taxed to its owner, the coal to its owner, and the ores to their owners, but.this is because there has been a severance of the legal title to the different strata, and each stratum is subject to taxation in the name of its owner just as much as if it represented a distinct and separate acreage. In the taxation of the coal, for instance, in such a case, the legal title might be in one owner and the equitable title in another, but the tax would be levied and assessed against the rem, that is, all the coal, and if a tax sale resulted from default in the payment of these taxes, the whole title to the coal would pass.
Another answer to the contention made by the appellants in this respect is that the learned court below has found as a fact that there was no assessment or attempt to assess the property otherwise than as a whole in the name of the United States until after the filing of the present bill. Of course, the rights of the parties to this controversy must be determined upon the facts as they stood at the time the '‘bill was filed. On this ground, as well as for the other reasons set out in this opinion, we are compelled to hold that the property was not subject to taxation for municipal purposes, and that the decree entered by the court below must be sustained.
Decree affirmed.
Mestrezat and Potter, JJ., dissent.