the limits of the said State; but that the subject of the public lands and the interests which may be given of the said *State therein, [*450 shall be regulated by future action between Congress, on the part of the United States: and the said State of Michigan shall in no case, and under no pretense whatsoever, impose any tax, assessment, or imposition of any description, upon any of the lands of the United States within its limits. This exemption from taxation of the lands of the United States, and the prohibition of the States in which they are located to interfere with their disposal, were designed, as they were calculated, to facilitate their sale, and to hold out inducements to purchasers, and enter, as one of its elements, into the price of such lands; and as, from the very nature of the contract of purchase, a buyer cannot prudently improve, or expend money on the land, before his title is consummate. All the principles of equity, as well as of law, concur in securing to the citizen an exoneration from the burdens of State assessment, until the moment that he may be recompensed by the enjoyment of the profits of the land purchased, and that is, when his title is perfected by patent. examination of the various acts of Congress,' say the court, "for the purpose of showing what we consider to be true in regard to the public lands, that with the exception of a few cases, nothing but a patent passes a perfect and consummate title." (13 Peters, 516.) And again: 449*] *"A much stronger ground, how ever, has been taken in argument. It has been said that the State of Illinois has a right to declare by law, that a title derived from the United States, which, by their laws, is only inchoate and imperfect, shall be deemed as perfect a title as if a patent had issued from the United States; and the construction of her own courts seems to give that effect to her statute. That State has an undoubted right to legislate as she may please in regard to the remedies to be prosecuted in her courts, and to regulate the disposition of the property of her citizens by descent, devise, or alienation. But the property in question was a part of the public domain of the United States. Congress is invested by the Constitution with the power of disposing of and making needful rules and regulations respecting it. Congress has declared, as we have said, by its legislation, that in such a case as this a patent is necessary to complete The Legislature of the State of Michigan the title. But in this case no patent has issued; illustrates this view. By her act providing for and, therefore, by the laws of the United States, the disposition of her university lands, she has the legal title has not passed, but remains in provided, that the land held by a certificate of the United States. Now, if it were competent purchase from the State, shall be taxed as perfor a State Legislature to say that, notwith-sonal property; that such certificate shall enstanding this, the title shall be deemed to have able the purchaser to support an action of trespassed, the effect of this would be, not that pass on the lands and entitle him to the immeCongress had the power of disposing of the diate possession thereof. (Laws of Michigan, public lands, and prescribing the rules and reg- 1844, No. 68, sec. 19.) And it has been deulations concerning that disposition, but that cided by her courts that the holder of a certifiIllinois possessed it. That would be to make cate of purchase from the United States cannot the laws of Illinois paramount to those of Con- maintain ejectment on it. This I learn from gress in relation to a subject confided by the the profession, for there are no reports pubConstitution to Congress only. And the prac- lished of their decisions. The same doctrine tical result in this very case would be, by force is the settled law of Ohio. (1 Ohio Rep., 313, of State legislation, to take from the United 314; 6 Ibid., 165; 7 Ibid., 151 and 252.) In States their own land, against their own will, Illinois, the holder of certificate of purchase and against their own laws. We hold the true may maintain ejectment, &c., by virtue of posprinciple to be this: hat whenever the ques-itive statutory enactment. (Revised Laws, p. tion in any court, State or federal, is, whether a 199.) title to land which had once been the property But we think that, independent of these statof the United States has passed, that question utes, the claim of the State to tax these lands is must be resolved by the laws of the United indefensible. States; but that, whenever, according to those The property of the United States is not taxlaws, the title shall have passed, then that prop-able by the several States. erty, like all other property in the State, is subject to State legislation, so far as that legislation is consistent with the admission that the title passed and vested according to the laws of the United States." (13 Peters, 516, 517.) The Act of Congress (15 June, 1836) admitting Michigan into the Union, is even stronger in its terms than the ordinance of 1787. It is as follows: "Sec. 4. And be it further enacted, that nothing in this act contained, or in the admision of the said State into the Union as one of the United States of America, upon an equal footing with the original States in all respects whatever, shall be so construed or understood as to confer upon the people, Legislature, or other authorithies of the said State of Michigan, any authority or right to interfere with the ale by the United States, and under their authority, of the vacant and unsold lands within The subjects over which the sovereign power of a State extends, are objects of taxation; but those over which it does not extend, are exempt from taxation. (McCulloch v. The State of Maryland, 4 Wheat., 316.) The power of legislation, and consequently of taxation, operates on all the persons and properly belonging to the body politic. (Providence Bank v. Billings & Pitman, 4 Peters, 563.) These principles exempt the United States and their property from taxation by the States. (See Weston et al. v. City Council of Charleston, 2 Peters, 449.) The exemption extends to the lands in controversy, unless the inchoate title acquired by the applicant for the purchase of them subjects them to taxation. *There certainly is no express legis- [*451 lation to this effect. How does the case stand on general princi ples? In order to place it in the most unfavorable light for our argument, let the situation of the complainant be assimilated to that of a vendee after contract, but before deed, who has a perfect right to a conveyance. Before conveyance actually made, who is to pay taxes on the lands agreed to be conveyed? Taxation is a legal question. Taxes are levied against the legal owner. They are prescribed by express statutes. Legal rights are alone looked to in the assessment and levy of taxes. Under the old credit system, lands were confessedly exempt from taxation until after the patent issued. A purchaser of them, even before the payment of the money, was as much an equitable owner as now. He was styled the purchaser of the land so soon as he made the payment of twenty per cent. and received his certificate. Look at the absurdity of the opposite doctrine: If a tax assessor is to inquire into the equitable rights and interests of parties, then when money has been agreed to be laid out in lands, it should be assessed and returned as lands, and vice versa, in regard to lands contracted to be sold. This very point arose in the case of Wilson's Exec. v. Tappan (6 Cond. Ohio Rep., 80; 7 Hammond, 172), and it was there decided, that the vendor was bound to pay them; and that, if not paid, the warranty in the deed of freedom from incumberances would indemnify the vendee against them. 66 The patents issued by the United States for the public lands contain the words 'give and grant." These words imply a warranty. (See Caines' Rep., 188; 7 Johns. Rep., 258; 8 Cowen, 36; 1 Coke, 384 A; 4 Kent's Com., ed. of 1844, 474, and cases there cited.) If the complainant can be compelled to pay these taxes, he has a right to be re-imbursed by the United States. The public domain, as such, cannot be taxed by the States. The lands of the complainant were not severed from it until conveyed to him by patent. After he had paid his money to the receiver on his application to purchase the lands, he could have been personally assessed for such sum, if he had been within the jurisdiction of Michigan. His property was not diminished by such a payment; for, if the patent were refused, the money would be refund ed. If actual possession had been taken of the lands, inasmuch as such possession is protected by the laws of the State, its value might be the subject of a personal tax. All this may be granted, and yet nothing will have been conceded tending to establish the right of the State to impose a tax upon the land itself, which does not constitute a charge against the purchaser personally, but is to be satisfied out of the land and by a sale of it. This is the character of the present tax, and must be of any land tax. Such tax is a proceeding in rem. It cannot be apportioned and split up, so as to sell 452*] the interest of the purchaser in the land, and transfer an interest in it, without the assent or co-operation of the United States, and yet not interfere with the absolute rights of property and control belonging to the latter. The federal government, though limited in the subject of its powers, is sovereign in their exercise; and in all cases where its powers are exclusive, or where the exercise of a concurrent power, by a State conflicts with the beneficial and perfect exercise of it by the United States, the federal authority is supreme. The extent of the alleged interference is not a question to be considered in determining its invalidity. The case of Dobbins v. Commissioner of Erie Co. (16 Peters, 435) applies this principle to a question of taxation. It also shows clearly, that this is a tax on the property assessed, and not a personal charge (p. 446), and that such a tax, when it acts upon the property or agents of the United States, is entirely illegal. The public domain is exclusively within the control of the United States, and is an important source of its revenue. The "perfect execution" of the power of its sale and management is certainly interfered with by the acts complained of, and the principles established in the above case (p. 447) control the present. 3. If the lands were subject to taxation to any extent by the State of Michigan, before the execution of the patents for them, it was not competent to assess, and tax, and sell them as the absolute property of the complainant, and at their full value, as if he owned them in fee. That such is the effect of the law complained of will not be denied. That it is illegal we think is already shown. The fee of the United States cannot be devested by the legislation of the State. The State could only give the purchaser at the tax sale an equitable interest, for the complainant himself had no other. 4. The case is properly cognizable in equity. and the relief sought is appropriate. As to the principle on which equity exercises its jurisdiction, there are equitable rights and legal rights incident to property. Courts of law will not take notice of mere equitable rights; they can be enforced only in equity, and hence arises the exclusive jurisdiction of courts of equity. But in cases where legal right are defined and settled by the rules of law, then equity follows the law. The right to tax, and the mode of taxation, are defined by statute, and the construction of statutes is the same at law and in equity. In support of these principles I refer to 1 Story's Eq., 14, 15, 16, 17, 72. Our rights, then, are settled by the law, and will be construed in the same manner in courts of law and of equity. Indeed, is it not manifest that the legality or illegality of the tax must be decided in the same way by [*453 courts of law and equity? Can that be a valid assessment in equity which is invalid at law, where there can be but one legal mode of assessment in any case? Why, then, if we rely upon our legal rights, do we ask the interfer ence of equity. We come for the remedy. The most impor tant source of jurisdiction of an equity court that which is concurrent with courts of law. Rights in each court are the same, but a party is at liberty to ask the aid of a court of equity to protect him in his legal rights on account the better remedy which results from the mode of administering relief in equity; and equity will interfere in all cases where the remedy law is not plain, adequate, and complete. (00 1 Story, 93, 94; 2 Story, 155, 163; 3 Peter 215.) When this is done, the rights of parties in the subject matter of the litigation are construed as at law. The remedy is according to equity, and it will be granted in all cases, with the simple condition, that a party who asks it shall do equity himself. What is meant by this? Not the wild notions as to natural equity which were suggested on the argument below; but simply, that where legal and conscientious matters are mingled in the same transaction with those of a fraudulent and illegal character, a party shall discharge the former part of the contract before he will be relieved as to the latter. (1 Story's Com., 77.) This maxim has here no application, until it be shown that a part of these taxes are legal and proper. of money received into her treasury from the taxation of lands so situated. 1. The first question is, whether the statutes of the State of Michigan did, in fact, authorize the assessment and sale of the lands of the complainant, and whether said statutes were intended to direct the assessment for taxation of lands of the United States before the patents for them had been executed by the officers of the United States." The statutes of Michigan did and do authorize the assessment, taxation, and sale of lands for nonpayment of the taxes, situated as those of the complainant were. The lands of the complainant had, prior to their assessment, been purchased from the United States, and he had received the regular certificates of purchase and payment from the receiver of public moneys. The sole point that is left for discussion is, These lands were not, it is believed, sold for as to the reasons which render the remedy at the taxes, before the patents were dated and law inadequate, and require the interference executed. But whether they were, or not, is of this court. These reasons are the follow-not material to the right decision of this cause. ing: 1st. To prevent a cloud being cast over the complainant's title. (See following authorities: Corporation of Washington v. Pratt, 8 Wheat., 682; Burnett v. City of Cincinnati, 3 Ohio Rep., 86; Gouverneur v. City of New York, 2 Paige, 435; Pettit v. Shepherd, 5 Paige Rep., 493, 501; Hamilton v. Cummings, 1 Johns. Ch. Rep.. 517; Ward v. Ward, 2 Hayw. Rep., 226; Leigh v. Ecerhart, Exec., 4 Munf. Rep., 380; Grover v. Hugel, 3 Russ. Ch. Rep., 432; Harrington's Rep., 3; Ostrom v. Bank of the United States, 5 Pet. Cond., 759.) 2d. To prevent a multiplicity of suits and unnecessary litigation. (1 Story, 82, 83, 84; 6 Paige Rep., 88.) Better for both complainant and the State that the matter should now be decided. 3d. To restrain public officers from doing an illegal act. If the act be consummated, there may be no redress; equity, therefore, interferes to prevent the consequent failure of justice by enjoining the act. (Osborn v. Bank of the United States, 6 Paige, 88; 2 Kent, 339, note, 3d ed.) The claim of the State to tax lands in the situation of those described in the complainant's bill are exceedingly inequitable. The lands are not actually nor theoretically separa454*] ted from the public *domain. The purchaser has taken no possession of them, nor exercised any acts of ownership over them. A tax on the unimproved and vacant lands of non-residents is generally inequitable, and, at best, oppressive and onerous. (See 2 Kent's Com., 332.) Just so soon as an individual proposes to buy the lands of the United States, the agents of the State rush in and fasten on it, and demand, on pain of forfeiture of the whole of it, that he pay taxes on it for an interest which he does not own, and which he cannot know he will receive, until, perchance, the land has been sold and lost. Mr. Norvell, for defendant: The questions of difference involved in this case are of deep importance to the State of Michigan, affecting, as they do, her right to tax lands as soon as they are purchased, and paid for, from the United States, and obliging her, if they should be decided adversely to the de fendant, to refund to individuals a large amount The Act passed by the legislative council of the territory of Michigan, and approved on the 22d of April, 1833, authorizes, in its first section, the assessment, levy, and collection of taxes, upon the valuation of real and personal property, to be made as prescribed in the subsequent sections of the same act. The 2d section directs the proper officers to ascertain, assess, and make out a separate and distinct list of the lands situated in their respective townships, "not owned by persons residing in such township," and prescribes the man ner in which the lands of non-residents shall be described and entered in the assessment rolls. This is precisely the same language used with regard to the lands owned by non-residents, and assessed for taxation, in the laws of Michigan, passed by her Legislature, after she became a State. The 14th section of the Act of April 22, 1833, provides that whenever the taxes on lands of non-residents, as well as residents, shall remain *unpaid for two years, the treas [*455 urer of the proper county shall cause so much of the land charged with such taxes and interest, as shall be necessary to pay the same, to be advertised and sold for that purpose, giving at least four months' notice, in certain public newspapers, of the time and place of sale. The long notice directed to be thus given, before the sale could take place, affords conclusive evidence that the lands of non-residents living out of the State were included in the terms and provisions of the act directing the assessment, taxation, and sale of real and personal estate, if the taxes were not duly paid thereon. The succeeding section of the law prescribes the time within which, and the conditions on which, the lands in question, thus assessed, taxed, and sold for the taxes, might be redeemed by the owners. I refer to the Act of April 22, 1833, at page 88 of the Session Laws of 1833, to be found here in the Department of State. The laws of Michigan make no distinction between the lands for which patents have not been issued, and those for which they have been issued, in providing for their assessment, taxation, and sale for the nonpayment of taxes." As soon as the lands are purchased of the Unit ed States, the money paid for them, and the duplicate receipts and certificates of purchase signed, and issued by the receivers of the public moneys at the land offices within the State, they become, according to the invariable interpretation of the tax laws of that State, and the usage in their execution, objects of assessment, taxation, and sale. the patents for them, subject to taxation at all by the State of Michigan," I answer in the affirmative. In the case of John H. Ostrom et al. v. Charles G. Hammond, Auditor-General of the State, tried in the Circuit Court of the United States for the District of Michigan, at the June Term of 1842, before Judge Wilkins, it was decided that the entry of public lands, the payment of the purchase money, and the certificate of the receiver, constituted such an equitable interest and title in the land as to authorize its taxation by the State, and its sale for the nonpayment of the taxes. At the succeeding October Term of the same court, Judge McLean presiding, the decision of the court, at the preceding term, in the case of Ostrom v. Hammond, the Auditor-General, was confirmed, both judges concurring in opinion. Newspaper reports of the case have alone, as yet, been published. But the decision must remain fresh in the memory of Mr. Justice McLean, of this court. An act was passed by the legislative council of Michigan, and approved December 30, 1834, making the certificates of the purchase of public lands" evidence of their possession by the persons holding such certificates of purchase of such lands, as against any person or persons not having a better title than actual possession. This act illustrates the general light in which the duplicate receipts or certificates of the purchase of public lands, signed by the receivers, were reviewed by the legislative authorities of Michigan. The statute remains unrepealed. And I am not aware that any of the courts of Michigan have decided that the holder of a certificate of purchase from the United States cannot maintain ejectment upon it." On In the case of Douglas v. Dangerfield, in the the contrary, the very law making these certifi- Supreme Court of Ohio, the court stated that cates evidence of possession was intended to the right to tax lands within the borders of that authorize the holder to maintain action of eject- State, before they become the property of individment in any of her courts, and it expressly pro- uals, was a right which had been exercised from vides that they shall be evidence in such courts the earliest period of the State government, with that possession is in the person holding the cer- respect to all lands except those belonging to tificate. And, as secretary of the legislative | the United States, while so held, or for a limited council when the act was passed, I remember period after the same *were sold. This [*457 it was maintained in debate, that lands which limited period has reference to the five years' had been purchased, and for which certificates exemption, which the compact of admission be of purchase from the United States had been tween the United States and Ohio secures to issued at the land offices, were as lawfully and purchasers of public lands in that State, after rightfully the subjects of taxation as if the pat- they have made their purchases. No such exents had been issued from the proper depart-emption is stipulated in the compact which ad456*] ment at Washington. *(See the Session Laws of Michigan, passed at the second session of legislative council in 1834, pp. 88, 89.) The Act of the Legislature of the State of Michigan, approved April 19, 1839, makes it the duty of the several county treasurers to collect all non-resident taxes assessed prior to 1838, remaining unpaid, as if the laws under which said taxes were assessed still continued in force. (See Session Laws of 1839, pp. 168 and 177.) An act to regulate tax sales for 1843 authorizes the sale of all lands for delinquent taxes assessed in the years 1836, 1837, and 1838. The several county treasurers are to make the sales under the direction of the Auditor-General. (See Session Laws of Michigan of 1843, pp. 55 and 70.) It is clear, then, that "the lands in question," belonging to the complainant, were authorized by the statutes of Michigan to be assessed for taxation, and to be sold for the nonpayment of taxes. 46 It is equally clear, from the plain language of the statutes, and from the practical interpretation put upon them by all the public authorities of Michigan, that "they were intended to direct the assessment for taxation of lands" purchased from the United States, before the patents for them had been executed by the officers of the United States," but after the money had been paid for them, and certificates of purchase and payment had been received from the proper land officer. 2. To the question, "whether the lands in question were, before the date and execution of mitted Michigan into the Union. She has the right to tax as soon as the public lands are purchased. Judge Hitchcock adds, in this same case, that "if the right to tax exists, and that it does there has not been any serious question for many years at least, it would seem to follow, that the right to collect must also exist, although in making collection it might become necessary to transfer to a new proprietor the thing taxed." When, however, this question 'does arise, it must be purely a legal question, to be settled by a court of law." (10 Wilcox, Ohio Rep., 156; see, also, pp. 154, 155.) In Ohio, it is well known that lands entered and surveyed in the military land district, have for years been taxed, and sold for taxes, before they were patented. This is stated in the report of the case of Hennick et al. v. Wallace (8 Ohio Rep.. 540), where the court say, that in another case, which was cited, "it was expressly held, that where lands have been entered and surveyed in the military land district, and sold for taxes be fore patented, that when patented, the patentee must hold the land subject to any claim which a purchaser at tax sale may have in consequence of such sale." In the case of Hennick, just referred to, the land was sold for taxes before patented, and the court said that the sale was legal, so far as anything appeared to it in the case. (8 Ohio Rep., 541.) In the case of The Lessee of Stuart et al. v. Parish (Supreme Court of Ohio, at the Decem ber Term, 1833, 6 Hammond, part 1, 476, 477), Stuart purchased the tract No. 5, in the San dusky Reserve, in 1817, and made the first payment. He afterwards took the benefit of the eight years' credit, under the laws which then prevailed. Stuart did not complete the payment for the land until 1830. Four years before that the land was taxed. The court would not entertain the question whether the land was liable to taxation before patent issued, but admitting the legality of the sale for taxes, said that the legal title of the patentee was not affected by such sale. In other words, the tax title could not convey an interest to the purchaser superior to that of the owner at the time of the sale for taxes. In Alabama, before public lands finally pass into the hands of the purchaser by patent, the collector may rent at auction so much as will pay the tax, but cannot sell until the title is complete. The Supreme Court of the United States, in the case of Bagnell et al. v. Broderick (13 Peters, 436), decided, that no doubt is entertained of the power of the States to pass laws to authorize purchasers to prosecute actions of ejectment, or certificates of purchase, against trespassers on the lands purchased." If conflicting patents issue, the State courts may give effect to the better right. 458*] *In Pennsylvania, where the consideration for the land has been paid, a survey, though unaccompanied by a patent, gives a legal right of entry. (3 Dall., 457.) The authorities, then, clearly show that lands are subject to taxation by the State, on certificates of purchase, before the patent issues. It would be very extraordinary if an individual could purchase lands of the United States, settle, improve, and cultivate them, on certificates of purchase, and yet, because, from the neglect and delay of the proper department, the patents are not issued for several years, they are exempt from taxation, while his neighbor was compelled to pay taxes, when he was deriving no greater advantage from the possession and cultivation of his land. Lands purchased and paid for at the land of fices, are not thereafter the property of the United States. The United States cannot withhold the patents, except in a few specified cases, as where the sale was illegal; where a prior sale or reservation, or a prior grant, may have been made; where the land had not previously been offered at public sale, or where it had been directed by government to be withheld from sale. These are rare exceptions, and do not affect or impair the general principle that, as soon as the public land is purchased and paid for, it becomes the property of the purchaser, and may be sold and transferred by him, as is constantly the case, before it is pattented. If the authorities and decisions were not in favor of the right of the State to tax such land or certificates of purchase, reason and common sense would demonstrate its equity and justice. 3. It follows from these views, which show that lands are subject to taxation before they are patented, that it is competent for the State to assess, tax, and sell them, as the property of the owner, as if they had been patented. If, from accident, or the exceptions adverted to under the preceding head, the certificates of purchase should not be matured into patents, the purchaser at a tax sale could not acquire a better title than the holder of the certificate. That is his risk. But in the case of the present complainant, it is not pretended that his titles were not perfected. On the contrary, the record brought up here alleges and admits that the patents for his lands were issued on the 12th of August, 1837. And this was before the lands were sold for the taxes. 4. It is doubted whether the remedy sought in this case, by a bill in equity, is proper. In the case of Ostrom v. The Auditor-General, involving the same principles as the case of the complainant involves. Judge Wilkins said that the complainants had an adequate and complete remedy in the State courts for any injury they might sustain by the sale of their lands for taxes, if the taxation and sale were illegal. And the 16th section of the Act of 1789, establishing the courts of the United States, provides that suits in equity shall not be sustained in the courts of the United States, in any case where a plain, adequate, and complete remedy may be had at law. *Mr. Justice MCLEAN delivered the [*459 opinion of the court: The complainant filed his bill in the Circuit Court of the United States, in Michigan, stating that he is the owner in fee simple of certain lands lying in Genesee County, amounting to three thousand five hundred and forty-nine and seventy-one hundredths acres, and of the value of $7,500. That, in 1836, he entered these lands, paid for them, and received from the land office a final certificate. Patents were issued for them on the 12th of August, 1837. That the delay in issuing the patents was not at the instance of complainant. Before the emanation of the patents, the lands were assessed for taxation, and sold by the defendant for the taxes thus assessed. Two years are allowed the owner to redeem the land by the act of Michigan, on the payment of the tax, charges, and interest, at the rate of twenty per cent. per annum. When this bill was filed, the time of redemption had not expired. The bill prays, that the assessment and sale may be declared illegal and void, and that the defendant may be enjoined from conveying the land, and other relief, &c. The case was considered as on a demurrer to the bill, and on the argument, the opinion of the judges were opposed on the following points: 1. 66 Whether the statutes of the State of Michigan did, in fact, authorize the assessment and sale of the lands in question, and whether said statutes were intended to direct the assessment for taxation of lands of the United States, before the patents for them had been executed by the officers of the United States. 2. "Whether the lands in question were, before the date and execution of the patents for them, subject to taxation at all by the State of Michigan. 3. Whether if they were subject to taxation, by the State, before the execution of the patents for them, it was competent to assess, and tax, and sell them, as the absolute property of the complainant, and at their full value, as if he owned them in fee. 4. Whether the remedy by bill in equity, and the relief sought, are proper." |