Argument for Petitioners. 276 U.S. subject to state taxation so long as the Corporation held title as an instrumentality of the United States. P. 555. 2. Purchasers of such land, by making the payments entitling them, under their contracts with the Corporation, to receive deeds subject to their obligation to execute mortgages to secure deferred payments, became the equitable owners, and the taxability of the land, as respects the Corporation, is to be determined as if both the deeds and the mortgages had been executed. Id. 3. In this situation, a city where the land is, the state law permitting, may tax the purchasers upon the entire value of the land and enforce collection by selling their interests; but it cannot sell for such taxes the interest retained by the Corporation for the benefit of the United States, as security for unpaid purchase money. Id. 11 F. (2d) 476, reversed. CERTIORARI, 275 U. S. 511, to a decree of the Circuit Court of Appeals, which reversed a decree of the District Court, 1 F. (2d) 741, denying an injunction to restrain sales of lots for city taxes. The suit was brought by the United States Housing Corporation, and joined in by the United States, against the city. The court below directed that the assessments for certain years be canceled and that sales for enforcement of the taxes be enjoined. Mr. John W. Davis, with whom Messrs. Thomas H. Hagerty, Russell E. Watson, and Edward L. Patterson were on the brief, for petitioners. The effect of the contracts was to render the property fully taxable by state authorities to the purchasers as soon as the purchasers became entitled to their deeds. It is a well recognized principle that one entitled to a conveyance of real estate, is in equity the real owner. Carroll v. Safford, 3 How. 441; Green v. Smith, 1 Atkyns, 572; Farrar v. Earl of Winterton, 5 Beav. 1; Bispham Equity, 7th ed., § 364, p. 534; Pomeroy, Eq. Juris., 4th ed., §§ 105, 368, 372, 1406; Hoagland v. Latourette, 2 N. J. Eq. 254; Huffman v. Hummer, 17 Id. 264; King v. Ruckman, 21 Id. 599; Haughwout v. Murphy, 22 Id. 531. 547 Argument for Petitioners. One with the right to receive legal title to property from the United States, and not excluded from its enjoyment, is to be treated as the beneficial owner and the land subject to taxation as his property. Wisconsin Central R. R. Co. v. Price County, 133 U. S. 496; Wilson Cypress Co. v. Del Pozo y Marcos, 236 U. S. 635; Carroll v. Safford, 3 How. 441; Northern Pacific R. R. v. Patterson, 154 U. S. 130; Bothwell v. Bingham County, 237 U. S. 642; Kansas-Pacific Ry. Co. v. Prescott, 16 Wall. 603; Irwin v. Wright, 258 U. S. 219. It has never been suggested hitherto that the mere giving of a mortgage to an agency of the United States would be sufficient to exempt the mortgaged property from taxation. And under the law of New Jersey, the mortgagee would receive no present interest. Blue v. Everett, 56 N. J. Eq. 455. A mere right in the United States to acquire property on the breach of a condition subsequent to the passage of title, will not exempt such property from taxation. Railway Co. v. McShane, 22 Wall. 444; Baltimore Shipbuilding Co. v. Baltimore, 195 U. S. 381. Moreover the provisions of the contract as to the title and mortgage indicate that it was the intention of the parties that the land should be taxable. The passage of title is the criterion of taxability. Wisconsin Ry. Co. v. Price County, 133 U. S. 496; Irwin v. Wright, 258 U. S. 219; Bothwell v. Bingham County, 237 U. S. 642; Baltimore Shipbuilding Co. v. Baltimore, 195 U. S. 375. It was the purpose of Congress to dispose of this property as soon as possible. Full power is given by the Act to sell on the terms agreed upon, which terms are to be conclusive as to the transfer of title. By "reserving a first lien" Congress meant that the United States should receive no more than the usual first Argument for Petitioners. 276 U.S. lien with all the incidents thereof. The first lien created by a mortgage cannot be more than a prior interest in the property at the time it is created. In certain circumstances, it may become subordinate to statutory liens such as tax liens; Cooley on Taxation, 4th ed., § 1240; or liens for certain supplies; Virginia Development Co. v. Iron Co., 90 Va. 126; Fidelity Ins. Co. v. Roanoke Iron Co., 81 Fed. 439; or mechanics liens; Jones on Liens, c. XXXVI. The exact effect and priority of all these depend on the various statutes in the different jurisdictions; Pomeroy Eq. Juris. 4th ed., §§ 1268, 1269; and the power to create such priority has been recognized in Provident Institution v. Mayor of Jersey City, 113 U. S. 506. The statute itself provides that the lien shall depend on the contract and not on the statute. United States v. Ansonia Brass Co., 218 U. S. 452. The construction that the petitioners contend for alone achieves substantial justice. Tucker v. Ferguson, 22 Wall. 527; Winona Land Co. v. Minnesota, 159 U. S. 526. Assuming without conceding that the United States has retained a lien that is prior to all others, the property may nevertheless be assessed to the purchasers and sold to enforce such assessment, subject always to that priority. The City's action in assessing and enforcing the taxes against the purchasers, subject to the prior lien of the United States, cannot prejudice the latter's rights in any way. Where legal title has passed to a purchaser and where there is a right of the United States as to the property that continues to be prior to any other, taxes may be levied and enforced on the property against the purchaser, subject to that priority. Baltimore Shipbuilding Co. v. Baltimore, 195 U. S. 375; United States v. Canyon County, 232 Fed. 985; Irwin v. Wright, 258 U. S. 219; Witherspoon v. Duncan, 4 Wall. 210; Railway Co. v. McShane, 22 Wall. 444. 547 Argument for Respondents. The wrongful refusal of the United States to convey legal title cannot be used to enable the purchasers to avoid such taxation. Even if it be held that the land itself is exempt from both conditional and unconditional taxation to the purchasers, nevertheless it is within the power of the State to provide for the taxation of whatever equitable interest the purchasers may hold. Solicitor General Mitchell, with whom Mr. Thomas W. O'Brien, Counsel, United States Housing Corporation, was on the brief, for respondents. Decisions of this Court in cases where the United States held the naked legal title in trust for a purchaser, or where land in the public domain has been held immune from state taxation before the purchaser has a right to a deed, are not pertinent. Until the full purchase price is paid, the United States has an interest in these lands for the enforcement of which certain remedies are available to it. Without regard to any other statutes or rules relating to priority, the statute authorizing sales by the Housing Corporation discloses a purpose to make the lien and rights of the United States in this land superior to those of any State or individual. The taxes levied by the State are on the land and not on the interest of the purchaser, and the tax sales under state law, if valid, would convey the land and extinguish the lien and rights of the United States. The state law makes no provision for selling the interest of the purchaser, nor for making tax sales subject to the rights of the United States. A decree not adjudging the taxes entirely void, but determining them inferior to the rights of the United States, and requiring the City, in making tax sales and issuing deeds, to state that they are subject to the rights of the United States, would amount to writing a new Opinion of the Court. 276 U.S. tax law for the State of New Jersey. Taking the state tax laws as they stand, the logical conclusion may be that the taxes are void, but at least the United States is entitled to have the decree provide that its rights are superior. The matter of reaching by taxation a taxable interest as distinguished from taxing the land itself, has been dealt with in the following cases: Northern Pacific Ry. Co. v. Myers, 172 U. S. 589; Irwin v. Wright, 258 U.S. 219; Baltimore Shipbuilding Co. v. Baltimore, 195 U. S. 375. MR. JUSTICE SANFORD delivered the opinion of the Court. The question here relates to the validity of certain taxes assessed by the City of New Brunswick, New Jersey, upon real estate to which the United States Housing Corporation held the legal title. The Housing Corporation was organized by authority of the President, pursuant to an Act of May, 1918,1 for the purpose of providing housing for employees of the United States and workers engaged in industries connected with the national defense during the late war; for which an appropriation was made. The entire capital stock of the Corporation is held for and on behalf of the United States. For the purpose stated the Corporation purchased in 1918 a tract of land in New Brunswick, subdivided it into lots, and erected houses upon them. By an amendment of July, 1919,2 providing for winding up its affairs, the Corporation was authorized and directed to sell and convey all its property remaining undisposed of after the termination of the war, "Provided, however, That no sale or conveyance shall be made hereunder on credit without reserving a first lien on such property for 1 1 40 Stat. 550, c. 74; as amended, 40 Stat. 594, c. 92. 2 41 Stat. 163, 224, c. 24. |