Document: 355 U.S. 489 78 S.Ct. 458 2 L.Ed.2d 460 CITY OF DETROIT et al., Appellants,v.The MURRAY CORPORATION and the United States. Petitioners, v. The UNITED STATES Borg-Warner Corporation, Appellants, DETROIT. STATES, Appellant, TOWNSHIP MUSKEGON al. CONTINENTAL MOTORS CORPORATION, Etc., Nos. 18, 36, 26, 37, 38. Supreme Court of States March 3, 1958 Mr. Hobart Taylor, Jr., Detroit, Mich., for appellant-petitioner, Wayne County. Vance G. Ingalls, City Detroit. Victor W. Klein, appellee-respondent, Murray Corp. America. Roger Fisher, Washington, D.C., Justice BLACK delivered opinion Court. 1 This is third in a series cases from State Michigan decided today involving claim constitutional tax immunity. In 1952 Corporation was acting as subcontractor under prime contract manufacture airplane parts between two other private companies From time to received partial payments contractors it performed its obligations subcontract. By agreement, title all parts, materials work process acquired by performance subcontract vested upon any such payment, even though retained possession. 3 On January 1, 1952, Detroit County Wayne, Michigan, each assessed against which part based on value possession held legal title-vesting provisions subcontract.1 paid this protest then sued Federal District refund city county. It contended that full property taxes infringed Government's immunity state taxation extent they were property. Government intervened Murray's behalf. motion summary judgment entered Appeals Sixth Circuit affirmed. 234 F.2d 380. decision county both appealed petitioned certiorari. We granted certiorari postponed question jurisdiction appeal hearing merits. 352 963, 77 357, 320; 960, 351, 319. proper. 28 U.S.C. § 1254(2), U.S.C.A. 1254(2). 4 believe case also controlled principles expressed our opinions No. 466, 474 Township Muskegon, 484, 483, challenged here do not violate Constitution.2 These not, levied directly or To contrary imposed Murray, corporation there no effort hold accountable. fact expressly exempts public belonging States, 6 Mich.Stat.Ann., 1950, 7.7, Pub.Acts 1893, 206, 7 amended, 1949, 55, these beginning 'subject prior rights Government.' Cf. S.R.A. Minnesota, 327 558, 66 749, New Brunswick 276 547, 48 371, 72 L.Ed. 693. 5 styled personal statutes relies support contention actually laid government However passing constitutionality 'we are concerned only with practical operation, definition precise form descriptive words may be applied it.' Lawrence Tax Commission, 286 276, 280, 52 556, 557, 76 1102. Consequently determining whether we must look through behind labels substance. at least true uphold strike one down. Wisconsin J. C. Penney Co., 311 435, 443—445, 61 246, 249—250, 85 267; Capitol Greyhound Lines Brice, 339 542, 70 806, 94 1053. Due regard State's power requires less. As applied—and course way judged involved levy party possessing using processing own business. disputed law authorizes circumstances. Shipbuilding Co. 228 Mich. 145, 199 N.W. 645; Gray, 314 516, 22 N.W.2d 771. their operation effect identical those upheld 26 37 persons exempt real see essential difference so far taxing person he possesses him uses when instances his ends. Nor have been pointed anything else would bar Carstairs Cochran, 193 10, 24 318, 596. Lawful valuable right possessor can use benefit. particular Taxing taxed 'for privilege possessing' property, but down because verbal omission prove victory empty formalisms. And formalisms too shadowy basis invalidating laws. Henneford Silas Mason 300 577, 582, 57 524, 526, 81 814. circumstances could obviate grounds invalidity merely adding few statutes. Yet remain precisely same. 8 There discriminate holding general applies has throughout State. If economic burden more remote less certain than where parties. Of will eventually feel financial some principle area heretofore clearly settled imposition an increased does itself invalidate tax. 9 respondents rely heavily Allegheny County, 322 174, 64 908, 915, 88 1209. Petitioners hand contend inconsistent trend decisions field, already distinguished point retains meaningful vitality erroneous. be, think controlling, essentially reasons set forth 474. emphasized Mesta Machine Company was, view, such. out had 'made segregate Mesta's interest reserved connection profit-making activities. Here, however, specifically assessment authorities careful attempt 10 important particulars very similar Esso Standard Oil Evans, 345 495, 73 800, 97 1174, storage gasoline A intrinsically different possession, gain. measured quantity stored while possessed technical distinction significance Constitution bars completely unrelated rational governmental 11 find nothing compels us taxes. discrimination Government, whom crippling obstruction functions, sinister hamstring power, slightest interference M'Culloch Maryland, Wheat. 316, 579. Congress proper agency, make difficult policy necessarily what parties who business should given 12 reversed cause remanded further proceedings opinion. ordered. 13 Adjustment interpenetrating factors Nation-State relation federal system, insofar amenable adjudication, subtle complicated process. precludes easy application accepted formulas. Particularly asserted claims intrusion into areas Nation. domain asking much rules certainty simplicity hardly found live branch law. Even Rule Against Perpetuities precarious certainty. necessity judicial accommodation intersecting interests States' concerns Nation carrying presents problems solutions cannot sought formula assuring bright, straight line decisions. Accordingly, admonished leading modern dealing require 'the observing close distinctions order maintain freedom performing without unduly limiting equally nation dual system.' James Dravo Contracting 302 134, 150, 58 208, 216, 82 155. 14 diversity views cases, concurrence result, suggests desirability recalling, old-fashioned phrase, 'first principles.' After all, have, howsoever appeared situations, unbroken history nearly century half. Temerarious appear, residuum continuity reconcilation numerous since McCulloch 1819, 579, made restriction laying government, officers.' supra, page 149, 216. governing principles, Chief Marshall himself formulated them, bear quotation: 15 "That subjects sovereign extends, objects taxation; over extend are, soundest taxation.' 16 sovereignty extends everything exists authority, introduced permission; means employed carry execution powers conferred body people States.' 17 Union pursuance Constitution, abuse, usurpation single give.' 18 taxation, otherwise, retard, impede, burden, manner control laws enacted Congress, General government." Weston Council Charleston, Pet. 449, 467, 481, quoted Bradley Pac. Railroad Peniston, Wall. 5, 38—39, 21 787 (dissenting opinion). 19 No helpful giving directions path solution immediate comments Bradley, whose powes penetrating analysis, particularly my view second none. 20 'Whilst disputes elaborately majority, conceded limits power. powers, operations, nor employs execution. within scope supreme, interfered impeded exercise. 'The differs toto coelo wherein enters individual perform services necessary functions government—as mails, troops, supplies, building ships works use. concern contractor faculties independent that. How by, duties obliged towards, consequence long with. alone, contractor, government.' pages 41 42, When Hughes latter paragraph 155, 218, impliedly indicated gave profits, purchases deviated traditional doctrines implied immunity, return orthodoxy elucidated it. I venture say whatever deviations aberrations doctrine now happily rest disclose, adjustment placed National demands collectors. ever questioned officers,' or, phrased 177, 911, 1209, 'that possessions, institutions, activities absence express congressional consent subject bright running undeviatingly See Van Brocklin Tennessee, 117 151, 670, 29 845; Alabama, 313 274, 279, 1011, 1012, 1327. 23 Stone stated unanimous court Alabama King & Boozer, 9, 62 43, 45, 86 application, therefore outcome, like before 'turns terms Nothing better illustrates truth statement comparison Boozer Kern-Limerick, Inc. Scurlock, 347 110, 74 403, 98 546, relevance minimized loud silence Court's present accord Since 'intergovernmental submission primarily problem finance legislation,' 122, 411, immaterial contracts purposefully drawn vest thereby withdraw vehicle expression views, might take satisfaction dissenter facts concurred result purposes repudiate rested, stated, case. 911. division turned relevant construction Pennsylvania system respect fixtures enhancement concededly taxable realty owned contractor. scheme old widely used ad valorem tax.' 184, 914. told case, 'Reviewing (in Allegheny) concluded simply forthrightly itself, 471, 477. But so, fortiori, 36 us. Surely detailed analysis brother WHITTAKER it,' demonstrates, if demonstrable law, incidents tax, them conclusive degree Allegheny. 36. Contract. 25 Contract ordnance. Machinery needed produce ordnance furnished manufactured purchased Title machinery Government; delivery site inspection acceptance behalf Government. 27 leased during period contract. bolted concrete foundations contractor's plant. Subcontract subassemblies nondurable tools (supplies). 30 materials, inventories, process, (materials) making 31 Materials segregated indentified records kept withdrawn producing supplies. Action Authority. 32 Revised previously determined thereto machinery. 33 Assessment including amount Authorization. 34 Statute provided, P.S.Pa. s. 5020-201: "The following shall * valued assessed, (a) All estate *." Appeal Mach. Pa. 191, 193, A.2d 236, 237-238. constituted mill properly estate. 35 provided: "declared first lien said property." 185, defaulted payment affected. 38 entitled "General Property Act," "AN ACT provide collection thereon *. That personal, taxation." s.s. 7.1-7.2, Comp.Laws 1948, 211.1 211.2. 39 Charter "City Treasurer enforce unpaid estate." Tit. VI, c. IV, 26. 40 provided "shall become once debt due 7.81, 211.40. that, owners pay thereon," owner listing *," unpaid, "the forthwith refusing neglecting 27, 42 "all hereafter village 7.81. 43 "All until 44 Assessor inscribed roll: "Assessed Subject Prior Rights Government." 45 outright reject prepared frankly jettison almost 150 years. save disregard practice. disregards practice argue excise enjoyment gives advantage otherwise immune professedly lay indubitably 46 totally presented carries special advantages user because, reason another, included Marshall's 'all *.' 481. impose something pleasure, profession, why being able extraneous power? Watson Comptroller, 254 65 170. 47 taxpayer assert 'derivative one,' 158, 220, resist exercise stand shoes. asserts own. free taxpayer, matter dollars cents affect sure, bill tax-free lose characteristic admeasurement uninterrupted historic longevity attributable momentum authority reflects, exposition considerations demanded certainly deep instinct considerations, 'empty formalism.' embodies considered minimum safeguard hindrance another same territory. conflict point. avoiding potentialities friction furthering smooth finds explanation justification. 49 danger resulting erosion fundamental command Supremacy Clause, greatest may, regulation move Scarcely consciously aimed attaching taxability, likelihood local legislation deliberately unwittingly discriminatory either enhanced. nondiscriminatory likely effective ill-advised collector officers account ultimately endeavor fail. defense suit recover erroneously satisfy inadequate substitute clear assertion threshold. 50 indirect impeding rule designed avoid direct obvious evil. Because pushed logical extremities argument maintaining historically extended. broad cloak thought best allay encroachment national interest, character relations changed outmoded. 51 seem nice, 'nice expected,' Galveston, H. S.A.R. Texas, 210 217, 225, 638, 639, 1031, none worse Not lump together similarities assumed consequences identities, long, practicalities doubtless led, Court, drawing countless covering dissent concur 53 Opinion HARLAN. 54 members consider fall together, deem advisable believing conclusions involved. 55 past established 'property' 'privilege' kind another. is, broadly speaking, constitutionally hands collected persons, involve becomes exclusive measurement Curry 14, 48, 9; 1174. Plummer Coler, 178 115, 829, 998; Educational Films America Ward, 282 379, 170, 75 400. Although stop short repudiating distinction, me blur future left confused uncertain. 56 privilege-tax agree majority lessee's user's 38, construed tax-exempt applied. dissenting opinion, reconciled decisions, concludes profit regarded substance rather interest. effect, seems dissenters equate measure meaningfully supra. percentage government-owned execute obligations. Indeed, compensating just once, whereas yearly; having wide latitude dueprocess limitations Fourteenth Amendment, points result. storing although multiplied fixed rate, provides conclusion. here, bore observed operate fashion measuring unequal lessees users vis-a -vis lessees, users, nonexempt legislature's purpose enacting statute determination constitutionality. equalize burdens normal perhaps by-pass Allegheny, thing repaying speculate motives permissible. Finally, noted quite deemed instrumentality petitioners showing, understand ground. 59 holds convincingly show conventional instead privately used. indistinguishable say, measure, matter, 60 holding, proceeding premise Detroit's characterization bind us, Carpenter Shaw, 280 363, 367—368, 121, 122—123, 478, gain, collectibel nondiscriminatory. struck cast language purports distinguish reduced vanishing point, neither qualified commercial activity. What happened groups doubt reflects difficulty reconciling bears witness Jackson's evolution field unsteady hand.' 176, 910. incidence longer controlling factor, 155; federally amount, (Curry supra) (Esso permissible, yardstick judging collectible high artificiality. Powell, Intergovernmental Immunities, Harv.L.Rev. 633, 757; cf. Society Savings Cleveland, Ohio Bowers, 349 143, 148, 607, 610, 99 950. activity 429, where, seek accomplish event procedurally impossible suit—enforcement understandable, therefore, wish minimize importance distinction. taxes, injected uncertainties plagued excessive refinements. For 'drawn hand,' visible. of, from, persons. However, appears indeed characterized authorities. Henceforth, apparently, determine drafted denominated could, desired, embracing 63 fluid incorporating elusive additional help daily negotiate effectively illustrated divergence five reality Rather add complications troubled preferable follow contracting undoubtedly relied, leave task adjusting needs created. reasons, joined WHITTAKER, FRANKFURTER, BURTON HARLAN join, dissenting. respectfully dissent. bases disagreement treatment 67 December 20, Kaiser Manufacturing agreed deliver Air Force airplanes, subassemblies, prices; 12, Curtiss-Wright Corporation. contemplated parties, Kaiser, 23, 1951, Curtiss-Wright, April 19, subcontracts respondent, America, (hereinafter called supplies) prices, approved officer Force. contained 'partial payment' among things, 'title non-durable theretofore (and thereafter, acquisition) produced (sub)contractor (the) contracts(s), chargeable Such hereinafter materials. date subcontracts, contractors, payments' $674,776.87.1 None supplies 68 FRANKFURTER. respondent completed 1952. 69 petitioners, (valuation) of.$12,183,180, $2,043,670 originally thereto. Applying respective rates assessment, $67,714.96 $12,572.66, Murray. written protest,2 after exhausted administrative remedies, brought three actions Eastern thereof ($80,287.62 plus interest) allocable inclusion referred to.3 and, stipulation, consolidated trial. moved judgments, stipulated genuine issue material existed actions. court, considering motion, exhibits affidavits opposition thereto, arguments briefs counsel, rendered favor prayed, 132 F.Supp. 899. Appeals, date, affirmed judgments Cir., 71 reverses reinstates doing believe, serious error, Acts openly admits. 461, Three principal issues presented, namely: (1) Did 'vest(ed)' 'title' elements ownership did acquire security thus, lienor? (2) Is Appeals? (3) were, fact, constitutes imposed? I. complete absolute to, beneficially on, contend, lienor, depends actual operations thereunder, question, last intention provisions, pertinent part, provide: '11. Partial payments.—Partial conditions. '(a) time, authorize Contractor') contract: Provided, exceed 90 percent cost Contractor (and) total unliquidated (see (c) below) contract, 80 price still delivered. '(b) Upon '(c) hereunder, deducted therefor proportionate Contractor, herein contained. 79 '(d) recognized (the materials), pursuant Article receipt notice termination (by Government), dispose Artice, Officer acquisition contractor) proceeds disposition), shall, balance credited direct; accordingly. Current production scrap sold approval (paid Government). liquidation hereunder completion deliveries (or thereof) incorporated Contractor. '(e) relieve risk loss destruction damage vests hereof.' (Emphasis supplied.) shown, uncontradicted affidavit, plant 'clearly identified,' 'tagging (or) labeling,' withdrawn, costs therefor, kept; consumed crediting equal (90 original cost) subparagraph provisions. noted, (b) 'shall Beginning August substantial amounts note 1). doubted plain simple appropriate, apt adequate Government.4 concede, assumes, so. Petitioners' position purposes, created convey 83 petitioners' 'lien' contention, ask ourselves: what? Admittedly indebted, hence, secure. vesting secure repayment repaid purchase Neither securing conveyance possibly effect. 84 advance several argue, first, (d) saying '(c)urrent Officer,' supports contention. overlooks continues, saying, 'but Government).' Thus, authorized sell current agent proceeds, procedure scrap. Second, (u)pon Contractor,' shows beneficial. accepted, it, plainly true, Government' transfer retransfer, remnant Murray; denied validly retransfer Concerning device escaping taxation. unacceptable merits (cf. 116, 407, 4105), but, addition, stipulation Court.6 insured admittedly indicates agreed, contracts, liable occurring 'to (had) vest(ed) (of subcontracts).' insure contractual liability caused insurance expanded cover, inter alia, '* removed, (it is) liable, located and/or premises occupied insured.'7 Plainly, precautionary action contrary, strongly understanding Ansonia Brass Copper 218 452, 49, 52, 1107. 87 dealt length contentions. seagoing dredge named Benyuard. aggregate price, hull propelling complete, vessel paid; '(t)he above specified (were to) sole Id., 52. Before became insolvent unable bills vessel, receiver appointed. An arose conveyed unfinished thus preventing materialmen's liens (were) fast for.' Ibid. said: 'It mere installments progresses, built superintendence inspector, approve themselves constructed, completion. well builders purchasers buy ship completion, stages progress, binding effectual pass title. 89 'As construe Benyuard, 'divest builder construction.' 'We chattel remains builder, constructing transferring therein government. treating owns. instrumentalities 470, 91 contract—containing ones vessel—not below allowed state-created vessel. appear followed every country question8 one.9 92 conclusion beneficial title—all ownership—in II. 93 materials? holds, erroneously, not. Under Michigan10 methods subdivisions authorized, namely, F. Smith Fitzgerald, 270 659, 672, 259 352, 357; Pingree Auditor General, 120 95, 102, 109, 1025, 1027, 1029—1030, L.R.A. 679. Act Michigan. 206 Public amended (6 Mich.Stat.Ann.1950, §§ 7.1—7.243, seq.) ('(a)n act *.'). Section 211.40 Mich.Comp.Laws 1948 7.81) part: 'Property taxes; lien, priority. Sec. 40. paid, precedence claims, encumbrances whatsoever acted, margin.11 Briefly summarized, '(a)ll city, cash value, payable fifteenth day July year, taxed'; 'owners possession' person, 'by agreement otherwise,' ought 'may same' assumpsit, deduct rents due; 'taxes property' 26th auction property'; 'in addition alien death, paid.' 95 fail how One profitably elaborate evident. courts repeatedly held. Phillip, 211, 213, 868, 869; Crawford Koch, 169 372, 135 339, 342; re Dissolution Ever Krisp Food Products 307 182, 196, 852, 856. Actually pleadings formally admit so.12 96 stridently assessed,' Charter, he) (he) *,' rather, possession.' taxed,' 26; says 11. makes 'owner possession,' 'a 'against owner' assessed.' Moreover, ruled 'While (personal property) sometimes imposed, predicated owner, often lacking impairment theory stands payment. cases13 purchases. hands. think, bailee. found, citizens moneys agent, Governmentowned therein, bailee.' 186, 187, 188—189, 914, 916. assessor's writing roll, instance, 'assessed any, principally 851, While abstract sense, urged concretely inapposite14 'renunciation sustained event, establishes taxed. *' Furthermore, inasmuch entire to' never anyone. It, inescapable III. 100 landmark firmly this, course, mean parties—such agents, employees—who share higher prices like, Government15 'is incident organization territory sovereignties.' 45. sales relating contract.16 clear. purchase, tractors permitted 'cost-plus-fixed-fee' purchaser vendor took tractors. requird collect vendee, remit State, sales. vendor, request refund. reversed, sale 101 entirely controlling. There, factory suitable required undertook guns price. lacked machine work. would, did, furnish various lathes machines, 'leased' installed 'bolted removed building.' 179, 912. Mesta, litigation procure exemption refund, compelled state, municipal machinery, reimburse amount. Subsequently revised account. protested remedies avail intervened. trial 'was 'owned included.' 180, Pennsylvania, reinstated acknowledged "beyond pale taxation' state' (ibid.), estate, chattels. came alia: 102 thing. Its procedures analogous rem personam. payment.' 103 assessors land land, machines added former. discern little theoretical difference, done form. ascertained base annual apply county, borough, town, township, school, poor purposes. 104 915. 105 foregoing date; materials; tax; 106 dissenting, affirm Appeals. 107 FRANKFURTER HARLAN, 489, 505, 486, 492. statutory 7.1, 7.10, 211.1, 211.10, 211.40, II, 7, They thereon. thereof, assume bare Inc., affirming 213 Minn. 487, 219 493, 442; Land O'Lakes Dairy Wadena 338 897, 251, 552, 229 263, 164; Offutt Housing Sarpy 351 253, 814, 1151. ending 31, $163,940.20, $510,827.67, aggregating $674,776.87, requests $569,211.09 outstanding processed. $2,043,670, $80,287.62 void. installments. suits (Nos. 12108 12482) halves, respectively, protest. (No. 12483) invalid beyond make. Armed Services Procurement 1947, 65, Stat. 21, 2301, 2303—2305, 5(a) agency head negotiated exceeding include provision for, created, paramount liens, agree.' empowered enter here. fails recognize long-existing well-established 'advance payments.' At passed art procurement regulations. (See Joint Resolution 24, May 1894, 582; f 22, 1911, 32; October 6, 1917, 79, 345, 383; June 28, 1940, 440, 676; 2, 508, 712, U.S.C.A.Appendix, 1171; First War Powers Act, 1941, 593, 838, 201; Executive Order 9001 (December 1941), Fed.Reg. 6787, 611 note; Department Regulations (July 1942), 81.321, 81.331, 81.347, 81.348, 6098, 6105, 6108, 6112, 6113; (August 25, 1945), 803.321, 803.330, 803.331, 10449, 10501 10503, 10507—10508; Army (November 1947) 804.400—804.407, 805.405, 806.407—2(a)(b), 7692—7693, 7700—7705.) synonymous. understood loan 'only security' 1947), 804.400—7, 805.407—2(a)(b), 7700, 7704—7705. November 1950 (32 CFR (1949 ed.) 402.501), saying: 'Advance loans advances anticipation Advance distinquished 'progress contract.' 1947 existing describing Regulations, 1945, 803.330 10507—10508. historical background prohibit procured (62 21), such, discretion type promote prohibition practices. 546. merit contracts. rejecting '(W)e turn examine validity naming colorable transaction Arkansas Tax. relied primarily. assumption, Arkansas, cost-plus ultimate (We not) drafting Navy conserve funds, purpose, changes transaction.' 410. negotiation 'parties possible avoidance element standard clause (referred regulations) inserted contracts.' coverage reads follows: 'All insured, manuscripts, mechanical drawings, tools, dies, jigs patterns, own, trust commission, consignment, insured.' Read-York, 152 313, 317; Douglas Aircraft Byram, Cal.App.2d 311, 134 P.2d 15; Craig Ingalls Corp., 192 Miss. 254, So.2d ex rel. Superior Beckley, 175 Wis. 272, 185 199; 116—122, 407—410; 178, 183, 913; American Boiler Works, 220 319, 321, Wright Aeronautical Glander St. 29, N.E.2d 483. exception Motors Corp Kenosha, 274 315, mention court's earlier Mich.Const., Art. X, 3. 1. sections IV: 'Section thereon.' 'Sec. 7. same, assumpsit expended benefit, rent twenty-sixth year courts. divest destroy lien. 27. Paragraph complaint alleged complaints same—that plaintiff answer 'admits allegations three' valuation adopted was) 1952.' Graves York O'Keefe, 306 595, 927, S.R.A Minnesota S.R.A., installment deed mortgagee. improved land. Afterward fee remaining (327 752) claimed ground transferred equity alone levied. varies respect. Trinityfarm Grosjean, 291 469, 918, contract; 160, 221, gross receipts Helvering Gerhardt, 304 405, 969, 1427, income engineer assistant managers, employees salaries States; Gerhardt case; storer though, storer, companion imported 'If lays (Government) one, affects shifted impact derived voluntary 'through

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