Evening star., 1937-12-06
HIGH COURT RULING
MAY LET STATE
TAX FEDERAL PAY
Decision Also May Permit
U. S. to Collect on Other
Public Salaries.
WEST VIRGINIA CASE
BRINGS NEW REVERSAL
Gross Receipts Assessment on Con.
tracing Company Upheld in
Five-to-Four Opinion.

The established rule that a
State may not tax 'inStrumentalities"
of the Federal Government apparently
was reversed by the Supreme Court
today in a momentous opinion deliv-
cred by Chief Justice Hughes.
The decision upheld a West Vir-
ginia tax on the gross receipts derived
by contracting company for work
done in the State under contract with
the Federal Government. The court
divided five to four, Justices Brandeis,
Stone, Cardozo and Black siding with
the Chief Justice.
Some observers believed the result
OF the decision may be to permit the
Federal Government to tax the in
comes of persons employed by the
States and to extend a similar privi-
lege to the State governments with
reference to the income of Federal
employees.
In another decision, delivered by
Associated Justice McReynolds, the
court refused to set aside a lower
court ruling empowering the Federal
Government to institute antitrust
proceedings against the Aluminium
Co. of America, in the Southern dis
trict of New York
Right of Appeal Granted
A decision giving State prosecuting
authorities the right of appeal in
criminal cases also was announced
today by the court.
loo;e;o,,
forts to compel the Government to
pay interest on Liberty bonds in gold
or its equivalent and the right of a
State to tax money received by an
individual under a contract with the
Federal Government may be an
nounced later.
The question of a States right to
authorize prosecuting authorities to
appeal in criminal cases and, if sue
cessful, to retry the defendant was
raised in proceeding by a convicted
murderer, Frank Palko, against the
State of Connecticut. At the .present
time, only Connecticut and Vermont
give their prosecuting officers such au-
thority.
Applicable Only to States.
The Federal Government has a neg
ative right of appeal, but may not
retry man. 1t was pointed out that
today's decision is applicable only to
the States and does not give the Fed
eral Government the same power.
In another opinion the court upheld
the validity of Georgia poll tax stat
ute which had been attacked as dis
eliminating against man in favor of
woman voters
There had been 81 decisions possible
today as the justices reassembled after
tWo-Week recess.
Payment of interest on bonds called
prior to the redemption date was
sought by Robert A. Taft of Cincin-
natl, the estate of the late James j.
Ransom of Des Moines, and Arthur
Mechen of Baltimore
Attorney General Cummings told
the Supreme Court that a decision
adverse to the Government would
produce confusion in public and
private finance"
Mr.. Taft contended, however, that
such ruling would cost the Treasury
only Sl0,0OO,000 interest on $7O,0O0,o00
of gold bonds still outstanding after
being called for redemption ahead OF
maturity.
Action also was possible by the court
on litigation used by the Roosevelt
administration as a basis for advo-
eating new method of valuing utili-
ties for rate-making purposes-based
on prudent past investment"
Directly involved was an order by
the California Railroad Commission
directing the Pacific Gas & Electric
Co. to reduce its gas rates.