Evening star. [volume] (Washington, D.C.) 1854-1972, 1938-09-23
REHEAR|NC PLEA
HITS TAX VERDICT
New York Port Employees
Contend Supreme Court
0verruIed Law.

The Supreme Court overruled 4
clear-cut doctrine of earlier law when
1t reversed previous decision last
March and moved to break down re.
strictions 1t had imposed on the re.
spective rights Of State and Federal
Governments to tax the agencies of
each other, 1t was contended in
supplementary memorandum in sup
port Of petition for rehearing filed
today in behalf Of three employees of
the Port Of New York Authority, in
whose case the reversal was made.
The question of whether the dual
taxation, If it is applied, shall be retro.
active was dealt with in the memo.
randum. The Solicitor Generals rea.
sonlng here appears circular" the
memorandum stated. His argument
Is that, because man has to be
judged at all. he has no right to insist
upon being judged by the law as it
stood when he acted"
The court is expected to act on the
petition when 1t reconvenes next
month. At the time of its ruling.
Justices Butler and McReynolds dis.
sented, asserting the court had Destroy
ed concepts of the taxing power which
have prevailed since the famous
decision of Justice Marshall in the
case Of McCulloch versus Maryland in
1919. In that ruling the State was
forbidden to tax the assets OF q
Federal bank in Baltimore.
Employer Not Determined.
In the case at issue, involving
Philip L. Gerhardt and two other en-
ployes of the Port of New York
Authority, it Was not clearly de-
termined whether they were employed
by State or semi-private body.
AS result Of the ruling by the
higher court number of other similar
cases apparently have been over
ruled" the memorandum, filed by
Attorney Wilbur La Roe. jr., stated,
land with them have gone the reason-
able expectations of all State and
municipal employees
We can imagine no better proof
Of the reasonableness Of those expec-
tations. as bearing upon the clarity
Of the doctrine relied upon, than its
universal application by the Board Of
Tax Appeals, by the District courts and
by the Circuit Court of Appeals. If
these worthy judges believed, as
result of this courts opinions, that
the true governmental employees Of
State and municipal agencies engaged
in governmental functions and paid
with State and municipal funds were
not taxable by the Federal Govern
ment, what other expectations could
well-intentioned men have had?"
Ruling Is Hit.
In the closing paragraphs Of the
memorandum, the court was told:
Obviously. the law officers of the
States of the Union cannot, in view
Of the responsibilities they bear to their
respective sovereign States, accept the
construction now put upon the courts
decision in the Gerhardt case by the
Treasury Department and the Depart
ment of Justice. that ordinarily, tax
immunity is privilege of Federal, not
Of State. instrumentalities. This talks
INV III lciiilo VI cIIiRlOytS, UuI VI Jll6
sovereign States themselves 1t as
sumes nothing short of a complete
change in the dual form Of government
under which the Nation has thrived
and prospered.
Certainly, if such a change was
to be made. 1t should have been done
by submission of an appropriate con-
stitutional amendment to the people.
We are not here dealing with a rule
of law to be interpreted in the high.
of changing economic and social con-
ditions. We are dealing with a rule
that affects the very structure of the
Government itself and the relative
powers of the States and of the Fed
eral Government. Surely, opportunity
should be afforded to the official rep
resentatives of the States to be heard
upon so vital change in the funda-
mental nature of our Government
-"