Source: https://www.law.cornell.edu/supremecourt/text/302/134
Timestamp: 2019-04-26 00:05:28+00:00

Document:
Messrs. Clarence W. Meadows, Homer A. Holt, and W. Holt Wooddell, all of Charleston, W. Va., for appellants.
Messrs. William S. Moorhead, of Pittsburgh, Pa., and W. Elliott Nefflen and W. Champan Revercomb, both of Charleston, W. Va., for appellee.
Mr. Stanley Reed, Sol. Gen., of Washington, D.C., for the United States as amicus curiae.
Respondent, the Dravo Contracting Company, is a Pennsylvania corporation engaged in the general contracting business, with its principal office and plant at Pittsburgh in that state, and is admitted to do business in the state of West Virginia. In the years 1932 and 1933, respondent entered into four contracts with the United States for the construction of locks and dams in the Kanawha river and locks in the Ohio river, both navigable streams. 1 The State Tax Commissioner assessed respondent for the years 1933 and 1934 in the sum of $135,761.51 (taxes and penalties) upon the gross amounts received from the United States under these contracts.
Respondent brought suit in the District Court of the United States for the Southern District of West Virginia to restrain the collection of the tax. The case was heard by three judges ( 28 U.S.C. 380, 28 U.S.C.A. § 380) and upon findings the court entered a final decree granting a permanent injunction. 16 F.Supp. 527. The case comes here on appeal.
The statute is known as the Gross Sales and Income Tax Law. Code of West Virginia 1931, c. 11, art. 13, § 1 et seq., amended effective May 26, 1933. Acts 1933, 1st Ex.Sess., c. 33. It provides for 'annual privilege taxes' on account of 'business and other activities.' The clause in question here is as follows: 'Upon every person engaging or continuing within this state in the business of contracting, the tax shall be equal to two per cent. of the gross income of the business.' 2 Acts W.Va.1933, 1st Ex.Sess., c. 33, § 2(e).
The tax was in addition to other state taxes upon respondent, to wit, the license tax on foreign corporations (Code of West Virginia, c. 11, art. 12, §§ 69, 71) and ad valorem taxes upon real and personal property of the contractor within the state.
The questions presented are: (1) Whether the state had territorial jurisdiction to impose the tax; and (2) whether the tax was invalid as laying a burden upon the operations of the federal government.
First. As to territorial jurisdiction. Unless the activities which are the subject of the tax were carried on within the territorial limits of West Virginia, the state had no jurisdiction to impose the tax. Hans Rees' Sons v. North Carolina ex rel. Maxwell, 283 U.S. 123, 133, 134, 51 S.Ct. 385, 388, 389, 75 L.Ed. 879; Shaffer v. Carter, 252 U.S. 37, 57, 40 S.Ct. 221, 227, 64 L.Ed. 445; Surplus Trading Company v. Cook, 281 U.S. 647, 50 S.Ct. 455, 74 L.Ed. 1091. The question has two aspects: (1) As to work alleged to have been done outside the exterior limits of West Virginia; and (2) as to work done within those limits but (a) in the bed of the rivers, (b) on property acquired by the federal government on the banks of the rivers, and (c) on property leased by respondent and used for the accommodation of his equipment.
1. A large part of respondent's work was performed at its plant at Pittsburgh. The stipulation of facts shows that respondent purchased outside the state of West Virginia materials used in the manufacture of the roller gates, lock gates, cranes, substructure racks and spur rims, structural steel, patterns, hoisting mechanism and equipment, under each of its contracts, and fabricated the same at its Pittsburgh plant. The roller gates and the appurtenant equipment were preassembled at respondent's shops at Pittsburgh, and were there inspected and tested by officers of the United States government. The materials and equipment fabricated at Pittsburgh were there stored until time for delivery, and the appropriate units as prepared for shipment were then transported by respondent to the designated sites in West Virginia and there installed. The United States knew at the time the contracts were made that the above-described work was to be performed at the plaintiff's main plant. The contracts provided for partial payments as the work progressed, and that all the material and work covered by the partial payments should thereupon become 'the sole property of the government.' Payments by the government were made from time to time accordingly.
It is clear that West Virginia had no jurisdiction to lay a tax upon respondent with respect to this work done in Pennsylvania. As to the material and equipment there fabricated, the business and activities of respondent in West Virginia consisted of the installation at the respective sites within that state, and an apportionment would in any event be necessary to limit the tax accordingly. Hans Rees' Sons v. North Carolina, supra.
2. As to work done within the exterior limits of West Virginia, the question is whether the United States has acquired exclusive jurisdiction over the respective sites. Wherever the United States has such jurisdiction the state would have no authority to lay the tax. Surplus Trading Company v. Cook, supra.
(a) As to the beds of the Kanawha and Ohio rivers. The present question is not one of the paramount authority of the Federal Government to have the work performed for purposes within the federal province (Scranton v. Wheeler, 179 U.S. 141, 163, 21 S.Ct. 48, 45 L.Ed. 126; United States v. Chandler-Dunbar Water Power Co., 229 U.S. 53, 61, 62, 33 S.Ct. 667, 57 L.Ed. 1063; Lewis Blue Point Oyster Co. v. Briggs, 229 U.S. 82, 88, 33 S.Ct. 679, 680, 57 L.Ed. 1083, Ann.Cas.1915A, 232), or whether the tax lays a burden upon governmental operations; it is simply one of territorial jurisdiction.
The title to the beds of the rivers was in the state. Pollard v. Hagan, 3 How. 212, 230, 11 L.Ed. 565; Shively v. Bowlby, 152 U.S. 1, 26, 14 S.Ct. 548, 38 L.Ed. 331; Port of Seattle v. Oregon-Washington R.R. Co., 255 U.S. 56, 63, 41 S.Ct. 237, 239, 65 L.Ed. 500; Borax Consolidated v. Los Angeles, 296 U.S. 10, 15, 16, 56 S.Ct. 23, 26, 80 L.Ed. 9. It was subject to the power of Congress to use the lands under the streams 'for any structure which the interest of navigation, in its judgment, may require.' Lewis Blue Point Oyster Co. v. Briggs, supra. But, although burdened by that servitude, the state held the title. Gibson v. United States, 166 U.S. 269, 271, 272, 17 S.Ct. 578, 41 L.Ed. 996; Port of Seattle v. Oregon-Washington R.R. Co., supra; Borax Consolidated v. Los Angeles, supra. There does not appear to have been any acquisition by the United States of title to those lands, unless, as respondent urges, the occupation of the beds for the purpose of the improvements constituted an acquisition of title. But as the occupation was simply the exercise of the dominant right of the federal government (Gibson v. United States, supra, 166 U.S. 269, at page 276, 17 S.Ct. 578, 41 L.Ed. 996) the servient title continued as before. No transfer of that title appears. The Solicitor General conceded in his argument at bar that the state of West Virginia retained its territorial jurisdiction over the river beds, and we are of the opinion that this is the correct view.
Clause 17 provides that Congress shall have power 'to exercise exclusive Legislation' over 'all Places purchased by the consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings.' 'Exclusive legislation' is consistent only with exclusive jurisdiction. Surplus Trading Company v. Cook, supra, 281 U.S. 647, at page 652, 50 S.Ct. 455, 456, 74 L.Ed. 1091. As we said in that case, it is not unusual for the United States to own within a state lands which are set apart and used for public purposes. Such ownership and use without more do not withdraw the lands from the jurisdiction of the state. They lands 'remain part of her territory and within the operation of her laws, save that the latter cannot affect the title of the United States or embarrass it in using the lands or interfere with its right of disposal.' Id., at page 650 of 281 U.S., 50 S.Ct. 455, 456, 74 L.Ed. 1091. Clause 17 governs those cases where the United States acquires lands with the consent of the Legislature of the state for the purposes there described. If lands are otherwise acquired, and jurisdiction is ceded by the state to the United States, the terms of the cession, to the extent that they may lawfully be prescribed, that is, consistently with the carrying out of the purpose of the acquisition, determine the extent of the federal jurisdiction. Fort Leavenworth R.R. Co. v. Lowe, 114 U.S. 525, 527, 538, 539, S.Ct. 995, 997, 29 L.Ed. 264; Palmer v. Barrett, 162 U.S. 399, 402, 403, 16 S.Ct. 837, 40 L.Ed. 1015; Arlington Hotel Co. v. Fant, 278 U.S. 439, 451, 49 S.Ct. 227, 229, 73 L.Ed. 447; United States v. Unzeuta, 281 U.S. 138, 142, 50 S.Ct. 284, 285, 74 L.Ed. 761; Surplus Trading Company v. Cook, supra.
Are the locks and dams in the instant case 'needful buildings' within the purview of clause 17? The state contends that they are not. If the clause were construed according to the rule of ejusdem generis, it could be plausibly contended that 'needful buildings' are those of the same sort as forts, magazines, arsenals, and dockyards; that is, structures for military purposes. And it may be that the thought of such 'strongholds' was uppermost in the minds of the framers. Elliot's Debates, volume 5, pp. 130, 440, 511; Cf. Story on the Constitution, volume 2, § 1224. But such a narrow construction has been found not to be absolutely required and to be unsupported by sound reason in view of the nature and functions of the national government which the Constitution established.
In Sharon v. Hill (C.C.) 24 F. 726, 730, 731, Justice Field (sitting with Judge (Sawyer) considered the provision to be applicable to a court building and custom house on land which had been purchased with the consent of the state. In Battle v. United States, 209 U.S. 36, 37, 28 S.Ct. 422, 423, 52 L.Ed. 670, we held that 'post offices are among the 'other needful buildings" within clause 17. See, also, United States v. Wurtzbarger (D.C.) 276 F. 753, 755; Arlington Hotel v. Fant, supra. Locks and dams for the improvement of navigation, which are as clearly within the federal authority as post offices, have been regarded as 'needful buildings.' United States v. Tucker (D.C.) 122 F. 518, 522, We take that view. We construe the phrase 'other needful buildings' as embracing whatever structures are found to be necessary in the performance of the functions of the federal government.
The Legislature of West Virginia by general statute had given its consent to the acquisition by the United States, but questions are presented as to the construction and effect of the consent. The provision is found in section 3 of chapter 1, article 1, of the Code of West Virginia of 1931. The full text is set out in the margin. 4 By the first paragraph the consent of the state is given 'to the acquisition by the United States, or under its authority, by purchase, lease, condemnation, or otherwise, of any land acquired, or to be acquired in this State by the United States, from any individual, body politic or corporate, for sites for * * * locks, dams, * * * or any needful buildings or structures or proving grounds, or works for the improvement of the navigation of any watercourse * * * or for any other purpose for which the same may be needed or required by the government of the United States.' By the second paragraph provision is made for gifts by municipalities to the United States of land for any of the purposes described in the first paragraph. The third paragraph cedes to the United States 'concurrent jurisdiction with this State in and over any land so acquired * * * for all purposes.' The jurisdiction so ceded is to continue only during the ownership of the United States and is to cease if the United States fails for five consecutive years to use any such land for the purposes of the grant.
The contention is made that the third paragraph of section 3 as to 'concurrent jurisdiction' was not in the Code of 1923, but was a later addition (1931), and should not be taken as qualifying the first paragraph. But the third paragraph was added before the acquisition here in question, and 'any land so acquired' manifestly refers to the acquisitions previously described which expressly embraced all such acquisitions in the future. The suggestion that the third paragraph applies only to the lands given by municipalities to the United States under the second paragraph is without force. The third paragraph appears to have been taken from the provision, in the same language, of section 19 of the Code of Virginia of 1919, which was not qualified by any intervening provision as to municipalities. See Code of West Virginia, 1931, c. 1, art. 1, § 3, Revisers' Note. The revisers say it was added to 'make more definite the provisions as to jurisdiction.' Id. We are not referred to any decision of the Supreme Court of West Virginia construing this paragraph.
Reference is also made to the provision of section 4 as to service of process. This is said to be unnecessary if only concurrent jurisdiction is granted. But this provision was a part of the former statute (1923) and cannot be taken as derogating from the force of the explicit amendment by the later addition in the third paragraph of the present section 3. And apparently to prevent misunderstanding, there was an amendment at the same time of the provision now in section 4 by the addition of the last clause 6 in order to make the reservation of the state's jurisdiction 'more comprehensive.' Code of West Virginia, 1931, c. 1, art. 1, § 4, Revisers' Note.
The third paragraph of section 3 carefully defines the jurisdiction ceded by the state, and there is no permissible construction which would ignore this definite expression of intention in considering the effect upon jurisdiction of the consent given by the first paragraph.
But it is urged that if the paragraph be construed as seeking to qualify the consent of the state, it must be treated as inoperative. That is, that the state cannot qualify its consent, which must be taken as carrying with it exclusive jurisdiction by virtue of clause 17. The point was suggested by Justice Story in United States v. Cornell, Fed.Cas.No.14,867, 2 Mason 60, 65, 66, but the construction placed upon the consent in that case made decision of the point unnecessary. There the place (Fort Adams in Newport Harbor) had been purchased with the consent of the state, to which was added a reservation for the service of civil and criminal process. Justice Story held that such a reservation was not incompatible with a cession of exclusive jurisdiction to the United States, as the reservation operated 'only as a condition' and 'as an agreement of the new sovereign to permit its free exercise as quoad hoc his own process.' Reservations of that sort were found to be frequent in grants made by the states to the United States in order to avoid the granted places being made a sanctuary for fugitives from justice. Story on the Constitution, volume 2, § 1225. Reference is made to statements in the general discussion in the opinion in Fort Leavenworth R.R. Co. v. Lowe, supra, but these are not decisive of the present question. The decision in that case was that the state retained its jurisdiction to tax the property of a railroad company within the Fort Leavenworth Military Reservation, as federal jurisdiction had not been reserved when Kansas was admitted as a state and, when the state subsequently ceded jurisdiction to the United States, there was saved to the state the right 'to tax railroad, bridge, and other corporations, their franchises and property, on said reservation.' The terms of the cession in this respect governed the extent of the federal jurisdiction. See Surplus Trading Company v. Cook, supra. There are obiter dicta in other cases, but the point now raised does not appear to have been definitely determined.
It is not questioned that the state may refuse its consent and retain jurisdiction consistent with the governmental purposes for which the property was acquired. The right of eminent domain inheres in the federal government by virtue of its sovereignty, and thus it may, regardless of the wishes either of the owners or of the states, acquire the lands which it needs within their borders. Kohl v. United States, 91 U.S. 367, 371, 372, 23 L.Ed. 449. In that event, as in cases of acquisition by purchase without consent of the state, jurisdiction is dependent upon cession by the state, and the state may qualify its cession by reservations not inconsistent with the governmental uses. Story on the Constitution, volume 2, § 1227; Kohl v. United States, supra, 91 U.S. 367, at page 374, 23 L.Ed. 449; Fort Leavenworth R.R. Co. v. Lowe, supra; Surplus Trading Company v. Cook, supra; United States v. Unzeuta, supra. The result to the federal government is the same whether consent is refused and cession is qualified by a reservation of concurrent jurisdiction, or consent to the acquisition is granted with a like qualification. As the Solicitor General has pointed out, a transfer of legislative jurisdiction carries with it not only benefits, but obligations, and it may be highly desirable, in the interest both of the national government and of the state, that the latter should not be entirely ousted of its jurisdiction. The possible importance of reserving to the state jurisdiction for local purposes which involve no interference with the performance of governmental functions is becoming more and more clear as the activities of the government expand and large areas within the states are acquired. There appears to be no reason why the United States should be compelled to accept exclusive jurisdiction or the state be compelled to grant it in giving its consent to purchases.
Normally, where governmental consent is essential, the consent may be granted upon terms appropriate to the subject and transgressing no constitutional limitation. Thus, as a state may not be sued without its consent and 'permission is altogether voluntary,' it follows 'that it may prescribe the terms and conditions on which it consents to be sued.' Beers use of Platenius v. Arkansas, 20 How. 527, 529, 15 L.Ed. 991; Smith v. Reeves, 178 U.S. 436, 441, 442, 20 S.Ct. 919, 44 L.Ed. 1140. Treaties of the United States are to be made with the advice and consent of the Senate, but it is familiar practice for the Senate to accompany the exercise of this authority with reservations. Hyde, International Law, volume 2, § 519. The Constitution provides that no state without the consent of Congress shall enter into a compact with another state. It can hardly be doubted that in giving consent Congress may impose conditions. See Arizona v. California, 292 U.S. 341, 345, 54 S.Ct. 735, 736, 78 L.Ed. 1298.
Clause 17 contains no express stipulation that the consent of the state must be without reservations. We think that such a stipulation should not be implied. We are unable to reconcile such an implication with the freedom of the state and its admitted authority to refuse or qualify cessions of jurisdiction when purchases have been made without consent, or property has been acquired by condemnation. In the present case, the reservation by West Virginia of concurrent jurisdiction did not operate to deprive the United States of the enjoyment of the property for the purposes for which it was acquired, and we are of the opinion that the reservation was applicable and effective.
c As to property leased by respondent and used for the accommodation of its equipment. There can be no question as to the jurisdiction of the state over this area.
The tax is not laid upon the government, its property, or officers. Dobbins v. Erie County Commissioners, 16 Pet. 435, 449, 450, 10 L.Ed. 1022.
The tax is not laid upon an instrumentality of the government. McCulloch v. Maryland, 4 Wheat. 316, 4 L.Ed. 579; Osborn v. Bank of the United States, 9 Wheat. 738, 6 L.Ed. 204; Gillespie v. Oklahoma, 257 U.S. 501, 42 S.Ct. 171, 66 L.Ed. 338; Federal Land Bank v. Crosland, 261 U.S. 374, 43 S.Ct. 385, 67 L.Ed. 703, 29 A.L.R. 1; Clallam County v. United States, 263 U.S. 341, 44 S.Ct. 121, 68 L.Ed. 328; People of New York ex rel. Rogers v. Graves, 299 U.S. 401, 57 S.Ct. 269, 81 L.Ed. 306. Respondent is an independent contractor. The tax is nondiscriminatory.
The tax is not laid upon the contract of the government. Osborn v. Bank of the United States, supra, 9 Wheat. 738, at page 867, 6 L.Ed. 204; Weston v. Charleston, 2 Pet. 449, 468, 475, 7 L.Ed. 481; Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429, 581, 582, 586, 15 S.Ct. 673, 691, 39 L.Ed. 759; Western Union Telegraph Company v. Texas, 105 U.S. 460, 464, 466, 26 L.Ed. 1067; Leloup v. Port of Mobile, 127 U.S. 640, 646, 8 S.Ct. 1380, 32 L.Ed. 311; Williams v. City of Talladega, 226 U.S. 404, 418, 419, 33 S.Ct. 116, 119, 57 L.Ed. 275; Federal Land Bank v. Crosland, supra; Willcuts v. Bunn, 282 U.S. 216, 51 S.Ct. 125, 75 L.Ed. 304, 71 A.L.R. 1260; Panhandle Oil Company v. Mississippi ex rel. Knox, 277 U.S. 218, 222, 48 S.Ct. 451, 452, 72 L.Ed. 857, 56 A.L.R. 583; Indian Motocycle Company v. United States, 283 U.S. 570, 574, 51 S.Ct. 601, 602, 75 L.Ed. 1277; Graves v. Texas Company, 298 U.S. 393, 401, 56 S.Ct. 818, 822, 80 L.Ed. 1236. The application of the principle which denies validity to such a tax has required the observing of close distinctions in order to maintain the essential freedom of government in performing its functions, without unduly limiting the taxing power which is equally essential to both nation and state under our dual system. In Weston v. Charleston, supra, and Pollock v. Farmers' Loan & Trust Co., supra, taxes on interest from government securities were held to be laid on the government's contract, upon the power to borrow money, and hence were invalid. But we held in Willcuts v. Bunn, supra, that the immunity from taxation does not extend to the profits derived by their owners upon the sale of government bonds. We said (Id., at page 225 of 282 U.S., 51 S.Ct. 125, 127, 75 L.Ed. 304, 71 A.L.R. 1260): 'The power to tax is no less essential than the power to borrow money, and, in preserving the latter, it is not necessary to cripple the former by extending the constitutional exemption of taxation to those subjects which fall within the general application of non-discriminatory laws, and where no direct burden is laid upon the governmental instrumentality, and there is only a remote, if any, influence upon the exercise of the functions of government.' Many illustrations were given.
In Western Union Telegraph Company v. Texas, supra, a specific state tax was imposed on each message sent by an officer of the United States on public business over the lines of the Telegraph Company. In holding the tax to be invalid, the Court leaned heavily upon the fact that the Company had accepted the terms of the Act of Congress of 1866 ( 14 Stat. 221) authorizing the use of the military and post roads and requiring in return that government messages have priority over all other business, and be transmitted at rates fixed annually by the Postmaster General. The Court considered that the Company had thus become an agent of the government for the transmission of messages on public business. See, to the same effect, Leloup v. Port of Mobile, supra. The same point was taken in Williams v. City of Talladega, supra, involving a local license fee applicable to the same Telegraph Company. The Court said that the tax was laid upon 'the privilege of carrying on a business a part of which is that of a governmental agency constituted under a law of the United States and engaged in an essential part of the public business, communication between the officers and departments of the Federal government.' The emphasis put in these cases upon the effect of the acceptance of the obligation of the act of Congress shows that they cannot be regarded as sustaining the board claim of immunity here advanced.
These decisions show clearly the effort of the Court in this difficult field to apply the practical criterion to which we referred in Willcuts v. Bunn, supra, and again in Graves v. Texas Company, supra. There is no ineluctable logic which makes the doctrine of immunity with respect to government bonds applicable to the earnings of an independent contractor rendering services to the government. That doctrine recognizes the direct effect of a tax which 'would operate on the power to borrow before it is exercised' (Pollock v. Farmers' Loan & Trust Co., supra), and which would directly affect the government's obligation as a continuing security. Vital considerations are there involved respecting the permanent relations of the government to investors in its securities and its ability to maintain its credit; considerations which are not found in connection with contracts made from time to time for the services of independent contractors. And in dealing with the question of the taxability of such contractors upon the fruits of their work, we are not bound to consider or decide how far immunity from taxation is to be deemed essential to the protection of government in relation to its purchases of commodities, or whether the doctrine announced in the cases of that character which we have cited deserves revision or restriction.
The question of immunity from taxation of the earnings of an independent contractor under a government contract arose in Metcalf & Eddy v. Mitchell, 269 U.S. 514, 46 S.Ct. 172, 70 L.Ed. 384. The services were rendered to a political subdivision of a state and the contractor's earnings were held to be subject to the federal income tax. That was a pivotal decision, for we had to meet the question whether the earnings of the contractor stood upon the same footing as interest upon government securities or the income of an instrumentality of government. It is true that the tax was laid upon net income. But if the tax upon the earnings of the contractor had been regarded as imposing a direct burden upon a governmental agency, the fact that the tax was laid upon net income would not save it under the doctrine of Gillespie v. Oklahoma, supra. And if the doctrine of the immunity of interest upon government bonds had been deemed to apply, the tax would have been equally bad whether the tax was upon net or gross income. The ruling in Pollock v. Farmers' Loan & Trust Co., supra, related to net income. The uniform ruling in such a case has been that the interest upon government securities cannot be included in gross income for the purpose of an income tax computed upon net income. The pith of the decision in the case of Metcalf & Eddy v. Mitchell is that government bonds and contracts for the services of an independent contractor are not upon the same footing. The decision was a definite refusal to extend the doctrine of cases relating to government securities, and to the instrumentalities of government, to earnings under contracts for labor.
The reasoning upon which that decision was based is controlling here. We recognized that in a broad sense 'the burden of federal taxation necessarily sets an economic limit to the practical operation of the taxing power of the states, and vice versa.' 'Taxation by either the state or the federal government affects in some measure the cost of operation of the other.' As 'neither government may destroy the other or curtail in any substantial manner the exercise of its powers,' we said that the limitation upon the taxing power of each, so far as it affects the other, 'must receive a practical construction which permits both to function with the minimum of interference each with the other; and that limitation cannot be so varied or extended as seriously to impair either the taxing power of the government imposing the tax * * * or the appropriate exercise of the functions of the government affected by it.' Metcalf & Eddy v. Mitchell, supra, 269 U.S. 514, at pages 523, 524, 46 S.Ct. 172, 174, 70 L.Ed. 384.
We said further that the nature of the governmental agencies or the mode of their Constitution could not be disregarded in passing on the question of tax exemption, as it was obvious that an agency might be of such a character or so intimately connected with the exercise of a power or the performance of a duty by the one government 'that any taxation of it by the other would be such a direct interference with the functions of government itself as to be plainly beyond the taxing power.' And it was on that principle that 'any taxation by one government of the salary of an officer of the other, or the public securities of the other, or an agency created and controlled by the other, exclusively to enable it to perform a governmental function,' was prohibited. We concluded that a nondiscriminatory tax upon the earnings of an independent contractor derived from services rendered to the government could not be said to be imposed 'upon an agency of government in any technical sense,' and could not 'be deemed to be an interference with government, or an impairment of the efficiency of its agencies in any substantial way.' Id. at pages 524, 525, of 269 U.S., 46 S.Ct. 172, 175, 70 L.Ed. 384.
As we have observed, the fact that the tax in the present case is laid upon the gross receipts, instead of net earnings, is not a controlling distinction. Respondent invokes our decisions in the field of interstate commerce, where a tax upon the gross income of the taxpayer derived from interstate commerce has long been held to be an unconstitutional burden. Philadelphia & Southern M.S.S. Co. v. Pennsylvania, 122 U.S. 326, 7 S.Ct. 1118, 30 L.Ed. 1200; Crew Levick Co. v. Pennsylvania, 245 U.S. 292, 297, 38 S.Ct. 126, 62 L.Ed. 295; United States Glue Co. v. Oak Creek, 247 U.S. 321, 328, 329, 38 S.Ct. 499, 62 L.Ed. 1135, Ann.Cas.1918E, 748; Fisher's Blend Station v. Tax Commission, 297 U.S. 650, 655, 656, 56 S.Ct. 608, 610, 80 L.Ed. 956.
But the difference is plain. Persons have a constitutional right to engage in interstate commerce free from burdens imposed by a state tax upon the business which constitutes such commerce or the privilege of engaging in it or the receipts as such derived from it. Minnesota Rate Cases (Simpson v. Shepard), 230 U.S. 352, 400, 33 S.Ct. 729, 57 L.Ed. 1511, 48 L.R.A.(N.S.) 1151, Ann.Cas.1916A, 18. Interstate commerce is not an abstraction; it connotes the transactions of those engaged in it, and they enjoy the described immunity in their own right. Here, respondent's activities at the dam sites are local and not in interstate commerce. Respondent has no constitutional right to immunity from nondiscriminatory local taxation, and the mere fact that the tax in question burdens respondent is no defense. The defense is that the tax burdens the government, and respondent's right is at best a derivative one. He asserts an immunity which, if it exists, pertains to the government and which the government disclaims.
In Alward v. Johnson, supra, as already noted, the tax was upon gross receipts, and these were derived from a contract for carrying the mails, but the tax was upheld. It there appeared that the tax was in lieu of taxes upon the property and had been treated by the state court as a property tax. But if the tax as actually laid upon the gross receipts placed a direct burden upon the federal government so as to interfere with the performance of its functions, it could not be saved because it was in lieu of a tax upon property, or was so characterized. See Hanover Fire Insurance Co. v. Harding, 272 U.S. 494, 509, 510, 47 S.Ct. 179, 183, 71 L.Ed. 372, 49 A.L.R. 713.
In Fidelity & Deposit Co. of Maryland v. Pennsylvania, 240 U.S. 319, 36 S.Ct. 298, 299, 60 L.Ed. 664, we sustained the tax upon the gross premiums received by a company as surety upon bonds running to the United States for 'internal revenue, customs, United States government officials, United States government contracts and banks for United States deposits,' and 'bonds given in courts of the United States in litigation there pending.' While the challenged tax was 'an exaction for the privilege of doing business,' we held it to be valid as 'mere contracts between private corporations and the United States do not necessarily render the former essential governmental agencies, and confer freedom from state control.' Id., 240 U.S. 319, at pages 320, 323, 36 S.Ct. 298, 300, 60 L.Ed. 664. The premiums, of course, were paid by those who were required to obtain the bonds, but the fact that the contracts were with the United States and that the tax was laid upon gross receipts from the writing of such contracts, did not make the tax an invalid exaction.
In both the Alward Case and that of the Fidelity & Deposit Company, the argument, pressed here, that the state withheld for its use 'a part of every dollar' received by the taxpayer, was equally pertinent and equally unavailing.
But if it be assumed that the gross receipts tax may increase the cost to the government, that fact would not invalidate the tax. With respect to that effect, a tax on the contractor's gross receipts would not differ from a tax on the contractor's property and equipment necessarily used in the performance of the contract. Concededly, such a tax may validly be laid. Property taxes are naturally, as in this case, reckoned as a part of the expense of doing the work. Taxes may validly be laid not only on the contractor's machinery, but on the fuel used to operate it. In Trinityfarm Construction Company v. Grosjean, 291 U.S. 466, 54 S.Ct. 469, 470, 78 L.Ed. 918, the taxpayer entered into a contract with the federal government for the construction of levies in aid of navigation, and gasoline was used to supply power for taxpayer's machinery. A state excise tax on the gasoline so used was sustained. The Court said that if the payment of the state taxes imposed on the property and operations of the taxpayer 'affects the federal government at all, it at most gives rise to a burden which is consequential and remote and not to one that is necessary, immediate or direct.' But a tax of that sort unquestionably increases the expense of the contractor in performing his service and may, if it enters into the contractor's estimate, increase the cost to the government. The fact that the tax on the gross receipts of the contractor in the Alward Case, supra, might have increased the cost to the government of the carriage of the mails did not impress the Court as militating against its validity.
There is the further suggestion that if the present tax of 2 per cent. is upheld, the state may lay a tax of 20 per cent. or 50 per cent., or even more, and make it difficult or impossible for the government to obtain the service it needs. The argument ignores the power of Congress to protect the performance of the functions of the national government and to prevent interference therewith through any attempted state action. In Thomson v. Union Pacific Railroad, supra, the Court pointedly referred to the authority of Congress to prevent such an interference through the use of the taxing power of the state. 'It cannot,' said the Court, 'be so used, indeed, as to defeat or hinder the operations of the National Government; but it will be safe to conclude, in general, in reference to persons and state corporations employed in government service, that when Congress has not interposed to protect their property from state taxation, such taxation is not obnoxious to that objection.' See Van Allen v. Assessors, 3 Wall. 573, 585, 18 L.Ed. 229; Fidelity & Deposit Co. of Maryland v. Pennsylvania, supra.
We hold that the West Virginia tax so far as it is laid upon the gross receipts of respondent derived from its activities within the borders of the state does not interfere in any substantial way with the performance of federal functions, and is a valid exaction. The decree of the District Court is reversed, and the cause is remanded for further proceedings in conformity with this opinion. It is so ordered.
That the privileges granted telegraph companies by federal law, had no bearing upon the validity of the tax is shown by Western Union Telegraph Co. v. Massachusetts, 125 U.S. 530, 8 S.Ct. 961, 31 L.Ed. 790 and Attorney General of Massachusetts v. Western Telegraph Co., 141 U.S. 40, 11 S.Ct. 889, 35 L.Ed. 628, in which state taxes on the property and franchises of companies, operating under the same statute as the Telegraph Company in the Texas Case were sustained because not on the transactions between the carrier and the United States.
Stock issued by the United States evidencing indebtedness to the holder cannot be taxed ad valorem by a state. 18 A tax upon the assets of a corporation is bad if obligations of the United States are included in the assessment. 19 A gross income tax is invalid to the extent that it is laid on income from federal securities. 20 The reason is that 'the tax * * * is a tax upon the contract subsisting between the government and the individual. It bears directly upon that contract, while subsisting and in full force. The power operates upon the contract the instant it is framed and must imply a right to affect that contract.' The government's obligation is for the payment both of principal and interest, and an exaction which bears upon either of these features of the obligation is prohibited.
If the government, as guardian of an incompetent Indian, leases land to a mining company on a royalty consisting of a percentage of the gross proceeds derived from the sale of ores mined, a state ad valorem tax assessed to the lessee on the ores mined and in storage upon the leased land before any sale or segregation of the equitable interests of the government as guardian, is void as burdening and impeding an operation of the government. 26 A sales tax on commodities sold to the government, though laid upon the seller at a given rate per unit sold, is also bad as directly burdening the government's transactions. 27 A tax on storage or withdrawal from storage essential to the sale of a commodity contracted to be delivered to the United States is in the same class as a tax on sales to the government. 28 On the other hand, a sales tax upon articles purchased by a government contractor, 29 or a net income tax laid upon his income, is valid. 30 The reason is that exactions of the latter sort do not impinge upon or directly affect the transaction between him and the government; do not affect the government's choice of means for executing its powers.
As in the Panhandle Case, so in the present, the receipt of the thing contracted for constitutes the transaction by which the tax is measured and on which the burden rests. We may thus paraphrase what was there said: To use the value and amount of the goods and services furnished to the United States as a measure of the tax is in substance and effect to tax the transaction itself. The amount of the tax rises and falls in direct ratio to the contract value of the goods and services rendered to the government. This is to tax the sale; and that is to tax the United States.
The Solicitor General, as amicus curiae, proposes a single test of the constitutionality of a state tax upon the operations of the United States, or the means chosen for the execution of its powers. That test is whether the taxing statute discriminates against the government and in favor of other taxpayers. He frankly admits that if the proposed criterion be adopted we must overrule Indian Motocycle Company v. United States, 283 U.S. 570, 51 S.Ct. 601, 75 L.Ed. 1277; Panhandle Oil Company v. Mississippi ex rel. Knox, supra; and Graves v. Texas Company, 298 U.S. 393, 56 S.Ct. 818, 80 L.Ed. 1236. He professes himself, as I am, unable to distinguish a sales tax or a tax upon storage preliminary to sale to the United States from a gross receipts tax upon goods and services furnished the government. In a brief filed as amicus curiae in Graves v. Texas Company, supra, he urged the court to hold such a tax imposed on gasoline under contract to the United States invalid as an unconstitutional impediment and burden upon the operations of the government. 33 It is said that these cases have been distinguished. But in the cases distinguished from them the tax was found to be one on the property of a contractor with the United States, or on its net income, not on the gross receipts of his contract with the government. To distinguish them from the present case is not to rely upon any principle, but upon the mere name or label given to a tax. Such distinctions only serve to confuse.
Thus it appears that, in his view, a nondiscriminatory state tax is to be judged not by the 'burden' it imposes, but by the extent of its 'interference' with the functioning of government. If this be the test, no tax, however great, can prevent such functioning, so long as the United States' taxing and borrowing powers remain adequate to meet the ordinary expenses of its operations and the added cost of state taxes thereon. The adoption of any such theory would require the overruling not only of the three decisions the Solicitor General singles out for deletion, but literally scores of others, beginning with McCulloch v. Maryland and ending with Graves v. Texas Co., 298 U.S. 393, 56 S.Ct. 818, 80 L.Ed. 1236, decided at the 1935 term in accordance with the views then earnestly pressed upon us by the Solicitor General.
It is not clear to what extent the court's opinion adopts the doctrine advocated by the government. It is said merely that the appellee is an independent contractor, that the tax is nondiscriminatory and is not laid upon the contract of the government; and it is suggested that if in the view of Congress the burden of such a tax becomes too heavy, Congress has the means of redress. Whether one or all of these factors is requisite to justify the exaction we are not told.
The cases on which the opinion especially relies do not justify sustaining this tax. Metcalf & Eddy v. Mitchell, 269 U.S. 514, 46 S.Ct. 172, 70 L.Ed. 384, throws no light upon the problem presented. A contractor employed to advise a state and its municipal subdivisions sought exemption from a federal tax upon net income. The law imposing the tax did not discriminate against the receipts from the contract, but treated them as part of the gross income upon which the taxable net income was to be calculated. In accordance with all of this court's applicable decisions, the tax was held not to be upon the state or its contract with the taxpayer, not upon an instrumentality or means chosen by the state for executing its powers, not directly upon the amount of the taxpayer's compensation received from the state. The exaction was not as here, of a proportion of each dollar paid by the government. It was upon net income remaining after allowable deductions from gross.
The decision in Fidelity & Deposit Co. of Maryland v. Pennsylvania, 240 U.S. 319, 36 S.Ct. 298, 60 L.Ed. 664, relied on as sustaining the instant exaction, neither rules nor aids in the decision of the present cause. There a foreign surety company was required by law to pay an annual fee equal to 2 per cent. of its gross premiums, in order to be admitted to do business in Pennsylvania. Under a federal statute surety companies desiring to execute bonds running to the United States were required to obtain written authority from the Attorney General so to do. The Fidelity Company obtained such authority and became surety in Pennsylvania on a number of bonds insuring the faithful performance of official duties by federal employees. It challenged so much of the state tax as was laid upon the premiums received for writing these bonds. The challenge was not sustained. The claim that the company, by obtaining leave to execute bonds running to the United States, had become a federal instrumentality, was properly overruled. 34 But it is said that, in sustaining the tax, the court held that an exaction on the gross receipts of government contracts is valid. A moment's reflection will show that this is incorrect. The premiums received by the surety company were received from its clients; those for whom it wrote the bonds. It received no compensation from the United States and its transactions in essence were with citizens of the state of Pennsylvania as such. They did not differ from transactions with federal officers and employees whereby the latter procured any other sort of goods or service. 35 Of course, the mere fact that a contractual relation, that of suretyship, was created between the Fidelity Company and the United States, was not in and of itself sufficient to relieve the company of the burden of paying a local tax for the privilege of doing business with its customers.
Alward v. Johnson, 282 U.S. 509, 51 S.Ct. 273, 75 L.Ed. 496, 75 A.L.R. 9, is cited as an instance where a gross receipts tax incident upon the consideration paid the contractor by the United States was sustained. Examination of the case demonstrates that the contrary is true. Alward was engaged in operating an automotive stage line between points in California. In his business he employed automotive property and used the state highways. In classifying property for taxation the state separately classified property of persons carrying on such a business as his and laid a tax on this class of property, in lieu of all other taxes, at the rate of 4 1/2 per cent. of gross receipts. Other classes of property were taxed at a percentage of value. As the major portion of Alward's gross receipts arose from a contract for carrying United States mails, he insisted that the tax was invalid because, by virtue of his contract with the government, he became a federal agency immune from taxation upon his gross receipts.
This Court found that the Supreme Court of California had declared the tax one upon property in cases having no relation to its incidence upon federal instrumentalities or means. It further found that the challenged classification for taxation of automotive property used in a business transacted on the public roads was not arbitrary or unreasonable. The case was likened to those arising under the commerce clause in which the intrastate property of an interstate carrier was either directly taxed or was taxed by use of a percentage of gross receipts in lieu of all other taxes, including property taxes, in order to reach a fair measure of the taxable value of the carrier's intrastate property. Pullman Co. v. Richardson, 261 U.S. 330, 43 S.Ct. 366, 67 L.Ed. 682; Hopkins v. Southern California Tel. Co., 275 U.S. 393, 48 S.Ct. 180, 72 L.Ed. 329. It was pointed out that the tax was not on gross receipts as such, and did not bear upon the contract between the taxpayer and the government. In the instant case, the tax is admittedly an excise for revenue imposed in addition to property taxes and foreign corporation fees paid by the appellee.
Much stress is laid by the Solicitor General upon the decision in Liggett & Myers Tobacco Co. v. United States, 299 U.S. 383, 57 S.Ct. 239, 240, 81 L.Ed. 294, and he suggests that the views therein stated be adopted in the present case in preference to those embodied in the Panhandle Oil Case, supra. The suggestion implies, contrary to the fact, that the two decisions are contradictory. The Liggett & Myers Company, a manufacturer of tobacco sold a portion of its product to a state. The company resisted the collection of a federal internal revenue tax laid 'upon all tobacco and snuff manufactured in or imported into the United States, and hereafter sold by the manufacturer or importer, or removed for consumption or sale' at a flat rate in cents per pound 'to be paid by the manufacturer or importer thereof.' Upon analysis of the statute it was concluded that the tax was upon the manufacture, and that payment was merely postponed until removal or sale. The tax did not vary in amount with the price received for the tobacco, and was not in terms upon its sale. Upon this ground the Indian Motocycle Co. Case and the Panhandle Case were distinguished.
In the Peniston Case, the question was whether a uniform ad valorem state tax could lawfully be assessed upon the intrastate property of the railroad, a federal corporation. The court held that it could. The correctness of the decision has never been doubted. Justices Bradley and Field, however, thought that the scope of the immunity was so broad as to exempt even the local property of a federal instrumentality from such a uniform local tax. It is to be observed that no other kind of exaction was involved. Mr. Justice Bradley insisted that while such a tax might lawfully be laid upon the property of one who was a mere contractor with the United States it could not be laid upon the local assets of a federal corporate instrumentality. The challenged tax was not upon the franchise of the corporation granted by the government, not on its right to exist within the state, nor upon the gross receipts from its operations. Confessedly the property of a contractor with the government is more remote from the government's operations than is the property of a government instrumentality. If the latter may be locally taxed a fortiori the former may, and the language of Mr. Justice Bradley applied only to that situation, and not to a gross receipts tax such as we have here.
The element of discrimination becomes important only in a case where a tax which would otherwise be permissible is aimed at the taxpayer because of his relation to the government. Of course a state cannot lay a heavier burden upon those contracting with the government simply because they are such contractors. A discrimination of that nature on its face spells a hostile purpose, an intent to hinder and burden the government, to impede its operations, and to discourage dealing with it. But the question of discrimination has no place in the consideration of the legality of an exaction laid directly upon the government, upon its operations, or upon the means or instrumentalities it has chosen for executing its powers.
No one denies the competence of the Congress to waive the immunity in whole or in part. 43 But his is the reverse of saying the power to tax federal means and operations exists in the states subject to veto by Congress of any exorbitant exercise of the power. And it may be pertinent to suggest that, if, as the court has always held, the immunity is reciprocal, the state Legislatures, by a parity of reasoning, ought to have the power to prohibit federal taxes upon state operations, if they be deemed immoderate.
It must be evident that if the principle of federal immunity is to be preserved, if all that the court has said respecting it is not to be set aside, the gross receipts tax under review cannot be rescued from condemnation by the circumstances that it bears upon an independent contractor, does not discriminate, and is not so burdensome as seriously to interfere with governmental functions.
I conclude, then, that the tax in question is plainly imposed upon the operations of the federal government; that it falls squarely within the definition of such a burden and is prohibited upon the principle announced in McCulloch v. Maryland and ever since consistently applied in the decisions of the court. I think that the judgment should be affirmed.
Mr. Justice McREYNOLDS, Mr. Justice SUTHERLAND and Mr. Justice BUTLER join in this opinion.
See Act of July 3, 1930, c. 847, 46 Stat. 928; H. Doc. No. 190, 70th Cong., 1st sess.; Act of August 30, 1935, c. 831, 49 Stat. 1035; H. Doc. No. 31, 73d Cong., 1st Sess.
Prior to May 26, 1933, the tax was three-tenths of one per cent., and the assessment on receipts prior to that date was at that rate. Two of the contracts of respondent were made before the rates were changed.
'§ 3. Acquisition of Lands by United States; Jurisdiction. The consent of this State is hereby given to the acquisition by the United States, or under its authority, by purchase, lease, condemnation, or otherwise, of any land acquired, or to be acquired in this State by the United States, from any individual, body politic or corporate, for sites for lighthouses, beacons, signal stations, post offices, customhouses, courthouses, arsenals, soldiers' homes, cemeteries, locks, dams, armor plate manufacturing plants, projectile factories or factories of any kind or character, or any needful buildings or structures or proving grounds, or works for the improvement of the navigation of any watercourse, or work of public improvement whatever, or for the conservation of the forests, or for any other purpose for which the same may be needed or required by the government of the United States. The evidence of title to such land shall be recorded as in other cases.
'Any county, magisterial district or municipality, whether incorporated under general law or special act of the legislature, shall have power to pay for any such tract or parcel of land and present the same to the government of the United States free of cost, for any of the purposes aforesaid, and to issue bonds and levy taxes for the purpose of paying for the same; and, in the case of a municipal corporation, the land so purchased and presented may be within the corporate limits of such municipality or within five miles thereof: Provided, however, That no such county, magisterial district or municipality shall, by the issue and sale of such bonds, cause the aggregate of its debt to exceed the limit fixed by the Constitution of this State: Provided further, That the provisions of the Constitution and statutes of this State, or of the special act creating any municipality, relating to submitting the question of the issuing of bonds and all questions connected with the same to a vote of the people, shall, in all respects, be observed and complied with.
Indian Motocycle Co. v. United States, 283 U.S. 570, 575, 51 S.Ct. 601, 602, 75 L.Ed. 1277; Board of Trustees of University of Illinois v. United States, 289 U.S. 48, 59, 53 S.Ct. 509, 510, 77 L.Ed. 1025; Helvering v. Powers, 293 U.S. 214, 225, 55 S.Ct. 171, 173, 79 L.Ed. 291.
McCulloch v. Maryland, 4 Wheat. 316, 430, 4 L.Ed. 579; Weston v. Charleston, 2 Pet. 449, 467, 7 L.Ed. 481.
Clallam County v. United States, 263 U.S. 341, 344, 44 S.Ct. 121, 122, 68 L.Ed. 328.
McGoon v. Scales, 9 Wall. 23, 27, 19 L.Ed. 545; Tucker v. Ferguson, 22 Wall. 527, 572, 22 L.Ed. 805; Van Brocklin v. Tennessee, 117 U.S. 151, 6 S.Ct. 670, 29 L.Ed. 845; Wisconsin Central R.R. Co. v. Price County, 133 U.S. 496, 504, 10 S.Ct. 341, 33 L.Ed. 687; Irwin v. Wright, 258 U.S. 219, 228, 42 S.Ct. 293, 296, 66 L.Ed. 573. But property acquired from the Government, upon its severance, loses the immunity in the hands of the transferee. Forbes v. Gracey, 94 U.S. 762, 24 L.Ed. 313; Group No. 1 Oil Corp. v. Bass, 283 U.S. 279, 51 S.Ct. 432, 75 L.Ed. 1032; Indian Territory Illuminating Oil Co. v. Board, 288 U.S. 325, 53 S.Ct. 388, 77 L.Ed. 812.
Dobbins v. Erie County Commissioners, 16 Pet. 435, 10 L.Ed. 1022; Collector v. Day, 11 Wall. 113, 20 L.Ed. 122. But the exemption does not extend to taxes laid upon his privately owned property or a sales tax on his personal purchases, even though they be of articles he uses in connection with his performance of his government work. Dyer v. City of Melrose, 215 U.S. 594, 30 S.Ct. 410, 54 L.Ed. 341; Tirrell v. Johnston, 293 U.S. 533, 55 S.Ct. 238, 79 L.Ed. 641; Id., 86 N.H. 530, 171 A. 641.
Clallam County v. United States, 263 U.S. 341, 44 S.Ct. 121, 68 L.Ed. 328; New Brunswick v. United States, 276 U.S. 547, 48 S.Ct. 371, 72 L.Ed. 693; People of New York ex rel. Rogers v. Graves, 299 U.S. 401, 57 S.Ct. 269, 81 L.Ed. 306. For the same reason a state tax which burdens the fiscal operations of a territory must fall: Farmers' & Mechanics' Savings Bank v. Minnesota, 232 U.S. 516, 34 S.Ct. 354, 58 L.Ed. 706.
Interstate railroad: Union P. Railroad Company v. Peniston, 18 Wall. 5, 21 L.Ed. 787; National banks: McCulloch v. Maryland, 4 Wheat. 316, 4 L.Ed. 579; Smith v. Kansas City Title & Trust Co., 255 U.S. 180, 41 S.Ct. 243, 65 L.Ed. 577.
Osborn v. Bank of U.S., 9 Wheat. 738, 6 L.Ed. 204; Union P. Railroad Company v. Peniston, 18 Wall. 5, 21 L.Ed. 787; Owensboro National Bank v. Owensboro, 173 U.S. 664, 19 S.Ct. 537, 43 L.Ed. 850.
Union P. Railroad Company v. Peniston, 18 Wall. 5, 21 L.Ed. 787; Indian Territory Illuminating Oil Co. v. Board, 288 U.S. 325, 327, 328, 53 S.Ct. 388, 77 L.Ed. 812.
Thomson v. Union Pacific Railroad, 9 Wall. 579, 19 L.Ed. 792; Western Union Tel. Co. v. Massachusetts, 125 U.S. 530, 8 S.Ct. 961, 31 L.Ed. 790; Attorney General of Massachusetts v. Western Union Tel. Co., 141 U.S. 40, 11 S.Ct. 889, 35 L.Ed. 628; Baltimore Shipbuilding & Dry Dock Co. v. Baltimore, 195 U.S. 375, 25 S.Ct. 50, 49 L.Ed. 242; Fidelity & Deposit Co. of Maryland v. Pennsylvania, 240 U.S. 319, 36 S.Ct. 298, 60 L.Ed. 664; Choctaw, O. & G.R.R. Co. v. Mackey, 256 U.S. 531, 41 S.Ct. 582, 65 L.Ed. 1076; Susquehanna Power Co. v. Tax Commission, 283 U.S. 291, 51 S.Ct. 434, 75 L.Ed. 1042; Broad River Power Co. v. Query, 288 U.S. 178, 53 S.Ct. 326, 77 L.Ed. 685; Federal Compress & Warehouse Co. v. McLean, 291 U.S. 17, 54 S.Ct. 267, 78 L.Ed. 622.
Choctaw, O. & Gulf R.R. Co. v. Harrison, 235 U.S. 292, 35 S.Ct. 27, 59 L.Ed. 234; Gillespie v. Oklahoma, 257 U.S. 501, 42 S.Ct. 171, 66 L.Ed. 338; Jaybird Mining Co. v. Weir, 271 U.S. 609, 46 S.Ct. 592, 70 L.Ed. 1112.
Indian Territory Illuminating Oil Co. v. Board, 288 U.S. 325, 53 S.Ct. 388, 77 L.Ed. 812; Taber v. Indian Territory Illuminating Oil Co., 300 U.S. 1, 57 S.Ct. 334, 81 L.Ed. 463.
The Solicitor General's argument, noticed later, would, however, validate a tax of any description imposed upon federal instrumentalities, provided the exaction were non-discriminatory.
Osborn v. Bank, 9 Wheat. 738, 867, 6 L.Ed. 204.
Federal Land Bank v. Crosland, 261 U.S. 374, 43 S.Ct. 385, 67 L.Ed. 703, 29 A.L.R. 1.
Western Union Telegraph Co. v. Texas, 105 U.S. 460, 26 L.Ed. 1067.
Leloup v. Port of Mobile, 127 U.S. 640, 8 S.Ct. 1380, 32 L.Ed. 311; Williams v. City of Talladega, 226 U.S. 404, 33 S.Ct. 116, 57 L.Ed. 275.
Weston v. Charleston, 2 Pet. 449, 7 L.Ed. 481.
New York ex rel. Bank of Commerce v. Com'rs of Taxes & Assessments New York City, 2 Black 620, 17 L.Ed. 451; Bank Tax Case, 2 Wall. 200, 17 L.Ed. 793; Bank of New York v. Supervisors, 7 Wall. 26, 19 L.Ed. 60; Home Savings Bank v. Des Moines, 205 U.S. 503, 27 S.Ct. 571, 51 L.Ed. 901; State of Missouri ex rel. Missouri Ins. Co. v. Gehner, 281 U.S. 313, 50 S.Ct. 326, 74 L.Ed. 870.
Northwestern Ins. Co. v. Wisconsin, 275 U.S. 136, 48 S.Ct. 55, 72 L.Ed. 202; National Life Ins. Co. v. United States, 277 U.S. 508, 48 S.Ct. 591, 72 L.Ed. 968. And no form of words or subterfuge can save an act the intent of which is to reach the income from federal bonds. Miller v. Milwaukee, 272 U.S. 713, 47 S.Ct. 280, 71 L.Ed. 487; Macallen Co. v. Massachusetts, 279 U.S. 620, 629, 49 S.Ct. 432, 73 L.Ed. 874, 65 A.L.R. 866.
Banks v. The Mayor, 7 Wall. 16, 25, 19 L.Ed. 57.
Home Ins. Co. v. New York, 119 U.S. 129, 8 S.Ct. 1385, 30 L.Ed. 350; Home Ins. Co. v. New York, 134 U.S. 594, 10 S.Ct. 593, 33 L.Ed. 1025.
Plummer v. Coler, 178 U.S. 115, 20 S.Ct. 829, 44 L.Ed. 998; Greiner v. Lewellyn, 258 U.S. 384, 42 S.Ct. 324, 66 L.Ed. 676.
Hibernia Savings & Loan Society v. San Francisco, 200 U.S. 310, 26 S.Ct. 265, 50 L.Ed. 495, 4 Ann.Cas. 934.
Weston v. Charleston, 2 Pet. 449, 465, 7 L.Ed. 481.
Jaybird Mining Co. v. Weir, 271 U.S. 609, 46 S.Ct. 592, 70 L.Ed. 1112.
Indian Motocycle Co. v. United States, 283 U.S. 570, 51 S.Ct. 601, 75 L.Ed. 1277; Panhandle Oil Co. v. Mississippi ex rel. Knox, 277 U.S. 218, 48 S.Ct. 451, 72 L.Ed. 857, 56 A.L.R. 583; Grayburg Oil Co. v. Texas, 278 U.S. 582, 49 S.Ct. 185, 73 L.Ed. 519; Id. (Tex.Com.App.) 3 S.W.2d 427. Compare Brown v. Maryland, 12 Wheat. 419, 440, 6 L.Ed. 678.
Graves v. Texas Co., 298 U.S. 393, 56 S.Ct. 818, 20 L.Ed. 1236.
Trinityfarm Construction Co. v. Grosjean, 291 U.S. 466, 54 S.Ct. 469, 78 L.Ed. 918.
General Construction Co. v. Fisher, 295 U.S. 715, 55 S.Ct. 646, 79 L.Ed. 1671; Id., 149 Or. 84, 39 P.2d 358, 97 A.L.R. 1252; Burnet v. A. T. Jergins Trust, 288 U.S. 508, 53 S.Ct. 439, 77 L.Ed. 925.
Alward v. Johnson, 282 U.S. 509, 51 S.Ct. 273, 75 L.Ed. 496, 75 A.L.R. 9.
In this brief the Solicitor General stated that figured upon the estimated purchases of the Government for the then current fiscal year, state sales taxes on gasoline of 4 cents per gallon, imposed by all the states, would impose an added burden upon the United States of $4,479,661.
Cornell v. Coyne, 192 U.S. 418, 24 S.Ct. 383, 48 L.Ed. 504; Hope Natural Gas Co. v. Hall, 274 U.S. 284, 47 S.Ct. 639, 71 L.Ed. 1049; Wheeler Lumber Bridge & Supply Co. v. United States, 281 U.S. 572, 50 S.Ct. 419, 74 L.Ed. 1047. The same problem arises in connection with taxation alleged to burden interstate commerce. See American Manufacturing Co. v. St. Louis, 250 U.S. 459, 39 S.Ct. 522, 63 L.Ed. 1084.
Western Union Tel. Co. v. Texas, 105 U.S. 460, 26 L.Ed. 1067; Williams v. City of Talladega, 226 U.S. 404, 33 S.Ct. 116, 57 L.Ed. 275; Indian Motocycle Co. v. United States, 283 U.S. 570, 51 S.Ct. 601, 75 L.Ed. 1277; Panhandle Oil Co. v. Mississippi ex rel. Knox, 277 U.S. 218, 48 S.Ct. 451, 72 L.Ed. 857, 56 A.L.R. 583; Graves v. Texas Co., 298 U.S. 393, 56 S.Ct. 818, 80 L.Ed. 1236.
Johnson v. Maryland, 254 U.S. 51, 55, 41 S.Ct. 16, 65 L.Ed. 126.
Brown v. Maryland, 12 Wheat. 419, 439, 6 L.Ed. 678.
Indian Motocycle Co. v. United States, 283 U.S. 570, 575, 51 S.Ct. 601, 603, 75 L.Ed. 1277.
Van Allen v. Assessors, 3 Wall. 573, 18 L.Ed. 229.
Western Union Telegraph Co. v. Texas, 105 U.S. 460, 465, 26 L.Ed. 1067; Western Union Telegraph Co. v. Taggart, 163 U.S. 1, 14, 16 S.Ct. 1054, 41 L.Ed. 49; Western Union Telegraph Co. v. Kansas, 216 U.S. 1, 32, 30 S.Ct. 190, 54 L.Ed. 355; U.S. Express Co. v. Minnesota, 223 U.S. 335, 344, 32 S.Ct. 211, 56 L.Ed. 459; Choctaw, O. & G.R.R. Co. v. Harrison, 235 U.S. 292, 299, 35 S.Ct. 27, 59 L.Ed. 234; Kansas City, Ft. S. & M. Ry. Co. v. Botkin, 240 U.S. 227, 232, 36 S.Ct. 261, 60 L.Ed. 617; Gillespie v. Oklahoma, 257 U.S. 501, 504, 505, 42 S.Ct. 171, 172, 66 L.Ed. 338; Northwestern Mutual Life Ins. Co. v. Wisconsin, 275 U.S. 136, 140, 48 S.Ct. 55, 56, 72 L.Ed. 202; Macallen Co. v. Massachusetts, 279 U.S. 620, 627, 49 S.Ct. 432, 434, 73 L.Ed. 874, 65 A.L.R. 866; Indian Motocycle Co. v. United States, 283 U.S. 570, 575, 51 S.Ct. 601, 602, 75 L.Ed. 1277; Eastern Air Transport, Inc. v. So. Carolina Tax Commission, 285 U.S. 147, 152, 52 S.Ct. 340, 341, 76 L.Ed. 673; Fox Film Corp. v. Doyal, 286 U.S. 123, 126, 52 S.Ct. 546, 76 L.Ed. 1010; Liggett & Myers Tobacco Co. v. United States, 299 U.S. 383, 387, 57 S.Ct. 239, 241, 81 L.Ed. 294.
Gillespie v. Oklahoma, 257 U.S. 501, 505, 42 S.Ct. 171, 172, 66 L.Ed. 338.
Pullman's Palace-Car Co. v. Pennsylvania, 141 U.S. 18, 11 S.Ct. 876, 35 L.Ed. 613; Western Union Tel. Co. v. Taggart, 163 U.S. 1, 16 S.Ct. 1054, 41 L.Ed. 49; Old Dominion S.S. Co. v. Virginia, 198 U.S. 299, 25 S.Ct. 686, 49 L.Ed. 1059, 3 Ann.Cas. 1100; United States Express Co. v. Minnesota, 223 U.S. 335, 32 S.Ct. 211, 56 L.Ed. 459; Pullman Co. v. Richardson, 261 U.S. 330, 43 S.Ct. 366, 67 L.Ed. 682. And as in the case of agents of the federal government or contractors with it, a state may measure the value of the property within its borders by a receipts tax in lieu of all property taxes. Compare United States Express Co. v. Minnesota, 223 U.S. 335, 32 S.Ct. 211, 56 L.Ed. 459; Cudahy Packing Co. v. Minnesota, 246 U.S. 450, 38 S.Ct. 373, 62 L.Ed. 827; Pullman Co. v. Richardson, 261 U.S. 330, 43 S.Ct. 366, 67 L.Ed. 682, with Alward v. Johnson, 282 U.S. 509, 51 S.Ct. 273, 75 L.Ed. 496, 75 A.L.R. 9.
Philadelphia & S.M. Steamship Co. v. Pennsylvania, 122 U.S. 326, 7 S.Ct. 1118, 30 L.Ed. 1200; Galveston, H. & S.A. Ry. Co. v. Texas, 210 U.S. 217, 28 S.Ct. 638, 52 L.Ed. 1031; Meyer, Auditor of Oklahoma, v. Wells, Fargo & Co., 223 U.S. 298, 32 S.Ct. 218, 56 L.Ed. 445.
Compare Western Union Tel. Co. v. Kansas, 216 U.S. 1, 30 S.Ct. 190, 54 L.Ed. 355, and Ozark Pipe Line Corp. v. Monier, 266 U.S. 555, 45 S.Ct. 184, 69 L.Ed. 439, with State of California v. Central Pacific Railroad Company, 127 U.S. 1, 8 S.Ct. 1073, 32 L.Ed. 150; Owensboro National Bank v. Owensboro, 173 U.S. 664, 19 S.Ct. 537, 43 L.Ed. 850; Third National Bank v. Stone, 174 U.S. 432, 19 S.Ct. 759, 43 L.Ed. 1035; and Louisville v. Third National Bank, 174 U.S. 435, 19 S.Ct. 874, 43 L.Ed. 1037.
Compare Cook v. Pennsylvania, 97 U.S. 566, 24 L.Ed. 1015, and Bowman v. Continental Oil Co., 256 U.S. 642, 41 S.Ct. 606, 65 L.Ed. 1139, with Panhandle Oil Co. v. Mississippi ex rel. Knox, 277 U.S. 218, 48 S.Ct. 451, 72 L.Ed. 857, 56 A.L.R. 583.
Compare Cook v. Pennsylvania, 97 U.S. 566, 24 L.Ed. 1015; Fargo v. Michigan (Fargo v. Stevens), 121 U.S. 230, 7 S.Ct. 857, 30 L.Ed. 888, Crew Levick Co. v. Pennsylvania, 245 U.S. 292, 38 S.Ct. 126, 62 L.Ed. 295; New Jersey Bell Tel. Co. v. State Board, 280 U.S. 338, 50 S.Ct. 111, 74 L.Ed. 463; Fisher's Blend Station v. Tax Commission, 297 U.S. 650, 56 S.Ct. 608, 80 L.Ed. 956; Puget Sound Stevedoring Co. v. Tax Commission, 302 U.S. 90, 58 S.Ct. 72, 82 L.Ed. 68, with Western Union Tel. Co. v. Texas, 105 U.S. 460, 26 L.Ed. 1067.
Compare Shaffer v. Carter, 252 U.S. 37, 40 S.Ct. 221, 64 L.Ed. 445; United States Glue Co. v. Oak Creek, 247 U.S. 321, 38 S.Ct. 499, 62 L.Ed. 1135, Ann.Cas.1918E, 748, and Atlantic Coast Line R. Co. v. Daughton, 262 U.S. 413, 43 S.Ct. 620, 67 L.Ed. 1051, with General Construction Co. v. Fisher, 295 U.S. 715, 55 S.Ct. 646, 79 L.Ed. 1671; Id., 149 Or. 84, 39 P.2d 358, 97 A.L.R. 1252, and Burnet v. A. T. Jergins Trust, 288 U.S. 508, 53 S.Ct. 439, 77 L.Ed. 925. But see Gillespie v. Oklahoma, 257 U.S. 501, 42 S.Ct. 171, 66 L.Ed. 338, and Burnet v. Coronado Oil & Gas Co., 285 U.S. 393, 52 S.Ct. 443, 76 L.Ed. 815.
Compare East Ohio Gas Co. v. Tax Commission, 283 U.S. 465, 51 S.Ct. 499, 75 L.Ed. 1171 with Dobbins v. Erie County Commissioners, 16 Pet. 435, 10 L.Ed. 1022, and People of New York ex rel. Rogers v. Graves, 299 U.S. 401, 57 S.Ct. 269, 81 L.Ed. 306.
Compare Eastern Air Transport, Inc. v. South Carolina Tax Commission, 285 U.S. 147, 52 S.Ct. 340, 76 L.Ed. 673, with Trinityfarm Construction Co. v. Grosjean, 291 U.S. 466, 54 S.Ct. 469, 78 L.Ed. 918, and Tirrell v. Johnston, 293 U.S. 533, 55 S.Ct. 238, 79 L.Ed. 641.
COTTON PETROLEUM CORPORATION, et al., Appellants v. NEW MEXICO et al.
UNITED STATES, Appellant, v. STATE TAX COMMISSION OF MISSISSIPPI et al.
UNITED STATES, Petitioner, v. LITTLE LAKE MISERE LAND COMPANY, INC., et al.
UNITED STATES, Appellant, v. STATE TAX COMMISSION OF the State of MISSISSIPPI et al.
SILAS MASON CO., Inc., et al. v. TAX COMMISSION OF STATE OF WASHINGTON et al. RYAN v. STATE OF WASHINGTON et al.
HELVERING, Commissioner of Internal Revenue, v. MOUNTAIN PRODUCERS CORPORATION.
ATKINSON et al. v. STATE TAX COMMISSION OF OREGON et al.
COLLINS et al. v. YOSEMITE PARK & CURRY CO.
HELVERING, Commissioner of Internal Revenue v. GERHARDT.
BOWEN v. JOHNSTON, Warden, United States Penitentiary, Alcatraz, Cal.
BUCKSTAFF BATH HOUSE CO. v. McKINLEY, Commissioner of the Department of Labor of the State of Arkansas, et al.
FORD MOTOR CO. v. BEAUCHAMP, Secretary of State of Texas, et al.
JAMES STEWART & CO., Inc., v. SADRAKULA.
DEPARTMENT OF TREASURY OF STATE OF INDIANA et al. v. WOOD PRESERVING CORPORATION.
ADAMS et al. v. UNITED STATES et al.
Charles PAUL, Director of Agriculture of California, et al., Appellants, v. UNITED STATES.
HUMBLE PIPE LINE CO., Petitioner, v. W. E. WAGGONNER, Sheriff, etc. NATURAL GAS AND OIL CORPORATION et al., Petitioners, v. W. E. WAGGONNER, Sher ff, etc.
WASHINGTON, et al., Appellants v. UNITED STATES.
NORTH DAKOTA, Appellant, v. UNITED STATES.
UNITED STATES of America, Appellant, v. TOWNSHIP OF MUSKEGON, a Municipal Corporation, et al. CONTINENTAL MOTORS CORPORATION, Etc., Appellant, v. TOWNSHIP OF MUSKEGON, a Municipal Corporation, et al.
SMITH et al. v. DAVIS et al.
CARSON, Commissioner of Finance and Taxation for the State of Tennessee v. ROANE-ANDERSON CO. et al. CARSON, Commissioner of Finance and Taxation for the State of Tennessee v. CARBIDE & CARBON CHEMICALS CORP. et al.
ESSO STANDARD OIL CO. v. EVANS et al. UNITED STATES v. EVANS et al.
S.R.A., Inc., v. STATE OF MINNESOTA (two cases).

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