Source: https://supreme.justia.com/cases/federal/us/318/357/
Timestamp: 2019-04-23 02:46:26+00:00

Document:
1. Under the Constitution, Congress has exclusive authority to determine whether and to what extent its instrumentalities, such as the Reconstruction Finance Corporation, shall be immune from state taxation. P. 318 U. S. 361.
"shall not, so long as Reconstruction Finance Corporation shall continue to own the same, be subject to any taxation . . . by any State, county, municipality, or local taxing authority, whether now, heretofore, or hereafter imposed, levied, or assessed, and whether for a past, present, or future taxing period."
(1) In withdrawing pro tanto the consent which, by R.S. § 5219, it had previously given to state taxation of shares of stock of national banks, Congress did not invade powers reserved to the States by the Tenth Amendment. P. 318 U. S. 361.
(2) As applied to taxes in respect of which liens had attached prior to its passage, the Act operates as a withdrawal of the consent of the United States to be sued. P. 318 U. S. 362.
A proceeding against property in which the United States has an interest is a suit against the United States.
(3) The prior grant of the privilege to tax the shares was analogous to a gratuity or bounty, and the withdrawal of the privilege invaded no rights protected by the Fifth Amendment. P. 318 U. S. 362.
Certiorari, 317 U.S. 618, to review the affirmance of judgments granting injunctions in two suits to enjoin the collection of state and local taxes.
and municipal taxes for the years 1935 and 1936, and invoked the jurisdiction of the United States District Court for the District of Arizona under § 24(1)(a) of the Judicial Code, 28 U.S.C. § 41(1)(a).
"shall not, so long as Reconstruction Finance Corporation shall continue to own the same, be subject to any taxation by the United States, by any Territory, dependency, or possession thereof, or the District of Columbia, or by any State, county, municipality, or local taxing authority, whether now, heretofore, or hereafter imposed, levied, or assessed, and whether for a past, present, or future taxing period."
49 Stat. 1185, 12 U.S.C. § 51d. On the authority of that Act, the District Court, after finding that respondent's remedy at law was inadequate, issued a permanent injunction against the collection by petitioners of that portion of the 1935 taxes levied on respondent's preferred stock owned by the Reconstruction Finance Corporation. A permanent injunction was also issued in a like cause of action based on taxes for the year 1936 which were levied after March 20, 1936. The judgments in the two suits were affirmed by the Circuit Court of Appeals. 130 F.2d 356. The case is here on a petition for writ of certiorari which we granted because of the public importance of the questions raised. 317 U.S. 618. Pursuant to the Act of August 24, 1937, 50 Stat. 751, 28 U.S.C. § 401, the case was certified to the Attorney General as involving the constitutionality of the Act of March 20, 1936. In response to that certification, the United States submitted a brief as amicus curiae.
Petitioners contend that the Act of March 20, 1936, violates the Fifth and the Tenth Amendments. They further argue that the word "person," as used in the Fifth Amendment, includes counties and states, and that they may raise the Tenth Amendment issue, since they are asserting the authority of the Arizona in assessing and in attempting to collect the taxes in question. We need not decide the last two questions. For even if we assume, arguendo, that petitioners are right in those contentions, we are of the view that the judgment below must be affirmed.
Little need be said in answer to the argument that the Act violates the Tenth Amendment. The authority by which the taxes in question were levied did not stem from the powers "reserved to the States" under the Tenth Amendment. It was conferred by Congress, which has, under the Constitution, exclusive authority to determine whether and to what extent its instrumentalities, such as the Reconstruction Finance Corporation, shall be immune from state taxation. Smith v. Kansas City Title & Trust Co., 255 U. S. 180, 255 U. S. 211-213; Federal Land Bank v. Crosland, 261 U. S. 374; Pittman v. Home Owners Loan Corp., 308 U. S. 21, 308 U. S. 33; Federal Land Bank v. Bismarck Lumber Co., 314 U. S. 95. Hence, when Congress withdrew the privilege which it had previously granted, it was not curtailing any political power which the Constitution had reserved to Arizona. See Owensboro Nat. Bank v. Owensboro, 173 U. S. 664; Des Moines National Bank v. Fairweather, 263 U. S. 103, 263 U. S. 106, and cases cited.
of the privilege, the tax had been collected or the tax lien foreclosed and the property reduced to the possession of the taxing authority. In the instant case, the state taxing authorities are asserting rights which, if recognized, can be enforced by the maintenance of a suit to establish and foreclose a lien on property of a federal instrumentality, the Reconstruction Finance Corporation. Cf. New York v. Maclay, 288 U. S. 290. But even a "proceeding against property in which the United States has an interest is a suit against the United States." United States v. Alabama, 313 U. S. 274, 313 U. S. 282. No such suit may be maintained without the consent of the United States. Such consent, though previously granted, has now been withdrawn. And the power to withdraw the privilege of suing the United States or its instrumentalities knows no limitations. Lynch v. United States, 292 U. S. 571, 292 U. S. 581-582, and cases cited. Nor did the prior grant of the privilege to tax the shares rise to a higher level than a gratuity or bounty. Nothing was given in exchange. Cf. 65 U. S. Philadelphia Co., 24 How. 300, 65 U. S. 302. When Congress authorized the states to impose such taxation, it did no more than gratuitously grant them political power which they theretofore lacked. Its sovereign power to revoke the grant remained unimpaired, the grant of the privilege being only a declaration of legislative policy changeable at will. Cf. Dodge v. Board of Education, 302 U. S. 74. Hence, as in the case of the recall of other gratuities (Frisbie v. United States, 157 U. S. 160, 157 U. S. 166; Cummings v. Deutsche Bank, 300 U. S. 115, 300 U. S. 122-124), the withdrawal of this privilege invaded no rights protected by the Fifth Amendment.
* For an earlier phase of this litigation, see Ex parte Bransford, 310 U. S. 354.

References: § 5219
 § 24
 § 41
 § 51
 § 401
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