Source: http://openjurist.org/669/f2d/738/united-states-v-district-of-columbia
Timestamp: 2017-07-23 16:59:12
Document Index: 363196677

Matched Legal Cases: ['§ 1345', '§ 47', '§ 203', '§ 47', '§ 47', '§ 202', '§ 47', '§ 47', '§ 47', '§ 45', '§ 1345', '§ 47', '§ 47', '§ 2720', '§ 202']

669 F2d 738 United States v. District of Columbia | OpenJurist
669 F. 2d 738 - United States v. District of Columbia HomeFederal Reporter, Second Series 669 F.2d.
669 F2d 738 United States v. District of Columbia 669 F.2d 738
215 U.S.App.D.C. 352, 29 Cont.Cas.Fed. (CCH) 82,032
UNITED STATES of Americav.DISTRICT OF COLUMBIA, Appellant.
No. 80-1457.
Argued May 27, 1981.Decided Nov. 17, 1981.
This sales tax controversy stems from a conference sponsored by the United States Department of Commerce held in early 1978 at the Sheraton Park Hotel in Washington, D.C. Courtesy Associates, Inc. (Courtesy), pursuant to a cost-plus-fixed-fee contract with the Department of Commerce, provided management and logistic services for the conference. Courtesy paid the amount billed by the Sheraton Park for space and food, including D.C. sales tax, after the hotel's charges had been approved by the Commerce Department's contracting officer. In this action, the United States seeks restitution from the District of Columbia for the amount of the sales tax paid by Courtesy and reimbursed, pursuant to the cost-plus-fixed-fee contract, by the United States. Precedent securely indicates that any municipality other than the District of Columbia could tax sales of this sort. Alabama v. King & Boozer, 314 U.S. 1, 62 S.Ct. 43, 86 L.Ed. 482 (1941); United States v. Forst, 442 F.Supp. 920 (W.D.Va.1977), aff'd, 569 F.2d 811 (4th Cir. 1978). We conclude that Congress did not intend to place the District of Columbia on a footing different from other cities in this regard, and therefore hold that the United States is not entitled to the restitution it seeks.
It is undisputed that if the tax in question had been collected by any state or municipality in the nation other than the District of Columbia, 28 U.S.C. § 1345 would secure original jurisdiction in a federal district court. E.g., United States v. Tax Commission, 421 U.S. 599, 95 S.Ct. 1872, 44 L.Ed.2d 404 (1975). The argument that Congress intended to establish a different rule for the District of Columbia is implausible.4 While Congress may displace section 1345 in particular categories of cases if it so desires, courts will not infer such displacement unless Congress has made its intention plain. See United States v. Kloman, 176 F.2d 27, 28 (D.C.Cir.1949) (quoting United States v. UMW, 330 U.S. 258, 272, 67 S.Ct. 677, 685, 91 L.Ed. 884 (1947)); United States v. Livingston, 179 F.Supp. 9, 12 (E.D.S.C.1959) (three-judge court), aff'd per curiam, 364 U.S. 281, 80 S.Ct. 1611, 4 L.Ed.2d 1719 (1960).
No clear indication of a congressional design to exclude this case from the district court's adjudicatory authority is discernible.5 Indeed, as the United States points out and the District of Columbia does not counter, there may be no provision in the D.C.Code embracing the claim asserted here. See D.C.Code §§ 47-2617, -2618 (identifying persons who may seek tax refunds and appeal adverse administrative determinations).6 The District of Columbia, acknowledging that the United States might have no recourse to any forum unless it can bring an action under section 1345, suggests that the Government could protect its rights "by means of appropriate contract provisions," or by "getting its contractors to challenge (the tax)." Reply Brief at 4. It is not probable that Congress would deliberately place such hurdles in the way of the challenge the Government seeks to present. Cf. City of New Orleans v. United States, 371 F.2d 21, 28 (5th Cir.), cert. denied, 387 U.S. 944, 87 S.Ct. 2076, 18 L.Ed.2d 1330 (1967).7
In entering judgment for the United States, the district court ruled that Courtesy was an "agent" of the United States and that the procurement of accommodations and meals "was essentially a direct purchase by the United States." Apparently analogizing exemption for sales to the United States under the D.C.Code to the Federal Government's immunity from state and local taxation under the Constitution, the district court cited two decisions dealing with federal tax immunity as it bears on transactions involving federal contractors: Alabama v. King & Boozer, 314 U.S. 1, 62 S.Ct. 43, 86 L.Ed. 482 (1941), and United States v. Livingston, 179 F.Supp. 9 (E.D.S.C.1959) (three-judge court), aff'd per curiam, 364 U.S. 281, 80 S.Ct. 1611, 4 L.Ed.2d 1719 (1960). Before turning directly to the D.C. sales tax, therefore, we treat the question whether the Federal Government's constitutionally based tax immunity would shield the procurement at issue were the taxing jurisdiction a state or a municipality other than the federal city.
The Federal Government's constitutionally based immunity, derived from the supremacy clause, see McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316, 4 L.Ed. 579 (1819), once generated "a bewilderingly complex array of judicial decisions." L. Tribe, American Constitutional Law 394 (1978). Current doctrine, however, establishes a rule of "legal incidence." Absent congressional consent, a state is barred by the supremacy clause from imposing a tax if the legal incidence of the levy is on the United States, but the Constitution presents no barrier if the legal incidence falls elsewhere:
The Constitution immunizes the United States and its property from taxation by the States, M'Culloch v. Maryland, 4 Wheat. 316 (4 L.Ed. 579) but it does not forbid a tax whose legal incidence is upon a contractor doing business with the United States, even though the economic burden of the tax, by contract or otherwise, is ultimately borne by the United States.
United States v. Boyd, 378 U.S. 39, 44, 84 S.Ct. 1518, 1521, 12 L.Ed.2d 713 (1964) (emphasis added). See generally L. Tribe, supra, at 394-404; Tribe, Intergovernmental Immunities in Litigation, Taxation, and Regulation: Separation of Powers Issues in Controversies About Federalism, 89 Harv.L.Rev. 682, 704-13 (1976) (although the Court's doctrine may appear wooden, it appropriately safeguards Congress' mediating role in deciding, free from state or federal executive intrusion, when to confer and when to deny immunity).
Resort to an "economic burden" test, barring a tax levy if the charge is ultimately passed through to the United States, was firmly rejected in Alabama v. King & Boozer, 314 U.S. 1, 62 S.Ct. 43, 86 L.Ed. 482 (1941). That pathmarking decision sustained state taxation of federal contractors' purchases of lumber to be used in construction of an army camp. The terms of the federal contract required the cost of the tax to be passed on to the United States. Despite the conceded immediate economic burden to the Government, the Court ruled that the only factor of constitutional significance is the legal incidence of the tax.
Alabama law, like District of Columbia law, made the seller collector of the tax, but the obligation to pay fell on the purchaser. "The precise question" in King & Boozer, therefore, was "whether the Government became obligated to pay for the lumber and so was the purchaser whom the (Alabama) statute taxes, but for the claimed immunity." 314 U.S. at 10, 62 S.Ct. at 46 (emphasis added). Notwithstanding the substantial control the Federal Government exercised over the contractors in King & Boozer, the Court determined that the United States was not the "purchaser" of the lumber within the meaning of the Alabama tax statute. The Government's control of the contractors did not arm the contractors with any authority to pledge the credit of the United States. The contractors, not the Federal Government, were bound to pay the purchase price to the vendor. Id. at 12, 62 S.Ct. at 46.
Language in King & Boozer suggested that a different result might obtain in cases where the contractor is authorized to pledge the credit of the United States. Kern-Limerick, Inc. v. Scurlock, 347 U.S. 110, 74 S.Ct. 403, 98 L.Ed. 546 (1954), presented just such a situation. The Court held impermissible an Arkansas sales tax levied on purchases by a federal contractor where the Government's contract (1) specifically identified the contractor as the "purchasing agent" of the United States and (2) made the Government directly liable to the seller. The "significant difference" between Kern-Limerick and King & Boozer, according to the Court, was not any distinction in the economic impact of the Alabama and Arkansas taxes, nor in the degree of discretion the contractors had in selecting suppliers. Rather, it was the express stipulation absent in the King & Boozer federal contract and present in the Kern-Limerick contract: "This purchase is made by the Government. The Government shall be obligated to the Vendor for the purchase price ...." 347 U.S. at 119, 74 S.Ct. at 409. The contract's explicit identification of "the Government" as the purchaser, the Court concluded, could not be avoided by Arkansas' attempt to designate the contractor as the purchaser. Under the contract, the United States was the disclosed sole purchaser. Id. at 121, 74 S.Ct. at 410. Hence, the legal incidence of the tax fell on the Government, not on the contractor, and federal tax immunity sheltered the transaction from any state levy. See id. at 120-21, 74 S.Ct. at 409-10.
United States v. Forst, 442 F.Supp. 920, 924 (W.D.Va.1977), aff'd, 569 F.2d 811 (4th Cir. 1978), cogently synthesizes the dispositions in King & Boozer and Kern-Limerick:
(Emphasis added.) In sum, absent a federal contract specifically designating the contractor as an agent authorized to pledge the Government's credit or explicitly rendering the Government directly liable to the seller, state sales taxes, exacted from federal government contractors, encounter no Court-directed federal immunity shoal.8 Congress, of course, may confer such immunity. See United States v. New Mexico, 624 F.2d 111, 116, 121 (10th Cir. 1980), cert. granted, 450 U.S. 909, 101 S.Ct. 1346, 67 L.Ed.2d 332 (1981). But in view of the potential impact on the revenue bases of the states, the judgment should be made by the national legislature, the branch best equipped by its structure and constituency to accommodate the respective interests of the states and the nation. The determination, "intrinsically political" as it is, should not be left to judicial resolution based on shades of differences in particular federal contracts, and even less to government contracting officers dominantly concerned with federal expenditures and not with preservation of state tax revenues against shrinkage. See Tribe, supra, 89 Harv.L.Rev. at 711 & nn.135-37.
In addition to King & Boozer, the district court considered as relevant authority United States v. Livingston, 179 F.Supp. 9 (E.D.S.C.1959) (three-judge court), aff'd per curiam, 364 U.S. 281, 80 S.Ct. 1611, 4 L.Ed.2d 1719 (1960). The court apparently believed that Livingston justified characterization of the procurement here as a "direct purchase" by the United States. Livingston held immune from South Carolina sales and use tax the purchases of a contractor performing management services for the Atomic Energy Commission who undertook the work not for profit, but as a contribution to the defense effort. The district court, although it attempted to draw support from Kern-Limerick, relied heavily on the fact that the contractor accepted only a one-dollar fee for its services. 179 F.Supp. at 16-22. The Supreme Court later treated Livingston as confined to its specific facts, noting the " 'extraordinary' contractual relationship between (the contractor) and AEC." United States v. Boyd, 378 U.S. 39, 45 n.6, 84 S.Ct. 1518, 1522 n.6, 12 L.Ed.2d 713 (1964). The Court held in Boyd that purchases of another AEC management services contractor were subject to state contractor's use tax: "Because the services involved herein are performed for a substantial fee in the course of the contractor's commercial operation the Livingston decision is not controlling." Id. Similarly, Livingston is not controlling in this case. Courtesy undertook the work, not as a patriotic gesture, but for a substantial fixed fee.
Second, the United States argues that because another provision, section 47-2605(m), already exempts sales that could not be taxed were the District of Columbia a state, exemption (a) must go further. But nothing indicates that the exemptions were drawn with meticulous care to avoid any overlap. Moreover, it appears that Congress, when it adopted exemption (m), did not focus specifically on federal tax immunity. The only reference to exemption (m) in the legislative history suggests that Congress had in mind the limits imposed by the interstate commerce clause. See 95 Cong.Rec. 6083 (1949) (statement of Sen. Hunt, sponsor of the legislation). The exemption (m) administrative regulations also suggest only commerce clause considerations. See 16 D.C.R.R. § 203.1(l ).
Since the text of the exemption for sales to the United States does not supply an altogether crisp response to the parties' contentions, the legislative history of the D.C. sales tax bears consideration. The District of Columbia Sales Tax Act was enacted in 1949 as Title I of the District of Columbia Revenue Act of 1949, Pub.L.No.81-76, 63 Stat. 112. The notion of a sales tax, however, had been ripening for some time. Ten years earlier, the House of Representatives commissioned Dr. Chester B. Pond to conduct a study of the tax structure of the District of Columbia. Although Dr. Pond recommended the enactment of a sales tax as part of a comprehensive revision of the D.C. tax laws, see H.R.Doc.No.108, 76th Cong., 1st Sess. 105 (1939), the idea proved controversial. For a decade, sales tax proposals, introduced in a number of revenue bills, were consistently defeated.
When the concrete facts of this case are considered, it becomes clear that the District of Columbia has levied a tax the legal incidence of which is upon the United States government. The record shows, and no amount of logic can deny, that Courtesy was here acting purely as the government's agent. The Conference, and implicitly the purchase of hotel accommodations with which we are here concerned, was first authorized by a specific Act of Congress. Then, in direct dealings between the United States (i.e., the Department of Commerce) and the Sheraton-Park Hotel (Hotel), the principal details of the Hotel accommodations were agreed upon. Only after this initial agreement did the Department of Commerce (Commerce) and Courtesy, Inc., (Courtesy) enter into a "management and logistics" contract to follow up on the arrangements already made between Commerce and the Hotel and to furnish certain additional services as needed by the Conference. Courtesy, negotiating openly on behalf of the United States operating as the "White House Conference" (Conference), then made the final arrangements for the necessary hotel accommodations. See United States v. Livingston, 179 F.Supp. 9, 22 (E.D.S.C.1959) (three judge court), aff'd per curiam, 364 U.S. 281, 80 S.Ct. 1611, 4 L.Ed.2d 1719 (1960). Thus, insofar as the hotel accommodations were concerned, the contract with Courtesy merely adopted the principal arrangements for the Conference previously agreed upon between the Hotel and the "White House Conference" acting through an official of the Department of Commerce who was charged with getting the Conference under way. I would hold that the hotel accommodations were exempt from the D.C. sales tax as a "sale( ) to the United States" under D.C.Code § 47-2605(a) (1973), recodified as § 47-2005(1) (1981) and affirm the judgment of the district court.
The majority then declares that this "bright line" is a function of the legal incidence of the state tax involved, legal incidence being the established constitutional litmus for immunity. At 744. While this conclusion may appear to state the law of tax immunity as declared by the Supreme Court, the inadequacy of the majority's explanatory theory is readily apparent from its efforts to reconcile those decisions with the analytical framework it has created from whole cloth. The court, in attempting to reconcile the case of Kern-Limerick, Inc. v. Scurlock, 347 U.S. 110, 74 S.Ct. 403, 98 L.Ed. 546 (1954), is forced to depart significantly from the foundation of its analysis.
In Kern-Limerick, the government contractor was given contractual responsibility to "handle all payments" to suppliers. 347 U.S. at 119, 74 S.Ct. at 409. Consequently, it appeared to be, under the applicable state law, the party upon whom the legal incidence of the gross receipts tax there involved fell. 347 U.S. at 111, 74 S.Ct. at 405. The Court, however, held that the Constitution prohibited the tax from being levied upon the contractor. Its reasoning was that since the federal contract explicitly provided that the United States was to be "obligated" to perform its contractor's duties, the contractor was acting merely as the government's purchasing agent; the incidence of the tax, therefore, actually fell upon the United States as principal. Attempting to reconcile this result with its own general theory of immunity, the majority lays down the narrowest possible rule that will cover the case. It is that in instances in which the contractor is "explicitly designated by the federal contract as an agent with authority to pledge the credit of the United States," the incidence of the tax paid by the contractor shall be deemed to fall on the United States. At 744. Since the contract between the government and Courtesy in the present case contains no such "explicit designation" of Courtesy as an agent, the majority concludes, the tax's incidence here was not upon the government.
To hold that Congress' power with respect to tax immunity may be exercised by the executive is not to say that immunity may be conferred "by the stroke of the draftsman's pen." United States v. Township of Muskegon, 355 U.S. 484, 487, 78 S.Ct. 483, 485, 2 L.Ed.2d 436 (1958). On the contrary, it is the majority's approach that would seem to me to "permit any government functionary to draw the constitutional line by changing a few words in a contract." Kern-Limerick, 347 U.S. at 126, 74 S.Ct. at 412 (Douglas, J., dissenting), quoted in At 744 n.8. It is rather only to state the rule, apparent from numerous Supreme Court decisions, that it is the legal substance of the relationship between the government and its contractor, rather than its contractual form, that defines the constitutional "line" between immunity from and liability for state taxes. "(T)he duty rests on this Court to decide for itself facts or constructions upon which federal constitutional issues rest." 347 U.S. at 121, 74 S.Ct. at 410.
Just as "(c)onstitutional immunity from state taxation does not rest on such insubstantial formalities as whether the (contractor) using government property is formally designated a 'lessee,' " United States v. Township of Muskegon, 355 U.S. at 486, 78 S.Ct. at 485,2 the formal designation (or lack thereof) of Courtesy as a "purchasing agent" cannot simply dispose of the question of whether the tax's incidence falls upon the government. Such designation may perhaps be a sufficient condition for so finding,3 but it is not, in my opinion, a necessary one. The Constitution not only permits but requires us to determine on the basis of all the facts in the record whether a government contractor is indeed an agent of the government to the extent that a tax levied upon it is one falling upon the government itself. "In determining whether these taxes violate the government's constitutional immunity, we must look through the form and behind labels to substance." City of Detroit v. Murray Corp., 355 U.S. 489, 492, 78 S.Ct. 458, 460, 2 L.Ed.2d 441 (1958).4
The Supreme Court's decisions in this area at once deny that form governs over substance in determining the legal incidence of a tax and establish that the executive may be empowered to carry out the business of government by electing or declining, as it sees fit, to appoint contractors as agents of the government. See Kern-Limerick, 347 U.S. at 114, 74 S.Ct. at 406 (under act of Congress so providing, Navy could "use agents other than its own official personnel, to handle the detail of purchase" (emphasis added)). Such decisions, when they are made within the contours of applicable congressional directives, pose no threat to the constitutional "mediating role" of Congress in reconciling state and federal interests. They are properly viewed as falling within the scope of the executive's authority to implement the laws. "When there is no prohibition of a particular type of contract and no direction to use a particular type, the contracting officers are free to follow business practices." Id. at 116, 74 S.Ct. at 407.
Pub.L. 95-31 § 202(d), 91 Stat. 170 (1977) (emphasis added).7 Congress' request to the President to call the Conference, and its grant of authority to use appropriated funds and act as may be necessary or appropriate without regard to statutory provisions that normally restrict the executive in the means it may employ to carry out acts of Congress in awarding government contracts,8 leave no doubt about the authority of the Department of Commerce to enter into all "necessary and appropriate" contracts for the Conference, including the one with Courtesy.9 Under the legislation authorizing the Conference, Commerce was "free to follow business practices," Kern-Limerick, 347 U.S. at 116, 74 S.Ct. at 407, including the retention of Courtesy as its agent. The majority's claim that a finding of immunity would somehow threaten Congress' power in the immunity field is entirely undermined by this evidence showing that Congress specifically chose to delegate its power to the capable discretion of the President. One need not argue with the majority's view that tax immunity is "an area best left to congressional control," At 744, to conclude that here, Congress has in the interest of expediency explicitly relinquished its control over the Conference.
(App. 91) (emphasis added). The word "their" refers to the Hotel since "hotel" is the last (indeed, the only) antecedent. Azure v. Morton, 514 F.2d 897, 900 (9th Cir. 1975); Quindlen v. Prudential Insurance Company of America, 482 F.2d 876, 878 (5th Cir. 1973); Mandina v. United States, 472 F.2d 1110, 1112 (8th Cir.), cert. denied, 412 U.S. 907, 93 S.Ct. 2299, 36 L.Ed.2d 972 (1973); United States v. Pritchett, 470 F.2d 455, 459 (D.C.Cir.1972). This reference in the contract between Courtesy and the Hotel therefore adopts the provisions of the prior agreement reached by the Hotel and Commerce.
As the court pointed out in United States v. Livingston, supra, the principal concern in such cases involving tangible property is that the contractor may make use of the property for purposes other than the government's benefit. "The vital thing" in cases denying immunity has been that the contractors used government property for the pursuit of private commercial purposes unrelated to the government contract. United States v. Township of Muskegon, 355 U.S. 484, 486, 78 S.Ct. 483, 485, 2 L.Ed.2d 436 (1958). See, e.g., Harvey F. Gamage, Shipbuilder, Inc. v. Halperin, supra (even though contract directly obligated United States to pay costs of constructing ship, immunity did not attach because ship was used in private commercial enterprise). A private party may not enjoy the immunity lawfully available only to the government. Hence, the presence of contractual terms ensuring that the government is the exclusive beneficiary of the immunity-as where the contractor is a mere agent of the government-has been strongly persuasive of the existence of immunity. But where, as here, the subject matter of the contract makes it certain that the government is the only party who can receive the benefit of what it purchases, there is likewise little need to worry that the contractor has appropriated the government's immunity. The substance of the contract, in short, can be just as persuasive as its explicit terms. "An agent ... need not be called by that name to be one." United States v. Livingston, supra, 179 F.Supp. at 22.
The majority opinion attempts to place this case in the context of the construction contracts entered into by the United States that were involved in Alabama v. King & Boozer, 314 U.S. 1, 62 S.Ct. 43, 86 L.Ed. 482 (1941) and Kern-Limerick, Inc. v. Scurlock, supra. These cases turned respectively on whether the government was "obligated to pay" for lumber and whether a contractor was "authorized to pledge the credit of the United States." But both of those cases involved construction contractors and items of tangible personal property which were purchased in connection with the projects, and hence present the agency question in a significantly different form. The contract here is essentially a service contract and none of the items that are alleged to be subject to the D.C. sales tax, rooms and meals, were delivered to the contractor (Courtesy).
A particularly useful comparison is furnished by United States v. Township of Muskegon, supra, 355 U.S. 484, 78 S.Ct. 483, 2 L.Ed.2d 436 (1958). There, a contractor using the government's property for its own commercial purposes as well as for performing a government contract was held unable to invoke the federal government's immunity. The Court noted that "(t)he case might well be different if the Government had reserved such control over the activities and financial gain" of the contractor that the contractor could have been deemed a "servant." Id. at 486, 78 S.Ct. at 485. In the context of a contract for the provision of services to the government contractor like the one involved in this case, the government without question retains "control" of its "property" to an extent that makes it clear where the incidence of the tax falls. See United States v. Livingston, supra, 179 F.Supp. at 23. The nature of the contract as one for services, then, more readily supports the inference that the contractor here was acting merely as the government's agent.
According to the majority, deviation from its "explicit designation rule" is permitted only in instances where a government contractor performs its services gratuitously. At 745 (discussing United States v. Livingston, supra). This is another instance of cutting the rule closely to fit the case law without regard for the broader principles those decisions sought to serve. Simple citation of the Supreme Court's obiter dictum in United States v. Boyd, 378 U.S. 39, 84 S.Ct. 1518, 12 L.Ed.2d 713 (1964), for the view that the analysis in the Livingston case is confined to "extraordinary" factual situations does not suffice to explain the majority's apparent adoption of the view that the amount of a contractor's profit, or the patriotic nature of its motives, is dispositive of the constitutional question it poses.
In addition to not receiving any of the services that are here sought to be taxed in its name, Courtesy had "no role whatsoever" in determining who was to occupy the rooms or consume the food furnished by the Hotel. These decisions were at all times reserved to the officials and employees of the United States, and withheld from Courtesy. Tyler Aff. (App. 70). Its sole relationship to those logistical items (rooms and meals) was limited to overseeing the furnishing of same to the Conference and its participants-within the $40 and $30 contract limitations on rooms and meals (App. 93)-checking the final Hotel bill, and, after the United States had checked the bill and approved it, paying the approved amount to the Hotel. (App. 70). It was then reimbursed by the United States. Courtesy thus ran no practical risk in paying the Hotel bill. Throughout it was practically a servant of the United States, whose task it was to handle the "detail(s) of purchase." Kern-Limerick, 347 U.S. at 114, 74 S.Ct. at 406.15 The principal decisions and arrangements with respect to the hotel accommodations were made by Commerce before it entered into the contract with Courtesy and the contract strictly limited Courtesy's authority with respect to the items upon which Commerce and the Hotel had previously agreed (App. 91).
The United States was clearly disclosed at all times as the real party in interest. Under the D.C. Code and the applicable Regulation, set forth above, the hotel accommodations were a "sale( ) to the United States" through its agent. Such was the intent of the parties in referring to the "(Hotel's) contract with the White House Conference."18 All the rooms and meals that were furnished to Conference participants as guests of the United States and the larger rooms in which the Conference meetings were conducted constituted essentially a sale to and use by the United States. There is absolutely no question whatsoever that the meeting rooms and services relating thereto were a direct sale to the government (App. 65).
In reaching the above conclusion, I cannot escape the plain words of the statute and assert, as the majority does, that D.C. Code § 47-2605(a) and its accompanying regulation should not be given their plain meaning because Congress in enacting the legislation did not "focus specifically" on federal tax immunity and that the exemption allegedly did not receive the "focused scrutiny of Congress." At 745-746. That would be a novel doctrine of statutory interpretation. The Supreme Court has cautioned that it is treacherous to find in congressional silence alone the adoption of a controlling rule of law. Boys Markets, Inc. v. Retail Clerks Union, Local 770, 398 U.S. 235, 241, 90 S.Ct. 1583, 1587, 26 L.Ed.2d 199 (1970); Girouard v. United States, 328 U.S. 61, 69, 66 S.Ct. 826, 829, 90 L.Ed. 1084 (1946). The exemption provisions are so plain that no discussion or elaboration was necessary. If statutory provisions setting forth a perfectly obvious legislative intent were to suffer because they were not debated in committee or on the floor the clearest and most basic provisions of every statute would fall.
In the district court, the United States pressed this argument vigorously and cited D.C.Code § 47-2601.14(a) in support of its contention. A126-29. The United States has not renewed the "sale for resale" argument on appeal, perhaps in recognition of D.C.Code § 47-2607, which provides that in the absence of a valid certificate of resale, receipts from a sale shall be deemed taxable. The record reflects no resale certificate. Moreover, as the District of Columbia pointed out in the district court, Courtesy "was not a middleman in the wholesale-retail chain," A136, thus a "sale for resale" exemption does not appear to accommodate the procurement at issue. See United States v. Forst, 442 F.Supp. 920, 925 (W.D.Va.1977), aff'd, 569 F.2d 811 (4th Cir. 1978)
Alabama v. King & Boozer, 314 U.S. 1, 62 S.Ct. 43, 86 L.Ed. 482 (1941); United States v. Livingston, 179 F.Supp. 9 (E.D.S.C.1959) (three-judge court), aff'd per curiam, 364 U.S. 281, 80 S.Ct. 1611, 4 L.Ed.2d 1719 (1960)
The District of Columbia Court Reform and Criminal Procedure Act of 1970, Pub.L.No.91-358, 84 Stat. 473, was intended to create a local court system similar in major respects to court systems in the several states. See S.Rep.No.405, 91st Cong., 1st Sess. 5 (1969)
The District relies principally on Herian v. United States, 363 F.Supp. 287 (D.D.C.1973). Herian was an ejectment action brought by the United States in the D.C. Superior Court and removed by the defendant to the United States District Court. Granting the motion of the United States to remand, the district court relied on D.C.Code § 45-910, which provides that "the landlord may bring an action of ejectment to recover possession in the Superior Court of the District of Columbia." Herian appears to depart from United States v. Kloman, 176 F.2d 27 (D.C.Cir.1949) (§ 1345 is not displaced unless Congress explicitly so directs). Moreover, Herian did not present, as this case does, the prospect that no forum may be available to the Government if the district court lacks authority to hear the controversy
The dissent in Kern-Limerick criticized the Court's analysis because it would "permit any government functionary to draw the constitutional line by changing a few words in a contract." 347 U.S. at 126, 74 S.Ct. at 412 (Douglas, J., dissenting). Cf. United States v. Township of Muskegon, 355 U.S. 484, 486, 78 S.Ct. 483, 485, 2 L.Ed.2d 436 (1958) (if formal contract designation of one party as lessee were dispositive, "immunity could be conferred by a simple stroke of the draftsman's pen"). See also Tribe, Intergovernmental Immunities in Litigation, Taxation, and Regulation: Separation of Powers Issues in Controversies About Federalism, 89 Harv.L.Rev. 682, 710 (1976) ("To find immunity because the federal executive has included certain terms in its contract seems wholly unjustifiable."). But cf. United States v. New Mexico, 624 F.2d 111, 116 n.5 (10th Cir. 1980) ("Although we are skeptical of cosmetic provisions drafted by government functionaries, we must find immunity when these contracts inherently and inexorably draw a private corporation so close to the government as to make it a servant."), cert. granted, 450 U.S. 909, 101 S.Ct. 1346, 67 L.Ed.2d 332 (1981). The Government contract in this case, however, plainly does not fall within the Kern-Limerick fold. It contains nothing resembling the language held to immunize purchases in that case. It neither authorizes Courtesy to obligate the Government to the vendor for the procurement, nor does it render the Government directly obligated to the Sheraton Park for the accommodations and meals
Although the sales tax is imposed on the vendor, D.C.Code § 47-2602, the purchaser is obligated by statute to reimburse the vendor for the amount of tax. Id. § 47-2603. The legal incidence of such a tax is on the purchaser. "(W)here a State requires that its sales tax be passed on to the purchaser and be collected by the vendor from him, this establishes as a matter of law that the legal incidence of the tax falls upon the purchaser." United States v. Tax Comm'n, 421 U.S. 599, 608, 95 S.Ct. 1872, 1878, 44 L.Ed.2d 404 (1975)
The argument lacks force, for the administrative regulation on which the Government relies cannot expand the scope of the exemption beyond that provided by statute. See District of Columbia v. Payne, 374 F.2d 261, 265 (D.C.Cir.1966)
Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384, 68 S.Ct. 1, 3, 92 L.Ed. 10 (1974), cited with approval in Schweiker v. Hansen, 450 U.S. 785, 788, 101 S.Ct. 1468, 1470, 67 L.Ed.2d 685 (1981) (per curiam).
No material facts are in dispute. The undisputed facts demonstrate the absence of a contract between the United States and the Sheraton Park and the absence of any authority in Courtesy to pledge the credit of the United States. We therefore conclude that the District of Columbia, although it did not move for summary judgment in the court below, is entitled to such a judgment as a matter of law. Jenkins v. Civil Service Comm'n, 460 F.Supp. 611, 612 n.1 (D.D.C.1978); C. Wright & A. Miller, Federal Practice and Procedure § 2720 (1973)
Were a case to arise in which the federal contract "specifically designated" the contractor an agent when the acts of the contractor plainly revealed it to be acting in pursuit of its own commercial interest, see note 2, supra, it would be necessary to decide whether the language of the contract could be held to define the constitutional dimensions of immunity. Justice Frankfurter expressed the view that in such a case, "it is immaterial that contracts by the Government have been purposefully drawn so as to (confer tax immunity)." City of Detroit v. Murray Corp., 355 U.S. 489, 499, 78 S.Ct. 458, 488, 2 L.Ed.2d 441 (1958) (Frankfurter, J., concurring) (emphasis added). Since that situation is not presented here, it is not necessary to reach the question of whether the terms of a contract may by themselves confer an immunity that would otherwise be lacking
"In this domain," wrote Justice Frankfurter, "it is asking too much for rules of certainty and simplicity in application that are hardly to be found in any live branch of law." City of Detroit v. Murray Corp., 355 U.S. at 496, 78 S.Ct. at 486 (Frankfurter, J., concurring). That is precisely the request the majority makes in propounding its "explicit designation" rule, a rule the rigidity of which does not, in my opinion, serve the true constitutional purposes of federal immunity from state taxation
See, e.g., United States v. Forst, 442 F.Supp. 920, 924 (W.D.W.Va.1977), aff'd, 569 F.2d 811 (4th Cir. 1978) (per curiam)
The breadth of the authority Congress sought to confer on the President is made still more evident when the history of this measure is considered. Originally, Congress requested the President to call the Conference within one year of the authorizing legislation, and granted him various powers in order to carry out that request. Pub.L. No. 94-487, 90 Stat. 2331, 2339-40 (1976). Subsequently, however, Congress found it necessary to extend the preparation period, and to broaden the President's authority by inserting the "act as may be necessary and appropriate" language into the legislation. The conclusion to be drawn is that Congress consciously chose to grant the President exceptionally broad discretion in calling and conducting the Conference as expeditiously as possible. That vested discretion must be read to include the power to appoint agents such as Courtesy
The statute is in this respect closely similar to the one involved in Kern-Limerick. See 347 U.S. at 113 n.3, 74 S.Ct. at 406 n.3
Besides the removal of restrictions in the second Act quoted in text, the original enabling Act also suspended the application of a statutory restriction on government contract awards, relating to the employment of personnel in the competitive civil service. Pub.L. No. 94-487 § 202(5), 90 Stat. at 2340 (1976). A suspension of the otherwise applicable requirement that the President rely on civil service personnel is strongly indicative of Congress' intent to grant him a free hand in employing private parties as agents of the government for the purposes of organizing the Conference
Compare United States v. New Mexico, 624 F.2d 111, 114 (10th Cir. 1980) (contracts for management services contemplate "long-term relationships and vest substantial autonomy in the contractors"), cert. granted, 450 U.S. 909, 101 S.Ct. 1346, 67 L.Ed.2d 332 (1981)
The case is thus quite unlike United States v. Forst, 442 F.Supp. 920 (W.D.Va.1977), aff'd, 569 F.2d 811 (4th Cir. 1978). In that case, the contract specifically stated that the contractor acted "as an independent contractor and not as an agent of the Government ..." Id. at 924 (emphasis added)