Warren E. Burger: We will resume the arguments in number 6527. Mr. Howard, you have 22 minutes remaining.
Frank A. Howard: Mr. Chief Justice, may it please the court. When the court recessed yesterday, I was attempting to answer Mr. Justice Blackmun’s question which I understood to be whether civilly committed institutional inmates were within the reach of the Eighth Amendment. I would like to try to arrive at the answer by explaining our theory of the reach of the Eighth Amendment, and why under that theory derived from this court’s decisions, my answer to the question would have to be no. This court’s decisions have never, in my reading, departed from the historic intent or the literal tax to the amendment which is internally consistent. It speaks of excessive fines, excessive bails, and cruel and unusual punishments. The amendment, as we read the court’s decisions, only speaks to punishments which are inflected consequential to or collateral to the criminal process of law. Corporal punishment in the schools, in our view is no part of the criminal process by any view. It is civil and correctional therapeutic in nature. It is not within the criminal concepts at all. The history of the Eight Amendment has been explained too often for me to try to bore the court with it. It originated from the imposition of inhumane sentences by the English Courts. Its interpretation by this Court’s decisions, as uniformly have been in the criminal context. In fact, the court has rejected his application in civil cases, in such cases as the deportation, the Fong Yue Ting case, and in a case involving Incarceration for Civil Contempt. This court has rejected the Eight Amendment as applicable there to give relief. The clearest illustration, we believe is in the case which is heavily relied upon by the petitioners and that is Trop v. Dulles. The distinction can be seen by comparing Trop with its companion case which was decided by this court on the same day in 1958, Perez v. Brownell. The Nationality Act of 1940 in Perez, stripped Mr. Perez of his citizenship because he voted in a foreign election. There was no criminal conviction, there was no criminal process. The court sustain that denationalization. In Trop, Mr. Trop had been found guilty by Court Marshall at wartime desertion and the statute there imposed denationalization as a consequence of that conviction. Chief Justice Warren in the opinion, as we read the opinion, only came to the question of the Eight Amendment, after finding that there was a conviction. The Eight Amendment was invoked by that criminal consequence. He then preceded to the famous language about penal and the distinction between penal and non-penal statutes, that the government cannot label something non-penal, when it is really penal. In our view, that is a secondary test, the threshold test is always whether there is a criminal process in link or nexus. If there is found such a connection then the question is whether the punishment is penal and if it found to be penal then the question is, is it cruel and unusual and, the court has certainly expanded the definition of the term cruel and unusual but we submit that it has never expanded the basic definition of punishment. So, unless there is punishment in the Eight Amendment sentence, the amendment does not apply and that brings me to the cases in the lower courts which have departed from this standard that I am suggesting. The prison cases are the best example and the most famous prison case is that decision written by Mr. Justice Blackmun, while on the Court of Appeals, Jackson v. Bishop in which the flogging of prisoners in Arkansas Penitentiaries was prohibited as violated the Eight Amendment. Other cases have applied it into juvenile institutions, the Nelson v. Heyne in the Seventh Circuit, dealt with a juvenile institution where there criminal and non-criminal youngsters in the institution but it gave no analysis to what we see to be the threshold issue.
John Paul Stevens: Mr. Howard, can I interrupt? I cannot remember whether yesterday, you answered Mr. Justice Blackmun’s question about two persons in the same institution. One, there is resolved of conviction for crime and the other is finding of mental illness, and the same punishment being meted out to both, it was if your answer, that one would have Eighth Amendment Claim and the other would not?
Frank A. Howard: Yes sir, I was really trying in a long way to get that answer now by explaining our theory. My answer would be yes, that under rigorous analysis of this court’s decisions, the civilly committed mental patient would not have benefit of the Eight Amendment.
John Paul Stevens: Would your analysis be the same if both of them, if the person inflicting the discipline, said in words, this is punishment and was doing what was in effect, punishing the man for a kind of both situation.
Frank A. Howard: I think I would be the same Mr. Justice. Again, I see it as a question of contours of the Eighth Amendment and what I see to be a blurring of those contours by lower court treatment, so far which has not examined this problem. Most of the cases involving mixed institutional custody have not stated why the Eight Amendment is invoked. They have assumed that it has been invoked.
John Paul Stevens: I was wondering if one could reconcile the case as you described about the loss of citizenship, by simply saying that one case it was punishment and the other case, it was not, rather than saying in one case there was a criminal process and the other was not. Wouldn’t the opinions be consistent with that rather simple approach, or is any language in the opinions, that would be inconsistent with that rather simple approach?
Frank A. Howard: Well, I have am find it difficult to see the analogy, Mr. Justice Stevens because in the Perez and Trop cases, the end result was exactly the same and the only distinction that I can see between taking away -- restoring Mr. Trop’s citizenship when he was convicted of wartime desertion and taking away from Mr. Perez when he voted in a foreign election was the Chief Justice’s lead in the opinion by discussing punishment as a consequence of crime.
John Paul Stevens: But couldn't one just simply say punishment, and forget it as a consequence of crime, wouldn’t the same distinction apply? That is really my problem.
Frank A. Howard: No, Sir.
John Paul Stevens: As in the loss of citizenship situation, it clearly was, I mean, in the consequence of wartime desertion, it was clearly punishment. It seemed to me, if that had been done by executive order or by some other procedure, other than it, results a crime, one could consistently with the opinion still call it punishment covered by Eight Amendment. I am not quite sure why one could not do that.
Speaker: But it followed a Court Marshall conviction for a criminal offense, didn’t it?
Frank A. Howard: Yes, it is clearly did.
Speaker: Not only that.
Frank A. Howard: And, I believe that was Chief Justice Warren’s basis for reaching the Eighth Amendment. He did not articulate the reasoning that I am urging to the court.
John Paul Stevens: Well, that is my point, the opinion does not articulate the rationale what you find in the opinion.
Frank A. Howard: Not in so many words but I think, the rationale is there and has to be recognized.
Speaker: Mr. Howard on your two men in the mental institution, how do you get around the screws case?
Frank A. Howard: Sir, I.
Speaker: They were both -- both of them are incarcerated.
Frank A. Howard: No sir, I would not accept that. I would say that it is --
Speaker: A confident, civilly committed man and say, “You did some wrong, you spit on the floor and so I am going deny you, your rights and I am going to beat daylights out of you, punish you.”
Frank A. Howard: Mr. Justice, I..
Speaker: Did I not screw?
Frank A. Howard: No, I do not think they are the same. I think that the courts have had a solicitor for institutional cases and it is perfectly understandable when a man’s or a child’s liberty is taken away from him and he is put in into an institution and he is isolated from the community. And, he cannot go home to his parents at night and he is subjected to inhumane conditions in that institution, then the courts have found that the conditions demand a remedy.” I would suggest that the Fourteenth Amendment would be more appropriate as a remedy in those situations in the Eight Amendment. And, a few courts have drawn that distinction between the prisoners either in jail or in a reformatory as a result of a criminal act and inmates there, either because of mental incompetence or because they are pre-trial detainees, it seems to me that for a detainee or a mental patient to suffer inhumane treatment or conditions is so irrationally and so unrelated to a state objective that he could challenge that treatment based on Fourteenth Amendment.
Speaker: You said, it is only not fairly a violation of Eighth Amendment, you are not saying it could be a violation.
Frank A. Howard: I am not saying that there could not be a remedy and of course, if we take it to this case, that is the issue that is not before the court today. There was a third question presented in the petition for Certiorari which would have brought a substitute for Due Process issue here. And, the court did not accept that and of course, neither of us have briefed it and I would not want to make any concessions on it but that is a possibility.
Speaker: But your point, as I understand it is, the screws case involved a deprivation of life without Due Process of law and did not involve the Eighth Amendment as said.
Frank A. Howard: Yes, sir.
Speaker: It fairly expert who argue the screws case.
Frank A. Howard: The screws case, of course, was a criminal case and it required specific intent but I think this gets us back to the case that was argued yesterday but the right has to be found if there is to be a deprivation.
Speaker: Mr. Howard could I interrupt again, it seems to me, we may just be arguing what constitutional basis there would be for the kind of review the plaintiff seeks in this case, because, if I understand you correctly, you are saying that if the student is given a fair hearing, say, they have a full trial on whatever the charge against him is and a fair procedure to determine his guilt. And, then as a result of that they impose a punishment so, they decide this offence justifies locking him in the basement for four days or something, in the basement of the school without bread or water or anything. I think, you are saying as a matter of Substantive Due Process, that would be intolerable even though it might not violate the Eighth Amendment and, if so, what difference does it really make? (Inaudible) is going to be one of it and such an extremely severe penalty as related to the offence, that it is not constitutionally tolerable.
Frank A. Howard: Mr. Justice, I think there are several questions that I do not wish to conceive that there is a Fourteenth Amendment substantive remedy here because we really have it examined or briefed in, and certainly I do not conceive that Procedural Due Process steps are required in every case.
Speaker: No, but I am assuming, we give the Procedural Due Process to get that aspect out of the questions that is all.
Frank A. Howard: And, then I have a punishment.
Speaker: Then say you locked a 5-year-old or 7-year-old boy in the basement for ten days. Could a school do that, provided you gave him an adequate hearing, would the constitution tolerate that? I think your position is either yes or it has to be under some provision other than the Eighth Amendment.
Frank A. Howard: Certainly, the schools cannot do it. My first position would be that there are adequate enough state remedies and no reasons to suspect that those remedies are not being enforced that there is no clear call for federal...
Speaker: How can you acknowledge the state right to do that and yet question the hypothetical case about the inmate in a mental institution who has given unusually severe discipline? What is the difference in constitutional terms?
Frank A. Howard: Well, I maybe have driven to the point of relaying, falling back on the Fourteenth Amendment. I find it is difficult to say that a student who suffers truly excessive punishment cannot have any remedy. But I...
Speaker: Do you prefer to have us find it a matter of Substantive Due Process rather than apply the Eight Amendment?
Frank A. Howard: I would prefer Mr. Justice that it come to you in an appropriate case so that the question can be examined very carefully and I wish only to make.
Speaker: Isn't that the very issue here? Whether no matter how severe the punishment, there is any constitutional remedy based on the facts alleged here. Maybe he has proceeded under the wrong theory but do you still deny him any relief?
Frank A. Howard: Well, the only issue that the court faces here with respect to severe punishment is whether the Eighth Amendment reaches in. It was -- the Fourteenth Amendment was a part of the case below. The Fifth Circuit, for example, rejected an examination case by case of the punishments inflicted in this case and I think at least partly on the theory that it gets the Federal Courts squarely into the business of second-guessing school administrators as to whether proper punishment was necessary and if it was then whether to two licks or swats what or five licks was appropriate in each case. I think the Fifth Circuit held that that was not an appropriate function of the Federal Courts and I would refer to your language in Bishop v. Wood, the case involving the dismissal of the City employee in which you made the point that the Federal Courts and not the appropriate forms to pass on daily multitudinous decisions which were handed down everyday in public agencies.
Speaker: Which do not affect litigants’ constitutional rights but here I am troubled by the problem, and see the underlying problem here is whether the constitution protects an individual from being in prison indefinitely by a school. If that is the course, the school chooses to punish.
Speaker: Here there was no imprisonment. There was no deprivation of liberty, was it there?
Speaker: No, but, in principle it is the same thing, at least...
Speaker: No, but not in the constitution which -- under the Fourteenth and the Fifteenth Amendment talks about life, liberty or property, and, here there was no deprivation of --
Frank A. Howard: No, there was not and -- the ordinary case, of course, involves a temporary detention and no deprivation of liberty.
Speaker: But the point would be, the only constitutional protection against the deprivation of liberty is to have the procedural due process preceded. And, I am assuming that the deprivation of liberty that I described was made only after a fair and full trial as retaining guilt. The question is, is there any limit on the punishment the state can impose on the student for as in correction of the school rule and I found in your position is, there is no limit unless it is substantive to some kind of Substantive Due Process.
Frank A. Howard: I find it very difficult to take the extreme position that you put me in Mr. Justice and I only it again that I would urged court.
Speaker: Is it not the problem with the Fifth Circuit opinion? We do not have to review every time a student gets slapped in order to avoid the constitutional extreme that the Fifth Circuit has reached, that is the only suggestion I am making.
Frank A. Howard: Well, I had may have to do also with this dilemma of what right in the constitution is secured? Now, if the Eight Amendment does not cover it, does the Fourteenth Amendment by its own force and the fact provide that right?
Speaker: Well, that question was presented at the petition, was it not and service was not granted on that issue.
Frank A. Howard: It was not granted, Your Honor and that is why..
Speaker: The limit of the grant is questions one and two?
Frank A. Howard: Yes sir, I am urging the court not to rush to judgment on this unless the case comes to you with called full briefs and argument because..
Speaker: Whereas, we are along the line is that the teacher struck this child up on the street. That would be assault and battery, wouldn't it?
Frank A. Howard: Yes sir and..
Speaker: But, maybe because it is in the school that it takes it out of the assault and battery.
Frank A. Howard: Well, I do not think it does. I think that these are essentially as the Fifth Circuit stated, Tort claims. The constitution does not provide a remedy for every wrong and Section 1983 as Paul v. Davis teaches us.
Speaker: That assault matter is obviously the state, it is not a federal.
Frank A. Howard: Yes Sir, one of the judges on the Court of Appeals asked counsel during the argument, is this not an attempt to use a constitutional cannon to kill Florida, do away with the Florida flyspeck and it seems to me that was an apt question. If I might turn to the due process issue, I understood Mr. Rogow yesterday to concede the point that we make in our brief and that is that the true issue here is whether procedural due process steps are required before the administration of any punishment, not just severe. I would prefer to quarrel with his definition but I do not believe I have to. This theory has been rejected by all courts which have considered it, with the exception of Baker v. Owen in which this court held that parental objection may not overruled the administrator's discretion. The court did not review the question of Procedural Due Process or it was a precedent there. The Baker Court found a few steps to be a necessary and there is one unreported cases from Georgia which he has cited in the briefs, which also required a... Goss v. Lopez is the starting point, we believe here, and the Goss case as we see it was predicated upon the deprivation of the right to education. That suspensions at least took the child out of school, away from the education which the state had guarantied to give them. Corporal punishment in contrast is correction while keeping the child in school. The purpose of Corporal Punishment as a disciplinary alternative, is to correct the child quickly while putting him back to class. The record here at least shows there was no retardation of progress of any of the children. The numerous citations are collected in brief to the record, the students progressed fairly, and normally on through school. They suffered no reputational harm and there is no showing that future schooling or future employment was jeopardized. So, in so far as the, in the first inquiry whether there is a protected interest, the state of Florida guarantees children the right to an education but it does not guarantee them the right to go public school with immunity from corporal punishment in case of misconduct. The petitioners have sought to find a secured right in the Fourth Amendment for which there is no case support at all and it was never argued below, Fourth Circuit did not even deal with this question. Mr. Rogow suggested the number theory and I do not know how far that goes or what it covers. Further, I think and his most strongest reliance is on some generalized liberty interest. We say first that there is no deprivation of liberty. The constitution says that liberty shall not be deprived or taken away and Corporal Punishment in the normal situation, and that is what we are talking about, is a temporary detention only for correctional purposes. The student’s liberty interest is just one ingredient and a balance of interest which is then reached by the states, by almost all of the states. State policy and history, in this country, favor local educators, discretion and control in these sorts of decisions and provide remedies when that discretion is abused. So, we submit that there is no fall for a federal mold which is going to be frightening to administrators, probably self-defeating in terms of the use of this remedy. Because educators do not look upon rules of the Supreme Court even if they are called informal. They do not look upon them as informal. They are mindful of Wood v. Strickland, the personal liability problem, and my time is up and I thank you for it.
Warren E. Burger: Thank you Mr. Howard. Mr. Rogow do you have anything further.
Bruce S. Rogow: I do Mr. Chief Justice. Mr. Chief Justice, may it please the court. As I understand Mr. Howard’s argument, it boils down to the fact that the constitution can ban the flogging of prisoners but it cannot ban the flogging of students. We do not think that..
Speaker: He was arguing that --
Byron R. White: He was limiting his remark of the Eighth Amendments.
Bruce S. Rogow: Yes and so am I at this point, Mr. Justice White and I want to reiterate to the court that there are two separate and distinct issues in this case. In the Eighth Amendment context, the argument is that this punishment is civil in nature and not criminal and, therefore some distinction can be drawn on that basis, so, it is merely a label of convenience. The factor to be looked at is whether or not it is punishment, irrespective of who is meeting out that punishment. In Trop v. Dulles and Perez v. Brownell, when one reads them, I think one sees that the focus is upon punishment. Not punishment for a crime but whether or not there was punishment involved and the court found in Perez that stripping a person of his nationality was not punishment. What it was, was an exercise of international affairs power of Congress saying that if someone voted in a foreign election then, because we had to show the foreign country, that we were not interfering in their business, we would strip a person of his nationality but it was not at all looking at that as punishment. In Trop, it was punishment and so the focus is upon punishment, I think that is important.
Potter Stewart: Well, it was precisely the same thing in both Trop and in Perez, i.e. the deprivation of citizenship. And, the reason it was punishment in the one case, in Trop, and not punishment in Perez is one, I had understood or one could understand was that in Trop, it followed a conviction of a criminal offence. And, isn't that what made it punishment.
Bruce S. Rogow: No, I do not --
Potter Stewart: Let us say, it was part of the sanction imposed upon one convicted of criminal offence and in the other case there was no criminal proceeding whatsoever. Now, isn’t that what made the same consequence, punishment in the one case and not punishment in the other.
Bruce S. Rogow: No, Mr. Justice Stewart, at the way, I read it, when one reads Perez carefully, one notes that the original law which stripped a person of his nationality, which was a civil law -- a civil war involved no desertion, conviction at all. The historical basis for Trop and Perez was an old statute that said, “If you served or if you are deserted, whether you are convicted or not, you would be stripped of your nationality.” I think the focus is upon punishment.
Potter Stewart: Why was it punishment in the one case and not in the other?
Bruce S. Rogow: Because...
Potter Stewart: They precise same thing.
Bruce S. Rogow: Because in Perez, it was not punishment because Congress was exercising a specific power that it had, not to punish a person but to protect the country and I think, when one reads Perez carefully, that that is a conclusion that one comes to, that is the basis for the distinction. I do not think it make very much difference to our case, quite frankly.
Speaker: But what if Congress says, we exercised an interstate commerce power here and that we are going to do this too, does that make it not punishment, if Congress is exercising a specific power?
Bruce S. Rogow: If it is an illegitimate exercise of that power which it was in Perez and there was a legitimate governmental interest that was being protected and the Court found that in Perez.
Speaker: But, I thought the Cruel And Unusual Punishment Clause was a barrier to what would otherwise be a quite sweeping exercise of Congressional power, that you have the power to regulate interstate commerce, almost anyway you want to, except when you run against specific prohibition, the Bill of Right, or are you saying that that is not the case?
Bruce S. Rogow: No, I am not saying that is not the case but I am saying that the first question that must be addressed is whether or not the intent of Congress in inflicting some kind of a sanction upon a person is to punish.
Potter Stewart: Well, the source of Congressional power is not really relevant here. Is it so long as it so, one might inquire upon whether or not it was an appropriate exercise of power granted by the constitution to the Federal legislature, but, once one found an affirmative answer to that, then the question is, did Congress enact a criminal law or a civil law? Congress has enacted many criminal laws under its commerce power, the Dyer Act, the Mann Act, and many, many others. Now, I suppose, and it is enacted as we both know many, many kinds of civil legislation under its commerce power. But, the question is not the source of Congressional power but whether or not this is, what has been created as a criminal offence followed both by criminal sanction, if so, is punishment, and if it is not, it is not.
Bruce S. Rogow: Where we disagree Mr. Justice Stewart is that, I do not think that the criminal aspect is important, the punishment aspect is important but as I say, Trop and Perez are not essential to our case at all because we come down to...
Speaker: Mr. Rogow, in Perez, was there any rule against voting in a foreign election?
Bruce S. Rogow: Any rule in what, in the foreign country or in this court...
Speaker: No, here.
Bruce S. Rogow: No, I do not think, I do not think there was...
Speaker: There was a consequence that was imposed but you violated no law in voting them.
Bruce S. Rogow: No.
Speaker: But you did by deserting?
Bruce S. Rogow: Yes.
Speaker: And in Trop, the suction of expatriation followed only upon conviction of a criminal offence. I am not talking about its predecessor in the Civil War, I am talking about the law involved in Trop, isn't that correct?
Bruce S. Rogow: Yes, it did.
Speaker: Not upon the fact of desertion.
Bruce S. Rogow: No.
Speaker: But upon a conviction of a criminal offence.
Bruce S. Rogow: All, I am saying is the focus is punishment and must is a punishment, if it is punishment, no matter who meets it out, it can violate the Eighth Amendment.
Speaker: Isn't there some substance in arguing and making you punishment argument that whatever happens to him follows upon the breach -- supposedly follows upon a breach of rule, of an official rule.
Bruce S. Rogow: And, that is exactly what happened in this situation, there are breach in the official rules and then punishment is imposed.
Speaker: What happens if the Principal tells the teacher, "you have been late three days this week, give me a rule and I will walk you out", is that a violation of Eighth Amendment?
Bruce S. Rogow: No, and we have never said that one whack is a violation of the Eighth Amendment. The question is whether or not, there is some opportunity for hearing before authorized punishment can be imposed.
Thurgood Marshall: There is no hearing, there is no nothing, I gave you all the facts. The Principal says, “You have been late, you have been late too many times and you deserve punishment, I am going to punish you, Give me the rule, Why?
Bruce S. Rogow: I would say there should be an opportunity for hearing under the Fourteenth Amendment because..
Thurgood Marshall: As per that, a violation of the Eighth Amendment?
Bruce S. Rogow: No Sir, it is not a violation of the Eighth Amendment.
Thurgood Marshall: The difference between that and this case is...
Bruce S. Rogow: It is the excessive and severe and brutal nature of the punishment which is imposed. I have said that we are seeking to outlaw under Eighth Amendment concepts, corporal punishment.
Thurgood Marshall: You said punishment was the key.
Bruce S. Rogow: Yes, first, one looks at punishment. If the punishment is excessive or severe, the Eighth Amendment may come in to play, that is our Eight Amendment argument. In the Fourteenth Amendment context, one looks at punishment again.
Thurgood Marshall: Was the Fourteenth Amendments here?
Bruce S. Rogow: The due process argument.
Thurgood Marshall: Is here?
Bruce S. Rogow: Certainly, if there is punishment that is to be imposed, what we are saying is that there must be an opportunity for hearing prior to the imposition of that punishment because there is both a liberty interest which I talked about yesterday and a property interest which I want to be very clear on, is also involved here. James Ingram was driven from that school by the panel for over a week, had he been suspended for over a week, he would have been entitled to a hearing under Goss v. Lopez. He was in effect, suspended by the panel, so we have a property interest that is involved in addition to a liberty interest. One of the argument that has been raised..
Speaker: But, it did not have the property interest involved in every case in which you contend procedural due process is required.
Bruce S. Rogow: No.
Speaker: As most cases would not involve school absence?
Bruce S. Rogow: No, another argument that has been raised here is that these are matters that should be left to the public schools. We give wide latitude to the public schools in our argument, but, there come moments when arbitrary decisions by governmental officers bring the constitution into play. Here the due process hearings that we ask serve as a protection. It provides rule by law and not rule by fear, protection of individual against arbitrary action by the government. These did not occur, these kinds of protections did not occur in this case. There was no consultation with the Principal and every if they were consultations with the Principal under Florida Law, there is no opportunity to be heard prior to the infliction of any corporal punishment and, we are saying that there are severe deprivations that are involved and therefore there must be an opportunity to be heard.
Speaker: Well, judging by your answer to Justice Marshall's question, a severe deprivation would not be necessary. If he is entitled to a hearing before he has one whack with the ruler.
Speaker: I am saying that in a Fourteenth Amendment context, that is a deprivation of liberty because it involves an intrusion, a bodily intrusion, the deprivation of privacy, the result and as the District Court judge found psychological harm, stigma, ridicule, all of that and the facts of this case support that.
Speaker: But, one whack with the ruler is a deprivation of privacy?
Bruce S. Rogow: It certainly is innovation upon one's privacy and freedom, not to be, to have one's bodily integrity invaded by the government.
Speaker: Not to be whacked.
Bruce S. Rogow: Not to be whacked.
Speaker: Mr. Rogow, I think you agreed yesterday that that would be Tort Action on the Florida Law against the Principal and teacher involved. Is there any reason to think that that would not afford equally and adequate relief to the individuals and questions?
Bruce S. Rogow: It might afford equally adequate relief but Monroe v. Pape says that is not the test. If there is..
Speaker: I understand that, I was asking whether or not the Florida Courts, if recourse had been sought that out, would not have afforded adequate relief.
Bruce S. Rogow: It would be available at Florida Courts. Children do not lose their rights.
Speaker: Is there a state equivalent of the Federal Tort Claims Act in Florida?
Bruce S. Rogow: Not the state equivalent, the school board can be sued, individual, teacher could be sued.
Speaker: There is no any other course under the Florida Law.
Bruce S. Rogow: No, but this case cannot turn on that issue. If for instance, a prisoner were beaten and everyone can see that that prisoner has the right to hearing if he is being punished by a 100 whacks with a strap, a 100 blows with a strap, he could sue in State Court or Federal Court. If there is an excessive and severe punishment that violates a constitutional right, both courts are equally open, Monroe v. Pape. Children does not lose their rights at the school house door, that was the effect of the Court Of Appeals decision, it went much too far. We submit that when children are in school, they are in custody of school authorities, of people acting under color of state law and those persons are bound by the constitution. And, for those reasons that the decision below should be reversed.
Warren E. Burger: Thank you, gentlemen. The case is submitted.


Milton P. Rice: The conventional use tax reaches merely property which is acquired without the state and brought in to the state for use or consumption therein.
Potter Stewart: You also have that conventional use tax (Voice Overlap).
Milton P. Rice: We do sir.
Potter Stewart: But that's not what's at issue here.
Milton P. Rice: No this one -- this tax is imposed here.
Potter Stewart: (Voice Overlap) the contractors' use tax regardless of who has the title to (Voice Overlap).
Milton P. Rice: Yes sir. The tax that we are talking about here enables us to proceed to the consumer to collect the tax in those instances where can't collect it from the vendor. Now those instances are numerous. They're not just what cases like we talked about here where the Government immunity might be ascertained. They cover also the cases where you have an insolvent or a bankrupt seller. And for that reason, you are unable to get the tax from him. If we had only the conventional use tax, we couldn't reach it under that either because that covers only what's brought in from outside the state.
Potter Stewart: Hopefully, a -- a use tax is general imposed on the buyer, isn't it?
Milton P. Rice: On the buyer, yes sir.
Potter Stewart: Not the seller.
Milton P. Rice: It maybe collected from a seller as was the case in General Trading Company against Iowa and maybe one or two (Voice Overlap) --
Potter Stewart: But generally, it's on a state purchase and they used it within the state --
Milton P. Rice: Yes sir.
Potter Stewart: -- and the tax isn't collectable that (Voice Overlap) --
Milton P. Rice: The taxable end is not even there, however use, -- the use by the buyer within the taxing state.
Earl Warren: So you classify the Government with insolvency?
Milton P. Rice: No sir. I don't think so. I wouldn't go that far at all. But to dispel any notion that this tax was involved for the purpose of reaching one particular class of user, I would mention these things. Now, as far as the Government is concern, our pressing problem we've had with our sales in use tax statute from the very start is our political subdivisions, our cities and counties. They decided after the tax have been in effect for a while that it could be avoided by the simple stratagem of having the city or the county go buy the building materials and then put it in the hands of the contractor and thereby insolate the whole thing from tax. Oh, I -- because I think I mentioned yesterday I have cases in court right now where that is being resisted. But on the authority of our Supreme Court's decision in these causes, I don't think they can get anywhere. As a matter of fact, one that went through the trial court and then abandoned his appeal when he discovered what our court had written in this causes.
Arthur J. Goldberg: (Inaudible)
Milton P. Rice: No sir, we do not report our nisi prius decisions.
Arthur J. Goldberg: (Inaudible)
Milton P. Rice: There was a memorandum opinion of some two pages in length delivered in it.
Speaker: Is that in the record?
Milton P. Rice: It is available. I know it's not in the record at present. I -- I can obtain the copies and we will be glad to do so if the Court would desire. But it certainly would attest to the fact that our Courts have sustained the taxes against our own contractors with political subdivisions.
Earl Warren: Suppose you do furnish us with that?
Milton P. Rice: I will and I have in the Court at this moment. I think -- I think maybe one of them maybe argued today, it's on demurrer involving some state contractors.
Earl Warren: Yes.
Milton P. Rice: That's being handled by an associate of mine.
Speaker: (Inaudible)
Milton P. Rice: But we consider this to be a very necessary adjunct to our sales and use tax. If we didn't have it, we know that considerable amounts of revenue would -- would escape us.
Potter Stewart: Do you know of any other state that has this? Is this fairly common or is it quite rare?
Milton P. Rice: I cannot answer that, if Your Honor please. We didn't copy any of the state statute when it was drawn, I know that. The statute was prepared in -- in my office, and we drew it ourselves.
Potter Stewart: When was it enacted, (Inaudible)
Milton P. Rice: 1955, after our sales tax have been in effect for some eight years. And it was the product of experience that we had acquired and revenue that we had lost simply through inability for one reason or another to get to the seller. Now, proceeding to the matter of the relationship between these contractors and the Atomic Energy Commission, it seems to me to be implicit in the decisions of this Court that a tax imposed upon a private person will not be struck down by this Court in the absence of circumstances that we referred to yesterday. The only way that I can see under the decisions of this Court that this tax can fall is for this Court to find as a matter of fact that they exist between these contractors and the AEC, an agency relationship such as to make these contractors as I think they insist, and was insisted in the South Carolina case, the alter ego of the Commission so as to make them one and inseparable with the Commission. Now, it is our position that the facts in this record simply do not bear out such a relationship. In the first place, I think it must be emphasized perhaps the relationship of principle and agent between the Governor -- the Government and a private person is a most unusual thing. The Federal Government in this country has let tens of thousands of contracts over the years of its history.
Speaker: (Inaudible)
Milton P. Rice: It is perhaps a little unusual for the Government to embark upon an undertaking of precisely this nature wherein there exist a Government monopoly, yes sir. I would concede that it's an unusual thing. But I don't think the existence of an unusual thing is a sufficient reason to --
Speaker: (Inaudible)
Milton P. Rice: There certainly are extensive controls reserved. I will concede that readily.
Speaker: (Inaudible)
Milton P. Rice: There are always controlled reserved, if Your Honor please, there were extensive controls in Alabama versus King & Boozer. The Government had the very right anyway to control virtually everything that took place down there. I'd say down to the driving of a nail even if they saw fit to exercise it. The point is that isn't convenient for the Government to exercise its supervision and they don't expect they're intended to. But the right is there always. For a Government, money is involved it's historically true, I think the Government reserves as much control as is necessary to prevent a wastage of Government money and -- and resources and wastage of time. All of those factors are present when the Government contracts that are not necessarily present when private parties do. And let's look to these contracts themselves. Now this to me is something I had great trouble with all along. We have the insistence made here that there is an agency relationship. It's been made I might add ever since 1947. That when we first commenced to assert any right, the taxes with respect to this contractors as soon as our Sales Tax Act was enacted in 1947. The claim was instantly made that these contractors are agents of the United States Government and for that reason immune. So, the thought was foremost in the mind of the AEC and -- and those representing it. But over the course of the existence of this contract, it has been rewritten some 37 times at the outset of this litigation, 37 times. The last rewrite is stated on the record testimony of their own witnesses was to reflect more accurately the operating relationship between AEC and its contractors, the 37th rewrite then was for that purpose alone according to their testimony. Yet nowhere, nowhere in this voluminous documents, of these documents because we've got two contractors here, is there any phraseology whatsoever that would import agency. Now, I realized and I wouldn't insist for a moment that labels are controlling. But it seems to me that whether that questions has been at issue for as long as it has here and they wanted to spell out that relationship and make it clear if in fact it was a relationship of agents that they would have said so in terms that anybody could've understood. That is a point I simply can't get away from. All they had to do is to write that contract and agency terms but they didn't. These parties are referred to throughout these documents as contractor not agent.
Byron R. White: But do you think -- do you think agency and contractor are inconsistent?
Milton P. Rice: Not completely, no sir.
Byron R. White: I thought you are -- I thought -- I thought your own court held they were agents?
Milton P. Rice: For purchasing purposes only.
Byron R. White: No. Alright, they're agents so we don't need to argue about agency or contractors. Contractors are agents for all sorts of purposes.
Milton P. Rice: Our court held only --
Byron R. White: (Voice Overlap) there that the agent here for that kind of a purpose we're talking about, is that it?
Milton P. Rice: Our court held they were agencies -- agents for the purpose of procurement only but not for the general performance of their contract. Now, that was -- they recognized the limited agency as could exist anytime even between a contractor and a private party. We don't dispute that at all. But the agency for one purpose doesn't mean agency for all purposes. I think anyone would have to concede that, at least we would certainly so insist.
Hugo L. Black: Well, do you think a constitutional liability could be affected by the skill of the lawyer in what words he used in drawing a contract?
Milton P. Rice: No sir. I don't think so but that is fact certainly that bears upon the relationship of what the parties think it is, is always pertinent it seems to me. If they meant for it to be that, they could use the agents as usually -- as easily as they use contract. And they knew what they were -- what they were talking about. They knew what their aim was. They'd been telling us for many years that they were agents.
Hugo L. Black: Well, what they did was, wasn't it, they hire a well-operating, well-functioning business which was engaged in business (Inaudible) profits to do some work for them whatever name they gave and it continued to do work for its profit which it obtained from the use of material which was supplied to them.
Milton P. Rice: Yes sir. In this contract they did, we submit in essence --
Hugo L. Black: What happened in King & Boozer?
Milton P. Rice: Well that's exactly what it did, if Your Honor please.
Hugo L. Black: What did they do in King & Boozer?
Milton P. Rice: Well, they took the materials that were acquired in the Government's name or furnished to them by the Government and they applied skill and labor to these materials and --
Hugo L. Black: Can on their business?
Milton P. Rice: Yes sir, that was their business, contracting.
Hugo L. Black: (Inaudible) to doing any -- less caring on its own business when they hired to carry on assumed business to achieve something for them that it was, that they had to pay having hired it. Suppose somebody had furnished that material for use and it wasn't doing this contract for the Government. Could they take tax, the use rather?
Milton P. Rice: Yes sir, I think the state could. Whether it chooses to or not is -- is something else. But I think the idea in (Inaudible) if I understand it correctly these -- you had materials here, property that was escaping the normal ad valorem taxes.
Hugo L. Black: (Voice Overlap) -- the (Inaudible) you say?
Milton P. Rice: Yes sir. You had a property that was escaping the normal state ad valorem property tax because the title to it was in the Government. Even though it was being used by a private person to help him produce profit and carry on his business. So the State of Michigan, characterized its ad valorem tax as being also upon the privilege of using the property and in that posture, this Court sustained the tax. That's -- as I read (Inaudible), likewise, the Town of Muskegon in Detroit against U.S. to the companion cases.
Speaker: (Inaudible)
Milton P. Rice: Apart from the name given the parties whatever significance that maybe in the contract, we have to look at this contract itself and we see that under these contractors have got broad latitude. They're expected to exercise their skill and their care and their judgement, in those areas where they weren't given specific directions by AEC. The record shows that there is a manual put out for the general guidance of the people at Oak Ridge that there was top level consultation between officials of Carbide and officials of AEC. But the record also shows that all of the thousands of employees of Carbide and Ferguson for that matter were supervised and directed and controlled by their own superiors. They were not responsible to the Government for the work which they did.
Arthur J. Goldberg: Did the record also (Inaudible)
Milton P. Rice: Yes sir and something like 12,000 Carbide employees, I believe. Its varied from time to time depending on the flow of the work there.
Arthur J. Goldberg: (Inaudible)
Milton P. Rice: There is not detailed supervision if Your Honor please as to the actual day to day performance by the people who are the backbone of the organization, that is the employees. They look to Carbide for their pay checks, if they have agreements, they go to Carbide to get that worked out. Carbide carries the Social Security and Workmen's Compensation and that sort of thing. These people are the -- there is no privity between these Carbide employees and the Government. Nobody ever goes to a Carbide employee on the job and say, “You do this or you do that.” Those orders are always transmitted through channels. So, in essence, even though maybe an extraordinary amount of control is reserve, the basic relationship is disturbed here. These people are working pursuant to a contact to achieve a desired end. That end can't be too well defined because we don't know where all these research is going to lead. We can't know it. But they weren't engaged to somebody who had experienced in physics and chemistry and who knew something about historically than more over knew something about running a giant industrial complex. And they expected to utilize that skill in carrying judgment that Carbide had acquired over the years since 1920.
William J. Brennan, Jr.: Well Mr. Rice, do you go this far -- certainly Carbide has a contract at least to perform services whether it performs in its contract (Inaudible) or anything else. It's been hired to perform services for the Unites States Government. Now, does your position that is a constitutionally sufficient basis of Tennessee, the tax, the privilege of preforming those services irrespective whether or not they're preformed under the supervision of representatives with the Unites States on this -- on the site.
Milton P. Rice: Yes sir.
William J. Brennan, Jr.: You'd go that far?
Milton P. Rice: Yes sir, I do.
William J. Brennan, Jr.: Well then why are you arguing that the chance of what's the relationship between the employees of Carbide -- and Carbide? Is that material to your position?
Milton P. Rice: Well, the other side evidently thinks its material to theirs.
William J. Brennan, Jr.: Oh, I thought (Voice Overlap) --
Milton P. Rice: I have to meet the --
Byron R. White: I thought they said just the reverse that it was not material. They didn't care whether their position was -- whether or not that was agency or contractor or servant. I thought it was in (Inaudible).
Milton P. Rice: Well, they are relying and have relied consistently upon the Livingston case from South Carolina which the states don't let basis entirely. I think that far as performing service is concerned, that's what any contractor is engaged to do. That's what the --
William J. Brennan, Jr.: Well --
Milton P. Rice: -- contractors in King & Boozer were engaged to do.
William J. Brennan, Jr.: And as I understand it --
Speaker: And there, it was like -- excuse me.
William J. Brennan, Jr.: All I'm trying to say is (Inaudible) a million, two hundred thousand a year or something like that?
Milton P. Rice: It's approximately a quarter of a million a month, that figures out 2,751,000 a year I believe.
William J. Brennan, Jr.: And as usual, my (Inaudible). That's -- that's close to 2,750,000 a year and I gather your position is that Tennessee constitutionally may had taxed privilege of preforming for that fee or any fee services for the United States Government or anybody else.
Milton P. Rice: Yes sir, I think so.
Byron R. White: But that isn't what you tax, isn't it?
Milton P. Rice: No sir. We have -- what we've taxed is the use of property, the same way we would tax it to anybody else.
Byron R. White: Yes. Well, you don't comport to be taxed (Inaudible) the privilege of performing services.
Milton P. Rice: No sir. Our tax isn't related in -- in those terms at all.
Hugo L. Black: Just (Voice Overlap) --
William J. Brennan, Jr.: But then you do the -- and then I'm lost. I must say I thought that your whole position was that you measure the facts on the privilege of performing these services the way you do which relates to (Inaudible, but you are taxing them on those with things, is it, directly, am I wrong about that?
Milton P. Rice: We lay the tax if Your Honor please upon the privilege of using tangible personal property in the performance of a contract. We measure the tax.
William J. Brennan, Jr.: You measured -- you measure the tax by the value of that property --
Milton P. Rice: The value of --
William J. Brennan, Jr.: -- but the tax is on the privilege of preforming the services.
Byron R. White: Of using property.
Milton P. Rice: Of using the property.
William J. Brennan, Jr.: Alright, using the property then.
Hugo L. Black: What was it in King & Boozer?
Milton P. Rice: It was essentially the same thing. I believe part of the King & Boozer taxes were sales taxes, but part of them were conventional use taxes, that's --
Speaker: (Inaudible) it was a sales tax.
Byron R. White: Sales and use.
Speaker: (Inaudible) Boozer sold to the contractor and the contractor paid it himself. He didn't -- it wasn't the purchase by the government.
Milton P. Rice: The title however, did pass to the Government immediately upon delivery of the goods, to the jobsite and their acceptance by Government inspectors.
Byron R. White: Yes, but that --
Speaker: (Inaudible) apparently the building was complete but of course the title passed to the Government, the Government (Inaudible) it to the contractor, the contract price which was a cost-plus fee.
Milton P. Rice: Cost-plus-fixed-fee, yes sir.
Speaker: But, the transaction of the sales between the contractor and King & Boozer and the contractor paid King & Boozer from its own (Inaudible)
Milton P. Rice: Well, you have the companion case there if Your Honor please, of Curry against United States which was a use tax. Now that's where the taxable incident had to be the use by the contractor, so you didn't have a vendor involved in.
Hugo L. Black: As I recall it, it was sustained even though the property that was used was conceded to be the property of the Government.
Milton P. Rice: Yes sir, that is correct.
Hugo L. Black: And he was using it in making his cost-plus money?
Milton P. Rice: Yes, sir.
William J. Brennan, Jr.: But --
Hugo L. Black: What's difference here in the contracts different here, they're doing it for money in the way of a fee, there they were doing in the way of the cost-plus contract.
Milton P. Rice: Well actually, it was a fixed fee, all they had involved there.
Hugo L. Black: Was it?
Milton P. Rice: Yes sir, that's all the contractor --
Hugo L. Black: King & Boozer was a cost-plus, was it?
Milton P. Rice: Well, I think all contracts since -- shortly after World War I had been cost-plus-fixed-fee. Cost-plus percentage has been out for some time.
Tom C. Clark: That was fixed-fee?
Milton P. Rice: No, it had had to be fixed-fee under the federal statutes.
Byron R. White: Of course, your court as -- itself has -- your state court has set aside any possibility of applying King & Boozer to this case, it said that Kern applies instead since this was (Inaudible) in behalf of the Government to the purchasing agency here, is that right?
Milton P. Rice: It would take care of that aspect of it. I don't think it would take care of the companion use tax situation in Curry.
Byron R. White: All I'm saying is that King & Boozer doesn't cover this case and Kern you say doesn't cover this case.
Milton P. Rice: That's correct.
Byron R. White: Neither one of them?
Milton P. Rice: But I think Curry does. That's the companion case to King & Boozer involving the Alabama use tax decided the same time that King & Boozer was.
Byron R. White: You just told yesterday that this wasn't the -- you weren't applying your ordinary use tax to this case. And it's (Voice Overlap) --
Milton P. Rice: It's our ordinary use tax --
Byron R. White: -- and that's Curry. Alright, that's Curry, ordinary use tax --
Milton P. Rice: That's the conventional use tax.
Byron R. White: -- is Curry. But you tell me that you -- you had to amend your statute here. Had to amend your statute and that create a special type of use tax to cover the situation? What's -- what's -- then so Curry isn't relevant either.
Milton P. Rice: Well, it wholly analogous, if Your Honor please, to the conventional use tax is simply --
Byron R. White: Well you (Voice Overlap) -- right, so you say it is now?
Milton P. Rice: It gives a little bit broader reach and that you can get to the property acquired within the state.
Byron R. White: Well then your court -- well, you were certain to suggest in your court below wasn't sound?
Milton P. Rice: No sir, not at all.
Byron R. White: Well, they said the ordinary use tax could not be applied to this case.
Milton P. Rice: The ordinary use tax couldn't have been applied so --
Byron R. White: Constitutionally it couldn't be applied to be held. But that this was not your -- this kind of attack. (Voice Overlap) --
Milton P. Rice: No sir. I think what they held was the ordinary sales tax couldn't be applied to the case and the ordinary use tax to being --
Byron R. White: Or the use tax? Under Kern, isn't that right?
Milton P. Rice: I don't recall if Your Honor please, that our court dealt with it in those terms told. It held that there was. There couldn't be any tax on procurement because procurement was done as an agent. That would I suppose, cut out the conventional use tax as readily as it would to conventional sales tax.
Byron R. White: Exactly.
Milton P. Rice: When you put it on procurement. But now, when you attach it clearly to a subsequent use without regard to procurement --
Byron R. White: Yes.
Milton P. Rice: -- well, then you've got a horse with a different color entirely.
Byron R. White: You know, and a -- and a horse -- and a horse of the -- of a color that Curry wasn't dealing with either?
Milton P. Rice: Perhaps so.
Tom C. Clark: Do you think Curry is controlling (Inaudible)
Milton P. Rice: I think the reasoning in Curry controls. It leads --
Tom C. Clark: (Inaudible) -- since it's binding that they were not agents or instrumentalities of the Government. Here, I understood that they were acting for the Government is buying this property where he got his money.
Milton P. Rice: Our court so held as far as procurement but not for the general performance of the contract.
Tom C. Clark: So that it (Inaudible)
Milton P. Rice: Procurement is only one phase of it.
Tom C. Clark: Procurement is factually (Inaudible)
Milton P. Rice: Yes sir. But, even a conventional use tax, the taxable incident is use. It's imposed as a compliment to a tax on procurement or sale or purchase. But it's only to enable the State to get the tax on that which is used within the State which was not taxed because it was involved in the State. Now, this tax we've got enables us to get the property even what -- that was acquired in the State. But we make the taxable incident its use, without regard to the circumstances of procurement.
Tom C. Clark: I -- I understand your (Inaudible)
Milton P. Rice: So, I think we come to this. We have to find here that for the general performance of this contract and in all respects, these persons are indeed agencies of the Federal Government. If we'd also find, if we find as the Tennessee Supreme Court did that they are private parties, that they are private contractors operating for a profit just like any other, well then, the tax is applicable and is not -- is not boarded by the application of the doctrine of constitutional immunity because we're simply not taxing the Government. We're taxing a private party who incidentally happens to be dealing with the Government. It would make no difference at all if we were dealing with the City of Nashville or Shelby County or with any of the other instrumentalities in the State of Tennessee or the State itself.
Hugo L. Black: What tax do they pay (Inaudible)
Milton P. Rice: Will Carbide and --
Hugo L. Black: Yes.
Milton P. Rice: -- Ferguson pay?
Hugo L. Black: What tax do they pay with respect to the (Inaudible) what taxes?
Milton P. Rice: Well, that's difficult to say if Your Honor please, Carbide has a private installation at Columbia which isn't related to this at all. It's --
Hugo L. Black: Well, I'm talking about -- well, this work that it does in that state (Inaudible)
Milton P. Rice: If it did this and this alone and had no other connection in the State, I would say unquestionably, it would pay a corporation excise tax which is measured by net income, like every other corporation doing business in the State would pay.
Hugo L. Black: As any other tax they pay?
Speaker: Wholly a franchise tax.
Milton P. Rice: Well, the franchise and excise tax are blend together in Tennessee --
Potter Stewart: (Inaudible)
Milton P. Rice: -- as they do in many states. Franchise is measured by net worth, excise, by net income. Beyond that, I can think of no taxes that they'd be required to pay at all, unless they're liable for this one. And others that are laid on what they do in the performance of their contract to Oak Ridge.
Hugo L. Black: May I get it down just precisely what your claim (Inaudible) or the tax is levied on.
Milton P. Rice: The tax is levied, if Your Honor please --
Hugo L. Black: Levied on the use of what?
Milton P. Rice: Tangible personal property.
Hugo L. Black: Owned by the Government?
Milton P. Rice: In this case, owned by the Government, it would --
Hugo L. Black: Well, that's some (Inaudible) --
Milton P. Rice: -- make no difference.
Hugo L. Black: -- about this case.
Milton P. Rice: Yes sir.
Hugo L. Black: Tangible personal property owned by the Government which was brought into the State -- was bought in the State?
Milton P. Rice: Or no matter where it was gotten.
Hugo L. Black: Then make a new (Inaudible)
Milton P. Rice: Wouldn't make any difference. If it is used by them in the performance of their contract or the fulfillment of contract obligations, we assert the right to tax them. That's the essence of our position here.
Hugo L. Black: Because of what? Essence to your position is what?
Milton P. Rice: The essence of our position is, if this property is being used by this contractor in the performance of his contract or to fulfill his contract obligations, the State has a right to tax the contractor for the privilege of so using it.
Hugo L. Black: Your -- your tax -- your argument there is that Tennessee has a right to tax any property used by a person from carrying out -- engaged in business, carrying out a contract regardless of who owns the property?
Milton P. Rice: Yes sir.
Tom C. Clark: Because I understand you to say there always been a tax on the income of the contractor (Inaudible) franchise or excise tax?
Milton P. Rice: They would as a corporation be required to pay to Tennessee on apportionment basis like every other corporation would a -- what's deemed to be a fair share of its net income or rather a tax based on a fair share apportioned to Tennessee.
Byron R. White: But all of the -- all of the -- all of this amount which it earns in Tennessee is going to be returned to Tennessee, isn't it, in its income tax, in its franchise tax or the excise tax measured by net income?
Milton P. Rice: If it paid the tax but now I'd have to add this if Your Honor please, if they didn't have this private operation in Tennessee, they might resist the franchise and excise taxes on the same basis, if they resist this one here. I don't know what they'd do.
Tom C. Clark: (Inaudible)
Milton P. Rice: Well, if they were able they -- they could argue that they were in fact agents for the Federal Government and that was their sole connection, their sole reason for being in Tennessee.
Byron R. White: Well then a -- the States (Voice Overlap) --
Milton P. Rice: They might very well try to avoid those taxes, I don't know.
Byron R. White: But -- well, the State still tax the income of the Government employees but they -- I mean, (Inaudible)
Milton P. Rice: Our tax is laid however, on the privilege of engaging in business in corporate form in Tennessee. Now, it's not an income tax like most States have.
Byron R. White: That's measured by?
Milton P. Rice: It's measured by the net income but the taxable privilege is engaging in business in the form of a corporation.
Byron R. White: And the fact that as they are now paying an excise tax on this income (Inaudible) Oak Ridge.
Milton P. Rice: Yes sir, I assume they are. I don't have any first hand information about that. I have no reason to doubt it. My time is up I believe.
Earl Warren: Mr. Solicitor General.
Archibald Cox: Mr. Chief Justice, may it please the Court. First, may I simply say that there is no claim that Carbide or Ferguson is free of any other taxes on companies doing business in Tennessee, both are clearly doing business there under these activities with the Government regardless of their other -- they would be taxable. Now this is a case where I think, it's very important to be precise in our use of words in all with it but there are too many slippery words here and I want to try and preserve the same meaning in hitting the high spots of the Government's argument. First, we do not think that our case turns on the amount of control, the degree of control that the Government has over Carbide through Ferguson's activities. To say the same thing in other words, we think it is irrelevant whether Carbide is a servant or an independent contractor. Our first contention is that the beneficial use of this property in the sense that it was that time was used in the City of Detroit and other Michigan cases is wholly that of the United States sort. To put it as Mr. Justice Harlan suggested yesterday that all these activities in which the property is used are the activities of the United States. It's perfectly clear that everything that is done here is done with the property of the United States, at the risk of the United States and on behalf of the United State. And I would say that it was perfectly clear that Carbide is the agent, not the servant, but the agent of the United States because everything it does, it does for the account of the United States in all liabilities of those of the United States, nor profits of those of the United States. It's just as if I inherited say a retail store and I hired a man or to go down and say, "Now, you run that store. Do everything in my name. I will supply all the property. I will supply all the operating expenses. I'm not going to butt in with your running in. I don't know anything about the retail business. But that would be comparable to this and it would all be done for my account and use and benefit. So that seems to us that this case is clearly distinguishable from City of Detroit and the other cases which emphasized that the -- a man couldn't get an exemption in carrying on his business for his entrepreneurial profit, not for a fee but for his entrepreneurial profit merely because the United States had the technical title to the property. And I think that if these Tennessee cases that were mentioned here were examined, of course I'm speculating. One would find that those contractors like the contractor in King & Boozer, have brought their equipment to the job as if they were in a sense entrepreneurs that they could profit or could lose and that they didn't simply received a salary for performing services. Then I come to the question which hasn't been decided except as it was decided in Livingston which we think clearly governs this case. May Tennessee levitate tax as Mr. Justice Brennan put it earlier, on the privilege of rendering services measured by the volume of the property that you handle? In that sense, use handled in rendering the services. Because I say use for beneficial use, this just handling, that's all these people do in this property. And we say that this isn't that kind of tax, that this is a tax on the beneficial use, on the activities and the fellow who gains from it and that that is a tax on the United States. Now, an effort was made to compare this case yesterday to SO -- Standard Oil Company case which you will recall was a tax on the privilege of storing gasoline. But that wasn't privilege tax. That was measured by the volume of the gasoline's store and it didn't matter whose gasoline was stored. It was the gasoline of anybody including the Government that quite properly it was held to be taxable. To make that case comparable to this one, one would have to suppose that a tax were levied on a privilege of storing gasoline of where we can't reach the buyer or the seller to collect the sales tax. And only, where one couldn't reach the buyer or seller to collect the sales tax. Well in that event, it really isn't on the privilege of the storing. It's an effort to substitute for the sales tax which is tax exempt or for the genuine use tax, which is tax exempt or if I can put this one other illustration. This seems to me to be comparable to saying that we're going to lay attack on the privilege of occupying property as the man, “As I occupy my office if the court occupies its chamber.” We're going to lay the tax and the privilege of occupying property but we will give credit. We won't collect it at any case where somebody has paid a real estate tax on the ownership for the use of the property. Well again, that's simply comes down to an attempt to collect the real property tax from the fellow who happens to be there knowing that he will have to pass it under the tax exempt owner. It's a tax on the property. Well now here, it's a tax on the use we submit by the United States that I think is a -- just the right case.
Arthur J. Goldberg: General, before you sit down, did you just say (Inaudible)
Archibald Cox: I think that the sole effect of that appeal was to put the Atomic Energy Commission on the same basis as every other Government agency to leave us free to make the arguments that we have made here or -- and to free the State of Tennessee of the arguments that the court made in Ron Anderson, holding that it couldn't tax. Now, I ought to in candor say that I have not made a quick (Inaudible) check. As I understand it, we would claim that the tax situation is exactly the same as it was under that statute and that what Commissioner Strauss said was what the Government officials often do when they don't want to lose an advantage. They argue it trying to do all kinds of terrible things.
Potter Stewart: After that (Voice Overlap) --
Archibald Cox: But the intention -- the intention was to remove the statute and treat the AEC just like all other agencies.
Potter Stewart: Under the statute as it formally was, am I mistaken in thinking that that exempted the Boozer type contract?
Archibald Cox: Well, there's apparently some doubt about that Justice Stewart. I would have thought that it did too and perhaps it did and I'll be glad to get more accurate information from the Commission but consulting quickly with Mr. Kramer, I must say that he tells me that he thinks that we would claim that the constitutional exemption was the same as the exemptions that were claimed under the statute. But I would like to emphasize that there must have been many, many people in Congress who voted for the appeal on the theory that this agency should be like other agencies. However, the chips might fall rather than vote it to subject these operations to pass.
Byron R. White: Which if it -- which the -- might not be able to do?
Archibald Cox: Well, I suppose Mr. Justice White that Congress can waive the constitutional immunity. That's my recollection of the language in some of the --
Byron R. White: There's no indication they intended to do anything other than put all agencies on the same basis.
Archibald Cox: That's clearly the only thing that was intended.
Byron R. White: And that may or may not have -- that they may or may not have thought that they were -- that they were allowing this particular kind of pacts in that -- in that respect.
Archibald Cox: Quite right. And I suppose they may have some of each. I guess the Tennessee representatives thought that they were helping Tennessee.
Byron R. White: That it was the statute rather than the constitution which bars the tax --
Archibald Cox: Right.
Byron R. White: -- and then he probably thought (Inaudible)
Archibald Cox: Some may have, others may not and others may have -- I think the majority probably felt, "Well, let's let them be like everybody else and the chips will fall where they do."