Court Opinion

ID: 9683668
Source: CourtListenerOpinion
Date Created: 2023-08-24 13:34:51.727383+00
Date Added: 2024-06-11T18:17:49.490756
License: Public Domain

Neil, Chiee Justice
(dissenting).
I reach a definite conclusion, after full consideration of the record and argument of counsel, that the appel- ■ *178lants are “independent contractors” and cannot claim immunity from the State retail sales and nse tax. The opinion of Mr. Justice Burnett is well nigh conclusive of that question and with his conclusion I concur. But I am unable to agree with his final conclusion that they are exempt from the tax upon the theory that they are so much a part of a governmental agency, ‘ ‘ The Atomic Energy Commission”, that their purchases of materials constitutes the “activities” of such governmental agency.
The insistence of able counsel for the appellants is that these contractors, who have been employed to serve the Atomic Commission, are exempt from taxation by the express terms of Section 9(b) of the Atomic Energy Act, which reads as follows: “In order to render financial assistance to those States and localities in which the activities of the Commission are carried on and in which the Commission has acquired property previously subject to State and local taxation, the Commission is authorized to make payments to State and local governments in lieu of property taxes. Such payments may be in the amounts, at the times, and upon the terms the Commission deems appropriate, but the Commission shall be guided by the policy of not making payments in excess of the taxes which would have been payable for such property in the condition in which it was acquired, except in cases where special burdens have been cast upon the State or local government by activities of the Commission, the Manhattan Engineering District or their agents. In any such case, any benefit accruing to the State or local government by reason of such activities shall be considered in determining the amount of the payment. The Commission, and the property, activities and income of the Commission, are hereby expressly exempted *179from taxation in any manner or form by any State, connty, municipality, or any subdivision thereof.”
I can conceive of no theory or premise upon which to base a conclusion that the appellants come within the four corners of the above statute if they are properly classified as independent contractors. It is not only conceivable, but quite consistent with reason, that agents of the Commission could rightfully claim exemption from taxation on the ground that whatever they do, or contract to do, must be adjudged as an activity of the Commission. But even where contractors claim to be agents the Congress should, to avoid doubt and confusion, specifically declare an exemption. In a legal sense the appellants are not agents of the Atomic Commission.
The argument is made that we should by sheer inference hold that the Congress intended to exempt contractors from the tax. There is nothing in the Act exempting them and this Court should not undertake to apply to them the doctrine of implied immunity. No one questions the generally accepted principle, that the possessions, institutions, and activities of the Federal Government are not subject to any form of State taxation in the absence of express Congressional consent. U. S. v. County of Allegheny, 322 U. S. 174, 64 S. Ct. 908, 88 L. Ed. 1209.
It is undoubtedly true that the Congress has the power to protect all governmental agencies and instrumentalities from State taxation. But it is a far-reaching and dangerous doctrine to hold that the authority of a sovereign State to levy a tax can be nullified upon the theory of implied delegated immunity. It is manifestly unsound to hold that Congress intended to deny to the State its right to levy a constitutional tax upon business enterprises furnishing supplies to a Federal agency merely *180because it may possibly cast upon the Government some economic burden.
The argument is made that unless the Congress meant to exempt contractors in its use of the word ‘ ‘ activities ’ ’ the statutory exemption is meaningless. I am unable to follow this contention. The Act to which reference is herein made, Section 9(b), Atomic Energy Act, exempts the “activities” of the Commission. The word “activities” should be construed as exempting property that the Commission has acquired. In other words, such resources, both tangible and intangible that may be in its possession and under its control which is devoted to the development of atomic energy. The Special Committee of Congress, appointed to consider the said Act, made the following report:
“Section 9. Property of the Commission.”
“The Commission is to take over all resources of the United States Government devoted to or related to atomic energy development. This .includes all atomic weapons, all property of the Manhattan Engineer District, and all patents, materials, plants and facilities, contracts, and information relating primarily to atomic energy. The Commission is authorized to reimburse States and municipalities for loss in taxes incurred through its acquisition of property”.
There is no reason for this Court to construe “activities ’ ’ as providing for an exemption from State taxation when the Congress refused to adopt an amendment which would have expressly exempted contractors from such a tax. In Standard Oil Co. of La. v. Fontenot, 198 La. 644, 4 So. (2d) 634, 642, it is pointed out by the Court: “Prior to the passage of Public Act 588 of the 76th Congress, 54 Stat. 265, the language therein, which would have made such contractors agents of the government and *181would have exempted them from all taxes — federal state and local, was stricken therefrom in the House and was concurred in by the Senate. Cong. Bee., Vol. 80, part 7, pages 7532-7535, Amd’t. 1205, H. B. 8438; Cong. Bee., Vol. 86, part 7, pages 7646-7648.” (Emphasis supplied.)
In Alabama v. King & Boozer, 314 U. S. 1, 62 S. Ct. 43, 45, 86 L. Ed. 6, the Court, speaking through Mu. Chief Justice StoNe says: “Congress has declined to pass legislation immunizing from state taxation contractors under ‘cost-plus’ contracts for the construction of governmental projects. Consequently the participants in the present transaction enjoy only such tax immunity as is afforded by the Constitution itself, and we are not now concerned with the extent and the appropriate exercise of the power of Congress to free such transactions from state taxation of individuals in such circumstances that the economic burden of the tax is passed on to the national government.”
There should be no disagreement upon the proposition that the word “activities” as used in Section 9(b) should be broadly construed. It should be so construed in all those cases where the Congress has expressly declared that a State tax is such a burden upon the particular instrumentality that it amounts to an impairment of the power of government. The contention of the State, while not disputing the foregoing proposition, is that the Court is not authorized to extend the exemption by construction “so as to exempt an independent contractor from non-discriminatory, constitutional excise taxation.” The correctness of this contention will not be seriously controverted in the face of the Congress’s express refusal to provide for an exemption.
*182I cannot conceive that Congress would ever agree to an exemption of “contractors” from State taxation as contended for in the case at bar. Is it possible that the Congress, in exempting “activities” of a Federal Bureau from liability for a State tax, intended thereby to exempt every person, firm or corporation who might do business with it pursuant to a written contracts I think not. If that is not an implied delegation of immunity, I don’t know how to classify it. That the Congress never intended to provide an exemption in such circumstances is not only shown by the Congressional Record, as pointed out in Standard Oil Co. of La. v. Fontenot, supra, but also in Penn. Dairies v. Milk Control Comm., 318 U. S. 261, 63 S. Ct. 617, 87 L. Ed. 748.
The country is now witnessing, and has for a number of years, the vast increase in the number of Federal agencies claiming immunity from State taxation under the specious plea that “we are the Federal Government.” They seek to extend the immunity, as illustrated by the present appeal, to all who may have a contract with them to render some form of service, or furnish them supplies of any kind. If the plea is good it results that Congress has clothed them with attributes of government which is superior to that of a sovereign State. The cases cited on the State’s brief, and particularly Penn. Dairies v. Milk Control Comm., supra, are conclusive of the question that Congress has had no thought of thus paralyzing the taxing authority of State governments.
If, however, I am mistaken in this conclusion, and the 'State of Tennessee is powerless to collect its just revenues, we should no longer think of “State sovereignty” as it has been known in the country’s history for more than a century and a half, but that sovereignty now exists at *183the whim, and possible caprice, of agencies which are a law nnto themselves.
In my opinion the appellants have no right to claim an exemption from the tax in question, in the absence of an express statutory provision, unless it plainly appears that it constitutes an encroachment upon, or interference with, the free exercise of governmental authority.
Prewitt, J., concurs in this dissenting opinion.