Court Opinion

ID: 8880654
Source: CourtListenerOpinion
Date Created: 2022-11-26 20:26:57.572169+00
Date Added: 2024-06-11T17:06:37.815219
License: Public Domain

WEICK, Chief Judge
(dissenting).
I regret that I must dissent from the majority opinion for I am of the firm belief that our decision in these appeals is not controlled by the two Michigan cases *77decided by the Supreme Court in City of Detroit1 and Township of Muskegon2.
The thrust of the Supreme Court decision in Phillips Chem. Co. v. Dumas Independent School Dist., 361 U.S. 376, 80 S.Ct. 474, 4 L.Ed.2d 384 (1960) is that a state tax may not discriminate against the Government or those with whom it deals. Id. at 385 and 387, 80 S.Ct. 474. I see no basis for permitting any justification of discrimination in this area.
In Phillips Chief Justice Warren, who wrote the opinion for the Court, pointed out rather clearly that the two Michigan cases did not involve discrimination of the character we have here. He stated:
“Appellee’s argument, essentially, is that the exemption of lessees of school-owned property from the Michigan statute supports the imposition here of a heavier tax on federal lessees than is imposed on lessees of other exempt public property, in general.
“This argument misconceives the scope of the Michigan decisions. In those cases we did not decide — in fact, we were not asked to decide — whether the exemption of school-owned property rendered the statute discriminatory. Neither the Government nor its lessees, to whom the statute was applicable, claimed discrimination of this character. Since the issue was not raised, the basis for the separate classification of property owned by schools was not examined. Therefore, the Michigan cases shed no light on the classification problem here.” [Footnotes omitted] Id. at 386, 80 S.Ct. at 480.
He concluded:
“ * * * [I]t still remains true, as it has from the time of M’Culloch v. Maryland, 4 Wheat. (17 U.S.) 316. [4 L.Ed. 579], that a state tax may not discriminate against the Government or those with whom it deals.” Id. at 387, 80 S.Ct. at 481, citing United States v. City of Detroit, supra, at 473, 78 S.Ct. 474.
Phillips was approved and followed by the Supreme Court in Moses Lake Homes, Inc. v. Grant County, 365 U.S. 744, 81 S.Ct. 870, 6 L.Ed.2d 66 (1961). In enunciating the rule in Moses Lake, the Court stated:
“If anything is settled in the law, it is that a State may not discriminate against the Federal Government or its lessees. See e. g., Phillips Co. v. Dumas School District, 361 U.S. 376 [80 S.Ct. 474, 4 L.Ed.2d 384]; United States v. City of Detroit, 355 U.S. 466, 473 [78 S.Ct. 474, 478, 2 L.Ed.2d 424] ; City of Detroit v. Murray Corp., 355 U.S. 489 [78 S.Ct. 458, 2 L.Ed.2d 441]. In United States v. City of Detroit, supra, we said:
“ ‘It still remains true, as it has from the beginning, that a tax may be invalid even though it does not fall directly on the United States if it operates so as to discriminate against the Government or those with whom it deals.’ 355 U.S., at 473, 78 S.Ct., at 478.” Id. at 751, 81 S.Ct. at 874.
It is worth noting that in Moses Lake the Supreme Court felt that Phillips was the controlling authority. Id. at 751, 81 S.Ct. 870. In its discussion of Phillips, the Court does not even refer to the possibility of justifying a discriminatory tax.
This lack of reference to the principle of justification relied upon by the majority as an alternative holding, is understandable in view of the fact that these cases involve the problem of intergovernmental tax immunity and not the equal protection test of permissible classification. See Phillips Chem. Co. v. Dumas School Dist., supra at 385, 80 S.Ct. 474.
The District Court found substantial discrimination against the Government in the exemption contained in Act 189 in favor of state-supported educational institutions. In my judgment there was substantial evidence to support this finding, and it is not clearly erroneous.
*78Appellants admit that the exception of state-supported institutions applies to “13 institutions, primarily universities and four year colleges” (Reply Brief, p. 8). The aggregate value of real property held by state universities and normal schools during the tax years was $1,-470,000,000. This figure includes tax exempt properties of substantial value which were used in connection with a business for profit in 1953 when Act 189 was adopted.
The business uses to which some of the properties were put, in at least some of the tax years, included a warehouse, dance hall-skating rink, parking lot, bowling alley, public airport, and a department store.
The District Court in its opinion stated:
“ * * * [A]nd all parties concede that if the Missile Plant were owned by a state university, its occupants would pay no taxes under Act 189.” (254a)
Appellants attempt to justify the discrimination on the ground that the Federal Government has shown great interest in and has financially supported state educational programs. This, I submit, does not operate as an implied consent to discriminate against it in state taxation.
Nor do I regard the amount of discrimination as de minimus in practical operation. The taxes imposed, which the Government under the provisions of its lease with Chrysler must pay, amounted to over $1,000,000, in four years. Chrysler used only a portion of the plant, solely for the purpose of manufacturing weapons for the Government.
While there may be some dispute over the value of properties used for business purposes, the Government in its brief itemizes five properties of the value of about $800,000, and this does not include Willow Run Airport, which the University of Michigan acquired from the Government for the sum of one dollar, upon which no estimate of value was made.
I would affirm the judgment of the District Court with the exception of its failure to allow pre-judgment interest. In lieu of an allowance of interest I would require only an accounting of the profit made by the investment of the moneys paid under protest by Chrysler.

. United States v. City of Detroit, 355 U.S. 466, 78 S.Ct. 474, 2 L.Ed.2d 424 (1958).

. United States v. Township of Muskegon, 355 U.S. 484, 78 S.Ct. 483, 2 L.Ed.2d 436 (1958).