Court Opinion

ID: 9639058
Source: CourtListenerOpinion
Date Created: 2023-08-22 16:03:23.953013+00
Date Added: 2024-06-11T18:10:11.903258
License: Public Domain

WOOLLEY, Circuit Judge
(dissenting). I am constrained to dissent from the judgment of the court on a principle first declared perhaps in McCulloch v. Maryland, 4 Wheat. (17 U. S.) 316, 4 L. Ed. 579, and consistently followed ever since. In that case the Supreme Court distinguished this principle from the dominant one that federal agencies are not subject to state taxation and summarized its views in the concluding paragraphs of the opinion, thus:
“The court has bestowed on this subject its most deliberate consideration. The result is a conviction that the states have no power, by taxation or otherwise, to retard, impede, burden, or in any manner control, the operations of the constitutional laws enacted by Congress to carry into execution the powers vested in the general government. This is, we think, the unavoidable consequence of that supremacy which the Constitution has declared. We are unanimously of opinion, that the law passed by the legislature of Maryland, imposing a tax on the Bank of the United State's, is unconstitutional and void.
“This opinion does not deprive the states of any resources which they originally possessed. It does not extend to a tax paid by the real property of the bank, in eommon with the other real property within the state, nor to a tax imposed on the interest which the citizens of Maryland may hold in this institution, in common with other property of the same description throughout the state. But this is a tax on the operations of the bank, and is, consequently, a tax on the operation of an instrument employed by the government of the Union to carry its powers, into execution. Such a tax must be unconstitutional.”
Fifty years later the Supreme Court, without disturbing in the least the two principles announced and distinguished in Mc-Culloch v. Maryland, stated the test of the distinction in these words:
“It is, therefore, manifest that exemption of Federal agencies from State taxation is dependent, not upon the nature of the agents, or upon the mode of their constitution, or upon the fact that they are agents, but upon the effect of the tax; that is, upon the question whether the tax does in truth deprive them of power to serve the government as they were intended to serve it, or does hinder the efficient exercise of their power. A tax upon their property has no such necessary effect. It leaves them free to discharge the duties they have undertaken to perform. A tax upon their operations is á direct obstruction to the exercise of federal powers.” Union P. R. Co. v. Peniston, 18 Wall. (85 U. S.) 5, 36 (21 L. Ed. 787). Last case, U. S. Fleet Corporation v. Western Union Telegraph Co. (App. D. C.) 13 F.(2d) 308.
Applying that test to the eases in hand, I think the judgments sustaining the taxes should be affirmed.