Rohr Aircraft Corporation v. County of San Diego

PETITIONER:Rohr Aircraft Corporation
RESPONDENT:County of San Diego
LOCATION:Federal Reformatory for Women in West Virginia

DOCKET NO.: 295
DECIDED BY: Warren Court (1958-1962)
LOWER COURT:

CITATION: 362 US 628 (1960)
ARGUED: Mar 30, 1960
DECIDED: May 23, 1960

Facts of the case

Question

Audio Transcription for Oral Argument – March 30, 1960 in Rohr Aircraft Corporation v. County of San Diego

Earl Warren:

Number 295, Rohr Aircraft Corporation, a California Corporation, Appellant, versus County of San Diego and City of Chula Vista.

Mr. Wright.

Leroy A. Wright:

Mr. Chief Justice and members of the Court.

This case involves an area of intergovernmental tax immunity and submission through taxation which is not heretofore been determined by this Court.

Briefly, the salient facts are, in 1942 and 1943, the Defense Plant Corporation, a subsidiary of RFC acquired and improved certain property in the San Diego County.

That property was leased to a war contractor, the predecessor of this appellant.

It was used during the war and the manufacture of war material.On October 15th of 1945, the lessee contractor terminated the links.

On May 29th, 1946, Reconstruction Finance Corporation declared the property surplus under the provisions of the Surplus Property Act of 1944.

From 1947 to 1948, the property was taken over by War Assets Administration.

It was actually used, as appears from testimony, herein the record at page 45.

It was actually used by the United States as a depot for the storage and sale of surplus war material.

The former lessee had vacated the property.

In 1948, there commenced an interim occupancy by the former lessee who owned property immediately adjacent to the area.

This interim occupancy resulted in the lease of September 1, 1949.

This lease is set forth in the record and appears — commencing at page 9.

The lease required the lessee to pay taxes that were roughly assessed against the premises or against the lessor or lessee.

Now, let us go back for a moment.

Here is government property admittedly owned by a governmental agency, the Defense Plant Corporation, a subsidiary of RFC.

This being so, how come any taxes?

In 1932 with the enactment of the Reconstruction Finance Corporation Act, the Congress concerted a provision which it drew from the old National Bank Act, first enacted in 18th — in the 19th century.

Under which, real property of the Corporation or was subjected to tax to the same extent as any other property was taxed and expressed waiver applicable to real property of the Corporation.

Therein lay the basis for the tax.

In the interim however by the enactment of the Surplus Property Act of 1944, mechanics were created by which an owning agency defined in the acts in terms to encompass RFC would declare that the — the property was surplus to its needs and would execute a declaration of surplus property which would be transmitted to the War Assets Administration.

The War Assets Administration would then have the responsibility for the control, management, maintenance with all of the various attributes which the Surplus Property Act gave to the United States as a result of the declaration.

The provisions of the Surplus Property Act insofar as here applicable are contained in Appendix A to appellant’s opening brief at pages 1 to 8 and regulations which were issued thereunder are further contained in the that appendix.

The case thus involves the question of whether or not the failure of RFC to execute a deed to the property at the time that it issued its declaration of the surplus to its needs.

The failure of RFC to execute that deed —

Felix Frankfurter:

A deed —

Leroy A. Wright:

— still —

Felix Frankfurter:

— a deed from RFC?

Leroy A. Wright:

To the United States.

Felix Frankfurter:

You mean —

Leroy A. Wright:

There was no deed, formal deed under the —

Felix Frankfurter:

From whom to whom?

Leroy A. Wright:

From RFC to the United States of America, such a deed was subsequently issued and recorded in 1955 but not at the time.

Felix Frankfurter:

It went from RFC to War Assets Corporation, is it?

Leroy A. Wright:

By virtue of the declaration that it was surplus.

Felix Frankfurter:

And it — I’m not interested, not in words, not to known but is the deed a formal deed the way one agency of government transfers to another?

Leroy A. Wright:

We think not, sir.

That is our position that the transfer was fully into war intention purposes accomplished by the declaration made by RFC that the property was surplus to its needs.

Felix Frankfurter:

I didn’t mean to stumble on the issue in the case by an innocent question.

Leroy A. Wright:

You did, sir.[Laughter]

Charles E. Whittaker:

That might raise questions, might it not, as to whether or not the RFC is an agency in the sense used here?

Leroy A. Wright:

I think not, sir, under the decision.

I’m thinking now of decision in Graves against New York involving the Home Owners’ Loan Corporation and various other decisions involving the nature of governmental activities or governmental corporations.

They exist only for the performance of a true governmental function, and would it not for the expressed waiver of proper — relating to property of the Corporation which is contained in the RFC Act.

I think it is admitted by all where any property by own — by any governmental corporation which those not have in its an enacting statute that expressed congressional waiver to tax is, as to its property, immune from local tax.

It has long been held that government corporations have no independent existence that they are used and are utilized by our National Government for the purpose of carrying on governmental functions.

This case then presents an issue of whether or not constitutional immunity from tax will rest on formalisms as this Court has said recently in United States against Muskegon through Justice Black, constitutional immunity does not rest on such insubstantial formalities as whether the party using government property is formally designated as a lessee, otherwise immunity can be conferred by simple stroke of the draftsman’s pen.

Could I ask you a question?

Leroy A. Wright:

Yes, sir.

Was — what was done in this case different from other?

I suppose the RFC has turned over other properties, do they?

Leroy A. Wright:

No, what was done here was — was typical — typical.

In this case, at the outset, I want to point out that we are not here concerned with complete escape from tax.

We are not here concerned with the type of tax involved in the so-called Michigan cases recently decided by this Court.

Here, the tax was a straight ad valorem property tax levied upon the property of the United States enforceable and intended to be enforced to the lien process if unpaid.

Charles E. Whittaker:

Well, doesn’t that assume the question — one of the questions in issue, namely, that this is property of the United States?

Leroy A. Wright:

Whether — you mean as distinguished from property of RFC?

Charles E. Whittaker:

Of the Corporation —

Leroy A. Wright:

Of the Corporation.

Charles E. Whittaker:

— to use the words of the Act.

Leroy A. Wright:

That is correct, sir.

There is a crucial point here gives this property of the Corporation since and after RFC, by its own voluntary act, executed the declaration of surplus.

And we have to examine —

Potter Stewart:

Well, now by the Corporation, you mean the Reconstruction Finance Corporation?

Leroy A. Wright:

Yes, sir.

Potter Stewart:

There’s no claim that this is the property of the Rohr Aircraft Corporation —

Leroy A. Wright:

No, none of which —

Potter Stewart:

— (Voice Overlap) to that?

Leroy A. Wright:

No.

Potter Stewart:

Nor as to — as to the taxability of Rohr Aircraft’s —

Leroy A. Wright:

Possessory interest.

Potter Stewart:

Possessory interest.

Leroy A. Wright:

No.

That has been stipulated.

As I was pointing out —

Potter Stewart:

Yes, I understood.

Leroy A. Wright:

— that throughout this case, there has been stipulated that there may — maybe retained by local tax authorities.

William J. Brennan, Jr.:

Well, Mr.– Mr. Wright —

Leroy A. Wright:

Yes.

William J. Brennan, Jr.:

— is the — is the question as simple as whether the 1932 statute is to be interpreted as raising this property, that this the 1932 statute which permits a local taxation?

Leroy A. Wright:

Those — that statute embrace these properties —

William J. Brennan, Jr.:

Yes.

Leroy A. Wright:

— after —

William J. Brennan, Jr.:

Yes.

Leroy A. Wright:

— RFC has declared its surplus to its needs —

William J. Brennan, Jr.:

Is that —

Leroy A. Wright:

— and transferred it to War Assets.

That is the question.

William J. Brennan, Jr.:

That’s the issue.

Leroy A. Wright:

That is the issue.

Charles E. Whittaker:

Well, and — I don’t understand what you mean by transferred to RFC.

You mean by the declaration?

Is that what you used as synonymous with transfer?

Leroy A. Wright:

Transfer here, I think to get the true meaning of, you have to determine and examine the consequences which flowed from the execution by RFC of the declaration that this property was surplus to its needs.

Those consequences are detailed in the provisions of the Surplus Property Act and the regulations issued by the Surplus Property Board.

Possessions, control, responsibility for repair and maintenance, ability, indeed without participation of RFC, to convey to others, to lease to others full dominion and control and as one court after another have said that bare and legal title only remained in RFC after this declaration.

That is what I mean by transfer, and that is what the Congress when it enacted Public Law 388 in 1955 expressly identified transfer as including such a change and responsibility, control and supervision over government properties as would flow from a declaration that it was surplus to the needs of a government corporation.

Charles E. Whittaker:

That was the definition, was it not, that was promulgated by Congress to avoid the effects of the Court of Claims decision?

Leroy A. Wright:

We think it’s not to avoid the effects of, but rather to identify what had happened.

Charles E. Whittaker:

I see.

Leroy A. Wright:

In — for recognition of the consequences which flowed —

Charles E. Whittaker:

I see.

Leroy A. Wright:

— from the Court of Claims decision.

I must perforce under the rules of this Court, first, to address myself, if I may, to the question of jurisdiction.

This case came up here by appeal.

Jurisdiction under the problems in the way this case arose is a difficult one.

It’s appellant’s position that there has here been drawn the question of validity of a statute of a State.

Those statutes being, the statutes under which taxes are levied on all property by local governments within California.

It cannot be questioned here that a federal question has been raised from the very inception of this case.

It is appellant’s contention that the statute has applied on the tax resulting, was attacked on federal grounds.

The fact that we are seeking recoupment rather resist — resisting the imposition of the tax, it makes no difference.

We point to the Court the case of Beaver County and Allegheny County, all of which are cited in the briefs, that there is here as in both Beaver County and in the County of Allegheny been drawn in to the question the validity of a tax, the argument that could be made on whether in attacking to that tax, we are attacking the statute under which it was levied for merely the tax.

It seems to be detailing with the distinctions which have no realism.

In the last analysis, the statute has in existence and purpose only insofar as the results of the levy.

We are attacking that levy and in so doing must perforce to be attacking the statute.

Be that as it may, it is appellant’s position here that the issues of this case clearly demonstrated that it is one which presents a very substantial federal question.

One that has wider application than might have first appeared and one which has been decided by the Court below in a manner probably not in the Court with other decisions of this Court, as we shall point out in an argument.

And that appeal lies or if not this Court as admonished by the statute, we should take the papers as a petition for certiorari and grant certiorari.

Leroy A. Wright:

I think this, when we come down to the issue of jurisdiction, either this Court wants to hear it on the merits before it does.

It has the mechanics in either one.

(Inaudible) to you that it’s a case which should be heard on the merits to resolve a conflict which exist between the Court of Claims, the Supreme Court of Michigan and there are other cases as will be discussed by the Government which — with which the Government is presently concerned.

We see then that under the Surplus Property Act, it is — it has been provided a complete mechanics by which property owned by the government corporation is administered, used, cared for, controlled, sold, leased and in deed.

The proceeds from leasing whole sale do not go back to our suit, if having declared the property surplus.

They are covered into the general treasury of the United States.

If something happened to the property during it’s controlled by War Assets, that risk of lost lives not for — on RFC but on the United States.

It is our position that the Congress in enacting the Surplus Property Act was utilizing the powers expressly conferred upon it by the Constitution that the Congress shall have the power to dispose of and make all read for rules and regulations respect to the territory or other property belonging to the United States.

In furtherance to that power, the Congress enacted the Surplus Property Act.

After that enactment, Reconstruction Finance Corporation by its own voluntary act executed a document which under the framework of the Surplus Property Act transferred out of RFC all incidence and all intendments of ownership.

Indeed, there was no deed in a formal sense of the word on any of the property of the Defense Plant Corporation.

This property, bear in mind, was acquired by the Defense Plant Corporation by a Joint Resolution of Congress.

There was transfer from the Defense Plant Corporation to RFC all property of the Defense Plant Corporation.

No deed was ever executed by Defense Plant Corporation to RFC covering any items of property.

All of this was accomplished by the Joint Resolution of Congress.

Here, the Administrator of War Assets, after this declaration, could, by his owner act, give and execute a conveyance without participation in any degree of Reconstruction Finance Corporation.

I should like, if I might, to reserve a balance of my time for rebuttal.

But before closing, I would like to call attention to a statement made by Mr. Justice Frankfurter in the Detroit-Murray cases on the question of intergovernmental submission to taxation.

Since intergovernmental submission to taxation is primarily a problem of finance and legislation, it is immaterial that contracts by Government have been purposefully drawn so as to vest title to the property that is subject to the tax in the Government and thereby withdrawn from the taxing power of the States.

We feel that this is so here.

Now, what we are dealing with is the true ownership of the property, not the fact that for chance, no deed was executed or none was necessary.

There was a complete and effectual transfer out of RFC to War Assets and there was no waiver with respect to property of the United States.

Earl Warren:

Mr. Baum.

Myron C. Baum:

Mr. Chief Justice, and may it please the Court.

If I may, on behalf of the United States, phrase the issue just likely differently.

The real issue here is whether the absence of a deed from the RFC to the United States was the event which made this property taxable by the State of California or the County of San Diego.

The appellees admit that this is the only issue for they state in their brief that if a deed had been executed, they would not contest the immunity of this property from local taxation.

So as I say, in phrasing the question, we focus immediately upon the sole and single issue was a deed required in order to render this property no longer property of the Reconstruction Finance Corporation.

And I submit that I can show to the Court very briefly that the statutes involved as well decisions which we rely on make it plain that no deed was required.

As counsel has already pointed out, Section 8 of the Reconstruction Finance Corporation Act of 1932 provided for the exception of property of the Reconstruction Finance Corporation from state and local taxation but it saves from that exemption real property and made it expressly subject to such taxation.

Myron C. Baum:

It is perfectly obvious that the reason for that subjection of real property of RFC, the local taxation was that in 1930s, the RFC was engaged in essentially commercial activity.

We submit here that once this property was no longer being used for any form of commercial or industrial activity of RFC but had been declared surplus and was transferred to another agency of the Government to fulfill regular governmental purposes, that the reason for this so-called waiver of immunity collapsed.

This is made patently obvious when we look at the provisions of the Surplus Property Act of 1944.

That Act provides that the owning agency, in this case the RFC, may declare property surplus when it determines that it is surplus to its needs.

That is not some oral statement, it is a formal declaration, a copy of it is printed in the record before Your Honors.

Upon that declaration of surplus, the War Assets Administration took over the property.

It took it over in this case in the sense of utilizing it for a storage depot.

By statute, it was given the duty of caring for and handling the property to control it’s disposal to dispose of it by sale, lease, exchange or transfer and under Section 15 (b) of the Surplus Property Act of 1944, the War Assets Administration was expressly empowered by Congress to execute any documents of title which were necessary to effectuate the purposes of the statute.

Now, I submit to Your Honors that if a deed was necessary to transfer title to this property from the RFC to the United States or to the War Assets Administration, it could not have been empowered to execute a deed to a purchaser whereas Congress has expressly said that by statute, that — the War Assets Administration may execute such a deed.

The same result follows if we look at the Federal Property and Administrative Services Act of 1949 which repeal the Surplus Property Act of 1944.

In that Act, we are now dealing with the General Services Administrator who succeeded to the War Assets Administration.

He is given supervision, direction over disposition of surplus property, the care and handling.

And any agency authorized by the General Service — General Services Administrator to dispose of surplus property may do so by sale, exchange, lease or transfer and may execute a deed.

Here again, we have an expressed statutory provision for a deed to be executed where if we follow appellees reasoning in that of the Court below, there has been a gap in the chain of title.

Obviously, no gap exists.

Finally, we come to the statute referred to as Public Law 388 which was a 1955 amendment to the Federal Property and Administrative Services Act.

That was adverted to by Mr. Justice Whittaker a moment ago.

That Act, however, was not a recognition or an avoidance of the decision of the Court of Claims.

That Act made provision for payments in lieu of taxes to the locality because as a result of the decision of the Court of Claims and of the Comptroller General of the United States, these properties had been rendered non-taxable.

And so it was provided that Congress would voluntarily make payments in lieu of taxes in order to alleviate the hardships which would be imposed.

In fact, the legislative history of that statute indicates that Congress far from repudiating the decision of the Court of Claims or of the Comptroller General was giving express recognition to it and was recognizing that something had to be done.

And so what it did was, as the Committee Reports themselves state, it may temporary provision for payments in lieu of taxes and Congressman Meader, the sponsor of the bill, himself, said this is not taxation.

This or these are payments in lieu of taxes.

So if we have any indication of what Congress thought of this in terms of expressed legislation, we have it there.

Actually this municipality didn’t get that to hand out, did it?

Myron C. Baum:

This municipality did for the year 1955 and that’s the statute begin, it comes effective in 1955.

We are here dealing with tax years preceding 1955 and that is why 1955 is no longer before us.

Charles E. Whittaker:

It is — it is true, is it not, Mr. Baum, that this statute permits the same taxation in lieu of taxes rather which the Court of Claims held could not be imposed as taxes?

Myron C. Baum:

That is true, Your Honor.

Charles E. Whittaker:

Yes.

Myron C. Baum:

That is true.

And even more significantly, I would like to point out that at the end of the Committee Report of the House Committee on Government operations which reported this bill, that’s House Report Number 1453, I regret that this report came to our attention after the brief was written and so it is not cited.

William J. Brennan, Jr.:

What’s the number of this again?

Myron C. Baum:

Number 1453, 84th Congress, First Session House Report.

I might say parenthetically that the Senate Report is a direct quotation of the House Report.

Felix Frankfurter:

What Congress and what session?

Myron C. Baum:

84th Congress, First Session, Your Honor.

Felix Frankfurter:

84th?

Myron C. Baum:

84th.

Felix Frankfurter:

First Session.

1453, is that right?

Myron C. Baum:

1453.

Felix Frankfurter:

Thank you.

Myron C. Baum:

At the end of that report, there appears a table which has the following caption at the top, “Properties on which payments would be made if the legislation were enacted,” and Item 5 on that table is Rohr Aircraft Chula Vista.

If we need anymore demonstration as to what was intended here, here is Congress itself saying that we need this legislation in order to make payments to the localities and Chula Vista in the County of San Diego and we do it through this legislation.

This is legislation which is in lieu of taxes and not a — a subjection to taxation.

In fact, the report goes on and it says, “Because of a ruling by the United States Court of Claims in 1952 and a subsequent ruling by the Comptroller General in the same year, certain real properties that had formally been subject to local taxation have now been rendered non-taxable by the local authorities.”

And then comes this illuminating sentence, “This is true whether complete legal title to real property has been transferred from a government corporation to another government department or whether the government corporation retained legal title and transfers custody, control or accountability for the real property to another government department.”

And then it goes on — it’s a — three sentences later and says, “It therefore appeared just and necessary.”

Charles E. Whittaker:

May I stop you right there?

Myron C. Baum:

Yes, sure, certainly.

Charles E. Whittaker:

That precisely gives what was held by a claim.

Myron C. Baum:

Well, in saying this is true.

Now, I don’t know whether you can interpret that either way, I think, Mr. Justice Whittaker.

I think — I — I construe it in saying the Committee is recognizing its truth as well.

And I think that is — it — illustrated by the sentence I was about to read —

Charles E. Whittaker:

Yes.

Myron C. Baum:

— which says, “It therefore appeared just and necessary that provisions be made as in this bill at least on a temporary basis to make payments in lieu of taxes until a comprehensive policy with regard to payments in lieu of taxes shall have been enacted by the Congress.”

In fact, Congressman Meader’s statement is to the same effect.

He says, “But my bill does not subject the Federal — Federal Government to taxation but provides for payments in lieu of taxes voluntarily undertaken by the Federal Government subject to repeal by the Federal Government at any time and thus, it would seem to me to avoid any difficulty about one unit of Government taxing another.”

Felix Frankfurter:

May I ask you, Mr. Baum —

Myron C. Baum:

Certainly, sir.

Felix Frankfurter:

— just to satisfy curiosity — about transfer for properties to one agency of Government (Inaudible) Reconstruction Finance (Inaudible)?

There’s been a good — there have been a good many of this certainly since the recent reorganization acts beginning (Inaudible) property may lease etcetera, etcetera all over the place when — when the things are merged over Department of Health, Welfare and Education was created.

There was a great deal of transfer of real estate, wasn’t it?

Myron C. Baum:

Yes, yes, Your Honor.

Felix Frankfurter:

Now, what is the practice of the Government it effectuated?

What is the mechanism for the — the (Inaudible) for effectuating your (Inaudible)

Myron C. Baum:

As far as I’m informed —

Felix Frankfurter:

By deed?

Myron C. Baum:

No, Your Honor.

As far as I am informed, Mr. Justice Frankfurter, those transfers are in effect transferred by the necessary operation of law, for example here, as the counsel said, this was — this property — the title to this property was held by Defense Plant Corporation.

Defense Plant Corporation was dissolved and was — and its property was taken over by RFC.

It became property of RFC.

In fact, the court below relies on legal title in RFC yet there was no deed.

It was transferred from War Assets to General Services Administrator, again no deed.

Property has been transferred by various government agency, either by reorganization plans, executive orders or as a result of statutes transferring functions —

Felix Frankfurter:

I —

Myron C. Baum:

— and it has never been transferred.

Felix Frankfurter:

We’re with the answer — I mean a statutory situation may make a — produce a different result?

I don’t think that answer is properly (Inaudible), but I just want to know what the — what the routine way of doing business —

Myron C. Baum:

The routine —

Felix Frankfurter:

— of inter-department for years.

Myron C. Baum:

The routine —

Felix Frankfurter:

There are a lot of (Inaudible) but then I don’t know how many executive orders making all sorts of transfers from one department to another, from one bureau to another, from one agency to another, and I — I — that’s why my initial question of surprise, I suspect, there are seldom deeds, are they?

Myron C. Baum:

There are seldom deeds and it is a source of some concern to us that a deed is being insisted upon in this case to have legal effect in performing the governmental function here involved.

William J. Brennan, Jr.:

Well, may I ask —

Myron C. Baum:

The true government — I’m sorry.

William J. Brennan, Jr.:

Is — are these particular properties somehow recorded as title in the RFC on the local state records?

Myron C. Baum:

I assume it is, Your Honor.

Myron C. Baum:

I think the tax bills were sent to the RFC during the years in question.

William J. Brennan, Jr.:

Well, I just — but the title records themselves in that county?

Myron C. Baum:

I couldn’t be wholly certain.

And I would have to defer to counsel on that but I believe that’s true or probably in Defense Plant Corporation.

I believe that’s the last record of transfer.

This property was formally owned by the predecessor of this Rohr Aircraft Corporation and was transferred by it to Defense Plant Corporation.

That’s the last transfer on record until as I’m advised recently which is not in the record here, Rohr Aircraft has since purchased its property after the years in — in suit.

Charles E. Whittaker:

Mr. Baum, may I ask you?

Is any light shed on this problem by the quitclaim deed made by RFC to the United States shown at Record 105 under date of March 17, 1955?

Myron C. Baum:

I think not, Your Honor.

I was going to come to this problem of why someone thought that a deed was necessary just at the moment.

Earl Warren:

May I ask question before you get —

Myron C. Baum:

Yes, Mr. Chief Justice.

Earl Warren:

— to that in — in transferring of property so far as deeds are concerned.

Is there any distinction been made — been made between transfers between departments of the Government and transfer between government corporations such as the RFC and — and others?

Myron C. Baum:

To — none to my knowledge, Your Honor.

Earl Warren:

(Voice Overlap) —

Myron C. Baum:

Coming to this question of a deed, if I may, Mr. Justice Whittaker.

First, I would like to point out, as the Court seems to be aware, the decision of the Court of Claims in Board of County Commissioners versus Sedgwick County which involved an exact, exactly similar factual pattern in which the Court of Claims came to the conclusion correctly, we think, that no deed was necessary, the title, beneficial title was in the United States and the property was not taxable by the State of Kansas in that case or the County of Sedgwick in Kansas.

I would like to point out one very illuminating feature of the Board of County Commissioners case, which does not appear from the quotations normally found, that there, as in this case, somebody thought that a deed had better be executed to clear up the chain of title.

And I think it is a source of some remarkable surprise.

This — I am not going into the record in this case.

This appears in the opinion as officially reported that the deed executed to the United States in that case was executed by the War Assets Administrator.

This, it seems to me, comes full circle.

We have the owning agency never — never executing a deed, never, according to the law of conveyancing at least, divesting itself of title but the — the transferee agency, the War Assets Administrator executes a deed to the United States which renders the whole business of a deed to me meaningless.

Felix Frankfurter:

Who — who got that deed?

Who was — what first — who was the United States, who was the —

Myron C. Baum:

I have no idea —

Felix Frankfurter:

— grantee?

Myron C. Baum:

— who receive the deed, Your Honor.

Felix Frankfurter:

You think the President of the United States?

Myron C. Baum:

I doubt it very much.

I assumed it was given to the War Assets Administrator himself and ultimately to the General Services Administrator.

Felix Frankfurter:

Was that recorded in the Registry of Deed here in the district?

Myron C. Baum:

It was not property in the district, it was property in Kansas.

Felix Frankfurter:

Oh, I mean in Kansas.

Do you think it’s recorded in the Registry?

Myron C. Baum:

I assume it was sent out for recording.

I was just relying on what I read from the opinion that — it seems to me to illustrate the whole mockery of the emphasis —

Felix Frankfurter:

I think (Voice Overlap) —

Myron C. Baum:

— on a deed.

Felix Frankfurter:

— a registration fee?

Myron C. Baum:

I think the United States is subject to local [Laughs] registration fee in that case.

Hugo L. Black:

Was the Government ever (Voice Overlap) of the United States?

Myron C. Baum:

Yes, it does.

Hugo L. Black:

Who gets that deed?

Myron C. Baum:

I didn’t hear your, Mr. Justice Black,

Hugo L. Black:

Who gets that deed?

Who gets the deed when it (Voice Overlap) —

Myron C. Baum:

The agency involved in the — in the handling of the property receives the deed but it’s the property is sometimes held directly in the name of the United States.

William J. Brennan, Jr.:

I wonder if he was even in the liberty of it, but suppose he signed it to the order of the United States and then stuck it and they don’t say it?

Myron C. Baum:

It could be done.

But that’s what happened in that case.

He was almost executing a deed to himself.

Now, much is made of the fact.

Oh, in that case, counsel has drawn my attention to the Board of County Commissioners.

The property was transferred to the Department of the Air Force so presumably, the deed went to the Air Force instead of — to the — that is — the deed was to the United States but physically may have been delivered to the Air Force instead of some other agency.

But I think that’s all irrelevant.

Much is sought to be made of the fact.

It’s made by the court below, and it’s made much here by appellees.

Myron C. Baum:

The fact that Mr. Larson, the one time General Services Administrator, stated before a Congress — congressional committee that he had withheld execution of deeds because he was of the belief that by failing to execute a deed, the property would remain taxable, and they didn’t want to disturb these localities by taking these properties off the tax rolls in a — in — all of a sudden and therefore, disrupting their sources of revenues.

Frankly, the best I can say to — to what Mr. Larson said is what he said himself.

He said, “I was wrong.”

Mr. Larson, as General Services Administrator, was in no position to interpret the law of the United States as Congress has enacted it.

This is not a case as we have referred for several hours in the cases preceding where the Administrator concerned is empowered to issue regulations to interpret the statute.

Here, we have statutes would say which property may be taxable on which property may not be or rather the Constitution which says which property may not be taxed.

Felix Frankfurter:

But — but humanly speaking, this is the first tree of light I have without any innuendo against counsel’s argument, this is the first tree of light I have on meaning of this case, namely, the human desire of Mr. Larson that this should not be withdrawn from the taxing power of California.

Myron C. Baum:

That — the whole explanation, I think, if — if Your Honor please, is that he was of the belief that he should — he is — he is the impact so to speak.

And of course, the deeds, the execution of deeds were executed at various times.

Now, in Board of County Commissioners, the deed was executed one year after the declaration of surplus.

In this case, it was not executed until nine years later.

In other cases, it runs for other periods of years without any rhyme or reason.

In fact, in this case, the deed was not even executed until the very same year when Congress was making provision for payments in lieu of taxes.

This property went back ultimately, as I understand it.

It was leased again by the War Assets Administration to the petitioner.

Myron C. Baum:

That’s correct, Your Honor.

Does that have any connection with the withholding of the deed?

Myron C. Baum:

No, Your Honor.

That had no connection whatever.

The only significance to that fact has is that it serves to demonstrate, if the Court please, that this case, if anything is likely an a — a fortiori situation to that presented in Board of County Commissioners because as the court below sought to say in Board of County Commissioners, the lessee remained continuously in possession during this surplus declaration for process whereas here, the lessee vacated the premises.

It was used by the Government itself for two years and then was again leased to the former lessee all over again under a five-year lease.

Now, it is a basic fact which we cannot escape that in tax law, and we have cited numerous decisions in our brief, we do not levy the tax according to the incidence of bare and legal title.

And the most that can be said here is that the RFC retained bear and legal type.

I doubt if that can even be justified in view of the statute which I have referred to.

I think that legal title had passed to the United States by the declaration of surplus because the transferer — transferee agency had all the powers of ownership including the power to execute a deed to a private person or whom you’re with.

And in similar situations, that result has been followed.

Hugo L. Black:

I don’t understand that argument.

You say that taxes are not laid just — where the person has bare legal tittle?

Myron C. Baum:

It’s — they look to the beneficial ownership.

We have had cases which I have referred to in the brief, Mr. Justice Black, where the United States had retained a bare legal title and in claim of immunity was asserted.

Myron C. Baum:

For example, there’s one case where a — the land patent had not yet been delivered and the courts held that that was of no significance that the private person had all incidence of beneficial ownership and therefore, the property was not immune from state and local taxation.

Hugo L. Black:

I thought you were — I misunderstood you.

I thought you were saying as a matter of general tax — taxing practice.

Myron C. Baum:

I meant in —

Hugo L. Black:

The taxes were not imposed on real estate simply because a person had the bare legal title.

Myron C. Baum:

I was — I was — I’m — I’m sorry I didn’t finish my sentence, I should have said bare legal title as opposed to the person holding the beneficial ownership, that is immunity does not rest on any concept of —

Hugo L. Black:

(Voice Overlap) immunity.

Myron C. Baum:

Yes.

In Continental Motors versus Township of Muskegon, which is a decision in the Court with the decision below.

We have exactly the same reasoning as adopted by the Supreme Court of California.

They relied on the statement of — of General Services Administrator Larson that the property was not to be removed from the tax rolls and they said that’s the result we should reach.

But it is not the result which should be reached in accordance with law as Mr. Larson himself recognized.

In fact, the ridiculous absurdity to which this decision has led is illustrated by a case now pending in the Court of Appeals for the Third Circuit referred to in our brief under the name of United States versus County of Lawrence.

That case also involved the disposal of surplus property.

And in that case the Court, the District Court in the Western District of Pennsylvania has held that even though a deed has been delivered, the property remains taxable to the RFC.

So we are taking this one step at a time until we find that once Congress has enacted a waiver of immunity with respect to RFC property, it seems to attach to the property forever and can never be removed.

That certainly is not a result which is in accordance with logic and reason.

I think the error of all these decisions in Continental and in County of Lawrence and at the court below is that it fails to recognize that this property has been effectively removed from the control, custody, operation, responsibility of RFC.

It is now fully under the control of the United States.

And that even if it be held that bare and legal title has some significance in this context, taxation should not be held dependant upon.

The decision below failed to recognize that the waiver of immunity from local taxation enacted by Congress in 1932 with respect to property of RFC, has lost all reason for existence as applied to this property which has become intermingled with general property of the United States to be disposed of as part of the Surplus Property Disposal Program.

Upon such transfer to a disposal agency and upon such intermingling of the property with other property of the United States, it should be treated in the same fashion.

The waiver of immunity enacted by Congress falls and the governmental immunity regularly attaching to real property of the United States becomes applicable.

For these reasons, we urge that the judgment should be reversed.

Earl Warren:

Mr. Kugler.

Manuel L. Kugler:

Mr. Chief Justice, and if the Court pleases.

I will confine my remarks, with the Court’s permission, merely to the question of jurisdiction.

The appellant has come before this Court on the basis of subsection (2) of the code in which he states that there has — that there is present here and that he has drawn in to question the validity of a statute of the State on the ground that it is repugnant to the Constitution, treaties and laws of the United States and that the decision a — there’s a decision in favor of the validity.

This is the burden of the appellant to — to prove this that he has met these conditions where the Court has previously said that these conditions must be complied with closely because this is a limit on the Court’s jurisdiction under an appeal.

He has made a broad reference in the courts below to our taxing statutes.

Manuel L. Kugler:

He has cited no specific statute or statutes.

The Court has said that in prior occasion that it is not enough to say that the tax infringes on a federal right or immunity but that he — he must be specific.

He must make a substantial effort to point out where there is a state law involved or state laws so that in fact, the highest court of the State may have had the opportunity to have reviewed the constitutionality of the state law against federal laws and statutes.

And this, he has failed to do.

I would observe to Your Honors that the — Mr. Leroy Wright has observed that this — and as he said it in effect that the law, he spoke of attacking the tax and that this, in effect, wasn’t attacked on the statutes.

But the Court in the Wilson case, Wilson versus Cook, which is in the briefs, 327 U.S., has stated in so many words that it is not enough to attack the tax but he must attack the statutes and this, he has failed to do.

And so this I don’t believe as he has stated as a detailing without realism.

The — the state court has never nor have the state courts ever passed upon the — any particular statute.

Our — our laws regarding taxes are on harmony with the federal laws and Constitution, nor do I believe that this Court is being asked to overturn any particular state statute.

The only issue here, as I see it, and the only issue raised by the appellant in the courts below and ruled on and passed upon by the California courts has merely been the interpretation of the federal laws we are faced with, the Reconstruction Finance Act, the Surplus Property Act of 1944.

The California court if it had decided that there was — that this property was not taxable under federal law and that’s all it directed its attention to is federal law and the interpretation of it and what was constitution — the congressional intent, then the California laws would have followed naturally and there would not have been a tax or the tax would not have been sustained.

On the other hand, the — the courts below decided that the federal congressional intent was to — to allow this property to be taxed and thus, the California laws followed in natural sequence.

I would say further that the Beaver case and the Allegheny case cited by council are not in support of his position in the least.

In both cases, we have writ of error and writ of appeal to this Court.

In each instance, we had an instance where there was a specific state statute involving the interpretation and meaning of what constituted real property.

In the Allegheny case, it was having machinery and the case of the Beaver case, it involved the definition of fixtures as being real property.

And the courts — the lower courts had to pass upon this.

This was a main argument and subsequently, of course, the United States allowed writs of appeal in these cases because down below, there had been great emphasis placed upon the interpretation of state laws as applied and the validity of those state laws was drawn in to the question and the question of whether it is repugnant or not to the Federal Constitution was dealt with.

We have no situation here.

Counsel has not carried the burden which his was — his responsibility.

And in our opinion, this writ does not lie.

Thank you.

Charles E. Whittaker:

Mr. Kugler, may I —

Manuel L. Kugler:

Yes —

Charles E. Whittaker:

— ask you a question about —

Manuel L. Kugler:

— Justice Whittaker.

Charles E. Whittaker:

— please?

In the Beacon and Allegheny cases, was not the question a little bit more than further this was real property, was it not, is this real property of the United States?

Manuel L. Kugler:

Well, Your Honor, I think that was what they were — were aiming to determine that they were — they had to go through the vehicle of determining what the state statute meant, whether the state statute applied, whether the definition in the state statute would control and there was this interpretation of local law which was present — which has never been present in this case.

Charles E. Whittaker:

Now, what have you to say of this?

Charles E. Whittaker:

The challenge here of lawfulness of the tax is upon the ground that the State has no power to impose it, isn’t that true?

Manuel L. Kugler:

That — that certainly is a question which I think raised by appellant.

Charles E. Whittaker:

Now, then, implicitly, doesn’t that raise some question why and namely, that the state statute, as applied, violates the Federal Constitution without — without saying it in words isn’t that inherently and implicitly and necessarily involved?

Manuel L. Kugler:

Perhaps, you’re correct but —

Charles E. Whittaker:

I — I don’t know — I’d like (Voice Overlap)

Manuel L. Kugler:

Yes, yes, I — I think — I think that we — we must concede there’s a merit to that but that the issue is this that under — under the — the rules of this Court and the decisions of this Court, including the Wilson case, as I observed, Wilson versus Cook, 327 U.S. 474, the Court observed that the — the record in this case does not disclosed at anytime in the course of proceedings.

In the state court, plaintiff asserted the invalidity of a state statute on any federal ground.

The — the Court considered only the validity of the tax not that of the statute.

As I see it, Your Honor, it isn’t a question of what appellant could have done in the courts below, it’s a question of what he did do and then he placed any emphasis upon this down below and was there a state statute or state court which passed upon the validity of the — the particular state statute which was raised, in this case, wasn’t as being repugnant to the Federal Constitution.

It’s not what he could have done but what he did do.

And objecting to the tax is not objecting to a statute according to the Wilson versus Cook case.

Charles E. Whittaker:

Well, if you say, you have no right to assess the tax because to do so would violate the Constitution of the United States, aren’t you saying that to apply your state statute to effect collection of the tax is what violates this — the Federal Constitution and therefore, the state statute, when so applied, violates the Constitution?

Manuel L. Kugler:

Well —

Felix Frankfurter:

Of course, you — you wouldn’t have the problem if you didn’t have a state statute —

Manuel L. Kugler:

No, that’s true, Mr. —

Felix Frankfurter:

— and because the —

Manuel L. Kugler:

— Justice Frankfurter.

Felix Frankfurter:

— the State couldn’t levy it.

But otherwise than that, the state statute doesn’t make itself (Inaudible) in any immediate sense or even its application to property that’s immune from taxation.

They don’t — the answer to that question turns on federal materials and now in state materials, doesn’t it?

Manuel L. Kugler:

Of course, that’s our position that these — these courts below and certainly the California Supreme Court know where they ask to, did they spend any time in discussing the validity of California statute.

They were concerned only with congressional intent in the RFC law and in the 1944 Surplus Property Act.

That’s — that’s —

Felix Frankfurter:

The question of how far back you go, I’m saying that you really implicate a matter of validity of the state statute either directly or — or either on its face by implication.

Manuel L. Kugler:

Yes.

Felix Frankfurter:

Didn’t the state statute has entangled this?

You said otherwise it be no proper, you didn’t have a state statute, a question could never arise.

Manuel L. Kugler:

Well, that — that’s true.

Felix Frankfurter:

But — but all the — all the shooting is about not the state statute but things outside of it.

Manuel L. Kugler:

That’s precisely true.

Manuel L. Kugler:

And of course, as I said, the — the — this Court before on prior occasions has made the point that — that challenging the tax is not enough under this rule.

Earl Warren:

— what — what you’ve said, Mr. Kugler, is there any reason why the certiorari jurisdiction the Court should not be exercised?

Manuel L. Kugler:

Oh, no, Your Honor.

But we — we would concede that certainly its within the power of the Court to go to that if it wishes but, of course, we were making the point in — because a right of appeal — because of error which counsel has taken course to this Court as a matter of — of right as opposed to a matter of discretion —

Earl Warren:

Yes.

Manuel L. Kugler:

— in the court of certiorari and —

Earl Warren:

You — you —

Manuel L. Kugler:

— give you more chance to adopt (Voice Overlap) —

Earl Warren:

— make no contention that there’s not a federal question involved here.

Manuel L. Kugler:

I’m sorry, I didn’t hear.

Earl Warren:

You make no contention that there’s not a federal question involved.

Manuel L. Kugler:

No, no, Your Honor.

No.

Earl Warren:

Yes.

Manuel L. Kugler:

Thank you very much.

Earl Warren:

Mr. Dietz.

Henry A. Dietz:

Mr. Chief Justice Warren, Mr. Justices of the Supreme Court.

First, might I state that I regret very much that the Chief Trial Deputy in County Counsel of San Diego County did not or is not able to be here to argue his own case.

He tried this matter from the trial courts through the Supreme Court of the State of California and unforeseeably, he had a heart attack and has had to retire.

So, in effect, I am pinch-hitting for him.

I hope I will be able to do him justice.

We have some rather interesting questions here with respect to passage of title and with respect to whether a deed is needed and whether this is a question that should be determined of this issue.

The Supreme Court of California expressed itself as this is being the sole question, whether the land seized to be real property of the RFC when control and responsibility was subsequently transferred to the War Assets Administration.

Michigan, on the other hand, expresses the question as being in the final analysis the question at issue was whether Congress clearly manifested an intent in the enactment of the Surplus Property Act of 1944 or otherwise that property of the RFC declared surplus without a transfer of the legal title should thereupon become immune from taxation, not withstanding, the waiver in the Act creating said corporation.

The first point that I wish to make is that we are attempting to determine this question on a matter of what was the intent of Congress.

In 1932, when the original Act was passed, a provision stated any real property of the Corporation, any real property of the Corporation indicating a predecessor to RFC shall be subject to state, territorial, county, municipal or local taxation to the same extent and according to its value as other real property.

Here, we have an expressed waiver of immunity but not only that, we have an expressed consent for the State to tax as such.

It’s not merely aware of immunity but a statement that the State shall tax.

These taxes have to do with the years 1951 to 1952, fiscal years through 1954, 1955.

The taxes in this case are not particularly in dispute, and I think that we are faced with three separate cases which involved the identical issue or the identical principle.

Henry A. Dietz:

So far as I have been able to recall, and I’m sorry that I can’t prove to you by a way of the record which is before you, it is my understanding that RFC is, at the present time, the record owner of this property on the tax rolls of the County of San Diego.

Now, let’s go in to the intent of Congress in passing this so-called waiver or giving this expressed consent to tax.

It was done for one purpose only, and I think that it generally recognized and that was during the depression years that there were properties being transferred and difficulties going on with respect to taxes to the extent that local taxation was in really a pretty sad situation if it was going to be necessary for the Government to take over various properties, and also to take care of that situation of the need for the local communities to be able to run themselves by the use of taxes.

In 1944, when the so-called Surplus Property Act was passed, the — I’m trying to find the exact statement as to what was said in the preamble of the 1944 (Inaudible)

Congress, after the determination by the Court of Claims and after the determination by the Comptroller General in his opinion, came to the conclusion in Section 701 and stated that a declaration of policy was this, “The Congress recognizes that the transfer of real property having a taxable status from the Reconstruction Finance Corporation or any of its subsidiaries to another government department is often operated to remove such property from the tax rolls of states and local taxing authorities, thereby creating an undue and an unexpected burden upon such states and local taxing authorities and causing disruption of their operations.

It is the purpose of this title to furnish temporary measures of relive for such states and local taxing authorities by providing that payments in lieu of taxes shall be made with respect to the real property so transferred on or after January 1st, 1946.”

Apparent to that time and for a period of eight years and so far as the Reconstruction Finance Corporation was concerned and the General Services Administration was concerned, it was the interpretation of the administrative agency that was given the duty of handling this property that it was necessary to pass a deed or pass a title for the purpose of determining whether there should be an immunity from taxation.

The basic reason that they did not desire to tax or did not desire to transfer title on these cases was because they said some 1500 plants would be taken off of the local tax rolls.

Likewise, they thought that they were interpreting what was the true intent of Congress and after all, this Honorable Court is to determine one thing, what was the intent of Congress with respect to taxability insofar as local communities were concerned where property has been declared surplus and where it has been accepted by War Assets Administration?

Even the case upon which counsel so heavily relies, the Sedgwick County case is very cautious, that being a Court of Claims case, to say that insofar as a mere declaration of surplus, this does not relieve immunity.

It is necessary that there be an acceptance on the part of one of the corporations.

But what was the intent of Congress in passing the Surplus Property Act of 1944?

Was it for the purpose of disposing a property and relieving itself of immunity from taxation, which is granted by the original Act?

Or was it for the purpose of orderly transfer of properties of the United States either to some other governmental activity, at which time we would claim, of course, there would be no tax by way of passage of legal title or it was to be placed in the hands of some private individual whereby would again be placed back on the tax rolls?

It is my contention that the purpose of it was that, in effect, all these disposal agencies were doing was to dispose of property for the purpose of an orderly disposition.

And if they were not in fact the owners of the real property as it’s indicated in the original statement of the exemption from tax.

Well, let’s see if we can cover this point with respect to the passage of a deed.

There’s only one way that I know of that property is taxed — real property is taxed in the original instance in a State, and that is when the property is placed upon the tax rolls as such.

This is the only notification that they have and under — under Revenue and Taxation Code 611 of our State, the assessor is required.

It is a mandatory duty upon him to assess property to the record owner, the legal record owner.

Could it not be that insofar as we are concern that this particular property as such that the passage of title or the indication of passage of title on those records of the local authorities who had been given the power of tax was for the purpose of assuring the local taxing authorities what they could attack or what they could tax?

It might well be that we should consider another thing, and that is the fact that even in the Beaver County case, it has been determined that it is necessary for the courts to consider, the fact that there will be a great disruption of the — of the taxing authorities in particular cases if it is not considered that where expressed taxation authority is given, then the State should have the right to have notice of it.

I believe that I have covered pretty thoroughly in our brief the various questions that have been propounded to us.

We are going very definitely upon the question of the intent of Congress.

I believe that the Supreme Court of the State of California, in its expression of what was the intent of Congress, the intent of Congress being not to disrupt taxation but to have a fair share passed on to the local communities.

And likewise, of — this one factor, which I think should be particularly known.

Number one, Rohr Aircraft’s predecessor sold this property to the Federal Government in the first instance.

Number two, it again went back in to possess — possession in 1944.

Number three, during this period of time, it was required by the Federal Government to pay the tax by its very lease.

This is not a case where the Federal Government property is being taxed, Rohr Aircraft is being taxed and the Federal Government has recognized it by a way of a lease.

Henry A. Dietz:

It has stated in the lease, and I hope I can find it, in the Tax Provision Number 13, “Lessee agrees to pay to the proper authority when and as the same becomes due and payable, all taxes, assessments and similar charges which at anytime during the term of this lease maybe taxed, assessed or imposed upon a lessor or a lessee with respect to or upon the leased premises and personal property,” and so forth.

And it even goes to the extent of stating that in the event a lessee fails to pay when due any taxes, assessments, utility bills or similar charges is about set forth then lessor may, at its option, face such taxes, assessments, bills or other charges that require lessee to immediately reimburse it for such cost which the amount is hereby declared to be additional rental and to become immediately due and payable.

Lessor reserves the right to contest the validity or amount of any tax assessment which, of course, we do not dispute.

In view of this fact that I have just stated that this tax is to go back to Rohr Aircraft and not to the Federal Government, they now seek to come in and obtain this tax back for the purpose of their own profits for the purpose of the funds going in to their coverage, rightful taxes on property, and if Rohr owned this property, it would be so taxed.

I think, perhaps, there is no need for me to go further in this case with exception of making one further statement, that is, that the lease in this case was entered into by Reconstruction Finance Corporation in 1949.

And in 1954, Reconstruction Finance Corporation by and through General Services Administrator made an additional years leased on this same property, if this is an indicia of RFC having no interest, no ability or no control over this property, then I am sadly mistaken.

And I thank you extremely for your wonderful courtesy.

Leroy A. Wright:

May I —

Earl Warren:

Mr. Wright —

Leroy A. Wright:

Mr. Chief Justice —

Earl Warren:

— you may continue.

Leroy A. Wright:

— members of the Court, with your permission.

But briefly cover a few other points which have been raised by appellees, first, on the question of jurisdiction.

This is a question which frankly has troubled me as one coming before you to seek the proper remedy.

I was puzzled by two cases which are cited and referred to on page 3 of our reply brief.

They are old ones but they eliminate — eliminate the problem for us.

One is the Indian Territory Illuminating Oil Company and the other Jaybird Mining Company against Weir.

At least these two cases are remarkable because they arose within a remarkably short time with each other.

In the Illuminating Oil Company, oils were withdrawn from Indian lands in Oklahoma and had been mingled with other quarreled concededly taxable.

And this case arose under the early concept of intergovernmental tax immunity when anything that was taken from the Government by a private contractor, was covered with the governmental immunity.

In the Jaybird case, we had ore which was mined on Indian lands and in the bin on the tax tally.

In both cases, the same statutes of Oklahoma were involved.

In both cases, the same assessment procedures and levying those taxes were involved.

In both cases, the same frame of immunity was raised and yet, in the Jaybird case, the writ of error or an appeal was allowed while in the Indian Territory case.

The appeal was dismissed, although the Court granted certiorari.

Here, as in Wilson versus Cook, how do we distinguish an attack on statute which counsel says we must from an attack upon a tax which is the product of the statute?

I think that an explanation of Wilson against Cook is the statement of Court which is contained on page 4 of our reply brief.

As the record does not show, the plaintiffs presented for decision to the State Supreme Court any federal question.

They have no appeal to this Court.

I would refer the Court to the opinion of a District Court of Appeal, which appears both in the jurisdictional statement and in our opening brief.

Leroy A. Wright:

In the jurisdictional statement, that opinion appears and attempted to be, and I am referring expressly to page 28, the District Court of Appeals in the Fourth Appellate District.

Appellant contends that the taxes in question were illegal and void under the general — the rule that lands on by the United States of America or its corporate instrumentalities are immune from state or local taxes cited McCulloch against Maryland and other cases.

This question was also raised in the pleadings.

It was expressly recognized in the findings of fact made by the trial court.

All of which are in the record.

But so much for this, I think the claim that the question of jurisdiction is under some of the language which this Court has used in dealing with other cases, a close one.

I think it equally claim that this does present a substantial federal question which has not heretofore been resolved by this Court.

And certainly, one on which a guidance it needs.

Counsel has laid to execrable stress upon administrative policy, a policy adopted by the Administrator of War Asset, Mr. Larson.

It’s interesting to note however that this policy is one which Mr. Larson abandoned and counsel is here urging that an abandoned policy be adopted as a rule of this Court on a theory that administrative policy, an interpretation that’s been long in effect serves as a guide for statutory interpretation.

True, this is the — the rule but it involves a — an administrative policy which has long been in effect and which has been followed.

This can then become a guide.

But certainly, no such administrative policy has here been shown by a mere statement in a letter from Mr. Larson that he used to do it this way but he stopped doing in that way.

Counsel has a statement that it is Rohr Aircraft that has been taxed.

This statement is not so find.

The entire record demonstrates that the tax filled the assessments, the levies were made upon property of the United States and upon that property, not upon Rohr Aircraft.

Tax bills were issued in the name of Reconstruction Finance Corporation.

They were sent and it is demonstrated by testimony in the record.

Presumably, to General Services Administration, at least the lessee got from GSA during the tax years here involved, they were forwarded to the lessee from GSA along with the request that they be paid in accordance with the provisions of the lease.

This, they worked.

But these taxes are ad valorem taxes levied upon property of the United States drew.

It may be a property of one its governmental instrumentalities but it’s nonetheless property of the United States.

And it subjects the property of the United States to seizure, to levy in the event the Rohr Aircraft Corporation did not comply with the provisions of its lease.

What would happen?

These properties of the United States would have been sold under the mechanics provided by the Revenue and Taxation Code where the seizure in sale of delinquent taxes.

They could have been.

Charles E. Whittaker:

Do you — do you, by that argument, sustain this right that all property, whether owned by the RFC or if not by its name is property of the United States not subject therefore to taxation?

Leroy A. Wright:

I — I’m not talking about the waiver.

The property — any property owned by the United States or by the United States to any of its corporate instrumentalities with respect to which there has been no waiver and if the waiver is not applicable, I think it’s a matter of general law which had been recognized takes with it the constitutional immunity of the Federal Government from a tax which is levied upon the property as such.

To distinguish the taxes, which were involved in the Detroit and Murray case which were levied upon the rights and interests of the lessee, the privilege tax, this tax is not such a case.

Leroy A. Wright:

This tax is levied upon the property of the United States.

If it’s permitted, it’s permitted at all solely because the Congress has waived its immunity and that waiver is still applicable.

We contend that after the declaration of surplus, waiver is no longer applicable that it seizes then to be property of the RFC.

Just the same as though, for example, a similar language is contained in the statute creating the Federal Farm Mortgage Corporation.

Suppose the Congress transferred the activities and functions of the Federal Farm Mortgage Corporation to the Department of Agriculture by legislative enactment, what would happen to the waiver?

We contend that it would fall.

Comment has been here made, again, that Rohr is being taxed, the appellant is here being taxed.

This ignores the fact as pointed out in our reply brief that California has a very specific and express system for the taxation of possessory interest in tax and in properties.

We make no complaint about that tax.

That is a tax which has been set up by the stipulations entered into in the court below as an equitable concept of any recovery which we might obtain here if our contention is sustained.

But that is a tax which would put us in a power with other lessees of other exempt properties within the State of California.

This tax is levied upon the Government’s property as a tax upon that property and not upon this lessee.

This Court has stated in recent cases that a State may not constitutionally taxed property owned by the Federal Government even though the property is in private hands and the taxes to be collected upon the private taxpayer.

That statement and that language is called from this Court’s various opinions in the Michigan cases recently decided.

And we believe that here, the State has been attempted to constitutionally tax property (Inaudible) by the United States.

We, therefore, submit that the case should be reversed.

Thank you.