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Mr. Howard P. Arnest, of Portland, Or., for appellants.
Mr. Carl E. Davidson, of Portland, Or., for appellees. [303 U.S. 20, 21]
PER CURIAM.
This case presents the question of the validity of the personal income tax law of Oregon, Oregon Code 1930, c. 25, tit. 69, 69-1501 to 69-1538, as amended by Laws 1933, cc. 322, 387, and by Laws 1933, 2d Sp. Sess., c. 31, as applied to the net income of the appellants derived from their work within the exterior limits of the state in the construction of the Bonneville Dam on the Columbia river under a contract with the United States. The contract was made in February, 1934, and the work was completed in that year. The tax was assailed upon the grounds (1) that it burdened the operations of the Federal Government and (2) that the area within which the work was done was within the exclusive jurisdiction of the United States. The Supreme Court of the state sustained the tax (156 Or. 461, 62 P.2d 13, 67 P.2d 161, 166) and the contractors appeal.
With respect to the contention that the state law lays an unconstitutional burden upon the Federal Government, the case is controlled by our previous decisions. Metcalf & Eddy v. Mitchell, 269 U.S. 514 , 46 S.Ct. 172; General Construction Co. v. Fisher, 295 U.S. 715 , 55 S.Ct. 646; James v. Dravo Contracting Co., 302 U.S. 134 , 58 S.Ct. 208; Silas Mason Company v. Tax Commission, 302 U.S. 186 , 58 S.Ct. 233, decided December 6, 1937. In the two cases last mentioned the tax which was upheld was upon the gross income of the contractors. In Metcalf & Eddy v. Mitchell, supra, and General Construction Co. v. Fisher, supra, the tax was upon the net income.
As to territorial jurisdiction, it appears that the area within the boundaries of Oregon in which the work was [303 U.S. 20, 22] performed embraced (a) the bed of the Columbia river, where the main structural works are placed, and (b) Bradford island and a portion of the mainland.
The United States did not acquire title to the bed of the river. Upon this point the state court said:
The case in this relation falls within the principle of our decision in James v. Dravo Contracting Company supra. The question, we there said, was not one of the paramount authority of the Federal Government to have the work performed for purposes within the federal province. The title to the bed of the river was in the state. And, although subject to the dominant right of the Federal [303 U.S. 20, 23] Government, the servient title continued in the state which thus retained its territorial jurisdiction for purposes not inconsistent with the exercise by the Federal Government of its constitutional functions. See, also, Silas Mason Company v. Tax Commission, supra.
The remaining question concerns the lands on Bradford island and the mainland which were purchased by the United States. Appellants rely upon the Oregon statute giving consent to the United States to purchase or otherwise acquire any land within the state 'for the purpose of erecting thereon any needful public buildings' under authority of any act of Congress, and providing that the United States should have 'the right of exclusive jurisdiction over the same,' saving the authority of the state for the service of process. Oregon Code 1930, 60-1303.
In Silas Mason Company v. Tax Commission, supra, we said that as a transfer of exclusive jurisdiction rests upon a grant by the state, it follows, in accordance with familiar principles applicable to grants, that the grant may be accepted or declined. Acceptance may be presumed in the absence of evidence of a contrary intent. But we found no constitutional principle 'which compels acceptance by the United States of an exclusive jurisdiction contrary to its own conception of its interests.' The mere fact that the Government needs title to property within the boundaries of a state 'does not necessitate the assumption by the Government of the burdens incident to an exclusive jurisdiction.'
In this instance, the state court took the view that the Federal Government had not accepted and did not intend to exercise exclusive legislative authority over the lands which had been purchased for this project. The court said:
The contract between the Government and appellants is not in evidence but the record discloses, as stated by the state court, that the Government did not seek to exclude the state from all legislative authority, an exclusion which would have followed from an acceptance of a grant of 'exclusive jurisdiction' with the sole reservation of the right to serve process. The enforcement and administration of the Oregon Compensation Law, see Oregon Code 1930, 49-1801 to 49-1845, as amended, with which the contractors were required to comply, were incompatible with the existence of exclusive legislative authority in the United States. 1 If, however, exclusive jurisdiction, although offered, was not accepted by the United States, there is no warrant for the conclusion that the state did not retain its territorial jurisdiction over the area in question so far as its exercise involved no interference with the carrying out of the federal project. And as we have decided that there is no such interference through the enforcement of a tax such as is here assailed, we find no ground for overruling the decision of the state court.
The judgment is affirmed.
Mr. Justice CARDOZO took no part in the consideration and decision of this case.
[ Footnote 1 ] The purchase of the lands, here involved, were made by the Government, and the contract with the appellants was made and performed, prior to the enactment of the Act of Congress of June 25, 1936, 49 Stat. 1938, 40 U.S.C.A. 290, and we express no opinion as to the effect of that act in relation to lands as to which exclusive jurisdiction had previously been granted to and accepted by the United States.
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Citation: 303 U.S. 20
Docket No: No. 303
Argued: January 13, 1938
Decided: January 31, 1938
Court: United States Supreme Court
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