Atkinson v. State Tax Commission

• Decision Date: 06 April 1937
• Citation: 156 Or. 461,67 P.2d 161
• Parties: ATKINSON et al. v. STATE TAX COMMISSION et al. [*]
• Court: Oregon Supreme Court

67 P.2d 161

156 Or. 461

ATKINSON et al. v. STATE TAX COMMISSION et al. ^[*]

Supreme Court of Oregon

April 6, 1937

In Banc.

Appeal from Circuit Court, Multnomah County; Robert Tucker, Judge.

On Rehearing.

Judgment in 62 P.2d 13, reversed, and judgment of trial court affirmed.

RAND J., dissenting.

Howard P. Arnest, of Portland, for appellants.

Carl E Davidson, Asst. Atty. Gen. (I. H. Van Winkle, Atty. Gen., on the brief), for respondents.

James R. Bain, Dist. Atty., and Frank S. Sever, Deputy Dist. Atty both of Portland, amici curiæ.

BAILEY Justice.

Oral argument on the rehearing of this matter, following granting of petition of the defendants and respondents, State Tax Commission and the members thereof individually, was practically limited to the question of whether the federal government has exclusive legislative jurisdiction over the site, within territorial limits of the state of Oregon, of the Bonneville Dam Project. The other contention stressed by the plaintiffs and appellants in their original briefs and at the first hearing, and decided adversely to them in our former opinion, was that in the work which they had performed in construction of the Bonneville Dam they had acted as an instrumentality or agency of the federal government, and that, therefore, their income derived from payment for such work was not subject to be taxed by the state of Oregon as personal income of the plaintiffs, copartners who are nonresidents of the state of Oregon. This contention, although not urged on the rehearing, was not abandoned. We shall not discuss the matter further, except to say that we adhere to our former opinion in this regard, further supported by the recent decision in Silas Mason Co. v. State Tax Commission (Wash.) 61 P.2d 1269.

The Bonneville Dam Project extends from the banks of the Columbia river on the Washington side, across the main or north channel of the river, thence across Bradford Island and the south channel of the Columbia river, known as Bradford slough, to the banks of the river in the state of Oregon. The territorial boundary of Oregon at the north is "the middle channel of said river, and, where it is divided by islands, up the middle of the widest channel thereof," which widest channel at this point is the water between Bradford Island and the Washington banks.

The entire area of Bradford Island was acquired by the federal government, either by purchase or condemnation. An extensive tract of mainland was also acquired by the federal government on the Oregon side of the river adjoining Bradford slough, some of which land was used in connection with construction of certain units of the dam works, and other parts were reserved for present use by army engineers and other federal employees engaged in work on the dam, for residence purposes, and for later occupancy by those having charge of the operation and maintenance of the powerhouse and locks. The record does not show what lands in the state of Washington, if any, were acquired for this project. Construction of the dam is under the direction of the War Department of the United States.

The major unit of the dam structure is built across the main or north channel of the Columbia river between Bradford Island and the Washington banks and is some distance upstream from the combined dam and power plant being constructed across the south channel, or Bradford slough. At the site of this latter structure the south channel is some 275 feet to 350 feet wide, measured between the meander lines as run by federal surveyors. The record does not disclose the distance from bank to bank during average high water.

The appellants early in 1934 entered into a contract with the United States through the War Department "for the furnishing of all plant, labor and materials, and performing the work in construction and maintenance of earth coffer dams, construction of coffer dam sluice-way, construction of grade crossing, grading of roadway and excavation and removal of earth for site of power house and navigation locks on the Columbia river" on land of the federal government and the bed of Bradford slough, designated as the Bonneville Dam Project. Their contract with the government was performed prior to the institution of this proceeding.

In the construction of the south unit of the dam, and this is also probably true of the north unit, it was necessary to build coffer dams on each side of the permanent structure. In the Bradford slough area one of the cofferdams is approximately 600 feet upstream from the permanent dam structure, and the other is some 800 feet downstream. The map which was introduced as an exhibit shows that each end of the dam and power plant in Bradford slough has been built on lands purchased by the federal government, at the north on Bradford Island and at the south on the Oregon mainland. The locks and the canal in connection therewith are constructed at the south of the dam across Bradford slough and to some extent over and across property purchased and owned by the federal government.

In the former opinion it was held that the federal government had exclusive jurisdiction over the site of the Bonneville Dam Project in the state of Oregon, and that the profits realized by plaintiffs from the performance of their contract were not subject to taxation by the state of Oregon. This is the only question here involved. In arriving at a solution of the problem it is, however, necessary to determine whether or not the federal government had, during the time that plaintiffs were engaged in performing their contract, exclusive legislative jurisdiction over the entire area, within the territorial limits of the state of Oregon, of the Bonneville Dam Project or certain parts of it.

Article 1, § 8, of the Constitution of the United States, provides that "Congress shall have Power *** to exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the Acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, Dock-yards, and other needful Buildings."

The major part of the dam structure is built upon the land underlying the waters of the two channels of the Columbia river. It is being constructed for the purpose of aiding navigation and for the development of hydroelectric power. The height of the dam has necessitated construction of parts of the base thereof upon the banks of Bradford slough and the banks of the Columbia river in Washington and Oregon.

Both channels of the Columbia river within the Bonneville Dam Project are navigable waters. And, since they are navigable, the soil underneath them below ordinary high-water mark within the territorial limits of the state of Oregon belongs to this state: State v. Imlah, 135 Or. 66, 294 P. 1046; Cook v. Dabney, 70 Or. 529, 139 P. 721; United States v. Utah, 283 U.S. 64, 51 S.Ct. 438, 445, 75 L.Ed. 844; Pollard's Lessee v. Hagan, 3 How. 212, 11 L.Ed. 565; Shively v. Bowlby, 152 U.S. 1, 14 S.Ct. 548, 38 L.Ed. 331.

The title to lands under the water of these channels within the territorial limits of the state of Oregon has not been acquired by the federal government from the state of Oregon by purchase, condemnation, or otherwise. Nor has the state of Oregon ceded to the national government exclusive legislative jurisdiction over the waters of these channels.

In United States v. Bevans, 3 Wheat. 336, 338, 4 L.Ed. 404, a question arose as to whether the state of Massachusetts or the United States had jurisdiction over a crime committed on a war ship "lying at anchor in the main channel of Boston harbours." In his opinion therein, at page 386, of 3 Wheat. 4 L.Ed. 404, Chief Justice Marshall said:

"What then is the extent of jurisdiction which a state possesses? We answer, without hesitation, the jurisdiction of a state is co-extensive with its territory; co-extensive with its legislative power. The place described is unquestionably within the original territory of Massachusetts. It is then within the jurisdiction of Massachusetts, unless that jurisdiction has been ceded to the United States."

In considering the question of whether the state of Oregon has legislative jurisdiction over the waters of Bradford slough and that part of the north channel of the Columbia river within the territorial boundaries of the state, some assistance may be had from the decision in Gromer v Standard Dredging Company, 224 U.S. 362, 32 S.Ct. 499, 502, 56 L.Ed. 801. In that case there was a dispute as to the power of Porto Rico to tax certain machinery and boats which were in the harbor of San Juan engaged in dredging operations in pursuance of a contract with the United States government. The opinion pointed out that the purpose of certain federal legislation was to give to Porto Rico local self-government and to confer on that insular possession "an autonomy similar to that of the states and territories, reserving to the United States rights to the harbor areas and navigable waters for the purpose of exercising the usual national control and jurisdiction over commerce and navigation." Then followed this pertinent statement: "The United States could have reserved government control and exercised it as it does in instances, by the consent of the states, over certain places in the states devoted to the governmental service of the United States." The court further held that such reservation had not been made by the federal government, and concluded that Porto Rico had jurisdiction to tax the personal property...