Clallam County, Wash v. United States, 255

• Decision Date: 26 November 1923
• Docket Number: No. 255,255
• Citation: 44 S.Ct. 121,68 L.Ed. 328,263 U.S. 341
• Parties: CLALLAM COUNTY, WASH., et al. v. UNITED STATES et al
• Court: U.S. Supreme Court

263 U.S. 341

44 S.Ct. 121

68 L.Ed. 328

CLALLAM COUNTY, WASH., et al.

v UNITED STATES et al.

No. 255.

Argued Nov. 15, 1923.

Decided Nov. 26, 1923.

Messrs. Thomas F. Trumbull, of Port Angeles, Wash., and John D. Fletcher and S. Warburton, both of Tacoma, Wash., for Clallam County.

Mr. Solicitor General Beck, of Washington, D. C., for the United States.

Mr. Justice HOLMES delivered the opinion of the Court.

This case comes here upon a certificate from the Circuit Court of Appeals. The suit was brought against the appellants, Clallam County, incorporated by the State of Washington, and its taxing officers, for a decree 'cancelling,' as it is put in the certificate, the taxes levied by the County and State for the years 1919, 1920 and 1921, upon land and other physical property to which the United States Spruce Production Corporation then had the legal title. 283 Fed. 645. The questions certified are (1) whether the District Court of the United States had jurisdiction of this suit, and (2) whether the property held by the Spruce Production Corporation is subject to state taxation upon facts the statement of which may be abridged as follows:

The Act of July 9, 1918, c. 143, subc 16, § 1, 40 Stat. 845, 888 (Comp. St. Ann. Supp. 1919, § 3115 1/32g), authorized the Director of Aircraft Production to form one or more corporations under the laws of any state for the purchase, production, manufacture and sale of aircraft, or equipment or materials therefor, and to own and operate railroads in connection therewith, whenever in his judgment it would facilitate the production of aircraft, etc., for the United States and Governments allied with it 'in the prosecution of the present war.' By section 3 (section 3115 1/32i) within one year from the signing of a treaty of peace with Germany proceedings were to be begun for the dissolution of the corporation so formed. In August, 1918, this corporation was organized under the laws of Washington. The stock except seven shares for the trustees of the corporation was subscribed for by the United States and those shares were controlled by the United States and all property and dividends accruing from them were assigned to the United States. The United States conveyed to the corporation the lands and property now sought to be taxed and a partially performed contract under which these lands were to be acquired and a sawmill and logging railroad were to be built. The corporation issued bonds that were all taken by the United States for cash or in payment for the property conveyed to the company. It proceeded to complete the railroad and mill and to get materials for air craft for the use of the United States in the war and its activities 'were wholly directed to the government's program of production of aeroplane lumber.' After the armistice these activities have been directed to liquidating the corporation's affairs, although to accomplish it some further contracts have been made, but, as we understand, solely for that end. The regulations of the Chief of Air Service appointed under the National Defence Act (39 Stat. 166) provide for administrative supervision of the liquidation under the Secretary of War.

In short the Spruce Production Corporation was organized by the United States as an instrumentality for carrying on the war, all its property was conveyed to it by or bought with money coming from the United States and was used by it solely as means to that end, and when the war was over it stopped its work except so far as it found it necessary to go on in order to wind up its...