Geery v. Minnesota Tax Commission

¹ Reported in 282 N.W. 673. For reasons announced on the previous appeal of this case, there being no opinions of the United States Supreme Court in the meantime which in our opinion hold otherwise, the judgment of the trial court is affirmed and made final. This is the second appearance of this case in this court. For our opinion on the former appeal see 202 Minn. 366,278 N.W. 594, to which we refer for a statement of the case up to the time of the filing of that opinion. When the case went back to the district court, the plaintiff moved for the entry of judgment and the defendants for leave to answer. Defendants' motion was denied, and the plaintiff's motion was granted. Judgment was entered, and this appeal followed.

The trial court denied the defendants' motion for two reasons, the first of which was that the application came too late, and the second that the proposed answer raised no issue that had not been passed upon adversely to the defendants by the former decision of this court. It is the contention of the defendants that the trial court abused its discretion in denying their motion for leave to interpose an answer, and further that since our first opinion was rendered opinions have been handed down by the Supreme Court of the United States which indicate that that court holds views contrary to those expressed in our former opinion. Passing the question of the trial court's discretion, we take the view that no material facts were alleged which were not alleged in the complaint or taken judicial notice of by this court or that would change our views upon the legal questions involved.

The two cases relied upon by the defendants as indicating that the Supreme Court of the United States entertains views different from those expressed in our previous opinion are Helvering v. Gerhardt, 304 U.S. 405, 58 S. Ct. 969,82 L. ed. 1427, decided May 23, 1938; and Allen v. Regents of University of Georgia, 304 U.S. 439, 58 S. Ct. 980, 82 L. ed. 1448, decided on the same day. Both of these cases involved the imposition of a federal tax. In Allen v. Regents the court held that the state, in order to raise funds for public purposes, had embarked on business having the incidents of similar enterprises usually prosecuted for private gain. It said [304 U.S. 452]:

"If it be conceded that the education of its prospective citizens is an essential governmental function of Georgia, as necessary to the preservation of the State as is the maintenance of its executive, legislative, and judicial branches, it does not follow that if the State elects to provide funds for any of these purposes by conducting a business, the application of the avails in aid of necessary governmental functions withdraws the business from the field of federal taxation."

It does not follow from this holding that the state, without the consent of congress, may tax a federal instrumentality engaged in governmental functions. In Helvering v. Gerhardt the court sustained a federal tax upon the salaries of officers of a corporation known as the "Port of New York Authority," which was created by the legislatures of New York and New Jersey with the approval of congress for the construction and operation of bridges, tunnels, freight terminals, and for the accommodation of interstate commerce in and across New York Harbor. This case may justify an extension of the federal power to tax state salaries under certain circumstances, but it does not justify a state tax upon federal instrumentalities or the salaries of men engaged in the discharge of the sovereign functions of the United States government. The contention of the defendants that the immunity from taxation is "reciprocal" as between the state and federal government is not borne out by the authorities. By the use of the word "reciprocal" apparently the defendants mean that the extent of the immunity is the same in either case. In Helvering v. Therrell, 303 U.S. 218, 223, 58 S. Ct. 539, 542,82 L. Ed. 758, the court said:

"The Constitution contemplates a national government free to use its delegated powers; also state governments capable of exercising their essential reserved powers; both operate within the same territorial limits; consequently the Constitution itself, either by word or necessary inference, makes adequate provision for preventing conflict between them.

"Among the inferences which derive necessarily from the Constitution are these: No State may tax appropriate means which the United States may employ for exercising their delegated powers; the United States may not tax instrumentalities which a State may employ in the discharge of her essential governmental duties — that is those duties which the framers intended each member of the Union would assume in order adequately to function under the form of government guaranteed by the Constitution.

"By definition precisely to delimit 'delegated powers' or 'essential governmental duties' is not possible. Controversies involving these terms must be decided as they arise, upon consideration of all the relevant circumstances."

The distinction between the immunity granted to the exercise of federal delegated powers and that given to the essential governmental duties exercised by the states seems clear. It places the two cases relied upon by appellants outside the issue here involved.

The judgment of the trial court is affirmed and made final.