88 F.2d 869 | 5th Cir. | 1937
Lead Opinion
An additional tax was assessed by the Commissioner and sustained by the Board of Tax Appeals against John H. Therrell for the years 1931 and 1932 because of income received by him in those years as liquidator of a number of Florida banks and trust companies. The only question is whether the Federal Constitution prohibits taxation by the United States of this income earned in the service of the State of Florida. The Board held that Therrell was neither officer nor employee of the State of Florida, but an independent contractor whose compensation was taxable, relying directly on Davie et al. v. Com’r, 26 B.T.A. 1007, and Metcalf & Eddy v. Mitchell, 269 U.S. 514, 46 S.Ct. 172, 70 L.Ed. 384.
We judicially notice the statutes of Florida and their provisions for the establishment of banks and trust companies, for their supervision, and for their winding up. Comp.Gen.Laws Fla. § 6053 and following, and especially sections 6102, 6102 (1), 6104, 6105, relating to liquidators. The State Comptroller when a bank or trust company is found insolvent or threatened with insolvency, or is in an unsound condition or violating the banking laws, “may * * * appoint a liquidator to take charge of the assets and affairs of such bank, and require of him such bond and security as the Comptroller deems proper * * * and such liquidator shall be subject to dismissal by the Comptroller. .* * * Such liquidator under the direction and supervision of the Comptroller, shall take possession of the books; records and assets of every description of such bank * * * and in his name shall sue for and collect all debts, dufes and claims belonging to it, and upon the order of a court of competent jurisdiction may sell or compound all bad or doubtful debts, and, on a like order, may sell all the real and personal property * * * and * * * sue for and enforce the individual liability of the stockholders. Such liquidator shall pay all money received by him to the State Treasurer to be held as a special deposit * * * and shall also make quarterly re-ports to or when called upon, to the Comptroller.” Comp.Gen.Laws Supp.Fla. § 6102. The appointment is, after notice to the bank, confirmed by the circuit court. The expenses of liquidation are paid out of the fund in the Treasurer’s hands. “The compensation of the liquidator shall be fixed by the Comptroller, and shall be based upon the amount of work actually necessary and performed, and shall in no case exceed five per cent, of the cash collections.” Comp.Gen.Laws Supp.Fla. § 6105. Therrell was appointed liquidator of a number of banks, and gave substantially all his time to the work. He had no commission from the Governor and took no oath of office, but he had formal appointments hy the Comptroller under his official seal confirmed by the court, and gave a bond for his faithful conduct touching each bank approved by the Comptroller.
The classic demonstration that a banking system is a fiscal instrumentality of the national government which cannot constitutionally be taxed by a state is found in McCulloch v. Maryland, 4 Wheat. 316, 4 L.Ed. 579. The classic counterpart is found in Collector v. Day, 11 Wall. 113, 20 L.Ed. 122, where it is shown that the governmental instrumentalities of the states are similarly not taxable by the United States. The taxation of a state judge’s salary, though under a general law, was held to be a taxation of his employment as judge, and therefore of the state’s administration of justice. These statements of the law have
Reversed.
State taxation of national bank shares is a case of such consent, Baltimore National Bank v. State Tax Commission, 297 U.S. 209, 56 S.Ct. 417, 80 L.Ed. 586.
Dissenting Opinion
(dissenting).
The view of the majority, that to tax petitioner in respect of the compensation he receives from the banks he liquidates is to invade and impair the sovereignty of Florida, seems to me illogical and unreal. Illogical and unreal because by law his compensation is to be, it is in fact, paid not by the state from its own funds, but by each bank he liquidates and from the funds of that bank. I recognize the existence and binding force of the holding that to tax officers and employees of a state actually employed in conducting, or in connection with the conduct of, its governmental functions in respect of their compensation as salaries or wages paid them by the state from its own funds is to burden the state. I realize that it would be vain now to protest that ruling. Texas Co. v. Carmichael (D.C.) 13 F.Supp. 242, 247. I think it plain, however, that the decisions which so hold have pressed the doctrine of governmental immunity to its very verge. To extend the protection of that doctrine as here proposed to one who is neither an officer of the state nor its employee but a mere agent at the will of or contractee with the Comptroller is, I think, not only without the support of a single authority but contrary to the very reason of the doctrine invoked. That reason, that the state must be free from interference in the exercise of its sov
I do not believe my associates would extend the exemption this far. I have difficulty in making flesh of one and fowl of the other when ail are engaged to the same end, in liquidating the bank, all are under the satne general supervision and control of the state Comptroller, and all are paid from the same source. It will avail nothing to point out that the supervision and liquidation of banks is a governmental function .and the Comptroller an officer of the state, discharging that function. The liquidator is not an officer of, he draws no salary from, the state. He merely undertakes for and under the appointment of a Comptroller, as a court receiver does for and under the appointment of a court, to handle specific matters of conservation and liquidation when appointed to do so. It will serve no purpose to cite or discuss the great number of authorities according or denying exemption on varying states of facts. It is sufficient to say they all agree upon the principle that where the effect of the tax upon the state is regarded as immediate and direct there is immunity; where it is regarded as remote and indirect there is none. Illustrative cases discussing the principle and assembling the authorities are: Helvering v. Powers, 293 U.S. 214, 55 S.Ct. 171, 79 L.Ed. 291; Burnet v. A. T. Jergins Trust, 288 U.S. 508, 53 S.Ct. 439, 77 L.Ed. 925; Metcalf & Eddy v. Mitchell, Administratrix, 269 U.S. 514, 46 S.Ct. 172, 70 L.Ed. 384; Register v. Commissioner (C.C.A.) 69 F.(2d) 607, 93 A.L.R. 186; Fox Film Corporation v. Doyal, 286 U.S. 123, 52 S.Ct. 546, 76 L.Ed. 1010; Liggett & Meyers Tobacco Co. v. United States, 57 S.Ct. 239, 81 L.Ed. -, decided January 4, 1937.
I think the Board rightly denied the exemption. Its decision and order should stand. I dissent from the reversal.