City of Detroit v. Murray Corporation City of Detroit/Dissent Whittaker

by Charles Evans Whittaker

United States Supreme Court

355 U.S. 489

City of Detroit  v.  Murray Corporation City of Detroit

Mr. Justice WHITTAKER, with whom Mr. Justice FRANKFURTER, Mr. Justice BURTON and Mr. Justice HARLAN join, dissenting.

I respectfully dissent. The bases of my disagreement can be made clear only by a full treatment of the case.

On December 20, 1950, the United States entered into a contract with Kaiser Manufacturing Company under which the latter agreed to produce and deliver to the Air Force certain airplanes, airplane parts and subassemblies, at fixed prices; and on December 12, 1950, a similar contract was made by the Government with Curtiss-Wright Corporation. As contemplated by the parties, Kaiser, on March 23, 1951, and Curtiss-Wright, on April 19, 1951, entered into subcontracts with respondent, The Murray Corporation of America, under which the latter agreed to produce and deliver to those prime contractors certain airplane parts, subassemblies and nondurable tools (hereinafter called supplies) at fixed prices, which subcontracts were approved by the contracting officer of the Air Force. The subcontracts contained 'partial payment' provisions which provided, among other things, that upon the making of any partial payments to Murray under the subcontracts 'title to all parts, materials, inventories, work in process and non-durable tools theretofore (and thereafter, upon acquisition) acquired or produced by the (sub)contractor for the performance of (the) contracts(s), and properly chargeable thereto * * * shall forthwith vest in the Government.' Such property will hereinafter be called materials. After the date of the subcontracts, and prior to January 1, 1952, the Government through the prime contractors, made 'partial payments' to Murray in the amount of $674,776.87. ^[1] None of the supplies to

Opinion of Mr. Justice FRANKFURTER. be produced by respondent under the subcontracts had been completed or delivered prior to January 1, 1952.

On the 1952 tax assessment date of January 1, 1952, petitioners, the City of Detroit and the County of Wayne, made an assessment (valuation) of Murray's personal property in the amount of.$12,183,180, which included $2,043,670 for materials originally acquired by Murray for the performance of the subcontracts, and properly chargeable thereto. Applying their respective tax rates to that assessment, the City of Detroit imposed a tax of $67,714.96 and the County of Wayne imposed a tax of $12,572.66, more than would have been the case if the value of the materials of $2,043,670 had not been included in the 1952 assessment against Murray.

Murray paid those taxes under written protest, ^[2] and after having exhausted all administrative remedies, it brought three actions against petitioners in the United States District Court for the Eastern District of Michigan for refund of that part thereof ($80,287.62 plus interest) allocable to inclusion in the assessment of the $2,043,670 upon the materials referred to. ^[3] The United States intervened in the actions and, by stipulation, they were consolidated for trial. Murray moved for summary judgments, and the parties stipulated that no genuine issue of material fact existed in the actions. The court, after considering the motion, and the exhibits and affidavits in support of and in opposition thereto, and hearing the arguments and considering the briefs of counsel, granted the motion and rendered judgment in each of the actions in favor of Murray and against petitioners for the amount prayed, plus interest. 132 F.Supp. 899. The Court of Appeals, holding that the materials were owned by the Government, and not by Murray, on the assessment date, that the tax assessed and imposed thereon and collected by petitioners was a general ad valorem personal property tax on the Government's property, and that the Government was constitutionally immune from such taxes, affirmed the judgments of the District Court. 6 Cir., 234 F.2d 380.

The majority now reverses the Court of Appeals and reinstates the assessment and tax. In doing so, I believe, they are not only in serious error, but also they add words to the taxing Acts involved and the opinion openly so admits. See 78 S.Ct. 461, supra.

Three principal issues are presented, namely: (1) Did the Government, by the terms of the 'partial payment' provisions of the subcontracts, become 'vest(ed)' with 'title' to all elements of property and incidents of ownership in the materials referred to prior to the assessment date, or did it thereby acquire 'title' thereto only as security and, thus, become only a lienor? (2) Is this a general ad valorem tax imposed on the materials, as contended by respondents and as found by the Court of Appeals? (3) If the materials were, in fact, the property of the Government on the assessment date, and the tax constitutes a general ad valorem tax on that property, may the tax be constitutionally imposed?

The first question of whether the Government acquired complete and absolute title to the materials prior to, and beneficially owned them on, the assessment date, as respondents contend, or had acquired 'title' thereto only as security and was therefore only a lienor, as contended by petitioners, depends upon the terms of the 'partial payment' provisions of the subcontracts and upon actual operations thereunder, for the question, in last analysis, is one of intention of the contracting parties.

The partial payment provisions, in pertinent part, provide:

'11. Partial payments.-Partial payments * * * may be made upon the following terms and conditions.

'(a) The contracting officer may from time to time, authorize partial payments to The Murray Corporation of America (hereinafter called 'the Contractor') upon property acquired or produced by it for the performance of this contract: Provided, that such partial payments shall not exceed 90 percent of the cost to the Contractor of the property upon which payment is made (and) in no event shall the total of unliquidated partial payments (see (c) below) * * * made under this contract, exceed 80 percent of the contract price of supplies still to be delivered.

'(b) Upon the making of any partial payment under this contract, title to all parts, materials, inventories, work in process and nondurable tools theretofore (and thereafter, upon acquisition) acquired or produced by the Contractor for the performance of this contract, and properly chargeable thereto * * * shall forthwith vest in the Government * * *.

'(c) In making payment for the supplies furnished hereunder, there shall be deducted from the contract price therefor a proportionate amount of the partial payments theretofore made to the Contractor, under the authority herein contained.

'(d) It is recognized that (the materials), title to which is or may hereafter become vested in the Government pursuant to this Article will from time to time be used by * * * the Contractor in connection with the performance of this contract. The Contractor, either before or after receipt of notice of termination (by the Government), may acquire or dispose of property to which title is vested in the Government under this Artice, upon terms approved by the Contracting Officer * * *. The agreed price (in case of acquisition by the contractor) or the proceeds received by the Contractor (in case of any other disposition), shall, to the extent that such price and proceeds do not exceed the unliquidated balance of partial payments hereunder, be paid or credited to the Government as the Contracting Officer shall direct; and such unliquidated balance shall be reduced accordingly. Current production scrap may be sold by the Contractor without approval of the Contracting Officer but the proceeds will be (paid or credited to the Government). * * * Upon liquidation of all partial payments hereunder or upon completion of deliveries called for by this contract, title to all property (or the proceeds thereof) which has not been delivered to and accepted by the Government under this contract or which has not been incorporated in supplies delivered to and accepted by the Government under this contract and to which title has vested in the Government under this Article shall vest in Contractor.

'(e) * * * The provisions of this Article shall not relieve the Contractor from risk of loss or destruction of or damage to property to which title vests in the Government under the provisions hereof.' (Emphasis supplied.)

It was shown, by an uncontradicted affidavit, at the hearing on the motion for summary judgments that the materials originally acquired by Murray for performance of the subcontracts, and properly chargeable thereto, were completely segregated from all other personal property in its plant and were 'clearly identified,' by 'tagging (or) labeling,' as property of the Government; that as materials were withdrawn by Murray, for use in producing the supplies, complete records of the materials so withdrawn, and the Government's costs therefor, were made and kept; and that when the supplies were completed and delivered by Murray and accepted by the Government, Murray paid the Government for the materials so consumed by crediting the contract price for the supplies with an amount equal to the Government's cost (90 percent of Murray's original cost) for the materials consumed in producing the supplies, as provided in subparagraph (c) of the partial payment provisions.

As noted, supra, subparagraph (b) of the partial payment provisions of the subcontracts expressly provides that upon the making of any partial payment to Murray under the subcontracts, 'title' to the materials 'shall forthwith vest in the Government.' Beginning on August 10, 1951, partial payments were made from time to time by the Government to Murray in very substantial amounts (see note 1). It cannot be doubted that the plain and simple language of subparagraph (b) was appropriate, apt and adequate to vest the title to the materials in the Government. ^[4] Petitioners concede, and the majority assumes, that this is so. Petitioners' position is, however, that the title so vested in the Government was for security purposes, and created only a lien on the materials as security to the Government, and also that actual operations under the contracts were inconsistent with any real intention to convey actual ownership of the materials to the Government.

As to petitioners' 'lien' contention, we must ask ourselves: A lien as security for what? Admittedly Murray was not indebted, nor to become indebted, to the Government under the subcontracts and, hence, there was and would be no debt to secure. Nor can it be said that the vesting of title to the materials in the Government was in any way to secure repayment of the partial payments made by the Government to Murray, because those partial payments were not to be repaid to the Government, but were expressly made by the Government in payment of the purchase price for the materials. Neither can it be said that the vesting of title to the materials in the Government was for the purpose of securing performance of the contracts by Murray, as conveyance of the materials to the Government could not possibly have any such legal effect.

Petitioners advance several arguments in support of their claim that the terms of the subcontracts, and actual operations under them, were inconsistent with any real intention to convey actual ownership of the materials to the Government.

As to the terms of the subcontracts, they argue, first, that subparagraph (d) of the partial payment provisions, saying that '(c)urrent production scrap may be sold by the Contractor without approval of the Contracting Officer,' supports their contention. That argument overlooks the fact that the subparagraph continues, saying, 'but the proceeds will be (paid or credited to the Government).' Thus, the contractor is authorized merely to sell the current production scrap as agent for the Government and must account to it for the proceeds, and, hence, this procedure is in no way inconsistent with the Government's ownership of the scrap. Second, they argue that the language of subparagraph (d) saying that, (u)pon liquidation of all partial payments hereunder or upon completion of deliveries called for by this contract, title to all property (or the proceeds thereof) which has not been delivered to and accepted by the Government under this contract or which has not been incorporated in supplies delivered to and accepted by the Government under this contract and to which title has vested in the Government under this Article shall vest in the Contractor,' shows that the Government's title to the materials was not real and beneficial. (Emphasis supplied.) This argument cannot be accepted, for it, as was plainly true, the language of subparagraph (b) saying that, upon the making of partial payments by the Government to Murray, title to the materials 'shall forthwith vest in the Government' was adequate to effect a transfer by Murray to the Government, it must follow that the similar language in subparagraph (d) was adequate to effect a retransfer, upon full completion of the subcontracts, of any remnant of the materials by the Government to Murray; nor can it be denied that the Government had the right and power validly to retransfer that property under those circumstances.

Concerning operations under the subcontracts, petitioners argue, first, that the use of the partial payment provisions in the subcontracts was a legal device for the purpose of escaping state ad valorem personal property taxation. This argument is not only unacceptable on its merits (cf. Kern-Limerick, Inc. v. Scurlock, 347 U.S. 110, 116, 122, 74 S.Ct. 403, 407, 410 ^[5]), but, in addition, it is contrary to the stipulation made by the parties at the hearing in the District Court. ^[6] Second, they argue that the fact that Murray insured the materials and its admittedly owned property in one policy in its own favor is inconsistent with government ownership of the materials and indicates that Murray regarded these materials as owned by it. As noted, supra, Murray agreed, under the terms of the contracts, to be liable to the Government for loss or destruction of or damage to the materials, occurring while in its possession, 'to which title (had) vest(ed) in the Government under the provisions (of the subcontracts).' To insure that contractual liability Murray caused its insurance policy to be expanded to cover, inter alia, '* * * personal property * * * sold but not delivered or removed, or for which (it is) liable, all while located in and/or on the premises occupied by the insured.' ^[7] Plainly, this precautionary action by Murray was in no way inconsistent with outright government ownership of the materials, but, on the contrary, it strongly indicates Murray's intention and understanding that the materials had been sold to and were owned by the Government though not delivered. Cf. United States v. Ansonia Brass & Copper Co., 218 U.S. 452, 467, 31 S.Ct. 49, 52, 54 L.Ed. 1107.

In United States v. Ansonia Brass & Copper Co., supra, this Court dealt at length with like contentions. There the Government had entered into a contract for the construction and delivery of a seagoing dredge to be named the Benyuard. The contract provided that the Government was to make 10 equal partial payments to the contractor, to aggregate 80 percent of the contract price, the first to be made when the hull and propelling machinery should be 10 percent complete, the second when 20 percent complete, and so on to the last payment, which was to be made when the vessel was delivered to and accepted by the Government, when the reserved 20 percent of the contract price was to be paid; and that '(t)he parts paid for under the system of partial payments above specified (were to) become thereby the sole property of the United States.' Id., 218 U.S. at page 466, 31 S.Ct. at page 52. Before completion of the dredge the contractor became insolvent and was unable to pay bills for materials used in the vessel, and a receiver was appointed. An issue arose as to whether the provisions of the contract had conveyed ownership of the unfinished vessel to the Government, thus preventing levy thereon of materialmen's liens created under state law. The Government contended '* * * that the terms of this contract (were) such that by its expressed provisions the vessel was to become the property of the United States as fast as it was paid for.' Ibid. Upon that issue this Court said:

'It is undoubtedly true that the mere facts that the vessel is to be paid for in installments as the work progresses, and to be built under the superintendence of a government inspector, who had power to reject or approve the materials, will not of themselves work the transfer of the title of a vessel to be constructed, in advance of its completion. But it is equally well settled that if the contract is such as to clearly express the intention of the parties that the builders shall sell and the purchasers shall buy the ship before its completion, and at the different stages of its progress, and this purpose is expressed in the words of the contract, it is binding and effectual in law to pass the title. * * *

'As we construe the contract for the construction of the Benyuard, it did 'divest the builder of any title to the property in the vessel during the process of construction.' * * *

'We are not now dealing with the right of a State to provide for such liens while property to the chattel in process of construction remains in the builder, who may be constructing the same with a view to transferring title therein to the United States upon its acceptance under a contract with the government. We are now treating of property which the United States owns. * * * The Benyuard, as fast as constructed, became one of the instrumentalities of the government * * *.' Id., 218 U.S. at pages 466, 470, 471, 31 S.Ct. at page 52.

This Court thus held that the contract-containing title-vesting provisions almost identical with the ones here conveyed full ownership of the unfinished vessel-not a mere lien to the Government, and it, therefore, reversed the judgment of the court below which had allowed state-created materialmen's liens to be imposed upon the unfinished vessel. The principles of that decision appear to have been followed in every decided case in this country upon the question ^[8] save one. ^[9]

I believe that these considerations require the conclusion that the District Court and the Court of Appeals were right in holding that the contracts in question conveyed full beneficial title-all elements of property and incidents of ownership-in the materials to the Government.

Is this a general ad valorem tax imposed on the materials? The majority holds, we think erroneously, that it is not. Under the Constitution of the State of Michigan ^[10] only two general methods of taxation by the State or its subdivisions are authorized, namely, (1) ad valorem taxes, and (2) excise or privilege taxes. C. F. Smith Co. v. Fitzgerald, 270 Mich. 659, 672, 259 N.W. 352, 357; Pingree v. Auditor General, 120 Mich. 95, 102, 109, 78 N.W. 1025, 1027, 1029-1030, 44 L.R.A. 679. The taxes here questioned were levied both by the city and county subject to the authority of the General Property Tax Act of Michigan. Act 206 of the Public Acts of Michigan, 1893, as amended (6 Mich.Stat.Ann.1950, §§ 7.1-7.243, Comp.Laws 1948, § 211.1 et seq.) ('(a)n act to provide for the assessment of property and the levy and collection of taxes thereon * * *.'). Section 211.40 of Mich.Comp.Laws 1948 (6 Mich.Stat.Ann.1950, § 7.81) provides in pertinent part: 'Property taxes; lien, priority. Sec. 40. The taxes thus assessed shall become at once a debt due to the * * * city * * * and county from the persons to whom they are assessed * * *. And all personal taxes hereafter levied or assessed shall also be a first lien * * * on all personal property of such persons so assessed * * * and so remain until paid, which said tax liens shall take precedence over all other claims, encumbrances and liens upon said personal property whatsoever * * *.' (Emphasis supplied.)

The pertinent parts of the Charter of the City of Detroit, under which that city acted, are set forth in the margin. ^[11] Briefly summarized, they provide that '(a)ll real and personal property within the city, subject to taxation by the laws of Michigan, shall be assessed at its true cash value, and that all city taxes shall be due and payable on the fifteenth day of July in each year, and on that date shall become a lien on the property taxed'; that the 'owners or persons in possession' of personal property shall pay the taxes assessed thereon but in case any other person, 'by agreement or otherwise,' ought to have paid the tax the person in possession who has paid the same 'may recover the amount from the person who ought to have paid the same' in an action of assumpsit, or may deduct the amount from rents due or to become due; and that if the 'taxes which are assessed against the property' are not paid by the 26th day of August the City Treasurer 'shall forthwith levy upon and sell at public auction the personal property'; that the personal property taxes 'in addition to being alien upon the property assessed shall become a debt against the owner from the time of the listing of the property for assessment, and shall remain a debt against the owner of the property or his estate after his death, until the same are paid.' (Emphasis supplied.)

We fail to see how it could be more plainly stated that these taxes are ad valorem taxes on the property. One cannot profitably elaborate a truth so evident. And the Michigan courts have repeatedly so held. City of Detroit v. Phillip, 313 Mich. 211, 213, 20 N.W.2d 868, 869; Pingree v. Auditor General, supra. Cf. Crawford v. Koch, 169 Mich. 372, 379, 135 N.W. 339, 342; In re Dissolution of Ever Krisp Food Products Co., 307 Mich. 182, 196, 11 N.W.2d 852, 856. Actually the pleadings formally admit that this is so. ^[12]

Petitioners stridently argue that the language in § 211.40 of the Michigan Comp.Laws saying that '(t)he taxes thus assessed shall become at once a debt due to the * * * city * * * and county from the persons to whom they are assessed,' and the language in §§ 1 and 7 of Tit. VI, c. IV, of the Detroit Charter, saying that '(t)he owners or persons in possession of any personal property shall pay all taxes assessed thereon (and if he) shall pay the same (he) may recover the amount from the person who ought to have paid the same * * *,' shows that the tax is not upon the materials but is, rather, upon the 'owners or persons in possession.' This argument overlooks the fact that § 211.40 continues, saying that 'all personal taxes hereafter levied or assessed shall also be a first lien * * * on all personal property of such persons so assessed * * * and so remain until paid.' The argument also overlooks the fact that Tit. VI, c. IV, § 1 of the Detroit Charter further provides that '(a)ll city taxes shall be due and payable on the fifteenth day of July in each year, and on that date shall become a lien on the property taxed,' as does § 26; and § 27 says 'all city taxes upon personal property * * * in addition to being a lien upon the property assessed shall become a debt against the owner from the time of the listing of the property for assessment, and shall remain a debt against the owner of the property * * * until the same are paid.' See note 11. (Emphasis supplied.) Thus, though the Michigan statute makes the tax a debt of the 'owner or person in possession,' it also makes the tax 'a lien on the property taxed,' and the Detroit Charter in addition to making the tax a debt 'against the owner' makes it 'a lien upon the property assessed.' Moreover, the precise question was specifically ruled by this Court in United States v. Allegheny County, 322 U.S. 174, 64 S.Ct. 908, where it was said:

'While personal liability for the (personal property) tax may be and sometimes is imposed, the power to tax is predicated upon jurisdiction of the property, not upon jurisdiction of the person of the owner, which often is lacking without impairment of the power to tax. In both theory and practice the property is the subject of the tax and stands as security for its payment. * * * But in all of these cases ^[13] what we have denied is immunity for the contractor's own property, profits, or purchases. We have not held either that the Government could be taxed or its contractors taxed because property of the Government was in their hands. * * * We think, however, that the Government's property interests are not taxable either to it or to its bailee. * * * A State may tax personal property and might well tax it to one in whose possession it was found, but it could hardly tax one of its citizens because of moneys of the United States which were in his possession as * * * agent, or contractor. We hold that Governmentowned property, to the full extent of the Government's interest therein, is immune from taxation, either as against the Government itself or as against one who holds it as a bailee.' Id., 322 U.S. at pages 184, 186, 187, 188-189, 64 S.Ct. at pages 914, 915, 916. (Emphasis supplied.)

Petitioners further argue that the Detroit assessor's action in writing on the tax roll, in this instance, the words 'assessed subject to prior rights of the Federal Government' shows that the tax is not on the Government's interest, if any, in the materials. It principally relies upon S.R.A. v. Minnesota, 327 U.S. 558, 66 S.Ct. 749, 90 L.Ed. 851, and City of New Brunswick v. United States, 276 U.S. 547, 48 S.Ct. 371, 72 L.Ed. 693. While those cases, in an abstract sense, are relevant to the point as urged by petitioners, concretely they are inapposite ^[14] for in each of those instances the tax was assessed directly upon property beneficially owned by third parties, while here the tax is directly assessed on property beneficially owned by the Government. Moreover, 'renunciation of any lien on Government property itself, which could not be sustained in any event, hardly establishes that it is not being taxed. * * *' United States v. Allegheny County, supra, 322 U.S. at page 187, 64 S.Ct. at page 916. Furthermore, inasmuch as the Government in this case beneficially owned the entire interest in the materials and the Detroit tax was assessed 'subject to' the Government's interest therein, it would seem to follow that the Detroit tax in question was never in fact assessed against anyone.

It, therefore, seems inescapable that the tax here involved was an ad valorem tax on the property of the Government.

Since the landmark case of M'Culloch v. Maryland, 4 Wheat. 316, 4 L.Ed. 579, no legal principle has been more firmly established than that property owned by the Federal Government is constitutionally immune from direct taxation by a State. I agree with the majority that this, of course, does not mean that taxes directly imposed upon third parties-such as agents, contractors or employees-who may be doing business with the Government, share the Government's immunity even though the economic burden of the tax, through higher prices and the like, may ultimately fall upon the Government ^[15] for such 'is but a normal incident of the organization within the same territory of two independent taxing sovereignties.' State of Alabama v. King & Boozer, 314 U.S. 1, 9, 62 S.Ct. 43, 45. In that case this Court upheld a state sales tax imposed, not directly upon the Government, but, rather, directly upon a government contractor relating to materials purchased by him for use in the performance of a government contract. ^[16] The case of Kern-Limerick, Inc. v. Scurlock, 347 U.S. 110, 74 S.Ct. 403, makes the distinction clear. In that case the government contractor was authorized to and did purchase, as agent of and directly for the United States, certain tractors which the contractor was permitted to use in the performance of his 'cost-plus-fixed-fee' contract with the Government. The purchaser was the Government and it paid the vendor for and took title to the tractors. The state law requird the vendor to collect from the vendee, and remit to the State, a sales tax on local sales. The vendor, at the request of the Government, paid the tax on these sales under protest and sued for refund. The State Supreme Court sustained the tax. On certiorari this Court reversed, holding that the sale was directly to the Government and that the tax was imposed directly upon the Government which was immune from state taxation.

Under the facts and circumstances here we think the case of United States v. Allegheny County, supra, is entirely controlling. There, Mesta Machine Company owned a factory in Pennsylvania suitable for the manufacture of ordnance required by the Government. The Government entered into a contract with Mesta under which the latter undertook to make and deliver guns to the Government at a fixed price. Mesta lacked some of the necessary machine tools to do the contemplated work. The contract provided that the Government would, and it did, furnish various lathes and other machines, which were 'leased' to Mesta and installed in its factory by being 'bolted on concrete foundations (and) * * * could be removed without damage to the building.' Id., 322 U.S. at page 179, 64 S.Ct. at page 912. The contract further provided that if Mesta, after using every effort short of litigation to procure exemption or refund, should be compelled to pay any state, county or municipal tax upon the government-owned machinery, the Government would reimburse Mesta for that amount. Subsequently Allegheny County revised Mesta's previously determined assessment for ad valorem taxes by adding thereto the value of the government-owned machinery and assessed an additional tax on that account. Mesta protested and exhausted administrative remedies without avail and then sued for refund. The United States intervened. The trial court held that the machinery in question 'was 'owned by the United States' and so far constitutional reason could not be included.' Id., 322 U.S. at page 180, 64 S.Ct. at page 912. The Supreme Court of Pennsylvania, 347 Pa. 191, 32 A.2d 236, reversed, and reinstated the assessment and tax. It acknowledged that the government-owned property was "beyond the pale of taxation' by a state' (ibid.), but thought that the tax was not against the United States but was assessed against Mesta, as a part of its real estate, and constituted a debt of Mesta and a lien on its real estate, but not a debt of the Government nor a line on its chattels. The case came here on appeal and this Court reversed, saying, inter alia:

'It is not contended that the scheme of taxation employed by Pennsylvania is anything other than the old and widely used ad valorem general property tax. * * * This form of taxation is not regarded primarily as a form of personal taxation but rather as a tax against the property as a thing. Its procedures are more nearly analogous to procedures in rem than to those in personam. While personal liability for the tax may be and sometimes is imposed, the power to tax is predicated upon jurisdiction of the property, not upon jurisdiction of the person of the owner, which often is lacking without impairment of the power to tax. In both theory and practice the property is the subject of the tax and stands as security for its payment.' Id., 322 U.S. at page 184, 64 S.Ct. at page 914.

'The assessors simply and forthrightly valued Mesta's land as land, and the Government's machines as machinery, and added the latter to the former. We discern little theoretical difference, and no practical difference at all, between that was done and what would be done if the machinery were taxed in form. Its full value was ascertained and added to the base to which the annual rates would apply for county, city, borough, town, township, school, and poor purposes.

'We hold that the substance of this procedure is to lay an ad valorem general property tax on property owned by the United States.' Id., 322 U.S. at page 185, 64 S.Ct. at page 915. (Emphasis supplied.)

The foregoing demonstrates, I think, that the Government owned the materials on the assessment date; that the tax was imposed on those materials; that the tax was a general ad valorem tax; and that the Government was constitutionally immune from such taxation by the State.

These are my reasons for dissenting, and, upon them, I would affirm the judgment of the Court of Appeals.

For dissenting opinions of Mr. Justice FRANKFURTER and Mr. Justice HARLAN, see 355 U.S. 489, 505, 78 S.Ct. 486, 492.

Notes

1. In the period beginning August 10 and ending December 31, 1951, partial payments were made to Murray, by the Government, under the Kaiser prime contract in the total amount of $163,940.20, and under the Curtiss-Wright contract in the total amount of $510,827.67, aggregating $674,776.87, and on the latter date requests for further partial payments in the amount of $569,211.09 were outstanding and being processed.
2. It there contended that materials of the value of $2,043,670, included in the assessment against it and its personal property, were owned by the Federal Government and were therefore constitutionally immune from state taxation, and that the additional tax assessed on account thereof of $80,287.62 was void.
3. It appears that Detroit personal property taxes are payable in two installments. The first two suits (Nos. 12108 and 12482) were brought against the City of Detroit for refund of the first and second halves, respectively, of the taxes so paid under protest. The third suit (No. 12483) was brought against the County of Wayne for refund of the taxes so paid to it under protest.
4. Petitioners, however, contend that the partial payment provisions of the subcontracts are invalid as beyond the power of the Government to make. They rely principally upon the provisions of the Armed Services Procurement Act of 1947, c. 65, 62 Stat. 21, 10 U.S.C.A. §§ 2301, 2303-2305, and particularly upon the language in § 5(a) and (b) thereof saying, in pertinent part:
5. A similar contention was made in that case, and in rejecting it this Court said: '(W)e turn to examine the validity of the argument that the naming of the Government as purchaser was only colorable and left the contractor the real purchaser and the transaction subject to the Arkansas Tax. State of Alabama v. King & Boozer, 314 U.S. 1, 62 S.Ct. 43, 86 L.Ed. 3, is relied upon primarily. We consider this argument under the assumption, made by the Supreme Court of Arkansas, that the contract was designed to avoid the necessity in this cost-plus contract of the ultimate payment of a state tax by the United States. * * * We find that the purchaser under this contract was the United States. * * * (We do not) think that the drafting of the contract by the Navy Department to conserve Government funds, if that was the purpose, changes the character of the transaction.' 347 U.S. at pages 116, 122, 74 S.Ct. at pages 407, 410.
6. It was stipulated that in the negotiation of the subcontracts the 'parties did not consider the possible avoidance of City and County ad valorem and personal property taxes as an element in their decision as to whether or not the standard partial payment clause (referred to in procurement regulations) should be inserted in these contracts.'
7. That insurance coverage provision reads as follows: 'All real and personal property of the insured, including manuscripts, mechanical drawings, tools, dies, jigs and patterns, their own, or held by them in trust or on commission, or on consignment, or sold but not delivered or removed, or for which they are liable, all while located in and/or on the premises occupied by the insured.'
8. In re Read-York, Inc., 7 Cir., 152 F.2d 313, 316, 317; Douglas Aircraft Co. v. Byram, 57 Cal.App.2d 311, 134 P.2d 15; Craig v. Ingalls Shipbuilding Corp., 192 Miss. 254, 5 So.2d 676; State ex rel. Superior Shipbuilding Co. v. Beckley, 175 Wis. 272, 185 N.W. 199; and cf. Kern-Limerick, Inc. v. Scurlock, 347 U.S. 110, 116-122, 74 S.Ct. 403, 407-410; United States v. Allegheny County, 322 U.S. 174, 178, 183, 64 S.Ct. 908, 911, 913; In re American Boiler Works, 3 Cir., 220 F.2d 319, 321, and Wright Aeronautical Corp. v. Glander Corp., 51 Ohio St. 29, 84 N.E.2d 483.
9. The one exception is American Motors Corp v. City of Kenosha, 274 Wis. 315, 80 N.W.2d 363, but even that case fails to mention that court's earlier decision to the contrary in State ex rel. Superior Shipbuilding Co. v. Beckley, supra.
10. Mich.Const., Art. X, § 3.
11. Tit. VI, c. II, § 1. 'All real and personal property within the city subject to taxation by the laws of this state shall be assessed at its true cash value * * *.'
12. Paragraph 3 of the complaint in the first action alleged and it is stipulated that the complaints in the three cases were the same-that the tax was assessed as 'the ad valorem tax on the personal property of this plaintiff for the year 1952 * * *.' The answer of the city 'admits the allegations in paragraph three' and the answer of the county 'admits * * * that the assessed valuation placed upon the personal property of plaintiff (by the city and adopted by the county was) the ad valorem tax on the personal property of plaintiff for the year 1952.'
13. James v. Dravo Contracting Co., 302 U.S. 134, 58 S.Ct. 208, 82 L.Ed. 155; Graves v. New York ex rel. O'Keefe, 306 U.S. 466, 59 S.Ct. 595, 83 L.Ed. 927, and State of Alabama v. King & Boozer, 314 U.S. 1, 62 S.Ct. 43, 86 L.Ed. 3.
14. In S.R.A v. Minnesota, the Government had sold real estate in Minnesota to S.R.A., Inc., under an installment contract for a deed but had retained legal title only as security and was, in effect, a mortgagee. S.R.A. took possession and improved the land. Afterward the State assessed general ad valorem taxes upon the property 'subject to fee title remaining in the United States.' (327 U.S. 558, 66 S.Ct. 752) S.R.A. claimed exemption from the tax on the ground that title to the property was in the United States. This Court upheld the tax because the contract of sale had transferred to the purchaser the equity in the property upon which alone the tax was levied. City of New Brunswick v. United States is almost identical to the S.R.A. case and varies from it in no substantial respect.
15. See Trinityfarm Co. v. Grosjean, 291 U.S. 466, 54 S.Ct. 469, 78 L.Ed. 918, which sustained an excise tax imposed by a State directly upon a government contractor on account of gasoline consumed by him in the performance of government contract; James v. Dravo Contracting Co., 302 U.S. 134, 160, 58 S.Ct. 208, 221, 82 L.Ed. 155, which upheld a gross receipts tax imposed by a State directly upon a government contractor on account of materials purchased by it for its use in performing the contract; Helvering v. Gerhardt, 304 U.S. 405, 58 S.Ct. 969, 82 L.Ed. 1427, which sustained an income tax levied directly upon a construction engineer and two assistant general managers, employees of an agency of the United States, in respect of their salaries from the United States; Graves v. New York ex rel. O'Keefe, 306 U.S. 466, 59 S.Ct. 595, 83 L.Ed. 927, is precisely like the Gerhardt case; Esso Standard Oil Co. v. Evans, 345 U.S. 495, 73 S.Ct. 800, 97 L.Ed. 1174, which upheld a state privilege tax imposed directly by a State upon a storer of gasoline even though, by contract, the Government, which had stored its gasoline with the storer, assumed liability for all state taxes.
16. In its companion case of Curry v. United States, 314 U.S. 14, 62 S.Ct. 48, 86 L.Ed. 9, the Court followed the same principle in holding that government cost-plus contractors who had imported into the State certain materials which they used in the performance of their contract were not entitled to share the Government's constitutional immunity from a state use tax, and said: 'If the state law lays the tax upon them rather than the (Government) with whom they enter into a cost-plus contract like the present one, then it affects the Government * * * only as the economic burden is shifted to it through operation of the contract.' Id., 314 U.S. at page 18, 62 S.Ct. at page 49 (Emphasis supplied.) As in King & Boozer, the impact of the tax upon the Government derived from the Government's voluntary assumption, or, as said by the Court, 'through operation of the contract.'