The opinion
GREEN, Judge
(concurring in the result) .
I concur in the result of the foregoing opinion, but on somewhat different grounds. On account of the importance of the principles which have been considered and discussed on the submission of the case and in view of the fact that the decision may be a precedent in other similar cases, I have deemed it advisable to express my opinion thereon at some length.
The federal government undoubtedly has the right to acquire, own, and use property independently of its war powers, but this right and power is not derived from any provision in the Constitution, for the Constitution makes no reference to it. It has this power, as I think, because it is one of the inherent rights and attributes of sovereignty. In Van Brocklin v. Tennessee, 117 U. S. 151, 154 , 6 S. C't. 670, 672, 29 L. Ed. 845 , cited and relied upon in the majority opinion as a leading ease, the court said: “The United States, for instance, as incident to the general right of sovereignty,” may do certain things; and it adds: “So the United States, * * * may acquire and hold real property in any state, whenever such property is needed for the use of the government in the execution of any of its powers.” • In fact, the right and power to own and hold property is such an essential element of sovereignty that no government could be successfully carried on without it. The right and power to own, however derived, necessarily includes the right to use and the right to sell, for no ownership would be complete without these rights, and if the government has the right to use its property, it necessarily has the right to sell this use, or, in other words, to lease the property. These powers so necessary to every government are obviously a governmental function, and as such cannot be impaired or controlled by state taxation.
Having stated these principles upon which I think nearly everyone will agree, it becomes necessary to notice the allegations of the petition which are, so far as necessary to b.e stated for the consideration of the point next to be taken up; “that the said United States has sold to the Alabama Power Company during the calendar year of 1926” a certain amount of hydroelectric power developed by the Wilson Dam, and “that since October 1, 1927, and continuously up to and including this date, said United States has exercised the privilege of manufacturing and selling hydroelectric power in the State of Alabama to the Alabama Power Company.” Whether the state Legislature recognized its limitations in the way of taxation or not, the state statute (Laws 1927, p. 141, § 2-D) upon which the ease of the state depends provided that “ * * * there is hereby levied a license or privilege tax upon each person, Arm, corporation, agent or officer, engaged in the business of manufacturing and selling hydro-electric power in the State of Alabama for the privilege of engaging in such business. * * *” This provision was followed by one with reference to the rate of the tax, which does not need to be considered.
It will be observed that the tax is on the privilege of engaging “in the business of manufacturing and selling hydroelectric power,” but the allegations of the petition show that the United States did not engage in such business. What it did was to sell electric power produced by the Wilson Dam to a single corporation. Whether the electric current was sold in separate lots, or whether a continuing contract was made which would in effect be a lease, does not appear from the petition nor, as I think, is it material. In neither case would the government be engaged in the business of manufacturing and selling hydroelectric power any more than a farmer would be engaged in the grain business because he sold at various times different kinds of grain, which were the products of his farm. If the word “business” was used in the statute in its commercial sense, as A think it was, the government was not making a tasines of creating and selling power. I think it is clear that the acts of the government *905 alleged and set forth, in. the petition do not come within the provisions of the Alabama statute.
The conclusion above stated would by itself dispose of the ease, but for the reasons given at the beginning of this opinion I deem it advisable to state my views on some other points where my conclusions are not in harmony with the majority opinion.
I am unable to agree to the statement in the majority opinion that the sale of hydroelectric power was authorized by the act under which the "Wilson Dam at Muscle Shoals was constructed. It seems to me that a reading of its provisions shows clearly that in a general way it was enacted for war purposes, and specifically to enable the government to produce nitrates which are so necessary in modem warfare. For this purpose the President was authorized to construct dams, locks, etc., “as in his judgment is the best and cheapest, necessary or convenient for the generation of electrical or other power and for the production of nitrates or other products needed for munitions of war and useful in the manufacture of fertilizers and other useful products.” The third paragraph of section 124 (50 USCA § 79), from which section the part above quoted is taken, provides that “the products of such plants shall be used by the President for military and naval purposes,” and that “any surplus which he shall determine is not required'shall be sold and disposed of by him.” All of these provisions were plainly within the constitutional authority of Con"gress, and it is equally true that they provide for the exercise of a governmental function, namely, preparation for war, but I am unable to find anything in the act which either authorizes or shows it was contemplated that use should be made of the power produced for any other purpose except that of the government itself. The act authorized the construction of “power houses, and other plants * * 4 for the production of nitrates or other products needed for munitions of war and useful in the manufacture of fertilizers.” The President was further authorized to use “the products of such plants • * * for military and naval purposes, 4 * * and any surplus which he shall determine is not required shall be sold.” Where the wording of the act is considered, I think it is dear that the word “products” refers to nitrates, a product necessary for the manufacture of high explosives and extremely useful as a fertilizer in the Way of increasing the amount of food crops grown, which was also necessary in time "of war. In this connection it should" also be said that, when the National Defense Act came before Congress, nothing was said either in the committee report or in discussion of the measure with reference to the production of hydroelectric power for sale. I do not, however,consider this point as important because, Congress having authority to authorize theeonstruetion of the dam, and the Government' having acquired the dam as its property, the United States would, I think, without any provision in the act, have the powers concerning its sale and use which have been herein above recited. On the other hand, if, in the use made of the dam, it went beyond its governmental powers, no provision in the act would add to its authority.
In the majority opinion it is stated that private business “ceases to be private business and becomes public business when the things done are done in the exercise of a public function or through a public agency.” If by this is meant that acts done for the public benefit or through a public agency by the national government thereby become a governmental function, I am unable to concur. To my mind, whatever is private business when done by a state would be private business when done by the United States. Leaving out the question of whether the government may carry on what in the strict sense of the term is private business, the question of whether such business, if done, is taxable must depend upon the powers conferred upon the government by the Constitution or existing by reason of the fact that the Constitution has created a sovereignty with certain inherent powers; but in all eases, as it seems to me, some governmental function must be performed in order that the exemption from taxation may be maintained.
It is said that the government has in many instances engaged in private business, such as the operations of the Post Office Department, the Emergency Fleet Corporation, the Panama Canal, the Alaskan Railroad, and the Insular Barge Company, together with a number of government canals for which the government could charge tolls' if it desired, and it is asked whether a tax could be levied by a state upon the business thus carried on or upon the receipts from such operations. Certainly not, but the rea-' son is plain. All of these acts are authorized by special provisions of the Constitution. The Constitution authorizes Congress to regulate commerce with foreign nations and between the states, and to regulate in the sense intended means, not merely .to eon *906 trol, but also to foster, maintain, or make more efficient by any appropriate means. Second Employers’ liability Cases, 223 U. S. 1, 47, 48 , 32 S. Ct. 169 , 56 L. Ed. 327 , 38 L. R. A. (N. S.) 44. Congress also bas complete power over the territories. In all of these matters, by giving Congress authority to act, the Constitution made such acts a governmental function of the government of the United States, and this, as I think, shows that these matters are exceptions to the general rule.
Clallam County v. United States, 263 U. S. 341 , 44 S. Ct. 121 , 68 L. Ed. 328 , was, as said in the majority opinion, a case which held that Congress might create a corporation for convenience in carrying out certain governmental functions, and that a tax levied by the state upon the property of the corporation was unconstitutional. But this is just another way of saying that when the federal government makes use of some instrumentality for carrying on a governmental function, which in the ease at bar was obtaining materials for use in war, the instrumentality stands in the same position as the government itself, and cannot be taxed. An examination of the decision will show that the Supreme Court confined its ruling to eases where some governmental function was being exercised and where the use of public property was confined to such purpose. The court called attention to the fact, not only that the corporation taxed had been organized as an instrumentality for carrying on the war, but when the war was over its work was stopped, except so far as was necessary to go on in order to wind up its affairs, and that whatever assets were realized would go to the United States. The same principle that gave the government the right to use this corporation and its property for war purposes gave the government the power to close out and dispose of the property which it held. In so doing a governmental function was being exercised.
In the case of South Carolina v. United States, 199 U. S. 437 , 26 S. Ct. 110, 117 , 59 L. Ed. 261 , 4 Ann. Cas. 737, the Supreme Court said that, “ * * * whenever a state engages in a business which is of a private nature, that business is not withdrawn from the taxing power of the nation”; and also “ * * * that the license taxes charged by the Federal government upon persons selling liquor are not invalidated by the fact that they are the agents of the state, which has itself engaged in that business.”
I think the principle which is involved in this statement applies equally to activities on the part of the national government, and if the national government was engaged in a business of creating and selling electric power for all persons who should apply therefor and not simply disposing of surplus power for which it had no use and which would otherwise go to waste, by a sale or lease to a single company, that a very different situation would be presented, for, in my judgment, it would not be carrying out any governmental function or doing any act which was necessary in order that a governmental function might be fully exercised. I am unable to see how such action would be necessary in order that the government might manufacture nitrates or prevent waste of public property. It is quite clear under the decision in the. South Carolina Case, supra, that a state could not so act without making itself subject to federal taxation, if a tax was imposed, and in this connection it ought to be said that, while there was a dissenting opinion in the South Carolina Case, the doubt in that ease arose, as I understand the dissenting opinion, not as to the general principle that the state could not engage in private business and claim exemption from the taxation, but from the fact that in that particular ease the state was engaged in the execution of a police power and thus carrying on a public and governmental function, as it had the undoubted right and power to do. It has been generally considered that the same limitations applied to both the federal and state governments in that neither could tax the property or instrumentalities of the other. Numerous Supreme Court decisions could be cited which have so held in effect, and in some cases almost literally. If the government can carry on a private business merely because it uses its own property or some instrumentality created for the purpose of carrying on a governmental function, this time-honored principle must be laid aside and a conclusion reached that there is one rule for the federal government and a different rule for the state governments. Let us see what would be the result.
The government has manufacturing plants, such as the big gun factories at Watertown, Watervliet, and Rock Island. If work for these plants was slack or entirely lacking, could the government sell its power or use its machinery, when adaptable for the purpose of entering into the commercial field, in competition with private industry without in any manner being subject to a *907 tax? The government has at its navy yards at Brooklyn and Mare Island, Cal., plants fully equipped for the construction of steamships of the largest size. In these plants large sums of money have been invested. They are used for the repair and construction of war vessels or other government boats or ships. The demand for larger vessels is not continuous, and for considerable periods of time little use is made of the construction features of these navy yards. As the overhead occasioned by these plants goes on continuously, the government could probably lessen'the cost to the taxpayer if these yards were used in the construction of merchant vessels in competition with private yards. The plant having been constructed for a governmental function, could the government carry on this private work without being subject to any tax? The government owns dredges used in aid of navigation. When these dredges are idle, could the government put them at work on private contracts and be exempt from tax? They were bought or constructed to perform a governmental function. So also the government may construct, if it sees fit, bakeries at its cantonments for the purpose of supplying its Army with food. If the troops are moved away from the cantonment, could the government continue to buy flour, operate the bakery, and sell its products to private individuals in the neighborhood of its location and be protected from taxation ? I think not, although in all these hypothetical cases the government would be using an instrumentality created for a governmental purpose; but these questions, as it seems to me, must be answered in the affirmative if the rule in favor of the federal government is as broad and comprehensive as the majority opinion implies, and in this I am unable to concur.
It is sometimes said that a distinction can be found in the fact that the federal government has only powers which are expressly conferred upon it by the Constitution or those which, as I have stated, are inherent in the sovereignty which was created by the Constitution, while the states have such powers as are not reserved to the federal government by the Constitution. But this, as it seems to me, does not alter the fact that, as long as either is acting within the limitations so prescribed, it is exercising a constitutional right and power. In my opinion the principle that both the national and state governments are subject to the same limitations with reference to taxation should be maintained.