Petition for Writ of Certiorari — District of Columbia v. Smoot Sand & Gravel Corp.

y FILED

MAY 1 1 1949

CHARLES ELMORE CROPLEY

No. _780 aterm

IN THE SUPREME COURT OF THE UNITED STATES

Ocroser Term, 1948

District or CoLumsia, Petitioner,

Vv.

Tas Smoor Sanp & Graver Corporation, Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

DISTRICT OF COLUMBIA CIRCUIT AND

BRIEF IN SUPPORT THEREOF

VERNON E. WEsrt,

Corporation Counsel, D. C.,

{ Cuester H. Gray,

Principal Assistant Corporation Counsel, D. C.,

/ Grorce C. Upprcrarr,

Assistant Corporation Counsel, D. C.,

Attorneys for Petitioner,

District Building, ~

Washington 4, D. C.

DIVISION OF PRINTING AND PUBLICATIONS —GOVERNMENT OF THE DISTRICT OF COLUMBIA

INDEX

Supsect INDEX

PAGE

Petition:

Diateinems OF Ue Dieter DRWGIIOE cic sininncncimimeniiccinnccanninne 1

II, hs 5 chciin dk ante hana nds diideteancncocbaena odes 3

A en ee ee ee nee ‘ne a <@

Reasons Relied on for Allowance of the Writ ~---.-------------_- 4

Brief in Support of Petition:

RE eee ee ae ee ae re Re Ce EE Ae 7

Grounds of Jurisdiction ~..-.--------------~- 7

NN Ti CI NO i in cir etek min bndeebadeuianams 7

ID EE NOE one vinnccncinnnedenininindinhimateeniitainlpenid ll

I RGN - occ nciuicndabhadtias hidemnnnpnaminigt lie selina tna hatte ll

Summary of Argument —_-------- © sdiilcinssialiioigs niche dsoaaseetieeletaiiinigh 14

I ia is csshinicsceictiahatecepnininiiienan and sia ieticlaoaci cen tale hchisaacenaciaapeennassictanienacni 15

I. The Court of Appeals erred in holding that the property in-

velved could not be constitutionally taxed at full value 15

II. The Court of Appeuls erred in holding that the vessels in-

volved have heretofore been tared upon an apportion-

AG A PO face bindadinn ginnenieemndin’ 23

RIN esis iceei nace cagect nae ernchipepatb niche lard eiiuliiiceationamns eliatiisiadten 25

Cases Crtep

American Refrigerator Transit Co. v. Hall, 174 U. S. 70 _---_-----_---_- 19

Ayer & Lord Tie Co. v. Kentucky, 202 U. S. 409 _---___-_-___-________ 21

Brushaber v. Union Pacific R. Co., 240 U. S. 1 ~.---------------------. 22

First Bank Stock Corp. v. Minnesota, 301 U. S. 234 ~--------____-__ 15

Greene v. Lousiville & Interurban R. R. Co., 244 U. S. 499 __----_ 23, 24

Hamilton National Bank v. District of Columbia, 81 U. S. App. D. C.

SE SEe, EY SUED eck acdc nnen orm vtcintihen ca baleasttta namin. elpsnicbekshsaaniaiieintepicteninas 23

International Milling Co. v. Columbia Transportation Co., 292 U.S. 511 15

Johnson Oil Co. v. Oklahmoa, 290 U. S. 158 ___------------- 19, 20, 24

Md. & Va. Milk Producers’ Association v. District of Columbia, 73 App.

D. C. 399, 119 F. 2d 787 -_- ~ 8B

INDEX—Continued

P

Neild et al. v. District of Columbia, 71 App. D. C. 306, 110 F. 2d 246. ___ s

New York Central R. Co. v. Miller, 202 U. 8. 584... 21

Northwest Airlines v. Minnesota, 322 U.S. 292... 20, 21

Old Dominion S. Co. v. Virginia, 198 U. 8. 299... —

Ott v. Mississippi Valley Barge Line Co., 336 U.S. 169... 19

Pullman Co. v. Richardson, 261 U. 8. 330 ....--------- 20

Pullman's Palace Car Co. v. Pennsylvania, 141 U.S.18 19, 20,21

Queen City Brewing Co. v. District of Columbia, 77 U.S. App. D. C. 213,

SOE a A capsiictinssécitneth eitepntantanechtecitiiaall tani ie 15, 20

Smoot Sand & Gravel Corp. v. Washington Airport, 283 U.S. 348 ______ 16

Southern Pacific Co. v. Kentucky, 222 U. S. 63 ____ ats: an

Stebbins v. Riley, 268 U.S. 137 _____ hci cacthesehghinashde Sah Seesieatttinea ie 22

waar ©, Cues oe, Be he ee 22

Union Tank Line Co. v. Wright, 249 U.S. 275 _.... 20, 23

Union Transit Co. v. Kentucky, 199 U.S. 194 __..._..... 20, 24

crambes Eiatee ©, Dhan, SUT: © OD a i i a ee 18

Vicksburg S. & P. R. Co. v. Dennis, 116 U.S. 665 __.. 24

ores We Dom, “GR AF a an ai ee 18

Wasconsin v. J. C. Penney Co., 311 U.S. 435 -_..............._ 23

OrHer AUTHORITIES

ek a aT ee eee a 4,7

Article I:

tn sea RE EE ROSE SI GET I MER RAE ORE Es OS oe 3, 16

Clause 3 (Commerce Clause) ........... 3, 18, 19

IN TP aides Seog esitincicesdeieralacaeniceialepac ul pa cacacdicg Siac atl 16

SDE. snc nie acerdutipindsssnticbciacicnapiig aekeE aa eiet its beh gee ent 3

ek TS a Fs Ni 3, 14, 22, 23

Fourteenth Amendment ______ 18, 19, 22, 23

Statutes CiTep

Act of July 1, 1908 (68 Stat. 0G ¢. 190) 2 16, 24

Sec. 6:

op ee aca mig ae

RS We a cre a 12

Par. 3, as amended 13

Par. 10, as amended 16

Act of April 28, 1904 (33 Stat. 563, c. 1815)

INDEX—Continued

Act of June 29, 1922 (42 Stat. 668, c. 249)

Act of July 3, 1926 (44 Stat. 832, c. 759)

United States Code, Congressional Service (1948 ed.):

Title 28, Sec. 1254

D. C. Code (1940 ed.):

IN THE SUPREME COURT OF THE UNITED STATES

Ocroser TERM, 1948

Is scladesteaen

District or CoLtumsia, Petitioner,

Vv.

Tue Smoor Sanp & Graver Corporation, Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

DISTRICT OF COLUMBIA CIRCUIT

To the Honorable, the Chief Justice of the United States,

and the Associate Justices of the Supreme Court of

the United States:

Your petitioner, the District of Columbia, respectfully

shows and represents unto your Honors that:

STATEMENT OF THE MATTER INVOLVED

Laws applicable to the District of Columbia, enacted by

the Congress of the United States in the exercise of exclu-

1

2

sive jurisdiction over the District of Columbia pursuant

to the Constitution of the United States, require that all

personal property in the District of Columbia subject to

taxation, including vessels, ships and boats, shall be listed

and assessed for taxation at not less than the full and true

value thereof in lawful money.

The respondent, a Delaware corporation having its only

office, with exception of its statutory office in Delaware, in

the District of Columbia, has, since 1927 when it was organ-

ized, owned various vessels and boats (consisting of

dredges, launches, tugboats, and scows). The tugboats

and many of the scows, during the fiscal years ended June

30, 1941, to June 30, 1945, inclusive, were daily used in the

District. They were sent down the Potomac River from

the District of Columbia to various sand and gravel de-

posits of the respondent in the Potomac River and its

tributaries from which sand and gravel was brought back

to respondent's storage places in the District of Columbia

(R. 34-37).

The Assessor of the District of Columbia assessed per-

sonal property taxes for the fiscal years referred to above

against respondent upon the basis of the full and true value

of the tugboats and scows which were daily in the District

and used in transporting its sand and gravel in and to the

District of Columbia. The Assessor did not include in

such assessments any of respondent’s dredges or any of its scows

which were out of the District, sunk, or otherwise out of com-

mission (R. 35, 36).

The respondent appealed from the aforesaid assessments

to the Board of Tax Appeals for the District of Columbia

upon the principal ground that the vessels and boats as-

sessed were not subject to taxation in or had any situs in

the District of Columbia, permanent or otherwise (R. 7, 18).

The Board of Tax Appeals sustained the validity of the

assessments, except with respect to certain scows (R. 42,

3

120, 121). Respondent petitioned the United States Court

of Appeals for the District of Columbia Circuit for a review

of the decision of the Board of Tax Appeals upon several

grounds, one being the contention that imposition of tangi-

ble personal property taxes by the District of Columbia on

the basis of 100% of value rather than on the basis of appor-

tionment is in violation of the Constitution of the United

States, particularly in violation of the grant of power ex-

tended to the Congress over the District of Columbia by

Art. I, Sees. 8 and 9 of the Constitution, the Fifth Amend-

ment thereto, and the ‘‘spirit’’ of the commerce clause,

‘‘as well as other provisions of the Constitution’? (R. 2-7).

On March 28, 1949, the United States Court of Appeals

reversed the decision of the Board of Tax Appeals and held

“that the District of Columbia could constitutionally

tax these tangibles, used exclusively in interstate com-

merece, upon a fair apportionment of value, but could not

constitutionally tax them at full value.’’ (R. 201.)

JURISDICTION

The judgment of the United States Court of Appeals for

the District of Columbia Circuit was entered March 28,

1949 (R. 202). The jurisdiction of this Court to issue

the writ applied for is invoked under Title 28, U. S. Code,

Congressional Service (1948), Sec. 1254 (Act of June 25.

1948, 62 Stat... ch. _....).

QUESTION PRESENTED

The question presented is whether a statute enacted by

the Congress of the United States taxing all property at its

full vahie, specifically including vessels, ships and boats,

in the District of Columbia, is within the Constitutional jur-

isdiction and power of the Congress of the United States.

4

REASONS RELIED ON FOR ALLOWANCE

OF THE WRIT

1. The United States Court of Appeals has decided a

question of substance relating to the construction and ap-

plication of a statute enacted by the Congress of the United

States under the Constitution which has not been but

should be settled by this Court. The question whether ves-

sels, ships and boats in the District of Columbia may be

constitutionally taxed under laws enacted by the Congress

of the United States applicable to the District of Columbia

has not been decided by this Court. This question is not

applicable to the respondent only; it is applicable to all

owners of vessels, ships and boats in the District of Colum-

bia not exempted from taxation and which are used simi-

larly to those of respondent.

2. The United States Court of Appeals has not given

proper effect to the decisions of this Court with respect to

what constitutes ‘‘actual situs’’ of tangible personal prop-

erty in a taxing jurisdiction.

3. The United States Court of Appeals has decided a

very important question of law concerning the Constitution

of the United States and statutes enacted by the Congress

of the United States which decision is in conflict with the

applicable decisions of this Court and prior decisions of the

Court of Appeals. In deciding this case the Court of Ap-

peals has committed a grievous error similar to one which

this Court corrected by reversing said Court of Appeals

some years ago.

Wuertrore, Your petitioner p iys the allowance of a

Writ of Certiorari to the United States Court of Appeals

for the District of Columbia Circuit in this cause, and that

said cause may be reviewed and determined by this Honor-

able Court, and that the judgment of said Court of Appeals

5

may be reversed and set aside; and for such further relief

and remedy in the premises as this Court may deem meet

and proper.

District of Columbia,

Petitioner.

By:

VERNON E. West,

Corporation Counsel, D. C.,

Cuester H. Gray,

Principal Assistant Corporation Counsel, D. C.,

Georce C, UPpprEcraFr,

Assistant Corporation Counsel, D. C.,

Attorneys for Petitioner,

District Building,

Washington 4, D. C.

BRIEF IN SUPPORT OF PETITION FOR CERTIORARI

BRIEF IN SUPPORT OF PETITION FOR CERTIORARI

OPINIONS BELOW

The opinions of the Board of Tax Appeals for the Dis-

trict of Columbia (R. 43-49) and the United States Court of

Appeals for the District of Columbia Circuit (R. 200) are

not yet reported.

GROUNDS OF JURISDICTION

The grounds on which the jurisdiction of this Court are

invoked are:

1. The United States Court of Appeals has decided a

question of substance relating to the construction and ap-

plication of the Constitution and a statute enacted by the

Congress of the United States which has not been but should

be settled by this Court.

2. The United States Court of Appeals has not given

proper effect to the decisions of this Court applicable to

the question decided.

3. The United States Court of Appeals has decided an

important question of law involving the Constitution and a

statute of the United States applicable to the District of

Columbia which decision is in conflict with the decisions of

this Court and its prior decisions relating to the power of

Congress.

STATEMENT OF THE CASE

The case, insofar as material to the question presented,

is as follows:

_

8

Tho respondent is a Delaware corporation, organized in

927 (CR. 84). During all of the tax years involved

in this proceeding (fiscal years ended June 30, 1941 to 1945,

inclusive) respondent's business consisted of dredging sand

and gravel from certain deposits in the Potomac River and

its tributaries, transporting such material by means of

soows towed by its tugs to its storage places in the Dis-

trict of Columbia, and thereafter selling it from such

storage placos and transporting it therefrom to the points

of delivery, in most cases by truck and in some cases by

moans of scows (R. 84-36; Findings 2-7).

Respondent's only office, with the exception of its statu-

tory office in Delaware, was in the District of Columbia.

It never transacted any business in Delaware except when

representatives went there to negotiate or close contracts

with customers in that State, and it held some of its cor-

porate meetings there (R, 37; Finding 11).

Respondent's shipyards, and its storage yards for the

material in which it deals, are located in the District

of Columbia, and were so located during the tax years in-

volved (R. 35, 37; Findings 4, 5 12). Such repairs to

respondent's scows and tugs as could not be done at the

sites of dredging operations were made at respondent's

shipyards in the District (R. 37; Finding 12),

The aforesaid sand and gravel was obtained by respond-

ent from 13 sand and gravel deposits located in the Potomac

River and its tributaries down-river from the District,

which it owned, except that in 1941 and 1942 it also obtained

sand and gravel from the vicinity of Dangerfield Island in

the Potomac River. Nine of the 13 deposits were located

in Maryland and 4 were in Virginia, Dredging operations

at Dangerfield Island may have been carried on wholly or

partly in the District obVirginia (R. 34, 36, 146; Findings

2, 7).

During the tax years concerned respondent operated the

tugs and scows involved in conducting its business as fol-

9

lows: At the beginning of business on each working day

approximately one-half of its scows were in the District

of Columbia, and approximately one-half thereof were at the

dredges down the river outside the boundary of the Dis-

trict. At about 7 o'clock A. M, at the beginning of business

the unloaded scows that were in the District were towed

by respondent's tugs to the sites of dredging operations.

They were left there, and the tugs then proceeded to tow

back to the District those scows which had been at the

dredging sites overnight. The Potomac River, for about

ten miles down-river from respondent’s shipyards, was

within the boundaries of the District of Columbia (R.

35, 36; Findings 5, 6). The process of towing the loaded

scows to the District began about three or four hours after

the movement of the tugs down-river with the unloaded

scows. The scows arrived in the District after lunch and,

after having been unloaded, were towed back to the sites

of dredging operations. All of such equipment (the scows

and tugs here involved) were in the District each working

day (R. 35, 36; Finding 6).

Throughout each of the years involved, respondent had

scows varying in number from about 65 to 87 engaged in

its operations within and without the District (R. 35;

Finding 6). Of these, 21 were out of the District, sunk or

otherwise out of commission (R. 36; Finding 10; R. 171,

172) and were not included in the District tax assessment;

4 were used to furnish fuel to respondent’s dredges and

came into District waters every week or ten days to be

loaded with fuel, remaining at other times at the sites of

dredging operations (R. 36; Finding 8); and 4 were at all

times outside the District engaged in stripping stumps,

clay and mud from sand and gravel (R. 36; Finding 9).

The 8 fuel and stripping scows were held by the Board of

Tax Appeals not to be subject to taxation by the District

for the years involved, and a refund of taxes and interest

thereon was authoriz:-1 (R. 42, 120, 121, 125-127). The re-

—

10

maining seows which were daily in the District, are those

involved in this proceeding.

Respondent did not, for any of the years involved, pay

any personal property taxes on its scows to Maryland,

Virginia or Delaware (R. 38; Findings 15, 16). The only

scows of respondent taxed anywhere were a portion of the

total number thereof, taxed by the District as shown above,

which scows were deily in the District incident to the con

duct of respondent's District business.

During the tax years involved the Virginia taxing au-

thorities taxed six dredges and eight tugs or launches be-

longing to respondent (R. 38; Finding 16). The basis for

such taxation was that the property taxed had its ‘‘home

port’’ in Virginia where it was registered (licensed) (R.

147, 148, 183-186). The dredges were not taxed by the Dis-

trict (R. 35; Finding 3).

Respondent did not, for any of the years involved, pay

any taxes to the State of Delaware (except franchise taxes),

or any personal property taxes to the State of Maryland

(R. 38; Finding 16). euaintiis

Respondent’s treasurer pointed out to District assessing

authorities in 1938 that a large part of its deliveries were

outside of District of Columbia waters and that conse-

quently, for days at a time, some of its tugs and scows were

not in District waters. The Board of Tax Appeals found,

however, that (R. 82; Finding 17):

«“* * * This condition as to petitioner’s tugs

and scows, except in regard to scows used in

stripping operations and its fuel scows, did not

exist during the fiscal years here involved.’’

During July of the years 1940 through 1945 respondent

filed its personal property tax returns with the Assessor of

the District for the fiscal years ending on the following

June 30th and reported therein as the value of its water

craft and boats the arbitrary figure of $15,000 (R. 39, 117;

11

Findings 18, 27, 29) which returns the Board of Tax

Appeals found were ‘‘false and incorrect’’. The value of

such property was greatly in excess of the amount reported

each year (R. 41, 117; Findings 23, 28).

The Board of Tax Appeals affirmed the assessments, ex-

cept with respect to the aforesaid 8 fuel and stripping scows

(R. 42, 119-121).

The Court of Appeals reversed, holding that the District

could not constitutionally tax the tugs and scows involved

at ‘‘full value’’.

SPECIFICATION OF ERRORS

The United States Court of Appeals for the District of

Columbia erred:

(1) In holding that vessels and boats which are daily

used in the District of Columbia in the conduct of a local

District business, and commingled with the general mass of

property in the District, cannot constitutionally be taxed

at full value.

(2) In holding that for many years the aforesaid vessels

and boats have been taxed upon an apportionment of their -

value, and that the District could tax such property only

upon a fair apportionment of value.

STATUTES INVOLVED

Act of July 1, 1902, 32 Stat. 590, 617, c. 1352, Sec. 6, Par. 1;

D. C. Code 1940, Sec. 47-1203, in material part as follows:

‘“‘That hereafter the assessor of the District

of Columbia, or his successor in office, shall an-

nually cause to be prepared a printed blank sched-

ule of all tangible personal property * * owned

or held in trust or otherwise, subject to taxation

* * and of the classes of corporations and com-

panies to be assessed, together with the rate of

tax prescribed, to which shall be appended an

12

affidavit in blank, setting forth that the forego-

ing presents a full and true stateme it of all such

personal property, *** * * *, Every * * corporation

* * in said District liable to taxation hereunder

* * shall, * * fill out the proper blanks in said sched-

ule with a full and true statement, as in this section

hereinbefore required, and make and sign an affi-

davit to the truth thereof, * * and thereupon said

board of personal-tax appraisers, or any one of

the members thereof, shall assess said property

at its fair cash value, and enter the same in the

columns upon said blanks provided for that pur-

pose, and the amount thus ascertained shall be

entered upon the books for taxation for * * each

fiscal year * *: Provided further, That if the said

board of personal-tax appraisers be not satisfied

as to the correctness of the return of personal

property made by any * * corporation * * said

board may reject said return, and said board, or

any one of the members thereof, may, from the

best information he or they can procure, or by

making such an examination of the personal prop-

erty as may be practicable, assess the same in such

amount as may to him or them seem just; * *.”’

Act of July 1, 1902, supra, Sec. 6, Par. 2 (paraphrased

as to tax rate in D. C. Code 1940, Sec. 47-1207) :

“PAR, 2. On all tangible personal property,

assessed at a fair cash value (over and above the

exemptions provided in this section), including

vessels, ships, boats, tools, implements, horses,

and other animals, carriages, wagons, and other

vehicles, there shall be paid to the collector of

taxes of the District of Columbia one and one-half

per centum on the assessed value thereof.’’!

?The Commissioners of the District of Columbia were authorized by the

Act of June 29, 1922, 42 Stat. 668, 669, 0.249 (D. C. Code 1940, Sec. 47-501),

to annually fix the rate of tax.

_——

13

See, 4 of the Act of July 3, 1926, 44 Stat. 832, 833, ¢. 759,

D. C. Code 1940, See. 47-713 and 47-1202:

‘*See. 4. That hereafter all real estate and per-

sonal property in the District of Columbia subject

to taxation shall be listed and assessed at not less

than the full and true value thereof in lawful

money.”’

Act of July 1, 1902, supra, Sec. 6, Par. 3, as amended by

Sec. 2 of the Act of April 28, 1904, 33 Stat. 563, c. 1815, a

portion-of which is contained in D, C. Code 1940, See. 47-

1212. The portion of the paragraph amended reads as fol-

lows (plain type shows the language of the 1902 Act; itali-

cized type shows the matter added by the 1904 Aci) :

‘‘After the passage of this Act it shall be un-

lawful for any person or persons entering the Dis-

trict of Columbia subsequent to June thirtieth

in each year and establishing a place of business

for the sale of goods, wares, or merchandise,

either at private sale or at auction, or engaging

in the business of common carrier by vessels,

ships, or boats, to conduct such business until

a sworn statement of the value of such stock,

vessels, ships, and boats has been filed with the

assessor of the District of Columbia, who shall

thereupon render a bill for the unexpired portion

of the fiscal year at the same rate as other per-

sonal taxes are levied: Provided, That this shall

not apply to vessels, ships, or boats if it shall be

made to appear by affidavit that any vessel, ship,

or boat has been assessed for taxation and the taxes

paid elsewhere.”’

(It will be noted that the amendment relates to ‘‘common

earriers’’ by vessels, ships, and boats; not to vessels, ships,

14

and boats engaged in ordinary general business such as

those of the respondent in this case.)

SUMMARY OF ARGUMENT

Congress has taxed, at full value, vessels, ships and boats in

the District. The vessels and boats, comprising a portion of re-

spondent’s entire fleet, were specific and individual items and

were in the District throughout the tax years with exception of

fractional parts of days. They were assessed at full and true value

as required by law. Such vessels and boats did not visit any port

except the Port of the District of Columbia. The Court of Ap-

peals committed grievous error in holding that such property

could not constitutionally be taxed at full value.

The doctrine of “actual situs” applies. Even under the doctrine

of “tax apportionment” relating to migratory property habitually

within a tax jurisdiction when the specific items of property are

constantly changing, which the Court of Appeals sought to apply,

the Court of Appeals erred under the decisions of this Court. The

tax as assessed does not violate the Fifth Amendment. If the tax

is assessed at less than full value as suggested by the Court of Ap-

peals, such assessment might be held to be so discriminatory to

others as to be equivalent to confiscation and void under the Fifth

Amendment.

The vessels and boats involved, comprising a portion of re-

spondent’s entire fleet, were not previously taxed upon an ap-

portionment of their value. Respondent reported its vessels and

boats for taxation for many years, including the tax years in-

volved, at the arbitrary figure of $15,000 which was consid-

erably less than their full and true value. This is not tax appor-

tionment under the decisions of this Court. The Court of Ap-

peals erred in holding that the property involved had been pre-

viously taxed upon an apportionment basis based on such facts.

In taxing a portion of respondent’s entire fleet, which portion

has been in the District throughout the tax years, there is, in

a practical sense, an apportionment of the number of vessels

which may constitutionally be taxed at full value.

ae

15

ARGUMENT

I

The Court of Appeals erred in holding that the property in-

volved could not be constitutionally taxed at full value.

It is clear from the findings of fact of the Board of Tax

Appeals, which have been sumarized in the foregoing state-

ment of the case insofar as here material, that the Sn.oot

Sand & Gravel Corporation, respondent, has conducted

a sand and gravel business in the District of Columbia since

it was incorporated. (For a long time prior to 1922 the

same business was carried on by an individual—one Smoot,

Tr. 327.) Its only business office, its shipyards, and its

storage yards for the material in which it deals, are all

located in the District of Columbia. It is a corporation

“in said District’? within the meaning of the tax statute

involved (Queen City Brewing Co. v. District of Columbia,

77: U. S. App. D. C. 218, 134 F. 2d 44, cert. den. 319 U. S.

767). Its ‘‘commercial domicile’’ was and is in the Dis-

trict (First Bank Stock Corp. v. Minnesota, 301 U. S. 234,

237 ; International Milling Co. v. Columbia Transportation

Co., 292 U. S. 511, 519; Md. € Va. Milk Producers’ Associ-

ation v. District of Columbia, 73 App. D. C. 399, 119 F. 2d

787, cert. den. 314 U. S. 646). Only its bare legal or statu-

tory domicile is elsewhere (Delaware).

The hub or ‘‘home’’ of all respondent’s commerical activ-

ities is in the District of Columbia. It has-never been else-

where.

The vessels and boats of respondent which have been

taxed under laws enacted by the Congress of the United

States consist of specific tugs and scows which were daily

in the District throughout the tax years involved, employed

in respondent’s business. Such vessels and boats had be-

come commingled with and a part of the general mass of

property in the District. Such vessels and boats daily

NN he ee

16

left the Port of the District of Columbia, except when re-

maining in respondent’s shipyards, and went to several

sand and gravel deposits located in the Potomac River

and its tributaries in Virginia and Maryland and returned

to the Port of the District of Columbia with the material

which respondent sells. So far as the record discloses,

these vessels and boats went to no other ‘‘Port’’ but the

District of Columbia. The fuel scows, which the Board of

Tax Appeals held to be not subject to taxation in the Dis-

trict and which are therefore not involved, did infrequently

visit the Port of Alexandria, Va. But, even so, the navig-

able water area of the Port of Alexandria was within the

District boundaries. Smoot Sand & Gravel Corp. v. Wash-

ington Airport, 283 U. S. 3482 Regardless whether the

tugs and scows here involved went to sand and gravel de-

posits located down-river from the District in Virginia, or

Maryland, they daily were in the District.

The Congress of the United States, exercising its exclus-

ive power to legislate for the District of Columbia under

Article I, Section 8, Clause 17 of the Constitution of the

United States, enacted statutes (Act of July 1, 1902, and

the Act of July 3, 1926, supra) taxing all tangible personal

property ‘‘in the District’? (over and above property ex-

empted *) at ‘‘not less than the full and true value thereof”’.

The statute specifically includes ‘‘vessels, ships, boats,’’ as

taxable tangible personal property.

The tugs and scows here involved were clearly ‘‘vessels”’

and ‘‘boats’’. They were ‘‘in the District’’. They had,

as the Board of Tax Appeals said (R. 45), ‘“‘an actual

situs and physical presence in the District throughout the

entire year, with the exception of fractional parts of days.”

The District assessing officials assessed the taxes involved

2 The ‘Act of October 31, 1945, 59 sail Ber he . 443, establishing the Virginia-

District boundary at Alexandria piethend line” was enacted sub-

sequent to any of the tax dates im wen

Act of July 1, 1902, supra, Sec. 6, Par. 10, as amended (D. C. Code 1940,

See. 47-1208).

17

based upon the ‘‘full and true value”’ of the specific prop-

erty, as the statute requires. Other vessels and boats

which were used as an integral part of respondent’s busi-

ness and which had acquired a situs outside the District

were not assessed by District tax officials.

The Board of Tax Appeals stated in its opinion (R. 48) :

“If the holding that petitioner’s equipment

had a taxable situs in the District for the taxable

years involved is correct, the Constitutional ques-

tions raised by petitioner as to taxation of prop-

erty having no such situs are not applicable.’

The Court of Appeals, in reversing the Board of Tax

Appeals, concluded that the ‘District of Columbia could

constitutionally tax these tangibles, used exclusively in

interstate commerce, upon a fair apportionment of value,

but could not constitutionally tax them at full value.’’

(Italics supplied.) This conclusion was reached notwith-

standing the fact that only a portion of the entire number

of vessels and boats of the respondent used in its sand and

gravel business was subjected to District taxation, and not-

withstanding the fact that the statute involved requires that

such property shall be assessed ‘‘at not less than the full

and true value thereof’’. As pointed out above, the only

vessels and boats subjected to District taxation under the

decision of the Board of Tax Appeals were specific tugs

and scows which were daily in the District throughout the

tax years involved.

In reaching its conclusion the Court of Appeals said (R.

201):

*** * In order to be constitutional, a property

tax on such tangibles must be apportioned upon

some fair basis. This has been the consistent hold-

ing of the Supreme Court. * *’’

ae emo sm a a

18

All the cases cited by the Court to the statement just

quoted involved State tax cases and the jurisdiction or

power of the various States to tax under the limitations

of the Commerce Clause of the Constitution or the Four.

teenth Amendment, or both. It is well settled that the

commerce clause operates as a limitation solely upon the

States and constitutes no bar to action of the Congress of

the United States, and that the Fourteenth Amendment is

not applicable in the District of Columbia. These principles

were recently announced by the Court of Appeals in Neild

et al. v. District of Columbia, 71 App. D. C. 306, 110 F. 2d

246, based almost entirely upon decisions of this Honorable

Court, * and after the case was twice argued, first by a

three-judge Court and again by a five-judge Court. One

of the cases cited was Wight v. Davidson, 181 U. S. 371,

which was an appeal from a decree of the Court of Appeals

of the District of Columbia reversing an order or decree

of the Supreme Court of the District confirming an assess-

ment upon lands for improvements made. The Court of

Appeals relied upon a similar case which originated in Ohio

and involved due process of law under the Fourteenth

Amendment. In reversing the Court of Appeals, with di-

rections to affirm the decree of the Supreme Court of the

District of Columbia, this Court said (181 U. S. 384) :

‘In the present case is involved the constitu-

tionality of an Act of Congress regulating assess-

ments on property in the District of Columbia,

and in respect to which the jurisdiction of Con-

gress, in matters municipal as well as political, is

exclusive, and not controlled by the provisions of

the 14th Amendment. No doubt, in the exercise of

such legislative powers, Congress is subject to the

provisions of the 5th Amendment to the Consti-

* And see United States v. Darby, 312 U. S. 100, as to the power of Congress

under the commerce clause.

19

tution of the United States, which provide, among

other things, that no person shall be deprived of

life, liberty, or property without due process of

law, nor shall private property be taken for pub-

lic use without just compensation. But it by no

means necessarily follows that a long and @onsist-

ant construction put upon the 5th Amendment, and

maintaining the validity of the acts of Congress re-

lating to public improvements within the District

of Columbia, is to be deemed overruled by a deci-

sion concerning the operation of the 14th An end-

ment as controlling state legislation.’’

It is respectfully submitted that the Court of Appeals has

committed an identical error in the present case.

It is further respectfully submitted that, even under the

tax apportionment doctrine introduced by Pullman’s Palace

Car Co. v. Pennsylvania, 141 U.S. 18, which was exten led to

include ships and vessels operating on inland waters in Ott

v. Mississippi Valley Barge Line Co., 336 U.S. 169 (decided

four days before the present case was argued), the Court of

Appeals has grievously erred. That doctrine is not appli-

cable to taxation of specific personal property having an

“actual situs’’ in a tax jurisdiction, even when such juris-

diction is Constitutionally limited or restricted under the

commerce clause and the Fourteenth Amendment. The

tule of tax apportionment applies only where migratory

property is habitually employed within a State and when

the specific and individual items of property are not con-

tinuously the same but are constantly changing as the nat-

ure of their use requires. Johnson Oil Co. v. Oklahoma,

290 U.S. 158; American Refrigerator Transit Co. v. Hall,

174 U.S. 70, 82. The basis of the apportionment assess-

ment may be such proportion of capital stock as the number

of miles of route traveled within the State bears to the total

number of miles in all States (the Pullman Car Co. case,

oe iy

supra), by an appraisement and valuation of the average

number of items or average amount of property habitually

used and employed within the State (the Johnson Oil Co.

case, supra), or by any appropriate means of reaching the

‘actual or full value’’ of the portion of the property used

within a State, including intangible values (Pullman Co. vy.

Richardson, 261 U.S. 330). The mileage basis used in the

Pullman Car Co. case, supra, was not permitted in Union

Tank Liv Co. v. Wright, 249 U.S. 275, because it was ar-

bitrary and the consequent valuation of the property was

grossly excessive. In the case last cited this Court held

that the average number of cars used in the State during

the tax year should be taxed on a basis of true value of the

cars rather than on a mileage basis.

The Board of Tax Appeals distinguished the Queen City

Brewing Co. case, supra, in deciding this case and said

(R. 45):

““* * * But the taxability of the property in-

volve 1 in this appeal rests not on any such ‘repre-

sentative’ theory, or ‘average’ assessment, but on

the fact that the very property sought to be taxed

had an actual situs and physical presence in the

District throughout the entire year, with the ex-

ception of fractional parts of days.’’ (Italics sup-

plied.)

This Honorable Court has held that the State of domicile

has jurisdiction to tax the personal property of its cor-

porations, unless such property has acquired an ‘‘actual

situs’’ in another State, and that by ‘‘actual situs”’ is meant

continuous presence in another State which thereby sup-

plants the home State and acquires the taxing power over

such personalty. Union Transit Co. v. Kentucky, 199 US.

194; footnotes 1 and 2 in Northwest Airlines v. Minnesota,

322 U.S. 292, 295, 296. Under this rule the jurisdiction of

a State where the property has an actual situs is not lost

21

or curtailed even if every item of that property should be

taken successively into another State for a day, a week,

six months, or other period of time less than a tax year.

New York Central R. Co. v. Miller, 202 U.S. 584; Northwest

Airlines v. Minnesota, supra. Since the ‘‘domicile of ac-

tual situs’? (Southern Pacific Co. v. Kentucky, 222 U.S.

63, 67) supplants the statutory domicile or domicile of

origin under this rule, it makes no difference that personal

property taxes have been paid upon some portion of the

property in other tax jurisdictions (Northwest Airlines v.

Minnesota, supra, p. 295). See also Ayer & Lord Tie Co. v.

Kentucky, 202 U.S. 409; Old Dominion S. Co. v. Virginia,

198 U.S. 296

The Pullman’s Palace Car Co. case and certain others de-

cided by this Court concerning the rule of tax apportion-

ment referred to above, distinguishing between that rule

and the rule of ‘‘actual situs’’, had been decided before

the Congress enacted the tax statute involved on July 1,

1902. As this Court so aptly pointed out in the case of

Southern Pacific Co. v. Kentucky, supra (p. 75): ‘*A ship

is not intended to stay in port, but to navigate the seas.’’

Certainly the Congress knew of the very restricted naviga-

ble water area within the boundaries of the District of

Columbia when it enacted the statute involved, knew of

the decisions of this Court on the subject, knew that ves-

sels, ships, and boats (which were specifically mentioned in

the statute) would necessarily have to leave the District

and return in order to be useful for the purposes intended,

and intended to tax such vessels, ships and boats as had

an actual situs in the District at their ‘‘fair cash value’”’

or, in other words, their ‘‘full and true value.’’ Then, in

1904, Congress amended the law so as to tax vessels, ships

and boats entering and engaging in the business of common

carrier in the District, at the same rate as other tangible

personal property, without regard to the ‘‘actual situs’’

rule, unless it appeared by affidavit that ‘‘any vessel, ship,

22

or boat has been assessed for taxation and the taxes paid

elsewhere.’’ Also, by an Act approved December 15, 1945 _

(59 Stat. 610, ¢. 579, D. C. Code 1940, Supp. VI, See. 47- |

1215), the Congress prescribed different bases for taxing _

rolling stock of railroads and other companies. Section (b) —

of that Act taxes such rolling stock as is primarily located —

in the District (i.e, having its ‘‘actual situs’’ in the Dis-

trict) at its ‘‘full and true value’’. Section (c) of that

Act begins: ‘‘(¢) Such rolling stock as is not primarily lo-

cated in the District of Columbia shall be reported and

taxed in the manner following’? and then proceeds to de-

scribe in detail the manner in which the tax on such rolling

stock shall be apportioned. It is therefore self-evident in

the statute that Congress recognized the essential differ.

ence between personal property which had an ‘‘actual situs”

in the District and should be taxed at its ‘‘full and true

value’’ and personal property which came into the District

habitually but oyly temporarily and, therefore, should be

taxed on the ‘‘apportionment”’ basis. All decisions of this

Court on the subject up to and including the Northwest Airlines

case, supra, had been decided prior to enactment of the Act of

December 15, 1945, supra. It is further significant to note

that if the Congress had omitted Section (b) of the 1945

Act, all railroad rolling stock, whether or not it had an

actual situs in the District, would have been taxed on an

apportionment basis.

In view of the foregoing, the only Constitutional question

presented falls within the language of the Fifth Amend-

ment. The tax involved does not violate the Fifth Amend-

ment and, therefore, the Court of Appeals should have

affirmed the Board of Tax Appeals. Clearly neither the

statute nor the assessments constitutes a taking of prop-

erty without due process of law under the decisions of this

Court involving. both the Fifth and Fourteenth Amend-

ments. Brushaber v. Union Pacific R. Co., 240 U. S. 1, 24;

Stebbins v. Riley, 268 U. S. 137; Tyler v. United States,

—

23

281 U. S. 497, 504; Union Tank Line Co. v. Wright, supra;

Wisconsin v. J. C. Penney Co., 311 U.S. 435, 444. As a

matter of fact, if the tax involved were one assessed by a

State the theory of the Court of Appeals of assessing the

property at less than full and true value would be repug-

nant to the equal protection clause of the Fourteenth

Amendment (Greene v. Louisville € Interurban R. R. Co.,

244 U. S. 499, 515, 516) and, even under an act of the Na-

tional Congress, might possibly be so discriminatory to

others as to be ‘‘equivalent to confiscation and therefore

void under the Fifth Amendment’’ (Hamilton National

Bank v. District of Columbia, 81 U. S. App. D. C. 200, 203,

156 F. 2d 843, 846).°

II

The Court of Appeals erred in holding that the vessels involved

have heretofore been taxed upon an apportionment of value.

The Court of Appeals stated in its opinion (R. 200) :

‘*The question is whether the District of Colum-

bia can levy its property tax upon the full value

of these tugs and scows. ‘For many years they

have been taxed upon an apportionment of their

value based upon use inside and use outside the

District.”’

The ‘‘tugs and scows’’ referred to by the Court were not

the entire fleet of vessels and boats used by respondent

in its sand and gravel business within and without the

District. Such tugs and scows were those which were in

the District throughout the entire tax years except for frac-

tional parts of days, as pointed out above. They consti-

tuted only a portion of the entire fleet. This case, there-

5This case is now pending decision in the Court of Appeals (No. 9833) on

second appeal from the Board of Tax Appeals.

24

fore, is not at all like the Johnson Oil Co. case, supra,

where the Supreme Court of Oklahoma sustained assess-

ments ‘‘on the entire fleet of cars’’; nor like the Union

Transit Co. case, supra, where the Court of Appeals of Ken-

tucky also sustained assessments on the ‘‘entire number” of

cars used within and without the State. Both of these cases,

reversed by this Court, were relied upon by the Court of

Appeals in deciding this case.

The material facts which are set forth in our Statement

of the Case, supra, are based upon findings of fact of the

board of Tax Appeals. Findings 18 and 27 (R. 39, 117) show

that respondent reported its vessels and boats for taxation

during the tax years involved at an arbitrary value of

$15,000. The full and true values thereof as determined by

the District assessor and affirmed by the Board of Tax Ap-

peals ranged from $330,943 for the year 1941 to $198,253 for

the year 1945 (Finding 23, 28; R. 41, 117). The Board point-

ed out that respondent, in 1938, was reporting the value of

its floating equipment at $15,000 (Finding 17, R. 82).

District assessors informed respondent’s treasurer, about

1943 or 1944, that they did not agree with respondent's

basis of reporting its boats for taxation at a valuation of

$15,000 but respondent nevertheless continued to report it

at such value (R. 153-155).° This, clearly, did not con-

stitute an apportionment of the value of the tugs and scows

referred to by the Court. The Board of Tax Appeals did

not make a finding of fact that the tugs and scows involved

have for many years been taxed upon an apportionment

of their value. The Acts of July 1, 1902, and July 3, 1926,

supra, do not permit taxation of vessels and boats on a

basis of apportionment of value. See Greene v. Louisville

& Interurban R. R. Co., supra, at p. 516, where this Court

said that the basis of assessment can be full value or any

® The omissions of taxing officers in previous years cannot control the duty

imposed by law upon their successors. Vicksburg S. & P. R. Co. v. Dennis,

116 U. S. 665, 670.

25

other percentage or portion thereof so long as the basis is

applied ‘‘to all alike’’.

CONCLUSION

It is respectfully submitted that the Court of Appeals

grievously erred in reversing the Board of Tax Appeals.

Wherefore, we urge that the writ of certiorari be granted.

Respectfully submitted,

Vernon E. Wrst,

Corporation Counsel, D. C.,

Cuester H. Gray,

Principal Assistant Corporation Counsel, D. C..,

Grorce C. Upprcrarr,

Assistant Corporation Counsel, D. C.,

Attorneys for Petitioner,

District Building.

Washington 4, D. C.