Hugo Black

“ Here it is undeniable that (1) the Government owned this industrial plant, (2) the only element of economic value in its ownership of the plant is its right to use it. That right of use was a government property interest, and any state tax on that right of use is a tax on an instrumentality of the United States and, hence, invalid. ”

“ As suggested before the the legislature apparently was trying to equate the tax burden imposed on private enterprise using exempt property with that carried by similar business using taxed property. Those using exempt property are required to pay no greater tax than that placed on private owners or passed on by them to their business lessees. In the absence of such equalization the lessees of tax-exempt property might well be given a distinct economic preference over their neighboring competitors, as well as escaping their fair share of local tax responsibility. ”

“ The United States owned an industrial plant in Detroit which it had leased, for a short term, to Borg-Warner, at a fixed annual rental, for use in its private business. The lease provided that if the lessee was required to pay any taxes upon the property to the State of Michigan, under the statute quoted, infra, or otherwise, during the term of the lease, the lessee might deduct the same from the rents, but the Government reserved the right to contest the validity of any such taxes. ”

“ Reviewing all the circumstances the Court concluded that the tax was simply and forthrightly imposed on the property itself, not on the privilege of using or possessing it. In carefully reserving the question whether the bailee could be taxed for exercising such privileges, the Court stated:
'Whether such a right of possession and use in view of all the circumstances could be taxed by appropriate proceedings we do not decide.
'Actual possession and custody of Government property nearly always are in someone who is not himself the Government but acts in its behalf and for its purposes. ”

“ One of its customers was the Government which had, by contract, agreed to reimburse Esso for any tax imposed upon it by the State in consequence of having stored the Government's gasoline. Thus the tax was not imposed by the State upon the Government's property interests but upon Esso which did not share the Government's immunity from state taxation, and the obligation of the Government derived not from the statute but through operation of the contract. ”

“ Where a federal right is concerned we are not bound by the characterization given to a state tax by state courts or Legislatures, or relieved by it from the duty of considering the real nature of the tax and its effect upon the federal right asserted.' Carpenter v. ”

“ Mr. Justice WHITTAKER, with whom Mr. Justice BURTON joins (dissenting) .
I respectfully dissent. Understanding of the bases of my convictions and reasons for doing so requires a rather full treatment of the case. ”