United States.2 It is based on the theory that the imposition of tax liens would obstruct the Government in the disposition of its property and would, therefore, contravene the provision of the Constitution which vests in Congress the power "to dispose of and make all needful rules and regulations respecting the territory or other property of the United States." This provision implies the exclusion of all other authority over the property which could interfere with the right or obstruct its exercise." Property of the United States is exempt from State taxation without regard to the manner in which it may have been acquired or the purposes for which it may be used. Land acquired by the United States through foreclosure of its tax liens, though not devoted to an active governmental use, is not subject to taxation. In Van Brocklin v. Tennessee (117 U. S. 151), it was said, "to allow land lawfully held by the United States as security for the payment of taxes assessed by and due to them, to be assessed and sold for state taxes, would tend to create a conflict between officers of the two governments, to deprive the United States of a title lawfully acquired under express acts of Congress and to defeat the exercise of the constitutional power to lay and collect taxes, to pay the debts and provide for the common defense and general welfare." The rule is applicable, although the land, with the consent of the Government, may be devoted temporarily to private uses. In a case involving the foreclosure by a municipality of a tax lien on property of the United States which had been leased for private purposes, the Circuit Court of Appeals said, "The right to dispose of property by the United States which is no longer needed is an essential governmental function in the economic management of governmental affairs and while the government is seeking a purchaser, the leasing of such property * * cannot have the effect of subjecting the property to taxation. Since a state or any subdivision thereof has no right to tax property of the United States used by it in the performance of any of its constitutional functions, it follows, we think, that it cannot tax property of the United States acquired for a post office, which having been abandoned for that purpose, is held by the government pending a sale of the property."

*

* * *

The laws of many States expressly exempt property of the United States from taxation.5 However, as pointed out in the Van Brocklin case, supra, State laws cannot be the foundation of such exemption because the immunity of Federal property from

2 Van Brocklin v. Tennessee, 117 U. S. 151; 29 L. ed. 845, 6 S. Ct. 670; United States v. Rickert, 188 U. S. 432, 47 L. ed. 432, 23 S. Ct. 478; Wisconsin Railroad Co. v. Price County, 133 U. S. 496, 33 L. ed. 687, 10 S. Ct. 341; Forbes v. Gracey, 94 U. S. 762, 24 L. ed. 313.

3 Wisconsin Railroad Co. v. Price County, 133 U. S. 496, 504, 33 L. ed. 687, 10 S. Ct. 341; United States v. Rickert, 188 U. S. 432, 439, 47 L. ed. 532, 23 S. Ct. 478.

4 City of Springfield v. United States, 99 Fed. (2) 860 (First Circuit).

5 See Digest of State Cession Statutes, Appendix II.

State taxation is not dependent upon the grace of the State. It was also observed in the same case that although various acts of Congress admitting States to the Union expressly provided that property of the United States should not be taxed by the State, such provisions were declaratory only and did not confer any new power upon the United States.

Notwithstanding the immunity from State taxation of property of the United States, Congress has in numerous instances consented to taxation by the States of property held by various Federal agencies. Numerous bills have been introduced in Congress in recent years which have provided that the States shall be compensated in one way or another in lieu of taxes lost as a result of real estate acquired by the Government being removed from State tax rolls. No general legislation of this character has been enacted, but an Executive Order' establishing the Federal Real Estate Board directed that board to study and make appropriate recommendations regarding the situation in different communities adversely affected by the loss of tax revenue on land purchased or acquired by the Federal Government. The report and recommendation of that board was recently submitted to Congress, but no action has been taken on it at the time of the preparation of this chapter.

72. State taxation of persons and private property within Federal territory.-As pointed out elsewhere in these chapters, the mere ownership by the United States of land within a State does not deprive the State of its jurisdiction over such area. Private property within such area remains subject to State taxation except insofar as the power to tax may have been relinquished by the legislature of the State or its exercise would interfere with governmental functions. However, private property situated within territory over which the United States has acquired exclusive jurisdiction cannot be made the subject of State taxation, except as such right may be expressly reserved by the State in its grant of jurisdiction or may be consented to by Congress. Federal statutes permitting State taxation in such areas are hereinafter discussed. Many State statutes in relinquishing jurisdiction to the United States expressly retain the right to tax

6 Reconstruction Finance Corporation, U. S. C., Title 15, Sec. 610; Home Owners' Loan Corporation, U. S. C., Title 12, Sec. 1463 (c); Federal Savings and Loan Insurance Corporation, U. S. C., Title 12, Sec. 1725 (e); Federal Deposit Insurance Corporation, U. S. ., Title 12, Sec. 264 (p); Federal Farm Mortgage Corporation, U. S. C., Title 12, Sec. 1020 (f); Production Credit Corporation, U. S. C., Title 12, Sec. 1138 (c); Central Bank for Cooperatives, U. S. C., Title 12, Sec. 1138 (c); Regional Agricultural Credit Corporation, U. S. C., Title 12, Sec. 931; Federal Intermediate Credit Banks, U. S. C., Title 12, Sec. 1111; Federal Housing Administration, Title 12, Sec. 1706 (b). The National Defense Housing Act of Oct. 14, 1940 (Lanham Act) as amended by act of Jan. 21, 1942, provides for the payment from rentals to states and political subdivisions thereof of sums in lieu of taxes on property acquired under the act.

7 Executive Order No. 8034, Jan. 14, 1939 (Federal Register, Jan. 17, 1939). 8 See section 7.

persons or property, or both, within such areas. The right so reserved may be exercised if it does not interfere with Government functions. There is an increasing tendency on the part of States, in ceding jurisdiction to reserve the right to apply their tax laws within the ceded area.

73. Federal statutes consenting to State taxation within areas under exclusive Federal jurisdiction.-An act of Congress approved October 9, 1940 (54 Stat. 1060, U. S. C., Title 4, Sec. 14, known as the "Buck Act," 10 authorizes States to extend their sales, use and income taxes to persons residing or carying on business or to transactions occurring in Federal areas. However, this act expressly provides that its provisions "shall not be deemed to authorize the levy or collection of any tax on or from the United States or any instrumentality thereof, or the levy or collection of any tax with respect to sale, purchase, storage or use of tangible personal property sold by the United States or any instrumentality thereof to any authorized purchaser." In this connection the courts have recognized that army post exchanges are instrumentalities of the United States within the contemplation of the Buck Act and that the operation of such exchanges are therefore not subject to State taxation under the act.11 However, an act of Congress approved June 16, 1936 (49 Stat. 1521, U. S. C., Title 23, Sec. 55A),12 authorizes the collection of taxes levied by States on the sale of gasoline and other motor fuels to post exchanges, ship stores, ship service stores and other similar agencies located on United States Military or other reservations when such fuels are not for the exclusive use of the United States.

CHAPTER XII

JURISDICTION OVER THE DISTRICT OF COLUMBIA AND WITHIN FEDERAL RESERVATIONS SITUATED WITHIN TERRITORIES AND INSULAR POSSESSIONS OF THE UNITED STATES

74. District of Columbia.-The United States has exclusive jurisdiction within the District of Columbia for all purposes. By the Constitution, Art. I, Sec. 8, Cl. 17, Congress is given power to exercise exclusive legislation in all cases whatsoever over the District of Columbia. The power of Congress to legislate for the District includes not only the powers that belong to Congress with respect to territory of the United States within a State, but the powers of the State as well, a delegation which embraces full and unlimited jurisdiction, subject only to the prohibitions of the Constitution, to provide for the general welfare of the citizens within

See Digest of State Cession Statutes, Appendix II.

1 See Appendix I.

11 Falls City Brewing Co. v. Reeves, 40 Fed. Sup. 35; Query v. United States, 121 Fed. (2) 631. See Kiker v. Philadelphia, 31 A. (2) 289.

12 See Appendix I.

the District by any and every act of legislation which Congress may deem conducive to that end.1

75. Territories and insular possessions.-Art. I, Sec. 8, Cl. 17 of the Constitution relates expressly to lands acquired by the United States with the consent of the "Legislature of the State." It is, therefore, not applicable to lands acquired by the United States in Territories or insular possessions.

The ultimate power of Congress over Territories is complete and absolute. It arises from and is incidental to the right to acquire the Territory itself, and from the power given by the Constitution to make all needful rules and regulations respecting the Territory or other property belonging to the United States. (Mormon Church v. United States, 136 U. S. 1, 34 L. ed. 481.) While Congress has delegated to the Territories and insular possessions the power to legislate with respect to their own municipal affairs, their laws are subject to the express or implied approval of Congress, and may be superseded at any time by direct legislation of Congress. Thus, in enacting laws they act as instruments of the Federal Government in the performance of Federal powers and their officers and agents, in administering such laws, perform Federal functions. It was said in United States v. McMillan (165 U. S. 504), "Congress, having the entire dominion and sovereignty, national and municipal, Federal and state over the Territories of the United States, so long as they remain in the territorial condition, may itself directly legislate for any Territory, or may extend the laws of the United States over it, in any particular that Congress may think fit Congress may not only abrogate laws of the territorial legislatures, but it may itself legislate directly for the local government. It may make a void act of the territorial legislature valid, and a valid act void. In other words, it has full and complete legislative authority over the people of the Territories and all the departments of the territorial governments." It is within the discretion of Congress to legislate for such areas directly through its own enactments or indirectly through action of the local government pursuant to the powers delegated to it by Congress.

*

However, notwithstanding the right of Congress to modify or revoke any laws passed by territorial legislatures, it is recognized that if Congress has by the organic act establishing the territory, or by other legislation, given the territorial government power which is inconsistent with exclusive jurisdiction of the United States, then the Federal Government does not exercise such exclusive jurisdiction so long as that power remains in force.2

1 Gudmundson v. Cardrillo, 126 Fed. (2) 521, aff'g 35 Fed. Supp. 527; see also Keller v. Potomac Electric Power Co., 261 U. S. 428, 442, 43 S. Ct. 445; 67 L. ed. 731; Nield v. District of Columbia, 71 App. D. C. 306, 110 Fed. (2) 246; Frend v. United States, 69 App. D. C. 281, 100 Fed. (2) 691, cert. denied 306 U. S. 640, 83 L. ed. 1040, 59 S. Ct. 488.

2 Balzac v. Puerto Rico, 258 U. S. 298, 304; Downs v. Bidwell, 182 U. S. 244; Lastra v. New York & Puerto Rico S. S. Co., 2 Fed. (2) 812; Sancho v. Bacardi Corporation of America, 109 Fed. (2) 57, 63.

It follows, therefore, that any question involving the immediate jurisdiction of the Federal Government within a territory should be considered in the light of the powers expressly delegated by Congress to the territorial government.3

4

In commenting upon the Foraker Act, which provided local self-government for the people of Puerto Rico, the Supreme Court of the United States said in Gromer v. Standard Dredging Co.5

The purpose of the act is to give local self-government, conferring autonomy similar to that of the States and Territories, reserving to the United States rights to the harbor areas and navigable waters for the purpose of exercising the usual national control and jurisdiction over commerce and navigation. The United States could have reserved control and exercised it as it does in instances, by the consent of the states, over certain places in the States devoted to the governmental service of the United States. We do not think, as we have said, that the United States has done so and that it has not is the view of the Executive Department of the government as expressed by the Attorney General.

6

The opinion of the Attorney General which was discussed in the Gromer case, next above referred to, involved the question as to what extent the Navy Department could exercise jurisdiction over the lands of Subig Bay Naval Reservation, Philippine Islands, which had been set aside by Executive Order and "placed under the goverance and control of the Navy Department," and whether such jurisdiction was of the character and extent to exclude the power of the Philippine Government within the reservation. The Attorney General, although recognizing that in such reservations "the military control up to the limit of the military necessities would be paramount," nevertheless observed that "a territorial statute is operative upon a military reservation within a Territory so long as it does not conflict with the laws of the United States or with the military administration and legitimate operations of the Government." He commented further that "the exercise of local jurisdiction having ordinary municipal purposes ove a reservation in a Territory is valid until and unless disapproved by Congress," and concluded that the jurisdiction of the Navy Department was "not of such character and extent to exclude the civil powers of the Philippine Government relating to the imposition of taxes, the management and disposition of real and personal property, the running of ordinary civil writs, and, in general, the

3 Alaska; Act approved Aug. 24, 1912 (37 Stat. 512; U. S. C. Title 48 Sec. 21, et seq.). See Carscadden v. Territory of Alaska, 105 Fed. (2) 377. Hawaii: Act approved Apr. 30, 1900 (31 Stat. 141; U. S. C., Title 48 Sec. 491, et seq.). Philippines: Act approved Aug. 29, 1916 (39 Stat. 547; U. S. C., Title 48 Sec. 1001 et seq.); Philippine Independence Act approved March 24, 1934 (48 Stat. 456). See Asiatic Pet. Co. v. Insular Collector of Customs, 297 U. S. 666, 80 L. ed. 967, 56 S. Ct. 651. Puerto Rico: Acts approved Apr. 12, 1900 (31 Stat. 77), March 2, 1917 (39 Stat 951) and May 17, 1932 (47 Stat. 158); U. S. C. Title 48, Sec. 731, et seq. Virgin Islands: Act approved March 3, 1917 (39 Stat. 1132; U. S. C. Title 48, Sec. 1391, et seq.).

4 Act approved April 12, 1900 (31 Stat. 77).

5 224 U. S. 362, 370.

626 Atty. Gen. 91.