New York ex rel. Rogers v. Graves - 299 U.S. 401 (1937)
U.S. Supreme Court
New York ex rel. Rogers v. Graves, 299 U.S. 401 (1937)
New York ex rel. Rogers v. Graves
Argued December 9, 10, 1936
Decided January 4, 1937
299 U.S. 401
1. The construction, management and operation of the Panama Canal are governmental functions, and within the constitutional power of Congress to regulate commerce and to provide for the national defense. P. 299 U. S. 406.
2. Such being the status of the Canal, it follows that all auxiliaries primarily designed and used to aid in its management and operation, and which have that effect, partake of its nature, and constitute, with the Canal, a single great regulator of national and international commerce. P. 299 U. S. 406.
3. The interrelation of its activities with the management and operation of the Panama Canal is such as to constitute the Panama Rail Road Company a governmental instrumentality of the United States. P. 299 U. S. 406.
4. This conclusion is supported by the contemporaneous and long-continued administrative practice, and the correctness of it is recognized by relevant federal legislation. Pp. 299 U. S. 406-407.
5. The character of the Railroad Company as a governmental instrumentality is not altered by the fact that its ships and railroad are used to some extent to carry private freight and passengers. The primary purpose of the enterprise being legitimately governmental, its incidental use for private purposes does not change its character. P. 299 U. S. 407.
6. Even if it be assumed that the dairy, hotels, and other enterprises, built and maintained by the Company are not governmental instrumentalities, this would not alter the fact that the railroad itself, in connection with the Canal, is a governmental instrumentality. P. 299 U. S. 408.
7. It is well settled that the federal government may employ a corporation as a means to carry into effect the substantive powers granted by the Constitution. McCulloch v. Maryland, 4 Wheat. 316. P. 299 U. S. 408.
8. The Railroad Company being immune from state taxation, it necessarily results that fixed salaries and compensation paid to its officers and employees in their capacities as such are likewise immune. P. 299 U. S. 408.
10. The evidence in this case sufficiently negatives the suggestion that the relator -- since 1906 the general counsel of the Railroad Company at a fixed annual salary, and in the same category in respect of the Company as the secretary and treasurer -- may have been an independent contractor, and not an officer. P. 299 U. S. 409.
271 N.Y. 543 reversed.
Appeal from a judgment affirming a judgment sustaining a state income tax. The taxpayer had claimed that the salary on which the tax was imposed was exempt from state income tax.