Opinion of the Court. 347 U.S. salaries of persons that carried on the work. James v. Dravo Contracting Co., 302 U. S. 134, reviewed this judicial history, adopted for federal contractors and state taxation the reasoning that subjected a state contractor's earnings to federal income tax and upheld the state's gross receipts tax upon a federal contractor's earnings on the ground that it did not interfere "in any substantial way with the performance of federal functions." Id., at 161. The question of the immunity of Government in relation to its purchases of commodities was left open. Id., at 153. Graves v. New York ex rel. O'Keefe, 306 U. S. 466, overruled New York ex rel. Rogers v. Graves, supra, and Gillespie, supra, fell in Oklahoma Tax Comm'n v. Texas Co., 336 U. S. 342, 365. A phase of the question reserved in the Dravo case came up in Alabama v. King & Boozer, 314 U. S. 1. We declared that federal sovereignty "does not spell immunity from paying the added costs, attributable to the taxation of those who furnish supplies to the Government and who have been granted no tax immunity." Id., at 9. That case involved the usual type sales tax on the seller, collectible by him from the buyer. There was there, too, a cost-plus-a-fixed-fee contract with the United States. We held the state tax collectible from the sellers, notwithstanding the Government bore the economic burden. A few excerpts will make clear the purport of the ruling: "As the sale of the lumber by King and Boozer was not for cash, the precise question is whether the Government became obligated to pay for the lumber and so was the purchaser whom the statute taxes, but for the claimed immunity. . . . The contract provided that the title to all materials and supplies for which the contractors were 'entitled to be reimbursed' should vest in the Government 'upon delivery at the site of the work or at an approved 110 Opinion of the Court. storage site and upon inspection and acceptance in writing by the Contracting Officer.'" Id., at 10. “... we think all the provisions which we have mentioned, read together, plainly contemplate that the contractors were to purchase in their own names and on their own credit all the materials required, unless the Government should elect to furnish them; that the Government was not to be bound by their purchase contracts, but was obligated only to reimburse the contractors when the materials purchased should be delivered, inspected and accepted at the site." Id., at 11. "But however extensively the Government may have reserved the right to restrict or control the action of the contractors in other respects, neither the reservation nor the exercise of that power gave to the contractors the status of agents of the Government to enter into contracts or to pledge its credit." Id., at 13. The contract here in issue differs in form but not in economic effect on the United States. The Nation bears the burden of the Arkansas tax as it did that of Alabama. The significant difference lies in this. Both the request for bids and the purchase order, in accordance with the contract arrangements making the contractors purchasing agents for the Government, note 2, supra, contain this identical, specific provision: "3. This purchase is made by the Government. The Government shall be obligated to the Vendor for the purchase price, but the Contractor shall handle all payments hereunder on behalf of the Government. The vendor agrees to make demand or claim for payment of the purchase price from the Government by submitting an invoice to the Con 288037 0-54-13 Opinion of the Court. 347 U.S. tractor. Title to all materials and supplies purchased hereunder shall vest in the Government directly from the Vendor. The Contractor shall not acquire title to any thereof." The purchase order is headed Navy Department Bureau of Yards and Docks, is signed by the contractor as purchasing agent, and requires the seller to make this certification on the claim for payment: "I certify that the above bill is correct and just; that payment therefor has not been received; that all statutory requirements as to American production and labor standards, and all conditions of purchase applicable to the transactions have been complied with; and that the State or local sales taxes are not included in the amounts billed.' "In the event the Contractor is required to pay and The stipulation of facts shows in detail the course of business under this contract in the purchase of supplies and the form of this purchase. Both conform to the language of the contract in requiring specific Government approval to the purchasing agent for each request for bid and each purchase. Under these circumstances, it is clear 110 Opinion of the Court. that the Government is the disclosed purchaser and that no liability of the purchasing agent to the seller arises from the transaction.10 A comment should be made about another excerpt from King & Boozer. It was referred to in the Arkansas opinion as though it were effective for the determination of this case. The quotation is this: "The soundness of this conclusion turns on the terms of the contract and the rights and obligations of the parties under it. The taxing statute, as the Alabama courts have held, makes the 'purchaser' liable for the tax to the seller, who is required 'to add to the sales price' the amount of the tax and collect it when the sales price is collected, whether the sale is for cash or on credit. Who, in any particular transaction like the present, is a 'purchaser' within the meaning of the statute, is a question of state law on which only the Supreme Court of Alabama can speak with final authority." Id., at 9-10. Read literally, one might conclude this Court was saying that a state court might interpret its tax statute so as to throw tax liability where it chose, even though it arbitrarily eliminated an exempt sovereign. Such a conclusion as to the meaning of the quoted words would deny the long course of judicial construction which establishes as a principle that the duty rests on this Court to decide for itself facts or constructions upon which federal constitutional issues rest." The quotation refers, we think, only to the power of the state court to determine who is responsible under its law for payment to the state of the 10 See Hodgson v. Dexter, 1 Cranch 345, 362; Larson v. Domestic & Foreign Corp., 337 U. S. 682, 703; Restatement, Agency, § 320; Williston, Contracts, § 281. Cf. Merchant Fleet Corp. v. Harwood, 281 U. S. 519, 525. 11 New Jersey Ins. Co. v. Division of Tax Appeals, 338 U. S. 665, 674; Richfield Oil Corp. v. State Board, 329 U. S. 69, 83; United Opinion of the Court. 347 U.S. exaction. The formulation of the "precise question" at the first of the quotation from King & Boozer, p. 118, supra, indicates this. We find that the purchaser under this contract was the United States. Thus, King & Boozer is not controlling for, though the Government also bore the economic burden of the state tax in that case, the legal incidence of that tax was held to fall on the independent contractor and not upon the United States.12 The doctrine of sovereign immunity is so embedded in constitutional history and practice that this Court cannot subject the Government or its official agencies to state taxation without a clear congressional mandate. No instance of such submission is shown. Nor do we think that the drafting of the contract by the Navy Department to conserve Government funds, if that was the purpose, changes the character of the transaction. As we have indicated, the intergovernmental submission to taxation is primarily a problem of finance and legislation. But since purchases by independent contractors of supplies for Government construction or other activities do not have federal immunity from taxation, the form of contracts, when governmental States v. Allegheny County, 322 U. S. 174, 182; Union Pacific R. Co. v. Public Service Comm'n, 248 U. S. 67, 69. Cf. Dyer v. Sims, 341 U. S. 22, 29. This principle covers the question of who is the "purchaser." S. R. A., Inc. v. Minnesota, 327 U. S. 558, 564; Metropolitan Bank v. United States, 323 U. S. 454, 456; Standard Oil Co. v. Johnson, 316 U. S. 481, 483. 12 See Oklahoma Tax Comm'n v. Texas Co., 336 U. S. 342, 365: "True intergovernmental immunity remains for the most part. But, so far as concerns private persons claiming immunity for their ordinary business operations (even though in connection with governmental activities), no implied constitutional immunity can rest on the merely hypothetical interferences with governmental functions here asserted to sustain exemption." |