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1960-055-01

United States Supreme Court MICHIGAN NAT. BANK v. MICHIGAN(1961) No. 155 Argued: Decided: March 6, 1961 R. S. 5219 permits States to tax the shares of national banks, but not "at a greater rate than . . . other moneyed capital . . . coming into competition with the business of national banks." Michigan taxes the shareholders of national banks at a higher rate on the value of their shares of stock than it taxes the shareholders of federal and state savings and loan associations on the paid-in value of their shares. Both classes of institutions make residential mortgage loans; but national banks accept deposits which are employed in making loans and which amount to many times the aggregate value of their shares of stock, whereas savings and loan associations accept no deposits and make their loans mainly out of the proceeds of the sale of their shares of stock. Held: Even if savings and loan associations are in competition with national banks, the tax levied on the shareholders of national banks is not so discriminatory in practical effect as to violate R. S. 5219. Pp. 468-483. (a) The restrictions of 5219 on the permitted methods of state taxation of national banks were designed to prohibit only those systems of state taxation which discriminate in practical effect against national banks or their shareholders as a class. Pp. 472-475. (b) Michigan's taxes on the shares of national banks and on savings and loan associations, respectively, do not in practical effect discriminate against national banks or their shareholders as a class. Pp. 475-483. 358 Mich. 611, 101 N. W. 2d 245, affirmed. Victor W. Klein argued the cause for appellants. With him on the brief were Thomas G. Long, Philip T. Van Zile II and Harold A. Ruemenapp. William D. Dexter, Assistant Attorney General of Michigan, argued the cause for appellees. With him on the brief were Paul L. Adams, Attorney General, Samuel J. Torina, Solicitor General, and T. Carl Holbrook, Assistant Attorney General. [365 U.S. 467, 468] MR. JUSTICE CLARK delivered the opinion of the Court. The State of Michigan levies "on the privilege of ownership" a 5 1/2-mill tax per dollar on the value of each common share of stock in national banks 1 located in the State. It requires federal and state savings and loan associations in the State to pay, in addition to other taxes not here involved, for its shareholders an intangibles tax of 2/5 of a mill on each dollar of the paid-in value of their shares. 2 In addition, state associations also pay a franchise tax of 1/4 mill per dollar of their capital and legal reserves. 3 [365 U.S. 467, 469] Appellant Michigan National Bank, with banking offices in eight Michigan cities, brought this suit to recover taxes paid under protest for the year 1952, claiming that the levy under Michigan's Act No. 9 resulted in a tax on national bank shares at least eight times greater than that levied on "other moneyed capital in the hands of individual citizens" in the State, in violation of 5219 of the Revised Statutes of the United States. 4 Initially its attack referred to moneyed capital in the hands of insurance and finance companies, credit unions and individuals, as well as savings and loan associations. Before trial in the Michigan Court of Claims, however, its claim was limited to the latter only, asserting that these institutions were in substantial competition with a phase of the national banking business, i. e., residential mortgage loans, and were preferentially taxed. The resulting tax discrimination, appellant says, renders Act No. 9 invalid [365 U.S. 467, 470] under the controlling decisions of this Court. Michigan's highest court has upheld the statute against this claim. 358 Mich. 611, 101 N. W. 2d 245. We noted probable jurisdiction, 364 U.S. 810 . We have concluded that in practical operation, Michigan's tax structure does not have a discriminatory effect and is, therefore, valid. This determination obviates the necessity of our considering the voluminous and confusing statistics relevant to the issue of whether or not there exists competition between banks and savings and loan associations in the State. The sole authorization upon which Michigan's Act No. 9 may rest is 5219. First Nat. Bank v. Anderson, 269 U.S. 341 (1926); Des Moines Nat. Bank v. Fairweather, 263 U.S. 103 (1923). That authorization is qualified by a proviso that a state tax on national bank shares shall not be "at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such State coming into competition with the business of national banks." We have assumed, without deciding, that the national banks located in Michigan and savings and loan associations there are in competition in a substantial phase of the business carried on by national banks, i. e., residential mortgage loans. The sole question here is whether Act No. 9 effects a tax discrimination between national banks and savings and loan associations. BACKGROUND RELATING TO THE PROBLEM. Michigan first authorized the organization of savings and loan associations in 1887. 5 They operate today under the same law as "cooperative" or mutual associations which accumulate capital only through the sale of shares to members, and by retention of a permitted surplus and a reserve from profits. They may make loans only on first mortgage real estate notes and can neither carry on a banking [365 U.S. 467, 471] business nor receive deposits. 6 Their reserves must equal 10% of liabilities to their members and the associations' surplus is limited to 5% of assets. 7 Earnings above the permitted reserves and surplus must be paid to members currently and at stated periods. The Congress authorized the organization of federal savings and loan associations in 1933 in the Home Owners' Loan Act, 48 Stat. 128, as amended, 12 U.S.C. 1461-1468. They operate along the same general lines as state associations. The shares of members in both are insured by the Federal Savings and Loan Insurance Corporation. 8 National banks, of course, engage in the general banking business as authorized by the National Bank Act. 9 Prior to 1916 they were not permitted to make real estate mortgage loans except on certain farm lands. In that year the Congress authorized the banks to make residential loans for a term of not over a year and to the extent of 50% of the value of the mortgaged property. 10 This term was first enlarged in 1927 to five years 11 and then to 10 years in 1935 by 49 Stat. 706, which also authorized an increase to 60% as the maximum proportion of property value permitted to be loaned. In 1934, national banks were authorized to purchase F. H. A. guaranteed mortgages. 12 Ten years later that authority was enlarged to include V. A. loans which the Comptroller of the Currency by decision found to be in the same category as F. H. A. mortgages. 13 It was not until this time that national [365 U.S. 467, 472] banks became any significant factor in the residential mortgage field. By 1952 the ratio of their deposits to their total assets had more than doubled, amounting to 92% of their assets, 14 having totaled only 41% thereof at the time of the passage of 5219. Michigan National was organized in 1941 with 150,000 shares of $10 par value and total resources of about $68,000,000. In 1952 it had outstanding 500,000 shares of the same par value (all of the increase having been issued as dividends) and resources of some $306,000,000. In 1952 its gross earnings on its capital account were 91%, which, after all expenses and taxes (except dividends and federal income tax), remained at over 31%. The 16 building and loan associations' average net earnings for the same year (before dividends and federal income taxes) amounted to 3.4% of their capital, approximately their normal annual earning. A $1,000 investment in Michigan National's stock (58.8 shares) in 1941 was worth $6,691.20 (157.5 shares) by 1952, an annual average increase in value of 61%. This does not include $1,308.80 in cash dividends paid over the same period. BACKGROUND AND CONSTRUCTION OF THE LEGISLATION. 1. Section 5219. Congress enacted the Section in 1864 15 and this Court has passed on it over 55 times in the near century of the Section's existence. During that period the Court has kept clearly in view, as was said in the last case in which [365 U.S. 467, 473] it wrote, that "the various restrictions [ 5219] . . . places on the permitted methods of taxation are designed to prohibit only those systems of state taxation which discriminate in practical operation against national banking associations or their shareholders as a class." Tradesmens Nat. Bank v. Oklahoma Tax Comm'n, 309 U.S. 560, 567 (1940). Reverting to one of the first and controlling cases dealing with the Section, Mercantile Bank v. New York, 121 U.S. 138 (1887), 16 we find that Mr. Justice Matthews declared for a unanimous Court that the purpose of the Congress in passing the provision was "to prohibit the States from imposing such a burden as would prevent the capital of individuals from freely seeking investment in institutions which it was the express object of the law to establish and promote." At p. 154. The Court further held deposits in savings banks to be moneyed capital but approved their total exemption from state taxes, along with other enumerated property, on the ground that the State had shown "just reason" so to do. In essence the case stands for the proposition that the State cannot, by its tax structure, create "an unequal and unfriendly competition" with national banks. This case followed in the light of Hepburn v. School Directors, 23 Wall. 480 (1874), where Chief Justice Waite had pointed out that the taxable value of the stock in a national bank is not necessarily determined by its nominal or par value but rather by "the amount of moneyed capital which the investment represents for the time being." "Therefore some plan must be devised to ascertain what amount of money at interest is actually represented by a share of stock." At p. 484. [365 U.S. 467, 474] The question of tax equivalence thus posed has echoed and re-echoed through the cases. A year subsequent to the decision in Mercantile Bank, supra, the same point was raised in Bank of Redemption v. Boston, 125 U.S. 60 (1888), where the exemption of deposits in savings banks was approved in an opinion which again was written by Mr. Justice Matthews. The Court, in comparing the tax levied on the two institutions, i. e., national banks and savings banks, said: "But shares of the national banks, while they constitute the capital stock of the corporations, do not represent the whole amount of the capital actually employed by them. They have deposits, too, shown in the present record to amount, in Massachusetts, to $132,042,332. The banks are not assessed for taxation on any part of these, although these deposits constitute a large part of the actual capital profitably employed by the banks in the conduct of their banking business. But it is not necessary to establish the exact equality in result of the two modes of taxation." At p. 67. A quarter of a century later, Mr. Justice Pitney in Amoskeag Savings Bank v. Purdy, 231 U.S. 373 (1913), in commenting on the factors to be considered in determining the burden of the tax, said: "There are other considerations to be weighed in determining the actual burden of the tax, one of which is the mode of valuing bank shares - by adopting `book values' [capital, surplus, undivided profits] - which may be more or less favorable than the method adopted in valuing other kinds of personal property." At p. 392. The point was made even more clearly by Mr. Justice Brandeis in First Nat. Bank v. Louisiana Tax Comm'n, 289 U.S. 60 (1933), where he said: "There is a fundamental difference between banks, which make loans mainly from money of depositors, and the other financial institutions, which make loans mainly from the money supplied otherwise than by deposits." [365 U.S. 467, 475] At p. 64. And so, we are taught that in determining the burden of the tax - its discriminatory character - we look to its effect, not its rate. See Amoskeag Savings Bank, supra; Covington v. First Nat. Bank, 198 U.S. 100 (1905), and Tradesmens Nat. Bank v. Oklahoma Tax Comm'n, supra, the last case of this Court on the point. 2. Michigan's Act No. 9. Act No. 9, we have stated, levies a tax of 5 1/2 mills on the book value of each share of stock in national banks, while the separately imposed tax on all savings and loan association shares, exclusive of other taxes, is 2/5 of a mill on the paid-in value of the shares plus, on state associations only, 1/4 of a mill on the value of the paid-in capital and legal reserves. It appears from the record that prior to the enactment of this tax an inequity in the State's tax structure was thought to exist between state and national banks. Upon study of the problem and the recommendation of the Taxation Committee of the Michigan Bankers Association, the State Legislature decided to tax all banks "exactly alike." It embodied the proposal of the Association into Act No. 9. While we have no legislative history in the record before us, according to the amicus curiae brief of the Bankers Association filed in the trial court, the sponsors of Act No. 9 thought it would be "reasonable from the viewpoint of the public, equitable from the viewpoint of the competitors, and practical from the viewpoint of the banks themselves." The opinion of responsible officials of this Association, filed in this case some seven years after Act No. 9 had been in effect and the taxes therein provided paid without protest, save for appellant and four other banks, was: "Actual experience with the taxation system shows that it has produced a reasonable amount of revenue to the State; that it has not created any competitive [365 U.S. 467, 476] disadvantage among the various types of institutions; and that it has proven to be simple to administer." Michigan's Supreme Court has also held that no discrimination in the tax was proven. While the basis of this holding is not too clear, we take it that the finding of total tax equality as between the national banks and the associations, insofar as Act No. 9 was concerned, meant that, in the court's view, the Michigan Legislature, in fixing the rate (5 1/2 mills) on the banks, had either (1) taken into consideration the moneyed capital on hand in each type of institution, i. e., deposits, which were not present as to savings and loan associations, or (2) if such method of valuation of bank stock was not permissible, that the Legislature intended to exempt from taxation any difference between the taxes levied on national banks and savings and loan associations because of the functions of the latter as repositories for the "small savings and accumulations of the industrious and thrifty." Such differences, the Michigan Supreme Court said, were "justified as partial exemptions," under Mercantile Bank, supra, and subsequent cases. While we are not bound by either of these interpretations placed on Act No. 9 by Michigan's highest court, 358 Mich. 611, 639-640, 101 N. W. 2d 245, 259-260, we do accept as controlling its interpretation that, in fixing the rate on national bank shares, the Legislature took into account the moneyed capital controlled thereby. We believe that, granted satisfaction of the other qualifications of 5219, a State's tax system offends only if in practical operation it discriminates against national banks or their shareholders as a class. That is to say, we could not strike down Act No. 9, as interpreted by Michigan's highest court, unless it were manifest that an investment in national bank shares was placed at a disadvantage by the practical operation of the State's law. According to our cases, discussed above, that clearly appears to have [365 U.S. 467, 477] been the purpose of the Congress in enacting 5219. 17 We have made a comprehensive examination of the record and fail to find such a discriminatory effect to be manifest in Michigan's tax system. As has been repeatedly indicated in our decisions, a dollar invested in national bank shares controls many more dollars of moneyed capital, the measuring rod of 5219. On the other hand, the same dollar invested in a savings and loan share controls no more moneyed capital than its face value. The bank share has the power and control of its proportionate interest in all of the money available to the bank for investment purposes. In the case of Michigan National, this control is more than 21 times greater than the share's proportionate interest in the capital stock, surplus and undivided profits would indicate. As to all national banks in the United States, the record shows that capital accounts amounting to about $7,000,000,000 control some $100,000,000,000 of deposits (92% of the total assets of all these banks) or an amount 14 times greater. Savings and loan associations have no similar assets of that character, their only source of moneyed capital being the share accounts of members and, at least in the case here, the relatively small amount of retained earnings and surplus permitted under law. Relating the statistics to the immediate problem, the capital, surplus and undivided profits of Michigan National totaled about $13,000,000, to which the 5 1/2-mill tax was applied. The tax amounted to $68,181. The 16 savings and loan associations with which appellant was in [365 U.S. 467, 478] competition had a paid-in share value of $134,000,000, to which was applied the 2/5-mill tax. The resultant tax was about $53,260. Had the same tax rate (2/5-mill) been applied to the moneyed capital, i. e., deposits, of Michigan National ($283,000,000), the product would have more than equaled the tax revenue from the application of the 5 1/2-mill rate against its capital account. In fact, it would have amounted to about $113,000, or 1.7 times the 1952 tax bill on appellant's shares. Similar results could be obtained as to all national banks in Michigan. Their total capital accounts, $166,700,000, when taxed at the 5 1/2-mill rate, yield some $917,000 in taxes. The 2/5-mill rate, if applied to their total deposits, $3,516,000,000, results in $1,406,000 in taxes. This is more than 1.5 times the 1952 taxes assessed under Act No. 9. While it is obvious that the taxable value of the shares in these two types of financial institutions is determined by different methods 18 and that they are being taxed at different rates, it does not follow that 5219 is automatically violated. "[I]t is not a valid objection to a tax on national bank shares that other moneyed capital in the state [is] . . . taxed at a different rate or assessed by a [365 U.S. 467, 479] different method unless it appears that the difference in treatment results in fact in a discrimination unfavorable to the holders of the shares of national banks." Tradesmens Nat. Bank v. Oklahoma Tax Comm'n, supra, at 567. Cf. Amoskeag Savings Bank v. Purdy, supra; Covington v. First Nat. Bank, supra. We must remember the interpretation placed on Act No. 9 by Michigan's Supreme Court. It held in effect that the Legislature had taken into account, in fixing the different rates on national bank stock and savings and loan shares, the additional moneyed capital controlled by the former. Since Michigan National's share owner's investment has the equivalent profit-making power of an amount 21 times greater than itself and the investor in savings and loan share accounts has no similarly multiplied power, the national bank share would not be "unfavorably" treated unless it was taxed in excess of 21 times the levy on savings and loan share accounts. Cf. Bank of Redemption v. Boston, supra, at 67. Here the ratio is only 13.8 to one, and if the additional franchise tax upon state associations is included, the proportion drops to 8.5 to one. This is not to say that the value of the bank's deposits is a factor in the computation of the tax to be paid under the Michigan statutes. However, the deposits are relevant to the determination of whether or not the tax, as computed under the statutes, is a greater burden than that placed on "other moneyed capital." 19 It is said, however, that this method would be contrary to Minnesota v. First Nat. Bank, 273 U.S. 561 (1927). It was argued in that case that an equivalence of tax [365 U.S. 467, 480] between national banks and other moneyed capital existed because, if the tax rate applicable to other moneyed capital was applied to the assets of the bank without deducting liabilities, the ultimate tax would be approximately the same. However, Mr. Justice (later Chief Justice) Stone, writing for the Court, rejected that argument because it "ignores the fact that the tax authorized by 5219 is against the holders of the bank shares and is measured by the value of the shares, and not by the assets of the bank without deduction of its liabilities . . . ." At 564. However, that case was decided on the authority of First Nat. Bank v. Hartford, 273 U.S. 548 , which Mr. Justice Stone also wrote and handed down the same day. There the comparison between the widespread capital exempted and that of national banks which was taxed, led to the invalidation of Wisconsin's tax statute. The error the Court found was that Wisconsin "construed the decisions of this Court as requiring equality in taxation only of moneyed capital invested in businesses substantially identical with the business carried on by national banks." At 555. While Minnesota's Act, as construed, was not so broad, it taxed capital (including state bank shares) other than that invested in national bank shares at a lower rate. Since both national and state banks were permitted to deduct deposits, it followed that it would have been discriminatory to tax one at a lower rate than the other. However, implicit in the ruling is the proposition that if the same base is employed in the valuation of the shares of the competing institutions, as here, and the practical effect of the different rate does not result in a discrimination against moneyed capital in the hands of national banks, when compared with other competing moneyed capital, it does not violate 5219. "[T]he bank share tax must be compared with . . . the tax on capital invested by individuals in the shares of corporations whose business competes with [365 U.S. 467, 481] that of national banks." Minnesota v. First Nat. Bank, supra, at 564. In short, resulting discrimination in the effect of the tax is the test. Moreover, these cases were both handed down prior to congressional enactment of the Home Owners' Loan Act of 1933, 20 which is "in pari materia" with 5219 and appears "to throw a cross light" [L. Hand in United States v. Aluminium Co. of America, 148 F.2d 416, 429 (C. A. 2d Cir. 1945)] on Michigan's savings and loan tax statute. The 1933 Act, permitting the creation of federal savings and loan associations, contained a provision respecting local taxation which stated in part: ". . . no State . . . shall impose any tax on such [federal] associations or their franchise, capital, reserves, surplus, loans, or income greater than that imposed by such authority on other similar local mutual or cooperative thrift and home financing institutions." 48 Stat. 134. Unless Congress had recognized that States taxing national bank shares were free, in spite of 5219, to exempt their own savings and loan associations from local taxation, it would have used language similar or referring to 5219, as it did in other federal statutes creating different types of thrift institutions. 21 To insure that the federal creatures received the same benefits, if any, as state agencies, Congress tied the taxation limitations to state action affecting the latter rather than to 5219. Although the federal statute was enacted prior to Michigan's savings and loan tax statute, its accommodation to such state measures, actual or potential, illustrates the assimilation by Congress of state savings and loan associations to their federal analogues, and not to the very [365 U.S. 467, 482] different national fiscal institutions which national banks are. Furthermore, the power of the State to grant liberal tax treatment to its own associations, viewed even without the light of congressional action, is amply supported by the exemption doctrine of Mercantile Bank, supra, recognized as still vital long after Michigan's law of 1887 under which the savings and loan associations of that State are organized. These considerations weigh heavily in evaluating Michigan's enactment under 5219. Under this standard, Michigan's tax structure does not, in practical effect, result in any discrimination. Its system looks to the moneyed capital controlled by the shareholder. If it is a share in a bank - either federal or state - the legislature considers the deposits available for investment and fixes a rate commensurate with that increased earning and investment power of the shareholder. The resulting tax is not on the assets of the bank, nor on deposits, but on the control the shareholder has in the moneyed capital market. Thus, controlling some 21 times the cash value of his share, a Michigan National shareholder pays the higher rate. On the other hand, a savings and loan shareholder controls no deposits. He has only the cash value of his share (and the comparatively minute reserves allowed by law), insofar as the moneyed capital market is concerned. Consequently he pays the lower rate. As the Michigan Bankers Association has indicated, this approach is realistic from a business standpoint, does not result in discrimination, is economically sound and is fair to each type of taxpayer. If it results, as it did in 1952, in giving Michigan National a tax advantage, it cannot complain. It may be that at some future time, although the statistics indicate it to be improbable, 22 the bank deposits may [365 U.S. 467, 483] fall to such a level that the 5 1/2-mill rate would be violative of 5219. But here we are concerned with only one year, 1952, and for that year the tax levied does not approach the permissible maximum. Such a possibility, however, may account for the action of the Legislature in setting the taxes at the lower than maximum levels now applied. Having assumed the element of competition between Michigan National and the savings and loan associations, a prerequisite to the application of 5219, and in the light of both the clear doctrine of our earlier cases and the phenomenal growth and earning power of appellant despite Act No. 9, we cannot say that its burden in 1952 was so heavy as would "prevent the capital of individuals from freely seeking investment" in its shares. We have considered appellant's other points and have concluded each is without merit. Affirmed. MR. JUSTICE STEWART took no part in the consideration or decision of this case. Footnotes [Footnote 1 Act No. 9 of the Public Acts of Michigan for 1953 (Mich. Comp. Laws, 1948, 1956 Supp., 205.132a) provides in pertinent part: "For the calendar year 1952 . . . and for each year thereafter, or a portion thereof, there is hereby levied upon each resident or non-resident owner of shares of stock of national banking associations located in this state . . . and there shall be collected from each such owner an annual specific tax on the privilege of ownership of each such share of stock, whether or not it is income producing, equal in the case of a share of common stock to 5 1/2 mills upon each dollar of the capital account of such association . . . represented by such share, and equal in the case of a share of preferred stock to 5 1/2 mills upon the par value of such share." [Footnote 2 Mich. Comp. Laws, 1948, 1956 Supp., 205.132, provides in pertinent part: "For the calendar year 1952, and for each year thereafter or portion thereof there is hereby levied upon each resident or non-resident owner of intangible personal property . . . and there shall be collected from such owner an annual specific tax on the privilege of ownership of each item of such property owned by him. . . . [T]he tax on shares of stock in . . . savings and loan associations shall be 1/25 of 1 per cent of the paid-in value of such shares." [Footnote 3 Mich. Comp. Laws, 1948, 450.304a, provides: "Every building and loan association organized or doing business under the laws of this state shall . . ., for the privilege of exercising its franchise and of transacting its business within this state, pay to the secretary of state an annual fee of 1/4 mill upon each dollar of its paid-in capital and legal reserve." The Michigan tax structure was amended, in 1954, to provide that [365 U.S. 467, 469] federal savings and loan associations also pay a privilege tax equal to 1/4 mill on capital and legal reserves. Mich. Comp. Laws, 1948, 1956 Supp., 489.371. [Footnote 4 R. S. 5219, as amended, 12 U.S.C. 548, provides in pertinent part: "The legislature of each State may determine and direct, subject to the provisions of this section, the manner and place of taxing all the shares of national banking associations located within its limits. The several States may (1) tax said shares . . ., provided the following conditions are complied with; . . . . . "(b) In the case of a tax on said shares the tax imposed shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such State coming into competition with the business of national banks: Provided, That bonds, notes, or other evidences of indebtedness in the hands of individual citizens not employed or engaged in the banking or investment business and representing merely personal investments not made in competition with such business, shall not be deemed moneyed capital within the meaning of this section." [Footnote 5 Mich. Pub. Acts 1887, No. 50. [Footnote 6 Mich. Comp. Laws, 1948, 489.37. [Footnote 7 Mich. Comp. Laws, 1948, 489.24. [Footnote 8 48 Stat. 1257, as amended, 12 U.S.C. 1726. [Footnote 9 12 U.S.C. 21-200. [Footnote 10 39 Stat. 754. [Footnote 11 44 Stat. 1232-1233. [Footnote 12 48 Stat. 1263. [Footnote 13 Home Loans Partially Guaranteed Under G. I. Act, Comptroller of the Currency Press Release, Dec. 12, 1944. [Footnote 14 In accounting terminology, bank deposits are liabilities. However, they are a source of assets and for convenience will be referred to as assets hereafter. [Footnote 15 13 Stat. 111. It has been amended four times (15 Stat. 34, R. S. 5219, 42 Stat. 1499, 44 Stat. 223), none of which changes are of any import here. In the 1958 edition of the United States Code it appears as 548 of Title 12. [Footnote 16 Also see an earlier case, often cited, People v. Weaver, 100 U.S. 539 (1879), which held that it was the actual incidence and practical burden of the tax which the Section sought out. This position is treated in detail by Professor Woosley in his work, State Taxation of Banks (1935). [Footnote 17 For a discussion of the effect of the cases, see Powell, Indirect Encroachment on Federal Authority by the Taxing Powers of the States, 31 Harv. L. Rev. 321, 367 (1918). He concludes that the cases lead "to a disregard of formal legal discrimination where there is in fact no substantial economic discrimination." To the same effect, see Woosley, op. cit., supra, note 16, at pp. 24-25. [Footnote 18 The taxable value of a national bank share of common stock under Act No. 9 is determined by dividing the "capital account" (common capital, surplus and undivided profits) by the number of shares of common stock outstanding. A share account in a savings and loan association, on the other hand, is valued according to its "paid-in value." That this latter figure includes neither surplus nor undivided profits is obvious from an inspection of the tax return of a savings and loan institution and its financial statement. For example, the Industrial Savings and Loan Association's intangibles tax return for 1952 shows that its paid-in share value was $5,970,000. The Association's monthly report for December 1952 shows that there were some $283,000 in undivided profits and $202,000 in legal reserves which were not included in the computation of paid-in value for tax purposes. [Footnote 19 It is argued that this disregards the fact that bank deposits are liabilities and must be repaid. This contention is without substance for the savings share accounts must, by law, be purchased by the savings and loan association upon a member's withdrawal. Mich. Comp. Laws, 1948, 489.6. In this respect, therefore, the share accounts and deposits are identical. Both must be repaid. [Footnote 20 48 Stat. 128, as amended, 12 U.S.C. 1461-1468. [Footnote 21 42 Stat. 1469, 12 U.S.C. 1261 (National Agricultural Credit Corporations); 39 Stat. 380, 12 U.S.C. 932 (joint-stock land banks). [Footnote 22 From its organization in 1941 to the end of 1951, Michigan National's total assets grew from $67,600,000 to $272,500,000, an average annual increase of some $20,500,000. By 1957, its assets [365 U.S. 467, 483] totaled $481,000,000, showing an average annual growth of almost $34,800,000 during the years since Act No. 9 was passed. Similarly, deposits increased, on the average, by $18,800,000 each year between 1941 and 1951. Since that time, they have grown at the average rate of $30,700,000 a year. MR. JUSTICE WHITTAKER, with whom MR. JUSTICE DOUGLAS joins, dissenting. I respectfully but resolutely dissent. Exposition of my reasons will require a rather full and careful statement of the facts and the applicable law. A State is without power to tax national bank shares except as Congress consents and then only in conformity with the conditions of such consent. See, e. g., First National Bank v. Anderson, 269 U.S. 341, 347 , and Des Moines National Bank v. Fairweather, 263 U.S. 103, 106 . [365 U.S. 467, 484] By 5219 of the Revised Statutes of the United States (Act of June 3, 1864, c. 106, 13 Stat. 111, as amended by the Act of February 10, 1868, 15 Stat. 34, the Act of March 4, 1923, 42 Stat. 1499, and the Act of March 25, 1926, 44 Stat. 223), Congress has consented that: "The legislature of each State may determine and direct, subject to the provisions of this section, the manner and place of taxing all the shares of national banking associations located within its limits. The several States may (1) tax said shares, or (2) include dividends derived therefrom in the taxable income of an owner or holder thereof, or (3) tax such associations on their net income, or (4) according to or measured by their net income, provided the following conditions are complied with: "1. (a) The imposition by any State of any one of the above four forms of taxation shall be in lieu of the others . . . ." "(b) In the case of a tax on said shares the tax imposed shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such State coming into competition with the business of national banks . . . ." Pursuant to that consent, Michigan passed its Intangibles Tax Act (Act 301, Public Acts of 1939; Mich. Comp. Laws, 1948, 205.132; Mich. Stat. Ann., 1950, 7.556 (2)) imposing, upon the owners, an annual tax (1) of 3% of the income from, but not less than 1/10 of 1% of the face or par value of, national bank shares, and (2) of 4 cents per $100 of the "paid-in value" of savings and loan association shares. By another statute, Michigan imposed, in addition, a privilege tax of 2 1/2 cents per $100 on the value of the capital and legal reserves of state (but not federal) savings and loan associations (Mich. Comp. Laws, 1948, 450.304a; Mich. Stat. Ann. 21.206) - thus [365 U.S. 467, 485] making a total tax of 6 1/2 cents per $100 of the value of state, and 4 cents per $100 of the value of federal, savings and loan shares. In obedience to that Intangibles Tax Act, appellant, Michigan National Bank, having offices and doing business in seven cities in Michigan, 1 paid to the State, on behalf of its shareholders, the taxes thereby imposed on its shares for the year 1952. Thereafter, by Act No. 9 of the Public Acts of Michigan for 1953 ( 205.132a, Mich. Comp. Laws, 1948, 1956 Supp.; Mich. Stat. Ann., 1959 Cum. Supp., 7.556 (2a)), the State amended its Intangibles Tax Act as respects bank shares, but without touching the provisions respecting savings and loan association shares, to provide, in pertinent part, as follows: "For the calendar year 1952 . . . and for each year thereafter, . . . there is hereby levied upon each . . . owner of shares of stock of national banking associations located in this state and banks and trust companies organized under the laws of this state, and there shall be collected from each such owner an annual specific tax . . . equal in the case of a share of common stock to 5 1/2 mills upon each dollar of the capital account of such association, bank or trust company represented by such share, and equal in the case of a share of preferred stock to 5 1/2 mills upon the par value of such share." 2 [365 U.S. 467, 486] Acting under the provisions of the amended statute ("Act 9"), the State imposed an additional tax upon the owners of appellant's "shares" for the year 1952 of $49,929.27. After paying that additional tax under protest, appellant brought this action in the Michigan Court of Claims for its recovery. The ground of its suit was that the State's action in taxing the "shares" of national banks at a rate of 55 cents per $100 of their value, while taxing the "shares" of savings and loan associations at a rate of 6 1/2 cents per $100 of their value, taxed the former "at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such State coming into competition with the business of national banks," and therefore violated 5219. After trial, the Michigan Court of Claims held that the assessment and collection of the additional tax did not violate 5219 and entered judgment for the State. On appeal, the Michigan Supreme Court, though conceding that Act 9 placed the shares of "both State and national banks in a special and more heavily taxed category" than the shares of savings and loan associations, held, inter alia, (1) that because savings and loan associations are "different in character, purpose and organization from national banks," operate "in a narrow, restricted field," and are not permitted to receive deposits, they could not, as a matter of law, come "into competition with the business of national banks" within the meaning of 5219, (2) that inasmuch as Michigan lawfully might entirely exempt some entities or activities from taxation without offending 5219, it may prefer the shares of savings and loan associations, by granting their owners a lower tax rate than it grants to the owners of shares of national banks, without thereby violating 5219, and (3) that when the value of the total assets, rather than the value of the shares, of the two types of financial institutions is considered (thus putting out of consideration [365 U.S. 467, 487] the liability of the banks to repay their deposits and other debts), the ratio of the total dollar tax burden to total assets is approximately the same in Michigan - .091 for banks and .089 for savings and loan associations - and this, it said, "establishes that there was practical equality of the total tax imposed upon building and loan associations and upon national banks." It therefore affirmed the judgment, 358 Mich. 611, 101 N. W. 2d 245, and we noted probable jurisdiction of the bank's appeal. 364 U.S. 810 . This Court today substantially adopts the latter conclusion, and on that basis affirms the judgment. In doing so, I must say, with respect, that the Court ignores both the provisions of 5219 and Michigan's mode, plainly expressed in its Act 9, of valuing national bank shares and the shares of savings and loan associations for the purposes of its tax upon them, and effectively defaces and departs from a long line of this Court's decisions, hammered out, case by case, over the course of nearly a century, that are squarely in point and specifically decisive of every question in the case. The admitted difference in the rates of tax - 55 cents per $100 of the value of national bank shares as opposed to 6 1/2 cents per $100 of the value of savings and loan shares - leaves, of course, no doubt that the former are taxed "at a greater rate than" the latter - more than eight times greater. Therefore, the only questions that can possibly be open here under 5219 are (1) whether savings and loan shares are "other moneyed capital in the hands of individual citizens," (2) whether that moneyed capital is "coming into competition with [some substantial phase 3 of] the business of national banks," and [365 U.S. 467, 488] (3) whether it is "substantial in amount when compared with the capitalization of national banks." The latter being an element that this Court has held to be implicit in the statute. First National Bank v. Hartford, 273 U.S. 548, 558 . Surely it cannot now be doubted that shares owned by individual citizens in a savings and loan association, which engages in the business of making residential mortgage loans for profit, are "other moneyed capital in the hands of individual citizens," within the meaning of 5219. This Court has long since settled the question. The term "include[s] shares of stock or other interests owned by individuals in all enterprises in which the capital employed in carrying on its business is money, where the object of the business is the making of profit by its use as money." Mercantile Bank v. New York, 121 U.S. 138, 157 . "By its terms the [statute] excludes from moneyed capital only those personal investments which are not in competition with the business of national banks." First National Bank v. Hartford, supra, at 557. See also Minnesota v. First National Bank, 273 U.S. 561, 564 ; First National Bank v. Anderson, supra, at 348, and cases cited. Whether such moneyed capital is being used in "competition with [some substantial phase of] the business of national banks" and is "substantial in amount when compared with the capitalization of national banks" are mixed questions of law and fact, "and in dealing with [them] we may review the facts in order correctly to apply the law." First National Bank v. Hartford, supra, at 552. Here the relevant facts are not in dispute. The uncontroverted evidence shows that, as a part or phase of its general banking business conducted in seven cities in Michigan, appellant is extensively engaged in the business of making residential mortgage loans. In those [365 U.S. 467, 489] cities, there are 16 savings and loan associations which are also extensively engaged in that business. Competition between them and appellant for such loans is keen and continuous. Both appellant and those loan associations extensively advertise for and solicit such loans from all classes and in every economic strata of the people in those communities. They make these loans on the same kinds of residential properties and in the same areas - one type of institution often refinancing and retiring a loan of the other. The rates, terms and conditions of the loans, being competitive, are substantially the same, and in many cases - particularly in the cases of F. H. A. and V. A. loans - they are of precisely the same terms and on exactly the same forms - forms prepared and furnished by the Federal Government. Directed specifically to the question whether moneyed capital of savings and loan associations was being used, in significant amounts, in "competition with [some substantial phase of] the business of national banks" in Michigan, the uncontroverted evidence shows that in the year in question, 1952, the savings and loan associations in Michigan held $433,000,000 of residential mortgage loans, while the national banks in that State held $301,000,000 of such loans - which constituted 30% of their total loans and discounts. In the same year, the 16 savings and loan associations that were most directly competing with appellant made 6,498 residential mortgage loans aggregating about $32,000,000 (of which $6,273,000 were F. H. A. and V. A. and $26,058,000 were conventional loans) which brought their total holdings in such loans to $97,000,000. Whereas, in the same year, appellant made 2,728 residential mortgage loans aggregating about $18,500,000 (of which $10,869,000 were F. H. A., $456,000 were V. A. and $7,245,000 were conventional loans) which brought its total holdings in such loans to $60,000,000. Those loans amounted to 40% of [365 U.S. 467, 490] appellant's total loans and discounts, constituted 20% of its assets and yielded 26% of its income. Upon the question whether the moneyed capital of savings and loan associations that was used in making residential mortgage loans in Michigan was "substantial in amount when compared with the capitalization of national banks" in that State, the uncontroverted evidence shows that in the year in question the savings and loan associations in Michigan held a total of $433,000,000 of such loans, whereas the total capitalization of all national banks in that State was $166,724,000. And the 16 savings and loan associations that were most directly competing with appellant held, in the same period, $97,000,000 of such loans, whereas appellant's capitalization was $13,038,000. Certainly these undisputed facts establish that "moneyed capital" of savings and loan associations was being used in very significant "competition with [a substantial phase of] the business of national banks" in Michigan, and that such competition was "substantial in amount when compared with the capitalization of national banks" in that State. It thus seems altogether clear to me that these uncontroverted facts establish every essential element of appellant's case. It cannot be denied that the plain words of 5219 prohibit the States from taxing the shares of national banks "at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such State coming into competition with [some substantial phase 4 of] the business of national banks." Yet, here Michigan taxed national bank shares at a rate of 55 cents per $100 of value, but it taxed savings and loan shares at a rate of only 6 1/2 cents per $100 of value. Did it not plainly thus tax national bank shares "at a greater [365 U.S. 467, 491] rate" than it taxed savings and loan shares? Certainly the latter were "other moneyed capital in the hands of individual citizens of such State." See, e. g., Mercantile Bank v. New York, supra, at 157; First National Bank v. Hartford, supra, at 557. Does not the uncontroverted evidence, which we have summarized in some detail, show that such "other moneyed capital" was used in Michigan in very significant "competition with [a substantial phase of] the business of national banks" and that such competition was "substantial in amount when compared with the capitalization of national banks" in Michigan? Do not these facts establish every element of appellant's case? Respondents do not, nor does the Court, point to any essential element that is missing. Why, then, is appellant not entitled to recover? The only reasons advanced by respondents are those it successfully urged upon the Michigan Supreme Court. Every one of those contentions is opposed to the plain terms of 5219 on the facts of this record, and also has been specifically decided adversely to respondents, on similar facts, by this Court, as I shall show. First. Respondents argue that, because they may not receive "deposits," create "checkbook money" or engage in "banking," but must operate "in a narrow, restricted field," savings and loan associations are so "different in character, purpose and organization from national banks" that - regardless of the actual facts shown in this record - they cannot, as a matter of law, come "into competition with the business of national banks" within the meaning of 5219. This argument, upon analysis, comes down to the contention that the restriction of 5219 was directed only against discrimination in favor of state banks. For they, so the argument runs, are the only state-created institutions that lawfully may engage in "banking business" similarly to national banks and hence, respondents [365 U.S. 467, 492] conclude, only the moneyed capital of state banks can constitute "other moneyed capital . . . coming into competition with the business of national banks," within the meaning of 5219. A similar question arose in First National Bank v. Anderson, 269 U.S. 341 . There "[t]he defendants took the position [in the state court] that the congressional restriction [of 5219] was directed only against discrimination in favor of state banking associations." This Court said the contention was ". . . untenable by reason of settled rulings to the contrary . . . ." Id., at 349. After summarizing its earlier cases, the Court declared that "[t]he purpose of the restriction is to render it impossible for any State, in taxing the shares, to create and foster an unequal and unfriendly competition with national banks, by favoring shareholders in state banks or individuals interested in private banking or engaged in operations and investments normally common to the business of banking. Mercantile National Bank v. New York, 121 U.S. 138, 155 ; Des Moines National Bank v. Fairweather, supra [263 U.S. 103], 116." 269 U.S., at 347 -348. (Emphasis added.) And it held that "Moneyed capital is brought into such competition [not only] where it is invested in shares of state banks or in private banking . . . [but] also where it is employed, substantially as in the loan and investment features of banking, in making investments, by way of loan, discount or otherwise, in notes, bonds or other securities with a view to sale or repayment and reinvestment. Mercantile National Bank v. New York, supra, 155-157; Palmer v. McMahon, 133 U.S. 660, 667 -668; Talbot v. Silver Bow County, 139 U.S. 438, 447 ." 269 U.S., at 348 . (Emphasis added.) Respondents' contention that "other moneyed capital" does not come into competition with the business of [365 U.S. 467, 493] national banks unless it is employed in a business substantially identical with all phases of the business carried on by national banks was squarely met and rejected by this Court, in words about as plain as it is possible to conceive, in First National Bank v. Hartford, supra. There, the Wisconsin Supreme Court "apparently construed the decisions of this Court as requiring equality in taxation only of moneyed capital invested in businesses substantially identical with the business carried on by national banks. Consequently, since that class of business must under the Wisconsin statutes be carried on in corporate form and capital invested in it is taxed at the same rate as national bank shares, other moneyed capital, as defined in 5219, within the state, it thought, was not favored." 273 U.S., at 555 -556. That view, if logically pursued, would mean that "other moneyed capital" invested in businesses engaged in some but not all of the activities of national banks could not be considered in determining the question of competition. In rejecting that contention, this Court said: "But this Court has recently had occasion, in reviewing the earlier decisions dealing with this subject, to point out that the requirement of approximate equality in taxation is not limited to investment of moneyed capital in shares of state banks or to competing capital employed in private banking. The restriction applies as well where the competition exists only with respect to particular features of the business of national banks or where moneyed capital `is employed, substantially as in the loan and investment features of banking, in making investments by way of loan, discount or otherwise, in notes, bonds or other securities, with a view to sale or repayment and reinvestment.' First National Bank v. Anderson, supra, 348. In so doing, it followed the [365 U.S. 467, 494] holding in Mercantile Bank v. New York, 121 U.S. 138, 157 . . . ." 273 U.S., at 556 . (Emphasis added.) The Court then proceeded to declare the law in such clear and ringing terms as have settled the question for the intervening 34 years - from 1927 until today. It said: "Competition may exist between other moneyed capital and capital invested in national banks, serious in character and therefore well within the purpose of 5219, even though the competition be with some but not all phases of the business of national banks. Section 5219 is not directed merely at discriminatory taxation which favors a competing banking business. Competition in the sense intended arises not from the character of the business of those who compete but from the manner of the employment of the capital at their command. No decision of this Court appears to have so qualified 5219 as to permit discrimination in taxation in favor of moneyed capital such as is here contended for. To so restrict the meaning and application of 5219 would defeat its purpose. It was intended to prevent the fostering of unequal competition with the business of national banks by the aid of discriminatory taxation in favor of capital invested by institutions or individuals engaged either in similar businesses or in particular operations or investments like those of national banks. . . . Our conclusion is that 5219 is violated wherever capital, substantial in amount when compared with the capitalization of national banks, is employed either in a business or by private investors in the same sort of transactions as those in which national banks engage and in the same locality in which they do business." 273 U.S., at 557 -558. (Emphasis added.) [365 U.S. 467, 495] Identical conclusions were again announced by the Court on the same day in Minnesota v. First National Bank, 273 U.S. 561 . 5 Here, there is no question about the fact that the making of residential mortgage loans was a substantial phase of the business of national banks in Michigan. Such loans amounted to $301,000,000 and constituted 30% of their total loans and discounts. Nor can there be any question about the fact that moneyed capital of savings and loan associations was being used in significant competition with the residential mortgage loan phase of the business of national banks in Michigan. Those loan associations held $433,000,000 of such loans. That amount was certainly substantial "when compared with the capitalization of national banks" in Michigan of $166,724,000. These facts, under the rule of the Hartford and Minnesota cases, would seem to leave no doubt that appellant's shares were discriminatorily taxed in violation of 5219. Second. Respondents argue that savings and loan associations are similar in character and purpose to the, now largely historical, small mutual savings banks that were common in the last century. On that assumption, they argue that inasmuch as this Court has held that taxation of national bank shares at a greater rate than was assessed against such mutual savings banks did not offend 5219 [365 U.S. 467, 496] (see, e. g., Mercantile Bank v. New York, 121 U.S. 138 (1887); Davenport Bank v. Davenport Board of Equalization, 123 U.S. 83 (1887); Bank of Redemption v. Boston, 125 U.S. 60 (1888); Aberdeen Bank v. Chehalis County, 166 U.S. 440 (1897), it should follow that the taxation of national bank shares at a greater rate than savings and loan shares does not offend the statute. That argument, too, was specifically answered by the Hartford case. With unmistakable reference to those cases, the Court said: "Some of the cases dealing with the technical significance of the term competition in this field were decided before national banks were permitted to invest in mortgages as they are now. Act of December 23, 1913, c. 6, 24, 38 Stat. 251, 273; Act of September 7, 1916, c. 461, 39 Stat. 752, 754; Act of February 25, 1927, 24. 6 And others go no further than to hold that in the [365 U.S. 467, 497] absence of allegation and proof of competition with national banking capital, it cannot be said that an offending discrimination exists." 273 U.S., at 558 . Then, squarely rejecting the theory of respondents' argument, the Court said: "With the great increase in investments by individuals and the growth of concerns engaged in particular phases of banking shown by the evidence in this case and in Minnesota v. First National Bank of St. Paul, today decided, post, p. 561, discrimination with respect to capital thus used could readily be carried to a point where the business of national banks would be seriously curtailed. Our conclusion is that 5219 is violated wherever capital, substantial in amount when compared with the capitalization of national banks, is employed either in a business or by private investors in the same sort of transactions as those in which national banks engage and in the same locality in which they do business." 273 U.S., at 558 . Surely nothing more need be said. Third. Respondents argue that inasmuch as this Court has held that a State may entirely exempt some entities or activities from taxation - i. e., churches, charities, small mutual savings banks, municipal bonds, and the like - without offending 5219 (see, e. g., Hepburn v. School Directors, 23 Wall. 480; Adams v. Nashville, 95 U.S. 19 ; Mercantile Bank v. New York, supra; Davenport Bank v. Davenport Board of Equalization, supra; Bank of Redemption v. Boston, supra; Aberdeen Bank v. Chehalis County, supra), it follows that a State may prefer the [365 U.S. 467, 498] shares of savings and loan associations, by granting their owners a lower tax rate than it grants to the owners of shares of national banks - even though the former are used in significant competition with a substantial phase of the business of the latter - without thereby violating 5219. Despite the strongest of implications to the contrary, we have no occasion here to consider whether the State might, under conditions shown by this record, entirely exempt the shares of savings and loan associations from taxation, while taxing the shares of national banks, for it has not done so. The State taxes savings and loan shares, although at only about 1/8 of the rate it levies on national bank shares. In these circumstances, respondents' argument runs in the very teeth of this Court's holding in the Hartford case that "Competition in the sense intended [by 5219] arises not from the character of the business of those who compete but from the manner of the employment of the capital at their command" ( 273 U.S., at 557 ), and "that 5219 is violated wherever capital, substantial in amount when compared with the capitalization of national banks, is employed either in a business or by private investors in the same sort of transactions as those in which national banks engage and in the same locality in which they do business." 273 U.S., at 558 . A more direct and conclusive answer cannot readily be perceived. Fourth. Respondents argue, and the Court agrees, that when the value of the total assets, rather than the value of the shares, of the two types of financial institutions is considered, the ratio of the total dollar tax burden to total assets is approximately the same in Michigan - .091 for banks and .089 for savings and loan associations - and therefore national bank shares are not really taxed at a greater rate than savings and loan shares. [365 U.S. 467, 499] This brings us to the heart of our disagreement with the Court. After correctly observing that "There are other considerations [than rates] to be weighed in determining the actual burden of the tax, one of which is the mode of valuing bank shares - by adopting `book values' [capital, surplus and undivided profits] - which may be more or less favorable than the method adopted in valuing other kinds of personal property," Amoskeag Savings Bank v. Purdy, 231 U.S. 373, 392 ; see also Hepburn v. School Directors, 23 Wall. 480, 484; Tradesmens National Bank v. Oklahoma Tax Comm'n, 309 U.S. 560, 567 , and that it is not the rate alone but the practical effect of the tax that determines whether there is discrimination, the Court says: "[I]t is obvious that the taxable value of the shares in these two types of financial institutions is determined by different methods . . . ." This conclusion is demonstrably wrong. In plain and simple terms Act 9 provides that the value of bank shares "shall be determined by dividing such capital account [capital, surplus and undivided profits] by the number of shares of such common stock . . . ." (see note 2), and the shares of savings and loan associations are valued at the "paid-in value." In each case, therefore, corporate liabilities are deducted and the tax is imposed upon the book value of the shares. Hence, it could hardly be plainer "that the taxable value of the shares in these two types of financial institutions is determined by" exactly the same, not "different," methods. One cannot profitably elaborate a truth so simple. Then, the Court comes to the real basis of its decision. It says "[Michigan's] system looks to the moneyed capital controlled by the shareholder. If it is a share in a bank - either federal or state - the legislature considers the deposits available for investment and fixes a rate commensurate with that increased earning and investment power of the shareholder"; that "a dollar invested in [365 U.S. 467, 500] national bank shares controls many more dollars of moneyed capital, the measuring rod of 5219. On the other hand, the same dollar invested in a savings and loan share controls no more moneyed capital than its face value. The bank share has the power and control of its proportionate interest in all of the money available to the bank for investment purposes. In the case of Michigan National, this control is more than 21 times greater than the share's proportionate interest in the capital stock, surplus and undivided profits"; that "Since Michigan National's share owner's investment has the equivalent profit-making power of an amount 21 times greater than itself and the investor in savings and loan share[s] . . . has no similarly multiplied power, the national bank share would not be `unfavorably' treated unless it was taxed in excess of 21 times the levy on savings and loan share[s] . . . . Here the ratio is only 13.8 to one . . . ." (Emphasis added.) I respectfully submit that this is an egregious error. Nothing in the Michigan statute provides or contemplates that the amount of capital "controlled" by the shares of a national bank, or the amount of the bank's "deposits," is a relevant factor in determining the value of bank shares for the purposes of this tax. Nor are "increased [values] to the shareholder," by reason of capital "controlled" by the bank or its "deposits," made relevant factors. Quite specifically to the contrary, Act 9 provides that "`Capital account' as referred to herein shall be determined by adding the common capital, surplus and undivided profits accounts . . ., and the dollar amount of the capital account represented by each share of its common stock shall be determined by dividing such capital account by the number of shares of such common stock . . . ." How could it more plainly be said that bank shares must be valued, for the purposes of this tax, solely upon their book value - without regard to [365 U.S. 467, 501] the bank's "deposits" or to the capital "controlled by the shareholder"? It is surely clear that the Michigan tax is not imposed upon national banks or upon their assets; instead, it is imposed upon the owners of the bank's shares, measured solely by the value of those shares - "determined by dividing [the] capital account by the number of shares of such common stock." See note 2. Respondents' argument, and the Court's decision, put out of consideration the liability of national banks to repay their deposits and other debts, and would impose the tax on their gross assets, in direct opposition to the plain terms of the Michigan statute. Precisely the same argument was rejected by this Court in Minnesota v. First National Bank, supra: "Petitioner argues that in its actual operation, the tax on national bank shares is no greater than the tax on credits, since under the statute individuals are taxed at the rate of three mills upon the full value of their credits without deducting their liabilities, whereas in taxing bank shares, the liabilities of the banks are deducted from their assets in ascertaining the forty per cent. valuation of their shares. Therefore, it is urged, if bank shares were taxed at the same rate without deducting the bank's liabilities in ascertaining the value of their shares, the amount of the tax would be approximately the same. This argument ignores the fact that the tax authorized by 5219 is against the holders of the bank shares and is measured by the value of the shares, and not by the assets of the bank without deduction of its liabilities, Des Moines National Bank v. Fairweather, 263 U.S. 103 . . . ." 273 U.S., at 564 . It would indeed be novel, even in the absence of the contrary provisions of Act 9, to add liabilities to assets in determining book value of corporate shares - a simple contradiction in terms. It is likewise idle to observe the [365 U.S. 467, 502] obvious fact that savings and loan associations have no "deposits," and hence no deposit liabilities to deduct, 7 or to argue that they, in valuing their shares for the purposes of this tax, should be allowed to deduct the amounts paid in by their "shareholders" for their "shares," as the resulting figure would be zero, and the effect would be to tax those shares only in fiction. Nothing in either Act 9 or in 5219 authorizes such double talk. Here, Michigan values national bank shares and savings and loan association shares, for the purposes of this tax, by exactly the same method, i. e., the value of the shares. Yet it taxes bank shares at a rate of 55 cents per $100 of their value, while taxing savings and loan shares at 6 1/2 cents per $100 of their value. Does not that conduct violate the provision of 5219 that national bank shares "shall not be [taxed] at a greater rate than is assessed upon other moneyed capital . . . coming into competition with the business of national banks"? If the Court's argument, that a tax upon the bank's "deposits" at the rate applied to the shares of savings and loan associations would produce a greater tax than results from application of the higher bank share rate to the value of its shares, has any relevance to any issue in this case, it can only be to demonstrate that including "deposits" in the valuation of bank shares would be to tax not just the bank's "shares," as authorized by 5219, but both the "shares" and the "deposits" of the bank, and not at the lower rate applicable to savings and loan shares but at the eight times higher one applicable to the shares of national banks. Similarly, the Court's argument that [365 U.S. 467, 503] appellant, despite this tax discrimination, has phenomenally prospered seems wholly irrelevant, for the criterion of 5219 is not whether national banks may prosper, despite state tax discrimination, but is rather that their share "shall not be [taxed] at a greater rate than is assessed upon other moneyed capital . . . coming into competition with the business of national banks." But, if the Court's argument has any relevance, it should be observed that Michigan national banks have not increased assets proportionately to savings and loan associations in that State since the passage of Act 9 in 1953, for the amount of residential mortgage loans then held by such associations in that State of $433,000,000 has now grown to $1,700,000,000. Finally, respondents argue that Congress, in restricting state taxation of federal savings and loan associations to a rate not "greater than that imposed by such authority on other similar local mutual or cooperative thrift and home financing institutions," 12 U.S.C. 1464 (h), evidenced its understanding and intention that savings and loan shares might be taxed at a lower rate than the shares of national banks, and thus impliedly repealed or modified 5219 so far as competition with the business of national banks from that source is concerned. There is no basis for an assumption that Congress, in so restricting state taxation of federal savings and loan associations, intended, so lightly and collaterally, to repeal or modify 5219 by implication. It is obvious that, by 1464 (h), Congress only restricted state taxation of federal savings and loan associations to a rate not greater than that assessed by the State against similar state associations. Therefore, if, as seems entirely clear from 5219 and our cases, a State may not tax national bank shares at a greater rate than it taxes state savings and loan association shares, when the latter are used in significant competition with a substantial phase of the former's business, [365 U.S. 467, 504] it accordingly may not tax national bank shares at a greater rate than it taxes the shares of federal savings and loan associations which are similarly competing with a substantial phase of the business of national banks. For it may not, in such circumstances, lawfully prefer either over national bank shares with which they so compete. In other words, by 1464 (h), Congress restricted the States from taxing federal savings and loan associations at a greater rate than state savings and loan associations, and by 5219 it restricted the States from taxing national bank shares at a greater rate than they assess "upon other moneyed capital . . . coming into competition with the business of national banks." Hence, if a State taxes national bank shares at a greater rate than it assesses against the "moneyed capital" of savings and loan associations - state or federal - which is used in significant competition with a substantial phase of the business of such banks, it violates 5219. That is exactly what Michigan has done here. The proper interpretation and application of 5219 to particular fact situations has been hammered out by the decisions of this Court, case by case, over the course of nearly a century. They have squarely met and decided, adversely to respondents, every question in this case. Finally, the Hartford and Minnesota cases brought a settled peace to this field that has endured until today - for 34 years. The obvious reason, I submit, is that they are right. There is, I respectfully submit, no call or reason to depart or deface those cases. And doing either will only again unsettle the law in a field where certainty of the applicable rules is nearly as important as their substance. Under the law, settled for at least the last 34 years, appellant has proved every element of its case, and is entitled to recover. I would therefore reverse the judgment. [Footnote 1 Appellant's main bank is located in the City of Lansing. It maintains branch banks in the Cities of Battle Creek, Flint, Grand Rapids, Marshall, Port Huron and Saginaw. [Footnote 2 Act 9 contains a further relevant provision which, in pertinent part, reads: "`Capital account' as referred to herein shall be determined by adding the common capital, surplus and undivided profits accounts . . ., and the dollar amount of the capital account represented by each share of its common stock shall be determined by dividing such capital account by the number of shares of such common stock . . . ." [Footnote 3 In First National Bank v. Hartford, 273 U.S. 548, 556 , 557, this Court held the phrase "some substantial phase," in the context here used, to be implicit in 5219. [Footnote 4 See note 3. [Footnote 5 Since this Court's decisions in First National Bank v. Hartford, supra, and Minnesota v. First National Bank, supra, in 1927, several proposals to limit state taxes on national bank shares to such as are imposed by the State on state banks - thus permitting other competing moneyed capital, including that of savings and loan associations, to be taxed at a lower rate by the State - have been made to and rejected by Congress. Hearings before the Senate Banking and Currency Committee on S. 1573, 70th Cong., 1st Sess. (1928); Hearings on H. R. 8727 before the House Committee on Banking and Currency, 70th Cong., 1st Sess. (1928); S. 3009, 73d Cong., 2d Sess.; H. R. 9045, 73d Cong., 2d Sess. [Footnote 6 A historical review of 24, Federal Reserve Act (12 U.S.C. 371), which prescribed the authority of national banks to make real estate mortgage loans, reveals that, prior to 1916, national banks were not authorized to loan money on the security of real estate, with the exception of certain farm land. By the Act of September 7, 1916 (39 Stat. 754), Congress first authorized national banks to make residential mortgage loans, but limited them to an amount not exceeding 50% of the actual value of the property and to run for a term not longer than one year. By the Act of February 25, 1927 (44 Stat. 1232), Congress authorized such residential mortgage loans to run for a period of five years. By the Act of June 27, 1934 (48 Stat. 1263), Congress authorized national banks to make mortgage loans under Title II, National Housing Act (12 U.S.C. 1701 et seq.), commonly known as F. H. A. mortgages. By the Act of August 23, 1935 (49 Stat. 706), amending 24 of the Federal Reserve Act, national banks were authorized to make conventional residential mortgage loans in amounts not exceeding 60% of the appraised value of the property for a term of 10 years if 40% of the principal be amortized in that term. By decision of the Comptroller of the Currency in 1944, national banks were authorized to participate in the V. A. (or G. I.) home loan program. By the 1950 Amendment to 24 (64 Stat. 80), national banks were authorized to make Title I, F. H. A. home [365 U.S. 467, 497] improvements loans. It thus appears that, by 1952, national banks were authorized to make F. H. A. mortgage and home modernization loans and also V. A. mortgage loans identical to those made by savings and loan associations, and conventional mortgage loans comparable to those made by such associations. [Footnote 7 The Michigan Supreme Court itself has recognized "that investors in savings and loan associations are subscribers to, or purchasers of stock therein. . . ." - and are not "depositors" or "creditors" thereof. Michigan Savings & Loan League v. Municipal Finance Commission of the State of Michigan (1956), 347 Mich. 311, 322, 79 N. W. 2d 590, 595. [365 U.S. 467, 505]

conservative

public_entity

federalism

1977-013-01

United States Supreme Court NEW YORK v. CATHEDRAL ACADEMY(1977) No. 76-616 Argued: October 3, 1977Decided: December 6, 1977 A three-judge District Court issued a judgment (later affirmed by this Court) declaring unconstitutional a New York statute (1970 N. Y. Laws, ch. 138) that authorized reimbursement to nonpublic schools for state-mandated recordkeeping and testing services, and permanently enjoining any payments under the Act, including reimbursement for expenses that such schools had already incurred in the last half of the 1971-1972 school year. Thereafter the New York State Legislature enacted 1972 N. Y. Laws, ch. 996, authorizing reimbursement to sectarian schools for their expenses of performing the state-required services through the 1971-1972 school year. Appellee sectarian school brought this reimbursement action under ch. 996 in the New York Court of Claims, which held that the statute violated the First and Fourteenth Amendments. The New York Court of Appeals, being of the view that ch. 996 comported with this Court's decision in Lemon v. Kurtzman, 411 U.S. 192 (Lemon II), ultimately reversed, and remanded the case for a determination of the amount of appellee's claim. In that case, after a state statute authorizing payments to sectarian schools for specified secular services had been struck down (in Lemon v. Kurtzman, 403 U.S. 602 (Lemon I)) and the trial court on remand had enjoined payments under the statute for any services performed after that decision but had not prohibited payments for services provided before that date, the Court approved such disposition on the ground that equitable flexibility permitted weighing the "remote possibility of constitutional harm from allowing the State to keep its bargain" against the substantial reliance of the schools that had incurred expenses at the State's express invitation. Held: 1. This Court has jurisdiction of this appeal as the Court of Appeals' decision was a final determination of the federal constitutional issue and is ripe for appellate review under 28 U.S.C. 1257 (2). P. 128. 2. Chapter 996 violates the First Amendment as made applicable to the States by the Fourteenth because it will necessarily have the primary effect of aiding religion, or will result in excessive state involvement in religious affairs. Lemon II distinguished. Pp. 128-133. (a) Here (contrary to the situation in Lemon II) the District Court had expressly enjoined payments for amounts "heretofore or hereafter expended." To approve enactment of ch. 996, which thus [434 U.S. 125, 126] was inconsistent with the District Court's order, would expand the reasoning of Lemon II to hold that a state legislature may effectively modify a federal court's injunction whenever a balancing of constitutional equities might conceivably have justified the court's granting similar relief in the first place. Pp. 128-130. (b) If ch. 996 authorizes payments for the identical services that were to be reimbursed under ch. 138, it is for the identical reasons invalid. Pp. 130-131. (c) Even if, as appellee contends, the Court of Claims was authorized to make an audit on the basis of which it would authorize reimbursement of sectarian schools only for clearly secular purposes, such a detailed inquiry would itself encroach upon the First and Fourteenth Amendments by making that court the arbiter of an essentially religious dispute. Pp. 131-133. 3. Contrary to Lemon II, the equities do not support what the state legislature has done in ch. 996, which constitutes a new and independently significant infringement of the First and Fourteenth Amendments. Moreover, appellee could have relied on ch. 138 only by spending its own funds for nonmandated, and perhaps sectarian, activities that it might otherwise not have been able to afford. Pp. 133-134. 39 N. Y. 2d 1021, 355 N. E. 2d 300, reversed and remanded. STEWART, J., delivered the opinion of the Court, in which BRENNAN, MARSHALL, BLACKMUN, POWELL, and STEVENS, JJ., joined. BURGER, C. J., and REHNQUIST, J., filed a dissenting statement, post, p. 134. WHITE, J., filed a dissenting opinion, post, p. 134. Jean M. Coon, Assistant Solicitor General of New York, argued the cause for appellant. With her on the brief were Louis J. Lefkowitz, Attorney General, Ruth Kessler Toch, Solicitor General, and Kenneth Connolly, Assistant Attorney General. Richard E. Nolan argued the cause for appellee. With him on the brief was Thomas J. Aquilino, Jr. MR. JUSTICE STEWART delivered the opinion of the Court. In April of 1972 a three-judge United States District Court for the Southern District of New York declared unconstitutional New York's Mandated Services Act, 1970 N. Y. Laws, [434 U.S. 125, 127] ch. 138, which authorized fixed payments to nonpublic schools as reimbursement for the cost of certain recordkeeping and testing services required by state law. Committee for Public Education & Religious Liberty v. Levitt, 342 F. Supp. 439. The court's order permanently enjoined any payments under the Act, including reimbursement for expenses that schools had already incurred in the last half of the 1971-1972 school year. 1 This Court subsequently affirmed that judgment. Levitt v. Committee for Public Education, 413 U.S. 472 . In June 1972 the New York State Legislature responded to the District Court's order by enacting ch. 996 of the 1972 N. Y. Laws. The Act "recognize[d] a moral obligation to provide a remedy whereby . . . schools may recover the complete amount of expenses incurred by them prior to June thirteenth[, 1972,] in reliance on" the invalidated ch. 138, and conferred jurisdiction on the New York Court of Claims "to hear, audit and determine" the claims of nonprofit private schools for such expenses. Thus the Act explicitly authorized what the District Court's injunction had prohibited: reimbursement to sectarian schools for their expenses of performing state-mandated services through the 1971-1972 academic year. The appellee, Cathedral Academy, sued under ch. 996 in the Court of Claims, and the State defended on the ground that the Act was unconstitutional. 2 The Court of Claims agreed that ch. 996 violated the First and Fourteenth Amendments, and dismissed Cathedral Academy's suit. 77 Misc. 2d 977, [434 U.S. 125, 128] 354 N. Y. S. 2d 370. The Appellate Division affirmed, 47 App. Div. 2d 390, 366 N. Y. S. 2d 900, but the New York Court of Appeals, adopting a dissenting opinion in the Appellate Division, reversed and remanded the case to the Court of Claims for determination of the amount of the Academy's claim. 3 39 N. Y. 2d 1021, 355 N. E. 2d 300. An appeal was taken to this Court, and we postponed further consideration of the question of our appellate jurisdiction until the hearing on the merits. 429 U.S. 1089 . We conclude that the Court of Appeals' decision finally determined the federal constitutional issue and is ripe for appellate review in this Court under 28 U.S.C. 1257 (2). 4 I The state courts and the parties have all considered this case to be controlled by the principles established in Lemon v. Kurtzman, 411 U.S. 192 (Lemon II), which concerned the permissible scope of a Federal District Court's injunction forbidding payments to sectarian schools under an unconstitutional state statute. Previously in that same litigation we had [434 U.S. 125, 129] declared unconstitutional a Pennsylvania statute authorizing payments to sectarian schools for specific secular services provided under contract with the State, and remanded the case to the trial court for entry of an appropriate decree. Lemon v. Kurtzman, 403 U.S. 602 (Lemon I). On remand, the District Court enjoined payments under the statute for any services performed after the date of this Court's decision, but did not prohibit payments for services provided before that date. 348 F. Supp. 300, 301 n. 1 (ED Pa.). In Lemon II this Court affirmed the trial court's denial of retroactive injunctive relief against the State, noting that "in constitutional adjudication as elsewhere, equitable remedies are a special blend of what is necessary, what is fair, and what is workable." 411 U.S., at 200 (footnote omitted). The primary constitutional evil that the Lemon II injunction was intended to rectify was the excessive governmental entanglement inherent in Pennsylvania's elaborate procedures for ensuring that "educational services to be reimbursed by the State were kept free of religious influences." Id., at 202. The payments themselves were assumed to be constitutionally permissible, since they were not to be directly supportive of any sectarian activities. Because the State's supervision had long since been completed with respect to expenses already incurred, the proposed payments were held to pose no continued threat of excessive entanglement. Two other problems having "constitutional overtones" - the impact of a final audit and the effect of funding even the entirely nonreligious activities of a sectarian school - threatened minimal harm "only once under special circumstances that will not recur." Ibid. In this context this Court held that the unique flexibility of equity permitted the trial court to weigh the "remote possibility of constitutional harm from allowing the State to keep its bargain" against the substantial reliance of the schools that had incurred expenses at the express invitation of the State. The District Court, "applying familiar equitable principles," could properly decline to enter an injunction that [434 U.S. 125, 130] would do little if anything to advance constitutional interests while working considerable hardship on the schools. Cf. Hecht Co. v. Bowles, 321 U.S. 321 . In the present case, however, the District Court did not limit its decree as the court had done in Lemon II, but instead expressly enjoined payments for amounts "heretofore or hereafter expended." See n. 1, supra (emphasis supplied). The state legislature thus took action inconsistent with the court's order when it passed ch. 996 upon its own determination that, because schools like the Academy had relied to their detriment on the State's promise of payment under ch. 138, the equities of the case demanded retroactive reimbursement. To approve the enactment of ch. 996 would thus expand the reasoning of Lemon II to hold that a state legislature may effectively modify a federal court's injunction whenever a balancing of constitutional equities might conceivably have justified the court's granting similar relief in the first place. But cf. Wright v. Council of City of Emporia, 407 U.S. 451, 467 . This rule would mean that every such unconstitutional statute, like every dog, gets one bite, if anyone has relied on the statute to his detriment. Nothing in Lemon II, whose concern was to "examine the District Court's evaluation of the proper means of implementing an equitable decree," 411 U.S., at 200 , suggests such a broad general principle. But whether ch. 996 is viewed as an attempt at legislative equity or simply as a law authorizing payments from public funds to sectarian schools, the dispositive question is whether the payments it authorizes offend the First and Fourteenth Amendments. II The law at issue here, ch. 996, authorizes reimbursement for expenses incurred by the schools during the specified time period "in rendering services for examination and inspection in connection with administration, grading and the compiling [434 U.S. 125, 131] and reporting of the results of tests and examinations, maintenance of records of pupil enrollment and reporting thereon, maintenance of pupil health records, recording of personnel qualifications and characteristics and the preparation and submission to the state of various other reports required by law or regulation." It expressly states that the basis for the legislation is the State's representation in the now invalidated ch. 138 that such expenses would be reimbursed. Thus, while ch. 996 provides for only one payment rather than many, and changes the method of administering the payments, nothing on the face of the statute indicates that payments under ch. 996 would differ in any substantial way from those authorized under ch. 138. Unlike the constitutional defect in the state law before us in Lemon I, the constitutional invalidity of ch. 138 lay in the payment itself, rather than in the process of its administration. The New York statute was held to be constitutionally invalid because "the aid that [would] be devoted to secular functions [was] not identifiable and separable from aid to sectarian activities." Levitt v. Committee for Public Education, 413 U.S., at 480 . This was so both because there was no assurance that the lump-sum payments reflected actual expenditures for mandated services, and because there was an impermissible risk of religious indoctrination inherent in some of the required services themselves. We noted in particular the "substantial risk that . . . examinations, prepared by teachers under the authority of religious institutions, will be drafted with an eye, unconsciously or otherwise, to inculcate students in the religious precepts of the sponsoring church." Ibid. Thus it can hardly be doubted that if ch. 996 authorizes payments for the identical services that were to be reimbursed under ch. 138, it is for the identical reasons invalid. The Academy argues, however, that the Court of Appeals has construed the statute to require a detailed audit in the Court of Claims to "establish whether or not the amounts [434 U.S. 125, 132] claimed for mandated services constitute a furtherance of the religious purposes of the claimant." 47 App. Div. 2d, at 397, 366 N. Y. S. 2d, at 906. This language is said to require the Court of Claims to review in detail all expenditures for which reimbursement is claimed, including all teacher-prepared tests, in order to assure that state funds are not given for sectarian activities. We find nothing in the opinions of the state courts to indicate that such an audit is authorized under ch. 996. 5 But even if such an audit were contemplated, we agree with the appellant that this sort of detailed inquiry into the subtle implications of in-class examinations and other teaching activities would itself constitute a significant encroachment on the protections of the First and Fourteenth Amendments. In order to prove their claims for reimbursement, sectarian schools would be placed in the position of trying to disprove [434 U.S. 125, 133] any religious content in various classroom materials. In order to fulfill its duty to resist any possibly unconstitutional payment, see n. 2, supra, the State as defendant would have to undertake a search for religious meaning in every classroom examination offered in support of a claim. And to decide the case, the Court of Claims would be cast in the role of arbiter of the essentially religious dispute. The prospect of church and state litigating in court about what does or does not have religious meaning touches the very core of the constitutional guarantee against religious establishment, and it cannot be dismissed by saying it will happen only once. Cf. Presbyterian Church v. Blue Hull Mem. Presb. Church, 393 U.S. 440 . When it is considered that ch. 996 contemplates claims by approximately 2,000 schools in amounts totaling over $11 million, the constitutional violation is clear. 6 For the reasons stated, we hold that ch. 996 is unconstitutional because it will of necessity either have the primary effect of aiding religion, see Levitt v. Committee for Public Education, supra, or will result in excessive state involvement in religious affairs. See Lemon I, 403 U.S. 602 . III But even assuming, as the New York Court of Appeals did, that under Lemon II a degree of constitutional infirmity may be tolerated in a state law if other equitable considerations predominate, we cannot agree that the equities support what the state legislature has done in ch. 996. In Lemon II the constitutional vice of excessive entanglement was an accomplished fact that could not be undone by enjoining payments for expenses previously incurred. And [434 U.S. 125, 134] precisely because past practices had clearly identified permissibly reimbursable secular expenses, an additional single payment was held not to threaten the additional constitutional harm of state support to religious activities. By contrast, ch. 996 amounts to a new and independently significant infringement of the First and Fourteenth Amendments. Moreover the Academy's detrimental reliance on the promise of ch. 138 was materially different from the reliance of the schools in Lemon II. Unlike the Pennsylvania schools, the Academy was required by pre-existing state law to perform the services reimbursed under ch. 138. In essence, the Academy could have relied on ch. 138 only by spending its own funds for nonmandated, and perhaps sectarian, activities that it might not otherwise have been able to afford. While this Court has never held that freeing private funds for sectarian uses invalidates otherwise secular aid to religious institutions, see Roemer v. Maryland Public Works Board, 426 U.S. 736, 747 , and n. 14 (plurality opinion), it is quite another matter to accord positive weight to such a reliance interest in the balance against a measurable constitutional violation. Accordingly, the judgment of the New York Court of Appeals is reversed, and the case is remanded to that court for further proceedings not inconsistent with this opinion. It is so ordered. THE CHIEF JUSTICE and MR. JUSTICE REHNQUIST believe that this case is controlled by the principles established in Lemon v. Kurtzman, 411 U.S. 192 (1973), and would therefore affirm the judgment of the Court of Appeals of New York. Footnotes [Footnote 1 The order permanently enjoined "all persons acting for or on behalf of the State of New York . . . from making any payments or disbursements out of State funds pursuant to the provisions of Chapter 138 of the New York Laws of 1970, in payment for or reimbursement of any moneys heretofore or hereafter expended by nonpublic elementary and secondary schools." No. 70 Civ. 3251 (June 1, 1972). [Footnote 2 At oral argument the Assistant Solicitor General of New York said that the State of New York frequently defends against claims for payment on the ground that the enabling Act authorizing suit in the Court of Claims is unconstitutional. [Footnote 3 The dissenting judges in the Court of Appeals voted to affirm on the majority opinion in the Appellate Division. 39 N. Y. 2d, at 1022, 355 N. E. 2d 300. We shall refer to the dissenting opinion of Justice Herlihy in the Appellate Division, 47 App. Div. 2d 396, 366 N. Y. S. 2d 905, adopted by the majority in the Court of Appeals, as the opinion of the Court of Appeals. [Footnote 4 It is clear that the New York Court of Appeals has finally determined that under the principles established in Lemon v. Kurtzman, 411 U.S. 192 (Lemon II), the Academy and other schools in similar positions are entitled to prove claims for reimbursement under ch. 996. While the Court of Appeals remanded for an audit in the Court of Claims to determine the amount of the Academy's claim, and while the precise scope of the audit is unclear, we conclude for the reasons stated in Part II of the text below that no possible developments on remand could sufficiently minimize the risk of future constitutional harm to justify relief even under Lemon II's balancing of constitutional and equitable considerations. Since further proceedings cannot remove or otherwise affect this threshold federal issue, the Court of Appeals' decision is final for purposes of review in this Court. See Cox Broadcasting Corp. v. Cohn, 420 U.S. 469, 478 -480. [Footnote 5 The Court of Claims dismissed the Academy's claim in part because it found no "enforceable standards or guidelines" in ch. 996 "which would enable this Court to separate and apportion the single per-pupil allotment among the various allowed purposes." 77 Misc. 2d, at 985, 354 N. Y. S. 2d, at 378. Thus it did not believe that ch. 996 authorized it to reimburse schools only for clearly secular expenses, such as the cost of maintaining attendance and medical records, while refusing payments for other "allowed purposes" such as in-class examinations that this Court had held impermissible. The opinion of the Court of Appeals does not contradict this interpretation. While the language quoted in the text is somewhat ambiguous, it appears that the Court of Appeals interpreted ch. 996 to require an audit similar to the post-audit contemplated in Lemon II, in which "the burden will be upon the claimant to prove that the items of its claims are in fact solely for mandated services . . . ." 47 App. Div. 2d, at 400, 366 N. Y. S. 2d, at 908. As was made clear in Levitt v. Committee for Public Education, 413 U.S. 472 , however, limiting reimbursement to mandated services would not fully address the constitutional objections to ch. 138, since it would provide no assurance against reimbursement for sectarian mandated services. Thus, a post-audit like the one contemplated in Lemon II, which the Court characterized as a "ministerial `cleanup' function," 411 U.S., at 202 , would not in this case exclude payments that impermissibly aided religious purposes. [Footnote 6 The parties have considered the Academy's claim a test of the constitutionality of ch. 996. Claims filed by other schools have been stayed in the Court of Claims pending the resolution of this case. MR. JUSTICE WHITE, dissenting. Because the Court continues to misconstrue the First Amendment in a manner that discriminates against religion and is contrary to the fundamental educational needs of the [434 U.S. 125, 135] country, I dissent here as I have in Lemon v. Kurtzman, 403 U.S. 602 (1971); Committee for Public Education v. Nyquist, 413 U.S. 756 (1973); Levitt v. Committee for Public Education, 413 U.S. 472 (1973); Meek v. Pittenger, 421 U.S. 349 (1975); and Wolman v. Walter, 433 U.S. 229 (1977). [434 U.S. 125, 136]

liberal

organization

first_amendment

1992-056-01

United States Supreme Court HAZEN PAPER CO. v. BIGGINS(1993) No. 91-1600 Argued: January 13, 1993Decided: April 20, 1993 Petitioners fired respondent Biggins when he was 62 years old and apparently a few weeks short of the years of service he needed for his pension to vest. In his ensuing lawsuit, a jury found, inter alia, a willful violation of the Age Discrimination in Employment Act of 1967 (ADEA), which gave rise to liquidated damages. The District Court granted petitioners' motion for judgment notwithstanding the verdict on the "willfulness" finding, but the Court of Appeals reversed, giving considerable emphasis to evidence of pension interference in upholding ADEA liability and finding that petitioners' conduct was willful because, under the standard of Trans World Airlines, Inc. v. Thurston, 469 U.S. 111, 128 , they knew or showed reckless disregard for the matter of whether their conduct contravened the ADEA. Held: 1. An employer does not violate the ADEA by interfering with an older employee's pension benefits that would have vested by virtue of the employee's years of service. In a disparate treatment case, liability depends on whether the protected trait - under the ADEA, age - actually motivated the employer's decision. When that decision is wholly motivated by factors other than age, the problem that prompted the ADEA's passage - inaccurate and stigmatizing stereotypes about older workers' productivity and competence - disappears. Thus, it would be incorrect to say that a decision based on years of service - which is analytically distinct from age - is necessarily age-based. None of this Court's prior decisions should be read to mean that an employer violates the ADEA whenever its reason for firing an employee is improper in any respect. The foregoing holding does not preclude the possibility of liability where an employer uses pension status as a proxy for age, of dual liability under the Employee Retirement Income Security Act of 1974 and the ADEA, or of liability where vesting is based on age, rather than years of service. Because the Court of Appeals cited additional evidentiary support for ADEA liability, this case is remanded for that court to reconsider whether the jury had sufficient evidence to find such liability. Pp. 608-614. [507 U.S. 604, 605] 2. The Thurston "knowledge or reckless disregard" standard for liquidated damages applies not only where the predicate ADEA violation is a formal, facially discriminatory policy, as in Thurston, but also where it is an informal decision by the employer that was motivated by the employee's age. Petitioners have not persuaded this Court that Thurston was wrongly decided or that the Court should part from the rule of stare decisis. Applying the Thurston standard to cases of individual discrimination will not defeat the two-tiered system of liability intended by Congress. Since the ADEA affords an employer a "bona fide occupational qualification" defense, and exempts certain subject matters and persons, an employer could incorrectly but in good faith and nonrecklessly believe that the statute permits a particular age-based decision. Nor is there some inherent difference between this case and Thurston to cause a shift in the meaning of the word "willful." The distinction between the formal, publicized policy in Thurston and the undisclosed factor here is not such a difference, since an employer's reluctance to acknowledge its reliance on the forbidden factor should not cut against imposing a penalty. Once a "willful" violation has been shown, the employee need not additionally demonstrate that the employer's conduct was outrageous, provide direct evidence of the employer's motivation, or prove that age was the predominant, rather than a determinative, factor in the employment decision. Pp. 614-617. 953 F.2d 1405, vacated and remanded. O'CONNOR, J., delivered the opinion for a unanimous Court. KENNEDY, J., filed a concurring opinion, in which REHNQUIST, C.J., and THOMAS, J., joined, post, p. 617. Robert B. Gordon argued the cause for petitioners. With him on the briefs were John M. Harrington, Jr., and John H. Mason. Maurice M. Cahillane, Jr., argued the cause for respondent. With him on the briefs were John J. Egan, Edward J. McDonough, Jr., and Eileen Z. Sorrentino. John R. Dunne argued the cause for the United States et al. as amici curiae urging affirmance. With him on the brief were Solicitor General Starr, Deputy Solicitor General [507 U.S. 604, 606] Roberts, Edward C. DuMont, Donald R. Livingston, and Gwendolyn Young Reams. * [Footnote * Robert E. Williams, Douglas S. McDowell, and Mona C., Zeiberg filed a brief for the Equal Employment Advisory Council et al. as amici curiae urging reversal. Briefs of amici curiae urging affirmance were filed for the American Association of Retired Persons by Steven S. Zaleznick and Cathy Ventrell-Monsees; and for the National Employment Lawyers Association by Paul H. Tobias. JUSTICE O'CONNOR delivered the opinion of the Court. In this case, we clarify the standards for liability and liquidated damages under the Age Discrimination in Employment Act of 1967 (ADEA), 81 Stat. 602, as amended, 29 U.S.C. 621 et seq. I Petitioner Hazen Paper Company manufactures coated, laminated, and printed paper and paperboard. The company is owned and operated by two cousins, petitioners Robert Hazen and Thomas N. Hazen. The Hazens hired respondent Walter F. Biggins as their technical director in 1977. They fired him in 1986, when he was 62 years old. Respondent brought suit against petitioners in the United States District Court for the District of Massachusetts, alleging a violation of the ADEA. He claimed that age had been a determinative factor in petitioners' decision to fire him. Petitioners contested this claim, asserting instead that respondent had been fired for doing business with competitors of Hazen Paper. The case was tried before a jury, which rendered a verdict for respondent on his ADEA claim and also found violations of the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 895, 510, 29 U.S.C. 1140, and state law. On the ADEA count, the jury specifically found that petitioners "willfully" violated the statute. Under 7(b) of the ADEA, 29 U.S.C. 626(b), a "willful" violation gives rise to liquidated damages. [507 U.S. 604, 607] Petitioners moved for judgment notwithstanding the verdict. The District Court granted the motion with respect to a state law claim and the finding of "willfulness," but otherwise denied it. An appeal ensued. 953 F.2d 1405 (CA1 1992). The United States Court of Appeals for the First Circuit affirmed judgment for respondent on both the ADEA and ERISA counts, and reversed judgment notwithstanding the verdict for petitioners as to "willfulness." In affirming the judgments of liability, the Court of Appeals relied heavily on the evidence that petitioners had fired respondent in order to prevent his pension benefits from vesting. That evidence, as construed most favorably to respondent by the court, showed that the Hazen Paper pension plan had a 10-year vesting period and that respondent would have reached the 10-year mark had he worked "a few more weeks" after being fired. Id., at 1411. There was also testimony that petitioners had offered to retain respondent as a consultant to Hazen Paper, in which capacity he would not have been entitled to receive pension benefits. Id., at 1412. The Court of Appeals found this evidence of pension interference to be sufficient for ERISA liability, id., at 1416, and also gave it considerable emphasis in upholding ADEA liability. After summarizing all the testimony tending to show age discrimination, the court stated: "Based on the foregoing evidence, the jury could reasonably have found that Thomas Hazen decided to fire [respondent] before his pension rights vested and used the confidentiality agreement [that petitioners had asked respondent to sign] as a means to that end. The jury could also have reasonably found that age was inextricably intertwined with the decision to fire [respondent]. If it were not for [respondent's] age, sixty-two, his pension rights would not have been within a hairbreadth of vesting. [Respondent] was fifty-two years old when he was hired; his pension rights vested in ten years." Id., at 1412. [507 U.S. 604, 608] As to the issue of "willfulness" under 7(b) of the ADEA, the Court of Appeals adopted and applied the definition set out in Trans World Airlines, Inc. v. Thurston, 469 U.S. 111 (1985). In Thurston, we held that the airline's facially discriminatory job transfer policy was not a "willful" ADEA violation because the airline neither "knew [nor] showed reckless disregard for the matter of whether" the policy contravened the statute. Id., at 128 (internal quotation marks omitted). T he Court of Appeals found sufficient evidence to satisfy the Thurston standard, and ordered that respondent be awarded liquidated damages equal to and in addition to the underlying damages of $419,454.38. 953 F.2d, at 1415-1416. We granted certiorari to decide two questions. 505 U.S. 1203 (1992). First, does an employer's interference with the vesting of pension benefits violate the ADEA? Second, does the Thurston standard for liquidated damages apply to the case where the predicate ADEA violation is not a formal, facially discriminatory policy, as in Thurston, but rather an informal decision by the employer that was motivated by the employee's age? II A The courts of appeals repeatedly have faced the question whether an employer violates the ADEA by acting on the basis of a factor, such as an employee's pension status or seniority, that is empirically correlated with age. Compare White v. Westinghouse Electric Co., 862 F.2d 56, 62 (CA3 1988) (firing of older employee to prevent vesting of pension benefits violates ADEA); Metz v. Transit Mix, Inc., 828 F.2d 1202 (CA7 1987) (firing of older employee to save salary costs resulting from seniority violates ADEA) with Williams v. General Motors Corp., 656 F.2d 120, 130 n. 17 (CA5 1981) ("[S]eniority and age discrimination are unrelated. . . . We state without equivocation that the seniority a given [507 U.S. 604, 609] plaintiff has accumulated entitles him to no better or worse treatment in an age discrimination suit."), cert. denied. 455 U.S. 943 (1982); EEOC v. Clay Printing Co., 955 F.2d 936, 942 (CA4 1992) (emphasizing distinction between employee's age and years of service). We now clarify that there is no disparate treatment under the ADEA when the factor motivating the employer is some feature other than the employee's age. We long have distinguished between "disparate treatment" and "disparate impact" theories of employment discrimination. "`Disparate treatment' . . . is the most easily understood type of discrimination. The employer simply treats some people less favorably than others because of their race, color, religion [or other protected characteristics.] Proof of discriminatory motive is critical, although it can in some situations be inferred from the mere fact of differences in treatment. . . . "[C]laims that stress "disparate impact" [by contrast] involve employment practices that are facially neutral in their treatment of different groups, but that in fact fall more harshly on one group than another and cannot be justified by business necessity. Proof of discriminatory motive . . . is not required under a disparate impact theory." Teamsters v. United States, 431 U.S. 324, 335 , n. 15 (1977) (citation omitted) (construing Title VII of Civil Rights Act of 1964). The disparate treatment theory is, of course, available under the ADEA, as the language of that statute makes clear. "It shall be unlawful for an employer . . . to fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's age." 29 U.S.C. 623(a)(1) (emphasis added). See Thurston, supra, at 120-125 (affirming ADEA [507 U.S. 604, 610] liability under disparate treatment theory). By contrast, we have never decided whether a disparate impact theory of liability is available under the ADEA, see Markham v. Geller, 451 U.S. 945 (1981) (REHNQUIST, J., dissenting from denial of certiorari), and we need not do so here. Respondent claims only that he received disparate treatment. In a disparate treatment case, liability depends on whether the protected trait (under the ADEA, age) actually motivated the employer's decision. See, e.g., United States Postal Service Bd. of Governors v. Aikens, 460 U.S. 711 (1983); Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248, 252 -256 (1981); Furnco Construction Corp. v. Waters, 438 U.S. 567, 576 -578 (1978). The employer may have relied upon a formal, facially discriminatory policy requiring adverse treatment of employees with that trait. See, e.g., Thurston, supra; Los Angeles Dept. of Water & Power v. Manhart, 435 U.S. 702, 704 -718 (1978). Or the employer may have been motivated by the protected trait on an ad hoc, informal basis. See, e.g., Anderson v. Bessemer City, 470 U.S. 564 (1985); Teamsters, supra, at 334-343. Whatever the employer's decisionmaking process, a disparate treatment claim cannot succeed unless the employee's protected trait actually played a role in that process and had a determinative influence on the outcome. Disparate treatment, thus defined, captures the essence of what Congress sought to prohibit in the ADEA. It is the very essence of age discrimination for an older employee to be fired because the employer believes that productivity and competence decline with old age. As we explained in EEOC v. Wyoming, 460 U.S. 226 (1983), Congress' promulgation of the ADEA was prompted by its concern that older workers were being deprived of employment on the basis of inaccurate and stigmatizing stereotypes. "Although age discrimination rarely was based on the sort of animus motivating some other forms of discrimination, it was based in large part on stereotypes unsupported [507 U.S. 604, 611] by objective fact. . . . Moreover, the available empirical evidence demonstrated that arbitrary age lines were, in fact, generally unfounded and that, as an overall matter, the performance of older workers was at least as good as that of younger workers." Id., at 231. Thus, the ADEA commands that "employers are to evaluate [older] employees . . . on their merits, and not their age." Western Air Lines, Inc. v. Criswell, 472 U.S. 400, 422 (1985). The employer cannot rely on age as a proxy for an employee's remaining characteristics, such as productivity, but must instead focus on those factors directly. When the employer's decision is wholly motivated by factors other than age, the problem of inaccurate and stigmatizing stereotypes disappears. This is true even if the motivating factor is correlated with age, as pension status typically is. Pension plans typically provide that an employee's accrued benefits will become nonforfeitable, or "vested," once the employee completes a certain number of years of service with the employer. See 1 J. Mamorsky, Employee Benefits Law 5.03 (1992). On average, an older employee has had more years in the workforce than a younger employee, and thus may well have accumulated more years of service with a particular employer. Yet an employee's age is analytically distinct from his years of service. An employee who is younger than 40, and therefore outside the class of older workers as defined by the ADEA, see 29 U.S.C. 631(a), may have worked for a particular employer his entire career, while an older worker may have been newly hired. Because age and years of service are analytically distinct, an employer can take account of one while ignoring the other, and thus it is incorrect to say that a decision based on years of service is necessarily "age-based." The instant case is illustrative. Under the Hazen Paper pension plan, as construed by the Court of Appeals, an employee's pension benefits vest after the employee completes 10 years of service with the company. Perhaps it is true [507 U.S. 604, 612] that older employees of Hazen Paper are more likely to be "close to vesting" than younger employees. Yet a decision by the company to fire an older employee solely because he has nine-plus years of service, and therefore is "close to vesting," would not constitute discriminatory treatment on the basis of age. The prohibited stereotype ("Older employees are likely to be ___") would not have figured in this decision, and the attendant stigma would not ensue. The decision would not be the result of an inaccurate and denigrating generalization about age, but would rather represent an accurate judgment about the employee - that he indeed is "close to vesting." We do not mean to suggest that an employer lawfully could fire an employee in order to prevent his pension benefits from vesting. Such conduct is actionable under 510 of ERISA, as the Court of Appeals rightly found in affirming judgment for respondent under that statute. See Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 142 -143 (1990). But it would not, without more, violate the ADEA. That law requires the employer to ignore an employee's age (absent a statutory exemption or defense); it does not specify further characteristics that an employer must also ignore. Although some language in our prior decisions might be read to mean that an employer violates the ADEA whenever its reason for firing an employee is improper in any respect, see McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802 (1973) (creating proof framework applicable to ADEA) (employer must have "legitimate, nondiscriminatory reason" for action against employee), this reading is obviously incorrect. For example, it cannot be true that an employer who fires an older black worker because the worker is black thereby violates the ADEA. The employee's race is an improper reason, but it is improper under Title VII, not the ADEA. We do not preclude the possibility that an employer who targets employees with a particular pension status on the assumption that these employees are likely to be older [507 U.S. 604, 613] thereby engages in age discrimination. Pension status may be a proxy for age, not in the sense that the ADEA makes the two factors equivalent, cf. Metz, 828 F.2d, at 1208 (using "proxy" to mean statutory equivalence), but in the sense that the employer may suppose a correlation between the two factors and act accordingly. Nor do we rule out the possibility of dual liability under ERISA and the ADEA where the decision to fire the employee was motivated both by the employee's age and by his pension status. Finally, we do not consider the special case where an employee is about to vest in pension benefits as a result of his age, rather than years of service, see 1 Mamorsky, supra, at 5.022., and the employer fires the employee in order to prevent vesting. That case is not presented here. Our holding is simply that an employer does not violate the ADEA just by interfering with an older employee's pension benefits that would have vested by virtue of the employee's years of service. Besides the evidence of pension interference, the Court of Appeals cited some additional evidentiary support for ADEA liability. Although there was no direct evidence of petitioners' motivation, except for two isolated comments by the Hazens, the Court of Appeals did note the following indirect evidence: respondent was asked to sign a confidentiality agreement, even though no other employee had been required to do so, and his replacement was a younger man who was given a less onerous agreement. 953 F.2d, at 1411. In the ordinary ADEA case, indirect evidence of this kind may well suffice to support liability if the plaintiff also shows that the employer's explanation for its decision - here, that respondent had been disloyal to Hazen Paper by doing business with its competitors - is "`unworthy of credence.'" Aikens, 460 U.S., at 716 (quoting Burdine, 450 U.S., at 256 ). But inferring age motivation from the implausibility of the employer's explanation may be problematic in cases where other unsavory motives, such as pension interference, were present. This issue is now before us in the Title VII context, [507 U.S. 604, 614] see Hicks v. St. Mary's Honor Center, 970 F.2d 487 (CA8 1992), cert. granted, 506 U.S. 1042 (1993), and we will not address it prematurely. We therefore remand the case for the Court of Appeals to reconsider whether the jury had sufficient evidence to find an ADEA violation. B Because we remand for further proceedings, we also address the second question upon which certiorari was granted: the meaning of "willful" in 7(b) of the ADEA, which provides for liquidated damages in the case of a "willful" violation. In Thurston, we thoroughly analyzed 7(b) and concluded that "a violation of the Act [would be] "willful" if the employer knew or showed reckless disregard for the matter of whether its conduct was prohibited by the ADEA" 469 U.S., at 126 (internal quotation marks and ellipsis omitted). We sifted through the legislative history of 7(b), which had derived from 16(a) of the Fair Labor Standards Act (FLSA), 52 Stat. 1069, as amended, 29 U.S.C. 216(a), and determined that the accepted judicial interpretation of 16(a) at the time of the passage of the ADEA supported the "knowledge or reckless disregard" standard. See 469 U.S., at 126 . We found that this standard was consistent with the meaning of "willful" in other criminal and civil statutes. See id., at 126-127. Finally, we observed that Congress aimed to create a "two-tiered liability scheme," under which some but not all ADEA violations would give rise to liquidated damages. We therefore rejected a broader definition of "willful" providing for liquidated damages whenever the employer knew that the ADEA was "in the picture." See id., at 127-128. In McLaughlin v. Richland Shoe Co., 486 U.S. 128 (1988), a FLSA case, we reaffirmed the Thurston standard. The question in Richland Shoe was whether the limitations provision [507 U.S. 604, 615] of the FLSA, creating a 3-year period for "willful" violations, should be interpreted consistently with Thurston. We answered that question in the affirmative. "The word `willful' is widely used in the law, and, although it has not by any means been given a perfectly consistent interpretation, it is generally understood to refer to conduct that is not merely negligent. The standard of willfulness that was adopted in Thurston - that the employer either knew or showed reckless disregard for the matter of whether its conduct was prohibited by the statute - is surely a fair reading of the plain language of the Act." 486 U.S., at 133 . Once again we rejected the "in the picture standard" because it would "virtually obliterat[e] any distinction between willful and nonwillful violations." Id., at 132-133. Surprisingly, the courts of appeals continue to be confused about the meaning of the term "willful" in 7(b) of the ADEA. A number of circuits have declined to apply Thurston to what might be called an informal disparate treatment case - where age has entered into the employment decision on an ad hoc, informal basis, rather than through a formal policy. At least one circuit refuses to impose liquidated damages in such a case unless the employer's conduct was "outrageous." See, e.g., Lockhart v. Westinghouse Credit Corp., 879 F.2d 43, 57-58 (CA3 1989). Another requires that the underlying evidence of liability be direct, rather than circumstantial. See, e.g., Neufeld v. Searle Laboratories, 884 F.2d 335, 340 (CA8 1989). Still others have insisted that age be the "predominant," rather than simply a determinative, factor. See, e.g., Spulak v. K Mart Corp., 894 F.2d 1150, 1159 (CA10 1990); Schrand v. Federal Pacific Elec. Co., 851 F.2d 152, 158 (CA6 1988). The chief concern of these circuits has been that the application of Thurston would defeat the two-tiered system of liability intended by Congress, because every employer that engages in informal age [507 U.S. 604, 616] discrimination knows or recklessly disregards the illegality of its conduct. We believe that this concern is misplaced. The ADEA does not provide for liquidated damages "where consistent with the principle of a two-tiered liability scheme." It provides for liquidated damages where the violation was "willful." That definition must be applied here unless we overrule Thurston, or unless there is some inherent difference between this case and Thurston to cause a shift in the meaning of the word "willful." As for the first possibility, petitioners have not persuaded us that Thurston was wrongly decided, let alone that we should depart from the rule of stare decisis. The two-tiered liability principle was simply one interpretive tool among several that we used in Thurston to decide what Congress meant by the word "willful," and in any event we continue to believe that the "knowledge or reckless disregard" standard will create two tiers of liability across the range of ADEA cases. It is not true that an employer who knowingly relies on age in reaching its decision invariably commits a knowing or reckless violation of the ADEA. The ADEA is not an unqualified prohibition on the use of age in employment decisions, but affords the employer a "bona fide occupational qualification" defense, see 29 U.S.C. 623(f)(1), and exempts certain subject matters and persons, see, e.g., 623(f)(2) (exemption for bona fide seniority systems and employee benefit plans); 631(c) (exemption for bona fide executives and high policymakers). If an employer incorrectly but in good faith and nonrecklessly believes that the statute permits a particular age-based decision, then liquidated damages should not be imposed. See Richland Shoe, supra, at 135, n. 13. Indeed, in Thurston itself, we upheld liability but reversed an award of liquidated damages because the employer "acted [nonrecklessly] and in good faith in attempting to determine whether [its] plan would violate the ADEA." 469 U.S., at 129 . [507 U.S. 604, 617] Nor do we see how the instant case can be distinguished from Thurston, assuming that petitioners did indeed fire respondent because of his age. The only distinction between Thurston and the case before us is the existence of formal discrimination. Age entered into the employment decision there through a formal and publicized policy, and not as an undisclosed factor motivating the employer on an ad hoc basis, which is what respondent alleges occurred here. But surely an employer's reluctance to acknowledge its reliance on the forbidden factor should not cut against imposing a penalty. It would be a wholly circular and self-defeating interpretation of the ADEA to hold that, in cases where an employer more likely knows its conduct to be illegal, knowledge alone does not suffice for liquidated damages. We therefore reaffirm that the Thurston definition of "willful" - that the employer either knew or showed reckless disregard for the matter of whether its conduct was prohibited by the statute - applies to all disparate treatment cases under the ADEA. Once a "willful" violation has been shown, the employee need not additionally demonstrate that the employer's conduct was outrageous, or provide direct evidence of the employer's motivation, or prove that age was the predominant, rather than a determinative, factor in the employment decision. The judgment of the Court of Appeals is vacated, and the case is remanded for further proceedings consistent with this opinion. So ordered. JUSTICE KENNEDY, with whom THE CHIEF JUSTICE and JUSTICE THOMAS join, concurring. I agree with the Court that the Court of Appeals placed improper reliance on respondent's evidence of pension interference, and that the standard for determining willfulness announced in Trans World Airlines, Inc. v. Thurston, 469 U.S. 111 (1985), applies to individual acts of age discrimination as [507 U.S. 604, 618] well as age discrimination manifested in formal, company-wide policy. I write to underscore that the only claim based upon the Age Discrimination in Employment Act (ADEA), 29 U.S.C. 621 et seq., asserted by respondent in this litigation is that petitioners discriminated against him because of his age. He has advanced no claim that petitioners' use of an employment practice that has a disproportionate effect on older workers violates the ADEA. See App. 2930 (amended complaint); 5 Record 71-76 (jury instructions). As a result, nothing in the Court's opinion should be read as incorporating in the ADEA context the so-called "disparate impact" theory of Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e to 2000e-17. As the Court acknowledges, ante, at 610, we have not yet addressed the question whether such a claim is cognizable under the ADEA, and there are substantial arguments that it is improper to carry over disparate impact analysis from Title VII to the ADEA. See Markham v. Geller, 451 U.S. 945 (1981) (REHNQUIST J., dissenting from denial of certiorari); Metz v. Transit Mix, Inc., 828 F.2d 1202, 1216-1220 (CA7 1987) (Easterbrook, J., dissenting); Note, Age Discrimination and the Disparate Impact Doctrine, 34 Stan.L.Rev. 837 (1982). It is on the understanding that the Court does not reach this issue that I join in its opinion. [507 U.S. 604, 619]

conservative

person

civil_rights

1970-135-01

United States Supreme Court SIMPSON v. FLORIDA(1971) No. 1267 Argued: Decided: June 14, 1971 A store manager and a customer were robbed by two armed men. Petitioner was tried and convicted of robbing the manager, but on retrial after reversal he was acquitted. He was then charged with robbing the customer, his motion to quash the information on double jeopardy grounds was overruled, and he was found guilty. Each jury verdict was a general one. The District Court of Appeal, after the decision in Ashe v. Swenson, 397 U.S. 436 , held as a matter of law that, while the acquittal at the second trial entitled petitioner to invoke collateral estoppel, his conviction at the first trial gave rise to a "double collateral estoppel," allowing the State to rely on the finding of the jury at the first trial that he was a participant in the robbery. The State Supreme Court denied review. Held: As stated in Ashe, supra, "mutuality" is not an ingredient of the collateral estoppel rule imposed on the States by the Fifth and Fourteenth Amendments; and unless the jury verdict in the second trial "could have [been] grounded . . . upon an issue other than that which the defendant seeks to foreclose from consideration" the double jeopardy provision vitiates petitioner's conviction. Certiorari granted; 237 So.2d 341. vacated and remanded. PER CURIAM. On November 9, 1966, two armed men entered a store in Jacksonville, Florida, and robbed the manager and a customer. During 1967 petitioner was tried and convicted in the state courts, after a jury trial, of the armed robbery of the manager, but the conviction was reversed on appeal because the trial judge neglected to instruct the jury on the lesser-included offense of larceny. Griffin v. State, 202 So.2d 602 (Fla. Dist. Ct. App. 1967). In 1968 petitioner was retried on the same charge and acquitted. Subsequently, he was charged with robbing the customer. His motion to quash the information on [403 U.S. 384, 385] double jeopardy grounds was overruled and a jury found petitioner guilty of armed robbery. Each of the three jury verdicts here involved was a general one. The trial court imposed a 30-year sentence and petitioner appealed to the District Court of Appeal. Prior to the adjudication of petitioner's appeal, this Court rendered its decision in Ashe v. Swenson, 397 U.S. 436 . We there held that the principle of collateral estoppel, which "bars relitigation between the same parties of issues actually determined at a previous trial," id., at 442, is "embodied in the Fifth Amendment guarantee against double jeopardy," id., at 445, and is fully applicable to the States, by force of the Fourteenth Amendment, in light of Benton v. Maryland, 395 U.S. 784 . The factual situation presented in Ashe remarkably parallels that of the instant case. There three or four men had interrupted a poker game and robbed all six participants. Petitioner had been acquitted by a general jury verdict on a charge of robbing one of the poker players, but was later tried and convicted of robbing a second. He contended that the prohibition against double jeopardy operated as a bar to the second prosecution because the only issue in each trial was the identity of the robbers. We held in Ashe that: "Where a previous judgment of acquittal was based upon a general verdict . . . [the rule of collateral estoppel] requires a court to `examine the record of a prior proceeding, taking into account the pleadings, evidence, charge, and other relevant matter, and conclude whether a rational jury could have grounded its verdict upon an issue other than that which the defendant seeks to foreclose from consideration.'" Ashe, supra, at 444. Here, as in Ashe, petitioner contends that his identity as one of the robbers was the sole disputed issue at each of his trials. The District Court of Appeal, however, [403 U.S. 384, 386] declined to examine the record of the second trial, but simply held instead, as a matter of law, that while petitioner's acquittal at the second trial entitled him to invoke collateral estoppel, his conviction at the first trial (where the sufficiency of the evidence was not disputed on appeal) gave rise to a "double collateral estoppel in that by application of this doctrine, appellant is estopped from contending without further proof that the State failed to prove the issue of his identity as one of the robbers on . . . the second trial inasmuch as on the first trial a jury had found above and beyond a reasonable doubt that appellant was a participant in the robbery." Simpson v. State, 237 So.2d 341, 342 (Fla. App. 1970). The Supreme Court of Florida, by a divided vote, declined review, and petitioner filed a timely petition for a writ of certiorari with this Court. We grant the writ and we vacate the judgment. The ground upon which the state court resolved petitioner's contention is plainly not tenable. Indeed, in Ashe itself, we specifically noted that "mutuality" was not an ingredient of the collateral estoppel rule imposed by the Fifth and Fourteenth Amendments upon the States. Ashe, supra, at 443. It is clear that Florida could not have retried petitioner a third time on the charge of robbing the store manager simply because it had previously secured a jury verdict of guilty as well as one of acquittal. And, had the second trial never occurred, the prosecutor could not, while trying the case under review, have laid the first jury verdict before the trial judge and demanded an instruction to the jury that, as a matter of law, petitioner was one of the armed robbers in the store that night. It must, therefore, be equally clear that unless the jury verdict in the second trial "could have [been] grounded . . . upon an issue other than that which the defendant seeks to foreclose [403 U.S. 384, 387] from consideration" the constitutional guarantee against being twice put in jeopardy for the same offense vitiates petitioner's conviction. The judgment of the Florida District Court of Appeal is vacated and the case is remanded to that court for further proceedings not inconsistent with this opinion. It is so ordered. MR. JUSTICE MARSHALL took no part in the decision of this case. MR. JUSTICE BRENNAN, with whom MR. JUSTICE DOUGLAS joins. The robbery of the manager and the robbery of the customer grew out of one criminal episode. I agree with the Court's disposition but, for the reasons stated in my concurring opinion in Ashe v. Swenson, 397 U.S. 436, 448 (1970), I would also hold that on the facts of this case the Double Jeopardy Clause prohibited Florida from prosecuting petitioner for the robbery of the customer. The CHIEF JUSTICE and MR. JUSTICE BLACKMUN dissent for the reasons given in the dissenting opinion of THE CHIEF JUSTICE in Ashe v. Swenson, 397 U.S. 436, 460 . [403 U.S. 384, 388]

liberal

public_entity

criminal_procedure

2005-029-01

United States Supreme Court MINISTRY OF DEFENSE AND SUPPORT FOR THE ARMED FORCES OF THE ISLAMIC REPUBLIC OF IRAN v. DARIUSH ELAHI(2006) No. 04-1095 Argued: Decided: February 21, 2006 Per Curiam. A private citizen seeks to attach an asset belonging to Iran's Ministry of Defense in order to help satisfy a judgment for money damages. The question raised is whether the Foreign Sovereign Immunities Act of 1976 (FSIA or Act), 28 U.S.C. §1602 et seq. (2000 ed. and Supp. III), forbids that attachment. The judgment for money damages consists of a default judgment against the Islamic Republic of Iran (for about $300 million) that the private citizen, Dariush Elahi, obtained in a federal-court lawsuit claiming that the Republic had murdered his brother. Elahi v. Islamic Republic of Iran, 124 F.Supp. 2d 97, 103 (DC 2000). The asset is an arbitration award (against a third party), which Iran's Ministry of Defense obtained in Switzerland. Ministry of Defense and Support for Armed Forces of Islamic Republic of Iran v. Cubic Defense Systems, Inc., 385 F.3d 1206, 1211 (CA9 2004). The Ministry asked the Federal District Court for the Southern District of California to confirm the award. Ministry of Defense and Support for Armed Forces of Islamic Republic of Iran v. Cubic Defense Systems, Inc., 236 F.Supp. 2d 1140 (2002). The court did so. And Elahi then intervened, seeking to impose a lien upon the award. The Ministry opposed the attachment on the ground that the Act grants it immunity from such a claim. The Federal District Court rejected the Ministry's immunity defense on the ground that, by suing to enforce the award, the Ministry had waived any such immunity. On appeal the Ninth Circuit disagreed with the District Court about waiver. But it then found against the Ministry on a different ground--a ground that the parties had not argued. The Act says that under certain conditions the property of an "agency or instrumentality" of a foreign government is "not ... immune from attachment" if the agency is "engaged in commercial activity in the United States." 28 U.S.C. §1610(b) (emphasis added). The Court of Appeals found that the Ministry engages in commercial activity and that the other conditions were satisfied. 385 F.3d, at 1219-1222 (applying §1610(b)(2)). And it held that this section of the Act barred the Ministry's assertion of immunity. Ibid. The Ministry filed a petition for certiorari asking us to review that decision. The Solicitor General agrees with the Ministry that we should grant the writ but limited to the Ministry's Question 1, namely whether "the property of a foreign state stricto sensu, situated in the United States" is "immune from attachment ... as provided in the Foreign Sovereign Immunities Act." Pet. for Cert. i (citing §§1603(a), 1610(a)). The Solicitor General also asks us to vacate the judgment of the Court of Appeals and remand the case for consideration of whether the Ministry is simply a "foreign state" (what the Ministry calls "a foreign state stricto sensu") or whether the Ministry is an "agency or instrumentality" of a foreign state (as the Ninth Circuit held). Brief for United States as Amicus Curiae 15-17. We grant the writ limited to Question 1. The Act, as it applies to the "property in the United States of a foreign state," §1610(a) (emphasis added), does not contain the "engaged in commercial activity" exception that the Ninth Circuit described. That exception applies only where the property at issue is property of an "agency or instrumentality" of a foreign state. Compare §1610(b) ("property ... of an agency or instrumentality of a foreign state engaged in commercial activity") with §1610(a) ("property ... of a foreign state used for a commercial activity") (emphasis added). The difference is critical. Moreover, in the Solicitor General's view a defense ministry (unlike, say, a government-owned commercial enterprise) generally is not an "agency or instrumentality" of a foreign state but an inseparable part of the state itself. Brief for United States as Amicus Curiae 8-11; see also Transaero, Inc. v. La Fuerza Aerea Boliviana, 30 F.3d 148, 153 (CADC 1994) ("hold[ing] that armed forces are as a rule so closely bound up with the structure of the state that they must in all cases be considered as the 'foreign state' itself, rather than a separate 'agency or instrumentality' of the state"). We shall not now determine whether the Solicitor General is correct about the status of the Ministry, for the Ninth Circuit did not address the question nor did the parties argue the matter before the Circuit. Neither can we fault the Ministry for that failure. As we said, supra, at 1, the District Court based its denial of immunity upon waiver. The parties' Ninth Circuit briefs focused on matters not relevant here (such as the waiver question), with one exception. The exception consists of a footnote in Elahi's brief mentioning the Act's "agency and instrumentality" provision. That footnote, however, does not ask for affirmance on that basis; nor did it provide the Ministry with clear notice that a reply was necessary. Answering Brief of Appellee in No. 03-55015 (CA9), p. 45, n. 27 (stating that "[i]f [the Ministry] is considered 'an agency or instrumentality of a foreign state,' rather than the foreign state itself, Mr. Elahi's attachment still is valid" (emphasis added)). The Ninth Circuit said that it was free to affirm on "any ground supported by the record." 385 F.3d, at 1219, n. 15. But the court did not explain what in the record might demonstrate that the Ministry is an "agency or instrumentality" of the state rather than an integral part of the state itself. The court noted that "Elahi appears to concede" that the Ministry is an "agency and instrumentality," id., at 1218, n.13, but any relevant concession would have to have come from the Ministry, not from Elahi, whose position the concession favors. Thus, in implicitly concluding that the Ministry was an "agency or instrumentality" of the Republic of Iran within the meaning of §1610(b), the Ninth Circuit either mistakenly relied on a concession by respondent that could not possibly bind petitioner, or else erroneously presumed that there was no relevant distinction between a foreign state and its agencies or instrumentalities for purposes of that subsection. See §1603(a), (b). Either way, the Ninth Circuit committed error that was essential to its judgment in favor of respondent. Because the Ninth Circuit did not consider, and the Ministry had no reasonable opportunity to argue, the critical legal point we have mentioned, we vacate the judgment of the Ninth Circuit, and remand the case for further proceedings consistent with this opinion. It is so ordered.

liberal

other

economic_activity

1967-170-01

United States Supreme Court JONES v. UNITED STATES(1968) No. 135 Argued: Decided: June 10, 1968 Rehearing granted; certiorari granted; 374 F.2d 414, vacated and remanded. Herbert Monte Levy for petitioner. Solicitor General Marshall, Assistant Attorney General Vinson, and Philip R. Monahan for the United States. PER CURIAM. The petition for rehearing is granted and the order denying the petition for writ of certiorari, 389 U.S. 835 , is set aside. The petition for a writ of certiorari is granted. The judgment of the Court of Appeals for the Second Circuit is vacated and the case is remanded to that court for further consideration in light of Bruton v. United States, 391 U.S. 123 . See Roberts v. Russell, ante, p. 293. MR. JUSTICE HARLAN and MR. JUSTICE WHITE dissent for the reasons stated in MR. JUSTICE WHITE'S dissenting opinion in Bruton v. United States, 391 U.S. 123, 138 (1968). MR. JUSTICE MARSHALL took no part in the consideration or decision of this case. [392 U.S. 299, 300]

liberal

public_entity

criminal_procedure

1976-136-01

United States Supreme Court NATIONAL SOCIALIST PARTY v. SKOKIE(1977) No. 76-1786 Argued: Decided: June 14, 1977 The Illinois Supreme Court denied a stay of the trial court's injunction prohibiting petitioners from marching, walking, or parading in the uniform of the National Socialist Party of America or otherwise displaying the swastika, and from distributing pamphlets or displaying materials inciting or promoting hatred against Jews or persons of any faith, ancestry, or race, and also denied leave for an expedited appeal. Held: 1. The Illinois Supreme Court's order is a final judgment for purposes of this Court's jurisdiction, since it finally determined the merits of petitioners' claim that the injunction will deprive them of First Amendment rights during the period of appellate review. 2. The State must allow a stay where procedural safeguards, including immediate appellate review, are not provided, and the Illinois Supreme Court's order denied this right. Certiorari granted; reversed and remanded. PER CURIAM. On April 29, 1977, the Circuit Court of Cook County entered an injunction against petitioners. The injunction prohibited them from performing any of the following actions within the village of Skokie, Ill.: "[m]arching, walking or parading in the uniform of the National Socialist Party of America; [m]arching, walking or parading or otherwise displaying the swastika on or off their person; [d]istributing pamphlets or displaying any materials which incite or promote hatred against persons of Jewish faith or ancestry or hatred against persons of any faith or ancestry, race or religion." The Illinois Appellate Court denied an application for stay pending appeal. Applicants then filed a petition for a stay in the Illinois Supreme Court, together with a request for [432 U.S. 43, 44] a direct expedited appeal to that court. The Illinois Supreme Court denied both the stay and leave for an expedited appeal. Applicants then filed an application for a stay with MR. JUSTICE STEVENS, as Circuit Justice, who referred the matter to the Court. Treating the application as a petition for certiorari from the order of the Illinois Supreme Court, we grant certiorari and reverse the Illinois Supreme Court's denial of a stay. That order is a final judgment for purposes of our jurisdiction, since it involved a right "separable from, and collateral to" the merits, Cohen v. Beneficial Loan Corp., 337 U.S. 541, 546 (1949). See Abney v. United States, 431 U.S. 651 (1977); cf. Cox Broadcasting Corp. v. Cohn, 420 U.S. 469, 476 -487 (1975). It finally determined the merits of petitioners' claim that the outstanding injunction will deprive them of rights protected by the First Amendment during the period of appellate review which, in the normal course, may take a year or more to complete. If a State seeks to impose a restraint of this kind, it must provide strict procedural safeguards, Freedman v. Maryland, 380 U.S. 51 (1965), including immediate appellate review, see Nebraska Press Assn. v. Stuart, 423 U.S. 1319, 1327 (1975) (BLACKMUN, J., in chambers). Absent such review, the State must instead allow a stay. The order of the Illinois Supreme Court constituted a denial of that right. Reversed and remanded for further proceedings not inconsistent with this opinion. So ordered. MR. JUSTICE WHITE would deny the stay. MR. JUSTICE REHNQUIST, with whom THE CHIEF JUSTICE and MR. JUSTICE STEWART join, dissenting. The Court treats an application filed here to stay a judgment of the Circuit Court of Cook County as a petition for certiorari to review the refusal of the Supreme Court of [432 U.S. 43, 45] Illinois to stay the injunction. It summarily reverses this refusal of a stay. I simply do not see how the refusal of the Supreme Court of Illinois to stay an injunction granted by an inferior court within the state system can be described as a "[f]inal judgmen[t] or decre[e] rendered by the highest court of a State in which a decision could be had," which is the limitation that Congress has imposed on our jurisdiction to review state-court judgments under 28 U.S.C. 1257. Cox Broadcasting Corp. v. Cohn, 420 U.S. 469, 476 -487 (1975), relied upon by the Court, which surely took as liberal a view of this jurisdictional grant as can reasonably be taken, does not support the result reached by the Court here. In Cox there had been a final decision on the federal claim by the Supreme Court of Georgia, which was the highest court of that State in which such a decision could be had. Here all the Supreme Court of Illinois has done is, in the exercise of the discretion possessed by every appellate court, to deny a stay of a lower court ruling pending appeal. No Illinois appellate court has heard or decided the merits of applicants' federal claim. I do not disagree with the Court that the provisions of the injunction issued by the Circuit Court of Cook County are extremely broad, and I would expect that if the Illinois appellate courts follow cases such as Freedman v. Maryland, 380 U.S. 51 (1965), and Nebraska Press Assn. v. Stuart, 423 U.S. 1319 (1975), relied upon by the Court, the injunction will be at least substantially modified by them. But I do not believe that in the long run respect for the Constitution or for the law is encouraged by actions of this Court which disregard the limitations placed on us by Congress in order to assure that an erroneous injunction issued by a state trial court does not wrongly interfere with the constitutional rights of those enjoined. [432 U.S. 43, 46]

liberal

public_entity

first_amendment

1952-008-01

United States Supreme Court UNITED STATES v. BEACON BRASS CO.(1952) No. 30 Argued: October 23, 1952Decided: November 10, 1952 A willful attempt to evade or defeat taxes by making false statements to Treasury representatives violates 145 (b) of the Internal Revenue Code, 26 U.S.C. 145 (b), and is not punishable exclusively under 35 (A) of the Criminal Code, 18 U.S.C. 1001, which outlaws the willful making of false statements "in any matter" within the jurisdiction of any department or agency of the United States. Pp. 43-47. 106 F. Supp. 510, reversed. The District Court dismissed an indictment under 145 (b) of the Internal Revenue Code, 26 U.S.C. 145 (b), on the ground that it failed to charge an offense thereunder. 106 F. Supp. 510. On direct appeal to this Court under 18 U.S.C. 3731, reversed, p. 47. Marvin E. Frankel argued the cause for the United States. With him on the brief were Acting Solicitor General Stern, Acting Assistant Attorney General Lyon, Ellis N. Slack and Melva M. Graney. Philip B. Perlman, then Solicitor General, was on the Statement as to Jurisdiction. Richard Maguire argued the cause and filed a brief for appellees. MR. JUSTICE MINTON delivered the opinion of the Court. On March 16, 1951, a one-count indictment was returned in the United States District Court for the District of Massachusetts against the appellees, Beacon Brass Company, a corporation, and Maurice Feinberg, its [344 U.S. 43, 44] president and treasurer. The indictment charged that in violation of 145 (b) of the Internal Revenue Code, 40 Stat. 1085, as amended, 26 U.S.C. 145 (b), the appellees had willfully attempted to evade taxes by making false statements to Treasury representatives on October 24, 1945, "for the purpose of supporting, ratifying, confirming and concealing the fraudulent and incorrect statements and representations made in the corporate tax return of said Beacon Brass Co., Inc., for the fiscal period ending October 31, 1944, filed on or about January 5, 1945 . . . ." Section 145 (b) provides in pertinent part: "[A]ny person who willfully attempts in any manner to evade or defeat any tax imposed by this chapter or the payment thereof, shall, in addition to other penalties provided by law, be guilty of a felony . . . ." (Emphasis supplied.) The six-year limitation period, 43 Stat. 341, 342, as amended, 26 U.S.C. 3748 (a) (2), applicable to offenses under this statute, had expired on a charge for filing a false tax return in January 1945, but it had not expired on a charge of making false statements to Treasury employees in October 1945. The District Court viewed the indictment as charging the separate crimes of filing a false return and making subsequent false statements to Treasury representatives, and dismissed the indictment as duplicitous. On September 14, 1951, a second indictment was returned against the appellees which repeated the charge that in violation of 145 (b) they "did wilfully and knowingly attempt to defeat and evade a large part of the taxes due and owing by the said corporation . . . by making certain false and fraudulent statements and representations, at a hearing and conference before representatives and employees of the United States Treasury [344 U.S. 43, 45] Department, on or about October 24, 1945 . . . ." Reference to the allegedly false return filed in January 1945 was omitted, and instead it was charged that the false statements were made "for the purpose of concealing additional unreported net income . . . ." Section 35 (A) of the Criminal Code, 18 U.S.C. (1946 ed.) 80 (now 18 U.S.C. (Supp. V) 1001) makes it unlawful to "knowingly and willfully . . . make . . . any false or fraudulent statements or representations . . . in any matter within the jurisdiction of any department or agency of the United States . . . ." Obviously, at the times of the indictments here, the three-year limitation period, 18 U.S.C. (Supp. V) 3282, for violations of this statute had expired as to statements made in October 1945. The District Court concluded that since 35 (A) deals specifically with false statements, Congress must be presumed to have intended that the making of false statements should be punishable only under 35 (A). Therefore, the District Court dismissed the indictment on the ground that it failed to charge an offense under 26 U.S.C. 145 (b). 106 F. Supp. 510. We noted probable jurisdiction of the United States' appeal taken under authority of 18 U.S.C. (Supp. V) 3731. We have before us two statutes, each of which proscribes conduct not covered by the other, but which overlap in a narrow area illustrated by the instant case. At least where different proof is required for each offense, a single act or transaction may violate more than one criminal statute. United States v. Noveck, 273 U.S. 202, 206 ; Gavieres v. United States, 220 U.S. 338 . Unlike 35 (A), 145 (b) requires proof that the false statements were made in a willful effort to evade taxes. The purpose to evade taxes is crucial under this section. The language of 145 (b) which outlaws willful attempts to evade taxes "in any manner" is clearly broad enough to include false statements made to Treasury representatives [344 U.S. 43, 46] for the purpose of concealing unreported income. Cf. Spies v. United States, 317 U.S. 492, 499 . The question raised by the decision below is whether by enacting a statute specifically outlawing all false statements in matters under the jurisdiction of agencies of the United States, Congress intended thereby to exclude the making of false statements from the scope of 145 (b). We do not believe that Congress intended to require the tax-enforcement authorities to deal differently with false statements than with other methods of tax evasion. By providing that the sanctions of 145 (b) should be "in addition to other penalties provided by law," Congress recognized that some methods of attempting to evade taxes would violate other statutes as well. See Taylor v. United States, 179 F.2d 640, 644. Moreover, since no distinction is made in 35 (A) between written and oral statements, the reasoning of the court below would be equally applicable to false tax returns which are, of course, false written statements. But the Courts of Appeals have uniformly applied 145 (b) to attempts to evade taxes by filing false returns. E. g., Gaunt v. United States, 184 F.2d 284, 288; Taylor v. United States, supra, at 643-644. Further support for our conclusion can be found in United States v. Noveck, supra, where this Court rejected the contention that the enactment of 145 (b) impliedly repealed the general perjury statute insofar as that statute applied to false tax returns made under oath. Cf. United States v. Gilliland, 312 U.S. 86, 93 , 95-96. Finally, the enactment of other statutes expressly outlawing false statements in particular contexts, e. g., 18 U.S.C. (Supp. V) 1010, 1014, negates the assumption - which was the foundation of the decision of the court below - that Congress intended the making of false statements to be punishable only under 35 (A). The appellees contend that the acts charged constitute only one crime of tax evasion which was complete when [344 U.S. 43, 47] the allegedly false tax return was filed. On the basis of this contention, appellees seek to sustain the decision below on the grounds that the six-year statute of limitations had run, and that the dismissal of the first indictment is res judicata and a bar to the second indictment for the same offense. We do not consider these questions because our jurisdiction on this appeal is limited to review of the District Court's construction of the statute in the light of the facts alleged in the indictment. 18 U.S.C. (Supp. V) 3731; United States v. Borden Co., 308 U.S. 188, 206 -207. The judgment of the District Court is reversed, and the cause is remanded for further proceedings not inconsistent with this opinion. Reversed. MR. JUSTICE BLACK is of the opinion that the District Court reached the right result and would affirm its judgment. [344 U.S. 43, 48]

conservative

person

criminal_procedure

2008-040-03

"United States Supreme Court\nENTERGY CORP. v. RIVERKEEPER, INC., ET AL.(2009)\nNo. 07-588\nArgued: (...TRUNCATED)

conservative

organization

economic_activity

1957-048-01

"United States Supreme Court\nLABOR BOARD v. MINE WORKERS(1958)\nNo. 64\nArgued: January 6, 1958Deci(...TRUNCATED)

liberal

organization

unions