Appellee American National Red Cross, claiming immunity as a
"federal instrumentality" from the Colorado unemployment
compensation tax, together with the United States, brought this
suit in a three-judge federal District Court to enjoin enforcement
as to it of the tax statute, and for a refund. From that court's
ruling in favor of appellees, this direct appeal was taken.
Held:
1. The three-judge court had jurisdiction to enjoin a state tax
upon an organization claiming immunity as a federal
instrumentality.
Query v. United States, 316 U.
S. 486, followed. P.
385 U. S.
357.
2. The Tax Injunction Act (28 U.S.C. § 1341), prohibiting
district courts from enjoining the collection of state taxes where
a "plain, speedy and efficient" state court remedy is available,
does not restrict a suit by the United States to enjoin the
unconstitutional imposition of state taxes; nor does the Eleventh
Amendment bar the action. Pp.
385 U. S.
357-358.
3. The Red Cross is clearly an instrumentality of the United
States for purposes of immunity from state taxation on its
operations, and Congress has not waived its immunity.
Affirmed.
Page 385 U. S. 356
MR. JUSTICE FORTAS delivered the opinion of the Court.
Colorado is one of three States [
Footnote 1] whose Employment Security Act imposes an
unemployment compensation tax upon charitable institutions, the tax
being measured by the amount of wages paid to the institution's
employees. Colo.Rev.Stat.Ann. § 82-6-1. When the State's
Department of Employment sought to enforce the tax upon wages paid
Colorado-based employees of the American National Red Cross
(hereinafter referred to as Red Cross), the Red Cross objected
that, as a "federal instrumentality," it was immune from such
taxation.
See McCulloch v.
Maryland, 4 Wheat. 316 (1819). Tax payments
aggregating more than $10,000 were made under protest, applications
for refund accompanying each payment. The Department of Employment
denied each such application. Thereupon, the Red Cross, along with
the United States as co-plaintiff, invoked the jurisdiction of a
three-judge federal District Court to enjoin enforcement against it
of the Colorado Employment Security Act on the ground that, as
applied to it, a federal instrumentality, the statute violated the
Federal Constitution.
See 28 U.S.C. § 2281. [
Footnote 2] The Department of
Employment responded that the Red Cross was not a federal
instrumentality, that any immunity it might have had been waived by
Congress in the 1960 amendments to the Federal Unemployment Tax
Page 385 U. S. 357
Act (26 U.S.C. § 3301
et seq.), and that, in any
event, the Red Cross had failed to exhaust available administrative
and state judicial remedies. The three-judge federal District
Court,
American National Red Cross v. Department of
Employment, 263 F. Supp. 581, ruled in favor of the Red Cross
and the United States on each of these issues, ordered a refund of
taxes already paid, and enjoined enforcement of the tax statute
against the Red Cross. Pursuant to 28 U.S.C. § 1253, [
Footnote 3] the Department of
Employment and its executive director sought direct review here. In
setting the case for argument, we postponed consideration of
questions pertaining to our jurisdiction and that of the
three-judge court. 384 U.S. 949 (1966).
We are persuaded that there exist no jurisdictional barriers to
our disposition of this appeal on the merits. Any challenge to the
applicability of the three-judge court provision, 28 U.S.C. §
2281, is foreclosed by this Court's decision in
Query v. United
States, 316 U. S. 486
(1942), where the Court held that three judges were required to
entertain a suit to enjoin a state tax statute sought to be
enforced against an Army Post Exchange which asserted its immunity
as a federal instrumentality, [
Footnote 4] and we do not consider that our later decision
in
Swift & Co. v. Wickham, 382 U.
S. 111 (1965), requires a different conclusion. Nor is
there compelling force in the argument, advanced by appellants,
that the Tax Injunction
Page 385 U. S. 358
Act (28 U.S.C. § 1341) [
Footnote 5] requires appellees first to exhaust their
state remedies, which are alleged by appellants to be "plain,
speedy and efficient." We need not decide whether omission to
provide interest on a successful refund application renders the
state remedy here an inadequate one within the meaning of §
1341. For we conclude, in accord with an unbroken line of
authority, [
Footnote 6] and
convincing evidence of legislative purpose, [
Footnote 7] that § 1341 does not act as a
restriction upon suits by the United States to protect itself and
its instrumentalities from unconstitutional state exactions. With
respect to appellants' contention that the State of Colorado has
not consented to suit in a federal forum even where the plaintiff
is the United States,
see Principality Monaco v.
Mississippi, 292 U. S. 313
(1934), and
Ex parte Young, 209 U.
S. 123 (1908).
On the merits, we hold that the Red Cross is an instrumentality
of the United States for purposes of immunity from state taxation
levied on its operations, and that this immunity has not been
waived by congressional enactment. Although there is no simple test
for ascertaining whether an institution is so closely related
to
Page 385 U. S. 359
governmental activity as to become a tax-immune instrumentality,
the Red Cross is clearly such an instrumentality.
See
generally Sturges, The Legal Status of the Red Cross, 56
Mich.L.Rev. 1 (1957). Congress chartered the present Red Cross in
1905, subjecting it to governmental supervision and to a regular
financial audit by the Defense, then War, Department. 33 Stat. 599,
as amended, 36 U.S.C. § 1
et seq. Its principal
officer is appointed by the President, who also appoints seven (all
government officers) of the remaining 49 Governors. 33 Stat. 601,
as amended, 36 U.S.C. § 5. By statute and Executive Order,
there devolved upon the Red Cross the right and the obligation to
meet this Nation's commitments under various Geneva Conventions,
[
Footnote 8] to perform a wide
variety of functions indispensable to the workings of our Armed
Forces around the globe, [
Footnote
9] and to assist the Federal Government in providing disaster
assistance to the States in time of need. [
Footnote 10] Although its operations are
financed primarily from voluntary private contributions, the Red
Cross does receive substantial material assistance from the Federal
Government. [
Footnote 11]
And time and time again, both the President and the Congress have
recognized and acted in reliance upon the Red Cross' status
virtually as an arm of the
Page 385 U. S. 360
Government. [
Footnote 12]
In those respects in which the Red Cross differs from the usual
government agency --
e.g., in that its employees are not
employees of the United States, and that government officials do
not direct its everyday affairs -- the Red Cross is like other
institutions --
e.g., national banks -- whose status as
tax-immune instrumentalities of the United States is beyond
dispute.
Nor did Congress, in the course of amending the federal
unemployment compensation tax statute in 1960, strip away any of
this immunity. Certainly there was no intent to do so. Indeed, in
debate on the floor of the House, Chairman Mills and Congressman
Ikard of the Ways and Means Committee expressed their view, which
was not controverted, that the Red Cross' immunity from state and
federal unemployment compensation taxes would survive the
amendments. 106 Cong.Rec. 13827 (1960). And the House Committee
Report stated that no nongovernment-owned instrumentality which
enjoyed immunity from the federal tax prior to 1960 -- the Red
Cross had such an exemption -- was to lose its state tax immunity.
H.R.Rep.No.1799, 86th Cong., 2d Sess., pp. 55-56, 128 (1960).
Finally, the present statutory scheme does not deprive the Red
Cross of immunity. That the Red Cross enjoyed immunity prior to the
1960 amendments seems clear, and was at the time conceded by the
State of Colorado. [
Footnote
13] Under the preexisting scheme, § 3305(b) of Title
26
Page 385 U. S. 361
exempted from state taxation any federal instrumentality exempt
from the federal unemployment compensation tax imposed by §
3301. The Red Cross was so exempt as the result of §§
3306(c)(6)(B) and 3306(c)(8), which referred to "service performed
in the employ of [a charitable organization]." As amended in 1960,
§ 3305(b) continues the state tax immunity for any
"instrumentality to which section 3306(c)(6) applies." And the
latter section as amended includes employment
"exempt from the tax imposed by section 3301 by virtue of any
provision of law which specifically refers to such section . . . in
granting such exemption."
26 U.S.C. § 3306(c)(6)(B). Although § 3306(c)(8),
which exempts from the federal tax "service performed in the employ
of a [charitable institution]," does not contain an explicit
citation to § 3301, its sole function is to exempt certain
employment from the reach of that section. We hold that federal
instrumentalities like the Red Cross, exempted from the federal tax
by virtue of § 3306(c)(8), are likewise exempt from state
taxation under § 3306(c)(6)(B).
Accordingly, the judgment appealed from is
Affirmed.
[
Footnote 1]
The other States are Alaska and Hawaii.
See Alaska
Stat. § 23.20.525(c) (7) (1962); Hawaii Rev.Laws §
93-7(i) (Supp.1963).
[
Footnote 2]
The statute provides that
"An interlocutory or permanent injunction restraining the
enforcement, operation or execution of any State statute by
restraining the action of any officer of such State . . . shall not
be granted by any district court or judge thereof upon the ground
of the unconstitutionality of such statute unless the application
therefor is heard and determined by a district court of three
judges under section 2284 of this title."
[
Footnote 3]
Section 1253 authorizes direct appeal to this Court from an
order granting an injunction in any proceeding "required by any Act
of Congress to be heard and determined by a district court of three
judges."
[
Footnote 4]
See also United States v. Georgia Pub. Serv. Comm'n,
371 U. S. 285,
371 U. S. 287
(1963);
Paul v. United States, 371 U.
S. 245,
371 U. S.
249-250 (1963).
Compare Currie, The Three-Judge
District Court in Constitutional Litigation, 32 U.Chi.L.Rev. 1,
37-50 (1964),
with Note, The Three-Judge District Court:
Scope and procedure Under Section 2281, 77 Harv.L.Rev. 299, 312-313
(1963).
[
Footnote 5]
Section 1341 provides that
"The district courts shall not enjoin, suspend or restrain the
assessment, levy or collection of any tax under State law where a
plain, speedy and efficient remedy may be had in the courts of such
State."
[
Footnote 6]
United States v. Arlington County, Commonwealth of
Virginia, 326 F.2d 929, 931 (C.A.4th Cir. 1964);
United
States v. Bureau of Revenue of State of N.M., 291 F.2d 677,
679 (C.A.10th Cir. 1961);
United States v. Woodworth, 170
F.2d 1019 (C.A.2d Cir. 1948);
City of Springfield v. United
States, 99 F.2d 860, 862 (C.A.1st Cir. 1938),
cert.
denied, 306 U.S. 650, (1939);
United States v.
Livingston, 179 F. Supp.
9, 11-12 (D.C.E.D.S.C.1959),
aff'd, 364 U.
S. 281 (1960).
[
Footnote 7]
See S.Rep. No. 1035, 75th Cong., 1st Sess., pp. 2-3
(1937); H.R.Rep. No. 1503, 75th Cong., 1st Sess., p. 2-3 (1937); 81
Cong.Rec. 1416-1417 (1937).
[
Footnote 8]
E.g., Geneva Convention of August 22, 1864, for the
Amelioration of the Wounded in Armies in the Field, 22 Stat. 940
(1882); Geneva Convention of July 27, 1929, For the Amelioration of
the Condition of the Wounded and the Sick of Armies in the Field,
47 Stat. 2074 (1932); Geneva Convention of August 12, 1949, For the
Multilateral Protection of War Victims, 6 U.S.T. & O.I.A. 3114,
T.I.A.S. No. 3362.
[
Footnote 9]
See, e.g., 10 U.S.C. § 2602; 33 Stat. 600, as
amended, 36 U.S.C. § 3.
[
Footnote 10]
See 33 Stat. 600, as amended, 36 U.S.C. § 3; 64
Stat. 1109, 42 U.S.C. §§ 1855-1855g.
[
Footnote 11]
See e.g., 46 Stat. 66, as amended, 36 U.S.C. § 13
(permanent headquarters building).
[
Footnote 12]
See, e.g., Proclamation of President Taft, August 22,
1911, 37 Stat. 1716; 64 Stat. 1109, 42 U.S.C. §§
1855a(f), 1855b, 1855c; H.Cong.Res. 232, 70 Stat. B32 (1956);
H.R.Rep. No. 1728, 82d Cong., 2d Sess., p. 2 (1952).
[
Footnote 13]
Such was the opinion of Assistant Attorney General McKevitt, who
so informed appellant Department of Employment.
See letter
of the Assistant Attorney General to appellee Red Cross, dated
November 21, 1960, exhibit 2, in support of appellees' motion for
summary judgment below.