Gordy v. Prince

Urner, J., delivered the opinion of the Court. The appellee is Assistant Regional Manager of the ⁵²⁰ Home Owners’ Loan Corporation, for Pennsylvania, Delaware, Maryland, Virginia and the District of Columbia. The office of the corporation for that region is located in Baltimore, and the appellee Is a resident of Maryland. A state income tax levy upon his official salary of $5,366.56 is contested by the appellee upon the ground that the federal character of his employment exempts him from such a charge.

Upon his appeal to the State Tax Commission, the action of the State Comptroller in making the levy was affirmed. But the ruling of the Commission was reversed when the case was further appealed to the Baltimore City Court. The Comptroller’s appeal from its order has brought the case to this court for its consideration and decision. In the case of Pittman v. Home Owners’ Loan Corporation, Ante, p. 512, 2 A. 2nd 689, at the present term, we affirmed an adjudication by the Baltimore City Court that the Home Owners’ Loan Corporation was immune, as an agency of the federal government, from liability to pay a tax, in addition to the legal service fee, upon the recordation of mortgages securing its loans.

That conclusion was, in our judgment, required by the decision of the United States Supreme Court in the case of Federal Land Bank v. Crosland, 261 U. S. 374 , 43 S. Ct. 385 , 67 L. Ed. 703 . The present case also has an authoritative precedent in the decision rendered by the Supreme Court in New York ex rel. Rogers v. Graves, 299 U. S. 401 , 57 S. Ct. 269 , 81 L. Ed. 306 . In that case the salary of the general counsel of the Panama Railroad Company, operated by the Federal Government, was held to be exempt from the New York state income tax.

The railroad company was a New York corporation originally owned by private interests, but all of its stock was acquired by the Government of the United States, and its subsequent use of the railroad was auxiliary to the construction and operation of the Panama Canal. Having determined that the railroad company was a governmental agency, the Supreme Court, in an opinion by Mr. Justice Sutherland, disposed as follows of the ques ⁵²¹ tion as to the liability to a state income tax of the general counsel’s salary: “The power of the federal government to use a corporation as a means to carry into effect the substantive powers granted by the Constitution has never been doubted since McCulloch v. Maryland, 4 Wheat. 316 , 4 L. Ed. 579 . The Panama Railroad Company was acquired and has been utilized in virtue of that power. The railroad company being immune from state taxation, it necessarily