BRUSH V. COMMISSIONER, 300 U. S. 352 (1937)

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U.S. Supreme Court

Brush v. Commissioner, 300 U.S. 352 (1937)

Brush v. Commissioner of Internal Revenue

No. 451

Argued February 4, 1937

Decided March 15, 1937

300 U.S. 352


1. The water system of the City of New York was created and is conducted in the exercise of the City's governmental functions, and the salary of the Chief Engineer of the City's Bureau of Water Supply is immune from federal taxation. Pp. 300 U. S. 360, 300 U. S. 366.

The Chief Engineer holds his office by statutory authority with a fixed annual salary. He exercises supervision over the engineering details connected with the supplying of water for public purposes and for consumption by the inhabitants of the City; supervises the protection of the water supply from pollution, and generally exercises control over the operation of the water system, its personnel, expenditure of money, and other matters relating thereto. The opinion sketches the history of the system, developed under legislative authority, and indicates its vital importance from both public and private standpoints.

2. This activity may be deemed an essential governmental function of the State. P. 300 U. S. 362.

3. The rule that forbids the United States to tax the governmental instrumentalities of the States, and vice versa, is necessarily implied in the Constitution as essential to the preservation of our form of government; its application is a question of national scope to be resolved by principles of general application. P. 300 U. S. 364.

4. Local rulings attempting to separate governmental from corporate activities in determining whether municipalities are suable for the torts of their agents should be applied with caution as a test in determining what municipal activities are subject to federal taxation. P. 300 U. S. 363.

5. The conclusion that the acquisition and distribution of a supply of water for the needs of New York City involve the exercise of essential governmental functions is fortified by a consideration of the public uses to which the water is put, and the dependency of the health and comfort of the inhabitants upon an adequate supply of pure water. P. 300 U. S. 370.

Page 300 U. S. 353

6. The fact that, in former times, the business of furnishing water to urban communities, including New York, was left largely or entirely to private enterprise is not a reason for holding that the function, when performed by the City, is not governmental. P. 300 U. S. 371.

7. Governmental functions are not to be regarded as nonexistent because they were held in abeyance and have but recently been called into use. P. 300 U. S. 371.

8. The fact that the City makes a charge for water service to private consumers does not stamp the function of supplying water as a private one. P. 300 U. S. 372.

9. South Carolina v. United States, 199 U. S. 437, 199 U. S. 461-462, and Flint v. Stone Tracy Co., 220 U. S. 107, 220 U. S. 172, distinguished. Dicta in an opinion by way of illustration do not control in subsequent cases in which the precise point is presented for decision. P. 300 U. S. 373.

85 F.2d 32 reversed.

Certiorari, 299 U.S. 56, to review a judgment affirming an order of the Board of Tax Appeals which sustained a deficiency income tax assessment on the salary of the petitioner in this case.

Page 300 U. S. 359

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