RUTLEDGE, J., dissenting.

332 U.S.

with reference to application of the Jones Act, is largely immaterial, perhaps only a matter of words.

That view, incorporating the rule of the Hearst case,' we have only recently extended to apply in cases of coverage of the Social Security Act and the Fair Labor Standards Act. United States v. Silk, 331 U. S. 704; Harrison v. Greyvan Lines, id.; Rutherford Food Corp. v. McComb, 331 U. S. 722. While the liability here is not legislative in origin, nevertheless as in the Hust case, application of the common-law "control" test to defeat the longshoreman's remedy under the state procedure, as provided by § 9 of the Judiciary Act of 1789, cannot "be justified in this temporary situation unless by inversion of that wisdom which teaches that 'the letter killeth, but the spirit giveth life.'' 328 U. S. at 725.

Finally, in my opinion, the terms of the agreement in its provisions for indemnity confirm the conclusion that liability of the "agent" in such a case as this was contemplated. Not only is there broad indemnity "for all expenditures of every kind made by it in performing, procuring or supplying the services, facilities, stores, supplies or equipment as required hereunder," with specified exceptions not covering such liabilities as are now in question. The indemnity also expressly provided:

8 In that case, assuming that the agreement made Hust, the injured seaman, an employee of the United States for purposes of ultimate control, in spite of the meticulous character of the differences between it and the Maritime Commission's standard contract, we said: "But it does not follow from the fact that Hust was technically the Government's employee that he lost all remedies against the operating 'agent' for such injuries as he incurred. This case, like National Labor Relations Board v. Hearst Publications, 322 U. S. 111, involves something more than mere application to the facts of the common-law test for ascertaining the vicarious responsibilities of a private employer for tortious conduct of an employee." 328 U.S. at 724.

• National Labor Relations Board v. Hearst Publications, 322 U. S.

155

RUTLEDGE, J., dissenting.

"To the extent not recovered from insurance, the United States shall also reimburse the General Agent for all crew expenditures (accruing during the term hereof) in connection with the vessels hereunder, including, without limitation, all disbursements for or on account of wages, extra compensation, overtime, bonuses, penalties, subsistence, repatriation, travel expense, loss or personal effects, maintenance, cure, vacation allowances, damages or compensation for death or personal injury or illness, and insurance premiums, required to be paid by law, custom, or by the terms of the ship's articles or labor agreements. (Emphasis added.)

as well as for payments made to pension funds and for social security taxes. This clause specifically contemplated that the "agent" should be responsible for paying claims not only for maintenance and cure but also for "damages or compensation for death or personal injury or illness," and should be indemnified for such payment. A narrow construction, of course, would limit the provisions for payment and indemnity to payments made without resort to suit. On the other hand, even a literal interpretation would cover payments made by the "agent" upon judgments recovered against it on claims of the character specified. I know of no good reason why the narrow view should be accepted or why the Government by its contract should desire to uproot seamen and others, including longshoremen insofar as they have acquired seamen's rights aboard ship, from their normally applicable remedies, in the absence of either explicit statutory command or express contractual provision to that effect. Moreover, in view of the scope of the indemnity provided, I see no possible harm that could be inflicted on the "agent" from interpreting the contract so as to allow the normally applicable remedies to apply.

Accordingly, I would reverse the judgment of the Court of Appeals.

ATLANTIC

COAST LINE RAILROAD CO. v. PHILLIPS, STATE REVENUE COMMISSIONER.

APPEAL FROM THE SUPREME COURT OF GEORGIA.

No. 385. Argued April 9, 1947-Decided June 23, 1947.

1. A charter granted by the State of Georgia to a railroad company in 1833 provided that "The stock of the said company and its branches shall be exempt from taxation for and during the term of seven years from and after the completion of the said rail roads or any one of them: and after that, shall be subject to a tax not exceeding one half per cent. per annum on the net proceeds of their investments." In 1937 the State imposed a tax of 52 per cent on the net income of all domestic and foreign corporations and in 1941 assessed deficiencies for such taxes against a lessee of the railroad. Held, following a decision of the highest court of the State, that the 1833 exemption did not apply to taxes on "income," imposed by a statute in 1937, and, therefore, the tax did not impair the obligation of the railroad's charter contrary to Art. I, § 10, of the Federal Constitution. Pp. 169–174.

2. Earlier decisions of this Court construing the same tax exemption provision, in cases involving property taxes and not a conventional income tax, are not controlling here. Pp. 173-174.

200 Ga. 856, 38 S. E. 2d 774, affirmed.

The railroad company appealed to the state courts from a tax assessment under a state statute challenged as violative of the contract clause of the Federal Constitution. The trial court gave judgment for the railroad. The State Supreme Court reversed. 200 Ga. 856, 38 S. E. 2d 774. On appeal to this Court, affirmed, p. 174.

Carl H. Davis and T. M. Cunningham argued the cause for appellant. With them on the brief was Philip H. Alston.

Victor Davidson and Claud Shaw, Assistant Attorneys General of Georgia, argued the cause for appellee. With them on the brief were Eugene Cook, Attorney General, and C. E. Gregory, Jr., Assistant Attorney General.

MR. JUSTICE FRANKFURTER delivered the opinion of the Court.

This was a proceeding in the courts of Georgia to declare invalid an assessment by the State Revenue Commissioner against the Atlantic Coast Line Railroad Company on the ground that the tax as applied to the appellant impairs the obligation of contracts. United States Constitution, Art. I, Sec. 10.

To encourage railroad development, the State of Georgia in 1833 chartered the Georgia Railroad Company (which later became the Georgia Railroad and Banking Company), and gave the railroad certain immunity from taxation. Georgia's increasing need of tapping new sources of revenue has not unnaturally brought to the courts the scope of this immunity. Its construction in relation to the claim of Georgia, .that despite the charter of 1833 the appellant is subject to its corporate income tax, is the sole issue before us.

The case is this. Georgia, in 1937, imposed a tax of 512 per cent. on the net income of all domestic and foreign corporations. Acts 1931, Extra. Sess. pp. 24, 26, amended, Acts 1937, pp. 109, 117; Ga. Ann. Code § 92-3102. No claim under this corporate income tax was made against the Atlantic Coast Line, one of the lessees of the Georgia Railroad, until 1941. For the calendar years 1941, 1942, 1943, the State Revenue Commissioner assessed against the appellant deficiency taxes on the basis of its net income from the road, computed at the 52 per cent. rate paid by all corporations. It is this assessment that is contested. The appellant resisted on the ground that the attempt of Georgia to impose this tax is in disregard of the obligation assumed by Georgia through § 15 of the Charter of 1833. The Supreme Court of Georgia sustained the assessment, holding that the tax exemption of the charter related merely to the limits to which a tax on the railroad property could be levied, such a property

tax to be measured so as not to exceed one-half per cent. of the net earning power of the properties. 200 Ga. 856, 38 S. E. 2d 774. The exemption, so the State Supreme Court found, was not concerned with what we now know as a corporate net income tax and therefore did not bargain away the power of the legislature to impose such a tax.

A claim that a State statute impairs the obligation of contract is an appeal to the United States Constitution, and cannot be foreclosed by a State court's determination whether there was a contract or what were its obligations. But while it is true that we are not bound by the construction of local statutes by the local courts in deciding the Constitutional question, "yet when we are dealing with a matter of local policy, like a system of taxation, we should be slow to depart from their judgment, if there was no real oppression or manifest wrong in the result." Clyde v. Gilchrist, 262 U. S. 94, 97.

The Georgia Supreme Court had to construe the following Georgia language:

"The stock of the said company and its branches shall be exempt from taxation for and during the term of seven years from and after the completion of the said rail roads or any one of them: and after that, shall be subject to a tax not exceeding one half per cent. per annum on the net proceeds of their investments." § 15, Act of December 21, 1833, Acts 1833, pp. 256, 263-64.

It is not for us to read such a local law with independent but innocent eyes, heedless of a construction placed upon it by the local court. Such a tax provision is not a collocation of abstract words. In seeking the meaning conveyed by a local enactment it must be viewed as part of the whole texture of local laws and of the economy to which they apply. The language draws to itself presuppositions not always articulated, and even what is expressed