Phillips Chem. Co. v. Dumas Isd, 361 U.S. 376 (1960)

Phillips Chemical Co. v. Dumas Independent School District


No. 40


Argued November 17-18, 1959
Decided February 23, 1960
361 U.S. 376

APPEAL FROM THE SUPREME COURT OF TEXAS

Syllabus

Under Art. 5248 of the Revised Civil Statutes of Texas, as amended in 1950, which pertains to taxation of private users of property of the United States, a Texas School District assessed against appellant a tax measured by the full value of real property owned by the United States but leased to appellant for use in its private manufacturing business under a lease subject to termination at the option of the United States in the event of a national emergency or a sale of the property. The Texas Supreme Court construed Art. 5248 as authorizing this assessment against appellant, but it had construed Art. 7173, which governs taxation of private lessees of real property owned by the State and its political subdivisions, as not authorizing taxation of a lessee under a lease subject to termination at the lessor’s option in the event of a sale.

Held: as construed and applied in this case, Art. 5248 discriminates unconstitutionally against the United States and its lessees, and the tax levied against appellant is invalid. Pp. 377-387.

(a) Since Texas law authorizes taxation of lessees of federal property, but not lessees of property of the State or one of its political subdivisions, when the leases are subject to termination at the option of the lessors, it discriminates against the United States and its lessees. Pp. 379-382.

(b) Such discrimination between lessees of federal property and lessees of state property is not justified by any significant difference between them. United States v. City of Detroit, 355 U.S. 466, distinguished. Pp. 383-387.

159 Tex. ___, 316 S.W.2d 382, reversed.