The Court of Claims has certified to us a question concerning which it desires instruction for the proper disposition of the aboveentitled cause now pending before it. Late in the last term we dismissed the certificate in the belief that the question propounded embraces the whole case, and so could not be answered consistently with the applicable statute or with the constitutional limitations on our jurisdiction. But before the term closed we vacated the order of dismissal (279 U.S. 826, 49 S.C.t. 515, 73 L. Ed. 978) and held the matter for further consideration.
The facts shown in the certificate are as follows: In the years 1918, 1919, 1920, and 1921, the plaintiff, a corporate dealer in bridge materials, engaged to sell and deliver to each of several counties in the States of Iowa and Nebraska a quantity of lumber, which in each instance was needed and used by the purchasing county in the construction or repair of bridges along public highways within the county. The plaintiff was to ship the lumber from places outside the State to designated points within the purchasing county and there deliver the same to the county f. o. b. at stated prices. The plaintiff fulfilled its engagement as made. The shipping was done by railroad under bills of lading calling for delivery by the carrier to the plaintiff, or on its order, at destination. The plaintiff forwarded the bills of lading to the county clerk; and when the shipments reached their destination the county clerk, acting for the county and conforming to the plaintiff's intention, presented the bills of lading to the carrier, paid the transportation charges, accepted the lumber, deducted the transportation charges from the stipulated f. o. b. price, and remitted the balance to the plaintiff.
The federal revenue laws in force at the time imposed on the transportation of freight by rail or water a tax of 3 per cent. of the amount paid for that service; required that the tax be paid 'by the person paying for the service'; and authorized the carrier to collect the tax on behalf of the government; but declared that transportation service rendered to a State should be exempt from the tax. Revenue Act 1917, c. 63, §§ 500, 501, 502, 503, 40 Stat. 300, 314, 315; Revenue Act 1918, c. 18, §§ 500(a) and (h), 501(a), 502, 40 Stat. 1057, 1101, 1102, 1103. In the administrative regulations issued under those laws the exemption of transportation service to a State was construed as including such service to her 'political subdivisions, such as counties, cities, towns, and other municipalities.'
No tax on the transportation service was demanded or paid when the transportation charges were paid. But thereafter the Collector of Internal Revenue assessed such a tax against the plaintiff and the plaintiff paid it under protest. Application was then made by the plaintiff to have the amount refunded; but the application was denied by the Commissioner of Internal Revenue.
The suit in the Court of Claims was brought by the plaintiff against the United States to recover the amount collected on the tax; that exaction being assailed on two grounds: One that the transportation service was rendered to the purchasing counties, and therefore was exempt from the tax, and the other that, as the counties paid the carrier its transportation charges, the liability, if any, for the tax did not attach to the plaintiff.
The certificate further shows that the court referred the case to a commissioner who, in accord with the reference, reported special findings of fact; and that both parties conceded the correctness and accuracy of the report. In making the certificate the court accepted and summarized the facts reported by its commissioner.
The question certified, somewhat shortened in words but not altered in substance, is-