Director of Revenue of Missouri v. CoBank ACB

Director of Revenue of Mo. v. CoBank ACB
Director of Revenue of Mo. v. CoBank ACB
	Supreme Court of the United States
Argued November 28, 2000; Decided February 20, 2001
Full case name	Director of Revenue of Missouri v. Cooperative Bank ACB
Citations	531 U.S. 316 ( more ) 531 U.S. 316 (2001)
Prior history	Decision against defendant in the Administrative Hearing Commission; reversed sub nom. Production Credit Assn. of Southeastern Mo. v. Director of Revenue 10 S.W.3d 142 (Mo., 2000)
Subsequent history	Administrative Hearing Commission affirmed 43 S.W.3d 311 (Mo., 2001)
Holding
	The National Bank for Cooperatives, which Congress has designated as a federally chartered instrumentality of the United States, is not exempt from state income taxation.
Court membership
	Chief Justice William Rehnquist Associate Justices John P. Stevens · Sandra Day O'Connor ; Antonin Scalia · Anthony Kennedy ; David Souter · Clarence Thomas ; Ruth Bader Ginsburg · Stephen Breyer
Case opinions
Majority	Thomas, joined by unanimous
Laws applied
	Farm Credit Act, Supremacy Clause

Last updated March 25, 2019

Director of Revenue of Mo. v. CoBank ACB, 531 U.S. 316 (2001), was a United States Supreme Court case decided in 2001. The case concerned whether CoBank is exempt from state income tax requirements. A unanimous Court held that they are not exempt.

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The Supreme Court of the United States is the highest court in the federal judiciary of the United States. Established pursuant to Article III of the U.S. Constitution in 1789, it has original jurisdiction over a narrow range of cases, including suits between two or more states and those involving ambassadors. It also has ultimate appellate jurisdiction over all federal court and state court cases that involve a point of federal constitutional or statutory law. The Court has the power of judicial review, the ability to invalidate a statute for violating a provision of the Constitution or an executive act for being unlawful. However, it may act only within the context of a case in an area of law over which it has jurisdiction. The court may decide cases having political overtones, but it has ruled that it does not have power to decide nonjusticiable political questions. Each year it agrees to hear about one hundred to one hundred fifty of the more than seven thousand cases that it is asked to review.

CoBank, part of the US Farm Credit System, provides loans and financial services to cooperatives, agribusinesses, rural public utilities and other farm credit associations, who collectively own CoBank. It is also an agricultural export credit agency, exclusive among banks of the Farm Credit System. This makes it an agricultural credit bank, a combination of a farm credit bank and a bank for cooperatives. It is based in Greenwood Village, Colorado, outside Denver.

Background

The Farm Credit Act of 1933 created various lending institutions, including banks for cooperatives, which are designated as federally chartered instrumentalities of the United States.^[1] CoBank ACB is the successor to all rights and obligations of the National Bank for Cooperatives.^[1] In 1996, CoBank filed amended returns on behalf of that bank, requesting an exemption from all Missouri corporate income taxes and refunds on the taxes it paid for 1991 through 1994. CoBank asserted that the Supremacy Clause accords federal instrumentalities immunity from state taxation unless Congress has expressly waived this immunity, which the Act did not expressly do. The state of Missouri denied the request, but the Missouri State Supreme Court reversed,^[2] stating that because the Act's current version is silent as to the banks' tax immunity, Congress cannot be said to have expressly consented to state income taxation and, thus, the banks are exempt.

Missouri is a state in the Midwestern United States. With over six million residents, it is the 18th-most populous state of the Union. The largest urban areas are St. Louis, Kansas City, Springfield, and Columbia; the capital is Jefferson City. The state is the 21st-most extensive in area. In the South are the Ozarks, a forested highland, providing timber, minerals, and recreation. The Missouri River, after which the state is named, flows through the center of the state into the Mississippi River, which makes up Missouri's eastern border.

The Eleventh Amendment to the United States Constitution was passed by Congress on March 4, 1794, and ratified by the states on February 7, 1795. The Eleventh Amendment restricts the ability of individuals to bring suit against states in federal court.

Opinion of the Court

Justice Clarence Thomas wrote the decision of the Court, which unanimously reversed the Missouri Supreme Court. The Court held that banks for cooperatives are subject to taxation.^[3] Thomas wrote for the Court that nothing in the 1985 amendments to the Farm Credit Act indicated a repeal of the previous express approval of state taxation and that the structure of the Act indicated by negative implication that banks for cooperatives were not entitled to immunity.^[4] The Court rejected further claims by CoBank that they were entitled to immunity under McCulloch v. Maryland , stating that that doctrine was expressly not invoked by Congress in this instance.^[4]

Clarence Thomas is an American judge, lawyer, and government official who currently serves as an Associate Justice of the Supreme Court of the United States. He is currently the most senior associate justice on the Court following the retirement of Anthony Kennedy. Thomas succeeded Thurgood Marshall and is the second African American to serve on the Court. Among the current members of the Court he is the longest-serving justice, with a tenure of 10,012 days as of March 22, 2019.

In law, a majority opinion is a judicial opinion agreed to by more than half of the members of a court. A majority opinion sets forth the decision of the court and an explanation of the rationale behind the court's decision.

McCulloch v. Maryland, 17 U.S. 316 (1819), was a U.S. Supreme Court decision from 1819 that defined the scope of the U.S. Congress's legislative power and how it relates to the powers of American state legislatures. The dispute in McCulloch involved the legality of the national bank and a tax that the state of Maryland imposed on it. In its ruling, the Supreme Court established firstly that the "Necessary and Proper" Clause of the U.S. Constitution gives the U.S. federal government certain implied powers that are not explicitly enumerated in the Constitution, and secondly that the American federal government is supreme over the states, and so states' ability to interfere with the federal government is limited.

There was also discussion of the specific wording of the statute. Thomas wrote, "Had Congress simply deleted the final sentence of §2134 that limited the exemption while retaining the sentence granting the exemption, we would have no trouble concluding that Congress had eliminated the States’ ability to tax banks for cooperatives. Short of this act, however, we find Congress’ silence insufficient to disrupt the 50-year history of state taxation of banks for cooperatives."^[4]

With this decision, the Missouri Supreme Court had erred in finding an exemption, and the case was remanded to them to alter their previous determination.^[3]

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References

1 2 531 U.S. at 319.
↑ 531 U.S. at 320-321.
1 2 531 U.S. at 325.
1 2 3 531 U.S. at 324.

External links

Text of Director of Revenue of Mo. v. CoBank ACB, 531 U.S. 316 (2001) is available from: Findlaw Justia * Oral Argument audio at the OYEZ Project

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[BACKGROUND-1] 1 2 531 U.S. at 319.

[PRIOR-2] 531 U.S. at 320-321.

[RESULT-3] 1 2 531 U.S. at 325.

[DECISION-4] 1 2 3 531 U.S. at 324.