(dissenting).
I find myself unable to agree with tbe majority opinion in this case and I therefore respectfully dissent for the following reasons.
The two determinative questions involved in this case are (1), the contention of the Roane-Anderson Company that it was merely an agent of the United States Government in carrying out its contract with the Atomic Energy Commission and thus its principal, the United States, is entitled to immunity from the payment of the privilege taxes which were paid in this case under protest and for recovery of which this suit is brought, and (2) that it, a private corporation, being merely an agent of the Federal Government and not being an independent contractor, would not be liable for the payment of said privilege taxes.
The essence of the majority opinion as I understand it is that since Roane-Anderson Company was using Government property in carrying out its contract, the exaction of the privilege taxes involved herein was a tax on the Government property itself or on the revenues derived therefrom. Under the facts developed in this case I am not able to agree with such a view.
I need not discuss the question of whether or not the decision of this Court in Roane-Anderson Co. v. Carson, 192 Tenn. 150, 239 S.W.2d 27, called the Sales Tax Case, creates a collateral estoppel in the present case on the question of whether or not the complainant Roane Anderson is an independent contractor, or a simple agent. However I think it is clear that this record shows that complainant was an independent contractor. It was so *389held in the above mentioned case in which this same contract was involved and was fully discussed in that opinion. The proof in the present case is simply an amplification of the same thing that was heretofore involved and I think it very clearly appears that complainant was an independent contractor.
In fact the insistence of complainant in both cases that it was a simple agent acting under the direction and control or the right of direction and control by the Government agency is indeed an obviously paradoxical insistence when it appeared in the former case as it does in the present case that the very reason that the complainant was employed by the Government agency was because the Government officers and officials did not have the so-called “know-how”, that is the skill, ability, experience, and so on necessary to accomplish the objectives of the Atomic Energy Commission, but that the complainant did have the “know-how”. It is certainly therefore very pertinent to inquire how or in what way the A.E.C. could undertake to exercise its right to direct the method and manner of performance of this contract, when admittedly it did not know how to do so.
In order to make clear some of what is to be hereinafter said, references made to the following matters pointed out in the brief of defendant:
“In his opinion, finding on the facts and the record that Roane-Anderson was not an agent or instrumentality of the United States, the Chancellor attached particular significance to the following matters pointed out by defendant:
“1. In connection with the operation of Roane-An-derson the United States did not occupy the position of principal because its only substantial obligation *390was to reimburse complainant for expenditures under the contract and pay it a fixed fee (Tr. 62).
“2. The United States was not bound as to third persons on obligations made by Roane-Anderson, unless assumed directly, being bound only to reimburse Roane-Anderson for expenditures. (Tr. 62).
“3. The duty of employment, supervision and direction of its operations rested on Roane-Anderson since all persons employed by it were its employees exclusively, the contract providing, 'The duties and functions of all such persons will be performed under the sole supervision and direction of the contractor * * * ’ (Contract, Art. 1, Sec. 2) (Tr. 62).
“4. The Government was not obligated to finance the work of Roane-Anderson, nor to make advances to it; this burden was placed on the contractor and the contract provided that the contractor will not be reimbursed for interest on capital employed nor on borrowed money (Contract, Art. V, Sec. 3) (Tr. 62).
“5. Third persons dealing with Roane-Anderson could not look to the Government for payment, but only to Roane-Anderson and its parent company (Turner Construction Company) (Tr. 62).
"6. State laws covered the employment relations of Roane-Anderson’s several thousand employees just like those of any ordinary cost-plus-fixed-fee contractor, the contract providing, 'The contractor shall act as Agent for the United States of America, it being understood and agreed, however, that all personnel and labor shall be and remain for all purposes the employees of the contractor, exclusively’ (Art. I, Sec. 3) (Tr. 63).
*391“7. The contractor was required to transfer to the Government on termination all materials, supplies, facilities, equipment, machinery, etc., acquired by the contractor in the performance of the contract (Art. XY, Sec. 2(e)) (Tr. 63).
“8. On termination the Government was required to assume and become liable for those obligations, commitments, etc., of the contractor ‘the cost of which would be reimbursable in accordance with the provisions of this contract’ (Art. XI, Sec. 3) (Tr. 63).
“9. The contractor was required under the contract to account for equipment purchased only when the Government reimbursed the contractor for the price thereof (Art. Y, Sec. 3) (Tr. 63).”
In carrying out its contract the complainant among other things did the following:
1.It operated a transportation system, using the buses and some other equipment furnished it by the Government. Such operation is made a privilege by Code Section 1248.134.
2.It operated passenger motor vehicles for hire which were furnished by the Government. This is made a privilege by Code Section 1152.5 and the tax is on the number of bus seats.
3. It engaged in the business of furnishing and distributing water and electric current to consumers at Oak Ridge. Such business is made a privilege by Code Section 1248.126.
4. It operated passenger motor vehicles of two types and freight motor vehicles upon highways, roads, streets, etc., of the State of Tennessee which privileges are covered by Code Section 1152.3 and 1152.4 and 1166.29.
*392The majority opinion says that it will hardly be denied that the functions of the Federal Government would be greatly impaired if not completely paralyzed if these operations should cease. With that none will disagree, but that statement is a far cry from saying that if the incidence of these privilege taxes falls directly upon the complainant and only incidentally on the Government, the necessary result would be that the operations would have to cease. All of the cases with which I am familiar especially those opinions of the Supreme Court of the United States cited in Roane-Anderson Co. v. Carson, supra, are to the effect that if the incidence of the tax is on the cost-plus-fixed-fee contractor and only incidentally increases the cost of the project to the Government, this does not serve as any basis for immunity of the contractor from payment of the tax, either sales tax or privilege tax.
The majority opinion contains the further statement that it is not conceivable that the Commissioner of Finance and Taxation or any other State agency could levy a distress warrant upon any Government property for the failure of Roane-Anderson Company to pay these taxes. No one will disagree with that statement, but there is not the slightest suggestion anywhere in this case that the State was laboring under any illusion that it could levy a distress warrant upon Government property.
The majority opinion relies upon Mayo v. United States, and Kern-Limerick, Inc., v. Scurlock, as authority for the proposition that the collection of these taxes will be a collection from the Federal Government. These cases in my opinion can be easily distinguished from the cases above referred to. In the Mayo case the State of *393Florida undertook to collect an inspection fee from the United States by reason of its distribution of fertilizer under the soil building and conservation program. The State there undertook to advance the theory that the fertilizer really belonged to the manufacturers and that the Government was serving only as a conduit or service agent through which it was being distributed for private corporations. The court answered that by a finding that the Government became the owner of the fertilizer at the manufacturing plants which were outside the State. Therefore it is held that the inspection fees were laid directly upon the United States, which could not be done.
The Kern-Limerick case involved the legality of the Arkansas gross receipts tax exacted of private contractors who had first purchased two expensive diesel tractors for use in constructing an ammunition depot for the United States. The opinion itself in that case distinguishes it from the King & Boozer case relied on in Roane-Anderson Co. v. Carson, supra, in the following language:
“The circumstances of the transaction would con-cededly make Kern-Limerick liable for the tax if the real purchaser were not the United States.” [347 U.S. 110, 74 S.Ct. 405.]
Then again the opinion said:
“We find that the purchaser under this contract was the United States. Thus, King & Boozer is not controlling for, though the Government also bore the economic burden of the state tax in that case, the legal incidence of that tax was held to fall on the independent contractor and not upon the United States.”
*394Now in tlie present case, as heretofore indicated, complainant in the instant case had to do its own financing because the Government was not obligated to advance any money but was simply to reimburse the contractor on expenditures finally approved by it but without interest on the capital employed or money borrowed by complainant. To that end complainant made arrangements with the National City Bank of New York for an overdraft agreement and when it received its monthly fee of $25,000 and its reimbursement checks the same were applied to reduce the above overdraft; likewise into the regular account in the Hamilton National Bank at Knoxville a revolving fund was maintained and there was deposited in that account all revenues from the operations of the above mentioned activities along with damage deposits by tenants occupying the residences which belonged to the Government and disbursements were made by the complainant of various sorts such as refunds to tenants, payment for employee’s bond purchases, contract expenditures other than payrolls and salaries, and payrolls and salaries, without the Government ever having its hands on any of the money.
In other words, for example, all of these funds were collected and deposited and disbursed in the name of the complainant and not of the United States and these collections were used by the complainant in aid of its financing of the project.
The only obligation of the Government was to reimburse the complainant in accordance with the contract provisions and to pay the fixed monthly fee; complainant was not authorized to bind the United States to third persons and third persons could not look to the United States for payment, wherein the Kern-Limerick case is *395clearly distinguished from tlie present one. It was only where on the termination of the contract that the Government would become liable for any obligations, commitments, etc., of the complainants where the cost of same would be reimbursable according to the contract.
In my view of this case none of these taxes are levied upon any property belonging to the United States but to the contrary the property of the United States is used as a measure in fixing the amount of tax against the contractor.
In Esso Standard Oil Co. v. Evans, 194 Tenn. 377, 250 S.W.2d 569, the distinction is clearly made. The attempt to collect an inspection fee on the Government owned gasoline was held invalid as being the direct tax on Government property, just as in Mayo v. United States, supra, whereas after this gasoline was taken from the river barges into storage tanks belonging to the Oil Company the privilege tax for the privilege of engaging in the business of storing gasoline was upheld. On appeal to the United States Supreme Court this privilege tax was upheld even though the Government ultimately had to pay it because it had agreed to assume liability for all State taxes. The opinion said that the Constitution does not extend sovereign exemption from State taxation to corporations or individuals, contracting with the United States, merely because their activities are useful to the Government, or because the tax would burden the Government financially. Further, that the State had not discriminated against the Federal Government by denying this immunity under the facts stated.
So it seems to me that in this case the fact that the tax is measured by the amount of Government property *396received or tire gross receipts consisting of the value of the property received plus any revenues from Government property is no reason to deny the State the right to collect the taxes even though the cost should ultimately fall on the Government. I therefore am of opinion that the decree of the Chancellor was correct.
Prewitt, Justice, joins in this dissent.