(dissenting)—The majority say that the sales tax must fall upon the person legally obligated to pay for construction of the military housing. With this I agree.
The majority then state that, by the express terms of the contract with the mortgagor-builder, the Delaware corporation, and not the United States was legally obligated to pay the appellant contractors; hence, the corporation was the buyer under the statute. The fact that the ultimate economic burden of the tax may fall upon the United States does not constitute it as the person legally obligated to pay the tax. Neither do I disagree with this rationale.
It is my disagreement with the majority in the disposition of the issue relating to whether the mortgagor-builder corporation is an instrumentality of the United States that brings me to a result contrary to that of the majority in this case.
Under the established rule for the construction of contracts, a contract must be picked up by its four corners and considered in its entirety. In so doing, it is inescapable to conclude other than that the prime purpose of the housing contract was the construction of military housing for the exclusive use of the United States. It was necessarily the obligation of the government to pay for this housing and, although it did not wish to be directly obligated, the United States, in causing the Delaware corporation to be organized, did so to provide a means to carry out its obligation to compensate the contractors for the construction of this housing.
In Clallam Cy. v. United States, 263 U. S. 341, 68 L. Ed. 328, 44 S. Ct. 121 (1923), it was held that a corporation created for the purpose of operating a sawmill and railroad *631for the promotion of the war effort and wholly owned by the United States was an instrumentality of the United States. The court there said:
“In short the Spruce Production Corporation was organized by the United States as an instrumentality for carrying on the war, all its property was conveyed to it by or bought with money coming from the United States and was used by it solely as means to that end, and when the war was over it stopped its work except so far as it found it necessary to go on in order to wind up its affairs. . . . U
“The State claims the right to tax on the ground that taxation of the agency may be taxation of the means employed by the government and invalid upon admitted grounds, but that taxation of the property of the agent is not taxation of the means. We agree that it ‘is not always, or generally, taxation of the means,’ as said by Chief Justice Chase in Thomson v. Pacific Railroad, 9 Wall 579, 591. But it may be, and in our opinion clearly is when as here not only the agent was created but all the agent’s property was acquired and used, for the sole purpose of producing a weapon for the war. This is not like the case of a corporation having its own purposes as well as those of the United States and interested in profit on its own account. The incorporation and formal erection of a new personality was only for the convenience of the United States to carry out its ends. . . . ” (Italics mine.)
Contemporaneous with the signing of the housing contract, the stock of the corporation in the instant case was irrevocably placed in escrow, together with the resignation of the officers and directors, to be delivered to the United States at the conclusion of the construction of the housing. There was no possible contingency for the return of the stock to the stockholders or the documents of resignation to the officers and directors. The corporation owned nothing of any value in the housing being constructed. It served solely as a means to the end of obtaining military housing for the United States. There was no possibility for it to engage in any purpose other than to serve the end of obtaining military housing for the United States on this exclusive project. Because it had no purposes independent *632of those of the United States, the corporation was nothing more than an instrumentality thereof.
The appellants cite Green v. Eglin AFB Housing, Inc., 104 So. (2d) 463 (Fla. 1958), which is persuasive of their contention. There, under the authority of the Capehart Act, the government entered into a contract virtually identical with that of the instant case for the construction of military housing at the Eglin Air Force Base in Florida. The Florida court in effect found that the Delaware corporations were government instrumentalities, stating:
“ ‘The AFB corporations were created at the direction of the United States for the sole purpose of borrowing money to be expended in constructing facilities needed by the United States, to be repaid by the United States and further securing the payment of this money by a mortgage upon property of the United States. These corporations will continue in existence until the mortgage debts are paid, so as to provide a party against whom the mortgages may be foreclosed in the remote contingency that the United States defaults in its obligation to pay the mortgage debt.
“ ‘Even if we regard the AFB corporation as private enterprises, their interest in the property is so negligible-lessees without right of use or possession—as to make it entirely unrealistic to hold that it destroys the status of these buildings as a part of the public works of the United States.
“ ‘It is very doubtful if these corporations should be regarded as anything other than agencies or instrumentalities of the Federal Government. In Clallam County, Wash. v. United States [263] U. S. [341], [44 S. Ct. 121], 68 L. Ed. 328, the Supreme Court held that a corporation created for the purpose of operating a sawmill and railroad in the promotion of the war effort during the first World War and which was wholly owned by the United States was an agency of the United States and that its property was, therefore, immune from state taxation. In describing the corporation there involved the [sic] used language peculiarly applicable to each AFB corporation: “The incorporation and formal erection of a new personality was only for the convenience of the United States, to carry out its ends.” The creation of the AFB corporations was only for the convenience of the United States to enable it to finance military construction in a manner determined by the Congress to be most conducive to the national interest. . . . ’ ”
*633The limited function of the Delaware corporation, its power and purpose are aptly stated by the Michigan court in Knapp-Stiles, Inc. v. Michigan Department of Revenue, CCH 2 Mich. Tax Cases ¶¶ 200-202 (1962). There, as here, the contracts were for military housing under the Cape-hart Act. The court said relative to the corporations:
“. . . In the Invitation for Bids, which is prepared and issued by the United States, acting through the Department of the Air Force, there is found in Paragraph 1, above quoted, the following:
“ ‘The statute further contemplates that the Government-owned housing site be leased to a mortgagor or borrower corporation which will act as a channel for the proceeds of the mortgage loan from the lender to the successful bidder . . . ’
“And a review of the documents—the lease, the contract, and the mortgage is convincing that this is substantially the only function that the Delaware corporations do perform.
“They have no real powers except to do the bidding of the United States. . . .
“The corporations do not determine the terms of the contract. That is all done before the corporations come into existence. They do not determine whether the contract has been performed. They cannot modify its terms. They cannot terminate it.
“True, the corporations had a lease upon the premises. While this is nominally for a fifty-five year term, in fact, the actual possession, maintenance and operation of the housing is in the hands of the United States and its Air Force as soon as the housing is ready for occupancy.
“The United States alone determines the terms of the contract. It alone can modify or terminate it. It alone determines when it has been performed.”
An analysis of In re S. S. Silberblatt, Inc. v. Tax Comm. of the State of New York, 5 N. Y. (2d) 635, 159 N. E. (2d) 195, 186 N. Y. S. (2d) 646 (1959), cited by the majority, discloses that the opinion is based on the erroneous premise that the Delaware corporations were “ . . . created for a commercial purpose for private profit, as distinguished from a governmental purpose.” As heretofore stated, consideration of the housing contract in its entirety cannot *634support such a conclusion. The analysis of the housing contract and the reasoning of the dissent in the Silberblatt case is correct.
“ . . . Although under our State law the tax is imposed upon the recording of the mortgage (Franklin Soc. v. Bennett, 282 N. Y. 79), this case is controlled by Federal law under which the tax is on the mortgage itself, which is a Federal instrumentality exempt from State taxation (Federal Land Bank v. Crosland, 261 U. S. 374; . . .). Unlike the Wherry Act, the Capehart Act, under which this military housing project was authorized, renders petitioner-appellant merely a builder and not a private sponsor of the military housing. The United States, through its Department of Defense, is the sponsor, financier and owner of the entire project. The mortgagor corporations are mere fictions, and they and the mortgagee banks had no other function in this business than to act as agents for the Federal Government (Clallam County v. United States, 263 U. S. 341, 345; Railroad Co. v. Peniston, 18 Wall. [85 U. S.] 5, 42). ...”
The majority attempt to distinguish the Clallam County case on the basis that the corporation there had no purpose other than to produce war materials for the United States government, and it quotes from the Clallam County case as follows:
“ ‘. . . This is not like the case of a corporation having its own purposes as well as those of the United States.
The inference from this quotation which is desired by.the majority is that the Delaware corporation had purposes other than those of the United States government. This is erroneous and unsupported by the record.
The holding of the cases cited by the majority, E. I. Du Pont de Nemours & Co. v. State, 44 Wn. (2d) 339, 267 P. (2d) 667 (1954), and United States v. Brown, 41 F. Supp. 838 (1941), is not inconsistent with the Clallam County case since the corporations, in those cases, were not instrumentalities of the United States because they had separate commercial purposes for private profit.
In the instant case we should hold that, although thé mortgagor-builder is the “buyer” to whom the retail sale *635of the housing project construction was made, it was nothing more than an instrumentality of the United States government; that it had no commercial purpose other than for the convenience of the United States, serving as a means to the end of obtaining this military housing; and that the sovereign immunity of the federal government applies.
The judgment of the trial court should be reversed, and the cause remanded with instructions to enter judgment restraining the Tax Commission from imposing the tax and to permit recovery of the tax which appellants paid under protest.
Hill, Donworth, and Weaver, JJ., concur with Hunter, J.
September 26, 1963. Petition for rehearing denied.