Opinion of the Court.

308 U.S.

ment on its contract. The Circuit Court of Appeals reversed and we granted certiorari."

Obviously, the seller fixed its stipulated prices so as to provide a margin of profit over federal taxes for which it might at the time of the contract be responsible on the particular "material" sold. This clearly appears from the governing provision's opening declaration that "the prices herein stipulated include any Federal tax heretofore imposed by Congress which is applicable to the material called for under the terms of this contract." But, without more, future increases in federal taxes "applicable to the material" might have substantially affected the margin of profit which the contract was calculated to insure. Against the contingency of increase in federal taxes applicable to the "material" purchased, the Government undertook to compensate the seller for payment of future federal taxes "on the articles or supplies contracted for" should Congress levy any sales tax, processing tax or other tax "applicable directly upon production, manufacture or sale of the articles . . . contracted for . . .”

But the Social Security Act imposes upon every employer "an excise tax with respect to having individuals

23 F. Supp. 262.

*100 F. 2d 793.

307 U. S. 618. The government's petition for certiorari set out that "Almost all government contracts since 1933 have contained provisions either identical with that here involved, or so similar as to present substantially the same question. . . . The War Department alone. . . states that approximately 4,000 potential claims may arise under contracts with language identical with that in . . . the contract in this case." The Comptroller General of the United States has interpreted a contract substantially identical with the one under consideration as denying reimbursement for Social Security taxes. 16 Comp. Gen. 790 (1937). Certiorari was granted in order to obtain a fins determination of the question.

Social Security Act, c. 531, 49 Stat. 620, §§ 804, 210 (b).

62

7

Opinion of the Court.

8

in his employ." And employment in that Act "means any service, of whatever nature, performed within the United States by an employee for an employer. . . with exceptions not material here. This excise has been represented as one levied "upon the relation of employment" and upon "the right to employ" and as a payroll tax. It is not-as taxes upon the privilege of selling, manufacturing or processing characteristically aremeasured by the value of the privilege taxed, or by either quantity or price of what is manufactured, processed or sold. A tax on the processing or sale of an article, while an excise, commonly would be denoted a tax "on" the article processed or sold. The contract itself speaks of such taxes which may, in the future, be "paid by the contractor on the articles or supplies contracted for." (Ital. supp.) Thus, this contract was concerned with federal taxes "on" the goods to be provided under it, whatever the occasion for the taxes. And a tax "on" the relationship of employer-employee-characterized as a tax on payrolls-is not of the type treated by the contract as a tax "on" the goods or articles sold.

The contract refers only to federal taxes, existing or future, on "material," "articles" or "supplies." And additional compensation is provided to offset only federal taxes of the type of sales taxes and processing taxes, "applicable directly upon production, manufacture, or sale" and actually paid on supplies delivered to the Government. Since a tax on payrolls, or on the relationship of employment, is not-but in fact is distinct from-the type of tax "on" articles represented by sales taxes and processing taxes, respondent is not entitled to the additional compensation which it seeks.

*Steward Machine Co. v. Davis, 301 U. S. 548, 578.

"See, Carmichael v. Southern Coal Co., 301 U. S. 495, 508. 'Id., 506, 511.

In view of our determination that the federal Social Security tax was not contemplated by the contract, we need not discuss respondent's contention that the tax paid under the Maryland Unemployment Compensation Act was a tax "imposed . . . by . . . Congress."

The judgment of the Circuit Court of Appeals is reversed and that of the District Court is affirmed.

Reversed.

MR. JUSTICE BUTLER took no part in the consideration and decision of this case.

TREINIES v. SUNSHINE MINING CO. ET AL.

CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE NINTH CIRCUIT.

No. 4. Argued October 10, 1939.-Decided November 6, 1939.

1. This Court inquires sua sponte into the question of the federal court's jurisdiction of this case under the Interpleader Act of January 20, 1936, since its own jurisdiction is affected thereby. P. 70.

2. A bill interpleading one group of claimants, all of whom are citizens of the same State, and another group claiming adversely, all of whom are citizens of another State, of which latter State the complainant himself is a citizen, satisfies the requirements of the Interpleader Act as to diversity of citizenship, since the Act requires diversity only as between the claimants. P. 70.

3. Art. III, §2 of the Federal Constitution, extending the judicial power of the United States to controversies "between citizens of different States," is broad enough to authorize the granting of jurisdiction to the federal court in such a case of interpleader. P. 71.

4. The Eleventh Amendment is not infringed by joinder of a state court judge and a state court receiver as defendants in an interpleader proceeding in the federal court, in which proceeding the State has no interest and neither the judge nor the receiver is enjoined by the final decree. P. 74,

7.A. L. Rev. 2734

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TREINIES v. SUNSHINE MIN. CO.

Opinion of the Court.

67

5. The authority of the federal court under the Interpleader Act to enjoin parties to the proceeding from further prosecuting any suit in any state or federal court in respect of the property involved, is essential to the interpleader jurisdiction and is a valid exercise of the judicial power. Section 265 of the Judicial Code-an earlier statute-forbidding the federal courts from staying proceedings in any state court, is inapplicable. P. 74.

6. A final decree of an Idaho state court of general jurisdiction in a suit to determine the ownership of personal property, awarding the property to the plaintiff and holding that a probate court of Washington which had awarded the property to another, under whom the defendant claimed, was without jurisdiction of the subject matter, held, as to the issue of the jurisdiction of the state courts, res judicata in a proceeding in the federal court interpleading the same plaintiff and defendant in respect of the same property. Pp. 75, 78.

99 F. 2d 651, affirmed.

CERTIORARI, 306 U. S. 624, to review the affirmance of a decree, 19 F. Supp. 587, adverse to the petitioner here, in a proceeding under the Interpleader Act. In an earlier phase of the controversy, certiorari to review a decree of the Supreme Court of Idaho, 57 Idaho 10; 59 P. 2d 1087, was denied by this Court, 299 U. S. 615.

Mr. Thomas D. Aitken for petitioner.

Mr. C. W. Halverson, with whom Mr. Nat U. Brown was on the brief, for the Sunshine Mining Co., respondent.

Mr. Richard S. Munter, with whom Mr. Lester S. Harrison was on the brief, for Katherine Mason et al., respondents.

MR. JUSTICE REED delivered the opinion of the Court.

This writ of certiorari was granted to review the action of the Court of Appeals for the Ninth Circuit in affirming1 a decree of the District Court of Idaho' upon a bill

199 F.2d 651.

ง 19 F. Supp. 587.

Opinion of the Court.

308 U.S.

of interpleader filed by the Sunshine Mining Company, a Washington corporation, against Evelyn H. Treinies and other citizens of the State of Washington, claimants to certain stock of the Sunshine Mining Company and the dividends therefrom, and Katherine Mason and T. R. Mason, her husband, and other citizens of the State of Idaho, adverse claimants to the same stock and dividends.

The occasion for the interpleader was the existence of inconsistent judgments as to the ownership of the Sunshine stock. The Superior Court of Spokane County, Washington, in administering the estate of Amelia Pelkes, adjudged that it was the property of John Pelkes, assignor of petitioner, Evelyn H. Treinies; and the District Court of Shoshone County, Idaho, adjudged that the same property belonged to respondent, Katherine Mason. They are the sole disputants. Other parties may be disregarded. On account of conflict between the judgments of the respective courts of sister states and the assertion of the failure to give full faith and credit to both in the interpleader action, we granted certiorari.

The alleged rights of the respective claimants arose as follows: Amelia Pelkes, the wife of John Pelkes, died testate in Spokane, Washington, in 1922, leaving her husband and one child, Katherine Mason, the offspring of a former marriage, as the beneficiaries of her will. As a part of her community estate, there were 30,598 shares of Sunshine Mining stock. It was considered valueless and was not inventoried or appraised. The order of distribution assigned a three-fourths undivided interest in these shares to Pelkes and a one-fourth to Mrs. Mason, an omnibus clause covering unknown property. The estate of Mrs. Pelkes was not distributed according to the order of distribution. Instead Pelkes and his stepdaughter, Mrs. Mason, divided the inventoried