Opinion
No. 2175
October 22, 1940
COURTS — FEDERAL LAW — STARE DECISIS — UNITED STATES SUPREME COURT.
1. The Supreme Court of Wyoming is in duty bound as best it can to follow the latest expressions of the United States Supreme Court on questions of federal law. 2. Where the Supreme Court of Wyoming reversed a judgment declining to allow recovery for taxes alleged to have been illegal and wrongfully collected from and paid by plaintiff under protest, in order to conform to certain rulings of the United States Supreme Court, but that court reversed its own rulings thereafter, the Supreme Court of Wyoming was obliged to overrule the decision and consequently to reverse a subsequent ruling of the trial court following the earlier decision.
APPEAL from the District Court, Fremont County; C.D. MURANE, Judge.
For the appellant there was a brief and oral argument by H.S. Harnsberger of Lander.
The Hudson Oil Company, respondent, is an oil and gas lessee of allotted lands of the Shoshone Indian Tribe, the legal title of which is held by the United States Government under trust patents under which title will eventually vest in Indian allottees. In a former case arising under this same lease, the Hudson Oil Company paid, under protest, a production tax upon oil produced from these lands in the years 1931 and 1932 and then brought suit to recover. In that case, the judgment was against the Oil Company from which it appealed to this court, and the judgment below was reversed, upon the theory that the oil produced from allotted Indian lands held in trust was not subject to a state production lieu tax. Hudson Oil Company v. Board of Commissioners, 49 Wyo. 1. Subsequent to the decision in the above case, the United States Supreme Court overruled some of its former decisions upon which this court apparently relied in arriving at its decision in Hudson Oil Company v. Commissioners, supra. The instant case involves production tax assessed by Fremont County upon oil taken from the same lands under the same lease, during the years 1937 and 1938, wherein the District Court of Fremont County followed the decision in Hudson Oil Company v. Commissioners, supra. From that judgment, the county is prosecuting this appeal, on the ground that the more recent decisions of the United States Supreme Court have changed the law and thus justified its appeal. The action and issues in the instant case are identical in all particulars with those of the former case, and appellant now seeks a reconsideration of the matter by this court for the foregoing reasons. Reference is here made to the authorities cited in our brief in the former appeal in support of our contention that the moment mineral becomes detached from the soil of public lands, it becomes the property of the digger and taxable in the same manner as other property. 26 R.C.L. 99; Forges v. Gracey, 94 U.S. 762. Governmental agencies are exempt from state taxation only so far as it interferes with their efficiency in performing the functions of the Government. Western Union Telegraph Company v. Attorney General, 31 L.Ed. 790, and other cases cited in our brief in the former case, including Miller v. Buck Creek Oil Co. In sustaining the contention of respondent in Hudson Oil Company v. Board of Commissioners, supra, this court reviewed a large number of federal decisions relating to the subject, and reversed the court below. While earlier decisions on the question as to when states may not tax governmental instrumentalities sustain the position taken by this court in the former case, the latest expression of the Supreme Court seems to have changed the rule. Federal Compress W. Co. v. McLean, 78 L.Ed. 343; Power Co. v. Commission, 75 L.Ed. 1042; Fox Film Corp. v. Doyal, 76 L.Ed. 1010; Broad River Power Company v. Query, 77 L.Ed. 685. Among the former decisions in effect overruled by the United States Supreme Court are Gillespie v. Oklahoma, 257 U.S. 501; Burnet v. Oil Gas Co., 285 U.S. 393. In the instant case there is no question of royalty or equitable interests of the Indians involved. The oil produced by the lessee was consequently taxable. Indian Territory Oil Co. v. Board of Equalization, 77 L.Ed. 812; Brush v. Commissioner of Internal Revenue, 81 L.Ed. 691. At the 1937 term, the Supreme Court held still further in the new direction in the case of James v. Dravo Contracting Company, 302 U.S. 154, where it was held that the state tax did not interfere with the performance of federal functions. See also Helvering, Commissioner v. Therrell, 303 U.S. 218; Graves v. People, 306 U.S. 466. While we recognize that this court may not readily accept the reasoning of the Federal Court, as presently constituted, we nevertheless insist that it would be a strange condition if, by refusing so to do, our State and our Counties should be deprived of those tax revenues, the exemption of which in its belief, has been expressly denied by the Federal Government. We respectfully submit that the decision of the lower court should be reversed.
For the respondent, there was a brief by Hagens Wehrli of Casper, and oral argument by Mr. Hagens.
This is an action to recover the sum of $773.04, levied by authorities of Fremont County, as an alleged production tax for oil produced from allotted Indian lands in 1937, paid by respondent under duress, and under protest, to the County Treasurer on December 22, 1938. The same identical question was tried by this court in 1935, but it is the contention of the appellant in the instant case that certain cases cited by appellant in the former case have been overruled. Those cases or most of them appear in the opinion of this court reported in 49 Wyo. 1. Among the cases relied on by appellant in the instant case are: Helvering v. Producers Corp., 303 U.S. 376; James v. Dravo Contracting Co., 82 L.Ed. 155; Graves v. New York, 83 L.Ed. 927; Brush v. Comm. Internal Revenue, 81 L.Ed. 691; Tabor v. Indian Territory Oil Co., 81 L.Ed. 463. It is submitted that a careful reading of the opinions in those cases will show them to be distinguishable from the facts in the case at bar. We were expecting appellant to cite British American Oil Company v. Board, 81 L.Ed. 95, which was discussed in the trial court, and which refers to Congressional provisions relating to the taxation of Indian lands and oil and gas produced therefrom. On the other hand, the Act of Congress providing for allotted Indian lands has remained unchanged from the date of its enactment to the present time, and there is not a word indicating any consent on the part of the United States that oil and gas produced therefrom shall be taxable. 31 U.S. Stat. 1085; 25 U.S.C.A. 220. It is our contention that nothing has been said by the United States Supreme Court since this court's decision of 1935, which can possibly result in a reversal of this court's conclusions in the earlier case. In addition, we direct attention to Iswellyn v. Colonial Trust Co., 17 F.2d 36. The oil produced in 1937 from said lease was not taxed as personal property either in the year 1937 or in the year 1938. It was taxed in lieu of a tax upon the land upon which it was removed. There is no contention in this case that the oil should have been taxed in 1938 as personal property. United States v. Bean, 253 Fed. 1. Where the legal and equitable title to the lands is in the United States, such lands are not subject to local taxation. Ver Straten v. Commissioner, 35 Wyo. 67. In the absence of an agreement in regard to the payment of taxes on property, it will be assumed that the parties intended that the owner of the property should pay them. Miller v. Buck Creek Oil Company, 38 Wyo. 505; Choctaw Co. v. Harrison, 59 L.Ed. 234. In the case of Large Oil Co. v. Howard (Okla.) 163 P. 537, it was held that the production tax imposed in lieu of an ad valorem tax was valid. The case was reversed by the United States Supreme Court in 63 L.Ed. 416. The United States Supreme Court cited neither the Gillespie nor the Burnet cases in its opinion, but it did cite Choctaw Co. v. Harrison, 235 U.S. 292; Indian Terr. Oil Co. v. Oklahoma, 240 U.S. 522; Howard v. Gypsy Oil Co., 247 U.S. 503. After considering the principles involved and the authorities on the subject, the Supreme Court again held that such tax should not be sustained. Jaybird, etc. v. Weir, 70 L.Ed. 1113. This court has already said that the case of Indian Territory Illuminating Oil Co. v. Board of Equalization, 288 U.S. 325, has no application to the facts in this case. The tax in the present case was not levied upon personal property. The tax was levied expressly on the production in lieu of a tax upon the land. The recent cases of the United States Supreme Court do not hold that the oil and gas produced from such lands may be taxed in lieu of the lands. The law, as announced in many cases by the United States Supreme Court which still stand and have not been overruled, and the law which has been announced by the Supreme Court of Wyoming pursuant thereto, is clearly to the effect that the oil and gas produced from allotted Indian lands is not subject to taxation.
This case comes here by direct appeal from the district court of Fremont County. It is quite similar in its facts and law involved with our case No. 1916, Hudson Oil Company v. The Board of County Commissioners of Fremont County, Wyoming, 49 Wyo. 1, 52 P.2d 683. That case was one wherein review was sought of a judgment of said district court which declined to allow plaintiff, the Hudson Oil Company, aforesaid, any recovery for certain taxes alleged to have been illegal and wrongfully collected from and paid by it under protest to the County Treasurer of Fremont County. In the instant case a recovery was allowed. In the earlier case we felt obliged to reverse the action of the district court aforesaid in order to conform to certain rulings of the national Supreme Court hereinafter mentioned.
Since the opinion in that case was filed the personnel of the Supreme Court of the United States has changed and with that change has come a change in the views of that Court on questions of law such as were presented and controlled our action in case No. 1916, supra. In Helvering v. Mountain Producers Corporation, 303 U.S. 376, 58 S.Ct. 623, 82 L.Ed. 907, the previous cases of Gillespie v. Oklahoma, 257 U.S. 501, 42 S.Ct. 171, 66 L.Ed. 338, and Burnet, Commissioner of Internal Revenue, v. Coronado Oil Gas Co., 285 U.S. 393, 52 S.Ct. 443, 76 L.Ed. 815, which in large measure supplied the basis for the opinion in our case No. 1916, supra, have been expressly overruled. This reversal of rulings was due to these earlier decisions being, as stated in the Mountain Producers Corporation case, "out of harmony with correct principle" when inquiry was "pressed * * * * in the light of the expanding needs of state and nation." The effect of the decision of the national court in the Mountain Producers Corporation case upon earlier decisions of that tribunal is to some extent reviewed in the dissenting opinion therein of Mr. Justice Butler, concurred in by Mr. Justice McReynolds.
Since the national court of last resort on federal law has, as indicated above, reversed its own rulings and since this court is in duty bound, as best it can, to follow the latest expression of that court on such questions, we are obliged to overrule the decision made in case No. 1916, supra, and consequently reverse the ruling of the district court of Fremont County in the case at bar, which undoubtedly followed our earlier decision. An order to that effect will be entered, remanding the cause for further proceedings not inconsistent with this opinion.
Reversed and remanded.
KIMBALL and BLUME, JJ., concur.