Jenny Lynn Min. Co., In re, 84-4014
| Decision Date | 10 January 1986 |
| Docket Number | No. 84-4014,84-4014 |
| Citation | 780 F.2d 585 |
| Parties | , 13 Bankr.Ct.Dec. 1392, Bankr. L. Rep. P 70,932, 16 Envtl. L. Rep. 20,254 In re JENNY LYNN MINING CO., Debtor; Gerald H. SPIERS, Trustee, Plaintiff-Appellant, v. OHIO DEPARTMENT OF NATURAL RESOURCES, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Sixth Circuit |
R.P. Cunningham, Raymond J. Pikna, Jr. (argued), Knepper, White, Arter & Hadden, Columbus, Ohio, for plaintiff-appellant.
Raymond Studer, Asst. Atty. Gen., Columbus, Ohio, Edda Sara Post, Asst. Atty. Gen. (argued), for defendant-appellee.
Before LIVELY, Chief Judge; CONTIE, Circuit Judge; and BROWN, Senior Circuit Judge.
The principal question in this case is whether Ohio's strip mining permit fee requirement for posting a performance bond is an excise tax entitled to priority treatment under the Bankruptcy Code, 11 U.S.C. Secs. 101 et seq. (1982). The matter is here on appeal from the district court, which affirmed the finding and conclusion of the bankruptcy court that the permit fee is an excise tax.
Jenny Lynn Mining Co. (Jenny Lynn) was licensed by the Ohio Department of Natural Resources (ODNR) to carry on strip mining operations. On February 18, 1981 Jenny Lynn filed a voluntary petition in bankruptcy in the Southern District of Ohio. The petition sought "straight" bankruptcy, that is, liquidation under Chapter 7. Following the election of Gerald H. Spiers as trustee, ODNR filed several proofs of claim. We are concerned only with proof of claim # 15, filed August 5, 1981, in which ODNR sought priority status for a claim of $42,060. On the proof of claim form ODNR described the ground of liability as:
Non-payment of cash and non depositing of surety bond or certificates of deposit required.
The trustee filed an objection to proof of claim # 15 on the ground that "[n]o documentation was attached to the proof of claim substantiating the claim." The basis of the objection was former Bankruptcy Rule 302(c), 1 which provided:
When a claim, or an interest in property of the debtor securing the claim, is founded on a writing, the original or a duplicate shall be filed with the proof of claim unless the writing has been lost or destroyed. If lost or destroyed, a statement of the circumstances of the loss or destruction shall be filed with the claim. If a security interest is claimed, the proof of claim shall be accompanied by satisfactory evidence that the security interest has been perfected.
The bankruptcy court conducted a hearing on the trustee's objection and concluded that Rule 302(c) did not apply since ODNR's claim was based on an obligation created by a statute and was not founded on a writing. The bankruptcy judge wrote:
Where a Proof of Claim is based upon the failure to perform a state statutory act, it will not generally be found necessary to attach documentation of the enactment.
The parties agreed that the claim was entitled to priority if the permit fee was in fact an excise tax. The permit fee requirement was contained in Ohio Revised Code (O.R.C.) Sec. 1513.07(A) (1978), which provided 2 in part:
No licensed operator shall conduct a strip mining operation without a permit for such operation issued by the chief of the division of reclamation. The chief shall issue an order granting a permit upon the approval by him of an application, as required by this section, payment of a permit fee in an amount equal to the product of thirty dollars multiplied by the number of acres, estimated in the application, which will comprise the area of land affected within the permit period by the strip mining operation for which the permit is requested, and the deposit of a surety bond, cash, or certificates of deposit as prescribed by division (A) of section 1513.08 of the Revised Code for the number of acres that the operator states in his application that will be affected during the first year of operation under the permit.
Examining the entire reclamation law the bankruptcy judge noted that the bond or money required to be deposited in order to obtain a permit was used both for actual reclamation of land that a strip mine operator failed to reclaim, and for expenses of operating the division of reclamation. He wrote, "[T]he privilege of operating a strip-mine in Ohio carried with it a statutorily imposed charge, or expense of doing business, to support both reclamation and operation of the agency established by the state to implement reclamation."
Defining an excise tax as "a tax imposed upon the performance of an act, the engaging in an occupation, or the enjoyment of a privilege," the bankruptcy court concluded that the permit fee is an excise tax. The court found the measure of the tax to be tied to "the meeting of responsibilities which exist concomitantly with the enjoyment of the privilege of operating a strip-mine."
On appeal to the district court the trustee argued that ODNR's claim did not involve an excise tax. According to the trustee, it was either a claim for a penalty or for a license fee, or a claim arising from the debtor's failure to perform its duties. However, the district court agreed with the bankruptcy court on both issues. The district court determined that the claim was clearly based on a statutory obligation, not on a writing between Jenny Lynn and ODNR. The district court also held that the findings on which the bankruptcy court based its characterization of the permit fee as an excise tax were not clearly erroneous, and upheld the determination that the claim was one for a tax, and therefore entitled to priority.
We agree with the courts below that Rule 302(c) did not apply to ODNR's claim. With respect to unsecured claims, the purpose of Rule 302(c) was to apprise the bankruptcy court and the trustee of the terms of any writing which formed the basis of a claim. The statutory requirement that strip mine operators post performance bonds to obtain permits is clear and unconditional. There was no documentation that would have provided additional notice to the trustee of the basis for the claim. Attaching a copy of the statute would have added nothing to the proof of claim. Proof of claim # 15 was not based on a "writing."
Government claims for excise taxes are entitled to priority under 11 U.S.C. Sec. 507(a)(6)(E) (1978). 3
(a) The following expenses and claims have priority in the following order:
* * *
* * *
(6) Sixth, allowed unsecured claims of governmental units, to the extent that such claims are for--
* * *
* * *
(E) an excise tax on--
(i) a transaction occurring before the date of the filing of the petition for which a return, if required, is last due, under applicable law or under any extension, after three years before the date of the filing of the petition; or
(ii) if a return is not required, a transaction occurring during the three years immediately preceding the date of the filing of the petition;
The bond or deposit required by O.R.C. Sec. 1513.07(A) was "for the payment of an amount of money equal to the estimated cost to the state to perform reclamation ... in case of default by the operator." O.R.C. Sec. 1513.08(A) (1975). In addition to requiring an operator to pay a fee and deposit a surety bond, cash or certificate of deposit when applying for a strip mining permit, the reclamation statute required additional bonds to cover "increments" as the mining extended to portions of the permit area not covered by the first year of operation. O.R.C. Sec. 1513.08(A) (1981).
The trustee contends that ODNR's claim is not founded on an excise tax, but is merely a general claim for an unsecured debt. This court recently dealt with a somewhat similar question in United States v. River Coal Co., Inc., 748 F.2d 1103 (6th Cir.1984). The Surface Mining Control and Reclamation Act of 1977, 30 U.S.C. Secs. 1201 et seq. (1982), requires strip mine operators to remit for deposit in the Abandoned Mine Reclamation Fund a reclamation fee of 35 cents per ton of coal mined. 30 U.S.C. Sec. 1232(a). A preliminary question in River Coal was whether these "fees" are in fact "taxes" and nondischargeable in bankruptcy. The district court held that the fees are taxes and the debtor in Chapter 11 proceedings argued on appeal that they are true fees. This court concluded that the reclamation fees...
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