Kennecott Copper Corporation v. STATE TAX COM'N, Civil Actions No. 671

• Decision Date: 30 October 1944
• Docket Number: 680.,Civil Actions No. 671
• Citation: 60 F. Supp. 181
• Parties: KENNECOTT COPPER CORPORATION v. STATE TAX COMMISSION. SILVER KING COALITION MINES CO. v. SAME.
• Court: U.S. District Court — District of Utah

60 F. Supp. 181

KENNECOTT COPPER CORPORATION v. STATE TAX COMMISSION.

SILVER KING COALITION MINES CO. v. SAME.

Civil Actions Nos. 671, 680.

District Court, D. Utah, Central Division.

October 30, 1944.

C. C. Parsons, of Salt Lake City, Utah, for Kennecott Copper Corporation.

R. J. Hogan, of Salt Lake City, Utah, for Silver King Coalition Mines Co.

A. H. Nielsen and W. L. Skanchy, both of Salt Lake City, Utah, for State Tax Commission.

JOHNSON, District Judge.

The decision of these cases depends upon the meaning and fair interpretation of the State and the United States statutes applicable to the situation.

These various statutes have been read and re-read during the progress of this discussion, and I will not have them re-read at this time, but they may be considered incorporated in the remarks that I shall make respecting the cases.

In this connection I will say that a taxing body, such as the Utah State Tax Commission, is charged with the duty of collecting all taxes that may be properly assessed and collected under the laws of the State, and it becomes its duty as such to solve powers that are doubtful in favor of the state. That is the universal practice, so far as I have observed, of all taxing bodies, including the revenue department of the United States. So that it results in many cases an appeal must be made to the courts to determine what is the proper meaning and construction of the statutes under which taxes have been levied and assessed. That is the case here.

The State statute provides for the collection of an occupation tax on the gross sales or value of the metals produced by mining companies, and so in these cases the State Tax Commission has proceeded to levy assessments upon the gross amount which it claims has been paid to or received by the respective mining companies covering the period involved, and which assessments have been paid under protest by plaintiff companies.

The tax or levy in these cases has this anomaly: For the bulk of the metal values produced it is agreed, using copper as an illustration, that it has a valuation or sales price of twelve cents a pound—the relative proportion of these two prices I am unable to state offhand—but for that which was produced in excess of this twelve cents per pound price they are here claiming a price of seventeen cents, resulting from a payment made, not by the purchasers of the metals in question, but by the United States Government.

I just asked counsel for the State Tax Commission whether that extra, additional payment was made for the benefit of the purchasers of these metals, or for the benefit of the seller of the metals. Not holding him to his answer, I am, however, of the opinion that he answered correctly when he said it was for the benefit of the sellers, that is to say, of the plaintiffs in these actions.

So that we have this question submitted for determination: Was that extra five cents per pound for this additional production any part of the purchase price or the sales price of these metals?

Certainly, so far as the relation between the purchaser and the seller or the Government is concerned, it constituted no bargain contract price or part of the price. Then what was it?

To that I think we must look to the statutes of the United States. The State of Utah, neither by its Legislature nor by its Tax Commission, can say what the United States Government shall do with its own money. That is a matter that must be determined by Congress, and its determination of that question is final and conclusive upon all the courts of...