Lake Superior Consol Iron Mines v. Lord Burrows v. Same Royal Mineral Ass v. Same Boeing v. Same Whiteside v. Same Merrimac Mining Co v. Same Bardwell v. Sargent Land Co

• Decision Date: 07 June 1926
• Docket Number: No. 336,No. 390,No. 391,No. 388,No. 471,No. 389,No. 355,336,355,388,389,390,391,471
• Citation: 46 S.Ct. 627,70 L.Ed. 1093,271 U.S. 577
• Parties: LAKE SUPERIOR CONSOL. IRON MINES et al. v. LORD et al. BURROWS et al. v. SAME. ROYAL MINERAL ASS'N et al. v. SAME. BOEING et al. v. SAME. WHITESIDE et al. v. SAME. MERRIMAC MINING CO. v. SAME. BARDWELL et al. v. SARGENT LAND CO. et al
• Court: U.S. Supreme Court

271 U.S. 577

46 S.Ct. 627

70 L.Ed. 1093

LAKE SUPERIOR CONSOL. IRON MINES et al.

v LORD et al.

No. 336.

BURROWS et al.

v SAME.

No. 355.

ROYAL MINERAL ASS'N et al.

v SAME.

No. 388.

BOEING et al.

v SAME.

No. 389.

WHITESIDE et al.

v. SAME.

No. 390.

MERRIMAC MINING CO.

v. SAME.

No. 391.

BARDWELL et al.

v. SARGENT LAND CO. et al.

No. 471.

Argued Dec. 8 and 9, 1925.

Decided June 7, 1926.

Messrs. Charles E. Hughes, of New York City, John W. Beaumont, of Detroit, Mich., and George W. Weadock, of Saginaw, Mich., for appellants in No. 355.

Messrs. Wm. D. Bailey, Oscar Mitchell, and Albert C. Gillette, all of Duluth, Minn., for appellants in Nos. 388 and 389.

Messrs. William D. Bailey and James W. Hunt, both of Duluth, Minn., for appellants in No. 390.

Messrs. John G. Milburn, of New York City, and J. R. Van Derlip, of Minneapolis, Minn., for appellants in No. 471.

Messrs. N. L. Miller and George W. Morgan, both of New York City, for appellants in No. 336.

Messrs. Patrick J. Ryan, G. A. Youngquist, and Clifford L. Hilton, all of St. Paul, Minn., for appellees.

Mr. Justice McREYNOLDS delivered the opinion of the Court.

By their several bills in the United States District Court, appellants alleged the invalidity of chapter 226, Laws of Minnesota, approved April 11, 1923, because of conflict with the Fourteenth Amendment and the state Constitution. They sought to prevent its enforcement. That court held the enactment valid, and by decrees en- tered January 15, 1925, dismissed the bills. These appeals followed.

The challenged act (fourteen sections), effective from its passage, provides—

'Sec. 1. There shall be levied and collected upon all royalty received during the year ending December 31, 1923, and upon all royalty received during each calendar year thereafter, for permission to explore, mine, take out and remove ore from land in this state, a tax of six (3) per cent.

'Sec. 2. For all purposes of this act the word 'royalty' shall be construed to mean the amount in money or value of property received by any person having any right, title or interest in or to any tract of land in this State for permission to explore, mine, take out and remove ore therefrom; and the word 'person' shall be construed to include individuals, copartnerships, associations, companies and corporations.'

Succeeding sections relate to reports to the tax commission, method of assessment, penalties, date of payment, etc. Section 5 provides:

'A person subletting land for the use of which he received royalty shall be required to pay taxes only on the difference between the amount of royalty paid by him and the amount received.'

And section 8:

'The situs of royalty for all purposes of this act shall be in this state, and the tax herein provided for shall be a specific lien from the time the same is due and payable upon all and singular the right, title, and interest of the person to whom such royalty is payable, in and to the land for permission to explore, mine, take out and remove ore on which the royalty is paid.'

Article 9, § 1, Constitution of Minnesota:

'The power of taxation shall never be surrendered, suspended or contracted away. Taxes shall be uniform upon the same class of subjects, and shall be levied and collected for public purposes. * * *' Extensive areas in northeastern Minnesota contain beds of rich iron ore and derive their chief value therefrom. Titles to these lands are held by many resident and nonresident individuals and corporations. For many years these owners have followed the common practice of making long-term leases (ordinarily 50 years) to parties who agree to mine the ore and pay the lessor, or his successors, at some designated place, a specified amount (12.5 cent to $1.25), or royalty, for each ton removed. Some lessees have made subleases, reserving to themselves something above what they are obligated to pay.

Great bodies of ore are now subject to such leases, or conveyances of similar import, and every year millions of tons are mined thereunder, most of which goes out of the state. The consequent royalties are very large-$16,000,000 during 1923.

In 1921 the Minnesota Legislature adopted the Occupation Tax Act-chapter 223. It prescribes a charge upon those who engage in mining, amounting to 6 per centum of the value of the ore extracted and removed, after deducting costs of operation and royalties. Oliver Iron Mining Co. et al. v. Lord, 262 U. S. 172, 43 S. Ct. 526, 67 L. Ed. 929, sustained this act. The Legislature evidently intended that chapter 226, Laws of 1923, should supplement chapter 223, Laws of 1921, and thus secure payment to the state of 6 per centum upon the value of all extracted ores, less the expense of raising them. If the owner operates, he must pay this 6 per centum, under the Occupation Tax Act; if a lessee mines, the act requires him to pay the same amount less royalty. The act of 1923 lays a charge of 6 per centum upon the royalty. See State v. Armson (Minn.) 207 N. W. 727, 731.

Appellants—corporate and individual—receive royalties from iron mines, under lease or similar contracts, at designated places, sometimes within and sometimes without the state. Some of them reside within the state and some without. Some own the fee; some are lessees, who have executed subleases. They maintain that the tax prescribed by chapter 226 of 1923 is not laid uniformly upon the same class of subjects, as required by the state Constitution; that its enforcement would deprive them of the equal protection of the laws and of property without due process of law, contrary to the Fourteenth Amendment; and that it impairs the...