Marquardt Corporation v. Weber County, Utah, 8309
| Decision Date | 09 May 1966 |
| Docket Number | No. 8309,8310.,8309 |
| Parties | The MARQUARDT CORPORATION and the United States of America, Appellants, v. WEBER COUNTY, UTAH, the State of Utah for the Uniform School Fund, Ogden City School District, Weber County School District, Mosquito Abatement District, Weber Basin Water Conservancy District, Warren-West Warren Cemetery Maintenance District, Central Weber Sewer Improvement District, Bona Vista Water Improvement District, and Ogden City, a municipal corporation, all bodies politic, Appellees. THIOKOL CHEMICAL CORPORATION and the United States of America, Appellants, v. BOX ELDER COUNTY, UTAH, the State of Utah for its own fund and for the Uniform and other State School Funds, Board of Education of the Box Elder County School District, Box Elder County Mosquito Abatement District, Brigham City, a municipal corporation, and Tremonton City, a municipal corporation, all bodies politic, Appellees. |
| Court | U.S. Court of Appeals — Tenth Circuit |
William Massar, Washington, D. C. (Richard M. Roberts, Lee A. Jackson, I. Henry Kutz, J. Edward Shillingburg, Washington, D. C., Daniel A. Alsup, Ogden, Utah, Walter G. Mann, Brigham City, Utah, William T. Thurman and Walker E. Anderson, Salt Lake City, Utah, on brief), for United States.
Phil L. Hansen and Ronald N. Boyce, Salt Lake City, Utah, were on brief, for appellees.
Before MURRAH, Chief Judge, SETH, Circuit Judge, and LANGLEY, District Judge.
This is a consolidated appeal from orders dismissing two actions brought to recover Utah use taxes assessed and collected pursuant to 59-13-73, 6 Utah Code Annotated, 1953, from appellants Marquardt and Thiokol on their use of tax exempt federal land in the performance of their contracts with the appellant United States.
The Utah statute imposes "a tax upon the possession or other beneficial use enjoyed by any private individual * * * of any property * * * which for any reason is exempt from taxation, when such property is used in connection with a business conducted for profit, except where the use is by way of a concession in or relative to the use of a public airport, park, fairground, or similar property which is available as a matter of right to the use of the general public, or where the possessor or user is a religious, educational or charitable organization or the proceeds of such use or possession inure to the benefit of such religious, educational or charitable organization and not to the benefit of any other individual association or corporation." The statute also exempts possession or use of public grazing lands under permits issued either by the United States or the State of Utah unless the lease or permit entitles the lessee or permittee to exclusive possession of the premises.
Since the actions were dismissed for failure to state a claim upon which relief could be granted, the well pleaded facts must be taken to be true for purposes of these appeals. In No. 8309 Weber County, Utah, assessed the statutory tax in 1960 and 1961 on Marquardt's use of federal land in the performance of contracts with the U. S. Air Force. In No. 8310 Box Elder County, Utah, assessed the same tax in 19601 on appellant Thiokol's use of federal land in the performance of similar contracts. In each case, the use taxes were assessed on the property's reasonable fair cash value and paid under protest to the respective counties for distribution to the counties and each of the appellee taxing units in whose behalf the assessments were made. Although the contracts are not in the record, it appears from the allegations in the petition that the contract obligated the government to reimburse the contractors for any taxes assessed and paid by the contractors pursuant to 59-13-73 and any recovery of the taxes for which the contractors had been reimbursed would inure to the benefit of the United States.
Appellants claim that the statute is unconstitutionally discriminatory because as written it is aimed at the United States and those with whom it deals, and furthermore, as construed and applied in these cases no tax was levied and collected thereunder on the use of exempt property in the performance of state contracts. The prayer was for a declaration of invalidity and for recovery of the taxes.
While the trial court's order did not specify the grounds of dismissal, the colloquy between court and counsel indicated that it was premised primarily on the view that the United States had simply agreed by contract to pay the contractors a "cost-plus-fixed-fee" (including taxes) and that the assessed taxes were in no sense levied against the United States which merely stood in the taxpayers' shoes as an assignee or subrogee. At this point in the lawsuit, the government seemed to concede that the trial court's reasoning would be valid if the claim of illegality was based solely upon the theory that the legal incidence of the tax fell directly upon the United States. But, counsel was at pains to point out, as indeed it does here on appeal, that the thrust of the attack is that the assessed taxes were discriminatorily assessed against the contractors because they were dealing with the United States; that the statute itself is aimed at the United States. In the view the trial court took of the case, it had no occasion to consider the pleaded defenses of res judicata, statute of limitations or state immunity under the Eleventh Amendment.
Utah does not seem to challenge the standing of the United States to bring the suit under its contractual obligation to reimburse the corporations and to recover the tax if illegally exacted. It simply says that its standing is no different from the corporations who paid the tax pursuant to the state exactions for the use of federal property for private gain.
In a case not unlike these we held that upon reimbursement to the taxpayer for the exacted tax pursuant to its contract to do so, the United States became the real party in interest to assert its right to be relieved from the unconstitutionally discriminatory tax and to assert its immunity from taxation by the state; that the right of immunity from the tax could be asserted by the United States or one standing in its shoes; and that "if the taxpayer has any right to assert the government's immunity, it is a derivative one." United States v. Bureau of Revenue, State of New Mexico, 10 Cir., 291 F.2d 677, and cases cited. The case was accordingly remanded to the trial court with directions to entertain the suit and adjudicate the asserted invalidity of the New Mexico state tax. On remand, however, a three-judge court convened for the purpose of adjudicating the constitutionality of the state statute held that upon reimbursement of the tax the United States became the subrogee of the taxpayer contractor; that the right of the government to maintain the suit as subrogee was derivative of the taxpayers' right; and it, therefore, could not assert its right of immunity. See United States v. Bureau of Revenue, State of New Mexico, D.C., 217 F.Supp. 849. No appeal was taken from this judgment.
We adhere to the views expressed on appeal to this court and hold that upon payment of the tax pursuant to its...
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