Mississippi River Fuel Corporation v. Fontenot

• Decision Date: 16 July 1956
• Docket Number: No. 15994.,15994.
• Citation: 234 F.2d 898
• Parties: MISSISSIPPI RIVER FUEL CORPORATION and Murphy Corporation, Appellants, v. Rufus W. FONTENOT, Collector of Revenue, State of Louisiana, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

234 F.2d 898 (1956)

MISSISSIPPI RIVER FUEL CORPORATION and Murphy Corporation, Appellants, v. Rufus W. FONTENOT, Collector of Revenue, State of Louisiana, Appellee.

No. 15994.

United States Court of Appeals Fifth Circuit.

June 15, 1956.

Rehearing Denied July 16, 1956.

Clyde R. Brown, Monroe, La., Clarence L. Yancey, Shreveport, La., C. McVea Oliver, Monroe, La., for appellants.

John B. Smullin, Chief Counsel, Dept. of Revenue, Baton Rouge, La., for appellee.

Before HUTCHESON, Chief Judge, and RIVES and JONES, Circuit Judges.

HUTCHESON, Chief Judge.

In response to the state's demand for the severance tax¹ on oil and gas produced on Barksdale Field at Shreveport, Louisiana, the taxpayers paid under protest in compliance with the statute and brought this suit to recover the amount paid.

Based upon Article I, § 8, Clause 17 of the Federal Constitution, giving to the Congress the power to exercise exclusive jurisdiction over places purchased by the United States with the consent of a state legislature, for the erection of forts, magazines, dock yards, and other needful buildings, and on Act 12 of 1892 Legislature, which purports to give the federal government exclusive jurisdiction over land acquired by it within the state, plaintiff's claim was that the state has surrendered its jurisdiction over the area, in and from which the oil and gas were produced, to the federal government, and, therefore, its laws imposing severance taxes on oil and gas produced on property of the government could not extend to and operate in that area.

The defenses were: (1) that Barksdale Field was acquired by donation from the City of Shreveport, and was not, within the meaning of the invoked provision of the Federal Constitution, purchased by the consent of the legislature; (2) that Act 12 of the Louisiana Legislature of 1892, relied on as giving legislative consent, is unconstitutional in that it is in violation of the article of the Louisiana Constitution, which provides that funds, credits, etc. cannot be loaned, and in violation of the article which provides that the power to tax corporations shall not be surrendered or suspended; (3) the tax is collectible in any event because, by paragraph (k), page 6, the lessees, upon consideration, contracted to pay the tax; and (4) the issue involved here was decided by the Louisiana Supreme Court against plaintiff in a suit² between the same parties, submitted on a stipulation of record in substance the same as that made here.

The district judge finding and concluding: (1) that the Louisiana severance tax is not a tax upon property but upon the privilege of severing natural resources from the soil, and in this case no part of the tax burden fell upon the federal government but was payable by the lessee who owned the working interest in the resource produced; (2) that the deeds by which the federal government acquired the title were donations and not sales, and the land did not fall within the purview of Art. I, § 8, Clause 17 of the Federal Constitution, and that exclusive territorial jurisdiction was not ceded by the State of Louisiana to the Federal Government; and (3) under paragraph (k) of the lease the lessees were obligated to pay the tax; rendered the judgment appealed from.

Appellants stating by way of preface: that they are not seeking to avoid the payment of the taxes because they are the lessees of the United States or because of any relationship, contractual or otherwise, with the Federal Government; and that they do not in any way question or seek to limit the scope of the principle³ denying to persons dealing with the government immunity from state taxation; vigorously insist that the United States has exclusive jurisdiction over Barksdale Field and confidently invoke, as applicable here, the settled principle that a state may not exercise any legislative authority, including its taxing power in relation to property and activities of individuals and corporations within the territory where the United States has such jurisdiction.

Insisting that what and all that is presented here is a conflict in jurisdiction between the State of Louisiana on the one hand and the United States on the other over Barksdale Airforce Base, one of the largest military installations in the nation, appellants' argument proceeds thus:

"The primary question in these suits, therefore, is whether the United States is vested with exclusive jurisdiction over Barksdale Air Force Base, the area from which minerals are being produced, and the area on which gas is gathered. If such jurisdiction is vested in the United States, then the taxes claimed cannot be collected for it is axiomatic that the taxing power of a state is limited to persons within, and subject to, such state\'s jurisdiction. The principle is succinctly stated in 84 C.J.S., Taxation, § 11, p. 61:

"`Since state laws do not operate beyond its jurisdictional limits, the taxing power of a state is limited to persons and property within, and subject to, its jurisdiction, and the same rule applies to the taxing power of a territory. * * *\'"

Proceeding upon and from this premise, it attacks the Murphy case, supra, as wrongly decided, and the opinion as basically unsound. Insisting that the theory of appellee and of the court below, that because the land was not paid for with money but was donated "it was not purchased" within the constitutional provision, is wholly untenable, it urges upon us that every fact in the case leads to, indeed compels, the conclusion that exclusive legislative jurisdiction over the property from which the oil and gas comes was vested in the United States,...