Mississippi River Fuel Corporation v. Cocreham, 23402.

Citation382 F.2d 929
Decision Date13 September 1967
Docket NumberNo. 23402.,23402.
PartiesMISSISSIPPI RIVER FUEL CORPORATION et al., Appellants, v. Roland COCREHAM, Collector of Revenue of the State of Louisiana, Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

COPYRIGHT MATERIAL OMITTED

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

Edwin L. Weisl, Asst. Atty. Gen., Roger P. Marquis, Atty., Dept. of Justice, Washington, D. C., for the United States as amicus curiae in support of appellant.

Emmett E. Batson, Chapman L. Sanford, Cyrus A. Greco, Baton Rouge, La., for appellee.

George C. Schoenberger, Jr., Joseph G. Hebert, Jess Johnson, Jr., New Orleans, La., amici curiae on the merits.

Before RIVES and WISDOM, Circuit Judges, and CONNALLY, District Judge.

WISDOM, Circuit Judge:

The substantive issue for decision is the right of the State of Louisiana to exact severance taxes on oil and gas produced under a lease to a private corporation when the land in question is part of a federal enclave, Barksdale Air Force Base in Bossier Parish, Louisiana. The district court held that the State may exact such taxes. 247 F. Supp. 819. We reverse. When the United States acquired title to the land, it acquired "exclusive jurisdiction" over the property, precluding the State's levying and collecting a tax on oil and gas severed from the land by a third party under a lease from the United States. Article I, Section 8, Clause 17, United States Constitution; Humble Pipe Line Co. v. Waggonner, 1964, 376 U.S. 369, 84 S.Ct. 857, 11 L.Ed.2d 782.

In 1930, the United States, with the consent of the Louisiana legislature,1 acquired from the state the 22,000 acres that comprise the Barksdale base. The defendant, in his capacity as Collector of Revenue, collected the Louisiana severance tax on oil and gas that the Mississippi River Fuel Corporation produced at Barksdale during September, 1963. The Company paid the tax under protest and brought this action in the United States District Court for the Eastern District of Louisiana to recover the amount so paid.2

Before reaching the substantive issue, however, we must decide whether the Eleventh Amendment withdraws jurisdiction over this suit from the federal courts.

I.

Under the Eleventh Amendment, private litigants may not sue a state in federal court without the state's consent.3 Smith v. Reeves, 1900, 178 U.S. 436, 20 S.Ct. 919, 44 L.Ed. 1140; Hans v. State of Louisiana, 1890, 134 U.S. 1, 10 S.Ct. 504, 33 L.Ed. 842.

A. In the district court, the Collector conceded jurisdiction and defended the case on the merits, but now he urges that this suit is one against the State of Louisiana and that Louisiana has not consented to be sued in a federal court. The Collector may question this court's jurisdiction on the basis of the Eleventh Amendment although he did not raise the issue below. Ford Motor Co. v. Treasury Dep't, 1945, 323 U.S. 459, 467, 65 S.Ct. 347, 89 L.Ed. 389. Moreover, the Collector's failure to challenge the district court's jurisdiction cannot itself constitute the requisite consent of the state; it is conceded that the Collector has no authority to waive the state's immunity from suit.

B. The Company contends that this suit has been brought against the Collector as an individual and not against the State of Louisiana. Cf. Atchison, T. & S. F. Ry. v. O'Connor, 1912, 223 U.S. 280, 32 S.Ct. 216, 56 L.Ed. 436. It also contends that Louisiana has consented to be sued for tax refunds in the federal courts. Since we find the latter contention dispositive of the issue, we do not decide whether this suit could be maintained against the Collector as an individual.

Act 330 of 1938, LSA-R.S. 47:1576, provides that persons wishing to contest the legality of state taxes paid under protest shall have "a legal remedy and right of action in any state or federal court having jurisdiction of the parties and subject matter * * *."4 At the time the legislature enacted this statute, Article III, Section 35, of the Louisiana Constitution limited the legislature's power to waive the state's immunity from suit in two ways. It required the legislature to "provide a method of procedure and to specify the effect of judgments which may be rendered" whenever the legislature authorizes a suit against the state. In 1946 and again in 1960, however, Article III, Section 35, was amended. The question is whether the 1946 and 1960 amendments withdrew the consent to suit in federal court that Act 330 had previously granted.

The present version of Article III, Section 35, provides that suits "authorized under this constitutional provision" shall be instituted only in Louisiana state courts.5 In answer to the contention that this provision prevents the federal courts from hearing tax refund suits, the Company argues that suits brought under Act 330 are independent of Article III, Section 35. The Company's contention derives support from the explicit exemption of taxpayers' suits from legislation designed to implement the constitutional provision. Act 27 of 1960. Moreover, federal courts have accepted jurisdiction of tax refund suits under Act 330 in cases that arose after the 1946 amendment,6 the first law to include language restricting suits against the state to Louisiana courts.7 And in 1959 the Louisiana Supreme Court declared that such suits may be brought in federal courts.8 In none of these cases, however, was the issue of federal jurisdiction raised; the parties simply assumed that restrictions in Article III, Section 35, had no effect on Act 330. The legislature acted on a similar assumption in 1950 when it incorporated Act 330 in full in the Louisiana Revised Statutes. The revision corrects incongruities and excludes obsolete laws. Act 42 of 1942. See also "Report to Accompany the `Projet of Louisiana Revised Statutes of 1950'", 1 LSA p. 5.

The amended version of Article III, Section 35, if applicable to tax refund suits, would not only withdraw Louisiana's consent to suit in a federal court; it would also affect the procedure for satisfaction of a judgment in favor of a taxpayer. Act 330 requires the Collector to segregate taxes paid under protest and repay them, with interest, if the taxpayer prevails in a suit for a refund; Article III, Section 35, forbids satisfaction of any judgment against the state except by a legislative appropriation made subsequent to the judgment. Although the present case does not directly involve the procedure for satisfaction of taxpayers' judgments, this second conflict sheds light on the basic issue whether the amendments of 1946 and 1960 should be read to alter Act 330.

If Article III, Section 35, applied to suits to recover taxes unlawfully assessed, legislative appropriations would now be necessary to satisfy judgments in favor of taxpayers successfully challenging a Louisiana tax. Before Act 330, the Louisiana statute relating to reimbursement of unconstitutional taxes paid under protest required such appropriations. Act 16 of 1934, amended by Act 23 of 1935. Because this requirement deprived protesting taxpayers of an adequate remedy at law, a federal court in Texas Co. v. Wilkinson, E.D.La., 1937, 21 F.Supp. 771, issued an interlocutory injunction against the collection of a Louisiana tax. The legislature promptly enacted Act 330 to avoid the result in Wilkinson. See A. Sulka & Co. v. City of New Orleans, 1945, 208 La. 585, 23 So.2d 224.

Act 330 forbids Louisiana courts from enjoining the collection of state taxes, and no subsequent legislation, including the constitutional amendments of 1946 and 1960, is inconsistent with this provision. If the amendments to Article III, Section 35, do not affect Act 330, federal courts are similarly powerless to enjoin state taxes, because Act 330 gives the taxpayer an adequate state remedy.9 If, however, the amendments apply to taxpayers' suits, they have restored the defect that Act 330 was designed to cure and have made federal courts again available to enjoin the collection of unconstitutional taxes. The taxpayer may seek an injunction even though the amendments also repeal the state's consent to be sued in a federal court; it is settled that a suit to enjoin the collection of unconstitutional taxes is an action against the tax collector as an individual and not against the state. Georgia R. R. & Banking Co. v. Redwine, 1952, 342 U.S. 299, 72 S.Ct. 321, 96 L.Ed. 335; see Ex parte Young, 1908, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714.

The Louisiana Constitution instructs the legislature to "provide against the issuance of process to restrain the collection of any tax and to provide for the prompt recovery by every taxpayer of any illegal tax paid by him."10 This constitutional provision was left intact in 1946 and 1960. In the face of this constitutional policy against actions to enjoin the collection of taxes, we cannot believe that the draftsmen of the 1946 and 1960 amendments intended to return to the situation antedating Act 330. Instead, we hold that taxpayers' suits are not subject to Article III, Section 35.11

The Collector asserts that Article III, Section 35, is the only section of the Louisiana Constitution that authorizes the legislature to waive the state's immunity from suit. Therefore, he says, the restriction to state courts of all suits "authorized under this constitutional provision" necessarily applies to the waiver of immunity in Act 330. This argument rests on the hypothesis that the legislature is powerless to waive the state's immunity from suit in the absence of an affirmative constitutional authorization. Since the state's immunity does not derive from the Louisiana Constitution, the argument is without merit. As the Louisiana courts have frequently pointed out, the legislature may act in all matters that the Constitution does not prohibit.12 No Louisiana Constitution prior to that of 1898 contained a provision relating to suits against ...

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