Murphy Corp. v. Fontenot

• Decision Date: 22 March 1954
• Docket Number: 41369,Nos. 41368,s. 41368
• Court: Louisiana Supreme Court
• Parties: MURPHY CORP. et al. v. FONTENOT, Collector of Revenue. NATURAL GAS & OIL COPR. et al. v. FONTENOT, Collector of Revenue.

Page 180

73 So.2d 180

225 La. 379

MURPHY CORP. et al. v. FONTENOT, Collector of Revenue.

NATURAL GAS & OIL COPR. et al. v. FONTENOT, Collector of Revenue.

Nos. 41368, 41369.

Supreme Court of Louisiana.

March 22, 1954.

Rehearing Denied April 26, 1954.

John B. Smullin, Levi A. Himes, Baton Rouge, George C. Gibson, Ponchatoula, for defendant-appellant.

C. Ellis Ott, Bogalusa, amicus curiae.

Shotwell & Brown, Oliver & Oliver, Monroe, Cook, Clark & Egan, Shreveport, for plaintiffs-appellees.

MOISE, Justice.

The issues being identical, these two cases were consolidated for the purposes of trial. The State of Louisiana, through its Collector of Revenue, Rufus W. Fontenot, imposed severance gas gathering taxes on fugitive gas captured by the plaintiff-lessees, Murphy Corporation et al. and Natural Gas and Oil Corporation et al., from a part of the lands of Barksdale Air Force Base. Plaintiffs paid these taxes, in the amounts of $2,371.29 and $1,191.04, respectively, under protest. This suit is for a refund of the money so paid. The district court rendered judgment as prayed for by the plaintiffs.

From that judgment the State of Louisiana prosecutes this appeal.

The following pertinent facts will be shown by the stipulation of record.

Feeling that it would be advantageous to the inhabitants of Shreveport, Louisiana and Bossier Parish, there was donated to the United States Government in the year 1930 by the City of Shreveport and the Parish of Bossier 22,000 acres of land in Bossier Parish, Louisiana to be used as an Army Air Force Base. The State of Louisiana donated the beds of the waters within the area. Thereafter, the Barksdale Air Force Base was constructed and was operated by the Secretary of War.

On April 16, 1943, the Secretary of War wrote a letter of acceptance to the Governor of the State of Louisiana in which he stated that the primary purpose of the land was for military purposes.

During the early part of 1951, a determination was made that a part of these lands which had been conveyed contained oil and gas deposits and were being drained by private enterprise engaged in the business of capturing the fugitive oil and gas deposits from the soil and reducing such to private ownership. Protective measures from the drainage were sought and secured by the Government's selling exploratory rights to private purchasers or lessees who became the owners of all the severed minerals when they were captured, except a 2/8ths royalty paid the U. S. Government.

On April 2, 1941, the then eminent Attorney General of the United States, after being called in consultation and after having a conference with the Cabinet and with the President of the United States, wrote an advisory letter to the President in which he directed that there was an implied authority in the President to take protective measures in cases where lands, acquired by the United States for a specific purpose, are found to contain minerals which are being drained by adjoining owners--such lands not being subject to the Mineral Lands Leasing Act of February 25, 1920, 41 Stat. 437, as amended, U.S.C.A., title 30, sec. 181 et seq. It was also stated in the letter that if it were advisable, or more convenient, protective action could be taken by another department or agency. The Attorney General's letter stated:

'If, however, it should be determined in particular cases that it is advisable or more convenient for the protective action to be taken by another department or agency it is within your power to transfer to the latter department or agency or Executive order the necessary authority, duty and jurisdiction with respect to the oil, to be exercised, however, upon the condition and to the extent that there is no interference with the primary use of the land.'

Pursuant to this letter, and by virtue of Public Land Order 701, published in the Federal Register of February 28, 1951, Volume 16, No. 40, Page 1901, and pursuant to the authority granted by Executive Order No. 9337 of April 24, 1943, U.S. Code Cong.Service 1943, p. 5.39, the right to sell leases of exploration for fugitive oil and gas in certain described tracts of Barksdale Air Force Base was transferred to the Department of the Interior with the provision that: 'There is no interference with the primary use of Barksdale Air Force Base.'

The Department of the Interior advertised for bids to carry out the measures of protection. Natural Gas and Oil Corporation and W. R. Stephens were the successful bidders. On July 31, 1951, W. R. Stephens assigned his undivided one-half interest to Murphy Corporation, one of the present plaintiffs.

In the lease granted to the plaintiffs, the usual clause common to such leases was included, with certain restrictions of operation, and the Government retained 2/8ths royalty rights in the oil and gas produced.

The leased land for the described purposes was 2,060 acres out of the 22,000 acres donated. The land leased was set apart from the land used for the governmental purposes of the Air Force Department. In fact, there was a dividing fence between the oil field and the Air Force Base. These private owners were granted the right of use and control over all instrumentalities, owned and constructed by them, such as drilling machines, towers, tanks and pipe lines for their private commercial purposes to explore for oil and gas and to reduce such to private ownership. Under these considerations, the State of Louisiana imposed a non-discriminatory tax at the time of severance.

Upon severing gas from the leased lands, the plaintiffs paid the Louisiana Gas Gathering Severance Tax, LSA-R.S. 47:631 et seq., under protest and now contend that the exclusive jurisdiction of the United States over the lands from which the gas was extracted has divested the State of Louisiana of its jurisdiction to collect taxes by virtue of Article I, § 8, Clause 17, of the Constitution of the United States and Act No. 12 of the Louisiana Legislature of 1892 and Act No. 31 of 1942, LSA-R.S. 52:1.

Article I, § 8, Clause 17 of the Constitution of the United States provides that Congress shall have the power to:

'exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the Acceptance of Congress, become the Seat of the Government of the United States, * * * and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings'.

The above facts show that the land leased was not to be used for the erection of a fort, magazine, arsenal, dock-yard or other needful buildings for military purposes. When the Federal Government granted to the private oil operators the right of exploration for oil and gas for their private commercial purposes, it was not the intention to take away from the donating State the right to collect its severance taxes which apply to all operators alike within the territorial jurisdiction of Louisiana.

Act No. 12 of 1892 of the Legislature of Louisiana, as amended by Act No. 31 of 1942, carried in the LSA-Revised Statutes as 52:1 reads:

'The United States, in accordance with the seventeenth clause, eighth section of the first article of the Constitution of the United States, may acquire and occupy any land in Louisiana required for the purposes of the federal government. The United States shall have exclusive jurisdiction over the property during the time that the United States is the owner or lessee of the property. The property shall be exempt from all taxation, assessments, or charges levied under authority of the state.

'The state may serve all civil and criminal process issuing under authority of Louisiana on the property acquired by the United States.'

It is self-evidence that the tax herein imposed is not levied on the property of the United States but on the property of the lessees, who use the gas and oil for their private commercial purposes.

We do not deny the exclusive federal jurisdiction over the donated lands or over any instrumentalities of the Federal Government, but our United States Supreme Court and the Attorney General of the United States have set out the navigable lanes for proper procedure. In fact, it was stated in the case of Fort Leavenworth R. Co. v. Lowe, Sheriff, 114 U.S. 525, 5 S.Ct. 995, 1002, 29 L.Ed. 264:

'Where, therefore, lands are acquired in any other way by the United States within the limits of a state than by purchase with her consent, they will hold the land subject to this qualification: that if upon them forts, arsenals, or other public buildings are erected for the uses of the general government, such buildings, with their appurtenances, as instrumentalities for the execution of its powers, will be free from such interference and jurisdiction of the state as would destroy or impair their effective use for the purposes designed. Such is the law with reference to all instrumentalities created by the general government. Their exemption from state control is essential to the independence and sovereign authority of the United States within the sphere of their delegated powers. But, when not used as such instrumentalities, the legislative power of the state over the places acquired will be as full and complete as over any other places within her limits.' (Italics ours.)

Under the above pronouncement, the authority to tax is vested in the State, and the immunity of the private owners under their theoretical concept is divested.

Act No. 12 of 1892, as amended, LSA-R.S. 52:1, was a legislative consent of the State of Louisiana to the donation of the lands herein involved. This consent was evidence, as shown from the facts, that property was exempt from taxation as long as it was used for military purposes. Exclusive legislative jurisdiction was granted to the federal...