Oliver Iron Mining Co v. Lord Iron Co v. Same Iron Mining Co v. Same Bennett Mining Co v. Same Republic Iron Steel Co v. Same Biwabik Mining Co v. Same Interstate Iron Co v. Same, No. 560

• Court: United States Supreme Court
• Writing for the Court: VAN DEVANTER
• Citation: 262 U.S. 172,67 L.Ed. 929,43 S.Ct. 526
• Parties: OLIVER IRON MINING CO. v. LORD et al. IRON CO. v. SAME. IRON MINING CO. v. SAME. BENNETT MINING CO. et al. v. SAME. REPUBLIC IRON & STEEL CO. et al. v. SAME. BIWABIK MINING CO. et al. v. SAME. INTERSTATE IRON CO. v. SAME
• Docket Number: No. 566,No. 564,No. 565,MESABA-CLIFFS,No. 560,CLEVELAND-CLIFFS,No. 561,No. 563,No. 562
• Decision Date: 07 May 1923

262 U.S. 172 43 S.Ct. 526 67 L.Ed. 929 OLIVER IRON MINING CO.

v.

LORD et al.

No. 560. CLEVELAND-CLIFFS IRON CO. v. SAME. No. 561. MESABA-CLIFFS IRON MINING CO. v. SAME. No. 562. BENNETT MINING CO. et al. v. SAME. No. 563.

REPUBLIC IRON & STEEL CO. et al.

v. SAME. No. 564. BIWABIK MINING CO. et al. v. SAME. No. 565. INTERSTATE IRON CO. v. SAME. No. 566. Argued Dec. 6 and 7, 1922. Decided May 7, 1923.

[Syllabus from 172-173 intentionally omitted]

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Mr. C. A. Severance, of St. Paul, Minn., for appellant Oliver Iron mining co.

Mr. H. J. Grannis, of Duluth, Minn., for appellants Cleveland-Cliffs Iron Co. and Mesaba-Cliffs Iron Mining Co.

Messrs. Oscar Mitchell and Wm. D. Bailey, both of Duluth, Minn., for appellants Bennett Mining Co. and others and Republic Iron & Steel Co. and others.

Mr. E. W. MacPherran, of Duluth, Minn., for appellants Biwabik Mining Co. and others and Interstate Iron Co.

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Messrs. Egbert S. Oakley and Patrick J. Ryan, both of St. Paul, Minn., for appellees.

Mr. Justice VAN DEVANTER delivered the opinion of the Court.

These are suits to restrain and prevent the enforcement of a taxing act adopted by the state of Minnesota, April 11, 1921. Chapter 223, Laws 1921. The principal sections of the act are copied in the margin¹ and may be summarized as follows: The first subjects all who are 'engaged in the business of mining or producing iron ore or other

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ores' within the state to the payment in each year of 'an occupation tax' equal to 6 per cent. of the value of the ore mined or produced during the preceding year—such tax to be 'in addition to all other taxes.' The second directs that the tax be computed on the value of the ore at the place where it is 'brought to the surface of the earth' less certain deductions to be noticed presently. The third requires all who are engaged in such business to make on or before the 1st of February in each year a true report under oath of relevant information respecting their mining operations during the preceding year. And the sixth provides that, where such a report is not made, the State Tax Commission shall determine, from such information as it may possess or obtain, the amount and

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value of the ore, and shall compute the tax and include therein a penalty of 10 per cent. for the failure to make the report.

The plaintiffs are corporations engaged in the business of mining or producing iron ore from mines within the state, and the defendants are the officers designated to carry the act into effect.

Preparatory to assessing the tax in 1922 the defendants requested the plaintiffs to make the prescribed reports of their mining operations during 1921, which the plaintiffs refused to do because they conceived that the act was invalid. The defendants then proceeded to take the requisite steps for imposing the tax, and the plaintiffs brought these suits to restrain and prevent such action on the grounds that the act and the tax about to be imposed were in conflict with the commerce clause of the Constitution of the United States, with the equal protection clause of the Fourteenth Amendment, and with a clause in section 1 of article 9 of the state Constitution providing:

'Taxes shall be uniform upon the same class of subjects.'

The cases were heard together on an agreed statement of facts and some supplemental evidence which was free from conflict. One of the matters stipulated was that the suits were brought in circumstances making them cognizable in equity. The District Court sustained the act and the tax and dismissed the suits on the merits. The cases are here on direct appeals by the plaintiffs under section 238 of the Judicial Code (Comp. St. § 1215).

The parties differ about the nature of the tax; the plaintiffs insisting it is a property tax, and the defendants that it is an occupation tax. Both treat the question as affecting the solution of other contentions. There has been no ruling on the point by the Supreme Court of the state. We think the tax in its essence is what the act calls it—an occupation tax. It is not laid on the land containing the ore, nor on the ore after removal, but on

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the business of mining the ore, which consists in severing it from its natural bed and bringing it to the surface where it can become an article of commerce and be utilized in the industrial arts. Mining is a well-recognized business, wherein capital and labor are extensively employed. This is particularly true in Minnesota. Obviously a tax laid on those who are engaged in that business, and laid on them solely because they are so engaged, as is the case here, is an occupation tax. It does not differ materially from a tax on those who engage in manufacturing. Stratton's Independence v. Howbert, 231 U. S. 399, 414, 34 Sup. Ct. 136, 58 L. Ed. 285; Stanton v. Baltic Mining Co., 240 U. S. 103, 114, 36 Sup. Ct. 278, 60 L. Ed. 546. The plaintiffs regard Dawson v. Kentucky Distilleries & Warehouse Co., 255 U. S. 288, 41 Sup. Ct. 272, 65 L. Ed. 638, as making the other way. But that case is not in point. The tax there considered, as the opinion shows (255 U. S. 292-294, 41 Sup. Ct. 272, 65 L. Ed. 638), was not laid on any business, but on the mere exertion by an owner of distilled spirits of his right to withdraw them from a bonded warehouse, and had 'none of the ordinary incidents of an occupation tax.'

We shall therefore treat the tax as an occupation tax in dealing with the contentions presented.

The chief contention is that mining as conducted by the plaintiffs, if not actually a part of interstate commerce, is no closely connected therewith that to tax it is to burden or interfere with such commerce, which a state cannot do consistently with the commerce clause of the Constitution of the United States.

The facts on which the contention rests are as follows: The demand or market within the state for iron ore covers only a negligible percentage of what is mined by the plaintiffs.² Practically all of their output is mined to fill existing contracts with consumers outside the state

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and passes at once into the channels of interstate commerce. Three-fourths of it is from open pit mines and one-fourth from underground mines. At the open pit mines empty cars are run from adjacent railroad yards into the mines and there loaded. Steam shovels sever the ore from its natural bed and lift it directly into the cars. When loaded the cars are promptly returned to the railroad yards, where they are put into trains which start the ore on its interstate journey. The several steps follow in such succession that there is practical continuity of movement from the time the ore is severed from its natural bed. The operations within the mine and the movement of the cars into and out of the mine are conducted by the plaintiffs. The subsequent transportation is by public carriers. At the underground mines the plaintiffs dig the ore, bring it to the surface through shafts and put it in elevated pockets where it readily can be loaded into cars. The subsequent movements are much the same as at the open pit mines, but their continuity is not so pronounced. Some of the ore from both kinds of mines—between 10 and 20 per cent.—is concentrated by washing or beneficiated after coming out of the mine and before starting out of the state, but our conclusion respecting the usual operations renders this deflection immaterial.

Plainly the facts do not support the contention. Mining is not interstate commerce, but like manufacturing, is a local business, subject to local regulation and taxation. Kidd v. Pearson, 128 U. S. 1, 20, 9 Sup. Ct. 6, 32 L. Ed. 346; Capital...