Salt Lake County v. Kennecott Copper Corporation

• Decision Date: 06 October 1947
• Docket Number: No. 3230-3234.,3230-3234.
• Citation: 163 F.2d 484
• Parties: SALT LAKE COUNTY v. KENNECOTT COPPER CORPORATION. SUMMIT COUNTY et al. v. SILVER KING COALITION MINES CO. SAME v. PARK UTAH CONSOL MINES CO. WASATCH COUNTY et al. v. SAME v. NEW PARK MINING CO.
• Court: U.S. Court of Appeals — Tenth Circuit

163 F.2d 484 (1947)

SALT LAKE COUNTY v. KENNECOTT COPPER CORPORATION.

SUMMIT COUNTY et al. v. SILVER KING COALITION MINES CO.

SAME v. PARK UTAH CONSOL MINES CO.

WASATCH COUNTY et al. v. SAME v. NEW PARK MINING CO.

Nos. 3230-3234.

Circuit Court of Appeals, Tenth Circuit.

April 14, 1947.

Rehearing Denied October 6, 1947.

Harry D. Pugsley, Spe. Asst. Atty. Gen. of Utah (Grover A. Giles, Atty. Gen. of Utah, Zar E. Hayes, Asst. Atty. Gen., Harold E. Wallace and J. P. Neeley, Asst. Salt Lake Co. Attys., both of Salt Lake City, Utah, P. H. Neeley, Summit Co. Atty., of Coalville, Utah, and L. C. Montgomery, Wasatch Co. Atty., of Heber, Utah, on the brief), for appellants.

J. M. Christensen and C. C. Parsons, both of Salt Lake City, Utah (Wm. M. McCrea and A. D. Moffat, both of Salt Lake City, Utah, on the brief for Kennecott Copper Corporation; R. J. Hogan, of Salt Lake City, Utah, on the brief for Silver King Coalition Mines Company; James Ingebretsen, William W. Ray, and Athol Rawlins, all of Salt Lake City, Utah, on the brief for Park Utah Consolidated Mines Co.; and H. G. Metos, of Salt Lake City, Utah, on the brief for New Park Mining Co.), for appellees.

Before PHILLIPS, BRATTON, and MURRAH, Circuit Judges.

BRATTON, Circuit Judge.

The questions presented in these cases relate to the validity of certain taxes imposed by the State of Utah against the properties of four mining companies in that state.

Section 2, Article XIII, of the Constitution of Utah provides that all tangible property in the state, not exempt under the laws of the United States, or under the constitution of the state, shall be taxed in proportion to its value, to be ascertained as provided by law; section 3 provides for uniformity and equality in rate of assessment and taxation; section 4 provides that all metalliferous mines or mining claims shall be assessed in such manner as the legislature shall provide; and section 11 creates a state tax commission and provides that it shall assess mines, have such other powers of original assessment as the legislature may provide, and supervise and administer the tax laws of the state. Section 80 — 5 — 1, Utah Code Ann. 1943, provides that all tangible property must be assessed at its full cash value, and that land and the improvements thereon must be assessed separately; section 80 — 5 — 46 provides that it shall be the duty of the state tax commission to assess annually all real, personal, and mixed property which the commission is by the constitution and laws of the state required to assess; section 80 — 5 — 56 provides that all metalliferous mines and mining claims, both placer and rock in place, shall be assessed at five dollars per acre and in addition thereto at a value equal to twice the net annual proceeds thereof for the calendar year next preceding, and that all machinery used in mining and all property or surface improvements upon or appurtenant to mines or mining claims and the value of any surface use made of mining claims or mining property for other than mining purposes shall be assessed at full value; and with certain deductions which do not have material bearing here, section 80 — 5 — 57 provides that the words "net annual proceeds" of a metalliferous mine or mining claim are defined to be the gross proceeds realized during the preceding calendar year from the sale or conversion into money or its equivalent of all ores from such mine or mining claim extracted by the owner, contractor, or other person working upon or operating the property, including all dumps and tailings.

Pursuant to an Act of Congress, 50 U.S.C. A.Appendix § 901 et seq., and by administrative action, the Administrator, Office of Price Administration, placed ceiling prices upon copper, lead, and zinc, of 12, 6½, and 8¼ cents per pound, respectively; and also pursuant to an Act of Congress, 50 U.S.C.A. Appendix, § 902, and by administrative action, Metals Reserve Company, a wholly owned agency of the United States, was authorized to make premium or subsidy payments at the rate of 5 cents per pound for copper, 2¾ cents per pound for lead, and 2¾ cents per pound for zinc, for all such minerals produced in excess of fixed quotas.

During the year 1943, Kennecott Copper Corporation, Silver King Coalition Mines Company, Park Utah Consolidated Mines Company, and New Park Mining Company severally owned mines and mining claims in Utah from which they produced copper, lead, and zinc in excess of their respective quotas. All of the companies except Kennecott Copper Corporation sold their entire excess production. Kennecott Copper Corporation sold part of its excess production and retained part. The unsold part was appraised. But for presently material purposes the entire excess production of that company may be treated as having been sold. Metals Reserve Company made premium or subsidy payments to the companies, computed on the basis of 5 cents per pound for copper, 2¾ cents per pound for lead, and 2¾ cents per pound for zinc, produced and sold in excess of the quotas. In assessing the mines and mining claims of the companies for the year 1944, the state tax commission added to twice the sum received by each company from the sale of its ores in 1943 the amount of the premium or subsidy payments made to that company and levied a tax against the company accordingly. The companies protested and seasonably applied to the commission for the abatement of the part of the tax attributable to the inclusion of the premium or subsidy payments in the tax base. In addition, the commission assessed certain lands owned by Kennecott Copper Corporation, and these assessments were also protested. The several protests were denied; the taxes were paid under protest; separate suits were instituted in the United States Court for Utah to recover the taxes in controversy; the cases were consolidated for trial before a jury; plaintiffs severally filed identical motions for directed verdicts; the motions were sustained and directed verdicts returned; separate judgments were entered; defendants perfected separate appeals; and the causes were consolidated for submission in this court.

One ground of the motions for directed verdicts for plaintiffs was that in the taxation of the mines and mining claims, the inclusion of subsidy payments in the gross proceeds and thence in the net proceeds, as a basis for such taxation, was not authorized by the law of Utah. That question consumes much space in the briefs and it was ably presented on oral argument. The Supreme Court of Utah quite recently considered the question and held without qualification that in the taxation of mines and mining claims in that state, premium or subsidy payments of this kind should be added to twice the amount of the proceeds received from the sale of the ores for the preceding calendar year as the base for such taxation. United States Smelting, Refining & Mining Co. v. Haynes, Utah, 176 P.2d 622. And at the same time, the court reached a like conclusion in a case involving a closely similar question. Combined Metals Reduction Co. v. State Tax Commission, Utah, 176 P.2d 614. The question before us is essentially one of local law and therefore these decisions of the supreme court of the state are controlling.

Another ground of the several motions for directed verdicts was that the inclusion of subsidy payments in the gross proceeds and thence in the net proceeds as a basis for taxation of the mines and mining claims constituted taxation of the means used by the United States in the prosecution of the war and amounted to a direct levy upon the activities and facilities employed by the United States in that behalf and therefore was beyond the power of the state, or its taxing unit. Although...