Santa Rita Oil & Gas Co. v. State Board of Equalization

• Decision Date: 17 June 1941
• Docket Number: 8215.
• Citation: 114 P.2d 521,112 Mont. 224
• Parties: SANTA RITA OIL & GAS CO. v. STATE BOARD OF EQUALIZATION et al.
• Court: Montana Supreme Court

114 P.2d 521

112 Mont. 224

SANTA RITA OIL & GAS CO. v. STATE BOARD OF EQUALIZATION et al.

No. 8215.

Supreme Court of Montana

June 17, 1941

Original proceeding by the Santa Rita Oil & Gas Company, a corporation, against the State Board of Equalization of the State of Montana, E. A. Dye, and others, Members of the State Board of Equalization of the State of Montana, for an injunction restraining defendants from assessing, imposing levying, or collecting certain taxes upon oil produced by plaintiff under an oil and gas lease of trust patent Indian land.

Proceeding dismissed.

MORRIS J., dissenting.

Louis P. Donovan, of Shelby, for plaintiff.

I. W Choate, of Helena, for defendants.

JOHNSON Chief Justice.

This is an original proceeding by which plaintiff seeks an injunction restraining the defendants, State Board of Equalization and the members thereof, from assessing, imposing, levying or collecting the operator's net proceeds tax, the royalty owner's net proceeds tax and the gross production tax under sections 2088 to 2096.2and2397 to 2408, Revised Codes, as amended, upon oil produced by plaintiff under an oil and gas lease of trust patent Indian land.

The complaint alleges that the plaintiff is an agent or instrumentality of the United States and that as such its operations and production are exempt from the state's taxing power; it further alleges that heretofore, in CauseNo. 7504, Santa Rita Oil & Gas Company v. State Board of Equalization,101 Mont. 268, 54 P.2d 117, this court decreed that the defendants be forever restrained from exactly the same actions here again sought to be restrained that the decree has not been set aside, modified or reversed, and remains in full effect.A copy of the decree in the prior suit is annexed to the complaint.That decree provided that the defendantState Board and its members at that time "be and they are hereby forever restrained and enjoined from assessing, imposing, levying or collecting from oil and gas produced on the lands and premises described in plaintiff's complaint," exactly the same taxes mentioned in the complaint in this action, with reference to exactly the same statutory provisions.The decree omitted a clause of the decision to the effect that the injunction should continue "until such time as appropriate and valid congressional consent is given to the imposition of any or all of these taxes"; but the omission is immaterial, as the decree is governed by the decision and in any event is subject to modification or amendment.28 Am.Jur. 494, sec. 323;Ladner v. Siegel,298 Pa. 487, 148 A. 699, 68 A.L.R. 1172, annotation, 1180;United States v. Swift & Co.,286 U.S. 106, 52 S.Ct. 460, 76 L.Ed. 999.

The answer admits that the defendants threaten to impose, levy and collect the taxes mentioned in the complaint with the exception of the royalty owner's proceeds tax, and denies that they are estopped by the prior decree of this court from proceeding to collect the other two taxes.The answer further says: "Defendants allege that they faithfully observed the injunction order of the judgment referred to in said Paragraph, from the time of its rendition, February 26, 1936, until the current tax year when, believing that said judgment and injunction order had been in effect superseded and overruled by the decision of the Supreme Court of the United States in the case of Helvering, Commissioner, v. Mountain Producers Corporation,303 U.S. 376, 58 S.Ct. 623, 82 L.Ed. 907, defendants took steps to collect the taxes in question from plaintiff and other oil operators similarly situated."

The present action is somewhat unique in that (1)the plaintiff nullifies its own cause of action by pleading affirmatively that the question is already res judicata and that nothing remains to be decided; (2)the defendants, while denying that they are estopped by the prior decree, admit that by it they were "forever restrained...