South Utah Mines Smelters v. Beaver County

• Decision Date: 21 May 1923
• Docket Number: No. 321,321
• Citation: South Utah Mines Smelters v. Beaver County, 262 U.S. 325, 43 S.Ct. 577, 67 L.Ed. 1004 (1923)
• Parties: SOUTH UTAH MINES & SMELTERS v. BEAVER COUNTY
• Court: U.S. Supreme Court

262 U.S. 325

43 S.Ct. 577

67 L.Ed. 1004

SOUTH UTAH MINES & SMELTERS

v BEAVER COUNTY.

No. 321.

Argued and Submitted March 15, 1923.

Decided May 21, 1923.

Messrs. C. C. Parsons and E. O. Leatherwood, both of Salt Lake City, Utah, for plaintiff in error.

Messrs. Harvey H. Cluff and Wm. A. Hilton, both of Salt Lake City, Utah, for defendant in error.

Mr. Justice SUTHERLANDdelivered the opinion of the Court.

This is an action brought by the plaintiff in error (plaintiff below) against the defendant in error (defendant below) in the federal District Court for the District of Utah to recover a tax alleged to have been illegally imposed by the state taxing authorities and paid under protest.The plaintiff is a mining corporation organized and existing under the laws of Maine, and since 1909 has owned mining property in Beaver county, Utah, consisting of mining claims, a concentrating mill, now obsolete and largely dismantled, and other property incident thereto.The property was continuously operated until August, 1914.The ores were copper-bearing and upon extraction were transported to the mill and there crushed and concentrated; the resulting concentrates being shipped and sold to smelters at some distance away.As a result of the concentrating operations refuse material, still retaining small quantities of copper and other metals, was deposited near the concentrating mill as tailings.This deposit was begun by plaintiff's predecessor as early as May, 1903, and from then until August, 1914, approximately 900,000 tons of tailings were accumulated upon desert land owned by plaintiff, nonmineral in character, and located about three miles from its mining claims.At the time of the accumulation of these tailings there was no known process by which th small percentage of metals which they contained could be profitably recovered.In August, 1914, plaintiff stopped work on its mining claims and has never since resumed.The court below expressly found that at the date last mentioned all ores which could be profitably mined under processes then or since known had been taken out, and that plaintiff's mine, excluding the tailings, had never since been of any value; that plaintiff had never abandoned its property, but had maintained its title and paid and discharged all taxes assessed against it; and that, on January 1, 1919, the said tailings deposit was of the value of $20,000.

In January, 1914, plaintiff made an agreement with the Utah Leasing Company for the treatment and reduction of this deposit upon a royalty of 10 per cent.The leasing company took possession of the tailings, constructed reduction works, using in connection therewith some of the plaintiff's improvements on its mining property, and, as result of its operations, recovered from the tailings in the year 1918 the net amount of $120,547,10 per cent. only of which was paid over to the plaintiff, under the terms of the agreement.The taxing authorities, claiming to act under the stateconstitution and laws, multiplied the amount thus recovered by 3 and fixed the value of plaintiff's mining property for the year 1919 for taxing purposes at the multiple thereof, viz.$361,641.The defendant thereupon assessed and collected from plaintiff $6,907.24 as a tax against plaintiff's mining property for the year 1919, based upon a valuation computed in the manner just stated.

The Constitution of Utah declares (sections 2and3, article 13) that all property in the state shall be taxed in proportion to its value, and requires the Legislature to provide a uniform and equal rate of assessment and taxation of all property according to its value in money, and prescribe such regulations as shall secure a just valuation for the taxation of all property, so that every person and corporation shall pay a tax in proportion to such value.By an amendment to section 4, article 13, adopted in 1918, it is provided that all metalliferous mines or mining claims, in addition to an arbitrary valuation of $5 per acre, shall be assessed 'at a value based on some multiple or submultiple of the net annual proceeds thereof.All other mines or mining claims and other valuable mineral deposits, including lands containing coal or hydrocarbons, shall be assessed at their full value.'

The Legislature, at its session in 1919, enacted a statute in pursuance of this constitutional provision, providing that metalliferous mines or mining claims shall be assessed, in addition to the $5 per acre, upon a value to be determined by taking the multiple of three times the net annual proceeds thereof.Other mines and valuable mineral deposits are to be assessed at their full value.The words 'net annual proceeds' are defined to be the net proceeds realized during the preceding calendar year from the sale, or conversion into money or its equivalent, of all ores extracted by the owner, lessee, contractor or other person working upon or operating the property during or previous to the year for which the assessment is made, including all dumps and taillings, after making certain deductions.Session Laws 1919, c. 114, § 5864.

Upon the facts stated and under these constitutional and statutory provisions, the lower court upheld the validity of the tax.

The plaintiff contended in the court below that the tailings deposit was neither a mine nor a part of a mine, but a thing separate and apart from its mining claims, constituting a 'valuable mineral deposit' and taxable as such upon the value and not a multiple thereof; that the agreement with the leasing company was a sale of the deposit, which thereupon ceased to be assessable as its property, or the basis for assessment of its worked out and worthless mine; that since 1914 its mining claims, having become valueless and yielding no net proceeds, were not taxable; that the tax assessed was therefore in contravention of section 3, article 13, of the Constitution of Utah, requiring a uniform and equal rate of assessment of property according to its value in money, so that every person and corporation should pay a tax in proportion to such value; and also was in contravention of the clauses of the Fourteenth Amendment to the Constitution of the United States in respect of due process and equal protection of the laws.The court below denied these contentions and sustained the tax and the case comes here for review upon writ of error.

The defendant has submitted a motion to dismiss the writ of error and of this we first dispose.The ground of the motion is that the case was tried by the court without a jury; that no exceptions were taken during the trial and no request for special findings or a declaration of law made during the progress of the trial; that the court gave its decision and a general finding orally and directed judgment for the defendant, which was duly entered; that nearly three months later, on motion of plaintiff, and against defendant's...