Southeastern, Inc. v. Oklahoma Tax Commission

• Decision Date: 12 April 1960
• Docket Number: No. 38657,38657
• Parties: SOUTHEASTERN, INC., a Corporation, Plaintiff in Error, v. OKLAHOMA TAX COMMISSION, Defendant in Error,
• Court: Oklahoma Supreme Court

Page 739

351 P.2d 739

1960 OK 97

SOUTHEASTERN, INC., a Corporation, Plaintiff in Error, v. OKLAHOMA TAX COMMISSION, Defendant in Error,

No. 38657.

Supreme Court of Oklahoma.

April 12, 1960.

Syllabus by the Court

1. The use tax is an excise tax which the State is authorized to exact, in connection with the sales tax, for the primary purpose of raising revenue for state purposes, and is designed to prevent consumers from escaping sales tax by going outside of the state and purchasing property and bringing it into the state for use or consumption; and, within the meaning of the Use Tax Act, contractors are users and consumers of personal property used by them in carrying out provisions of 'lump sum construction contracts with governmental agencies';

2. (And) where there is admittedly no stated constitutional immunity created by Congress, no implied constitutional immunity from state or local taxation is given private persons (contractors) for their ordinary business operations, even though they are performed in connection with governmental activities.

Action by statutory proceedings to review final order of Oklahoma Tax Commission sustaining assessment of use taxes against Southeastern, Inc., a corporation. Affirmed.

G. Ellis Gable, Chas. P. Gotwals, Jr., Jack N. Hays, Tulsa, for plaintiff in error.

E. J. Armstrong, Oklahoma Tax Commission, Oklahoma City, for defendant in error.

JOHNSON, Justice.

This is a statutory proceeding brought to review the final order of the Oklahoma Tax Commission sustaining an assessment of use taxes against Southeastern, Inc., a contractor.

The admitted facts are that Southeastern was a private contractor and obtained a contract pursuant to competitive bidding by private contractors using F. H. A. mortgage financing to finance and build an armed services housing project, or, as referred to by protestant, a 'Capehart Project,' consisting of 700 housing units. The contract designated Southeastern as the 'eligible builder' and required it as contractor to perform a 'turn-key job' for a lump-sum consideration. The contract provided among other things that all profits that may accrue through the housing contract accrue to the benefit of the contractor, or eligible builder, and not to the mortgagor-builder, and that 'nothing in this (the) invitation for bids shall be deemed to relieve the contractor or eligible builder of any liability for the payment of sales or use taxes properly levied.'

The amount of the use tax levied and collected on purchases of tangible personal property admittedly purchased by Southeastern and its subcontractors outside of this State and brought into this State to be used by it in the construction of the project is unquestioned. Only a legal question is posed.

Southeastern contends that 'the immunity that Southeastern asserts is the Government's immunity, not its own; that it as a taxpayer stands in the Government's shoes. The immunity is not asserted because, as a matter of dollars and cents it may affect the Government, but because, by the dealings with the Government, in effect, Southeastern, in this instance, has become a quasi-Federal instrumentality or moving force for the purposes of this contract arrangement.' Citing and relying on United States v. Allegheny County, 332 U.S. 174, 64 S.Ct. 908, 88 L.Ed. 1209, and other similar cases. And argue that the decision in this case should rest on the construction of the contractual arrangements involved in this particular 'Capehart Project,' as Southeastern and other suppliers to this project are not asking for a general tax exemption, but only for the proper Federal immunity from the State taxation to which they claim they are entitled by virtue of the particular dealings by the Federal Government itself through the Department of the Air Force.

The tax was imposed and collected by virtue of 68 O.S.1951 §§ 1251C, 1310 et seq. The use tax was enacted with intention that the purchase of tangible personal property outside this State should be subject to payment of the use tax if such property would have been subject to the sales tax had it been purchased within this State, ...