Standard Oil Co. of Louisiana v. Fontenot, 36309.

CourtSupreme Court of Louisiana
Citation198 La. 644,4 So.2d 634
Decision Date17 October 1941
Docket Number36309.
PartiesSTANDARD OIL CO. OF LOUISIANA v. FONTENOT, Director of Revenue.

4 So.2d 634

198 La. 644

FONTENOT, Director of Revenue.

No. 36309.

Supreme Court of Louisiana

October 17, 1941

Rehearing Denied Nov. 3, 1941. [4 So.2d 635] [Copyrighted Material Omitted] [4 So.2d 636]

[198 La. 648] Eugene Stanley, Atty. Gen., Cicero C. Sessions, Sp. Asst. Atty. Gen., and A. Leon Hebert, Jr., of Baton Rouge, for defendant and appellant.

[198 La. 649] T. M. Milling, of Baton Rouge, Cecil Morgan, of Shreveport, and A. M. Curtis, of New Orleans, for plaintiff and appellee.

Samuel O. Clark, Jr., Asst. Atty. Gen., J. Louis Monarch, Alvin J. Rockwell, and Paul F. Mickey, Sp. Assts. to Atty. Gen., and Rene A. Viosca, U. S. Atty., Leon D. Hubert, Jr., Asst. U. S. Atty., and Robert Weinstein, Asst. U. S. Atty., all of New Orleans, for United States, intervener and appellee.

HIGGINS, Justice.

The Standard Oil Company of Louisiana, a corporation organized under the laws of this State, engaged as a dealer in selling gasoline and other petroleum products, instituted this suit under the provisions of Act No. 330 of 1938, against the Director of Revenue of the State of Louisiana, to recover the sum of $22,662.55, representing excise taxes claimed to be due the State for the month of December, 1940, and paid under protest by the plaintiff to the defendant. The plaintiff alleged that the sales of gasoline, motor fuel, lubricating oil and kerosene were expressly exempt from the payment of the taxes by certain State statutory provisions because they were made to the Federal Government or its agencies or instrumentalities, and also pleaded the implied constitutional immunity against the imposition of the taxes, stating that it was a direct and immediate burden upon essential governmental operations of the War Department of the United States.

[198 La. 650] The defendant filed exceptions of no right and no cause of action, which were overruled, and in its answer denied that the sales in question were made by the plaintiff to the United States Government or any agency, department or instrumentality thereof, and that the plaintiff was entitled to constitutional immunity from the taxes as a direct and immediate burden upon the Government or any department or instrumentality thereof; and averred that the sales were made by the plaintiff as the dealer to independent contractors, who had undertaken to construct army camps in Rapides Parish under 'cost-plus-a-fixed-fee' contracts with the War Department of the Federal Government and that the Sovereign State of Louisiana, under its reserved constitutional powers, had the right to levy and collect these nondiscriminatory excise taxes.

The United States Government filed a petition of intervention, claiming the State statutory exemptions but did not plead the implied constitutional immunity from the taxes.

The contractors were not made parties to the suit nor did they intervene therein.

The district judge held that the contractors acted as agencies of the Federal Government in purchasing the gasoline, motor fuel, and lubricating oil and not as independent contractors and, therefore, the statutory exemptions were applicable and the taxes were not due. He was also of the opinion that the taxes on the sales of kerosene--not exempt by any statutory provision--were a direct and immediate [198 La. 651] burden upon the governmental functions of the United States and, consequently, the taxes were unassessable and uncollectible, because of the implied federal constitutional immunity.

The defendant appealed.

Since the filing of this suit, the plaintiff paid, under protest, identical taxes for subsequent periods, and these taxes have been segregated pending the final outcome of this case.

The taxes sought to be levied and collected by the State of Louisiana in this case are those imposed by Act No. 6 of the Extra Session of 1928, as amended by Act No. 1 of the Extra Session of 1930, as amended (Art. V1-A, Const. of 1921), and Act No. 87 of 1936, as amended, and Act No. 15 of the First Extra Session of 1934, as amended, and Act No. 259 of 1938.

This Court has held that the taxes imposed by some of these statutes are excise taxes placed on dealers in gasoline and motor fuel and are not consumers' taxes or 'sales taxes'; and that these excise taxes are not laid upon the products but upon the dealer for the right or privilege of selling, using, or consuming the product, and are due and payable immediately upon manufacture or importation of the product [4 So.2d 637] for distribution, sale, use, or consumption in this State, and before any transportation, sale, or other disposition thereof. State v. Sinclair Refining Co., 195 La. 288, 196 So. 349; State v. Standard Oil Co. of Louisiana, 190 La. 338, 182 So. 531; State v. Tri-State Transit Co. of Louisiana, Inc., et al., 179 La. 811, 155 So. 233; State [198 La. 652] v. City of Monroe, 177 La. 983, 149 So. 541; State v. Tri-State Transit Co. of Louisiana, Inc., et al., 173 La. 682, 138 So. 507; State v. Johnson, 173 La. 669, 680, 138 So. 503. See also, Trinityfarm Const. Co. v. Grosjean, D. C., 3 F.Supp. 785; Id., 291 U.S. 466, 54 S.Ct. 469, 78 L.Ed. 918.

The statutory exemptions pleaded by the plaintiff and the intervener are contained in the several statutes (under which the taxes are imposed) and are identical, with the exception of the statute levying the dealers' tax on kerosene which does not contain any exemption provision, and read:

'That the tax herein levied shall not apply to sales to the United States Government or any agency or department thereof * * *.' 1st paragraph of Sec. 13, Act No. 259 of 1938 and Sec. 14 of Act No. 6 of the Extra Session of 1928.

The case was tried on a stipulation of facts, which substantially sets forth the following:

The S. and W. Construction Company and H. N. Rodgers & Sons Company, partnerships, and Forcum-James Company, a corporation organized and existing under the laws of the State of Tennessee, all of which are hereafter referred to as the S. and W. Construction Company and associates, and the partnership of W. Horace Williams Company entered into separate 'cost-plus-a-fixed-fee' contracts for the construction of complete tent camps and cantonments, etc., at Camp Livingston and Camp Claiborne, near Alexandria, Louisiana, with the United States Government, through the War Department, which was [198 La. 653] authorized by Acts of Congress providing for national security and the acquisition of facilities and weapons of defense. Act of June 13, 1940, c. 343, 54 Stat. 350; Act of July 2, 1940, c. 508, 54 Stat. 712.

The contracts recited that at each camp the estimated total cost of each project was the approximate sum of $4,242,655., exclusive of the contractors' fixed fee, which, in each instance amounted to the sum of $155,705. The estimated cost of the work was based upon detailed approximations agreed to by both the Government and the contractors and was subject to the express understanding that the contractors did not guarantee their correctness. The fixed-fee to be paid the contractors was to constitute complete compensation for their services, including profit and all general overhead expense.

Under the terms of Article 1 of the contracts, the contractors were obligated to 'furnish the labor, materials, tools, machinery, equipment, facilities, supplies not furnished by the Government, and services, and do all things necessary for the completion of the following work * * * in accordance with the drawings and specifications or instructions * * * contained in the contracts or furnished by the contracting officers.' The title to all work, completed or in the course of construction, when approved and accepted in writing was to be in the Government. Likewise, upon delivery at the site of the work or at an approved storage site, and upon inspection and acceptance, in writing, by the contracting officers, title to all materials, tools, machinery, equipment and supplies [198 La. 654] for which the contractors were entitled to reimbursement were to vest in the Government.

Under Article II of the contracts, the contractors were to be reimbursed for such actual expenditures in the performance of the work as were approved and ratified by the contracting officers, including labor, materials, tools, machinery, equipment, supplies, plant, processes, services, power, and fuel necessary for either temporary or permanent use in connection with the work.

In Article III of the contracts the method for making the various payments referred to therein was set forth. With respect to costs, it was provided that the Government was to currently reimburse the contractors upon certification and verification by the contracting officers of the original papers governing payrolls for labor, invoices for materials, and other expenditures.

Article IV of the contracts required the contractors to keep such books and records as were satisfactory to the contracting officers who had the right to inspect them.

The Standard Oil Company of Louisiana was the lowest competitive bidder in response to bids for gasoline, motor fuel, kerosene, tractor fuel and lubricating oil requested by the respective contractors, in accordance with the instructions of the constructing quartermasters, who were referred to in the contracts as the Government's [4 So.2d 638] contracting officers and who were the Government's representatives at the scene of the construction work. During [198 La. 655] December 1940 the Standard Oil Company sold gasoline and other petroleum products to the contractors, pursuant to orders placed by them with it, for use and consumption in the performance of the contracts.

The constructing quartermasters were not bound to accept the recommendations of the contractors as to the competitive bids for the petroleum products, but could select other bids or require the contractors to secure additional bids. The bids of...

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