Union Sulphur Co. v. Reed

• Decision Date: 18 February 1918
• Docket Number: 15737.
• Citation: 249 F. 172
• Parties: UNION SULPHUR CO. v. REED, Tax Collector, et al.
• Court: U.S. District Court — Eastern District of Louisiana

249 F. 172

UNION SULPHUR CO. v. REED, Tax Collector, et al.

No. 15737.

United States District Court, E.D. Louisiana.

February 18, 1918

Howe Fenner, Spencer & Cocke, of New Orleans, La., Sullivan &amp Cromwell, of New York City, and Pujo & Williamson of Lake Charles, La., for complainant.

Elias R. Kaufman, of Lake Charles, La., for defendant tax collector.

A.V Coco, Atty. Gen., for defendant auditor.

FOSTER District Judge.

This is a bill to have declared void, as against plaintiff, Act 145 of 1916 of the General Assembly of Louisiana, and to enjoin the collection of the taxes assessed under its provisions. Plaintiff prays for an injunction pendente lite, but no hearing has been asked on that issue, and the case is submitted for final hearing on the pleadings and an agreed statement of facts.

Under the said act, at stated times, plaintiff is required to file a statement showing the amount of sulphur mined during the preceding three months, and is then required to pay a tax of 10 cents per ton on that amount for the privilege of continuing operations during the ensuing three months.

It is contended by plaintiff that the tax is a direct tax upon property, and not a license tax, and therefore violates article 225 of the Constitution of Louisiana. Plaintiff further contends that the severing of minerals from its land is an incident of ownership, and, whether the 10-cent tax be considered a direct or a license tax, it violates the equal protection clause of the Fourteenth Amendment of the Constitution of the United States.

Defendants contend that Act 145 of 1916 imposes a license tax upon the business, or occupation, of severing minerals from the soil and is valid under the provisions of article 229 of the Constitution of Louisiana. The question presented is a very close one. Its decision depends upon the peculiar facts of this case and cannot be controlled by any case not based upon practically identical facts.

In Louisiana it is the general law that nearly all occupations and businesses are required to pay a license. The lawyer and the doctor must each pay a license for the privilege of practicing his profession; the merchant pays an ad valorem tax on the stock of merchandise in his store, and is also required to pay a license tax for the privilege of doing business during the ensuing year. This tax is graduated and based on the receipts of the preceding year. Under the provisions of Act 145 of 1916, a license is required of the plaintiff for the privilege of doing business during the ensuing three months and it is based on the amount of sulphur mined during the preceding three months. If the plaintiff should desire to avoid payment of this license, it could do so by ceasing to do business. No lien is imposed on the amount of sulphur previously mined, and no direct seizure of the said sulphur is provided for. If not paid, the tax must be collected in the same manner as all other license taxes. This involves a suit in a court of competent general jurisdiction, either by a summary rule or an ordinary suit. In either event there is an appeal to the Supreme Court of Louisiana. Section 20, Act 171 of 1898; New Orleans v. Penn Mutual Life Insurance Co., 106 La. 31, 30 So. 254; State v. Allgeyer, 110 La. 839, 34 So. 798.

Plaintiff relies particularly on the case of Thompson v. McLeod (decided by the Supreme Court of Mississippi) 112 Miss 383, 73 So. 193. That case arose under the provisions of chapter 110, Laws of Mississippi of 1912. There is a fundamental difference between that act and the act here in question. Under the Mississippi law the tax purports to be levied on the business of extracting turpentine from standing trees, and while the law classes it as a privilege tax, or occupation fee, no license to do business for the...