United Pacific Ins. Co. v. Wyoming Excise Tax Div., Dept. of Revenue and Taxation, No. 85-15

CourtUnited States State Supreme Court of Wyoming
Writing for the CourtBefore THOMAS; ROSE; THOMAS; THOMAS
Citation713 P.2d 217
Docket NumberNo. 85-15
Decision Date24 January 1986
PartiesUNITED PACIFIC INSURANCE CO., Appellant (Defendant), v. WYOMING EXCISE TAX DIVISION, DEPARTMENT OF REVENUE AND TAXATION, Appellee (Plaintiff).

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713 P.2d 217
UNITED PACIFIC INSURANCE CO., Appellant (Defendant),
v.
WYOMING EXCISE TAX DIVISION, DEPARTMENT OF REVENUE AND TAXATION, Appellee (Plaintiff).
No. 85-15.
Supreme Court of Wyoming.
Jan. 24, 1986.

Page 218

James L. Applegate and Glenn Parker of Hirst & Applegate, Cheyenne, for appellant.

A.G. McClintock, Atty. Gen., Peter J. Mulvaney, Deputy Atty. Gen., Michael L. Hubbard, Sr. Asst. Atty. Gen., Robert J. Walters, Asst. Atty. Gen., Cheyenne, for appellee.

Before THOMAS, C.J., and ROSE, * ROONEY, ** BROWN and CARDINE, JJ.

ROSE, Justice.

The trial court entered judgment for unpaid Wyoming sales and use taxes against the surety of a nonresident prime contractor performing work in Yellowstone National Park under a contract with the United States government. We will affirm.

Bernal Construction Company (Bernal), a nonresident prime contractor, was awarded a contract to build a water system in Yellowstone National Park. Appellant United Pacific Insurance Company (United Pacific) agreed to become Bernal's surety on Miller Act bonds (40 U.S.C. § 270a). 1 The Wyoming

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Excise Tax Division determined that Bernal was obligated to pay some $53,360.38 in state sales and use taxes (pursuant to §§ 39-6-602 2 and 39-6-603, W.S.1977, 1984 Cum.Supp. 3 ) and proceeded, in state district court, against United Pacific to recover the tax under § 39-6-604(a), W.S.1977, 1984 Cum.Supp. 4 United Pacific moved to dismiss the complaint on grounds that the district court lacked subject-matter jurisdiction and that the complaint failed to state a claim upon which relief could be

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granted. The motion to dismiss was denied and the case proceeded to a bench trial, where the trial court entered judgment against United Pacific for $53,360.38.

Appellant raises these issues for decision:

"A. The Trial Court lacked jurisdiction over the subject matter of the action.

"B. Plaintiff failed to plead and prove entitlement to relief.

"C. A surety on a bond, executed under the provisions of the Miller Act (40 U.S.C. § 270a-e) relating to the United States Government contract for improvements in Yellowstone National Park is not liable for Wyoming sales or use tax, unless the bond so provides.

"D. The Trial Court's imposition of statutory, non-contract liability on Defendant was contrary to W.S. 1977 § 39-6-405[ (a) ](x) Cum.Sup.; [ 5 and to the intention of Congress, as expressed in the Miller Act, an interference with the Federal Government welfare and activity, constituting a violation of Article VI Section 2 of the Constitution of the United States, 6 and therefore void."

Appellee State of Wyoming phrases the issues for decision in this way:

"I. DID THE DISTRICT COURT EXERCISE PROPER SUBJECT MATTER JURISDICTION OF THE ACTION?"

"II. DID APPELLEE SUFFICIENTLY PLEAD AND PROVE ENTITLEMENT TO RELIEF?"

"III. DID THE TRIAL COURT CORRECTLY HOLD THAT APPELLANT IS LIABLE FOR AN OBLIGATION IMPOSED BY STATE LAW AND NOT ON THE BOND EXECUTED PURSUANT TO THE MILLER ACT?"

"IV. IS THE IMPOSITION OF STATUTORY LIABILITY ON APPELLANT CONTRARY TO W.S. 39-6-405(a)(x) AND IF NOT, DOES IT VIOLATE THE SUPREMACY CLAUSE OF THE UNITED STATES CONSTITUTION?"

"V. CAN APPELLANT RAISE CONSTITUTIONAL OBJECTIONS TO W.S. 39-6-604(a) ON APPEAL IF IT DID NOT DO SO AT THE TRIAL COURT BELOW?"

Following briefing and oral argument in this case, the court asked the parties to submit supplemental briefs addressing the question:

"Whether beyond permitting the imposition and collection of sales and use taxes the provisions of Title 4, United States Code, §§ 105, 108 and 110, 7 or any

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other authority justify the extension of the provisions of § 39-6-604(a), W.S.1977 (1984 Cum.Supp.) to a factual situation involving the furnishing of a bond pursuant to the Miller Act, 40 U.S.C., § 270(a)(b) [sic], in connection with performance of a construction contract in Yellowstone National Park in view of the exclusive legislative jurisdiction of the United States of America over Yellowstone National Park?"

There are, then, two basic questions to be resolved in this appeal: (1) whether the Wyoming courts can entertain this suit; and (2) whether appellee was entitled to the relief granted.

JURISDICTION

For clarity, we outline the well-established principles we need not decide in this case, but which set the stage for the question here raised. The State can recover sales and use tax from a nonresident prime contractor ( § 39-6-504(b), W.S.1977 (May 1985 Replacement); 8 and § 39-6-510, W.S.1977 (May 1985 Replacement) 9 ) even

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though he has a federal contract. C.R. Frederick, Inc. v. State Board of Equalization, 38 Cal.App.3d 385, 120 Cal.Rptr. 434, 440 cert. denied 419 U.S. 1120, 95 S.Ct. 802, 42 L.Ed.2d 819 (1974); G.M. Shupe, Inc. v. Bureau of Revenue, 89 N.M. 265, 550 P.2d 277, 279 (1976); Robert E. McKee, General Contractor, Inc. v. Bureau of Revenue, 80 N.M. 453, 457 P.2d 701, 705 (1969); Hot Springs Concrete Co. v. Rosamond, 178 Ark. 194, 10 S.W.2d 12, 13 (1928). Wyoming can recover the tax from any surety who has posted state statutory tax bonds for a nonresident prime contractor. Section 39-6-602(b), W.S.1977 (May 1985 Replacement). 10 Any such suit would properly be entertained by Wyoming courts. The State cannot, however, recover such taxes from the federal government in any court. Section 39-6-505(a)(iv), W.S.1977 (May 1985 Replacement); 11 4 U.S.C. § 107(a); Washington v. United States, 460 U.S. 536, 103 S.Ct. 1344, 1346, 75 L.Ed.2d 264 (1983); United States v. New Mexico, 455 U.S. 720, 102 S.Ct. 1373, 1383, 71 L.Ed.2d 580 (1982); United States v. Tax Commission of Mississippi, 421 U.S. 599, 95 S.Ct. 1872, 1876, 44 L.Ed.2d 404 (1975).

In addition, if a nonresident prime contractor not working on a federal project has filed a performance bond, his surety can be held liable for the sales and use taxes. Section 39-6-604(a), supra note 4. This is so because the statute becomes a part of the contract. The existing law is part of a contract, just as if it had been written into the contract. Meuse-Rhine-Ijssel Cattle Breeders of Canada, Ltd. v. Y-Tex Corporation, Wyo., 590 P.2d 1306, 1309 (1979); Tri County Electrical Association, Inc. v. City of Gillette, Wyo., 584 P.2d 995, 1007 (1978). See also In re Hagood, Wyo., 356 P.2d 135 (1960); Board of Commissioners of Platte County v. Mason, 38 Wyo. 1, 264 P. 93 (1928); Black and Yates v. Negros-Philippine Lumber Company, 32 Wyo. 248, 231 P. 398, 37 A.L.R. 1487 (1924). The United States Supreme Court has long so held. Ogden v. Saunders, 25 U.S. (12 Wheat.) 213, 257-262, 6 L.Ed. 606 (1827).

Wyoming courts, however, have no jurisdiction to entertain suits on a Miller bond. 40 U.S.C. § 270b(b); 12 United

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States ex rel. Harvey Gulf International Marine, Inc. v. Maryland Casualty Company, 573 F.2d 245, 247 (5th Cir.1978); Aetna Casualty & Surety Company v. United States ex rel. R.J. Studer & Sons, 365 F.2d 997, 1000 (8th Cir.1966); American Insurance Company v. Kinder, Mo.App., 640 S.W.2d 537, 540 (1982); Hot Springs Concrete Co. v. Rosamond, supra, 10 S.W.2d at 13; General Equipment, Inc. v. United States Fidelity and Guaranty Insurance Company, La.App., 292 So.2d 806, 807 (1974); Pierce Contractors, Inc. v. Peerless Casualty Company, Fla., 81 So.2d 747, 749 (1955).

The issue presented in the case at bar, however, slips into the interstices created by these well-established principles. The question which remains unanswered by these authorities is whether the State can recover the tax owed by a nonresident contractor from a Miller Act surety in state court. The answer requires an analysis of the interplay of three statutory schemes with differing purposes and objectives.

The Wyoming taxing scheme provides for sales tax ( § 39-6-401 et seq.) and the comparable-use tax ( § 39-6-501 et seq.) and also provides for payment of sales and use taxes by contractors ( § 39-6-601 et seq.). In addition, § 39-6-604(a), W.S.1977, provides that an additional obligation is imposed on one who provides a performance bond to also answer for the unpaid taxes of a nonresident contractor. At the time the surety contract in question was made, the statute read:

"Whenever a nonresident general or prime contractor or nonresident subcontractor furnishes a surety bond for the faithful performance of his contract or subcontract there is imposed an additional obligation upon the surety company to the state of Wyoming and the board as its agent that the contractor shall pay all sales and use taxes which become due in the performance of the contract. In the case of a nonresident general or prime contractor this additional obligation includes liability to pay the board all sales and use taxes which have not been paid to a licensed vendor or the board by the contractor or subcontractor. The general or prime contractor or his surety company is authorized to recover from the subcontractor the amount of sales and use taxes accruing with respect to purchases made by the subcontractor which were paid to the board by the contractor or the surety company, or an amount equal to the sales and use taxes so paid by the contractor may be withheld from payments made under the contract. The liability of the surety company under this section is limited to three percent (3%) of the contract price." Section 39-6-604(a).

It is under authority of this section that the State seeks to recover the unpaid taxes from United Pacific.

The Buck Act authorizes the states to collect such taxes as are here in question on activities occurring within federal enclaves, 13 except from the United States or its instrumentalities. 14 Prior to passage of the Buck Act in 1947, the question of state authority to tax in federal enclaves was a difficult one. See United States v. New Mexico, supra, 102 S.Ct. at 1380-1382, and C.R. Frederick, Inc. v. State Board of Equalization, supra, 120 Cal.Rptr. at 438-

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6 practice notes
  • Alvarez v. Insurance Co. of North America, No. C-86-6120-CAL.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • August 4, 1987
    ...effect of the Miller Act, and that decision offers little guidance here. In United Pacific Insurance Co. v. Wyoming Excise Tax Division, 713 P.2d 217 (Wyo.1986), the Wyoming Supreme Court rejected the argument that the Miller Act preempted a state sales and use tax on Miller Act sureties. T......
  • Miller v. State, No. 88-161
    • United States
    • United States State Supreme Court of Wyoming
    • December 14, 1989
    ...(Wyo.1989); Stephens v. State, 774 P.2d 60 (Wyo.1989); United Pacific Ins. Co. v. Wyoming Excise Tax Div., Dept. of Revenue and Taxation, 713 P.2d 217 (Wyo.1986); State ex rel. Mortg. Guar. Ins. Corp. v. Langdon, 671 P.2d 811 (Wyo.1983); and Brasel & Sims Const. Co., Inc. v. State Highway C......
  • Countrywide Home Loans v. First Nat. Bank, No. 06-3.
    • United States
    • United States State Supreme Court of Wyoming
    • October 17, 2006
    ...Wyoming is a "first in time" jurisdiction. United Pacific Insurance Co. v. Wyoming Excise Tax Division, Dept. of Revenue and Taxation, 713 P.2d 217, 226 (Wyo.1986). We are charged with the duty of giving effect to the statutes our legislature has enacted. Where the language of a statute is ......
  • Ray v. St. Vincent Healthcare, Inc., No. 05-235.
    • United States
    • United States State Supreme Court of Wyoming
    • August 7, 2006
    ...See U.S. Const. art. VI; Wyo. Const. art. 1, § 37; United Pac. Ins. Co. v. Wyoming Excise Tax Div., Dep't of Revenue & Taxation, 713 P.2d 217, 227 (Wyo.1986). Therefore, the proper statute of limitations to apply in Wyoming state courts for § 1983 claims is the four-year limitations period ......
  • Request a trial to view additional results
6 cases
  • Alvarez v. Insurance Co. of North America, No. C-86-6120-CAL.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • August 4, 1987
    ...effect of the Miller Act, and that decision offers little guidance here. In United Pacific Insurance Co. v. Wyoming Excise Tax Division, 713 P.2d 217 (Wyo.1986), the Wyoming Supreme Court rejected the argument that the Miller Act preempted a state sales and use tax on Miller Act sureties. T......
  • Miller v. State, No. 88-161
    • United States
    • United States State Supreme Court of Wyoming
    • December 14, 1989
    ...(Wyo.1989); Stephens v. State, 774 P.2d 60 (Wyo.1989); United Pacific Ins. Co. v. Wyoming Excise Tax Div., Dept. of Revenue and Taxation, 713 P.2d 217 (Wyo.1986); State ex rel. Mortg. Guar. Ins. Corp. v. Langdon, 671 P.2d 811 (Wyo.1983); and Brasel & Sims Const. Co., Inc. v. State Highway C......
  • Countrywide Home Loans v. First Nat. Bank, No. 06-3.
    • United States
    • United States State Supreme Court of Wyoming
    • October 17, 2006
    ...Wyoming is a "first in time" jurisdiction. United Pacific Insurance Co. v. Wyoming Excise Tax Division, Dept. of Revenue and Taxation, 713 P.2d 217, 226 (Wyo.1986). We are charged with the duty of giving effect to the statutes our legislature has enacted. Where the language of a statute is ......
  • Ray v. St. Vincent Healthcare, Inc., No. 05-235.
    • United States
    • United States State Supreme Court of Wyoming
    • August 7, 2006
    ...See U.S. Const. art. VI; Wyo. Const. art. 1, § 37; United Pac. Ins. Co. v. Wyoming Excise Tax Div., Dep't of Revenue & Taxation, 713 P.2d 217, 227 (Wyo.1986). Therefore, the proper statute of limitations to apply in Wyoming state courts for § 1983 claims is the four-year limitations period ......
  • Request a trial to view additional results

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