United States v. Bureau of Revenue of State of New Mexico

• Decision Date: 07 June 1963
• Docket Number: No. 4488-4493.,4488-4493.
• Citation: 217 F. Supp. 849
• Parties: UNITED STATES of America, Phillips Petroleum Company, the Anaconda Company, Homestake-New Mexico Partners, Homestake-Sapin Partners, Kermac Nuclear Fuels Corp., and Kerr-McGee Oil Industries, Inc., Plaintiffs, v. BUREAU OF REVENUE OF the STATE OF NEW MEXICO, Charles C. Brunacini, Commissioner of Revenue, and Carlos Trujillo, Jr., Director, School Tax Division, Defendants.
• Court: U.S. District Court — District of New Mexico

217 F. Supp. 849

UNITED STATES of America, Phillips Petroleum Company, the Anaconda Company, Homestake-New Mexico Partners, Homestake-Sapin Partners, Kermac Nuclear Fuels Corp., and Kerr-McGee Oil Industries, Inc., Plaintiffs, v. BUREAU OF REVENUE OF the STATE OF NEW MEXICO, Charles C. Brunacini, Commissioner of Revenue, and Carlos Trujillo, Jr., Director, School Tax Division, Defendants.

Nos. 4488-4493.

United States District Court D. New Mexico.

June 7, 1963.

Louis F. Oberdorfer, Asst. Atty. Gen., Frederick B. Ugast and William Massar, Attorneys, Department of Justice, Ruth Streeter, Asst. U. S. Atty., Holger Albrethsen, Jr., Chief Counsel, Grand Junction Office, United States Atomic Energy Commission, Robert A. McKay and John F. McNett, Office of the Chief Counsel, Albuquerque Operations Office, United States Atomic Energy Commission, for plaintiff United States.

Bryan G. Johnson, Albuquerque, N. M., for plaintiffs Phillips Petroleum Co. and Anaconda Co.

Harry L. Bigbee, Santa Fe, N. M., for plaintiffs Homestake-New Mexico Partners and Homestake-Sapin Partners.

Lynn Adams, Oklahoma City, Okl., for plaintiffs Kermac Nuclear Fuels Corporation and Kerr-McGee Oil Industries, Inc.

Earl E. Hartley, Atty. Gen. of New Mexico, Norman S. Thayer, Asst. Atty. Gen., and F. Harlan Flint, Asst. Atty. Gen., for defendants.

Before BRATTON, Circuit Judge, and ROGERS and PAYNE, District Judges.

BRATTON, Circuit Judge.

These cases present for determination the question of the validity of privilege taxes imposed by the State of New Mexico upon private companies, measured by receipts from the Atomic Energy Commission, hereinafter referred to as the Commission, in payment for uranium concentrate.

The United States is one of the plaintiffs in all of these six cases. Phillips Petroleum is a co-plaintiff in one; The Anaconda Company in one; Homestake-New Mexico Partners in one; Homestake-Sapin Partners in one; Kermac Nuclear Fuels Corporation in one; and Kerr-McGee Industries in one. The Bureau of Revenue of New Mexico, the Commissioner of Revenue, and the Director, School Tax Division, of the Bureau are defendants in all of them. For convenience, reference will be made to the several co-plaintiffs joining the United States as the Companies. The purposes of the actions are to obtain an adjudication that the provisions of the Emergency School Tax Act of New Mexico, as amended, N.M.S.A.1953, §§ 72-16-1 to 72-16-47, hereinafter referred to as the act, be construed as not to apply to sales of uranium made to the Commission; that if the provisions of the act do apply to such sales, it be adjudicated as unconstitutional and void for the reason that it discriminates against the United States; to recover judgment for sums paid for sales of uranium previously made to the Commission; and to restrain further exactions under the act. The first action was dismissed. The judgment was reversed and the cause was remanded for further proceedings. United States et al. v. Bureau of Revenue et al., 10 Cir., 291 F.2d 677. The cases were consolidated for hearing. The answer in each case was amended. Each amended answer contains the affirmative defense that the act creates the right of action for the recovery of taxes paid under protest; that it prohibits the bringing of such suit more than four months after such payment; that it provides that failure to bring the suit within that period shall constitute a waiver of the protest on all claims against the State on account of the illegality of the tax; that the suit was filed more than four months after payment of some of the taxes; and that the rights of plaintiffs, if any existed to recover the taxes paid under protest more than four months preceding the filing of the suit have become barred. The cases were submitted to this specially constituted court composed of three members in accordance with 28 U.S.C.A. § 2281, for final hearing upon the admissions contained in the pleadings and stipulated facts.

The Companies were separately engaged in the business of processing uranium-bearing ore at their plants in New Mexico for the production of uranium concentrate for sale to the Commission. The Companies each entered into a contract with the Commission for the sale of uranium concentrate which it processed. Each contract required the Company to pay under protest the taxes exacted under the act; provided that the price of the uranium concentrate should reflect the burden of the taxes; and provided that the portion of the price attributable to the taxes should be refunded to the United States by the Company if it was successful in obtaining refunds, rebates, or credits of the taxes. Each contract required the Company to institute suit if necessary at the direction of the United States to obtain the refund of protested tax payments. Taxes were assessed under the act. In determining the amount of such taxes, the defendants included in the taxable gross receipts of the business of the Company the proceeds received from the sales of their products to the Commission. The Companies paid under protest taxes exacted under the act attributable to revenue derived from sales to the Commission. The taxes thus paid were in the aggregate amount of $1,063,571.56, most of which was paid in 1957, 1958, and 1959. Only $87,667.59 was paid after February 29, 1960. The actions were instituted on June 29, 1960.

The major ground urged by the United States for recovery is that during the period involved in these actions the act was unconstitutional in its application to purchases of uranium concentrate which the Commission made from the Companies for the reason that by its terms the act expressly exempted from its provisions sales of tangible personal property, other than metaliferous mineral ores, whether refined or unrefined, made to the State or any of its political subdivisions but failed to grant a like exemption to sales made to the United States, or its agencies. The act was originally enacted in 1935. Chapter 73, article 1, Laws of 1935. By section 2 of the act, sales to the State or its political subdivisions and those made to the United States or its agencies or departments were expressly exempted from the tax. By chapter 187, Laws of 1957, the exemption in favor of the State and its political subdivision was retained, but that in favor of the United States and its agencies and departments was dropped. And by chapter 195, Laws of 1961, the exemption in favor of the United States and its agencies and departments was again enacted into law in language identical in...