A federal instrumentality acting under Congressional authority
cannot be subjected to an occupation or privilege tax by a state.
Farmers' Bank v. Minnesota, 232 U.
S. 516.
Where the agreement between the government and an Indian tribe
imposes upon the government a definite duty in regard to operation
of coal mines, as is the case with the Choctaw and Chickasaw
agreement of April 23, 1897, lessees of the mines are the
instrumentalities through which the obligation of the United States
is carried into effect, and they cannot be subjected to an
occupation or privilege tax by the state in which the mines are
located. Neither state courts nor legislatures, by giving a tax a
particular name, can take from this Court its duty to consider its
real nature and effect.
Galveston &c. Ry. Co. v.
Texas, 210 U. S. 227.
Where the manifest purpose of a gross revenue tax equal to a
specified percentage on gross receipts from production of a mine in
addition to
Page 235 U. S. 293
taxes levied and collected upon an
ad valorem basis, is
to reach all sales and secure such percentage, the tax is, in
effect, a privilege or occupation tax, and so
held as to
such a tax imposed by Oklahoma on persons engaged in mining and
producing coal.
The facts, which involve the constitutionality of a gross
revenue tax levied by the State of Oklahoma on persons engaged in
mining and the production of coal, and the power of a state to tax
instrumentalities of the federal government, are stated in the
opinion.
Page 235 U. S. 295
MR. JUSTICE McREYNOLDS delivered the opinion of the Court.
By an original bill filed July 19, 1909, in the Circuit Court of
the United States, Eastern District of Oklahoma, appellant sought
to enjoin the sheriff of Pittsburg County from collecting taxes
claimed by the state upon the gross sale of coals dug from mines
belonging to the Choctaw and Chickasaw Indians which it leased and
operated. The claim was based on the Oklahoma statute which
provides for a gross revenue tax, and was resisted upon the ground
(among others) that in reality the demand was for an occupation or
privilege tax to which the appellant could not lawfully be
subjected because, as a federal instrumentality acting under
Congressional
Page 235 U. S. 296
authority, it had leased and was operating mines to which the
Indians held title. A general demurrer was sustained, and the cause
is here by direct appeal.
No objection has been interposed to the forum selected or the
procedure adopted.
Oklahoma v. Wells, Fargo & Co.,
223 U. S. 298.
Appellant is a railroad corporation with power to lease and
operate coal mines. In the region formerly known as Indian
Territory -- now within the State of Oklahoma -- the Choctaw and
Chickasaw Indians, as wards of the United States, own a large area
of segregated and unallotted lands containing valuable coal
deposits which are not subject to taxation by the state.
Tiger
v. Western Investment Co., 221 U. S. 286,
221 U. S. 310;
Ex Parte Webb, 225 U. S. 663,
225 U. S.
684.
The Act of Congress approved June 28, 1898, 30 Stat. 495, 510,
c. 517, "Curtis act," ratified, confirmed, and put into effect the
Atoka Agreement of April 23, 1897, between the United States and
the Choctaws and Chickasaws, which provided that their coal lands
should remain common property of the members of the tribes; that
the revenues derived therefrom should be used for the education of
their children; that the mines thereon should be under the
supervision and control of two trustees appointed by the President,
and subject to rules prescribed by the Secretary of the Interior;
that all such mines should be operated and the royalties paid into
the Treasury of the United States; that the royalty should be
fifteen cents per ton, with power in the Secretary of the Interior
to reduce or advance the same according to the best interests of
the tribes, and that all lessees should pay fixed sums as advanced
royalties.
In harmony with the provisions of the Curtis Act, appellant
secured from the duly appointed trustees leases of certain mines,
obligating itself to take out annually
Page 235 U. S. 297
specified amounts of coal and to pay the stipulated royalty. It
proceeded actively to develop these, either directly or through its
agent, and for some years before the present suit was begun took
therefrom large quantities of coal, and fully complied with the
obligations assumed.
Section 6 of the Oklahoma statute approved May 26, 1908,
entitled
"An Act Providing for the Levy and Collection of a Gross Revenue
Tax from . . . Persons, Firms, Corporations, or Associations
Engaged in the Mining or Production of Coal, . . ."
provides:
"Every person, firm, association, or corporation engaged in the
mining, or production, within this state, of coal . . . shall,
within thirty days after the expiration of each quarter annual
period expiring respectively on the first day of July, October,
January, and April of each year, file with the state auditor a
statement under oath, on forms prescribed by him, showing the
location of each mine . . . operated by such person, firm,
association, or corporation during the last preceding quarter
annual period, the kind of mineral; . . . the gross amount thereof
produced; the actual cash value thereof; . . . and shall at the
same time, pay to the state treasurer a gross revenue tax, which
shall be in addition to the taxes levied and collected upon an
ad valorem basis upon such mining . . . property and the
appurtenances thereunto belonging, equal to two percentum of the
gross receipts from the total production of coal therefrom. . .
."
An amendment of March 27, 1909, changed the quarterly periods
and reduced the rate on receipts to one-half of one percentum.
Appellants furnished the auditor with a statement of the output
of the mines operated, but declined to pay the tax assessed upon
the gross receipts from sales. Thereupon the sheriff, under
directions of the auditor, was
Page 235 U. S. 298
about to enforce the demand by a levy, and the present bill was
filed to restrain him.
From the foregoing it seems manifest that the agreement with the
Indians imposed upon the United States a definite duty in respect
to opening and operating the coal mines upon their lands, and
appellant is the instrumentality through which this obligation is
being carried into effect. Such an agency cannot be subjected to an
occupation or privilege tax by a state.
M'Culloch
v. Maryland, 4 Wheat. 316,
17 U. S. 425;
Farmers Bank v. Minnesota, 232 U.
S. 516. But it is insisted that the statute, rightly
understood, prescribed only an
ad valorem imposition on
the personal property owned by appellant -- the coal at the pit's
mouth -- which is permissible, according to many opinions of this
Court.
Thomson v. Pacific
Railroad, 9 Wall. 579;
Union
Pacific Railroad v. Peniston, 18 Wall. 5;
Central Pacific Railroad v. California, 162 U. S.
91;
Thomas v. Gay, 169 U.
S. 264.
The court below held that the effect of the act was to lay a
valid tax on personalty, and the same result was subsequently
reached by the Supreme Court of Oklahoma.
McAlester-Edwards
Coal Co. v. Trapp, 43 Okl. 510. The United States District
Court for the Western District of Oklahoma arrived at a different
conclusion.
Missouri, Kansas & Texas Ry. v. Meyer, 204
F. 140.
Neither state courts nor legislatures, by giving a tax a
particular name or by the use of some form of words, can take away
our duty to consider its real nature and effect.
Galveston,
Harrisburg & San Antonio Ry. v. Texas, 210 U.
S. 217,
210 U. S.
227.
It is unnecessary to consider the power of the State of Oklahoma
to treat coals dug from mines operated by the appellant as other
personalty, and to subject them to a uniform
ad valorem
tax, for it seems to us clear that the Act of 1908 provided for no
such imposition. Its very
Page 235 U. S. 299
language imposes a "gross revenue tax which shall be in addition
to the taxes levied and collected upon an
ad valorem
basis." We cannot therefore conclude that the gross receipts were
intended merely to represent the measure of the value of property
liable to a general assessment -- provision is made for determining
that, upon a different basis.
Oklahoma v. Wells, Fargo &
Co., 223 U. S. 298,
223 U. S. 301.
The requirement is not on account of property owned on a given day,
as is the general custom where
ad valorem taxes are
provided for, and as the Oklahoma laws require, but the manifest
purpose is to reach all sales and secure a certain percentage
thereof -- a method commonly pursued in respect of license and
occupation taxes.
Pullman Co. v. Knott ante, p.
235 U. S. 23.
A tax upon a merchant's, manufacturer's, or miner's gross sales
is not the same thing as one on his stock treated as property.
Cooley on Taxation (3rd ed.), p. 1095. The former is upon his
business. In effect, the Oklahoma act prescribes an occupation tax
(
Ohio Tax Cases, 232 U. S. 576,
232 U. S.
592), and, accepting as true the allegations of
appellant's bill, we think it cannot lawfully be subjected thereto.
The decree of the court below is reversed, and the cause remanded
for further proceedings in conformity with this opinion.
Reversed.