HOMESTAKE-SAPIN PARTNERS, Appellant, v. UNITED STATES of America, Appellee.
No. 8527.
United States Court of Appeals Tenth Circuit.
Jan. 16, 1967.
Rehearing Denied March 13, 1967.
375 F.2d 507
The Board‘s order is enforced except as to the portions ordering the reinstatement of Leeth and Lewis with back pay.
William Massar, Washington, D. C. (Richard C. Pugh, Lee A. Jackson, Harold C. Wilkenfeld, Washington, D. C., John F. Quinn, Jr., Ruth C. Streeter, Albuquerque, N. M., with him on brief), for appellee.
Before MURRAH, Chief Judge, and LEWIS and BREITENSTEIN, Circuit Judges.
MURRAH, Chief Judge.
This appeal presents thе question whether the United States or Homestake-Sapin Partners is entitled to the proceeds of settlement of four civil actions brought by them as co-plaintiffs to recover taxes paid by Homestake under the New Mexico Emergency School Tax Act,
A history of the litigation is essential to a proper understanding of оur decision.
The Atomic Energy Commission contracted to buy uranium concentrate from several processors, among them Homestake-Sapin Partners and Homestake-New Mexico Partners.1 The contracts covering the period in question, from approximately August 1, 1958, to April 1, 1962, all provided:
“1. Except as otherwise expressly provided herein the contract price is deemed to include all Federal, State and loсal taxes (including fees and charges), which would be payable in respect of this contract if no interest of the Federal Government were involved * * *.
“2. The Contractor agrees to credit toward payment of the contract price or to pay to the Commission the amount of any such Federal, State or local tax which, in consequence of a constitutional or statutory immunity or exemption under Federal, State, оr local law based upon the direct or indirect relationship of the subject matter of this contract to the Atomic Energy Commission or the United States of America (hereinafter referred to as a ‘precluded tax‘), is either not paid or, if paid, is refunded, rebated, or credited for the benefit of the Contractor. * * *”
The contracts also gave the Commission the right to designate a “precluded tax“, to direct the contraсtor to seek exemption from it, to direct that action be taken to preserve the right to a refund if exemption were refused, and to request the contractor to join with the Commission in a suit to recover such taxes for the benefit of the Commission. Finally, that part of the contract which became operative after April 1, 1962, gave the contractor the right to seek recovery for its own benefit of precluded taxеs paid after that date. In other words, from and after April 1, 1962, the United States had no interest under the contract in so-called “precluded taxes“.
New Mexico Emergency School Taxes were designated “precluded” and the contractors directed to pay them under protest. In June, 1960, six suits were brought in New Mexico federal court all seeking to recover precluded taxes paid
In June, 1962, Homestake filed a state court action to recover taxes paid after April 1, 1962 (this action was brought by Homestake alone and for its own benefit since, as previously noted, the United States had no claim under the contract for taxes paid after April 1, 1962; the asserted ground of invalidity was that the mining and processing tax discriminated against Homestake). This suit was never litigated; instead, the court entered judgment on the basis of a “Consent to Judgment” executed by Homestake and an “Admission of Facts” executed by the State. This judgment recited that the taxes in question were constitutionally levied, but that Homestake erroneously overpaid the privilege tax on mining and processing imposed by
After this judgment was entered, the six federal joint suits came on for trial pursuant to remand on stipulated facts before a specially constituted three judge court. The trial resulted in a second dismissal, United States v. Bureau of Revenue of State of New Mexico, D.C., 217 F.Supp. 849, on two grounds. First, the court reasoned that the only rights possessed by the United States were acquired by subrogation when it reimbursed Homestake for the taxes it had paid; it further reasoned that Homestake had no standing “* * * to challenge the tax and assert a right of refund on account of discrimination against the United States * * *“; therefore, the United States could not assert the unconstitutionality of the tаx because Homestake had no standing to do so and the United States as subrogee could not rise above the rights of its subrogor.4 The second ground was that
While the appeal of this decision was pending, the United States and New Mexico entered into settlement negotiatiоns with respect to all twelve joint suits. A settlement of $1.25 million, or 47% of $2.6 million in taxes involved in the twelve joint suits was acceptable to both sides. However, Homestake refused to sign the documents necessary to consummate the proposed settlement because included was a document reciting that Homestake was entitled to no part of the settlement proceeds. Thereafter, Homestake and the United States made a separate agreement whereby they agreed to accept and consummate the proposed settlement, and to escrow the approximately $227,000 attributable to the four joint suits in which Homestake-Sapin or Homestake-New Mexico was a party pending determination of their respective rights to the settlement fund in this suit. The agreement specifically provided that “No plaintiff shall be deemed (by reason of having participated in the acceptance and consummation of any of said settlement offers or having entered into this stipulation) to have admitted or recognized that the plaintiff claiming adversely to it is entitled to any part of any settlement proceeds.”
Pursuant to this agreement, the United States brought this suit against Homestake alleging the terms of the contract tax provisions, that it had designated the “precluded taxes” in question, that the only ground of invalidity alleged in the suits was the unconstitutionality of the taxes, and that the complaints in the four joint suits specifically alleged that Homestake was obligated to reimburse the United States for any such taxes refunded.
Homestake answered admitting all the allegations of the United States’ complaint except that it denied that unconstitutional invalidity was the only ground alleged in the four joint suits to which it was a party. As to that, it affirmatively alleged that the settlement was not based on precluded tax claims, but instead on erroneously computed and overpaid claims to which it alone was entitled; that the taxes were not “precluded” within the meaning of the contract but were in fact nondiscriminatory and constitutional, i. e. constitutionally exacted but erroneously computed; that the United States owed and breached a fiducial obligation tо recover the overpayments for the benefit of Homestake and was estopped to assert a claim to the escrowed fund. Homestake also counterclaimed alleging in substance the same claims made in its affirmative defenses.
Both sides submitted affidavits and documents to the court and moved for summary judgment. The court granted summary judgment in favor of the United States and awarded it the entire escrowed fund.
Homestake‘s first ground for reversal is based upon its first alleged defense, i. e. that the fund in suit represents a settlement of claims for taxes constitutionally exacted but erroneously computed and overpaid, not settlement of precluded tax claims. It points to the 1962 state court judgment which recited Homestake had overpaid its taxes and argues that New Mexico was ready to refund approximately 50% of the taxes involved in the twelve joint suits on the basis of the 1962 judgment; that the attorneys for the United States were aware of this but decided to try for a 100% recovery in the three judge case; and that upon dismissal of that case the United States decided to settle for the 50% it knew was available because of the 1962 consent judgment. On this postulate Homestake contends that the settlement which produced the fund in suit was based upon an overpayment claim, not a precluded tax claim.
The settlement stipulations were, of course, contracts. And, if the intent of the parties becomes an issue, it should be gathered from the language of the contract, and resort to extraneous facts is justified only if the contract itself creates an ambiguity; ambiguity justifying extraneous evidence is not generated by the subsequent disagreement of the parties concerning the meaning of the contract. See Greer v. Stanolind Oil and Gas Co., 10 Cir., 200 F.2d 920, 922; United States ex rel. Moseley v. Mann, 197 F.2d 39; Filtrol Corp. v. Loose, 10 Cir., 209 F.2d 10; Kohler, Stover & Ivey v. City of Tulsa, 10 Cir., 214 F.2d 946; Dipo v. Ringsby Truck Lines, 10 Cir., 282 F.2d 126; Cf. Evensen v. Pubco Petroleum Corp., 10 Cir., 274 F.2d 866.
The suits were founded in the uranium contracts between Homestake-Sapin and the government which defined precluded taxes in terms of unconstitutional taxes and provided that Homestake-Sapin would bring suit to recover designated precluded taxes. As we have seen, twelve such suits wеre instituted to recover precluded taxes as defined in the contract (in four of these suits Homestake-Sapin was a co-plaintiff). In none of the suits was the claim made that the taxes sought to be recovered were erroneously computed and overpaid. The sole and only ground for recovery was unconstitutional exaction.
The settlement agreements which we interpret necessarily derive their content аnd meaning from the claims in the suits they settled. When these agreements are viewed in the light of the unequivocal nature of the suits they settled, their meaning and purpose becomes too plain for doubt. In this posture of the case extrinsic evidence is inadmissible, and the case is ripe for summary judgment on the overpayment issue.
We hold that the settlement agreements denominated “Stipulations of Settlement and Discontinuance” and “Stipulаtion of Settlement” settled the claims in the suits for unconstitutional exaction of taxes which were designated in the suits as precluded taxes.
Homestake-Sapin next asserts that even though the agreements settled no overpayment claim, the United States was nevertheless aware of the force and effect of the 1962 judgment and New Mexico‘s willingness to settle these claims on the basis of that judgment. In other words, the argument is that New Mexiсo was willing to settle the claims for unconstitutional exactions according to the overpayment formula utilized in the 1962 judgment. On this hypothesis it argues that the United States owed a fiducial obligation to protect Homestake-Sapin‘s interest under color of the 1962 judgment and is now
This brings us to Homestake‘s contention that even if, as we hold, the settlement involved only claims for unconstitutionally exacted taxes, the claims were nevertheless not for “precluded taxes“, as that term is used in the contracts.6 As we understand the contention, it is that the uranium contract precluded only taxes unconstitutional under the intergovernmental immunity doctrine; that discriminatory taxes do not derive their unconstitutionality from the intergovernmental immunity doctrine and are, therefore, not precluded under the contract.
As we have seen, “precluded taxes” as defined in the contract are those refunded “* * * in consequence of a constitutional or statutory immunity or exemption under Federal, State, or local law based upon the direct or indirect relationship of the subject matter of this contract to the Atomic Energy Commission or the United States of America * * *.” Homestake takes the position that “constitutional immunity” as used in the contract refers to intergovernmental immunity under the supremacy clause and not to discrimination against the United States and those with whom it deals which it says derives from the
Whether a tax discriminatory against the United States is unconstitutional under the
We think the language of the tax provision clearly indicates that unconstitutionally discriminatory taxes were intended to be treated as “precluded“. The contract certainly does not expressly limit “precluded taxes” to those from which the United States is immune because levied directly on it or its agency. On the contrary, since taxes exempted because of the “indirect” relationship of the subject matter of the contract to the United States are “precluded“, unconstitutionally discriminatory taxes would seem to come well within the purview of that term. We do not think the drafters of this contract intended to draw a distinction between an unconstitutionally discriminatory tax аnd one from which the United States is immune under the supremacy clause, when, as we have seen, authoritative case law does not attempt to make such a distinction.
We conclude that the claims on which suit was brought and settlement made were precluded tax claims within the meaning of the contract.
The judgment is affirmed.
DAVID T. LEWIS, Circuit Judge (concurring).
In determining the rights of rival claimants to a fund created by a compromise of a filed law suit it is indeed fundamental that first inquiry should be made through the contract of settlement which, if certain and unambiguous, would control. In the case at bar the contract of settlement unambiguously settles all claims of both Homestake and the United States against the State of New Mexico. And the undisputed facts show that the claims of Homestake and the United States against each other and to the fund were intended to be and were specifically preserved in the settlement proceedings. I can accord no further dispositive legal significance to the nature of the filings or the settlement agreements. The United States is entitled summarily to succeed now because it was entitled to succeed in the law suit that was settled. As Chief Judge Murrah clearly points out, the subject tax imposition by New Mexico was, as a matter of law, a “precluded tax” within the meaning of the parties’ contract. The claim of the United Statеs to the disputed fund thus has merit in law and the claim of Homestake is without merit. There is no factual dispute involving intent nor contractual relationship existing between these parties that prevents summary disposition.
BREITENSTEIN, Circuit Judge (concurring).
In my opinion a case of the complexity of this should not have been decided on a motion for a summary judgment. My associates do not agree and I accept their judgment. The result reached is correct becausе the tax was precluded and the United States was entitled to recover in the settled suits. Indeed, it was entitled to recover substantially more than the amount paid in settlement.
ALFRED P. MURRAH
CHIEF JUDGE