WILSON ET AL., DOING BUSINESS AS WILSON LUMBER CO., v. COOK, COMMISSIONER OF REVENUES.
NO. 328.
Supreme Court of the United States
Argued January 11, 1946. Decided March 4, 1946.
327 U.S. 474
O. T. Ward argued the cause for the Commissioner of Revenues. With him on the brief was R. S. Wilson. In No. 328, Thos. S. Buzbee filed a motion to affirm or dismiss in part.
Solicitor General McGrath, Assistant Attorney General Samuel O. Clark, Jr., Sewall Key, Arnold Raum, J. Louis Monarch and William Robert Koerner filed a brief for the United States, as amicus curiae.
MR. CHIEF JUSTICE STONE delivered the opinion of the Court.
An Arkansas statute, “Act 118 of 1923, Pope‘s Digest, Arkansas Statutes (1937),
Appellants in No. 328, a copartnership, entered into contracts with the United States for the purchase and severance of timber on national forest reserves located within the state, some of which were public lands of the United States when Arkansas was admitted to statehood and some of which were acquired by the United States by purchase with the consent of the state. The contracts of severance and purchase provided that “title to all timber included in this agreement shall remain in the United States until it has been paid for, and scaled, measured or counted.” By the contracts the appellants were required in advance of severance to place with the Government representative advance installments of the estimated purchase price.
In the years 1937 to 1942, appellants, proceeding under their contract, severed timber from the forest reserves in question. An execution having been issued and delivered to the county sheriff, appellee in No. 328, and also appellant in No. 329, for collection of the tax assessed against appellants in No. 328 for the years in question, they brought the present suit in the state chancery court to enjoin the collection. The questions on which the parties ask decision are (a) whether the forest reserves which were public lands of the United States before Arkansas was admitted to statehood are subject to the taxing jurisdiction of the state; (b) whether the forest reserves acquired by the United States by purchase remain subject to the taxing authority of the state; and (c) whether the tax is unconstitutional as a tax laid upon the property or activities of the United States, or because the tax laid on plaintiffs imposed an unconstitutional burden on the United States.
The chancery court gave judgment for plaintiffs, enjoining collection of the tax. It held that if the tax “be
Plaintiffs have appealed, in No. 328, from so much of the judgment as sustained the tax with respect to lands acquired by the United States by purchase, urging in their assignments of error that the Supreme Court of Arkansas erred in reversing the judgment of the chancery court, “which held to be void the severance tax statute,” and in holding that the severance tax law is not repugnant to the supremacy clause,
Under
As the record does not show that the plaintiffs presented for decision to the state Supreme Court any federal question, they have no appeal to this Court unless the opinion of the state Supreme Court shows that that court ruled on the validity of a state statute under the laws and Constitution of the United States. Charleston Assn. v. Alderson, supra, 185-6 and cases cited. That court‘s opinion, while holding that the “tax law” was applicable to “persons severing timber from lands of the United States in a national forest,” does not indicate that plaintiffs raised there, or that the court passed upon, the validity of the statute as applied. The court considered only the validity of “the tax,” not that of the statute.
With reference to plaintiffs’ liability for the tax, it decided only that the state “has the right to collect the severance tax, so far as territorial jurisdiction is concerned,” for severance of timber from lands acquired by the United States by purchase, and that plaintiffs could not claim the benefits of the immunity, if any, of the Federal Government from “the tax,” since it was imposed on plaintiffs, not the Government or its property. It said that the Government was not constitutionally immune from such economic burden as might be passed on from the taxpayer to the Government by reason of the effect of the tax paid by the severers, citing James v. Dravo Contracting Co., 302 U. S. 134 and Alabama v. King & Boozer, 314 U. S. 1. Being asked to enjoin the collection of the tax, the state court contented itself with holding that the tax, which was assessed on plaintiffs and not the Government, imposed no burden on the Government which infringed its implied constitutional tax immunity. Since the collection of a tax by a state officer, as here, may or may not offend against the Constitution, independently of the
In order to support an appeal to this Court it is necessary that the question of the validity of the state taxing statute be either presented to the state court or decided by it. It is not sufficient merely to attack, as here, the tax levied under the statute, or “the right to collect the tax” which has been levied, or to show that the validity of the tax alone has been considered. Charleston Assn. v. Alderson, supra, 185, and cases cited. For “the mere objection to an exercise of authority under a statute, whose validity is not attacked, cannot be made the basis” of an appeal. Jett Bros. Co. v. City of Carrollton, 252 U. S. 1, 6. It is for this reason that we have held that an appeal will not be sustained where there has been only an attack upon a tax assessment, Jett Bros. Co. v. City of Carrollton, supra; Miller v. Board of County Comm‘rs, 290 U. S. 586; Memphis Gas Co. v. Beeler, supra, 650; Commercial Credit Co. v. O‘Brien, 323 U. S. 665; Charleston Assn. v. Alderson, supra, 185, or, as here, upon a “tax,” Citizens National Bank v. Durr, supra, 106; Indian Territory Illuminating Co. v. Board of County Comm‘rs, 287 U. S. 573; Baltimore National Bank v. State Tax Comm‘n, 296 U. S. 538; Irvine v. Spaeth, 314 U. S. 575, or upon the attempt to collect a tax, Jett Bros. Co. v. City of Carrollton, supra.
Since plaintiffs’ attack is directed to the validity of the tax as laid, and not to the validity of the statute, as applied, we are without jurisdiction of their appeal under
Our decision in James v. Dravo Contracting Co., supra, and in Alabama v. King & Boozer, supra, and the cases
Plaintiffs now, for the first time, assail the tax and the statute imposing it, on the ground that the Act requires the severer to collect the tax from the owner of the timber at the time of severance,
But we are not free to consider these grounds of attack for the reason that they were not presented to the Supreme Court of Arkansas or considered or decided by it. While the constitutional question now sought to be presented is in some measure related to that decided by the state court, and, like it, arises under the implied constitutional immunity of the Federal Government from state taxation, it is not merely “an enlargement” of an argument made before the state court, but is so distinct from the question decided by the state court that our decision of the issue raised there would not necessarily decide that now sought to be raised. Compare Dewey v. Des Moines, 173 U. S. 193, 197, 198. We are therefore not free to consider it.
“In reviewing the judgment of a state court, this Court will not pass upon any federal question not shown by the record to have been raised in the state court or considered there, whether it be one arising under a different or the same clause in the Constitution with respect to which other questions are properly presented.” New York ex rel. Cohn v. Graves, 300 U. S. 308, 317, and cases cited. For, as we said in McGoldrick v. Compagnie Generale, 309 U. S. 430, 434-435, “In cases coming here from state courts in which a state statute is assailed as unconstitutional, there are reasons of peculiar force which should lead us to refrain from deciding questions not presented or decided in the highest court of the state whose judicial action we are called upon to review. Apart from the reluctance with which every court should proceed to set aside legislation as unconstitutional on grounds not properly presented, due regard for the appropriate relationship of this Court to state courts requires us to decline to consider and decide questions affecting the validity of state statutes not urged or considered there. It is for these reasons that this Court, where the constitutionality of a statute has been upheld in the state court, consistently refuses to consider any grounds of attack not raised or decided in that court.” See also Keokuk & Hamilton Bridge Co. v. Illinois, 175 U. S. 626, 633; Bolln v. Nebraska, 176 U. S. 83, 89-92; New York v. Kleinert, 268 U. S. 646, 650-1; Whitney v. California, 274 U. S. 357, 362, 363; Saltonstall v. Saltonstall, 276 U. S. 260, 267-8.
In view of the lien provisions of the statute and its provisions which purport to authorize the taxpayer to collect the tax from the owner of the severed timber, here the Government, it is suggested that we cannot rightly adjudge that the state is entitled to recover the tax on the transactions of severance involved, without determining the applicability of these provisions to the Government and their validity if so applied. We are not now concerned with the Government‘s liability to the statutory lien or for payment of the tax. It will be time enough to consider its interests when some effort is made to enforce the lien or collect the tax from the United States. We obviously do not by our judgment against the plaintiffs
The state, construing its own law, has rendered an unconditional judgment holding plaintiffs liable for the tax. For purposes of our review we must assume that the judgment conforms to state law. Hence we are called on to determine only federal questions properly raised on the record. Considering the only question of the tax immunity of the United States which is so raised, we decide for reasons already stated that the tax now laid and sustained imposes no unconstitutional burden on the Federal Government. No question arising under the
The statute of Arkansas consenting to the purchase of forest lands by the United States, provided that the state should “retain a concurrent jurisdiction with the United States in and over lands so acquired . . . ,” to issue and execute “civil process in all cases, and such criminal process as may issue under the authority of the State . . . ” It made no express grant or reservation of legislative power over the areas purchased. Hence the statute cannot be taken as having yielded or intended to surrender to the Federal Government the state legislative jurisdiction over the area in question, so far as exercise of that jurisdiction is consistent with federal functions. Any doubt as to the effect of such a grant by the state in conferring exclusive legislative jurisdiction over the territory which is acquired by the Federal Government is removed by the provisions of the federal statute.
Section 12 of the federal statute, authorizing the purchase, provided:
“That the jurisdiction, both civil and criminal, over persons upon the lands acquired under this Act shall not be affected or changed by their permanent reservation . . . as national forest lands, except so far as
the punishment of offenses against the United States is concerned, the intent and meaning of this section being that the State wherein such land is situated shall not, by reason of such reservation and administration, lose its jurisdiction nor the inhabitants thereof their rights and privileges as citizens or be absolved from their duties as citizens of the State.”
By this enactment Congress in effect has declined to accept exclusive legislative jurisdiction over forest reserve lands, and expressly provided that the state shall not lose its jurisdiction in this respect nor the inhabitants “be absolved from their duties as citizens of the State.” Compare Mason Co. v. Tax Comm‘n, supra; Atkinson v. Tax Comm‘n, 303 U. S. 20; Collins v. Yosemite Park Co., 304 U. S. 518, 528; Stewart & Co. v. Sadrakula, 309 U. S. 94, 99.
Our conclusion, based on the construction of the interrelated state and federal statutes, is that the state has territorial jurisdiction to lay the tax upon activities carried on within the forest reserve purchased by the United States.
What we have said of the argument that the tax assessed on plaintiffs is an unconstitutional burden on the Government, is applicable to the tax assessed for severance of timber from forest reserve lands which, from the beginning, have been a part of the public domain. That tax is likewise valid if the state has legislative jurisdiction over such lands within its boundaries.
Upon admission of Arkansas to statehood in 1836 upon an equal footing with the original states (
Since the United States did not purchase the lands with the consent of the state, it did not acquire exclusive jurisdiction under the constitutional provision, and there has been no cession of jurisdiction by the state. Surplus Trading Co. v. Cook, 281 U. S. 647, 651; Mason Co. v. Tax Comm‘n, supra, 210. Although Arkansas has, by
We conclude that the state has legislative jurisdiction over the federal forest reserve lands located within it, whether they were originally a part of the public domain of the United States, or were acquired by the United States by purchase, and that the tax assessed against plaintiffs is not subject to any constitutional infirmity, or to any want of taxing jurisdiction of the state to lay it with respect to transactions on the federal forest reserve located within the state.
The judgment is reversed insofar as it adjudged plaintiffs not liable for the tax on severance of timber from lands held by the United States as original owner, and the cause
So ordered.
MR. JUSTICE DOUGLAS concurs in the result.
MR. JUSTICE JACKSON took no part in the consideration or decision of these cases.
Opinion of MR. JUSTICE RUTLEDGE, dissenting, announced by the CHIEF JUSTICE.
In No. 328 the Court sustains the application of the Arkansas severance tax to the appellants.1 In my judgment the cause should be remanded to the state court for it to determine the applicability of the lien and collection provisions to the United States, or their severability, and in the light of that determination to ascertain the constitutional validity of the tax as applied to appellants. Those issues are inescapable on the record in this case. For until they are determined any decision here can affect only a tax of uncertain incidence, unless the Court in sustaining it means to rule, as I think the Arkansas court ruled, that the tax is valid whether or not the statute‘s lien and collection provisions2 apply to the United States as owner of the land and the severed timber.
Neither course is properly open to us. Since the Arkansas court, as this Court‘s opinion does not dispute, has sustained the tax without deciding whether the lien and collection provisions are severable and inapplicable to the United States, we are completely at loss to know whether the tax rests ultimately upon the Government, as it does under Arkansas law on all other owners not expressly exempted. Consequently we have no determinable issue, but only a speculative inquiry of a sort beyond the tradition and, in my opinion, the jurisdiction of this Court to decide. On the other hand, if the effect of the decision here, as in the Arkansas court, is to sustain the tax regardless of whether the lien and collection provisions apply in whole or in part to the United States, the result is substantially to sustain a tax laid by the state directly on the Government. This result is as unacceptable as to render an advisory opinion upon the validity of a tax of uncertain and speculative application.
From McCulloch v. Maryland, 4 Wheat. 316, to now the rule has remained that the states are without power, absent the consent of Congress, to tax the United States, whether with reference to its property or its functions.
This is true regardless of the vagaries of decision, at different periods, in allowing expansion of the Government‘s immunity to include others. Recent recessions from former broad extensions of this kind have settled that ultimate economic incidence upon the Government of a state tax laid upon others is not alone enough to invalidate the tax. James v. Dravo Contracting Co., 302 U. S. 134; Alabama v. King & Boozer, 314 U. S. 1; see Penn Dairies v. Milk Control Comm‘n, 318 U. S. 261, 269.3 But this does not mean either that such incidence of the tax is irrelevant to its validity or that all state taxes purporting to be laid upon others but in fact reaching the Government are valid.
It is still true that “the taxpayer is the person ultimately liable for the tax itself.” Colorado Bank v. Bedford, 310 U. S. 41, 52; Federal Land Bank v. Bismarck, 314 U. S. 95. If the person who must pay the tax in the first place is required by the taxing statute to collect the tax or an equivalent amount from the United States, the tax is upon the United States. “State law could not obligate the Central Government to reimburse for a valid tax, much less for an invalid one.” United States v. Allegheny County, 322 U. S. 174, 189. Although the Court has gone far in permitting the states to force one private person to act as tax collector for another, cf. Monamotor Oil Co. v. Johnson, 292 U. S. 86; Felt & Tarrant Mfg. Co. v. Galla-gher, 306 U. S. 62; General Trading Co. v. Iowa Tax Comm‘n, 322 U. S. 335, and dissenting opinion at 339, that device cannot be utilized by the states to lay taxes on the United States. Nor has it been held heretofore, if it is now, that a tax purporting to be laid upon a private individual or concern is valid regardless of whether the provisions of the state taxing statute for passing on the tax to another are applicable to the United States or are valid if so applied.
I am unable to comprehend the effect of the Court‘s decision. If it is ruling sub silentio or ex hypothesi that the lien and collection provisions of the Arkansas statute, for any application to the Government, are inapplicable or severable, we have no right to make such a decision. That is the business of the Arkansas courts. If the ruling is that the tax is valid even though those provisions are applicable to the United States, then for the first time the Court is overruling the basic principle of McCulloch v. Maryland. If the decision is, finally, that the tax is valid whether or not the lien and collection provisions are applicable or severable, then it embodies both faults.
I do not think the Court means to overrule McCulloch v. Maryland. Nor does it purport to interpret or determine the Arkansas law concerning either applicability or severability of the statute‘s provisions. But unless it is doing this, without so stating, I see no escape from the other horn of the dilemma. Either the tax as applied is valid or it is invalid. Whether it is valid or not depends on whether the lien and collection provisions apply to the United States, for they place the tax directly upon the owner. That issue is inescapable in this case, whether in the Arkansas court or here;
I do not think the Arkansas court decided either that the lien and collection provisions are inapplicable to the United States or that they are severable from the re-
My reasons for this view are several. In the first place, the court‘s opinion, though noting the collection and lien provisions and the contract‘s term that title to the severed timber should remain in the Government “until it has been paid for, and scaled, measured or counted,” does this in the introductory statement of the case and then proceeds through a lengthy discussion without again referring to those provisions.
Moreover they provide plainly that where the severer is different from the owner, the former must pay the tax but he is required to pass it on to the owner.4 A further provision requires him to withhold the amount of the tax from any money or severed property in kind due the owner under their contract.5 Another section gives the state a
lien on the severed resources for the tax and penalties.6 The clear effect of the provisions requiring “the reporting taxpayer” to “collect or withhold” the amount of the tax from the owner is to give him a defense to the owner‘s action to recover the full contract price for the severed resources and an equally clear right of action against the owner for the amount of the tax.
Thus the scheme of the tax is to place both its ultimate legal and its ultimate economic incidence on the owner. The tax in terms is “due by the respective owners of such natural resources.”7 It is “a privilege tax or license tax; and is levied on the business of severing,” as the Arkansas court declared in this case. 208 Ark. 459, 468, 187 S. W. 2d 7, 12. But it is ultimately, as that court has also declared, though not expressly in this case, a privilege or license tax levied upon the owner‘s business of severing, for it applies to him whenever he severs or permits severance for sale; and “sale” includes turning over the timber
“Producer” is defined as every person, firm, corporation or association of persons “engaged in the business of mining, cutting or otherwise severing from the soil or water for commercial purposes natural resources, including minerals and ores, pearls, diamonds, and other precious stones, bauxite, fuller‘s earth, phosphates, shells, chalk, cement, clay, sand, gravel, asphalt, ochre, oil, gas, salt, sulphur, lignite, coal, marble, stones and stone products, timber, turpentine and all other forest products and all other natural products of the soil or water of Arkansas.”
Moreover, as the Arkansas court did hold specifically in this case, the act contains only two exemptions, neither of which applies to the United States.9 And on this ground, together with the maxim expressio unius, it ruled the act applicable to the severance of timber “in all instances except the two exemptions mentioned.”10
That ruling, it seems to me, is especially significant when it is considered not only in the light of the court‘s failure to make further reference to or ruling upon the collection provisions, but also in view of the Arkansas court‘s previous decisions. Thus, in Miller Lumber Co. v. Floyd, 169 Ark. 473, 480, 275 S. W. 741, the court held: “Where a landowner makes a contract with another person to cut and remove the timber from his land for sale or commercial purposes, the owner must pay the severance tax; for such contractor and his servants who actually sever the timber act for the owner in the premises, and their act of severing the timber is the act of the owner.”11 (Emphasis added.)
No reference was made in this case to the Miller case. In the absence of one we cannot assume that the court intended to overrule that decision or to destroy its rationalization or universal applicability, except for the specific exemptions. Not only the opinion in this case, as much by its omissions as by what it expressly rules, but also the Arkansas court‘s prior decisions, give every ground for believing that it did not intend either to apply the tax differently in this case than in any other or to overrule its
The majority seem to imply however that this may be exactly what was done; that perhaps the Arkansas court held that since the tax would be unconstitutional if, as the statute contemplates, it were directly placed upon the Government as owner, it would treat the tax as falling not on the Government but on the severer alone. As has been stated, nothing in that court‘s opinion suggests such a ruling. And if there were either a ruling or a sufficient suggestion of this sort, it would raise other serious questions, not considered by that court or here, concerning the validity of the tax. The effect of such a holding would seem to be to single out contractors with the Government for the imposition of a tax not placed on other severers. All other contractors, by the terms of the statute and the Arkansas decisions, would be required to pass the tax along to owners. Only contractors with the Government would not be allowed or required to do this. Thus to treat the tax as applicable only to the severer in this case, and the collection provisions affecting the owner as severable and inapplicable, would raise serious questions of discrimination, which neither the Arkansas court nor this Court has
It is true that they have not raised here any question of discriminatory enforcement. But this is because they had no reason to believe that the Arkansas court had applied, or would apply, the statute differently to them than to others or to anticipate the character of the ruling now made. It is doubtful, to say the least, that the Arkansas legislature could place a severance tax exclusively upon persons who sever resources from governmentally owned land. The same doubt would apply to the state court‘s effort to make the statute so effective, were it to undertake doing this. In my judgment it has not done so. Whether or not such an effort ultimately would be successful, appellants are entitled to be heard upon the question before that result is achieved. They should not be deprived of this opportunity through this Court‘s upholding of an ambiguously applicable statute or in advance of a decision by the only court which can remove the ambiguity. Because the Arkansas court has not passed upon applicability or severability of the collection provisions as they affect the owner, and because it has not determined the validity of the tax as applied in the light of such a determination, I think the cause should be remanded to it, so that the former questions may be authoritatively determined before we undertake to decide, upon the wholly speculative basis now presented, whether the tax as applied is valid.