Gypsy Oil Co. v. Oklahoma Tax Commission

KENNEDY, District Judge

(concurring in the result).

I desire briefly to record my views in regard to the disposition of this ease. The plaintiff has no adequate remedy at law, for two reasons: (1) It is required that the tax shall be paid monthly and a lien attaches. Therefore there would be involved the necessity of a multiplicity of suits for recovery back if such taxes were paid under protest. (2) There is no adequate method provided for the recovery of interest upon taxes so paid. The provision of the general statutes of Oklahoma providing for recovery of 3 per cent, on illegal taxes is not adequate, especially in the absence of evidence establishing such rate as reasonable.

As to the amount involved not being sufficient to give the federal court jurisdiction, I cannot agree that the amount of the tax involved must be adopted as the basis of determining the amount in controversy. I am unable to distinguish the ease at bar from the case of Berryman v. Board of Trustees of Whitman College, 222 U. S. 334, 32 S. Ct. 147, 56 L. Ed. 225. There the Supreme Court decided that the. value of the contract to be protected determined the jurisdictional amount. Here the right to “be protected is the freedom from state taxation of an agency of. the federal government. The latter principle of right has been so long and so repeatedly established that it is equivalent in strength to a contract right. Neither do I believe that the incident of future taxes which may or may not be levied necessarily enters into the consideration of the question under the doctrine of the Berryman Case. Mr. Chief Justice White, in writing the opinion, quoted with approval the language of a former decision of the court, and at page 347 of 222 U. S., 32 S. Ct. 147, 149 says: “The contest was over the contract and the consequent want of power to collect any and all taxes the assessment of which did violence to the contract rights of the bank. The court had jurisdiction of the parties and of the subject-matter of the suit, and it was adjudicated that there was a contract which was entitled to *13protection against impairment by state legislation within the right guaranteed by the Federal Constitution. This adjudication necessarily included not only the taxes for specific years, but foreclosed the right to collect any taxes concerning which the contract afforded immunity to the bank.”

If the right to the protection against taxes upon a federal agency is analogous to a contract right, I can find no distinguishable difference between the eases. To say that present and future taxes which by the terms of the present act apparently expire on July 1, 1935, will not aggregate the jurisdictional amount would mean that the Legislature of Oklahoma could pass repeating statutes of the same character for a limited duration, thereby defeating the right of the plaintiff to he free from the recurring lien of illegal state taxes. In this view, I think that the court has jurisdiction of the cause and should decide it upon the merits.

Adverting to the merits, the claim is made by plaintiff that the tax in question is an excise tax and not a property tax, and therefore not within the permissive act of Congress quoted in the opinion of Judge McDERMOTT. It will be noted that there is no specified limit to the gross production tax there permitted. It is immaterial in the practical construction of the act of Congress what the tax here may be called. In its nature it is the same type of tax which the state of Oklahoma has already levied on gross production upon the basis of value (admittedly valid as coming within the permissive act). Under the challenged law, attempt is made to levy a gross production fax upon the basis of volume. There is no distinguishable difference between the two. Both are within the scope of the permissive act, and I care not whether they may be denominated excise, gross production, or property taxes.

In our interpretation and construction we. should follow the principle aptly stated in Shaffer v. Carter, 252 U. S. 37, where the Supreme Court in speaking of state taxation laws, uses language at page 55, 40 S. Ct. 221, 226, 64 L. Ed. 445 as follows: “This argument, upon analysis, resolves itself into a mere question of definitions, and has no legitimate hearing upon any question raised under the federal Constitution. For, where the question is whether a state taxing law contravenes rights secured by that instrument, the decision must depend not upon any mere question of form, construction, or definition, but upon tbe practical operation and effect of the tax imposed.”

I think the tax here challenged comes clearly within the permissive aet of Congress, and, for that reason, the bill should be dismissed upon the merits.