Case Title: KIEWIT SONS v ST BD OF EQUALIZA

Citation: 

Docket Number: 

State: montana

Court: Montana Supreme Court

Date: 1973-01-29T00:00:00Z

Document:
No. 12199 I N T H E SUPREME C O U R T OF THE STATE O F M O N T A N A PETER KIEWIT SONS ' CO. , a Corporation, P l a i n t i f f and Appellant, STATE BOARD OF EQUALIZATION O F T H E STATE O F M O N T A N A , J. M O R L E Y COOPER, Chairman, JOHN C. ALLEY AND RAY J. WAYRYNEN, a s members thereof, Defendants and Respondents. Appeal from: D i s t r i c t q o u r t of t h e F i r s t J u d i c i a l District, '. \ , Honorable -. bvr H. F a l l , Judge presiding. . -. . _ ?~u~~sEJ.!.--~o.~ Record : For Appellant: \ ' . Garlington, Lohn and Robi-nson Missoula, Montana. Sherman V. Lohn and Lawrence '. Daly argued, Missoula, Montana. a Amicus Curiae S c o t t P. Crampton and G i l b e r t E . Andrews, Washington, D. C. Bruce I. Kogan argued, Washingtori, D. C. For Respondents: Poore, McKenzie & Roth, Butte, Montana. Robert A. Poore argued, Butte, Montans. Jene B e l l appeased, Helena, Montana . Submitted: NOV-mber 27, 1972 Decided: ; $ l , ( i F i l e d : 1 hr. J u s t i c e WesLey Castles delivered the Opinjon of the Court. This i s an a p p e a l from a judgment of the d i s t r i c t court of the Cilst: j u d i c i a l d i s t r i c t , county of Lewis and Clark. In February and March 1971, p l a i n t i f f Peter Kiewit sons' Cu. paid a t o t a l of $8,726.47 as gross r e c e i p t s tax payments i n compliance with Chapter 35, T i t l e 84, R.C.M. 1947. A t the same time, p l a i n t i f f a l s o f i l e d l e t t e r s of protest with defendant State Board of Equalization challenging the v a l i d i t y of the public cuntractors' license a c t and demanded refund of the payments. Within s i x t y days p l a i n t i f f proceeded t o bring an action i n he d i s t r i c t court seeking t o have Chapter 35, T i t l e 84, R.C.M. 1947, declared i n v i o l a t i o n of the laws and Constitution of the s t a t e of Montana and the Constitution of the United S t a t e s , t o obtain refund of a l l taxes and fees remitted t o the s t a t e of Xontana under the chapter i n question. The d i s t r i c t court, s i t t i n g without a jury, found the pro- visions of Chapter 35, T i t l e 84, R.C.M. 1947, did not v i o l a t e the laws or Constitution of Montana nor the Constitution of the United States. Judgment was entered f o r defendant. P l a i n t i f f f i l e d motions t o amend the findings of f a c t and conclusicns of Law and f o r a new t r i a l , which were denied by the t r i a l court. From the judgment and order denying those motions, p l a i n t i f f appeals. I n addition t o b r i e f s and argument i n t h i s Court by counsel tor che p a r t i e s , a b r i e f and o r a l argument was presented by the United States government a s amicus curiae i n support of plain- t i f f ' s position. W e f e e l a t t h i s point t h a t a b r i e f history of the Act i n question would be helpful. The i n i t i a l version of what became Chapter 35, T i t l e 84, R.C.M, 1947, was passed by the Montana legislature i n 1935. It required the licensing by the s t a t e of dealing with the s t a t e or any of i t s p o l i t i c a l sub- Ji-visions; federal contractors were excluded from the Act, In ;.larch 1965, in an at'iemyt t o ensure the payment of s t a r e and local taxes by contractors working i n the s t a t e , Chapter 277, Laws 1965, was passed by the legislature. The problem arose because some contractors working i n the s t a t e did not report a l l of t h e i r equipment t o county tax assessors, who were attempting t o impose ~ u u n t y property tax on those contractors, Also, some contractors working i n the s t a t e would not f i l e corporate o r personal income tax returns which would have f a i r l y r e f l e c t e d t h e i r business p r o f i t s from within the s t a t e . Chapter 277, Laws 1965, imposed a I% tax upon gross receipts (3)' a l l nonresident public contractors operating within the s t a t e . In April 1965, the c o n s t i t u t i o n a l i t y of Chapter 277, Laws 1965, was raised t o t h i s Court and the Court found it t o be unreasonable discrimination and ruled i t unconstitutional. S t a t e ex r e l . Schultz- Lindsay v. Board of Equalization, 145 Mont. 380, 403 P. 2d 635. I n 1967, the Montana l e g i s l a t u r e again attempted t o work out a solution t o the problem of contractors not paying t h e i r taxes. That l e g i s l a t u r e enacted a revenue enforcing measure de- signed t o operate hand i n hand with ~ o n t a n a ' s long-standing personal property tax and income tax, t o ensure more e f f e c t i v e tax collec- t i o n and reduce tax avoidance. It then passed an amendment t o :hi< 1935 licensing a c t whicll required a 1% tax upon a l l recei-pts of public contractors i n the s t a t e , including both resident and nonresident contractors, covering a l l public works within the s t a t e including construction done by the United States government. The revenue enforcing measure was enacted i n an attempt t o require some of the contractors working i n the s t a t e t o meet t h e i r Cax r e s p o n s i b i l i t i e s . The mechanics of the measure a r e b e s t v~nderstood by taking, a s an example, the Kiewit contract f o r p a r t 3 1 1 the >fontma Libby D a m project. The contract was given t o Xiewit because i t was the lowest responsible bidder. The con- i:ractor then entered on the performance of i t s contract and a s the work progressed i t received payments from the landowner. It paid L;L of &,uch receiprs t-o t h e a t a t e Goaid of Eq1.ializati.cn. I n such ndnner Kiewit has paid o r w i l l pay 1% of approximately 6.4 million d o l l a r s or about $64,000 t o the S t a t e Board of Equalization, This fund i s held t o the c r e d i t of istantial way with the performance of the federal functions and i s a valid exaction. 11 lhe 12oux-L ~11en went on t o point out t h a t the economic impact uptjn the federal government must be d i r e c t and substantial and t h a t the 2% gross tax was neither d i r e c t nor substantial, For 3 further discussion of t h i s rationale, see S i l a s Mason Co. v. S t a t e Tax Commission, 188 Wash. 98, 61 P.2d 1269. Following the reasoning of the United States Supreme Court, we firtd the tax involved here was not aimed a t nor does i t impede the federal government i n performing i t s functions. I f there is any burden on the federal government, it i s i n d i r e c t and n o t substantial. The tax i s valid. The judgment of the d i s t r i c t court i s affirmed, k s s o c a e J u s t i c e , I Chief J u s t i c e A s s c i a t e ~ u s t i c k s . i 1