Source: https://www.legalcrystal.com/case/94835/swiss-oil-corp-vs-shanks
Timestamp: 2019-04-18 13:22:49+00:00

Document:
1. Upon review of a decision of a state court construing the state law as denying the relief sought by the appealing party even if the particular state statute attacked by him were assumed to be invalid, the constitutionality of that statute is not involved in this Court. P. 273 U. S. 411 .
2. A state tax, called a "license" or "franchise" tax, measured by 1% of the market value of the annual production and imposed, in addition to general ad valorem property taxes, on producers of petroleum only, is not in violation of the Equal Protection Clause of the Fourteenth Amendment, even if itself a property tax, since a separate classification of petroleum producers for tax purposes is not palpably arbitrary or unreasonable. P. 273 U. S. 412 .
3. The Fourteenth Amendment does not require uniformity in taxation or forbid double taxation. P. 273 U. S. 413 .
Error to a judgment of the Court of Appeals of Kentucky which reversed a judgment in mandamus commanding Shanks, as Auditor of Public Accounts, to issue a warrant for a refund of taxes to the plaintiff oil company.
The Swiss Oil Corporation, plaintiff in error, instituted a mandamus proceeding in the Circuit Court of Franklin County, Kentucky, to compel the state auditor, the defendant in error, to issue a warrant for the refund of taxes alleged to have been illegally assessed against it on the ground, among others, that the taxing statute was repugnant to the Constitution of the United States. This is the appropriate procedure, under the state law, for compelling a return to the taxpayer of taxes improperly collected. Section 162, Carroll's Ky.Stat. 1922; Craig, Auditor v. Renaker, 201 Ky. 576.
The trial court gave judgment for plaintiff, which was reversed on appeal to the Court of Appeals of Kentucky, 208 Ky. 64. The case comes here on writ of error. Judicial Code, § 237.
"The tax hereby provided for shall be imposed and attach when the crude petroleum is first transported from the tanks or other receptacles located at the place of production."
introduce evidence, and the Commission was authorized, after a hearing, to change the value set for taxation purposes upon the oil produced.
This Act, as amended, was construed by the Kentucky Court of Appeals, in an earlier decision. Raydure v. Board of Supervisors, 183 Ky. 84. It there held that the legislature had no power under §§ 171 and 172 of the state constitution to substitute the production tax authorized by the Act of 1917 as amended by the Act of 1918 for the ad valorem method of taxing oil producing property required by the constitution, nor to exempt such property from ad valorem taxation. Following this decision, the wells and oil producing property of plaintiff and others have been subjected to state, county, and local ad valorem taxes in addition to the production tax imposed upon plaintiff.
Plaintiff, in the state court, drew in question the validity of the Act of 1918 as thus construed under the Kentucky Constitution. It contended that, if construed as imposing a license tax, the statute was unconstitutional in attempting to substitute an occupation for the ad valorem tax required by § 172 of the state constitution. The main contention, however, was that the tax in substance was a property, and not a license, tax, and hence invalid under § 171 of the state constitution, requiring uniform taxation, since oil properties were subject to two property taxes, whereas other classes of property were subject to but one. These contentions, translated into terms of the federal Constitution, were urged below and renewed here.
§ 8 of the federal Constitution; (c) that the tax is assessed and collected without notice and without opportunity to the taxpayer to be heard, in violation of the due process clause of the Fourteenth Amendment.
"Each of these criticisms is leveled at, and can affect only, the amendment of 1918, and there is, and could be, no criticism of the title of the original act passed in 1917, or any claim that it imposed any burden upon interstate commerce, or that it did not afford the taxpayer ample opportunity to be heard before the tax attached."
"The original act imposes, just as does the amendment, a graduated occupational tax measured by the amount of business done by each and every oil producer in the state. The amendment is simply a reenactment of the original act, with the latter's administrative features so changed as to make the collection of the tax both more certain and less burdensome upon the taxpayer and the assessing and collecting officials. If any or all of the above contentions are sound, the amendment would be destroyed, but this would leave the original act in force and unamended. Precisely the same tax would have been collected from oil producers in either event."
The court also pointed out that, as this is a proceeding by a taxpayer for a refund of taxes under a statute which permits the refund only if the taxes paid were not due, there could in any event be no recovery by the plaintiff, since the tax, if not due under the Act of 1918, was due and payable under the Act of 1917.
and Constitution of its own state is not open to review here. Southwestern Oil Co. v. Texas, 217 U. S. 114 , 217 U. S. 119 ; Brown-Forman Co. v. Kentucky, 217 U. S. 563 , 217 U. S. 569 . Since the Kentucky Court of Appeals has held that the plaintiff is not entitled under the state law to the relief prayed, even if the Act of 1918 be deemed invalid, no questions as to the validity of that act under the federal Constitution is presented for decision on this record.
But plaintiff argues that this determination of the state court presupposes the validity under the federal Constitution of the Act of 1917, which has the same vice as the later act. It is contended, as it was of the Act of 1918, that the one percent production tax imposed is, in effect, a property tax. Since the Constitution of Kentucky, as construed in Raydure v. Board of Supervisors, supra, does not admit of the substitution of a production tax for an ad valorem tax, and requires the latter to be levied in addition to the production tax, there is therefore double taxation not imposed on other classes of property, and hence a denial of the equal protection of the laws guaranteed by the Fourteenth Amendment.
to be determined, whether the tax be regarded as a license or a property tax (p. 217 U. S. 571 ). See also Southwestern Oil Co. v. Texas, supra, where an occupation tax upon wholesale dealers in coal and other mineral oils was upheld despite the fact that wholesale dealers in other commodities were not similarly taxed.
made in the exercise of legislative judgment and discretion." Stebbins v. Riley, 268 U. S. 137 , 268 U. S. 143 .

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