Court Opinion

ID: 3987456
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:43:36.133066+00
Date Added: 2024-06-11T13:52:25.497990
License: Public Domain

I concur in both the results and the reasoning of the main opinion. Because it is argued that "the amount of money actually received * * * from the sale of ores" is that which alone comes out of the pocket of the purchaser, I deem it helpful to supplement what has been said in the opinion by a further analysis.
It must be kept in mind that the tax imposed in this case is not one on the sale of ore or metal but one on the privilege of mining. The taxable event is the engaging in the occupation *Page 163 
of mining. The fact that there is an exemption from the tax upon companies receiving less than $20,000 in gross value of ore does not make it less so. The very act was denominated "Mining Occupation Tax." The tax is imposed except as specifically otherwise provided on
"Every person engaged in the business of mining or producing ore," etc.
The remainder of the first paragraph of Sec. 80-5-66, U.C.A. 1943, deals with the measuring rod — to wit: a
"Tax equal to one per cent of the gross amount received for or the gross value of metalliferous ore sold," etc.
In view of the purpose to impose a tax on the privilege of engaging in the business of mining which business was the taxable event to which the tax was incident, I do not think it unreasonable to construe both the first paragraph and subparagraphs (a), (b) and (c) of the second paragraph of Sec. 80-5-66 as making the event of a bona fide sale during the calendar year the occasion which made the tax applicable, leaving still open the question of what amounts of money received for or on account or by reason or by virtue of the sale were to be the measure of the tax. That would make the payability of the tax depend on getting the ore produced in the channels of commerce. Thus we are not relieved from the necessity of determining whether the basis for computing the tax should or should not contain the moneys received under the "price-premium plan." I realize a good case can be made for excluding as well as including moneys received from that source but I think the conclusion arrived at by Mr. Justice Wade is more in accord with the realities of the situation than that of Mr. Chief Justice Larson and does no violence to the language of Sec. 80-5-66, U.C.A. 1943, and is in harmony with what I believe to be the intent of the legislature.
As to the realities: It is well known that the basic metals of copper, lead and zinc were indispensable to a successful prosecution of the war; that they were needed in great *Page 164 
quantities for that purpose; that the government was for all practical purposes the sole customer for these metals; that ceiling prices were necessary to resist inflation and thus prevent a great increase in the cost of war to the taxpayers; that if ceiling prices were alone resorted to for this purpose they would need to be placed at a point where the marginal high cost producer could continue to produce which would inordinately increase the profits of the low cost producer. A plan was, therefore, devised which would, in effect, give different prices to economically differently situated mines for the metal in their ores. And this was known as the "premium price plan." The very title of the plan is significant. Mines were to be paid different prices for their ores depending on the quotas assigned to them, which in turn depended on their production costs. The fact that part of the price came from the smelter and part from the government or all from the smelter if it used the authority it had to pay the premium price, the latter to be reimbursed for part of the expenditures, or all from the government as in the cases when the Metals Reserve Company bought the ores directly, would make no difference as to the prices received by the different mines. In many cases the higher cost mines were given zero quotas and were paid premium prices on all ores mined and placed into commerce, that is "sold"; and some of the zinc producers received even three different prices, being under "B" and "C" classifications and having an "A" quota of zero. In reality there was no free market and there were various premium prices paid for the same metals produced by mines economically differently situated. The fact that there was a ceiling plus the fact that all ores going to the smelters received these ceiling prices plus, in case they exceeded their quotas, additional or premium prices plus the fact that practically the entire output went to the government, made the real situation one where the smelters were in effect buying the ore from the mines for the government, paying ceiling prices for the metal content, the Metals Reserve Company adding a premium price where applicable. The smelters *Page 165 
were also reimbursed by the government for the ceiling prices which they paid to the mines in that the government in turn took the metal off their hands at the ceiling prices. The profits came to the smelters in the reduction charge made to the mines if it was smelted on a toll basis or, as in most cases, the reduction fee plus the percentage of metal taken as part of the smelter's remuneration if it were taken on a contract basis. But the price paid to the mines was in reality the ceiling price plus whatever premium price was applicable, if any.
That the so-called subsidy was in fact considered as an additional price for the metal in the ore is borne out by the fact that at first it was announced that the Metals Reserve Company would pay as an over all price the ceiling plus the premium prices for domestic ores where production exceeded quotas which were to be fixed. But under the Emergency Price Control Act the Metals Reserve Company could not sell for any more than the maximum price established. Hence, if the Metals Reserve Company had paid respectively 17¢ for copper, 11¢ for lead and 9 1/4¢ for zinc it would have been required to have them smelted on a toll basis and then sold to the fabricator for 12¢, 6 1/2¢ and 8 1/4¢ per pound respectively for copper, lead and zinc. While the ultimate outlay to the government would have been substantially the same, it was simpler to have the mills or smelters pay only ceiling prices for the metals, the Metals Reserve Company paying the producer the premium price if applicable. But even this method required a change in the regulations of the Office of Price Administration in May, 1942. This was immediately after setting up the "premium price plan." The change in the regulation required sales of copper, lead, and zinc or ores containing such metals to smelters at ceiling prices but permitted Metals Reserve Company,
"pursuant to the premium price plan announced by the Federal Loan Agency, the War Production Board and the Office of Price Administration," *Page 166 
to pay the premium price or subsidy and provided that it "should exempt from the maximum regulation." There should be little doubt, then, that the extra amount paid for metal in over quota ores is part of a price.
I do not think, as I shall point out below, that it makes any difference in the interpretation of Sec. 80-5-66 whether the amount paid by the Metals Reserve Company is called a premium price or a subsidy payment. In this part of my opinion I am attempting to meet the plaintiffs on their own ground, to wit: that moneys actually received from ore sold is the price or amount paid by the immediate purchaser, that is the mill or smelter. I am attempting to show that the price paid is a ceiling and a premium price even though they may directly come from two different sources. While reasons or motive for devising a plan or scheme ordinarily will not determine its legal nature, the reasons which actuated the plan may throw much light on the legal significance of the transactions or steps which are necessary for its working. Undoubtedly the reason for the Premium Price Plan was to keep the marginal mines in operation without material increase in ceiling prices. With our rapidly diminishing supply of known non-ferrous ores in place1 it might *Page 167 
be a wise policy of the government to subsidize marginal mines even in peace times at least to the point where production of going mines would not be abandoned because of cost. Abandonment of a mine may result not only in postponement of production to a later age but in absolute loss of the ore. If a premium price were given to conserve ores by getting them out of the ground in cases when abandonment and collapse of a mine permanently render their recovery impossible so as to stock pile them instead of getting them into commerce for present use, the motive might be somewhat different but legal nature of the transactions involved in the same plan as was in this case adopted would be the same.
The Intent of the Legislature:
Undoubtedly the legislature at the time of the passage of the Occupation Mining Tax Law (Chap. 101, Session Laws 1937, now Secs. 80-5-65 to 82, U.C.A. 1943) did not envisage a war, consequent price ceilings and premium prices. It intended to impose a tax on the privilege of mining ore and it made the measure of that tax a sum equal to one per cent of the gross amount received for or one per cent of the value of the metalliferous ore sold. It may and probably did have in mind that the measure of the value of the ore would be what was received directly from the smelter in a bona fide sale because it envisaged that as the usual situation in course of trade and did not think in terms of a consideration from another source. What was meant by a "bona fide sale" was a nonfictitious sale made on a free and open market. It probably had in mind and concluded that such receipts of such sale would measure the value of the ore, one percent of which value was to be the measure of the tax. But the language does not need to be so limited. It is a tenable position that the paramount intent of the legislature was, at all events, to have the tax measured by one per cent of all moneysyielded by the sale, the event of sale being the time when the measuring rod should be applied. *Page 168 
The strongest argument of respondents is that the construction of the act itself made one per cent of the amount of money actually received from a bona fide sale of the ores (less reasonable costs of transportation) the basis of the computation and that that must mean money received from the mill or smelter at ceiling prices without including the premium price. The answer is that the amount of money received for the ores are both the ceiling and premium prices, whether paid by the mill or smelter directly, subject to reimbursement from the Metals Reserve Company, or by the smelter and the Metals Reserve Company combined. The sale or delivery "for sale" to the mill or smelter is the occasion for the payment of the combination price. This is the occasion which gives assurance that the ore will not remain on the dump or in the stopes but will have made its entry into the channels of commerce. Under a fixed price the power of a commodity to command other commodities in exchange is not the same as on a free market. Value as meant by the legislature in Sec. 80-5-66 is no longer extant. The only remaining basis is the money received from the sale and certainly the money received from the sale is the total price which the sale yielded regardless of whether part of it would ultimately or immediately be paid by the Metals Reserve Company either directly or indirectly.
This conception comports with the overarching intent of the legislature and with the realities of the entire situation as previously set out. The manner which the government adopted for compensating the marginal or over quota producer for the mining and disposal of his ore, admitting the motive was increased incentive to produce, is not controlling. If the government had purchased all the ore directly and paid each producer directly the ceiling price and the premium price, if he were entitled to any, there would have been but little difficulty with the meaning of the word "sale" as used in the statute. By calling one part of the total amount received the sale price and other part a subsidy it cannot be made to appear that the latter part should be *Page 169 
excluded from what in reality, and I think in concept of law, is the total sale price.
I have above discussed the terms of the statute in the light of the proposition that the moneys paid by the Metals Reserve Company was in reality a part of a total price actually received by the owner or lessee from the sale of his ore albeit that total price may have come from two sources. But I would not want my views to rest on the narrow basis of what various parts of a total received were called. While in concept I think the whole can be conceived of in law as the price the sale yields, in final analysis I do not believe it makes much difference whether the part which the smelters pay is called a ceiling price and the other a premium price or a subsidy. After all we should look through terms to realities. As holds the main opinion in reality the
"Amount of money * * * actually received by the owner * * * from the sale of all ores or metals during the calendar year * * *"
was what those sales yielded and what they yielded was what was received from the mills or smelters or others to whom they were delivered plus what the Metals Reserve Company paid.
For the reasons contained in the main opinion as modified or augmented herein, I concur.
1 "The known reserves of copper in this country that are at present commercially feasible to mine have been estimated to have a life of but 34 years if they are mined at a rate equal to the average 1935 to 1939 rate of use of copper. If one includes submarginal and highly speculative resources, an additional 5 to 25 years might be added to this figure. * * * It is well known that at the present time, lead is the most critical of the common non-ferrous metals and that the future of lead production in this country is not bright. It has been estimated that our commercial reserves, if they were mined at a rate equal to the 1935-1939 annual rate of use of lead, would last but 12 years. When submarginal and highly speculative resources are included, less than five years additional supply is available. Without question, the position of the United States with respect to lead is particularly critical and needs full study to prevent any possible waste of our limited natural resources. * * * According to Pehrson, the commercial reserves of zinc, if mined at the average of our 1935-1939 annual rate of use, would last but 9 years. Taking into account known submarginal and highly speculative resources, another 5 to 25 years can be added." Report and Recommendations of the Nonferrous Metals Fact Finding Board, March 20, 1946 — pages 13, 20 and 28.