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474

RUTLEDGE, J., dissenting.

to one who clears the land as payment for the clearing, although his purpose in doing this is only to make the soil available for tilling.3

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. 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." "1 (Emphasis added.)

8 See note 11.

11

9 One was for the individual owner who occasionally severs in order to build or repair improvements on the premises or for his own use and another for the "producer of switch ties" who hews them out entirely by hand. 208 Ark. 459, 463, 187 S. W. 2d 7, 10.

10 The decision held the tax invalid as applied to the severance from lands held by the United States as original owner, though not as to those purchased with the state's consent.

11 The effect of the quoted statement is emphasized by its context, in part as follows: "It is apparent then that the owner of lands, who cuts down trees for the purpose of building fences or repairing and constructing houses and other improvements on the land from the timber thus severed from the soil is exempted from paying the tax. It is equally evident that when the timber severed from the soil is

RUTLEDGE, J., dissenting.

327 U.S.

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

sold, it falls within the terms of the act, and the tax must be paid by someone. To illustrate: if the owner of timber lands desired to sever it for the purpose of clearing the land and putting it in cultivation and hired other persons to sever the timber for him, he would be required to pay the severance tax. If the owner should lease his land to another person for a designated number of years in order to have his lessee clear the land and put it in cultivation, and if the consideration for the lease in whole or in part was that the lessee should have the timber so removed from the land, the severance tax would have to be paid by such lessee. It will be noted that the language of the act is specific on this subject and provides that the severer or producer as he is called shall pay the tax. The act is very broad and comprehensive, and is levied upon all persons engaged in severing the timber from the soil for sale or commercial purposes, regardless of the purpose for which it is done. The only exception is that the tax shall not be paid where the timber severed is actually used in erecting or repairing structures and other improvements on the land. The application of the timber in part payment for clearing the land is a severing of it for commercial purposes, although the primary purpose of severing it is to enable the land to be put in cultivation. 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."

In a previous appeal in the same case, 160 Ark. 17, 254 S. W. 450, the court had sustained the act as constitutional on the theory that it was a privilege tax and not a property tax.

474

RUTLEDGE, J., dissenting.

prior determinations of the ultimate nature, character and incidence of the tax.12

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

12 This view is sustained also by the court's expressed view that "Imposition of the tax here does not in any sense interfere with the Government's business." 208 Ark. 459, 468, 187 S. W. 2d 7, 12. The statement could mean that the tax would not be applied to the Government as to other owners, in which event a severance of the collection provisions would be implied. That it does not have this meaning is evidenced, I think, by the court's reliance on James v. Dravo Contracting Co., supra, where quite different statutory provisions were in question. The court's misapplication of the Dravo case was, I think, but a reflection of its implicit idea that the tax would be valid since it was collected immediately from the appellants, even though they might pass on its economic burden to the Government, without regard to how that might be done.

RUTLEDGE, J., dissenting.

327 U.S.

considered and which appellants are entitled to have determined.

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.

Statement of the Case.

DUGGAN, TRUSTEE, v. SANSBERRY, TRUSTEE,

NO. 418. CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE SEVENTH CIRCUIT.*

Argued February 6, 1946.-Decided March 4, 1946.

1. In a federal court in which a petition for reorganization of a corporation under Chapter X of the Bankruptcy Act had been approved and reorganization proceedings were pending, a petition was filed for reorganization under Chapter X of an alleged subsidiary against which a bankruptcy proceeding was then pending in another federal court. The reorganization court ordered a stay of a scheduled sale of the property of the alleged subsidiary in the bankruptcy proceeding. Held that the order of the reorganization court was binding upon the bankruptcy court and was not there subject to collateral attack. Pp. 501, 504.

2. It was the duty of the bankruptcy court to obey the stay order of the reorganization court, irrespective of whether the petition for reorganization of the alleged subsidiary had been properly filed. P. 504.

3. Since the interested parties had an opportunity in the reorganization proceeding to secure a determination of the question whether a parent-subsidiary relationship existed between the corporations, the same issue should not be tried collaterally in the bankruptcy proceeding. P. 507.

4. Section 149 of the Bankruptcy Act, which provides that "An order, which has become final, approving a petition filed under this chapter shall be a conclusive determination of the jurisdiction of the court," can not be construed as allowing a collateral attack in the bankruptcy court upon the proceedings in the reorganization court. P. 508.

5. Under its constitutional power on the subject of bankruptcies, Congress may proscribe collateral attack in bankruptcy proceedings on proceedings initiated in a reorganization court. P. 510. 149 F.2d 548, reversed.

Christopher Engineering Company petitioned for reorganization under Chapter X of the Bankruptcy Act in *Together with No. 419, National Aircraft Corp. v. Sansberry, Trustee, also on certiorari to the same court, argued and decided on the same dates.

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