OCTOBER TERM, 1997
Syllabus
MONTANA ET AL.
v. CROW TRIBE OF INDIANS ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH
CIRCUIT
No. 96-1829. Argued February 24, 1998-Decided May 18, 1998
In 1904, the Crow Tribe ceded part of its Montana Reservation to
the United States for settlement by non-Indians. The United States
holds rights to minerals underlying the ceded strip in trust for
the Tribe. In 1972, with the approval of the Department of the
Interior and pursuant to the Indian Mineral Leasing Act of 1938
(IMLA), Westmoreland Resources, Inc., a non-Indian company, entered
into a mining lease with the Tribe for coal underlying the ceded
strip. After executing the lease, Westmoreland signed contracts
with its customers, four utility companies, allowing it to pass on
to the utilities the cost of valid taxes. Westmoreland and the
Tribe renegotiated the lease in 1974. The amended lease had an
extendable ten-year term, and set some of the highest royalties in
the United States. In 1975, Montana imposed a severance tax and a
gross proceeds tax on all coal produced in the State, including
coal underlying the reservation proper and the ceded strip.
Westmoreland paid these taxes without timely pursuit of the
procedures Montana law provides for protests and refunds. Some six
months after the State imposed its taxes, the Crow Tribal Council
adopted its own severance tax. The Department of the Interior
approved the Tribe's tax as applied to coal underlying the
reservation proper but, because of a limitation in the Tribe's
constitution, did not approve as to coal beneath the ceded strip.
The Tribe again enacted a tax for coal mined on the ceded strip in
1982, and again the Department rejected the tax.
In 1978, the Tribe brought a federal action for injunctive and
declaratory relief against Montana and its counties, alleging that
the State's severance and gross proceeds taxes were preempted by
the 1M LA and infringed on the Tribe's right to govern itself. The
District Court dismissed the complaint. The Ninth Circuit reversed,
holding that the Tribe's allegations, if proved, would establish
that the IMLA preempted the State's taxes. The Court of Appeals
noted, however, that the Tribe had paid none of Westmoreland's
taxes and apparently would not be entitled to any refund in the
event that the taxes were declared invalid.
Crow Tribe v.
Montana, 650 F.2d
1104, 1113, n. 13
(Crow I). In 1982, the Tribe and
Westmoreland entered into an agreement, with Interior Department
approval, under which Westmoreland agreed to pay the Tribe a tax
equal to the State's then-existing taxes, less any tax pay-
697
ments Westmoreland was required to pay to the State and its
subdivisions. The agreement achieved, prospectively, the federal
permission the Tribe had long sought. It allowed the Tribe to have
an approved tax in place so that, if successful in the litigation
against Montana, the Tribe could claim for itself any tax amounts
Westmoreland would be ordered to pay into the District Court's
registry
pendente lite. It also enabled Westmoreland to
avoid double taxation, and absolved the company from any tax
payment obligation to the Tribe for the 1976-1982 period. In 1983,
the District Court granted a motion by the Tribe and Westmoreland
to deposit severance tax payments into the District Court's
registry, pending resolution of the controversy over Montana's
taxing authority. In 1987, the court granted the same interim
relief for the gross proceeds taxes. Later that year, the United
States intervened on behalf of the Tribe to protect its interests
as trustee of the coal upon which Montana's taxes were levied.
After trial, the District Court determined that federal law did not
preempt the State's taxes on coal mined at the ceded strip. The
Ninth Circuit again reversed, concluding that the taxes were both
preempted by the IMLA and void for interfering with tribal
self-governance.
Crow Tribe v.
Montana, 819 F.2d
895, 903
(Crow II). The Court of Appeals stressed,
inter alia, that the State's taxes had at least some
negative impact on the marketability of the Tribe's coal.
Id., at 900. This Court summarily affirmed. When the case
returned to the District Court in 1988, the court ordered
distribution of the funds in its registry to the United States as
trustee for the Tribe. Subsequently, the United States and the
Tribe filed amended complaints against Montana and Big Horn County
to recover taxes paid by Westmoreland
prior to the 1983 and
1987 orders directing deposits into the court's registry. Neither
the Tribe nor the United States requested, as additional or
alternate relief, recovery for the Tribe's actual financial losses
attributable to the State's taxes.
After trial, the District Court concluded that the disgorgement
remedy sought by the Tribe was not appropriate. Key to the court's
decision was this Court's holding in
Cotton Petroleum Corp.
v.
New Mexico, 490 U. S. 163, that both
State and Tribe may impose severance taxes on on-reservation oil
and gas production by a non-Indian lessee.
Cotton Petroleum
indicated that Montana's taxes on ceded strip coal were invalidated
in
Crow II not because the State lacked power to tax the
coal at all, but because its taxes were "extraordinarily high." 490
U. S., at 186-187, n. 17. The District Court also considered that
Westmoreland would not have paid coal taxes to the Tribe before
1983, for Interior Department approval was essential to allow
pass-through to the company's customers. Furthermore, under the
1982 lease agreement, the
698
Syllabus
Tribe and Westmoreland stipulated that Westmoreland would have
no tax liability to the Tribe for the 1976-1982 period. Moreover,
the deposited funds, Westmoreland's post-1982 tax payments, had
been turned over in full to the United States for the benefit of
the Tribe. The court further noted that Westmoreland did not timely
endeavor to recover taxes paid to the State and counties, and the
Tribe did nothing to prompt Westmoreland to initiate appropriate
refund proceedings. The court received additional evidence
concerning the effect of Montana's taxes on the marketability of
Montana coal and described the parties' conflicting positions on
that issue, but made no findings on the matter. The Ninth Circuit
again reversed, holding that the District Court had ignored the law
of the case and abused its discretion.
Held: The restitution sought for the Tribe is not
warranted. pp.713-719.
(a) As a rule, a nontaxpayer may not sue for a refund of taxes
paid by another. The Ninth Circuit evidently had that rule in mind
when it noted, in
Crow I, that the Tribe was apparently not
entitled to any refund of taxes Westmoreland had paid to Montana.
The Tribe maintains, however, that the disgorgement remedy it
gained does not fall within the "refund" category. The Tribe's
disgorgement claim must be examined in light of this Court's
pathmarking decision in
Cotton Petroleum Corp. v.
New
Mexico, 490 U. S.
163. There, the Court clarified that neither the IMLA, nor any
other federal law, categorically preempts state nondiscriminatory
severance taxes on all extraction enterprises in a State, including
on-reservation operations. Both State and Tribe have taxing
jurisdiction over on-reservation production. The Court in
Cotton
Petroleum distinguished
Crow II in a footnote,
indicating that Montana had the power to tax Crow coal, but not at
an exorbitant rate. Pp. 713-715.
(b) The Tribe first argues that it, not Montana, should have
received Westmoreland's 1975-1982 coal tax payments; therefore the
proper remedy is to require the State to turn all taxes it
collected from Westmoreland over to the Tribe. However, as
Cotton Petroleum makes plain, neither the State nor the
Tribe enjoys authority to tax to the total exclusion of the other.
This situation differs from cases like
Valley County v.
Thomas, 109 Mont. 345, 97 P. 2d 345, in which only one
jurisdiction could tax a particular activity. Moreover, the Tribe
could not have taxed Westmoreland during the period in question,
for the Interior Department had withheld the essential permission,
further distancing this case from
Valley County. The
District Court correctly took these and other factors into account
in holding disgorgement an exorbitant, and therefore inequitable,
remedy. pp. 715-716.
699
(c) The Tribe and the United States urge the negative impact of
Montana's high taxes on the marketability of the Tribe's coal as an
alternative justification for requiring Montana to disgorge the
taxes collected from Westmoreland. This claim rests on the concern
that, by taxing the coal actually mined and sold, Montana deprived
the Tribe of its fair share of the economic rent. Again, however,
the Tribe could not have exacted a tax from Westmoreland before
1983, because the Interior Department withheld approval. And no
evidence suggests that Westmoreland would have agreed to pay even
higher royalties to the Tribe in 1974, but for Montana's tax. It
merits emphasis also that under
Cotton Petroleum, Montana
could have imposed a severance tax, albeit not one so
extraordinarily high. The District Court did not consider awarding
the Tribe, in lieu of all the 1975-1982 taxes Montana collected,
damages based on actual losses the Tribe suffered. This was not an
oversight. The complaint contained no prayer for compensatory
damages. Nor did the proof establish entitlement to such relief.
The Tribe concentrated on disgorgement as the desired remedy; it
deliberately sought and proved no damages attributable to coal not
sold because the State's tax made the price too high. Federal Rule
of Civil Procedure 54(c) therefore could not aid the Tribe, for the
Tribe had not shown entitlement to actual damages. While not
foreclosing the District Court from any course the Federal Rules
and that court's thorough grasp on this litigation may lead it to
take, this Court is satisfied that the Court of Appeals improperly
overturned the District Court's judgment. pp. 717-719.
92 F.3d
826,
98 F.3d
1194, reversed and remanded.
GINSBURG, J., delivered the opinion of the Court, in which
REHNQUIST, C. J., and STEVENS, SCALIA, KENNEDY, THOMAS, and BREYER,
JJ., joined. SOUTER, J., filed an opinion concurring in part and
dissenting in part, in which O'CONNOR, J., joined,
post, p.
719.
Clay R. Smith, Solicitor of Montana, argued the cause for
petitioners. With him on the briefs were
Joseph P. Mazurek,
Attorney General,
James E. Torske, Carter G.
Phillips,
Paul E. Kalb, and
Christine A. Cooke.
Robert S.
Pelcyger argued the cause and filed a
brief for respondent Crow Tribe of Indians.
Jeffrey A. Lamken argued the cause for the United
States.
With him on the brief were Solicitor General Waxman, As-
700
sistant Attorney General Schiffer, Deputy Solicitor General
Kneedler, and James C. Kilbourne. *
JUSTICE GINSBURG delivered the opinion of the Court. This case
originated in 1978 when the Crow Tribe sought to enjoin the State
of Montana and its counties from taxing coal extracted from mines
held by the United States in trust for the Tribe. Having succeeded
in that endeavor, the Tribe and the United States now seek to
recover coal-related taxes once paid to the State and counties by
Westmoreland Resources, Inc., a nontribal enterprise that mined
coal under a lease from the Tribe. We hold that the restitution
sought for the Tribe is not warranted.
I A
Just north of the northern surface boundary of the Crow
Reservation in Montana lies the "ceded strip," approximately
1,137,500 acres of land that was originally part of the
reservation. The Tribe ceded the tract to the United States in 1904
for settlement by non-Indians. Act of Apr. 27, 1904, ch. 1624, 33
Stat. 352; see
Ash Sheep Co. v.
United States,
*Briefs of
amici curiae urging reversal were filed for
the State of New York et al. by
Dennis C.
Vacco,
Attorney General of New York,
Barbara G.
Billet,
Solicitor General,
John W McConnell, Deputy Solicitor
General, and
John B. Curcio, Assistant Attorney General, and
by the Attorneys General for their respective States as follows:
Bill Pryor of Alabama,
Bruce M. Botelho of Alaska,
Grant Woods of Arizona,
Daniel E. Lungren of
California,
Robert A. Butterworth of Florida,
Margery
S.
Bronster of Hawaii,
Alan G.
Lance of Idaho,
Thomas J.
Miller of Iowa,
Frank J.
Kelley of Michigan,
Hubert H. Humphrey III of
Minnesota,
Jeremiah W (Jay) Nixon of Missouri,
Don
Stenberg of Nebraska,
Frankie Sue Del Papa of Nevada,
Heidi Heitkamp of North Dakota,
Mark W Barnett of
South Dakota,
Jan Graham of Utah,
William H. Sorrell
of Vermont,
Richard Cullen of Virginia,
Christine Q
Gregoire of Washington, and
William U. Hill of Wyoming; and
for the National Conference of State Legislatures et al. by
Richard Ruda and
James I. Crowley.
701
252 U. S. 159
(1920). Surface interests in the ceded strip were thereafter
conveyed to non-Indians, but the United States holds rights to
minerals underlying the strip in trust for the Tribe. Since 1904,
the State and the Counties of Big Horn, Treasure, and Yellowstone
have exercised full legal authority and responsibility for public
services on the ceded strip, and the Tribe has not exercised civil
jurisdiction over this area. See
Crow Tribe v.
Montana, 650 F.2d
1104, 1107 (CA9 1981) (noting the Court of Appeals'
understanding, in
Little Light v.
Crist, 649 F.2d
683, 685 (CA9 1981), that "the ceded area is not a part of the
reservation").
In 1972, with the approval of the Department of the Interior and
pursuant to the Indian Mineral Leasing Act of 1938 (IMLA), 52 Stat.
347, 25 U. S. C. § 396a
et seq., Westmoreland Resources, a
non-Indian company, entered into a mining lease with the Tribe for
coal underlying approximately 31,000 acres of the ceded strip.
After executing the 1972 lease, Westmoreland signed contracts with
its customers, four Midwest utility companies, allowing
Westmoreland to pass on the cost of valid taxes to the utilities.
Westmoreland began mining the coal in the spring of 1974.
In November 1974, Westmoreland and the Tribe renegotiated the
1972 lease. The renegotiated royalties were recognized at the time
as being among the highest in the United States.
Crow Tribe
v.
United States, 657 F. Supp. 573, 587 (Mont. 1985); see
App. 376 (testimony of Westmoreland's president that the
renegotiated royalty was "by far the highest royalty that was being
paid in the nation").l A settlement agreement attending the 1974
renegotiation stated that the Tribe found the amended lease and
associated documents "satisfactory in that they provide the
financial, economic and social protections that the Tribe deems
necessary."
Id., at
1 Westmoreland's president contrasted the 35 and 40 cents per
ton royalties Westmoreland had agreed to pay the Tribe with federal
royalties which were "at that time ... 17 and a half cents a ton,
maybe 20 cents a ton." App.375-376.
702
44. The amended lease and the royalties for which it provided
had an extendable term of ten years, running from June 14, 1972.
Id., at 8. Pursuant to the lease, Westmoreland paid the
Tribe almost $18 million in royalties through October 1983.
Crow
Tribe v.
United States, 657 F. Supp., at 588.
In July 1975, the State imposed a severance tax and a gross
proceeds tax on all coal produced in Montana, including coal
underlying the reservation proper and the ceded strip. See Mont.
Code Ann. §§ 15-23-701 to 15-23-704, 15-35-101 to 15-35-111 (1979).
The severance tax rate applicable to the ceded strip coal was 30
percent of the contract sales price of the coal extracted; 2 the
gross proceeds tax rate was approximately 5 percent of the contract
sales price. During the relevant periods,3 Westmoreland paid
approximately $46.8 million in severance taxes to the State and
$11.4 million in gross proceeds taxes to Big Horn County.4
Westmoreland paid these taxes without timely pursuit of the
procedures Montana law provides for protests and refunds. App. to
Pet. for Cert. 37; see also Tr. of Oral Arg. 13-14. The company
subsequently agreed, in exchange for $50,000, to dismiss with
prejudice any claim of entitlement to a refund of the severance or
gross proceeds taxes it had paid to the State or Big Horn County.
App. to Pet. for Cert. 37; see also App. 294-296.
In January 1976, some six months after the State imposed its
coal taxes, the Tribal Council adopted an ordinance setting out a
Crow Tribal Coal Taxation Code.
Id., at 79-86. The Tribe's
code imposed a 25 percent severance tax on "all
2 The Montana Legislature, post-1985, incrementally reduced the
severance tax rate to 15 percent of the contract sales price. App.
to Pet. for Cert.25.
3For the severance tax, the relevant period is 1975-1982, and
for the gross proceeds tax, 1975-1987.
4 Big Horn County collected taxes on its own behalf and for
other jurisdictions.
703
persons engaged in or carrying on the business of coal mining
within the boundaries of the Crow Indian Reservatio[n]."
Id., at 81; see also
id., at 97-98. Reservation
boundaries, as described in the code, included the coal beneath the
ceded strip.
Id., at 81.5 Under the Tribe's constitution,
the tax adopted by the Tribal Council was subject to review by the
Department of the Interior.
Id., at 329.
In January 1977, the Department approved the Tribe's code "to
the extent that it applied to coal underlying the Crow Reservation
proper."
Id., at 98. Because of a limitation in the Tribe's
constitution, however, the Department "disapproved the tax to the
extent that it applied to the Crow Tribe's coal in the ceded
strip."
Id., at 153; see also id., at 217-218, 329.6 In
1982, the Tribe again enacted a tax for coal mined on the ceded
strip, and again the Department rejected the tax. See
Crow
Tribe v.
Montana, 819 F.2d
895, 897 (CA9 1987). According to the Superintendent of the
Crow Agency, Bureau of Indian Affairs, the Department continued to
withhold permission for extension of the Tribe's tax to the ceded
area because the Tribe's constitution "disclaimed jurisdiction
outside the boundaries of the reservation." App. 218. The Tribe
endeavored to amend its constitution to satisfy the Department's
objection; it did
5 The Tribe's Chairman, in a March 11, 1975, statement opposing
an increase in Montana coal taxes, however, observed that the State
"has an important governmental responsibility" for development of
Indian coal resources, particularly on the ceded strip; the role of
the State, the Chairman added, "is substantially reduced where
development takes place on the Crow Reservation, for under ...
federal law the Crow Tribe ... exercises governmental and
proprietary jurisdiction over the people and property within its
reservation." App. 53.
G On March 3, 1978, the Assistant Secretary of the
Interior disapproved, on procedural grounds, an amendment to the
Crow Constitution that would have had the effect of applying the
Tribe's 1976 coal tax code to the removal of coal underlying the
ceded area.
Id., at 98; see also Defendant's Exhs. 542,
543.
704
not petition for court review of the Department's refusal to
approve extension of the Tribe's tax to the ceded strip.
B
The Tribe brought a federal action against Montana and Montana
counties in 1978, seeking declaratory and injunctive relief against
imposition of the State's severance and gross proceed taxes on coal
belonging to the Tribe. The State's taxes, the Tribe alleged, were
preempted by the IMLA and infringed on the Tribe's right to govern
itself. The District Court dismissed the complaint for failure to
state a claim upon which relief could be granted.
Crow Tribe
v.
M ontana, 469 F. Supp. 154 (Mont. 1979). The Court of
Appeals for the Ninth Circuit reversed.
650 F.2d
1104 (1981), amended,
665 F.2d
1390 (1982)
(Crow 1). It held that the Tribe's
allegations, if proved, would establish that the IMLA preempted
Montana's taxes, 650 F. 2d, at 1113-1115, and that the taxes
impermissibly infringed upon the Tribe's sovereignty, id., at
1115-1117.
While the Ninth Circuit trained on the nonmonetary claim the
Tribe was then pursuing, one for declaratory and injunctive relief
to stop the imposition of Montana's taxes, the Court of Appeals
noted: "As to the taxes already paid by Westmoreland ... it is true
that the Tribe has not paid any of the taxes and is apparently not
entitled to any refund if the tax statutes are declared invalid."
Id., at 1113, n. 13. The Ninth Circuit further observed that
the Tribe's own attempt "to tax its lessees' coal production was
partially frustrated by the Secretary of the Interior's refusal to
sanction the Tribe's tax ordinances insofar as they applied to coal
production on the ceded strip."
Id., at 1115, n. 19.
In July 1982, after the
Crow I decision, the Tribe and
Westmoreland entered into an amended lease agreement, approved by
the Interior Department that September. Under the amended
arrangement, Westmoreland agreed to pay the
705
Tribe a tax equal to the State's then-existing taxes, less any
tax payments Westmoreland was required to make to the State and its
subdivisions. See App. 135-141; see also id., at 329-330. The 1982
agreement achieved, prospectively, the federal permission the Tribe
had long sought. It allowed the Tribe to have an approved tax in
place so that, if successful in the litigation against Montana, the
Tribe could claim for itself any tax amounts Westmoreland might be
ordered to pay into the District Court's registry
pendente
lite. Correspondingly, the agreement enabled Westmoreland to
avoid double taxation, present and future, and it absolved the
company from any tax payment obligation to the Tribe for the
1976-1982 period. App. to Pet. for Cert. 32-35.
In November 1982, in keeping with their amended lease agreement,
the Tribe and Westmoreland jointly filed a motion to deposit
severance tax payments into the District Court's registry, pending
resolution of the controversy over Montana's authority to tax coal
mined at the ceded strip.
Id., at 32. In January 1983, the
District Court granted the motion. Thereafter, Westmoreland paid
the Montana severance tax into the court's registry in lieu of
paying the State. The District Court granted the same interim
relief, in November 1987, for the gross proceeds tax.
Id.,
at 35, 36. In ordering the registry deposits, which ultimately
would be paid over, with interest, to the prevailing party (Montana
or the Tribe), the District Court recalled the Ninth Circuit's
observation that "the Tribe is apparently not entitled to any
refund of taxes previously paid by Westmoreland to Montana." App.
213 (citing
Crow I, 650 F. 2d, at 1113, n. 13). The
provisional remedy attended to that concern; it "preserve[d the
District Court's] power ... [to give post-1982] tax moneys to their
rightful owner after a trial on the merits." App. 215.
In June 1983, the United States intervened on behalf of the
Tribe to protect its interests as trustee of the coal upon
706
which Montana's taxes were levied. Trial took place in January
1984, after which the District Court concluded that federallaw did
not preempt the State's taxes on coal underlying the ceded strip.
Crow Tribe v.
United States, 657 F. Supp. 573 (Mont.
1985). The Ninth Circuit again reversed.
Crow Tribe v.
Montana, 819 F.2d
895 (1987)
(Crow II). Montana's taxes, as applied to the
ceded strip coal, the Court of Appeals held, were both "preempted
by federal law and policies," as reflected in the IMLA, and "void
for interfering with tribal self-government."
Id., at 903.
Explaining its decision, the Ninth Circuit stressed these
considerations: The Tribe had a vital interest in the development
of its coal resources, id., at 899,901; the State's taxes had "at
least some negative impact on the ... marketability [of the Tribe's
coal]," id., at 900; Montana's coal tax exactions were not
"narrowly tailored" to serve only the State's "legitimate"
interests, id., at 902. Montana appealed, and this Court summarily
affirmed. 484 U. S. 997 (1988).
When the case returned to the District Court in 1988, the Tribe
sought an order directing release of the funds held in the court's
registry. Montana did not object but, in a new twist, Westmoreland
did. The company, for the first time in this protracted litigation,
asserted that neither Montana nor the Tribe qualified for receipt
of the funds. Montana was out because the Ninth Circuit had
declared the State's taxes preempted. The Tribe, according to
Westmoreland, did not have a valid tax law in place even in the
years following 1982-the fund deposit period-for want of proper
Interior Department approval. Therefore, Westmoreland urged, the
company should receive back all deposited funds.
Rejecting Westmoreland's novel claim of entitlement to the
deposited funds, the District Court observed that the Ninth
Circuit, in
Crow I, 650 F. 2d, at 1117, and
Crow II,
819 F. 2d, at 898, had characterized the minerals underlying
the ceded strip as a " 'component of the Reservation land
itself.'"
707
App. 286. It follows, the District Court next said, that the tax
approved for the reservation proper in 1977, see
supra, at
703, covered the strip as well, and the Interior Department had
erred in ever opining otherwise, App. 286. As to Westmoreland's
operations on the strip, the District Court further stated, the
Crow tax had been modified by the 1982 agreement amending the
lease.
Id., at 287; see
supra, at 704-705. That 1982
Tribe-Westmoreland accord controlled, the District Court concluded,
rendering the amount deposited payable to the Tribe, and not to
Westmoreland. Shortly thereafter, the District Court ordered
distribution of funds in its registry to the United States, as
trustee for the Tribe. App. 288-291.
Having secured exclusively for the Tribe's benefit
Westmoreland's post-1982 tax payments once held in the District
Court's registry, the United States and the Tribe commenced the
fray now before us. Filing amended complaints against Montana and
Big Horn County, they invoked theories of assumpsit and
constructive trust in support of prayers to recover some $58.2
million in state and county taxes paid by Westmoreland
prior
to the 1983 and 1987 orders directing deposits into the court's
registry. App. to Pet. for Cert. 243-260. These complaints alleged
that, because the State and Big Horn County had collected taxes
from Westmoreland in violation of federal law, it would be unjust
and inequitable to allow them to retain the funds. In "equity and
good conscience," the United States and the Tribe urged, Montana
should pay over for the benefit of the Tribe all moneys illegally
collected, together with interest thereon. See id., at
249-250,258-259.7 Neither the Tribe nor the United States
requested, as additional or alternate relief, recovery for the
7 Specifically, the amended complaints sought all moneys paid as
severance taxes from 1975 through 1983, and as gross proceeds taxes
from 1975 through 1988, together with prejudgment interest. App. to
Pet. for Cert. 250-251,259.
708
Tribe's actual financial losses attributable to the State's
taxes.8
Montana moved for summary judgment, arguing,
inter alia,
that any refund right that may have existed belonged to
Westmoreland, as payer of the taxes in question.
Id., at 72.
The District Court, in December 1990, denied Montana's motion on
the ground that full airing of the parties' positions was in order.
Id., at 67-85.
On Montana's application, the District Court certified for
interlocutory appeal, pursuant to 28 U. S. C. § 1292(b), the
question whether summary judgment for the State was properly
denied.
Id., at 61-66. The Ninth Circuit, in 1991, initially
granted permission for the interlocutory appeal, but one year
later, in 1992, dismissed the appeal as improvidently granted.
Crow Tribe v.
Montana, 969 F.2d
848 (Crow III). In dismissing the appeal, the Ninth
Circuit commented that the "sole issue" presented was whether the
Tribe and the United States, although they did not pay the Montana
taxes, were nevertheless positioned to state a claim for relief in
assumpsit and constructive trust. That issue, the Ninth
8 An earlier amended complaint filed in November 1982, a year
after
Crow I, sought in addition to the declaratory and
injunctive relief originally requested, "restitutionary, tax
refunds, money damages, and other relief," including "punitive or
exemplary damages." App. 143, 158. The current complaints seek
restitution, but do not refer to "refunds" or "money damages."
In 1993, the Tribe sought once again to amend its complaint,
inter alia, to recover from Westmoreland taxes allegedly due
under the Tribe's coal tax ordinance for the period 1976-1982. In a
July 1993 order, the District Court denied leave to amend,
observing: "This case is now more than fifteen years old";
"defendants have allowed ... previous motions to amend the
complaint to be granted without objection"; "[t]his motion,
however, contains additional causes of action ... [which] could
change the nature of the litigation." Record, Doc. No. 637, p. 4.
In so ruling, the District Court noted that "[t]he trial court's
discretion [to deny tardy amendments] is ... broadened" when newly
alleged facts and theories "have been known to the party seeking
amendment since the inception of the cause of action."
Id.,
at 3.
709
Circuit said, "was already addressed" in
Crow II. The
Court of Appeals then recited passages from
Crow II
indicating why that court had determined that" 'the state tax[es]
threaten[ed] Congress' overriding objective of encouraging tribal
self-government and economic development.'" 969 F. 2d, at 848-849
(quoting
Crow II, 819 F. 2d, at 903).
C
The District Court conducted a trial in April and May 1994 to
determine whether coal taxes paid by Westmoreland to Montana and
its counties in the years 1975-1982 unjustly enriched the State and
its subdivisions at the expense of the Tribe. In detailed findings
and conclusions, that court explained why, in its judgment, the
disgorgement remedy sought by the Tribe was not appropriate. App.
to Pet. for Cert. 17-38, 42-54.
The Tribe's case rested on three principal points: first, the
fact, settled in
Crow I, that the coal underlying the ceded
strip was a mineral resource of the Tribe; second, the federal
policy favoring tribal self-government and economic development;
finally, the Ninth Circuit's preemption decision. Critical to the
preemption decision, the District Court recognized, was the Court
of Appeals' determination that "Montana's coal taxes burdened the
Tribe's economic interests by increasing the costs of production by
coal producers, which reduced royalties received by the Tribe."
App. to Pet. for Cert. 45 (citing
Crow II, 819 F. 2d, at
899).
Counterbalancing the Tribe's case, the District Court observed
first that the State and its subdivisions, not the Tribe, provided
"[p]ublic services to residents and businesses on the [c]eded
[s]trip, many of which facilitate the mining of coal." App. to Pet.
for Cert. 47; see
supra, at 701, 703, n. 5. Key to the
District Court's reasoning, however, was the respective taxing
authority of State and Tribe.
In a decision rendered two years after the Ninth Circuit's
Crow II preemption decision, this Court held that both
State
710
and Tribe may impose severance taxes on on-reservation oil and
gas production by a non-Indian lessee.
Cotton Petroleum
Corp. v.
New Mexico, 490 U. S. 163 (1989).
Cotton Petroleum indicated that Montana's taxes on ceded
strip coal were invalidated, not because the State lacked power to
tax the coal at all, but because the taxes at issue were
"extraordinarily high."
Id., at 186-187, n.17.
The Tribe's exercise of taxing authority, on the other hand,
required approval from the Secretary of the Interior, and that
approval had not been obtained in the relevant period, 1975-1982.
See
supra, at 703-704. In 1988, the District Court had
determined that the Interior Department's refusal to approve the
Tribe's tax on the ceded strip was an error, see
supra, at
707, but the presence of the state taxes did not cause that error.
App. to Pet. for Cert. 36. Rather, the Department initially
questioned the Tribe's authority to tax on the ceded strip and
later pointed to the Tribe's noncompliance with the proper
procedures for amending its constitution to impose the tax.
Id., at 36-37.
Accorded weight in the District Court's evaluation, Westmoreland
would not have paid coal taxes to the Tribe prior to 1983, for
Interior Department approval was essential to allow pass-through to
the company's customers.
Id., at 35. Furthermore, under the
1982 lease agreement, see
supra, at 704-705, the Tribe and
Westmoreland stipulated that Westmoreland would have no tax
liability to the Tribe for the 1976-1982 period. App. to Pet. for
Cert. 36.9 Moreover, the deposited funds, Westmoreland's post-1982
tax payments,
9The District Court clarified that its 1988 ruling referring to
the Interior Department's error was issued not to suggest any
Westmoreland tax obligation to the Tribe in lieu of the State
predating the 1982 lease agreement, but "as a basis for ordering
that the escrowed funds be released to the Tribe and not
Westmoreland by virtue of [that] agreement." App. to Pet. for Cert.
36; see also id., at 53-54.
711
had been turned over in full to the United States for the
benefit of the Tribe.
Ibid.; see
supra, at
705-707.
The District Court further noted that Westmoreland did not
timely endeavor to recover taxes paid to the State and counties,
and that the Tribe did nothing to prompt Westmoreland to initiate
appropriate proceedings for refunds. App. to Pet. for Cert. 50-51.
In that regard, the District Court recalled the Court of Appeals'
statement in
Crow I that" 'as to the taxes already paid by
Westmoreland, ... the Tribe ... is apparently not entitled to any
refund if the tax statutes are declared invalid.''' App. to Pet.
for Cert. 53 (quoting
Crow I, 650 F. 2d, at 1113, n.
13).
Concerning the negative effect of Montana's taxes on the
marketability of coal produced in Montana, the District Court
entertained additional evidence, supplementing the evidence offered
ten years earlier. Westmoreland's president testified that "he
could not identify any utility contracts lost during the relevant
time period due to Montana's coal taxes," App. to Pet. for Cert.
29, and the parties' economic experts presented conflicting
testimony on the impact of Montana's taxes on the sale of Montana
coal. The District Court described the conflicting positions, but
made no findings on the matter.
Id., at 29-30.
Satisfied that the factors justifying preemption did not impel
the disgorgement relief demanded by the Tribe, that under
Cotton
Petroleum, the State could impose a reasonably sized severance
tax, and that the State, though enriched by Westmoreland's tax
payments, did not gain that enrichment unjustly at the expense of
the Tribe, the District Court refused to order that Montana coal
taxes collected between 1975 and 1982 be remitted to the
Tribe.10
10 The Tribe and the United States also claimed that the State
and Big Horn County were unjustly enriched as a result of their
tortious interference with the Tribe's contractual and business
relationships with the Shell Oil Company. The District Court
rejected this claim as not proved, see
712
The Ninth Circuit again reversed the District Court's judgment;
in a
per curiam opinion, the Court of Appeals read its prior
opinions to require the relief the Tribe demanded, i.
e., an
order directing the State and county to disgorge approximately
$58.2 million in coal taxes paid by Westmoreland to Montana and its
subdivisions before Westmoreland began making payments into the
District Court's registry.
92 F.3d
826, amended,
98 F.3d
1194 (1996)
(Crow IV). Acknowledging "the absence of
traditional requirements for relief under theories of assumpsit or
constructive trust," 92 F. 3d, at 828, the Court of Appeals
remanded for entry of the disgorgement order. That court left to
the District Court only the "unresolved request[s] for prejudgment
interest [and attorney's fees]."
Id., at 830-831.
In the Ninth Circuit's view, the District Court had not adhered
to the "law of this case," id., at 828,11 and had therefore abused
its discretion, id., at 830. In particular, the Court of Appeals
faulted the District Court for giving undue weight to the fact that
Westmoreland rather than the Tribe had paid the taxes, id., at
828-829,12 and to the fact, made plain by this Court in
Cotton
Petroleum, 490 U. S., at 176-187, that "similar [state] taxes
are not always preempted,"
Crow IV, 92 F. 3d, at 829.
Further, the Ninth Circuit discounted the public services Montana
provided at the ceded strip because "the State would have provided
such services even if the
id., at 54-57, and the Ninth Circuit affirmed that disposition.
92 F.3d
826, 830-831, amended,
98 F.3d
1194 (1996). We denied the Tribe's crosspetition for review of
the final judgment disposing of the Shell Oil claim. 522 U. S. 819
(1997).
11 The Court of Appeals repeatedly referred to "law of the case"
made in
Crow III, see 92 F. 3d, at 828, and n. 2, 829, a
decision denying interlocutory review and therefore containing no
"holding," see supra, at 708-709.
12But CL
Crow I, 650 F. 2d, at 1110 ("incidence of
[Montana's] taxes is on the non-Indian mineral lessee"); id., at
1113, n. 13 ("[a]s to the taxes already paid by Westmoreland, ...
[the Tribe] is apparently not entitled to any refund").
713
Tribal coal had not been mined."
Ibid. Finally, the Court
of Appeals attributed to the District Court a finding that
Westmoreland "would have paid the tribal tax even without [the
Interior Department's] approval because [Westmoreland] agreed to do
so in its 1982 lease."
Id., at 830; see also
ibid.
("Westmoreland was willing to pay coal taxes to the Tribe as early
as 1976, so there was no reason for the [District Court] to
distinguish between the taxes collected before and after
1982.").13
We granted certiorari, 522 U. S. 912 (1997), and now reverse the
judgment of the Court of Appeals.
II A
The petition for certiorari presents the question whether the
Tribe-or the United States as its trustee-may recover state and
county taxes imposed on and paid by the Tribe's mineral lessee,
Westmoreland, a party who has forfeited entitlement to a tax
refund. Taxpayer Westmoreland, it is undisputed, did not qualify
for a refund because the company failed to pursue protest and claim
procedures within the time Montana law prescribes. Further,
Westmoreland entered into a settlement with the State and the
county relinquishing any claim it might have had for return of the
tax payments in question. See
supra, at 702.
As a rule, a nontaxpayer may not sue for a refund of taxes paid
by another. See,
e. g., Furman Univ. v.
Livingston,
136 S. E. 2d 254, 256, 244 S. C. 200, 204 (1964);
Krauss
Co. v.
Develle, 236 La. 1072, 1077, 110 So. 2d 104, 106
(1959);
Kesbec, Inc. v.
McGoldrick, 278 N. Y. 293,
297, 16 N. E. 2d 288, 290 (1938); cf.
United States v.
California, 507 U. S. 746, 752
(1993). The Ninth Circuit evidently had that rule in mind
13 But cf. App. to Pet. for Cert. 35 (District Court found that
during the 1975 through 1982 period Westmoreland "would not have
paid coal taxes to the Tribe as no Department of Interior approval
had been obtained to allow a pass-through to its customers").
714
when it noted, in
Crow I, that the Tribe "is apparently
not entitled to any refund" of taxes Westmoreland had paid to
Montana. 650 F. 2d, at 1113, n. 13.
The Tribe now maintains, however, that the disgorgement remedy
approved by the Ninth Circuit does not fall within the "refund"
category. The Tribe suggests two ways of analyzing its claim.
First, Westmoreland was liable for tax payments, but it paid the
wrong sovereign; the Tribe, not the State, should have been the
recipient of those payments. Second, the State's taxes adversely
affected the Tribe's economy by reducing the demand for the Tribe's
coal and the royalties the Tribe could charge; a remedial order
transferring Westmoreland's 1975-1982 tax payments from Montana to
the Tribe would eliminate the enrichment unjustly gained by the
State at the Tribe's expense.
Before inspecting the Tribe's justifications for the
disgorgement ordered by the Court of Appeals, we place in clear
view a pathmarking decision this Court rendered less than two years
after our summary affirmance in
Crow II.14 In
Cotton
Petroleum Corp. v.
New Mexico, 490 U. S. 163 (1989), we
held that the IMLA did not preempt New Mexico's nondiscriminatory
severance taxes on the production of oil and gas on the Jicarilla
Apache Reservation by Cotton Petroleum, a non-Indian lessee.
Id., at 186-187. In so holding, we acknowledged that the
same on-reservation production of oil and gas was subject to tribal
severance taxes, id., at 167-169, and that New Mexico's taxes might
reduce demand for on-reservation leases,
id., at 186-187.
Cotton Petroleum clarified that neither the IMLA, nor any
other federal law, categorically preempts state mineral severance
taxes imposed, without discrimination, on all extraction
enterprises in the State, including on-reservation operations.
"Unless and until Congress provides otherwise, each of the
14 "A summary disposition affirms only the judgment of the court
below, and no more may be read into our action than was essential
to sustain that judgment."
Anderson v.
Celebrezze,
460 U. S. 780,
785, n. 5 (1983).
715
. two sovereigns [ -State and Tribe- ]has taxing jurisdiction
over all [on-reservation production]."
Id., at 189.
The Court in
Cotton Petroleum distinguished
Crow
II in a footnote referring to the Solicitor General's
representation that Montana's taxes were "extraordinarily high" and
the Ninth Circuit's recognition that "the state taxes had a
negative effect on the marketability of coal produced in Montana."
490 U. S., at 186-187, n. 17. Montana,
Cotton Petroleum thus
indicates, had the power to tax Crow coal, but not at an exorbitant
rate. See id., at 187, n. 17 (according to the Tribe's expert,
Montana's rate was" 'more than twice that of any other state's coal
taxes' ").15 We examine the Tribe's disgorgement claim in light of
Cotton Petroleum, a decision on the books before the Tribe
(and the United States) filed their current claims for
restitution.
B
We consider first the argument that the Tribe, not Montana,
should have received Westmoreland's 1975-1982 coal tax payments;
therefore the proper remedy is to require the State to turn all
taxes it collected from Westmoreland over to the Tribe. As
authority, the Tribe and the United States rely on cases typified
by
Valley County v.
Thomas, 109 Mont. 345, 97 P. 2d
345 (1939). That case involved a Montana law providing for the
licensing of motor vehicles by the county in which the vehicle is
owned and taxable. Valley County claimed that McCone County was
unlawfully issuing licenses, and collecting license fees, for
vehicles owned and taxable within Valley County. Valley sued McCone
for both injunctive and monetary relief. The Montana Supreme Court
held that if Montana's vehicle licensing law made Valley, not
McCone, the county entitled to issue the licenses in question,
15 Since 1985, the District Court observed, "the Montana
legislature has enacted production incentive credits and
incrementally reduced the amount of the severance tax"; in November
1994, the rate was 15 percent of the contract sales price. App. to
Pet. for Cert. 25.
716
then Valley could recover from McCone the fees McCone improperly
collected. It would make scant sense, the court reasoned, to hold
instead that Valley should "exact the ... license fee anew from the
[vehicle] owner, leaving the latter to his remedy, if any, for the
illegal exaction."
Id., at 385386, 97 P. 2d, at 366.
As the District Court in this case correctly recognized, App. to
Pet. for Cert. 49-50, the
Valley County pattern is not the
one presented here. There, the Montana licensing statute bound both
counties. One, and not the other, was the sole subdivision
authorized to issue the license and collect the fee. Here, as
Cotton Petroleum makes plain, neither the State nor the
Tribe enjoys authority to tax to the total exclusion of the other.
Moreover, dispositively distancing the Tribe's situation from that
of the prevailing subdivision in
Valley County, the Tribe
itself could not have taxed lessee Westmoreland during the period
in question, for the Interior Department (whether wrongly or
rightly) had withheld the essential permission.
It bears repetition that the Department did not approve the
Tribe's imposition of a coal tax on ceded strip production until
September 1982, see
supra, at 705, that the Tribe never
sought judicial review of the Department's pre-1982 disapprovals,
see
supra, at 703-704, that Westmoreland would pay no tax to
the Tribe absent Department approval, see
supra, at 706,
710, 713, n. 13, that Montana's taxes did not impede the Tribe from
gaining the Department's clearance, see
supra, at 710, and
that Montana received no share of the post-1982 tax payments
released from the District Court's registry, see
supra, at
705-707. These were factors the District Court correctly considered
significant in holding disgorgement an exorbitant, and therefore
inequitable, remedy.16
16 In view of the evidence diligently canvassed by the District
Court, including the Tribe-Westmoreland 1982 agreement that
Westmoreland would have no tax liability to the Tribe for the
1976-1982 period, see
717
C
The negative impact of Montana's high taxes on the marketability
of the Tribe's coal, as the District Court correctly comprehended,
was the principal basis for the Ninth Circuit's
Crow II
preemption decision. See
supra, at 709. The Tribe and the
United States urge that impact as an alternative justification for
requiring Montana to disgorge taxes collected from Westmoreland
from 1975 through 1982.
At oral argument, counsel for the Tribe clarified that the
impact of concern was not coal that went unsold because the State's
tax made the price too high. See Tr. of Oral Arg. 37. Instead, the
Tribe's disgorgement claim rested on the coal "actually produced
and sold"; by taxing that coal, counsel maintained, Montana
"deprived [the Tribe] of its fair share of the economic rent."
Ibid.
Again, however, the Tribe itself could not have exacted a tax
from Westmoreland before 1983, because the Interior Department
withheld approval. And the royalty the Tribe and Westmoreland
agreed upon in 1974 was both high and long term, running until June
1982. See
supra, at 701-702. No evidence suggests
Westmoreland would have paid higher royalties, but for Montana's
tax. It merits emphasis also, as the District Court recognized,
App. to Pet. for Cert. 46, 50, that under our
Cotton
Petroleum decision, Montana could have imposed
a
severance tax, albeit not one so extraordinarily high. See
Cotton Petroleum, 490 U. S., at 186-187 (New Mexico's oil
and gas severance taxes imposed on onreservation production,
amounting to about 8 percent of the value of the taxpayer's
production, were not preempted by federal law although the taxes
could be expected to have "at least a marginal effect on the demand
for on-reservation
supra, at 705, 710-711, we see no substantial basis for
believing that Westmoreland "would have paid the tribal tax even
without [the Interior Department's] approval" or that "Westmoreland
was willing to pay coal taxes to the Tribe as early as 1976," six
years before the Department agreed that the Tribe was positioned to
tax coal mined at the ceded strip.
Crow TV, 92 F. 3d, at
830.
718
leases, the value to the Tribe of those leases, and the ability
of the Tribe to increase its tax rate").
The District Court did not consider awarding the Tribe, in lieu
of all the 1975-1982 taxes Montana collected, damages based on
actual losses the Tribe suffered. We cannot call this an oversight.
The complaint contained no prayer for compensatory damages. See
supra, at 707-708, and nn. 7,8. Nor did the proof establish
entitlement to such relief. See
supra, at 711.17
The only testimony homing in on Westmoreland's sales came from
the company's president. He could "identify [no] utility contracts
lost during the relevant time period due to Montana's coal taxes."
App. to Pet. for Cert. 29. While he acknowledged that some
customers "exercise[d] the payment option under their contracts
rather than continuing to receive coal and that the Montana coal
taxes were probably a factor," he identified as other factors
"demand, alternative sources, and transportation."
Ibid.
Indeed, as just noted, see
supra this page, the Tribe
concentrated on disgorgement as the desired remedy; it deliberately
sought "no damages ... now" for "coal that was not sold because the
price was too high [due to] the State's tax." Tr. of Oral Arg. 37.
Federal Rule of Civil Procedure 54(c), therefore, could not aid the
Tribe. That Rule instructs that "every final judgment shall grant
the relief to which the party in whose favor it is rendered is
entitled, even if the party has not demanded such relief in the
party's pleadings." The Tribe, however, had not shown entitlement
to actual damages.
In sum, the District Court carefully and fairly determined that
the disgorgement demanded was not warranted and should not be
granted. In so ruling, that court endeavored to heed both
Crow
II and
Cotton Petroleum, and closely attended to the
history of and record in this tangled, long-
17The Tribe attempted, unsuccessfully, to show that Montana's
high taxes caused the Tribe to lose its lease with Shell Oil
Company. See supra, at 711-712, n. 10.
719
pending case. See
supra, at 708, n. 8. Proceeding as it
did, the District Court ignored no tenable "law of the case" and
did not indulge in an "abuse of discretion." See
Crow TV,
92
As a result of the District Court's orders for registry
deposits, see
supra, at 705, the Tribe has displaced Montana
to this extent: With respect to ceded strip mining operations, all
severance taxes have gone to the Tribe since January 1983, and all
gross proceeds taxes since November 1987. Montana's retention of
preregistry deposit taxes must be assessed in light of the
court-ordered distribution of all funds in the registry to the
United States, as trustee for the Tribe. See
supra, at 707.
The District Court, best positioned to make that assessment, was
obliged to do so based on the case and proof the parties presented.
The Tribe and the United States here argued for total disgorgement.
They did not develop a case for relief of a different kind or size.
While we do not foreclose the District Court from any course the
Federal Rules and that court's thorough grasp on this litigation
lead it to take, we are satisfied that the Court of Appeals
improperly overturned the District Court's judgment.
***
For the reasons stated, the judgment of the Court of Appeals for
the Ninth Circuit is reversed, and the case is remanded for further
proceedings consistent with this opinion.
It is so ordered.
JUSTICE SOUTER, with whom JUSTICE O'CONNOR joins, concurring in
part and dissenting in part.
The Court's meticulous treatment of this exhausting litigation,
including its discussion of the way
Cotton Petroleum Corp.
v.
New Mexico, 490 U. S. 163, 186, n. 17
(1989), bears on
Crow Tribe v.
Montana, 819 F.2d
895 (CA9 1987)
(Crow II), summarily aff'd, 484 U. S. 997
(1988), shows the error of
720
Opinion of SOUTER, J.
requiring disgorgement to the Crow Tribe of all Montana taxes
collected from Westmoreland based on coal mined from the ceded
strip between 1976 and 1982. As the Court explains,
ante, at
715,
Cotton Petroleum makes clear that the taxes were
objectionable not because the State was wholly disentitled to tax
the Tribe's coal operation, but because the " 'extraordinarily
high'" taxes affecting the marketability of the Tribe's coal were
simply excessive. 490 U. S., at 186187, n. 17. Since Montana was
free to levy and collect the portion of taxes below the threshold
of excessiveness, I concur in the Court's decision to reverse the
judgment and remand for further proceedings.
If the Court stopped there, the Court of Appeals would be free
to set the stage for the District Court to engage in serious
weighing of a claim to partial disgorgement under the Tribe's
complaint, which, as now amended, seeks disgorgement of all moneys
"illegally collected." * Although this request for relief was
originally predicated on a reading of
Crow II that
Cotton
Petroleum shows was too expansive, the Tribe's prayer naturally
encompasses the lesser claim to disgorgement of any taxes in excess
of the State's limit.
It would be open to the Court of Appeals, further, to indicate
that nothing done either by the Department of the Interior or by
the Tribe raised a dispositive bar to the Tribe's claim to pre-1983
revenues, contrary to what the District Court had suggested, App.
to Pet. for Cert. 35-37, leaving that latter court free to
determine what had been excessive and to reweigh the equities.
After considering what the Tribe had already received, among the
other relevant facts, the District Court might require disgorgement
of all, some, or none of the excessive taxes for the period before
1983.
The Court impedes any such exercise of trial court discretion,
however, if it does not entirely foreclose it. Although the Court
says that it does not "foreclose the District Court
*In December 1990, the United States, as trustee for the Tribe,
filed its own amended complaint seeking essentially the same
relief.
721
from any course the Federal Rules and that court's thorough
grasp on this litigation lead it to take" when the case is returned
to it,
ante, at 719, the Court's conclusions effectively
thwart application of one of the principal rules of restitution
that should be brought to bear on this case. It is from the
resulting truncation of the District Court's discretion that I
respectfully dissent.
Although both Montana and the Tribe may tax the value of the
coal on its extraction or severance from the land,
ante, at
714-715, Montana may tax only to a certain economic point. Beyond
that point, as between Montana and the Tribe, only the Tribe may
add to the tax burden. When a taxing authority like Montana has
taxed unlawfully to the prejudice of another jurisdiction that
should have received the revenue in payment of its own lawful tax,
accepted principles of restitution entitle the latter government to
claim disgorgement of what the former had no business receiving. At
the most general level, a "person who has been unjustly enriched at
the expense of another is required to make restitution to the
other." Restatement of Restitution § 1, p. 12 (1937). At a more
specific level, there is the rule that "[w]here a person has paid
money ... to another in the erroneous belief, induced by mistake of
fact, that he owed a duty to the other so to do, whereas such duty
was owed to a third person, the transferee ... is under a duty of
restitution to the third person."
Id., § 126(1), at 514. The
Supreme Court of Montana has accordingly held, as the majority
recognizes,
ante, at 715-716, that as between two
jurisdictions claiming to tax the same transaction, one that
collected taxes without lawful authority must surrender them to the
other one, entitled to impose them,
Valley County v.
Thomas, 109 Mont. 345,97 P. 2d 345 (1939); see also,
e.
g., College Park v.
Eastern Airlines, Inc., 250 Ga. 741,
742-744, 300 S. E. 2d 513,515-516 (1983) (invoking "general
equitable principles of restitution," including § 126(1), to hold
that one municipality may recover taxes mistakenly paid to
another);
Indian Hill v.
Atkins, 153
722
Opinion of SOUTER, J.
Ohio St. 562, 566-567, 93 N. E. 2d 22, 25 (1950) (citing §
126(1) and authorizing suit by one town to recover taxes paid to
another);
School Dist. No.6 v.
School Dist. No.5, 255
Mich. 428,429,238 N. W. 214, 215 (1931) (authorizing suit to
recover taxes paid to wrong school district because "[t]hrough
breach of the law, plaintiff and its taxpayers have been deprived
of their just due, and defendant has money which in equity and good
conscience belongs to plaintiff");
Balkan v.
Buhl,
158 Minn. 271, 279, 197 N. W. 266, 269 (1924) ("[T]o permit
defendant to retain any of the taxes wrongfully collected by it
from its neighbor's territory, would be to permit it to benefit
from its own wrong .... Such a result is so objectional as to
require no discussion beyond its bare statement"). Under Montana's
own law, then, reflecting accepted principles of restitution, the
Tribe raises at least a facially valid claim when it seeks
disgorgement of the excess taxes collected by the State in the
period before 1983.
Although the Court seeks to differentiate this case from the
ambit of
Valley County, the proffered distinctions come up
short. First, it is not to the point that in
Valley County
only one jurisdiction could validly tax, whereas here both may do
so,
ante, at 716. The remaining element of the Tribe's claim
against Montana goes only to the state revenues that might be found
to have exceeded the limit of valid state taxation; beyond the
point at which state taxation became excessive the State had no
authority, while the Tribe did. (It is true, of course, that in
this case the respective spheres of the two taxing jurisdictions
are bounded by an economic, not a geographic, line. But that
distinction does not affect the principle involved, and the Court
does not argue otherwise.)
Second,
Valley County is not distinguishable on the
ground that the governmental claimant there had an enforceable
licensing and revenue scheme in place, whereas the Tribe "could not
have taxed lessee Westmoreland during the period in question, for
the Interior Department (whether
723
wrongly or rightly) had withheld the essential permission,"
ante, at 716. The District Court's original ruling,
acknowledged in its most recent opinion and never challenged by
Montana, was that the Tribe "at all relevant times ... had a valid
coal mining tax applicable to Westmoreland's mining on the Ceded
Strip." App. to Pet. for Cert. 36. After the Ninth Circuit's ruling
in
Crow II that the mineral estate beneath the surface of
the ceded strip was a part of the Tribe's reservation, 819 F. 2d,
at 898, the District Court observed:
"This analysis of the Reservation status of the Crow coal
compels the conclusion that the approval which the Department of
the Interior gave to the 1976 tax ordinance was fully applicable to
Westmoreland's mining of Crow Ceded Strip coal because that coal
was and is a component of the Reservation land itself. The approval
of the Department of Interior of the 1976 Crow Tribal Tax Code as
it applied to activities on the Reservation was necessarily an
approval of that tax as being applicable to Westmoreland's mining
of Crow Tribal coal. Accordingly, the Interior Department's
purported refusal to approve the tax as it might apply to any
mining operation on the Ceded Strip was based on what the Ninth
Circuit has found to be a mistaken interpretation of the applicable
law." App. 286.
Thus, the Tribe's provision must now be recognized as valid for
the period in question, and there is no apparent reason why the
Tribe should be disqualified from seeking to obtain the State's
excess revenues that should have gone to the Tribe under the
Tribe's own tax regulation. While the Tribe could not have enforced
the tax against Westmoreland without the Interior Department's
approval, that is neither here nor there as between the Tribe and
the State. And although the Tribe failed to obtain judicial review
of the Department's refusal, that has no bearing on the equity of
the State's retention of money to which it never had a valid
724
Opinion of SOUTER, J.
claim. That is, there is no apparent reason to hold that the
originally unlitigated third-party mistake of the Interior
Department should affect the restitution claim as between two rival
taxing authorities, one of which was clearly entitled to tax but
got nothing, the other of which was entitled to nothing by way of
excess taxes, but has pocketed the money anyway.
Third, despite a suggestion in the Court's opinion,
ante,
at 710, 716,
Valley County is not rendered inapposite by the
Tribe's 1982 agreement with Westmoreland. So far as it matters
here, that agreement simply capped Westmoreland's tax burden at the
limit imposed by Montana's then-current taxing scheme and did not
purport to govern any claim the Tribe might have against the
State.
To reject the Court's attempts to distinguish this case from
Valley County is not, of course, to deny that any
distinction exists. In fact, there is a significant difference
between the two situations, and one that may prevent the door from
closing entirely against the pre-1983 claim. In
Valley
County and the comparable cases, the disgorgement issue turned
on the relative merits of the competing jurisdictions' claims of
entitlement to impose a tax; neither rival government had any
interest in the property or activity taxed except that of a taxing
authority. In this case, however, that is not so, for the Tribe
that sought to tax the extraction of the coal was also the owner of
the coal before the extraction. Thus, any tribal taxation was
merely a way to recover or retain some of the value of the Tribe's
own property (a fact unaffected by the favorable terms of the
Tribe's royalty agreement with Westmoreland, see
ante, at
717); so, too, Montana's receipt of the excess taxation (passed on
by Westmoreland) was an appropriation of the Tribe's own property,
just as it was an invalid counterpart of the tax collection that
would have been rightful by the Tribe. The Ninth Circuit recognized
this when it found that "Montana made plain its intention to
appropriate most of the economic rent" of the
725
Tribe's coal. See
Crow Tribe v.
Montana, 650 F.2d
1104, 1113 (1981). Because the Tribe's claim may properly be
viewed in this light, we can put to one side any questions whether
the Court is right, or I am, about the significance of the error by
the Department of the Interior or the point-forpoint applicability
of
Valley County. We may bypass the principles specific to
claims between contending taxing authorities entirely and simply
ask whether something in this record would in practical terms
defeat the Tribe's claim to disgorgement of its own property taken
in the form of excess taxes. The Court's answer to this question is
uncertain. The Court endorses the view that some degree of
disgorgement would have been "exorbitant,"
ante, at 716, and
"compensatory damages" unjustified,
ante, at 718, and it
suggests that the District Court's previous award to the Tribe of
all taxes paid into the registry after 1982 amounted to a windfall
big enough to provide at least rough restitution for the excessive
share of taxes collected in the preceding six years.
Ante,
at 716, 719. At the same time, the Court says it imposes no bar to
the possibility of further remedial action in the trial court.
Perhaps the Court sees the windfall only when it regards the Tribe
as one of two rival taxing authorities, as distinct from the Tribe
as a property owner that has suffered as such. I trust that this
distinction is open for exploration and development upon remand.
Whether the Tribe is equitably entitled to a penny more than it has
now, I do not know, but I think it is clear that nothing in this
record disentitles the Tribe at least to press for disgorgement of
some or all of Montana's pre-1983 excess tax revenues.
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