United Pacific Insurance Co. v. Wyoming Excise Tax Division, Department of Revenue & Taxation

713 P.2d 217, 1986 Wyo. LEXIS 456

Opinions

ROSE, Justice.

The trial court entered judgment for unpaid Wyoming sales and use taxes against the surety of a nonresident prime contractor performing work in Yellowstone National Park under a contract with the United States government. We will affirm.

Bernal Construction Company (Bernal), a nonresident prime contractor, was awarded a contract to build a water system in Yellowstone National Park. Appellant United Pacific Insurance Company (United Pacific) agreed to become Bernal’s surety on Miller Act bonds (40 U.S.C. § 270a).¹ The Wyo ming Excise Tax Division determined that Bernal was obligated to pay some $53,-360.38 in state sales and use taxes (pursuant to §§ 39-6-602² and 39-6-603, W.S. 1977, 1984 Cum.Supp.³) and proceeded, in state district court, against United Pacific to recover the tax under § 39-6-604(a), W.S.1977, 1984 Cum.Supp.⁴ United Pacific moved to dismiss the complaint on grounds that the district court lacked subject-matter jurisdiction and that the complaint failed to state a claim upon which relief could be granted. The motion to dismiss was denied and the case proceeded to a bench trial, where the trial court entered judgment against United Pacific for $53,360.38.

Appellant raises these issues for decision:

“A. The Trial Court lacked jurisdiction over the subject matter of the action. “B. Plaintiff failed to plead and prove entitlement to relief.

“C. A surety on a bond, executed under the provisions of the Miller Act (40 U.S.C. § 270a-e) relating to the United States Government contract for improvements in Yellowstone National Park is not liable for Wyoming sales or use tax, unless the bond so provides.

“D. The Trial Court’s imposition of statutory, non-contract liability on Defendant was contrary to W.S. 1977 § 39-6-405[ (a) ](x) Cum.Sup.;

Footnotes

•

[5] and to the intention of Congress, as expressed in the Miller Act, an interference with the Federal Government welfare and activity, constituting a violation of Article VI Section 2 of the Constitution of the United States, [6] and therefore void.”

Appellee State of Wyoming phrases the issues for decision in this way:

“I. DID THE DISTRICT COURT EXERCISE PROPER SUBJECT MATTER JURISDICTION OF THE ACTION?” “II. DID APPELLEE SUFFICIENTLY PLEAD AND PROVE ENTITLEMENT TO RELIEF?”

“HI. DID THE TRIAL COURT CORRECTLY HOLD THAT APPELLANT IS LIABLE FOR AN OBLIGATION IMPOSED BY STATE LAW AND NOT ON THE BOND EXECUTED PURSUANT TO THE MILLER ACT?”

“IV. IS THE IMPOSITION OF STATUTORY LIABILITY ON APPELLANT CONTRARY TO W.S. 39-6-405(a)(x) AND IF NOT, DOES IT VIOLATE THE SUPREMACY CLAUSE OF THE UNITED STATES CONSTITUTION?”

“V. CAN APPELLANT RAISE CONSTITUTIONAL OBJECTIONS TO W.S. 39-6-604(a) ON APPEAL IF IT DID NOT DO SO AT THE TRIAL COURT BELOW?”

Following briefing and oral argument in this case, the court asked the parties to submit supplemental briefs addressing the question:

“Whether beyond permitting the imposition and collection of sales and use taxes the provisions of Title 4, United States Code, §§ 105, 108 and 110, [7] or any other authority justify the extension of the provisions of § 39-6-604(a), W.S.1977 (1984 Cum.Supp.) to a factual situation involving the furnishing of a bond pursuant to the Miller Act, 40 U.S.C., § 270(a)(b) [sic], in connection with performance of a construction contract in Yellowstone National Park in view of the exclusive legislative jurisdiction of the United States of America over Yellowstone National Park?”

There are, then, two basic questions to be resolved in this appeal: (1) whether the Wyoming courts can entertain this suit; and (2) whether appellee was entitled to the relief granted.

JURISDICTION

For clarity, we outline the well-established principles we need not decide in this case, but which set the stage for the question here raised. The State can recover sales and use tax from a nonresident prime contractor (§ 39-6-504(b), W.S.1977 (May 1985 Replacement);⁸ and § 39-6-510, W.S.1977 (May 1985 Replacement)⁹) even though he has a federal contract. C.R. Frederick, Inc. v. State Board of Equalization, 38 Cal.App.3d 385, 120 Cal.Rptr. 434, 440 cert, denied 419 U.S. 1120, 95 S.Ct. 802, 42 L.Ed.2d 819 (1974); G.M. Shupe, Inc. v. Bureau of Revenue, 89 N.M. 265, 550 P.2d 277, 279 (1976); Robert E. McKee, General Contractor, Inc. v. Bureau of Revenue, 80 N.M. 453, 457 P.2d 701, 705 (1969); Hot Springs Concrete Co. v. Rosamond, 178 Ark. 194, 10 S.W.2d 12, 13 (1928). Wyoming can recover the tax from any surety who has posted state statutory tax bonds for a nonresident prime contractor. Section 39-6-602(b), W.S.1977 (May 1985 Replacement).¹⁰ Any such suit would properly be entertained by Wyoming courts. The State cannot, however, recover such taxes from the federal government in any court. Section 39-6-505(a)(iv), W.S. 1977 (May 1985 Replacement);¹¹ 4 U.S.C. § 107(a); Washington v. United States, 460 U.S. 536, 103 S.Ct. 1344, 1346, 75 L.Ed.2d 264 (1983); United States v. New Mexico, 455 U.S. 720, 102 S.Ct. 1373, 1383, 71 L.Ed.2d 580 (1982); United States v. Tax Commission of Mississippi, 421 U.S. 599, 95 S.Ct. 1872, 1876, 44 L.Ed.2d 404 (1975).

"Persons storing, using or consuming tangible personal property are liable for the tax imposed by this article. The liability is not extinguished until the tax has been paid to the state but a receipt given to the person by a registered vendor in accordance with subsection (a) of this section is sufficient to relieve the purchaser from further liability.”

In addition, if a nonresident prime contractor not working on a federal project has filed a performance bond, his surety can be held liable for the sales and use taxes. Section 39-6-604(a), supra note 4. This is so because the statute becomes a part of the contract. The existing law is part of a contract, just as if it had been written into the contract. Meuse-Rhine-Ijssel Cattle Breeders of Canada, Ltd. v. Y-Tex Corporation, Wyo., 590 P.2d 1306, 1309 (1979); Tri County Electrical Association, Inc. v. City of Gillette, Wyo., 584 P.2d 995, 1007 (1978). See also In re Hagood, Wyo., 356 P.2d 135 (1960); Board of Commissioners of Platte County v. Mason, 38 Wyo. 1, 264 P. 93 (1928); Black and Yates v. Negros-Philippine Lumber Company, 32 Wyo. 248, 231 P. 398, 37 A.L.R. 1487 (1924). The United States Supreme Court has long so held. Ogden v. Saunders, 25 U.S. (12 Wheat.) 213, 257-262, 6 L.Ed. 606 (1827).

Wyoming courts, however, have no jurisdiction to entertain suits on a Miller bond. 40 U.S.C. § 270b(b);¹² United States ex rel. Harvey Gulf International Marine, Inc. v. Maryland Casualty Company, 573 F.2d 245, 247 (5th Cir.1978); Aetna Casualty & Surety Company v. United States ex rel. R.J. Studer & Sons, 365 F.2d 997, 1000 (8th Cir.1966); American Insurance Company v. Kinder, Mo. App., 640 S.W.2d 537, 540 (1982); Hot Springs Concrete Co. v. Rosamond, supra, 10 S.W.2d at 13; General Equipment, Inc. v. United States Fidelity and Guaranty Insurance Company, La.App., 292 So.2d 806, 807 (1974); Pierce Contractors, Inc. v. Peerless Casualty Company, Fla., 81 So.2d 747, 749 (1955).

The issue presented in the case at bar, however, slips into the interstices created by these well-established principles. The question which remains unanswered by these authorities is whether the State can recover the tax owed by a nonresident contractor from a Miller Act surety in state court. The answer requires an analysis of the interplay of three statutory schemes with differing purposes and objectives.

The Wyoming taxing scheme provides for sales tax (§ 39-6-401 et seq.) and the comparable-use tax (§ 39-6-501 et seq.) and also provides for payment of sales and use taxes by contractors (§ 39-6-601 et seq.). In addition, § 39-6-604(a), W.S.1977, provides that an additional obligation is imposed on one who provides a performance bond to also answer for the unpaid taxes of a nonresident contractor. At the time the surety contract in question was made, the statute read:

“Whenever a nonresident general or prime contractor or nonresident subcontractor furnishes a surety bond for the faithful performance of his contract or subcontract there is imposed an additional obligation upon the surety company to the state of Wyoming and the board as its agent that the contractor shall pay all sales and use taxes which become due in the performance of the contract. In the ease of a nonresident general or prime contractor this additional obligation includes liability to pay the board all sales and use taxes which have not been paid to a licensed vendor or the board by the contractor or subcontractor. The general or prime contractor or his surety company is authorized to recover from the subcontractor the amount of sales and use taxes accruing with respect to purchases made by the subcontractor which were paid to the board by the contractor or the surety company, or an amount equal to the sales and use taxes so paid by the contractor may be withheld from payments made under the contract. The liability of the surety company under this section is limited to three percent (3%) of the contract price.” Section 39-6-604(a).

It is under authority of this section that the State seeks to recover the unpaid taxes from United Pacific.

The Buck Act authorizes the states to collect such taxes as are here in question on activities occurring within federal enclaves,¹³ except from the United States or its instrumentalities.¹⁴ Prior to passage of the Buck Act in 1947, the question of state authority to tax in federal enclaves was a difficult one. See United States v. New Mexico, supra, 102 S.Ct. at 1380-1382, and C.R. Frederick, Inc. v. State Board of Equalization, supra, 120 Cal.Rptr. at 438-439, for excellent analyses of prior history. The Buck Act was passed to prevent the claim of immunity from state use and sales taxes on the ground that the activity or use occurred in an area of exclusive federal legislative jurisdiction. United States v. State Tax Commission of Mississippi, supra, 95 S.Ct. at 1879. The taxes now may be imposed to the same extent as if the activity occurred in a nonfederal area. 4 U.S.C. § 105(a), supra note 7. The Act retains the immunity of the United States itself from liability for such taxes. 4 U.S.C. § 107(a); United States v. New Mexico, supra, 102 S.Ct. at 1383. Wyoming law also expressly honors this prohibition. Sections 39-6-405(a)(x) and 39-6-505(a)(iv), W.S.1977 (May 1985 Replacement). Thus, the Buck Act authorizes imposition of sales and use tax on contractors working on federal projects. C.R. Frederick, Inc. v. State Board of Equalization, supra, 120 Cal.Rptr. at 440; Robert E. McKee, General Contractor, Inc. v. Bureau of Revenue, supra, 457 P.2d at 705; Texas Co. v. Siefried, 60 Wyo. 142, 147 P.2d 837, 842, reh. denied, 60 Wyo. 142,150 P.2d 99 (1944); Bullock v. W &W Vending & Food Service of Texas, Inc., Tex.Civ. App., 611 S.W.2d 713, 717-718 (1981). As the United States Supreme Court has explained, the liability of federal contractors for state taxes is broad indeed; congress may expressly expand immunity for federal contractors, but without such action, the states’ power to tax the federal contractors will be denied only under the “clearest constitutional mandate.” Washington v. United States, supra, 103 S.Ct. at 1351, quoting United States v. New Mexico, supra, 102 S.Ct. at 1384. Thus, it is clear that under the Buck Act the State of Wyoming has full jurisdiction to recover the state tax from the federal contractor, Ber-nal.

In the case at bar, however, the State sought to recover the delinquent tax from the contractor’s surety, United Pacific, under the authority of § 39-6-604(a), which imposes an additional statutory obligation on the surety for performance of a nonresident prime contractor to pay overdue sales and use taxes. The contractor in the case at bar did not post a tax bond under § 39 — 6—602(b). Rather, at the department’s request, the contractor furnished copies of the payment and performance bond for the project which had been procured in response to Miller Act requirements. The department immediately notified United Pacific “that an additional obligation is imposed upon your surety company * * * that the contractor shall pay all sales and use taxes” and that United Pacific’s liability was limited to three per cent of the total contract price.

Thus, we are required to consider the third statutory scheme, the Miller Act (40 U.S.C. § 270a to § 270d). The Miller Act requires a federal contractor such as Ber-nal to post a payment bond. 40 U.S.C. § 270a(a)(2), supra note 1. The Act also requires the federal contractor to post a performance bond (40 U.S.C. § 270a(a)(l), supra note 1), which includes a federal tax bond. 40 U.S.C. § 270a(d), supra note 1. The Miller Act’s objectives are different from the previous statutory schemes. The policy of the Miller Act is to protect those whose labor and materials go into public projects as well as the United States. Aet-na Casualty & Surety Company v. United States ex rel. R.J. Studer & Sons, supra, 365 F.2d at 1000, citing United States ex rel. Sherman v. Carter, 353 U.S. 210, 77 S.Ct. 793, 797, 1 L.Ed.2d 776 (1957), and Clifford F. MacEvoy Co. v. United States ex rel. Calvin Tomkins Co., 322 U.S. 102, 64 S.Ct. 890, 893, 88 L.Ed.2d 1163 (1944); United States ex rel. Bryant Electric Company, Ltd. v. Aetna Casualty & Surety Company, supra, 297 F.2d at 669. This protection is in lieu of any protection they might receive under state statutes. Nickell v. United States ex rel. Texas Vitrified Pipe Company, 340 F.2d 117, 119 (10th Cir.1965), citing United States ex rel. Sherman v. Carter, supra. The Miller Act provides that all who provide labor or materials to a project for which a § 270a payment bond has been made have a right to sue on the bond. 40 U.S.C. § 270b(a).¹⁵ The Act also mandates that “[e]very suit instituted under this section shall be brought * * * in the United States District Court * * * and not elsewhere.” 40 U.S.C. § 270b(b). Appellant United Pacific claims that the latter section prevents the Wyoming state courts from exercising jurisdiction over the suit by the State against the surety on the statutory tax liability. We cannot agree.

It is true that some courts have used broad language in discussing the exclusive jurisdiction provision which would appear to cover every judgment against a surety who provides a Miller Act bond. United States ex rel. Bryant Electric Company, Ltd. v. Aetna Casualty & Surety Company, supra, 297 F.2d at 669; Balboa Insurance Company v. Sippial Electric Company, Ala., 379 So.2d 579, 581 (1980). The bulk of the cases involve suit by a material-man on the bond. See, e.g., United States ex rel. Harvey Gulf International Marine, Inc. v. Maryland Casualty Company, supra, 573 F.2d at 247; Pierce Contractors, Inc. v. Peerless Casualty Company, supra; Gichner v. Insurance Companies of North America, D.C.Mun.App., 180 A.2d 842 (1962); General Equipment, Inc. v. United States Fidelity and Guaranty Insurance Company, supra; Hoffmeister Cabinets of Nevada, Inc. v. Bivins, 87 Nev. 282, 486 P.2d 57 (1971); Gypsum Contractors, Inc. v. American Surety Company of New York, 37 N.J. 315, 181 A.2d 174 (1962); Gifford-Wood Company v. Travelers Indemnity Company, 42 Misc.2d 962, 249 N.Y.S.2d 317 (1964). Furthermore, it is well established that the mere fact that a Miller Act bond has been issued is not a proper basis for resting jurisdiction solely in the federal courts. Rather, for the federal jurisdiction to be exclusive, the suit must be one on the Miller Act bond. Western Casualty & Surety Company v. Biggs, 217 F.2d 163, 165 (7th Cir.1954); Ukropina-Polich-Kral v. Superior Court for the County of Butte, 186 Cal.App.2d 299, 8 Cal.Rptr. 692 (1960); Voelz v. Milgram Contracting Co., 272 Wis. 366, 75 N.W.2d 305, 306 (1956); Hot Springs Concrete Co. v. Rosamond, supra, 10 S.W.2d at 14. The prohibition in the Miller Act against state court jurisdiction over actions on the bond does not relate to other suits which are not based directly on the bond. Massachusetts Bonding & Ins. Co. v. Robert E. Denike, Inc., 92 F.2d 657, 658 (3rd Cir.1937), cited in Voelz v. Milgram Contracting Co., supra, 75 N.W.2d at 306, and Ukropina-Polich-Kral v. Superior Court for the County of Butte, supra, 8 Cal.Rptr. at 693.

Some courts have rejected the general claim advanced there — that the suit against a Miller Act surety is not a suit on the bond — but such cases are confined to their peculiar facts, which are distinguishable from the case at bar. Koppers Company v. Continental Casualty Company, 337 F.2d 499 (8th Cir.1964); Gypsum Contractors, Inc. v. American Surety Co. of New York, supra; Pierce Contractors, Inc. v. Peerless Casualty Company, supra, 81 So.2d at 749; General Equipment, Inc. v. United States Fidelity & Guaranty Insurance Company, supra, 292 So.2d at 807; American Insurance Company v. Kinder, supra, 640 S.W.2d at 639; Airport Construction and Materials, Inc. v. Bivens, 279 Ark. 161, 649 S.W.2d 830, 833 (1983).

The instant suit does not seek recovery on the bond. Although the surety agreement must be read to include existing law, as if the law had been written in the contract (Meuse-Rhine-Ijssel Cattle Breeders of Canada, Ltd. v. Y-Tex Corporation, supra, 590 P.2d at 1309), the existing law, § 39-6-604(a), W.S.1977, does not merely engraft a state tax bond on the performance bond agreement. Rather, in the plain words of the statute, “there is imposed an additional obligation upon the surety company to the state of Wyoming” to pay the tax. The result then is that, in essence, the surety contract recognizes the independent statutory obligation of the surety to answer for the taxes of the contractor. Neither is this suit one based directly on the bond, for the suit seeks recovery on the independent statutory obligation. Nor does this suit seek recovery out of the bond. The independent statutory obligation would exist even if the bond funds were exhausted by claims of the United States for failure of the contractor to perform. If this were a suit on the Miller Act bond, the State could not recover the tax from the surety, even in federal court. See Nickell v. United States ex rel. Texas Vitrified Pipe Company, supra, 340 F.2d at 119 (the government could not “recover on the bond from the surety for the contractor’s unpaid taxes,” because “claims for taxes are not labor and material within the meaning of the ordinary Miller Act bond”). See also Oklahoma Tax Commission v. Seaboard Surety Company, 327 F.2d 709, 711 (10th Cir.1964) (the use tax could not be recovered because it was the statutory obligation of the federal contractor, not of the surety on its bonds).

Nor does the Wyoming statute improperly condition Miller Act rights. Cf. Aetna Casualty & Surety Company v. United States ex rel. R.J. Studer & Sons, supra, 365 F.2d at 999; Hoeppner Construction Company v. United States ex rel. Mangum, 287 F.2d 108 (10th Cir.1960). Rather, the statute imposes a distinct obligation on the surety also to guarantee the state taxes.

We conclude that the Wyoming statute is clear and imposes an independent statutory obligation on United Pacific to answer for Bernal’s unpaid taxes. This is the cost of doing business in this state. Like the investment broker in Gaudina v. Haberman, Wyo., 644 P.2d 159, 166 (1982), United Pacific “is obligated to know the law surrounding such transactions * * *. It has long been a basic precept that ignorance of the law is no excuse.” See also Czapla v. Grieves, Wyo., 549 P.2d 650 (1976). All contracts are made subject to the existing law. Meuse-Rhine-Ijssel Cattle Breeders of Canada, Ltd. v. Y-Tex Corporation, supra, 590 P.2d at 1309. Imposition of this liability does not discriminate against the United States or those with whom it does business, as condemned in Washington v. United States, supra, 103 S.Ct. at 1344, for the reason that all performance sureties for all nonresident general contractors are likewise obligated.

In conclusion, it is appropriate for us to say that this action is quite simply not a suit on the bond nor is the action based directly on the bond and it is not a suit seeking recovery out of the bond. Rather, it is a suit to enforce an independent statutory obligation placed on all those who act as sureties on performance bonds for any nonresident prime contractor — a tax obligation squarely within the permissible parameters of the Buck Act. Thus, nothing in the Miller Act prevents the state district courts from exercising jurisdiction over this suit.

SUPREMACY CLAUSE

Appellant argues that § 39-6-604(a), W.S.1977, violates the Supremacy Clause of the United States Constitution, supra note 6, and should be set aside. We cannot agree. Under the Supremacy Clause, enforcement of a state statute such as ours may be preempted by federal law where congress expressly provides, where “despite the absence of explicit preemptive language” it is clear that congress intended to preempt by legislating comprehensively, or where it is impossible to comply with both the state and federal law and thus enforcement of the state law is an obstacle to the achievement of the federal aims. Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691, 104 S.Ct. 2694, 2700, 81 L.Ed.2d 680 (1984); Maryland v. Louisiana, 451 U.S. 725, 101 S.Ct. 2114, 2129, 68 L.Ed.2d 576 (1981); Guschke v. City of Oklahoma City, 763 F.2d 379, 383 (10th Cir.1985).

Appellee responds that we ought not decide this issue because it was not raised below. In general, this court will not consider the constitutionality of a statute if it has not been raised below. Jahnke v. State, Wyo., 692 P.2d 911, 928 (1984); Hopkinson v. State, Wyo., 664 P.2d 43, 50, cert, denied 464 U.S. 908, 104 S.Ct. 262, 78 L.Ed.2d 246 (1983); Nickelson v. People, Wyo., 607 P.2d 904, 907 (1980). The rule that this court will not address the constitutionality of a statute is a refinement of the rule in Scherling v. Kilgore, Wyo., 599 P.2d 1352, 1358 (1979). Nickelson v. People, supra, 607 P.2d at 908. The rule recited in Scherling v. Kilgore is the well-established one which holds that the supreme court will not consider any issue raised for the first time on appeal unless it goes to jurisdiction or is fundamental. See, e.g., Kost v. First National Bank of Greybull, Wyo., 684 P.2d 819, 825 (1984); Estate of Altman, Wyo., 650 P.2d 277, 281 (1982); Harries v. State, Wyo., 650 P.2d 273, 277 (1982); In re Parental Rights of PP, Wyo., 648 P.2d 512, 519 (1982); Police Protective Association v. City of Rock Springs, Wyo., 631 P.2d 433, 437 (1981); Buttrey Food Stores Division v. Coulson, Wyo., 620 P.2d 549, 554, 20 A.L.R.4th 419 (1980). This court has accordingly addressed the constitutionality of our statutes when the question was not even raised by the parties in this court, where the matter is fundamental. White v. Fisher, Wyo., 689 P.2d 102, 105 (1984). In the case at bar, it is clear that the question whether § 39-6-604(a) violates the Supremacy Clause by intruding on a federally preempted area is a fundamental matter.

Enforcement of § 39-6-604(a) does not violate the Supremacy Clause. Under the Buck Act, the authority to tax in federal areas is explicitly granted the states. Thus, congress has neither expressly nor impliedly preempted the tax field, nor can it be impossible to comply with both state and federal law. The mandate of the Buck Act is that the state may tax as if Yellowstone National Park were not a federal area. For purposes of the Buck Act, then, it makes no difference that the surety provided a federal Miller Act bond, rather than a state performance bond. Nothing in the Miller Act expressly prohibits a state from imposing such independent statutory obligation on the surety. Where, as here, an act of congress carves an exception to the exclusive federal legislative jurisdiction over federal areas, and where, as here, state legislation does not conflict with other relevant federal legislation, there is no violation of the Supremacy Clause.

PLEADING AND PROOF

The trial court did not err in failing to grant appellant’s motion to dismiss for failure to state a claim. We find that the complaint adequately sets forth the basis of the tax liability alleged against United Pacific. Technical forms of pleading are not required so long as the complaint shows the plaintiff is entitled to relief. Harris v. Grizzle, Wyo., 599 P.2d 580, 583 (1979). Fair notice is the objective of a pleading. Johnson v. Aetna Casualty & Surety Co. of Hartford, Wyo., 608 P.2d 1299, 1302 (1980); Washakie School District Number One v. Herschler, Wyo., 606 P.2d 310, 316, cert, denied 449 U.S. 824,101 S.Ct. 86, 66 L.Ed.2d 28 (1980). We find that the complaint is not defective under these standards.

Lastly, appellant urges that the State failed to prove its entitlement to relief. In particular, appellant claims that the State failed to introduce any evidence, other than the deficiency notice, of the amount owed by the contractor. It is true that the State must have submitted some evidence upon every element of its claim. Osborn v. Manning, Wyo., 685 P.2d 1121, 1124 (1984). It is also conceded that courts cannot supply evidence. Hendrickson v. Hendrickson, Wyo., 583 P.2d 1265, 1267 (1978). The bonds, however, were introduced as part of Plaintiff’s Exhibit No. 1, and indicate the amount of the construction contract. The statute limits the liability of the surety to three per cent of this amount. We find the bonds to be sufficient evidence from which the trial court could reasonably conclude that $53,360.38 was the amount of the tax owed.

For the foregoing reasons, the judgment of the trial court is affirmed.

THOMAS, C.J., files a dissenting opinion.

1

. 40 U.S.C. § 270a provides:

"(a) Before any contract, exceeding $25,000 in amount, for the construction, alteration, or repair of any public building or public work of the United States is awarded to any person, such person shall furnish to the United States the following bonds, which shall become binding upon the award of the contract to such person, who is hereinafter designated as 'contractor':

"(1) A performance bond with a surety or sureties satisfactory to the officer awarding such contract, and in such amount as he shall deem adequate, for the protection of the United States.

"(2) A payment bond with a surety or sureties satisfactory to such officer for the protection of all persons supplying labor and material in the prosecution of the work provided for in said contract for the use of each such person. Whenever the total amount payable by the terms of the contract shall be not more than $1,000,000 the said payment bond shall be in a sum of one-half the total amount payable by the terms of the contract. Whenever the total amount payable by the terms of the contract shall be more than $1,000,000 and not more than $5,000,000, the said payment bond shall be in a sum of 40 per centum of the total amount payable by the terms of the contract. Whenever the total amount payable by the terms of the contract shall be more than $5,000,000 the said payment bond shall be in the sum of $2,500,000.

"(b) The contracting officer in respect of any contract is authorized to waive the requirement of a performance bond and payment bond for so much of the work under such contract as is to be performed in a foreign country if he finds that it is impracticable for the contractor to furnish such bonds.

"(c) Nothing in this section shall be construed to limit the authority of. any contracting officer to require a performance bond or other security in addition to those, or in cases other than the cases specified in subsection (a) of this section.

"(d) Every performance bond required under this section shall specifically provide coverage for taxes imposed by the United States which are collected, deducted, or withheld from wages paid by the contractor in carrying out the contract with respect to which such bond is furnished. However, the United States shall give the surety or sureties on such bond written notice, with respect to any such unpaid taxes attributable to any period, within ninety days after the date when such contractor files a return for such period, except that no such notice shall be given more than one hundred and eighty days from the date when a return for the period was required to be filed under the Internal Revenue Code of 1954. No suit on such bond for such taxes shall be commenced by the United States unless notice is given as provided in the preceding sentence, and no such suit shall be commenced after the expiration of one year after the day on which such notice is given."

2

. Section 39-6-602, W.S.1977, 1984 Cum.Supp., provided:

“(a) Any contractor who furnishes tangible personal property under contract or in the development of real property is the consumer or user of the tangible personal property within the meaning of the sales and use tax laws of Wyoming.

“(b) To secure payment of sales and use taxes by nonresident prime contractors, each nonresident contractor shall file with the board a surety bond or legal security equal to three percent (3⅜) of the payments due under the contract or an amount determined by the board. The bond shall be conditioned upon the payment of all sales and use taxes which become due and payable to this state under the contract or in the real property development. This bond requirement does not apply for a nonresident contractor who has furnished a surety bond as provided by W.S. 39-6-604.

"(c) Any person a party to or performing work on a contract under this section may be enjoined from commencing or continuing any work until an approved bond has been filed with the department of revenue and taxation. Such an action shall be brought in the name of the state by the attorney general or by a county attorney. The state is not required to post security in seeking a restraining order or preliminary injunction under this section.”

3

. Section 39-6-603, W.S.1977, 1984 Cum.Supp., provided:

"(a) Any subcontractor who contracts with a general or prime contractor is liable for sales and use taxes as a general or prime contractor. The general or prime contractor shall withhold three percent (3%) of the payments due a nonresident subcontractor arising out of the contract entered into between both contractors. The contractor shall withhold the payments until the subcontractor furnishes him with a certificate issued by the board showing all sales and use taxes accruing by reason of the contract between them have been paid. The board may demand the with-holdings at any time to satisfy the sales and use tax liability of the subcontractor and any balance shall be released by the board to him. If a contractor fails to withhold payments or refuses to remit them upon demand by the board he is liable for any sales and use taxes due the state by the nonresident subcontractor.

"(b) If a nonresident subcontractor contracts with a general or prime contractor and posts with the board a surety bond deemed sufficient by the board conditioned upon payment when due of all sales and use taxes in the performance of the contract, the withholding provisions of subsection (a) of this section do not apply."

4

.Section 39-6-604(a), W.S.1977, 1984 Cum.Supp., provided:

"Whenever a nonresident general or prime contractor or nonresident subcontractor furnishes a surety bond fpr the faithful performance of his contract or subcontract there is imposed an additional obligation upon the surety company to the state of Wyoming and the board as its agent that the nonresident contractor shall pay all sales and use taxes which become due in the performance of the contract. In the case of a nonresident general or prime contractor this additional obligation includes liability to pay the board all sales and use taxes which have not been paid to a licensed vendor or the board by the nonresident contractor. The nonresident general or prime contractor or his surety company is authorized to recover from the nonresident subcontractor the amount of sales and use taxes accruing with respect to purchases made by the nonresident subcontractor which were paid to the board by the nonresident contractor or the surety company, or an amount equal to the sales and use taxes so paid by the nonresident contractor may be withheld from payments made under the contract. The liability of the surety company under this section is limited to three percent (3%) of the contract price.”

5. Section 39-6-405(a,)(x), W.S. 1977, 1984 Cum. Supp., provided:

"(a) The following sales or leases are exempt from the excise tax imposed by this article: ******

“(x) Sales to the United States government;

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