Cigarette-maker Philip Morris, supports a New York state Assembly bill that would solve a long battle over collecting taxes on cigarettes sold by Indian reservation stores by making wholesalers pay the levy, a company spokesman said on Thursday.

The Indian tribes would then seek refunds for the taxes paid on any cigarettes that were sold to other Indians, explained David Sutton, a spokesman for Altria Group, which owns Philip Morris.

"But if you or I went as non-Native Americans consumers, the tax on the product would have already been paid on the wholesale level and they would not be entitled to a refund of that tax under this bill because you and I are not tribal members," he explained.

New York's tax revenues have dropped with Wall Street's profits, and the legislature returns next week for a special session to tackle the three-year, $26 billion deficit.

Estimates of how much the state loses by failing to collect the cigarette taxes range from several hundred million dollars a year to as much as $1 billion.

The ruling by the 2nd U.S. Circuit Court of Appeals will leave the rights in the hands of Penguin Group Inc. and the heirs of John Steinbeck's widow, Elaine. Author John Steinbeck died in 1968; his wife in 2003.

The appeals court said a lower court judge misapplied copyright law in awarding the rights in 2006 to the son, Thomas Steinbeck, and granddaughter Blake Smyle. Both already receive a portion of the proceeds of sales.

The case was returned to the lower court with instructions to leave the rights with various individuals and organizations, including the publisher Penguin and Elaine Steinbeck's heirs. The heirs include her sister, four children and grandchildren.

Mark S. Lee, the lawyer representing Thomas Steinbeck and Blake Smyle, said he was disappointed with the ruling.

Attorney Susan J. Kohlmann, who represented Steinbeck's estate, said the estate and its heirs were delighted, saying Wednesday's ruling meant "the wishes of John Steinbeck related to ownership of his literary works have been validated."

Court-appointed receiver Clark Kelso said he needs the money over the next five years to build new medical units for 10,000 sick or mentally ill inmates.

Kelso also asked U.S. District Judge Thelton Henderson to hold Gov. Arnold Schwarzenegger and the state's controller in contempt of court if they don't allocate the money soon.

Federal courts have declared the health care system in California's 33 state prisons so poor that it violates inmates' constitutional rights. Kelso was named by the court to oversee the reform effort.

The request to U.S. District Judge Thelton Henderson in San Francisco comes as lawmakers remain at odds over how to cope with California's $15.2 billion deficit seven weeks after the start of the fiscal year.

His office also reviewed a draft friend-of-the-court brief offered by the chemical giant.

But the draft was used for reference only, said administration spokeswoman Lara Ramsburg, and the brief Manchin ultimately filed urging the state Supreme Court to hear DuPont's appeal was his own.

"Here, the proposed draft was provided, we politely reviewed it, said 'Thanks, but no thanks,' and ultimately decided to go another way," she said.

The court is in summer recess and has not yet decided whether to take the case.

The revelation about communication between the governor's office and the chemical giant is the latest twist in a complex class-action lawsuit involving nearly 8,000 people exposed to toxic chemicals that spewed for decades from a zinc-smelting plant in Spelter.

While the case centered on medical and liability issues, the plaintiffs also argued that close ties to DuPont made environmental regulators and other state officials complicit in allowing a 112-acre waste pile tainted with arsenic, cadmium and lead to sit in the center of town until 2001.

After a five-week trial in county circuit court last fall, jurors convicted DuPont of wanton, willful and reckless conduct and ordered it to pay punitive damages to deter future misconduct. Total damages were $382 million.

Former Mississippi Gov. Ronnie Musgrove, who is running for the seat vacated by Republican Trent Lott, has not been charged and says he did nothing wrong, but Republicans quickly seized the opportunity to slam him for taking the money.

Robert Moultrie and Nixon Cawood Jr., executives with The Facility Group of Smyrna, Ga., pleaded guilty to giving Musgrove an illegal $25,000 "gratuity" during his 2003 gubernatorial re-election campaign. Musgrove lost the race to Republican Haley Barbour.

The Facility Group managed construction of Mississippi Beef Processors LLC, a cattle plant that closed just three months after it opened in 2004, costing 400 jobs and sticking Mississippi taxpayers with $55 million in state-backed loans.

The appeals court issued the ruling Thursday, saying the Saudi defendants are protected by sovereign immunity. It also agreed with a lower court that a Saudi banker and a charitable organization cannot be held liable.

The Saudi defendants were among hundreds of other defendants sued by victims of the attacks, including the families of those who died.

Other defendants in the case include foreign governments, charities and individuals alleged to have provided financial and logistical support to al-Qaida.