Central Coal & Coke Co. v. Carseloway

• Decision Date: 13 December 1930
• Docket Number: No. 314.,314.
• Citation: Central Coal & Coke Co. v. Carseloway, 45 F.2d 744 (10th Cir. 1930)
• Parties: CENTRAL COAL & COKE CO. et al. v. CARSELOWAY, County Assessor et al.
• Court: U.S. Court of Appeals — Tenth Circuit

45 F.2d 744 (1930)

CENTRAL COAL & COKE CO. et al. v. CARSELOWAY, County Assessor et al.

No. 314.

Circuit Court of Appeals, Tenth Circuit.

December 13, 1930.

W. L. Curtis, of Ft. Smith, Ark. (Thos. B. Pryor, of Ft. Smith, Ark., on the brief), for appellants.

Paul O. Simms and Edward H. Brady, both of Vinita, Okl., for appellees.

Before COTTERAL, PHILLIPS, and McDERMOTT, Circuit Judges.

McDERMOTT, Circuit Judge.

The appellants, plaintiffs below, are residents of Missouri. The appellees are the taxing authorities of Craig county, Okl. The plaintiffs own the coal and coal rights underlying certain lands in Craig county; the county assessed these properties for taxes. Not here complaining of the amount of the assessment, but claiming that these properties are not subject to any tax, the plaintiffs filed their bill to enjoin such assessment. An answer was filed; the cause was tried on an agreed statement of facts; the trial court dismissed the bill 40 F.(2d) 540; the plaintiffs appeal.

The agreed statement discloses that the plaintiffs first acquired options to purchase these coal rights; tested the minerals by drilling; having ascertained thereby the existence and extent of the coal beds, they bought the coal for $35 an acre, taking from the owners warranty deeds conveying to plaintiffs "all coal without reference to quality or quantity in, on, under and about" the described real estate, "together with the right to mine and remove" such coal, and the right to use the surface for such purpose for a stipulated price. The statement discloses that, aside from the preliminary drilling, no mining operations have been carried on, and the surface rights have not been acquired. Plaintiffs have mortgaged these properties. The plaintiffs returned all of these coal rights to Craig county for general taxes in 1924 and 1925; the county assessed them in each succeeding year. The taxes so assessed were paid by plaintiffs except the last half of the 1928 and the 1929 tax. The plaintiffs paid $35 an acre for these rights; they valued them for taxes at $12.50 an acre, and paid taxes on that valuation for four and a half years. In June, 1929, the equalization board increased the assessment to $15 an acre. The plaintiffs then quit paying any tax, and now claim that these properties are not subject to any tax.

It is clear that the plaintiffs own properties of large value, situate in Oklahoma. Their ownership is secure because Oklahoma maintains a stable government. If plaintiffs need not contribute to the maintenance of that government, while enjoying the benefits thereof, some all-sufficient reason should appear.

The plaintiffs' claim of ownership of the mineral estate is sound, for, while there is no statute in Oklahoma authorizing a severance of the mineral estate from the surface, there is none forbidding it, and the right to so sever, by appropriate grant or reservation, has been upheld in every court in which the question has arisen. See 40 C. J. 969, citing cases from twenty-two jurisdictions, including Dill v. Rockwell, 94 Okl. 25, 220 P. 620, and Barker v. Land Company, 64 Okl. 249, 167 P. 468, L. R. A. 1918A, 487. See, also, Dunlap v. Jackson, 92 Okl. 246, 219 P. 314; 18 R. C. L. 1174. By the deeds of severance, the plaintiffs became the owners of one interest in real estate, and their grantors remained the owners of another interest.

The Oklahoma taxing statutes are comprehensive. Section 9574, C. O. S. 1921, provides that: "All property in this state, whether real or personal, * * * shall be subject to taxation." Section 9959 reiterates this mandate, but excepts certain municipal bonds. Section 9960 provides:

"All taxable property shall be listed and assessed each year at its fair cash value, estimated at the price it would bring at a fair voluntary sale, in the name of the owner thereof on the first day of January of each year."

Section 9582 provides that:

"Real property for the purpose of taxation shall be construed to mean the land itself, and all buildings, structures and improvements or other fixtures of whatsoever kind thereon, and all rights and privileges thereto belonging or in any wise appertaining, and all mines, minerals, quarries and trees on or under the same."

The plaintiffs are the "owners," by warranty deed, of "minerals * * * under the same." Such minerals are a part of "all property in the state." Plaintiffs meet this apparently impregnable legislative mandate by reference to the case of In re Indian Territory Illuminating Oil Company, 43 Okl. 307, 142 P. 997, 1001, which, as far as we can discern, has no bearing on the claim asserted. That case did not involve the question of legislative authority to tax the owner of any mineral; on the contrary, the taxpayer in the cited case was the lessee under an ordinary exploratory oil and gas lease; the opinion described his right as being "a mere lease or license to go upon the premises, search for and, if found, take them the oil and gas away." The court held that authority for a tax must find its source in some legislative act, and that there was no warrant, in the Oklahoma statutes, "for levying an ad valorem tax upon an oil and gas lease as such." Furthermore, the cited case dealt with oil and gas, a fugacious mineral, and the property rights therein differ materially from solid minerals. Ohio Oil Company v. Indiana, 177 U. S. 190, 20 S. Ct. 576, ...