Addison v. Goodin, 61154
| Decision Date | 13 January 1987 |
| Docket Number | No. 61154,61154 |
| Citation | 731 P.2d 391 |
| Parties | B.H. ADDISON, Appellant, v. J. Ben GOODIN, County Treasurer of LeFlore County, and Jo Ann Boydston, Appellees. |
| Court | Oklahoma Supreme Court |
Hamilton & Warren, Inc. by James E. Hamilton, Poteau, for appellant.
Gary E. Negen, Asst. Dist. Atty., Wilburton, for appellee, J. Ben Goodin, County Treasurer of LeFlore County.
In 1958 the severed mineral interests underlying a certain quarter section of land in LeFlore County were voluntarily placed on the ad valorem tax rolls. Taxes on this interest were paid on this basis until 1973. In 1980 the County Treasurer of LeFlore County declared the taxes on this interest to be delinquent and offered the mineral estate at tax sale. Appellant B.H. Addison purchased the certificate of tax sale covering this interest. 1
Shortly before the two year holding period on the certificate had passed, 2 appellant was informed that Jo Ann Boydston was attempting to redeem the certificate by paying the taxes declared delinquent. Appellant then initiated the present action to enjoin Boydston from attempting to redeem the certificate. Appellant also sought an injunction, or, in the alternative, a writ of mandamus, to require the county treasurer to recognize the validity of appellant's claim and to cooperate in the issuance of a tax deed.
Default judgment was entered against Boydston and that ruling is not challenged here. However, the trial court also ruled that Oklahoma law did not provide for the assessment of a nonproducing mineral estate separate from the surface estate, and that the voluntary assessments did not justify the subsequent determination of delinquency. As there were no taxes legally due on the estate, the sale was invalid and any interest claimed thereunder void. 3 The trial court thus refused to require appellee county treasurer to recognize the validity of appellant's claim. Appellant now challenges that ruling.
Appellant argues that the case of Mitcham v. Bowers 4 requires the finding that sale of the minerals for delinquent taxes was proper. In Mitcham a mining company had voluntarily placed its interests in coal and asphalt underlying the town of Lehigh, Oklahoma on the ad valorem tax rolls. The company's assessments of these mineral interests were made separately from assessments of surface interests owned by the company. The company ceased paying assessments on both surface and minerals at the same time. A sale for delinquent taxes was subsequently held at which the property was offered for the taxes listed against the surface. The plaintiffs in that action had purchased the coal and asphalt rights from the original mining company. Plaintiffs sought to quiet their title in the minerals as against those claiming under the tax resale deeds. This Court held that since the property was only sold for the taxes listed against the surface no interest in the coal and asphalt had been conveyed under the tax deeds. The opinion concluded that the coal and asphalt interests were still liable for the taxes listed against them.
Appellant is correct in arguing that Mitcham supports his proposition that a voluntary assessment of a severed mineral interest might subject that interest to a continuing tax obligation, which might, arguably, be declared delinquent if the obligation were allowed to lapse. Upon review, however, it appears that Mitcham, a case never subsequently cited by this Court, presented an aberrational statement of Oklahoma law on this point.
The holding in Mitcham was reached upon the basis of the adoption of the reasoning of Central Coal & Coke Co. v. Carselowey, 5 in which the federal courts attempted to anticipate Oklahoma's treatment of the ad valorem taxation of mineral interests. Central Coal dealt with interests in coal for which a mining company had initially voluntarily entered assessments. However, the mining company later challenged the payment of taxes when the county equalization board moved to increase the valuations on the coal rights. The mining company then claimed that such interests were not subject to such tax.
The federal district court decided Central Coal on the basis of the application of a general ad valorem taxation statute from the state of Texas, which it found to be nearly identical to the Oklahoma statute. It appears that Texas, under the statute, taxed minerals and mineral rights separately from the surface of the land. Thus, reasoned the federal courts, Oklahoma should also assess and tax minerals separately from the surface estate when the interests are severed. 6 Oklahoma, however, has not interpreted our ad valorem taxation provisions in this way. The basis for our interpretation regarding mineral interests has been the statutory provisions relating to the taxation of minerals on their production. The interpretation of these provisions, which is quite contrary to that espoused in the Central Coal cases, was clearly stated in Kenoyer v. Board of Equalization: 7
The land is separately assessable and taxable, but, in determining its value for taxation purposes, the mineral contents--actual or prospective--are to be disregarded. Such undoubtedly was the purpose of the Legislature and the people in enacting the gross production tax law. The gross production tax law operates to lay a tax on the product when it is produced and separated from the land; and its purpose is to reduce to a certainty the taxation of mineral wealth or that species of property. Section 9582, Comp.Okl.Stat.1921, must be read in connection with the provisions of law (section 9814, supra) levying a tax on the gross production of minerals. The general statute above referred to (section 9852) antedated the gross production tax law, and would be operative as to all of its provisions were it not for the existence of the law taxing mineral products as they are produced.
The statute in express language exempts from taxation on an ad valorem basis the mineral contents in lands by providing that the gross production tax is to be substituted for all taxation for all royalty interests in the land. It then logically follows that, if the royalty interest or mineral rights cannot be taxed when owned by a person or persons not owning the surface, it would be an anomaly to tax these undeveloped minerals when they constitute a part of the freehold or remain the property of the owner of the surface.
It was not the intention of the lawmakers to burden this species of property with additional taxation, unless the products remain in storage up to and at a specified time. Likewise the machinery and equipment for the operation for the production of these minerals are unassessable on an ad valorem basis, unless operation ceases for a certain time specified in the statute.
Defendant in error relies upon numerous decisions and general texts on the subject of taxation, to the effect that one of the elements of value for the purpose of taxation of real property is its mineral value, in addition to its value for other uses and purposes. The power to tax must be found in the statutes or the local Constitution. It is a subject peculiarly statutory, and fiscal bodies, excise boards or courts have no authority whatever to lay or levy a tax not expressly provided for in some act of the Legislature or the Constitution. These decisions relied on by the board of equalization, the defendant in error, were based upon statutes not designed to tax minerals upon a gross production basis, and are interpretations of statutes in jurisdictions not having this method of taxation, and therefore these decisions construing local statutes unlike ours are but logical and just in holding that in valuing real property, for the purpose of taxation consideration should be given to undeveloped minerals in the land or benath the surface in such quantities as to enhance the value of the land over its mere surface value....
And, in McNaughton v. Beattie, we explained: 8
It must be clearly understood that this separate taxable estate in the mineral rights exists only during the time when production is obtained from the property and gross production tax levied and paid thereon. Although the language in Kenoyer v. Board of Equalization, etc., supra, might indicate that the mineral rights are never subject to ad valorem tax, since they might be subject to gross production tax in the future, such was not the holding of the court. The...
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