Barnard Realty Co. v. City of Butte

• Decision Date: 15 January 1915
• Docket Number: 3446.
• Citation: 145 P. 946,50 Mont. 159
• Parties: BARNARD REALTY CO. v. CITY OF BUTTE ET AL.
• Court: Montana Supreme Court

145 P. 946

50 Mont. 159

BARNARD REALTY CO. v. CITY OF BUTTE ET AL.

No. 3446.

Supreme Court of Montana

January 15, 1915

Appeal from District Court, Silver Bow County; Jeremiah J. Lynch Judge.

Action by the Barnard Realty Company against the City of Butte and others. From a judgment for plaintiff and an order denying a new trial, defendants appeal. Affirmed.

Alex Mackel, W. F. Davis, and N. A. Rotering, all of Butte, for appellants.

E. B Howell and Edwin M. Lamb, both of Butte, for respondent.

BRANTLY C.J.

This action was brought to obtain a decree declaring null and void an assessment and tax levied in pursuance thereof by the authorities of the defendant city, upon property belonging to plaintiff and situated within the corporate limits of the city, and perpetually enjoining the defendant Daniel Shovlin, the city treasurer, from enforcing the collection of the tax by sale of the property. The trial court granted the relief demanded. The defendants have appealed from the decree and an order denying their motion for a new trial.

Patent to the Barnard placer mining claim was issued by the United States to Anthony W. Barnard and George McCausland on November 15, 1875. The claim covers an area of 34.75 acres lying along Missoula Gulch, which extends from north to south, immediately west of the city as originally surveyed and platted. For several years after the patent was issued the mine was profitably worked for placer gold. When the deposits were so far exhausted as to render this character of mining unprofitable, Anthony W. Barnard, who in the meantime had become the sole owner, caused a portion of the claim to be subdivided into blocks and lots and to be made an addition to the city as the Barnard addition. The lots in this addition have heretofore been sold, Barnard reserving the mineral rights. The addition covers the central portion of the claim, leaving portions of it to the north and south as reserves for mining purposes, or to be devoted to other uses. The plaintiff subsequently became the successor to all of Barnard's rights. Lands to the west owned by other persons were also subdivided and made additions to the city, with the result that at the present time the southern portion of the claim, an irregular area of several acres, is bounded on the north, east, and west by lots occupied by buildings. A fair understanding of the situation may be gained by reference to the diagram found in Barnard Realty Co. v. City of Butte, 48 Mont. 102, 136 P. 1064, with the accompanying explanatory statement. The area designated "Barnard placer," extending from the alley on the north to and south of Silver street, is the property involved in this controversy. The entire area of the claim as originally patented was assessed by the county assessor for the year 1912 as placer mining property at $2.50 per acre. Subsequently the assessor, at the instance of the city authorities, again assessed the area in controversy at a valuation of $19,000, upon the theory that it had an independent value to this amount and for use as city lots. In the first assessment the plaintiff was named as the owner; in the second Anthony W. Barnard was named as the owner. Both assessments were extended by the county clerk upon the county assessment roll and upon the duplicate delivered by him to the city treasurer as a basis for the levy of city taxes. The plaintiff paid the amount of the tax levied upon the first assessment, but refused to pay that levied upon the second, and, when the city treasurer proceeded to advertise and sell the property as delinquent, brought this action. Two questions have been submitted for decision, viz., whether the second assessment and the tax levied in pursuance of it were authorized by law, and whether injunction is the proper remedy.

Section 2 of article 12 of the Constitution specifically declares all property, with certain exceptions, subject to taxation. The same provision permits the Legislature in its discretion to exempt other property devoted to certain purposes. The following section (3) provides as follows:

"All mines and mining claims, both placer and rock in place, containing or bearing gold, silver, copper, lead, coal or other valuable mineral deposits, after purchase thereof from the United States shall be taxed at the price paid the United States therefor, unless the surface ground, or some part thereof, of such mine or claim, is used for other than mining purposes, and has a separate and independent value for such other purposes, in which case said surface ground, or any part thereof, so used for other than mining purposes, shall be taxed at its value for such other purposes, as provided by law; and all machinery used in mining, and all property and surface improvements upon or appurtenant to mines and mining claims which have a value separate and independent of such mines or mining claims, and the annual net proceeds of all mines and mining claims shall be taxed as provided by law."

Section 2500 of the Revised Codes is substantially an enactment of this provision in the form of statute.

The purpose had in view by the convention in formulating the provision of the Constitution was to bring into the class of taxable property mines and mining claims, and to provide a method by which the owners of them might be compelled to bear their equitable proportion of the expense of government. Theretofore this species of property had generally been exempt. Northern P. Ry. Co. v. Mjelde, 48 Mont. 287 137 P. 386. Recognizing the fact that such property is not generally susceptible of profitable use unless the deposits therein are extracted and put into commercial form, and in order to encourage the work of profitable development by protecting it against exactions which might prevent this result, it was deemed that the owner of a mining claim would fully acquit himself of his obligation to the public by paying a tax: (1) Upon the acreage at the price paid to the United States; (2) upon the machinery used in mining and surface improvements, etc., upon or appurtenant to the claim, which have a value independent thereof; and (3) upon the net proceeds of the product. So long as the claim is used and held exclusively for mining purposes, the owner of it is not required to bear any other burden; but when the property, having by its location acquired a value for some independent use, is devoted by the owner to such use, it becomes at once subject to taxation at that value as is other real estate, to be ascertained by the assessing officer just as he ascertains the value of other land for the purpose of taxation. By devoting it to the new use, the owner, so to speak, creates an estate which, in the eye of the law, is regarded as independent of the original estate and is subject to taxation as such. It will be noted, however, that two conditions must concur to justify the imposition of the additional...