Bison Nitrogen Products Co. v. Lucas

• Citation: 738 P.2d 147
• Decision Date: 02 June 1987
• Docket Number: 59102,Nos. 57477,s. 57477
• Parties: BISON NITROGEN PRODUCTS CO., Appellant, v. Tom LUCAS, Treasurer of Woodward County, State of Oklahoma; and J.L. Cory, Assessor of Woodward County, State of Oklahoma, Appellees. OKLAHOMA NITROGEN CO., and Bison Nitrogen Products Co., Appellants, v. Mary Jane HENSLEY, Treasurer, and Darlene B. Lewis, Assessor Woodward County, State of Oklahoma, Appellees. , and 59103.
• Court: Oklahoma Supreme Court

Page 147

738 P.2d 147

1987 OK 46

BISON NITROGEN PRODUCTS CO., Appellant, v. Tom LUCAS, Treasurer of Woodward County, State of Oklahoma; and J.L. Cory, Assessor of Woodward County, State

of Oklahoma, Appellees.

OKLAHOMA NITROGEN CO., and Bison Nitrogen Products Co., Appellants, v. Mary Jane HENSLEY, Treasurer, and Darlene B. Lewis, Assessor

Woodward County, State of Oklahoma, Appellees.

Nos. 57477, 59102, and 59103.

Supreme Court of Oklahoma.

June 2, 1987.

Conner, Winters, Ballaine, Barry & McGowen, J. Denny Moffatt, Tulsa, for appellants.

Tom Gruber, Dist. Atty., Dwight R. Smith, Asst. Dist. Atty., Woodward, for appellees-Hensley and Lewis.

SIMMS, Justice:

These consolidated actions challenge the scheme of ad valorem tax assessment of personal property in Woodward County. Under this scheme used by the County Assessor, assessment ratios varying from 15% to 27% of value were applied to various items of personal property. The essence of appellants' position on appeal is that this application of different rates of taxation to personal property, with its resulting unequal tax burdens, is arbitrary and unconstitutional in two ways: First, because all tangible personal property should be assessed at the same ratio; second, because all property subject to ad valorem taxation, whether real or personal, should be assessed at the same ratio. Appellants also contend that they should be entitled to interest on any tax paid under protest and subsequently refunded.

Appellants, Oklahoma Nitrogen Company and Bison Nitrogen Company, brought actions below pursuant to 68 O.S.Supp.1965, § 2469, to obtain refunds of ad valorem taxes paid under protest for taxes assessed on real and personal property for 1980 and 1981. Various real property and personal property assessments were challenged based on variations in assessment ratios. Following its previous decision in an earlier action, Oklahoma Nitrogen Company v. Lucas, (Dist.Ct.No. C-80-212) brought by plaintiff, Oklahoma Nitrogen Company, to challenge only the real property assessment variations of 14% to 25% of use value in Woodward County, the trial court held in favor of plaintiffs on the real property issues. ¹

Plaintiffs argued below, as they do here, that it is unconstitutional to allow different assessment percentages to be imposed on various types of personal property and to allow different assessment ratios on personal and real property. They urged the trial court to extend the holding of Cantrell v. Sanders, Okl., 610 P.2d 227 (1980) and the trial court's earlier decision in Lucas to personal property. In Cantrell, we held that real property remains one class of subjects and that the assessment percentage rate upon that class of subjects must be uniform under article 10, § 5 of our Constitution, even if different use classifications are used to value the property. We therefore struck the Tulsa County Assessor's scheme of applying eight different assessment percentages to some fourteen categories of property, holding the unequal burden of taxation to be unconstitutional. Cantrell, however, was concerned exclusively with real property. The trial court in each case refused to extend the application of Cantrell, to personal property, finding different treatment of real and personal property well recognized in the law of many areas, including taxation. The court found that the long-standing method of personal property valuation by use classification with varying assessment ratios was acceptable and denied plaintiffs' requested relief.

On appeal, the Court of Appeals reversed the trial court in No. 57,477, holding Cantrell controlling and finding that Cantrell and Poulos v. State Board of Equalization, Okl., 646 P.2d 1269 (1982), required the same assessment ratio be applied to real and personal property. Certiorari has been previously granted. The decision of the Court of Appeals is vacated; the trial court is affirmed in part and reversed in part. The trial courts' judgments in No. 59,102 consolidated with No. 59,103, are affirmed in part and reversed in part. These actions are considered together with No. 57,477 in this opinion.

The record shows that the County Assessor adopted a "use" classification scheme for assessing personal property for ad valorem taxation, and variable assessment ratios were applied to different property. Irrigation equipment, for example, received tax treatment different from grain elevators and water beds.

It is beyond argument that real property in this state is but one class of taxable property with valuation for the different classifications of property fixed according to its use. Article 10, § 8 provides that all real property must be assessed according to its use value.

There is no similar provision for "use" classification of personal property. There is no constitutional or statutory provision to authorize the use classification scheme used by the County Assessor to tax different types of personal property at varying rates. Article 10, § 8 does not set out a classification standard for personal property. The first sentence of that section states "All property which may be taxed ad valorem shall be assessed for taxation at its fair cash value, estimated at the price it would bring at a fair voluntary sale, ..." A ceiling rate of 35% of that "fair cash value" is established. The second part of that section provides for "use value" exception of real property already discussed. No exception for personal property is made, nor may one be assumed without reading more into the constitution than was placed there by the people.

Article 10, § 8 makes a distinction between two classes of property: personal property and real property. Accepting that personal property is one "class" of property within § 8, and that use value in differences assessments are not authorized by law, it therefore follows that the Woodward County Assessor's practice of taxing personal property at varying rates is contrary to the controlling provisions of article 10, § 5. That section provides that taxes "shall be uniform upon the same class of subjects."

Appellants next argue that fundamental notions of equity, basic taxation concepts, the State Constitution and Constitution of the United States require that the same assessment ratio be applied to realty and personalty so that all property be subject to an equal tax burden. Appellants argue that we explicitly recognized that premise in the language of Poulos v. St. Bd. of Equalization, Okl., 646 P.2d 1269 (1982), and implicitly recognized it in the rationale of Cantrell v. Sanders, Okl. 610 P.2d 227 (1980). Appellants contend that it is discriminatory and arbitrary to treat tangible personal property and real property of the same value in a different manner. They argue that the fundamental concept of ad valorem taxation requires equal tax burdens based upon value and that no distinction should be drawn between real and personal property. Appellants contend that with the following language from Poulos, 646 P.2d at 1273, this Court recognized and became committed...