Certain-Teed Products Corporation v. Comly

• Decision Date: 14 February 1939
• Docket Number: 2077
• Parties: CERTAIN-TEED PRODUCTS CORPORATION v. COMLY, COUNTY ASSESSOR, ET AL
• Court: Wyoming Supreme Court

87 P.2d 21

54 Wyo. 79

CERTAIN-TEED PRODUCTS CORPORATION v. COMLY, COUNTY ASSESSOR, ET AL

No. 2077

Supreme Court of Wyoming

February 14, 1939

APPEAL from the District Court, Albany County; V. J. TIDBALL, Judge.

Action by the Certain-teed Products Corporation against W. A. Comly as county assessor of Albany county, and others, to enjoin the collection of production taxes on gypsite. From a judgment for the plaintiff, defendants appeal.

Affirmed.

For the appellants, the cause was submitted upon the brief of S Glenn Parker of Laramie, and Ray E. Lee, Attorney General Thos. F. Shea, Deputy Attorney General; and Wm. C. Snow Assistant Attorney General, all of Cheyenne, Wyoming.

The important statute involved is Section 2906, C. S. 1920, now Sec. 115-601, W. R. S. 1931. The issue involved is whether raw materials manufactured into plaster products are subject to a production tax. Various definitions of mines are to be found in the decided cases. Marvel v. Merritt, 116 U.S. 11; McCurtain v. Grady, 38 S.W. 65; Coal Mining Company v. Grogan, 53 Ill.App. 60; Coleman v. Coleman (Pa.) 1 Pears. 470; Murray v. Allred, 39 L. R. A. 249; Earl of Ross v. Wainman, 14 Mees & W. 859, 18 R. C. L. 1092. The fact that the land from which the material is removed was patented as a homestead is not material. The material in controversy is called "gypsite" and the evidence tended to show that it is gypsum in a certain state of decomposition due to action of the elements. Gypsum has been classed as a mineral within the meaning of public land laws of the United States. Madison v. Octave Oil Co. (Cal.) 99 P. 176; McQuiddy v. Calif., 29 Land Dec. 181; White v. Miller, 200 N.Y. 29; Phifer v. Heaton, 27 Land Dec. 57; Nephi Plaster Co. v. Juab County, 33 Utah 114, 93 P. 53. There are other decisions holding that deposits similar in character to gypsum are mineral and that the lands containing them are mineral in character. Geary v. Todd, 18 Land Dec. 58; Florida Central Railroad, 26 Land Dec. 660; Pacific Coast Marble Co. v. Northern Pac. R. R. Co., 25 Land Dec. 233; Richter v. State, 27 Land Dec. 95; Hartwell v. Gannan, 10 N. J. Eq. 128; McCombs v. Stephenson, 154 Ala. 109; Jeffrey v. Land Co. et al., 164 S.E. 292. If the process of producing the materials used by the plaintiff is mining, the gross output is subject to taxation. Constitution of Wyoming, Article XV, Sec. 3; Sec. 115-603, R. S. 1931. Operators of mines are required to make returns of the gross production to the Board of Equalization of the State of Wyoming for taxation. Sec. 115-601, 602, R. S. Mining property is difficult to value for purposes of taxation. 3 Cooley on Taxation 1150. Bunten v. Rock Springs Grazing Ass'n. (Wyo.) 215 P. 244; State ex rel. Greenwood v. Pearson (Wyo.) 26 P.2d 641; Lion Coal Company v. Bunten, 280 F. 887. There is a distinction between overvaluation of property and fraudulent taxation. Overvaluation of itself does not furnish ground for equitable relief. Lacey v. McCafferty, 215 F. 352; State ex rel. Greenwood v. Pearson, 46 Wyo. 307. The case of Board of Commissioners of Sweetwater County v. Bernardin, 74 F.2d 809, while not in point upon the issues in this case, contains a very clear discussion of our taxing statutes. Allegations of fraud in plaintiff's petition are mere conclusions and insufficient to state a cause of action. Ricketts v. Crewdson, 13 Wyo. 884; Crewdson v. Nefsy Co., 14 Wyo. 61; Bunten v. Rock Springs Grazing Ass'n., 28 Wyo. 461; Kelly v. Rhoades, 7 Wyo. 253. The evidence shows that gypsite is a form of gypsum and it is well settled that gypsum is a mineral. White v. Miller, 200 N.Y. 29, 92 N.E. 1065, 17 A. L. R. 161. Gypsite is therefore a mineral deposit. Removing it from the earth is mining. Gypsite is a valuable deposit. It is subject to a production tax.

For the respondent, the cause was submitted upon the brief of C. P. Arnold of Laramie.

Our constitutional and statutory provisions relating to mineral production tax are Article XV, Section 3, Section 115-601, R. S. 1931; Chapter 11, Laws 1917, and the powers of the State Board of Equalization are defined in Article X, Section 15 of the Constitution. Plaintiff and respondent had no remedy by appeal when this action was brought. Midwest Oil Company, 39 Wyo. 461. Our laws contemplate the valuation of all taxable property at its true value in money at private sale. Bunten v. Rock Springs Grazing Assn., 29 Wyo. 461; Chapter 115-119, R. S. 1931. The action of the State Board was a nullity. The gypsite was taxed at $ 2.85 a ton and the land from which it was removed was taxed also. How can it be said that this is a legal tax? Power to tax can only be exercised under a statute defining its limitations. Metropolitan Building Company v. King Company, 113 P. 114. Boards of Equalization must act within statutory rules and in good faith. Bunten v. Rock Springs Grazing Association, supra. Respondent was not conducting mining operations. Wheeler v. Smith (Wash.) 32 P. 785. Illegality applies to matters which are contrary to law. Bunten v. Rock Springs Grazing Association, supra. There is a recognized distinction between use and market value. While respondent is using this gumbo or gypsite to make plaster out of valueless material, it is not subject to production tax, because in its crude state it has no cash market value. Samkish v. Skagit (Wash.) 204 P. 181; Metropolitan Bldg. Co. v. King Company, 113 P. 1114. The Board valued this gypsite at $ 2.85 a ton in 1927 for taxation and in the following year valued the same material under like conditions at 27 [cent] a ton, and apparently to rebut any presumption of legality in its assessment, the Board admitted that it knew nothing about the value of gypsite, couldn't find out and asked the trial court to perform the function of the State Board of Equalization. In the light of this record, can it be said that the State Board of Equalization acted within its jurisdiction in assessing $ 2.85 a ton "gypsite" which had no value whatever and was not taxable under the decisions of our Supreme Court? And can it be said that the State Board acted within its jurisdiction when it made its order on the 9th of March 1927, requiring respondent to pay a tax on "gross production," and on the land from whence it was taken also? Can it be said that the State Board acted in a quasi-judicial capacity as a finder of fact when it ignored every avenue of information that the Board itself possessed, refused to listen to avenues of information opened up by others, and finally as a climax, surrendered its functions to the trial court?

Corthell, McCollough & Corthell of Laramie, Amici Curiae.

The true intent of the definitions of mines found in the authorities is to distinguish underground from open workings. The most comprehensive and concise expression of these definitions is found in Webster's New International Dictionary. The decisions of the Department of the Interior are solely concerned with the question whether certain lands are more valuable for mineral than for agricultural purposes. Nephi Plaster Co. v. Juab Company (Utah) 93 P. 53 is cited in appellants' brief in support of the statement that "gypsum" is a mineral. While no special importance seems to be attributed by the appellants to the case, it has been treated in some other connections as a leading case. 18 R. C. L. 1093. In that case the court entered into an elaborate discussion of the question whether gypsum was a mineral and as to meaning of the terms "mine," "minerals," "mineral lands," etc., concluding that gypsum was a mineral and was subject to taxation as net proceeds of a mining claim. We have not been able to discover any reason for this discussion, since it is stated in the opinion in substance that the taxpayer conceded that the land from which the gypsum was removed had been patented under the mineral laws of the United States. We think the entire opinion must be regarded as dictum. The lands in the case at bar were patented under an agricultural entry. After the Nephi case was decided, the Utah constitutional provisions on the subject were amended several times. Tintic Company v Utah Company, 15 P.2d 633; Utah Mines and Smelters v. Beaver Co., 262 U.S. 325. In Miller v. Buck Creek Oil Company this court left undecided the question whether the Wyoming tax was imposed upon the land within which the mine is located or upon the severed product of the mine. In First National Bank of Chicago v. Central Coal and Coke Co., 3 F.Supp. 433, it was held by the United States District Court that the tax was levied upon the severed product as personal property and not upon the land as real property; and this interpretation would seem to be essential to the accomplishment of the end in view if the tax is to be applied to mines on the public domain, the ownership of which is not taxable, and not only upon property in private ownership. Among the earlier English cases dealing with the taxation of mining property, Rex v. Sedgley (K. B. 1831) 2 B. & AD. 65 involved the production of limestone from strata sloping from a surface outcrop to a depth of forty or fifty yards, whence the material was raised by machinery through shafts or drawn through tunnels to the surface. These operations were held to be mining as distinguished from surface quarrying. Conversely in Rex v. Alberberry (K. B. 1801) 1 East 534, the workings of a surface body of limestone were distinguished from a mine. However, the cases of Darvill v. Roper (V. C. 1855) 3 Drewry 294; Parker Gravel Co. v. Com., 21 B. T. A. 51 and Dunn & Baker v. Comm., 30 B. T. A. 663, appear to distinguish the operations in the case at bar from the mining operations contemplated by our constitution and statute. There is no evidence that there has been any attempt to apply the production tax to...