Commonwealth v. Elkhorn Piney Coal Min. Co.

Citation43 S.W.2d 684,241 Ky. 245
PartiesCOMMONWEALTH v. ELKHORN-PINEY COAL MIN. CO.
Decision Date24 November 1931
CourtCourt of Appeals of Kentucky

Appeal from Circuit Court, Harlan County.

Action by the Commonwealth of Kentucky against the Elkhorn-Piney Coal Mining Company. From a judgment for defendant, plaintiff appeals.

Affirmed.

J. W Cammack, Atty. Gen., and James M. Gilbert, Asst. Atty. Gen for the Commonwealth.

Sampson & Sampson, of Harlan, for appellee.

WILLIS J.

The single question presented by this appeal is whether a coal mining leasehold, and its appurtenances, is real estate or personal property for the purpose of taxation. The importance of the question lies in the fact that real estate takes a rate of 30 cents, whilst personalty must pay 50 cents, on each $100 of taxable value.

The Elkhorn-Piney Coal Mining Company is the present owner of a coal mining lease covering a large boundary of land in Harlan county. The lease confers the right to remove the coal upon a royalty basis, and it has been equipped for operation by the erection of various improvements, consisting of tipples miners' houses, and other fixtures attached to the land. The commonwealth asserts that the leasehold property is personalty for purposes of taxation, whilst the coal company contends that it is real estate. The circuit court sustained the contention of the coal company, and the commonwealth has appealed.

The relevant statutes are as follows:

Section 458. "The words 'real estate' or 'land' shall be construed to mean lands, tenements and hereditaments and all rights thereto and interest therein, other than a chattel interest; and the words 'personal estate' shall include chattels, real and other estate, such as, upon the death of the owner intestate, would devolve upon his personal representative."

Section 2357. "Every deed shall, unless an exception be made therein, be construed to include all buildings, privileges and appurtenances of every kind attached to the lands therein conveyed."

Section 4019. "An annual ad valorem tax for state purposes of thirty cents (30¢) upon each one hundred dollars ($100.00) of value of all real estate directed to be assessed for taxation, as provided by law and fifty cents (50¢) upon each one hundred dollars ($100.00) of value of all other property directed to be assessed for taxation, as provided by law shall be paid by the owner, person or corporation assessed. ***"

Section 4022. "For the purpose of taxation, real estate shall include all lands within this state and improvements thereon; and personal estate shall include every other species and character of property--that which is tangible as well as that which is intangible."

Section 4024. "All estate, real and personal, and all interest in such estate, named and specified in the tax book, shall be assessed for taxation, and the tax paid by the owner thereof to the persons authorized by law to receive the same, unless otherwise specially provided."

Section 4025. "Land shall be valued for taxation without reference to conflicting title, and shall be listed in the county in which it is located. Tangible personal property shall be listed and taxes paid thereon in the county, municipality and taxing district where the same has established a taxable situs based on the actual situation of the property."

Section 4039. "It shall be the duty of all persons owning any real or other property, mineral rights, or standing trees of any kind whatever on the lands of another, or any coal, oil, or gas privileges by lease or otherwise, or any interest therein, in this state, other than in the county in which the said owner resides, or if said owner should reside out of the state, to list the property for taxes personally, or by an authorized agent in the county where situated at the same time and in the same manner as is now provided by law of resident owners; or to file a descriptive list of the same between the first day of July and the first day of October in each year with the county clerk of the county wherein said property is located, fixing a fair cash value of the same and giving the nearest resident thereto and the number of the magisterial district in which the same is located."

Section 4041 provides for the redemption of lands sold for taxes, and section 4042 provides that all tracts or parts of land shall be listed in the counties in which they may be situated.

Section 4049. "Real estate, or any interest therein, shall be listed in the county or district where situated against the owner of the first freehold estate therein. If the owner fails to list the same, the assessor shall, nevertheless, list all lands in his county; and to enable him to ascertain the person in whose name to make the list, he is empowered to swear witnesses, and their statements must be put in writing and returned with the tax book, and a note of reference made to the proof in the listing of the land."

The solution of the problem presented will be aided by a survey of former decisions upon the general subject-matter of the dispute.

In Mount Sterling Oil & Gas Company v. Ratliff, 127 Ky. 1, 104 S.W. 993, 31 Ky. Law Rep. 1229, it was held that the reservation of a royalty in oil and gas leases assigned to another, consisting of a part of the oil to be produced therefrom, created a taxable asset in the county where the land was located. The statute provided "any coal, oil or gas privileges, by lease or otherwise, or any interest therein," must be listed for taxation in the county where the land is situated. Section 4039, Kentucky Statutes 1903. The court said: "Whether the right reserved *** be called personal property, a chattel real, incorporeal hereditament, or privilege, it is property and as such subject to taxation" under the statute then in force.

In Wolfe County v. Beckett, 127 Ky. 252, 105 S.W. 447, 32 Ky. Law Rep. 167, 17 L. R. A. (N. S.) 688, two questions were involved: First, are oil and gas wells held under leases taxable? And, if so, who should pay the taxes? Such property was held taxable to the owner, the lessee being liable for all the taxes thereon, except that upon the royalty reserved to lessor. A severance of the mineral estate was accomplished by the lease. The court did not determine whether the property was to be taxed as land or personalty.

In a number of cases this court has held that coal, oil, and gas leases, producing oil and gas wells, and leasehold interests of every kind, constitute taxable assets, but whether such interests were real estate or personal property, it was deemed unnecessary to determine. Raydure v. Board of Supervisors, 183 Ky. 84, 209 S.W. 19; Stepp v. Pike County Board, 194 Ky. 177, 238 S.W. 408; Wood Oil Co. v. Com., 196 Ky. 196, 244 S.W. 429; Associated Producers' Co. v. Board of Supervisors, 202 Ky. 538, 260 S.W. 335; Com. v. Garrett, 202 Ky. 548, 260 S.W. 379; Moss v. Board of Supervisors, 203 Ky. 813, 263 S.W. 368; Swiss Oil Corporation v. Shanks, 208 Ky. 64, 270 S.W. 478; Board of Supervisors v. Superior Oil Corp., 210 Ky. 539, 276 S.W. 527.

In Purcell v. City of Lexington, 186 Ky. 381, 216 S.W. 599, a leasehold estate for 99 years, with the privilege of renewal in perpetuity, was held to be taxable property of the lessee. The court, however, found it immaterial, and did not decide whether the leasehold was to be considered as personalty or realty for taxation purposes, since both were taxable in exactly the same way and to the same extent, or were during the years involved in the action.

It has been held, however, that leasehold estates in mineral lands, whether consisting of coal, oil, gas, or other minerals, are to be regarded as real estate for the purposes of partition ( Union Gas & Oil Co. v. Wiedemann Oil Co., 211 Ky. 382, 277 S.W. 323), for fixing the venue of actions under section 62 of the Civil Code of Practice (Kennedy v. Hicks, 180 Ky. 563, 203 S.W. 318; Shadoin v. Sellars, 223 Ky. 751, 4 S.W.2d 717), for the determination of rights affected by the recording statutes ( Rader v. Shaffer, 186 Ky. 802, 218 S.W. 292; Arnett v. Stephens, 199 Ky. 733, 251 S.W. 947; Richards v. Potter (Ky.) 124 S.

W. 850; Loeb v. Conley, 160 Ky. 91, 169 S.W. 575, Ann. Cas 1916B, 49), for the purpose of conveyancing and for the construction of instruments affecting such interests ( Hester v. O'Rear, 202 Ky. 176, 259 S.W. 41; Scott v. Laws, 185 Ky. 440, 215 S.W. 81, 13 A. L. R. 369; Gray-Mellon Co. v. Fairchild, 219 Ky. 143, 292 S.W. 743; Ky. Rock Asphalt Co. v. Milliner, 234 Ky. 217, 27 S.W.2d 937; Duncan v. Mason, 239 Ky. 570, 39 S.W.2d 1006; Richards v. Potter (Ky.) 124 S.W. 850; Eastern Ky. Mineral & Timber Co. v. Swann-Day Lumber Co., 148 Ky. 82, 146 S.W. 438, 46 L. R. A. (N. S.) 672; Ball v. Clark, 150 Ky. 383, 150 S.W. 359), for the application of the statute of frauds (Kash v. United Star Oil Co., 192 Ky. 442, 233 S.W. 898; Lowther v. Scheirich, 195 Ky. 177, 241 S.W. 834; Beckett-Iseman Co. v. Backer, 165 Ky. 818, 178 S.W. 1084; Kentucky Counties Oil Co. v. Cupler, 204 Ky. 799, 265 S.W. 334), and for the creation and enforcement of liens in favor of mechanics and materialmen to secure payment for labor and material used in drilling wells for the...

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16 cases
  • Com. v. Elkhorn Piney Coal Mining Co.
    • United States
    • United States State Supreme Court — District of Kentucky
    • November 24, 1931
    ...241 Ky. 245 ... Commonwealth ... Elkhorn Piney Coal Mining Company ... Court of Appeals of Kentucky ... Decided November 24, 1931 ...         Taxation. — Coal mining ... ...
  • Continental Supply Co. v. Marshall
    • United States
    • U.S. Court of Appeals — Tenth Circuit
    • January 23, 1946
    ... ... Kirchner, 185 Okl. 129, 90 P.2d 1055. Cf. Commonwealth v. Elkhorn-Piney Coal Mining Co., 241 Ky. 245, 43 S.W.2d ... ...
  • Lively v. Elkhorn Coal Co., 11592.
    • United States
    • U.S. Court of Appeals — Sixth Circuit
    • July 29, 1953
    ... ... Beckett-Iseman Oil Co. v. Backer, 165 Ky. 818, 178 S.W. 1084; Commonwealth v. Elkhorn Piney Coal Mining Co., 241 Ky. 245, 43 S.W.2d 684; Kash v. United Star Oil Co., 192 Ky ... ...
  • Commonwealth ex rel. Martin v. Sutcliffe
    • United States
    • Kentucky Court of Appeals
    • March 22, 1940
    ... ... oil, a lease for coal, a lease for gas; and he may even carve ... out a cave estate therein ... Ky. 84, 209 S.W. 19; Com. v. Elkhorn Pincy Coal Mining ... Co., 241 Ky. 245, 43 S.W.2d 684. It cannot be ... ...
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