Denver Nat. Bank of Denver, Colo. v. State Commission of Revenue and Taxation, 39443

• Decision Date: 06 July 1954
• Docket Number: No. 39443,39443
• Citation: 272 P.2d 1070,176 Kan. 617
• Parties: DENVER NAT. BANK OF DENVER, COLO. v. STATE COMMISSION OF REVENUE AND TAXATION.
• Court: Kansas Supreme Court

Page 1070

272 P.2d 1070

176 Kan. 617

DENVER NAT. BANK OF DENVER, COLO. v. STATE COMMISSION OF REVENUE AND TAXATION.

No. 39443.

Supreme Court of Kansas.

July 6, 1954.

Rehearing Granted Oct. 15, 1954.

Syllabus by the Court.

Working interests in oil and gas wells located in Kansas and owned by a resident of Colorado at the time of his death are not tangible personal property and are not taxable as a part of the estate of the resident of Colorado, pursuant to G.S.1949, 79-1501 and 79-1501e.

Charles V. Rankin, Lawrence, and Ervin G. Johnston, Peru, argued the cause, Wilbur G. Leonard, Council Grove, Beverly H. Wilder, Jack A. Quinlan, Topeka, were with them on the briefs for appellant.

Richard M. Driscoll, Russell, argued the cause, Jerry E. Driscoll, Russell, was with him on the briefs for appellee.

SMITH, Justice.

This is an appeal from a judgment of the district court reversing an order of the commission of revenue and taxation sustaining a previous order of the director of revenue assessing inheritance tax on certain working interests in oil and gas properties in Kansas owned by a resident of Denver at the time of his death.

The case was tried on an agreed statement of facts. It was agreed that the owner of the property died testate in Denver and owned a gross estate in Kansas of $112,977.20 and certain percentages of working interests in producing oil and gas leases appraised at $96,029.26; that the director had determined a tax was due of $2,242.87; that such tax had been paid; that an application for abatement and refund had been denied; that should the working interests in the oil and gas leases owned by decedent at the time of his death be excluded from the inheritance tax computations, the total tax due would amount to $1,028.24; that Kansas and Colorado were reciprocal states; that the interests in the oil and gas leases in Kansas had been held to be taxable in Colorado and such tax had been paid; that the working interests in the oil and gas leases owned by decedent at the time of his death were operated by him through his office in Denver.

The stipulation then contained three paragraphs as follows:

'15. The sole remaining issue in this matter is whether the said working interests as afore-stated, which were owned by decedent at the time of his death, and operated by decedent through his office in Denver, Colorado, at the time of his death, are subject to taxation for inheritance tax purposes by the State of Kansas.

'16. That if the appellant's position herein is sustained, the Inheritance Tax owed the State of Kansas by said estate should be reduced to the amount of $1,028.24, and appellant is entitled to a tax refund in the amount of $1,214.63.

'17. That if the appellee's contention herein is sustained, no adjustment of inheritance tax paid is necessary.'

The district court held the working interests in question were incorporeal and the property attempted to be taxed was without the jurisdiction of the state. The order of the state tax commission was reversed and the appellant was given judgment for $1,214.63. The commission has appealed from that judgment.

The specifications of error are that the district court erred in its findings; that the oil and gas lease was intangible personal property under the laws of Kansas; that there was nothing in the record to show or indicate that the leases themselves had a taxable situs in the state of Kansas; that it was the interest of the deceased that was being taxed; that the property attempted to be taxed was without the jurisdiction of the state; and erred in overruling the motion for a new trial made by and on behalf of the state commission of revenue and taxation.

The action arises from the provisions of two sections, one is G.S.1949, 79-1501. That is the section imposing an inheritance tax. It provides as follows:

'All property, corporeal or incorporeal, and any interest therein, within the jurisdiction of the state, whether belonging to the inhabitants of the state or not, which shall pass by will or by the laws regulating intestate succession, or by deed, grant or gift made in contemplation of death, or made or intended to take effect in possession or enjoyment after the death of the grantor, to any person, absolutely or in trust, except in case of a bona fide purchase for full consideration in money or money's worth; and except property to or for the use of literary, educational, scientific, religious, benevolent and charitable societies or institutions: Provided, Such use entitles the property so...