Fed. Land Bank v. BD. OF CTY. COM'RS OF ADAMS CTY.
| Decision Date | 22 April 1985 |
| Docket Number | Civ. A. No. 84-K-126. |
| Parties | FEDERAL LAND BANK OF WICHITA, Plaintiff, v. The BOARD OF COUNTY COMMISSIONERS OF the COUNTY OF ADAMS, the Board of County Commissioners of the County of Alamosa, the Board of County Commissioners of the County of Arapahoe, the Board of County Commissioners of the County of Baca, the Board of County Commissioners of the County of Bent, the Board of County Commissioners of the County of Boulder, the Board of County Commissioners of the County of Chaffee, the Board of County Commissioners of the County of Cheyenne, the Board of County Commissioners of the County of Conejos, the Board of County Commissioners of the County of Costilla, the Board of County Commissioners of the County of Crowley, the Board of County Commissioners of the County of Custer, the Board of County Commissioners of the County of Delta, the Board of County Commissioners of the County of Douglas, the Board of County Commissioners of the County of Eagle, the Board of County Commissioners of the County of Elbert, the Board of County Commissioners of the County of El Paso, the Board of County Commissioners of the County of Fremont, the Board of County Commissioners of the County of Garfield, the Board of County Commissioners of the County of Gunnison, the Board of County Commissioners of the County of Huerfano, the Board of County Commissioners of the County of Jefferson, the Board of County Commissioners of the County of Kiowa, the Board of County Commissioners of the County of Kit Carson, the Board of County Commissioners of the County of La Plata, the Board of County Commissioners of the County of Larimer, the Board of County Commissioners of the County of Las Animas, the Board of County Commissioners of the County of Lincoln, the Board of County Commissioners of the County of Logan, the Board of County Commissioners of the County of Mesa, the Board of County Commissioners of the County of Moffat, the Board of County Commissioners of the County of Montezuma, the Board of County Commissioners of the County of Montrose, the Board of County Commissioners of the County of Morgan, the Board of County Commissioners of the County of Otero, the Board of County Commissioners of the County of Ouray, the Board of County Commissioners of the County of Park, the Board of County Commissioners of the County of Phillips, the Board of County Commissioners of the County of Prowers, the Board of County Commissioners of the County of Pueblo, the Board of County Commissioners of the County of Rio Blanco, the Board of County Commissioners of the County of Rio Grande, the Board of County Commissioners of the County of Routt, the Board of County Commissioners of the County of Saguache, the Board of County Commissioners of the County of San Miguel, the Board of County Commissioners of the County of Sedgwick, the Board of County Commissioners of the County of Teller, the Board of County Commissioners of the County of Washington, the Board of County Commissioners of the County of Weld, the Board of County Commissioners of the County of Yuma, Defendants. |
| Court | U.S. District Court — District of Colorado |
COPYRIGHT MATERIAL OMITTED
Martin A. Rosen, Pendleton & Sabian, P.C., Denver, Colo., for plaintiff.
S. Morris Lubow, Denver, Colo., for defendants.
Before me are cross motions for summary judgment. Plaintiff Federal Land Bank of Wichita brings this action against 50 Colorado counties through their respective boards of county commissioners, claiming jurisdiction under 28 U.S.C. §§ 1331 and 1332. The bank seeks (1) declaratory judgment that its royalty interests are exempt from taxation by the counties; (2) a mandatory injunction prohibiting the counties from future assessments or collection of such taxes upon the bank's mineral holdings; and (3) costs, attorney fees, and other unspecified legal and equitable relief. Defendant counties previously challenged this court's jurisdiction and moved to dismiss the action. On April 9, 1984 I denied defendant counties' motion to dismiss. See Federal Land Bank of Wichita v. Board of County Commissioners of Adams County, 582 F.Supp. 1507 (D.C.Colo.1984).
Plaintiff bank is a federal instrumentality established pursuant to the Federal Farm Loan Act of 1916, as continued under the Farm Credit Act of 1971 (12 U.S.C. § 2001 et seq.). Plaintiff owns oil and gas mineral interests in 50 counties in the State of Colorado. In 21 of those 50 counties the bank's interests burden lands which are currently producing oil and gas. In the remaining 29 counties, plaintiff's interests burden nonproducing oil and gas lands. Plaintiff's interests are presently taxed as real property in accordance with Colorado's ad valorem tax, Articles 1-13 of Title 29 of the Colorado Revised Statutes. Plaintiff claims that application of Colorado's ad valorem tax to the bank violates 12 U.S.C. § 2055 of the Farm Credit Act of 1971, which exempts federal land banks from all state, municipal, and local taxation, except for taxes upon real estate according to value. I must decide whether the statutory language of 12 U.S.C. § 2055 prohibits the application of Colorado's property tax to plaintiff's mineral interests.
In its first four claims for relief plaintiff contends that Colorado's tax on producing oil and gas interests (Colo.Rev.Stat. § 39-7-101 et seq.) is inapplicable to the bank. It argues: (1) the tax is "in effect" a tax on personal property and not a tax on real property; (2) the tax is not based on value; (3) the statute violates the equalization requirements of Article X, Section 3, of the Colorado constitution; and (4) the statute implicitly recognizes an exemption for royalty interests held by federal instrumentalities. Plaintiff's fifth claim for relief, set forth in its amended complaint, concerns a separate provision of Colorado's tax law. Plaintiff claims that the provision for taxation of severed mineral interests (Colo.Rev. Stat. § 39-1-104(4)) is not based on value as required by 12 U.S.C. § 2055.
Rule 56 of the Federal Rules of Civil Procedure (F.R.C.P.) permits the entry of summary judgment on a claim when there is no genuine issue of material fact outstanding. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157-159, 90 S.Ct. 1598, 1608-1609, 26 L.Ed.2d 142 (1970); Luckett v. Bethlehem Steel Corp., 618 F.2d 1373, 1377, 1383 (10th Cir.1980). As a matter of law, the movant must show entitlement to summary disposition beyond all reasonable doubt. Norton v. Liddel, 620 F.2d 1375, 1381 (10th Cir.1980)
In order to determine the propriety of summary judgment I must construe all pleadings, affidavits, and depositions liberally in favor of the party against whom the motion is made. Id. Summary judgment is not a substitute trial by affidavit. Ando v. Great Western Sugar Company, 475 F.2d 531, 535 (10th Cir.1973). No margin exists for disposition of factual issues, nor does summary judgment serve as a substitute for trial when there are disputed facts. Commercial Iron & Metal Company v. Bache & Company, 478 F.2d 39, 41 (10th Cir.1973). Where different inferences can be drawn from conflicting affidavits, depositions and pleadings, summary judgment should not be granted. United States v. Diebold, Inc., 369 U.S. 654, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962); Romero v. Union Pacific Railroad, 615 F.2d 1303, 1309 (10th Cir.1980).
The parties to this action have stipulated to many of the facts contained in plaintiff's complaint. Only questions of law remain for me to decide. Summary judgment is therefore appropriate in this case.
The first question I must answer is whether plaintiff's mineral interests are real property or personal property. If I find that plaintiff's mineral interests are personal property, I must hold that the bank, as a federal instrumentality exempt from local taxation under federal constitutional immunity principles and under 12 U.S.C. § 2055, is not subject to taxation by the State of Colorado.
The federal statute on which plaintiff bases its claim of immunity from local taxation provides:
Every Federal land bank and every Federal land bank association and the capital, reserves, and surplus thereof, and the income derived therefrom shall be exempt from Federal, State, municipal, and local taxation, except taxes on real estate held by a Federal land bank or a Federal land bank association to the same extent, according to its value, as other similar property held by other persons is taxed.
12 U.S.C. § 2055 (emphasis added). The statute specifically exempts federal land banks from local taxation. It also waives the bank's immunity from nondiscriminatory state and local taxation according to value of real property. The federal statute, however, does not define the terms "real property" or "according to its value." These terms must be interpreted in order to decide whether there is a conflict between Colorado's taxation scheme and 12 U.S.C. § 2055.
Whether interests are treated as personalty or realty is a question of local law upon which local statutes and decisions control. Waggoner Estate v. Wichita County, 273 U.S. 113, 117, 47 S.Ct. 271, 273, 71 L.Ed. 566 (1927); United States v. Mays, 264 F.2d 317, 320 (10th Cir.1959).1 Thus, to determine whether the bank's mineral interests are considered real estate, I must look to Colorado law.
Colorado law
Colorado law leaves no room for doubt that plaintiff's mineral interests are real property. When oil or mineral rights have been severed from the surface estate and are owned by persons other than the owners of the surface rights, two separate and distinct freehold estates exist and are subject to taxation. Union Pacific Railroad Company v. Hanna, 73 Colo. 162, 214 P. 550 (1923).2 Colorado's property tax law provides that producing oil and gas leaseholds shall be taxed as real property (Colo.Rev.Stat. § 39-7-102(1)) and that severed mineral estates (nonproducing)...
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Federal Land Bank of Wichita v. Board of County Com'rs of Adams County, 85-1752
...oil and gas interests. The district court granted summary judgment to the defendant Colorado counties. Federal Land Bank v. Board of County Commissioners, 607 F.Supp. 1137 (D.Colo.1985). We agree with the well-reasoned opinion of the district court and A state cannot tax a federal instrumen......