Federal Royalty Co. v. State

• Citation: 42 S.W.2d 670
• Decision Date: 24 September 1931
• Docket Number: No. 2558.,2558.
• Parties: FEDERAL ROYALTY CO. v. STATE.
• Court: Court of Appeals of Texas

42 S.W.2d 670

FEDERAL ROYALTY CO. v. STATE.

No. 2558.

Court of Civil Appeals of Texas. El Paso.

September 24, 1931.

Rehearing Denied October 22, 1931.

Appeal from District Court, Pecos County; Joe G. Montague, Judge.

Suit by the state against the Federal Royalty Company. Judgment for plaintiff, and defendant appeals.

Affirmed.

Ike S. Handy, of Houston, for appellant.

Hart Johnson, of Ft. Stockton, and Brian Montague, of Del Rio, for the State.

WALTHALL, J.

This suit was brought by the state of Texas, in the district court of Pecos county, against the Federal Royalty Company, a corporation, with its principal office in Harris county, Tex., to recover the taxes, interest, penalties, and costs alleged to be due for the year 1929, and to foreclose the tax lien on a royalty interest in oil and gas in two sections of patented public school lands situated in Pecos county; the said two sections of land being fully described in the petition. The lands are situated in the eastern portion of Pecos county in what is generally known as the Yates oil field.

The case was tried to the court without a jury, and appealed to this court upon an agreed statement of facts.

In view of the issues presented here, we deem it unnecessary to state the pleadings of the parties more than to say that the suit was brought by the county attorney of Pecos county, Hon. Hart Johnson, on behalf of the state, for the collection of the taxes, interest, penalties, and costs and the foreclosure of the tax lien on the lands described as the property of defendant for the year 1929, the lands being unrendered for taxes in Pecos county, and delinquent in the payment of taxes assessed against said property.

The defendant answered by general demurrer, special exceptions, and general denial; the contention made by the defendant being that no assessment for taxes was made and that the royalty interests owned by it were in fact personal property and not real property, and not subject to taxation in Pecos county.

Judgment was rendered against defendant; defendant duly excepted, gave notice, and has perfected this appeal.

Opinion.

Appellant submits that "the assessment under which the taxes sued for were made was void because not made by the Tax Assessor of Pecos County."

Appellee submits that the assessment was a valid assessment.

On the issue as to the making the assessment on the property in controversy, the record, very briefly stated, shows: The parties agree in writing to the following: It was agreed that on January 1, 1929, the appellant was the owner of the interests described in the petition, under and by virtue of the following written instruments; that the interests are correctly described on the tax rolls of Pecos county for the year 1929, as unrendered property, and that the same are correctly described on the delinquent tax roll of said county for said year; agreed that all notices prerequisite to filing suit for delinquent taxes were given; demand was made for payment of such taxes, and that defendant failed and refused to pay same or any thereof. Appellant being the owner of the interests in the property, we need not, under this proposition, state the character of the interests owned in determining the validity of the assessment more than to say that the interest held is such as is held by what is commonly known as mineral deeds, and a lessee under the usual form of an oil and gas lease, hereinafter more particularly stated.

The record and agreement shows that on September 10, 1928, Pecos county, acting by and through the commissioner's court of that county, by reason of the many years of experience in the matter of appraisals and valuations of such properties for tax assessments possessed by Thomas Y. Pickett & Co. of Dallas, Tex., employed that company to compile a list of the record owners of all producing oil and gas properties wherever situated or located in Pecos county, Tex., and undeveloped leases and royalty interests adjacent thereto, as of January 1, 1929, and 1930; said compilation and record to show the particular interest, or interests therein owned, to secure for Pecos county all information possible and available for the use of Pecos county, sitting as a board of equalization in determining the proper valuations to be fixed upon such properties for assessment and taxation purposes; and generally to compile such information as shall be of aid and benefit to Pecos county in equalizing the values of such properties for taxation; to meet with the commissioners' court of Pecos county, Tex., sitting as a board of equalization, and to furnish said board all the information secured by them during their investigations for the purpose of equalizing the assessments upon such properties; to make a survey of all pipe lines, refineries, tank farms, and tankage, and all other properties of value used in connection with said oil and gas development, including transportation facilities.

The assessment of the property made by the assessor, and, in doing so, the use made by him of the information in the form of an inventory made by Thomas Y. Pickett & Co., is shown by the evidence of the assessor, which we copy at length.

"My name is J. L. Moore and I live in Fort Stockton, Pecos County, Texas. I hold the official position of Tax Assessor of Pecos County, which position I have held continuously for the past eight years, and once before, all told twenty-three years. The six sheets of paper which are handed me clipped together are a part of filed documents and records of my office as Tax Assessor. They are copies of what purports to be an inventory. An original was made at the time a copy was made. These were made up by Thos. Y. Pickett & Co. who are employed to get up these inventories and they delivered to me the original to mail out to the owner and I mailed the original out. The original was not signed and returned by the owner. The original and copy are made and where the property is not rendered by the owner I gave to the owner that original copy for his signature. The original was mailed by me to The Federal Royalty Company and was not returned signed. In other words, the Federal Royalty Company did not render its inventory to me of any property it might own in Pecos County for 1929 for the purpose of taxation. And this file or clip of papers which I have in my hand is the carbon copy of the original which was mailed to The Federal Royalty Company and after that time, I used this copy for presentation to the Board of Equalization of Pecos County and after its action this clip of papers was returned to me by the Board of Equalization and I have since retained it as a part of the files and documents of my office. I used this for the purpose of placing on the unrendered rolls the property subject to taxation in Pecos County for the year 1929 of the property of the Federal Royalty Company. The taxes on these sheets are estimated on these sheets according to each item and are copied from this on the roll; the roll is a copy of this, and this file of papers constitutes a copy of my office. From examination of these sheets it appears that some figures are in colored pencil and some in ordinary lead pencil. As I remember the colored figures are exactly as they appeared on the originals. The lead pencil figures did not occur on the originals. These figures were the ones that were decided on by the Board of Equalization and delivered to me.

"The book which you now tender me is the tax roll for the year 1929 for Pecos County, Texas. It is a permanent record in my office. When these copies are completed I deliver one to the County Clerk, one to the State Comptroller and I keep one in my office. It is the duty of the Tax Assessor to prepare that roll and it was prepared under my supervision. Turn to Form `D', page 42. Beginning with line 35 through 44 as it appears on page 42 of Form `D,' roll of unrendered property in Pecos County, assessed for taxation by Tax Assessor, J. L. Moore for the year 1929; when the State Equalization Tax Board fixes the rate of state taxes I am then notified by it of the rate of the State Tax; there is a copy sent to me by the Comptroller, a copy of the State Tax rate for 1929 was sent to me. I used this rate in determining the State Tax on the valuations of land shown in this assessment. The County Commissioners of Pecos County fix the County and Common School Tax rate. This land is in the Independent School District. This figure I have here is for the Sheffield Independent School District. I assess property for the Independent School District of Sheffield. The trustees of the Independent School District meet and make levy and the President or Secretary notify me what their rate is. I was advised in the year 1929 of the rate determined for the Sheffield District. The County Tax is fixed by the Commissioners and I was advised of the County Tax rate for 1929. In determining the amount of taxes I used the rate of which I was advised by the State Tax Board and those rates were computed on the values that appear in this assessment.

"I have only one regular deputy. I have men who do other work around the County. In 1929 I had the deputy who works here now, Mr. Valentine, and I had a deputy at Buena Vista, Mr. J. F. Heagy and one at Iraan, Mr. Mitchell. I had no members of the firm of Thos. Y. Pickett & Company or no employee of Thos. Y. Pickett & Company in my employ as deputy tax assessor. The assessments of this property for taxes on which the Federal Royalty Company is being sued were not made by me nor were they made by any of my deputies, but were made by Thos. Y. Pickett & Company. Thos. Y. Pickett & Company obtained the evidence on which those values were fixed. I do not know what process they used, whether they used the basis of daily production or whether they estimated the oil reserves in the ground, but I think it was on the barrel. I know nothing about the valuations of oil property. I have no...