Humble Oil & Refining Co. v. State

• Decision Date: 22 December 1927
• Docket Number: (No. 538.)
• Citation: 3 S.W.2d 559
• Parties: HUMBLE OIL & REFINING CO. v. STATE.<SMALL><SUP>*</SUP></SMALL>
• Court: Texas Court of Appeals

3 S.W.2d 559

HUMBLE OIL & REFINING CO. v. STATE.^*

(No. 538.)

Court of Civil Appeals of Texas. Waco.

December 22, 1927.

Rehearing Denied January 26, 1928.

Appeal from District Court, Navarro County; Hawkins Scarbrough, Judge.

Suit by the State against the Humble Oil & Refining Company, with cross-action by defendant. From a judgment for plaintiff and sustaining a plea in abatement to the cross-action, defendant appeals. Reversed and remanded.

Richard Mays and H. B. Daviss, both of Corsicana, and G. P. Dougherty, E. E. Townes, and John C. Townes, Jr., all of Houston, for appellant.

B. W. George and Taylor & Howell, all of Corsicana, and Phillips, Townsend & Phillips, of Dallas, for the State.

BARCUS, J.

This suit was instituted by appellee against appellant to recover $88,526.69 taxes which it claimed were due by appellant on the mineral estates in twelve separate tracts of land in Navarro county for the year 1923. The cause was tried to a jury, and at the conclusion of the testimony the trial court instructed the jury to return a verdict in favor of appellee for the amount sued for. Appellant by cross-action made the grantors from whom it had purchased the respective mineral estates parties defendant, and asked for judgment over against each of said grantors on their respective warranties. Appellee, as well as the warrantors, filed pleas in abatement, claiming that there were misjoinders of parties and causes of action. The court sustained the pleas in abatement, and dismissed said guarantors and warrantors from the suit.

The material facts are undisputed. It appears that in 1923 the "Powell oil field" was discovered and proved to be one of the most extensive and valuable oil fields that have been discovered in Texas. The appellant, on January 1, 1923, owned one lease of 40 acres in said field, and thereafter, during the year 1923, at various times between January and June, it purchased eleven other tracts, varying from 12 to 135 acres. Eight of these tracts were purchased direct from the landowners, and on three of the tracts the landowners had, prior to January 1, 1923, sold seven-eighths of the mineral estate to different parties, who owned said mineral estates on January 1st, and who thereafter, during 1923, by proper conveyances, transferred same to appellant. The owners of the entire twelve tracts of land rendered same for taxes for the year 1923, and paid said taxes.

The big discovery well in the Powell field came in in May, 1923, and immediately the mineral estates became very valuable, and many large producing wells were drilled in said territory during the summer of 1923. After the oil field was discovered, the commissioners' court instructed the tax assessor to assess the mineral estates against each of the respective owners thereof as of date when the assessments were made, and, in compliance with said instruction, the tax assessor attempted to assess against each owner thereof the mineral estate he owned in June, July, and August; said assessments being made as soon as a producing well would be brought in affecting the particular locality. Assessments were made against appellant as the owner of the twelve tracts of land, same being assessed in July, 1923. In June 1924, it was discovered that the assessments against appellant as made by the assessor in July, 1923, were invalid for various reasons, and the commissioners' court, by order, declared same invalid, and directed the assessor to reassess said properties for said mineral estates for the year 1923. The tax assessor did, in July, 1924, reassess said twelve tracts of land against appellant as the owner thereof; the total assessment against the twelve tracts being $5,145,000.

Appellants contend that, since the mineral estate had not been severed from eight of said tracts of land on January 1, 1923, and since the owners of the land had rendered said land in its entirety for taxes for 1923, and paid the taxes so assessed and levied, that the attempted levy made by the tax assessor in July, 1924, was illegal and void. We sustain this contention. It is now a well-recognized principle of law that, after the mineral estate has been severed by the owner from the land, same is subject to taxes, and the owner of the mineral estate is liable for taxes to the same extent that property owners are liable for any other tax. State v. Downman (Tex. Civ. App.) 134 S. W. 787; Id., 231 U. S. 353, 34 S. Ct. 62, 58 L. Ed. 264; Stephens County v. Mid-Kansas Oil & Gas Co., 113 Tex. 160, 254 S. W. 290, 29 A. L. R. 566; Texas Co. v. Daugherty, 107 Tex. 226, 176 S. W. 717, L. R. A. 1917F, 989. Until, however, the mineral estate has been severed, the rendition of the land carries with it the value of the entire estate. Article 7146 of the Revised Statutes reads:

"Real property for the purpose of taxation, shall be construed to include the land itself, * * * and all the rights and privileges belonging * * * thereto, and all mines, minerals, quarries and fossils in and under the same."

Article 7174 of the Revised Statutes provides that, in ascertaining the value of the real estate on which there is any mineral, same shall be taken into consideration in arriving at the true value thereof. Article 7156 of the Revised Statutes provides that lands which have been assessed in any county for taxes and the taxes paid thereon according to law shall not be afterwards subject to the payment of taxes for the same period in a different county. We think said statute should equally apply; if it is shown that taxes have been paid on a particular tract of land for a given year in the name of one person, it cannot be assessed and be made liable for taxes against any other person. In addition to the provisions of article 7146 of the statutes above quoted, to the effect that real property shall include all minerals under the same, the authorities seem to hold that the state has no right to sever the mineral estate and render same separately from the land, but that a rendition of the land against the owner can be at such a value as to include the enhanced value thereof by reason of its containing valuable minerals. Kansas Nat. Gas. Co. v. Board of Commissioners, 75 Kan. 335, 89 P. 750; In re Delinquent Taxes, 81 Minn. 422, 84 N. W. 302; State v. Downman (Tex. Civ. App.) 134 S. W. 787; Id., 231 U. S. 353, 34 S. Ct. 62, 58 L. Ed. 264. Since the parties who owned the real estate on the eight tracts of land on January 1, 1923, rendered same for taxes for the year 1923, which assessments were approved by the commissioners' court and paid by said owners, the state did not have the power to thereafter assess the mineral estates against appellant, who purchased said estates long after the 1st of January, 1923, or against any other person.

Appellant contends with reference to the three tracts on which it bought the mineral estate after January 1, 1923, that it is not liable personally for said taxes. It contends that the owners of the respective mineral estates on January 1, 1923, are personally liable for said taxes, and that, at most, the state has only a lien on the mineral estate to secure the payment of said tax, and that in no event is it personally liable therefor. We sustain this contention. Article 7151 of the Revised Statutes provides, in effect, that all property shall be assessed against the person who owned same on January 1st in the year for which same is rendered, and our courts have uniformly held that the person who owns property on the 1st of January is personally liable for the taxes for said year, although same may be sold shortly thereafter. Carswell & Co. v. Habberzettle, 39 Tex. Civ. App. 493, 87 S. W. 911; Irvin v. Edwards, 92 Tex. 258, 47 S. W. 719; Winters v. Independent School District (Tex. Civ. App.) 208 S. W. 574.

Appellant further contends that the valuation of property for taxes for any year shall be fixed as of January 1st preceding said assessment. We sustain this contention. Our statutes seem to be somewhat in confusion with reference to the time when the value of property shall be ascertained in fixing the rendition. Article 7174 requires each tract or lot of land to be valued by itself as same may "be fairly worth in money at the time such assessment is made." Article 7211 provides that, if the tax assessor is not satisfied with the value placed thereon by the owner, the assessor shall value same, and shall value it at "the reasonable cash market value of such property at the time of its rendition." Article 7212 of the Revised Statutes provides that the board of equalization of the county shall supervise the assessments, and, if in their judgment the assessments have not been rendered correctly, that they may make such corrections as in their judgment are proper. Article 7214 of the Revised Statutes provides that the tax assessor, before he enters upon his duties, shall take an oath that he will inspect the property, and will assess same at its market value as of January 1st preceding the assessment. Article 7151 of the Revised Statutes provides that the owner of the property, on January 1st, shall render the same for taxes, and that same shall be rendered between January 1st and April 30th of each year. It thus appears that, under articles 7174 and 7211, the property when rendered shall be valued as at the time of the assessment, and, under article 7214, the assessor is required by his oath to value it as of January 1st.

Section 1, art. 8, of the state Constitution, requires that "taxation shall be equal and uniform." As above stated, under the decisions of our courts, the owner of the property on January 1st is...