Johnston v. Oklahoma Tax Commission, 44465

• Decision Date: 06 June 1972
• Docket Number: No. 44465,44465
• Parties: Georgia M. JOHNSTON and Wayne F. Johnston, Appellants, v. OKLAHOMA TAX COMMISSION, Appellee.
• Court: Oklahoma Supreme Court

Page 1295

497 P.2d 1295

Georgia M. JOHNSTON and Wayne F. Johnston, Appellants, v. OKLAHOMA TAX COMMISSION, Appellee.

No. 44465.

Supreme Court of Oklahoma.

June 6, 1972.

Loeffler & Allen, Bristow, for appellants.

Albert D. Lynn, Gen. Counsel, Mike Tapp, E. J. Armstrong, E. B. Lee, Oklahoma City, for appellee.

DAVISON, Vice Chief Justice.

We have for decision in this appeal the validity of an additional assessment in the sum of $12.65 made by the Oklahoma Tax Commission against appellants, under the Documentary Stamp Tax Act (68 O.S.Supp.1967, §§ 5101--5107) set forth in relevant parts later in this opinion.

The monetary importance of the decision lies in its application to future transfers of 'lands, tenements and other realty' under the provision of § 5101.

Following are the facts which pose the question: By warranty deed appellants conveyed to Johnny L. Spencer certain realty located in Creek County, Oklahoma, for a consideration of $22,500.00. Spencer paid $5000.00 of the consideration in cash and concurrently with the conveyance delivered to appellants the remaining consideration in the form of a promissory note in the sum of $17,500.00 secured by a purchase money mortgage of the same date as appellants' deed to Spencer. The deed and the purchase money mortgage were recorded concurrently in the office of the County Clerk of Creek County. .$1000.00 was paid for other property involved in the same transaction.

The appellants as mortgagees of the purchase money mortgage paid the real estate mortgage tax of $17.50 under 68 O.S.1961, §§ 1901--1910 (Supp.1965). Section 1902 reads:

'All mortgages of real property situated within this state which are taxed by this Article, and the debts and obligations which they secure, together with the paper writings evincing the same, Shall be exempt from ad valorem and all other taxation by the state, counties, towns, cities, school districts and other local subdivisions of the state, except this Article shall not affect in any manner the collection of any income tax payable in whole or in part from the interest received from such mortgage indebtedness. The exemption conferred by this exemption shall not be construed to impair or in any manner affect the purchaser of real estate which may be sold for non-payment of taxes levied by any local authority.' (Emphasis supplied)

That $17.50 is the proper payment under § 1904, which prescribes the amount of the tax, is not questioned. What is questioned by appellants is the additional tax assessed by the Commission under § 5101 of the Documentary Stamp Tax Act, which reads:

'There is hereby imposed on each deed, instrument, or writing by which any lands, tenements, or other realty sold shall be granted, assigned, transferred, or otherwise conveyed to or vested in the purchaser or purchasers, or any other person or persons, by his or their direction, when the consideration or value of the interest or property conveyed, Exclusive of the value of any lien or encumbrance remaining thereon at the time of sale, exceeds One Hundred Dollars ($100.00) a tax at the rate of fifty-five cents ($.55) for each Five Hundred Dollars ($500.00) or fraction thereof.' (Emphasis supplied)

Appellants in computing the tax base subtracted the amount of the purchase money note and mortgage ($17,500.00) from the total consideration for the conveyance ($22,500.00) and paid the tax of $6.60 on the tax base of $5000.00. The Commission concluding that § 5101 did not authorize the deduction of the amount of the purchase money note and mortgage ($17,500.00) determined the necessary aggregate amount of documentary stamps to be $19.25. The additional $12.65 was paid under protest by appellants.

The appellants pray that the order of the Commission assessing the additional tax be vacated, that appellants' position be affirmed and that the additional assessment, paid under protest, be returned to appellants.

Our first concern, in considering the questions raised by appellants, is with the nature of the real estate mortgage tax required to be paid as a condition precedent to recordation and with the nature of the tax requiring that documentary stamps in certain amounts be placed upon conveyances of 'lands, tenements and other realty.'

Although the real estate mortgage tax was levied in lieu of 'ad valorem and all other taxation by state, counties, towns, cities, school districts and other local subdivisions of the state,' we have nevertheless held that tax is not a property tax but a tax upon the privilege of recording 'real estate mortgages.' Trustees, Executors & Securities Ins. Corp., Ltd., et al. v. Hooten, 53 Okl. 530, 157 P. 293; McGannon, Admx. v. State ex rel. Trapp, et al., 33 Okl. 145, 124 P. 1063. It necessarily follows that the Documentary Stamp Tax Act levies a tax upon the privilege of executing a 'deed, instrument or writing' that effects transfers of 'land, tenements and other realty.'

Appellants urge that the purchase money note and mortgage of $17,500.00 was in reality taxed twice--once when the real estate mortgage tax was exacted under 68 O.S.1961, § 1904 (Supp.1965) and once when documentary stamps were required on the entire consideration for the transfer ($22,500.00) which included the purchase money note and mortgage of $17,500.00. The point is...