Matagorda County Appraisal Dist. v. Conquest Exploration Co.

• Decision Date: 19 April 1990
• Docket Number: No. 13-89-346-CV,13-89-346-CV
• Parties: MATAGORDA COUNTY APPRAISAL DISTRICT, et al., Appellants, v. CONQUEST EXPLORATION COMPANY, Appellee.
• Court: Texas Court of Appeals

Page 687

788 S.W.2d 687

MATAGORDA COUNTY APPRAISAL DISTRICT, et al., Appellants, v. CONQUEST EXPLORATION COMPANY, Appellee.

No. 13-89-346-CV.

Court of Appeals of Texas Corpus Christi.

April 19, 1990.

Russell R. Graham, Deborah S. Cartwright, Calame, Linebarger & Graham, Austin, for appellants.

James Popp, Patricia L. Sessa, M. Frank Powell, William F. Ikard, Austin, for appellee.

Before NYE, C.J., and SEERDEN and DORSEY, JJ.

OPINION

NYE, Chief Justice.

This is a property taxation case. Appellants, Matagorda County Appraisal District (MCAD) and Matagorda County Appraisal Review Board (Review Board) appeal from the summary judgment granted in favor of appellee, Conquest Exploration Company (Conquest). The trial court found that appellants incorrectly appraised and taxed Conquest for exempt mineral interests owned by the State of Texas, that the error was clerical, and that Conquest should receive a refund. Appellants present three points of error. We reverse the judgment granted by the trial court.

This conflict involves the 1987 tax year. Prior to May 1, 1987, Conquest's tax agent prepared and rendered to MCAD the percentage of mineral working interests of six producing gas wells owned by Conquest for Tax Year 1987. Subsequently, a professional appraisal firm hired by MCAD appraised the Conquest properties resulting in similar, but not identical, working interest percentages. On or about May 15, 1987, Conquest's tax agent received a Notice of Appraised Value setting forth Conquest's working interests for 1987 taxes. These notices informed Conquest to contact MCAD immediately if any of the information on the Notice was wrong or if there was a problem with the proposed appraised value of the properties. The Notice also informed Conquest that the deadline for written appeals to the Review Board regarding these matters was May 18, 1987. Conquest neither notified MCAD of any problems nor filed an appeal with the Review Board within the designated time period. The following table indicates the different percent working interest (% W.I.) values submitted in the present controversy:

1. The division orders produced by Conquest for the wells in question indicate that several individuals in addition to Conquest own working interest percentages in the wells. For purposes of this case we will attribute to Conquest what it has claimed throughout this suit--the total percent working interest per well.

                Well No.   RRC No.      %  Royalty    % W.I. owned     % W.I.         %  W.I
                                        owned by       by 1      rendered     assessed by
                                        State of       Conquest         by          MCAD and
                                          Texas                      Conquest      noticed to
                                                                                    Conquest
                

1 The division orders produced by Conquest for the wells in question

                  Note indicate that several individuals in addition to Conquest own working
                  Note interest percentages in the wells.  For purposes of this case we will
                  Note attribute to Conquest what it has claimed throughout this suit--the total
                  Note percent working interest per well
                5"A         119941       .210000       .790000       .833333        .833333
                1"AU        121037       .250000       .750000       .833333        .833333
                1"AL        121038       .250000       .750000       .833333        .833333
                1"D         119727       .250000       .750000       .833333        .875000
                8L          118469       .166667       .833333       .875000        .875000
                9           118954       .166667       .833333       .875000        .875000
                

On January 28, 1988, Conquest filed a Motion for Correction of the tax roll under Tex. Tax Code Ann. § 25.25 (Vernon Supp.1990). The motion alleged that the working interest percentages attributed and taxed to Conquest on the appraisal roll exceeded the respective percentage working interests Conquest actually owned. Conquest also alleged that the excess working interest amounts were owned by the State of Texas and dedicated to the benefit of the permanent school fund and therefore exempt from taxation. ² On January 29, 1988, Conquest paid MCAD the taxes on its proportionate interest, and separately tendered taxes on the alleged state exempt portion subject to refund under Tex. Tax Code Ann. § 26.15 (Vernon 1982).

Review Board denied Conquest's motion on jurisdictional grounds. Conquest subsequently filed suit seeking judicial review of appellant's denial by way of a Motion for Summary Judgment. The Review Board filed its own Motion for Summary Judgment. At a hearing for both motions, the trial court denied Review Board's motion and granted summary judgment in favor of Conquest.

The trial court found that MCAD's attribution of exempt property interests owned by the State of Texas in establishing the appraised values of Conquest's property on the tax appraisal roll was a clerical error. The court also found that this clerical error could be corrected by Tex. Tax Code Ann. § 25.25(c) (Vernon Supp.1990). Appellants were ordered to recalculate Conquest's property interests for the 1987 tax year and correct the 1987 appraisal roll accordingly. Furthermore, appellants were ordered to reduce the respective appraised values to those values representing only the appraisal of Conquest's owned/operated interests. Through this order, Conquest was to receive a $32,000 ad valorem tax refund.

The movant for a summary judgment has the burden of showing that no genuine issue of material fact exists and therefore the movant is entitled to judgment as a matter of law. Nixon v. Mr. Property Management Co., Inc., 690 S.W.2d 546, 548 (Tex.1985); Wyatt v. Mealy, 704 S.W.2d 63, 64 (Tex.App.--Corpus Christi 1985, no writ); Marshall v. Garcia, 514 S.W.2d 513, 518 (Tex.Civ.App.--Corpus Christi 1974, writ ref'd n.r.e.); see also City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671, 678-79 (Tex.1979). In deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the non-movant will be taken as true. Nixon, 690 S.W.2d at 548-49. Every reasonable inference must be indulged in favor of the non-movants and any doubts resolved in their favor. Nixon, 690 S.W.2d at 549. On appeal as well as in the trial court the issue is not whether the summary judgment proof raises a fact issue regarding the essential elements of a plaintiff's claim or cause of action, but whether the summary judgment proof establishes as a matter of law that there is no genuine issue of material fact concerning one or more of the essential elements of the plaintiff's cause of action. Gibbs v. General Motors Corp., 450 S.W.2d 827, 828 (Tex.1970); Denison v. Haeber Roofing Co., 767 S.W.2d 862, 864 (Tex.App.--Corpus Christi 1989, no writ); McCurry v. Aetna Casualty and Surety Co., 742 S.W.2d 863, 866 (Tex.App.--Corpus Christi 1987, writ denied); Tex.R.Civ.P. 166a(c).

ADMINISTRATIVE REMEDIES

Appellants contend in point of error number two that the trial court erred in granting Conquest's motion for summary judgment because Conquest failed to exhaust its proper administrative remedies pursuant to the Code ³ and voluntarily paid the full amount of taxes assessed for 1987, thereby precluding any refund and change to the 1987 appraisal roll. Appellants argue that the provisions in chapters 41 and 42 of the Code are the exclusive remedies available to property owners. Conquest argues that it is unconstitutional to tax the properties owned by the State of Texas and dedicated to the permanent school fund, and therefore, as a matter of law, Conquest did not need to follow the administrative remedies in those chapters. We agree that Conquest did not exhaust its administrative remedies, but disagree that chapters 41 and 42 provide the sole remedy available to taxpayers.

Conquest argues that it is unconstitutional to tax those property interests belonging to the State and dedicated to the permanent school fund because such interests are tax-exempt. See Tex. Const. art. VII § 5; Tex.Nat.Res.Code § 11.041 (Vernon 1987). Furthermore, Conquest asserts that these interests are tax-exempt as a matter of law. See City of Marlin v. State, 205 S.W.2d 809, 810 (Tex.Civ.App.--Waco 1947, no writ); Tex. Const. art. VII § 5, VIII § 2, XI § 9; Texas Tax Code Ann. § 11.11(a) (Vernon Supp.1990). Recently, the Texas Attorney General stated that the State's interest in land that is part of the permanent school fund is exempt from ad valorem taxes, even though the State has leased the land to a private concern to be used for a private purpose. Tex.Atty.Gen.Op. JM-1049 (1989). Conquest concludes that this exemption precludes having to follow the administrative remedies of chapters 41 and 42 of the Code to ensure relief. We disagree.

Contrary to what Conquest alleges and as we stated previously, the State has no working interest in any of the wells in controversy. The division orders clearly reveal that the State only receives a royalty interest from these wells. A "Royalty interest" by definition is a share of the production, [of an oil or gas well] free of the costs of production. H. Williams & C. Meyers, Oil and Gas Terms, 862-63, 7th ed. (1987) (emphasis added). Because the State has no working interest in any of the wells in controversy, Conquest was not taxed for any property interest owned by the State. Rather, both Conquest and appellants attributed to Conquest a larger working interest percentage than actually existed for the wells. The taxation of these wells did not violate any constitutional or statutory provisions or Attorney General opinions.

The Code provides for correction of errors in the tax roll both before and after it has been approved by the appraisal review board. A taxpayer is entitled to receive notice of the tax appraisal affecting his property. Tex. Tax Code Ann. §§ 25.12, 25.19(a) (Vernon Supp.1990). Chapter 41 provides for review of the appraisal records by...