Mt. Sterling Oil & Gas Co. v. Ratliff

• Decision Date: 30 October 1907
• Citation: 104 S.W. 993,127 Ky. 1
• Parties: MT. STERLING OIL & GAS CO. v. RATLIFF, SHERIFF.
• Court: Kentucky Court of Appeals

104 S.W. 993

127 Ky. 1

MT. STERLING OIL & GAS CO. v. RATLIFF, SHERIFF.

Court of Appeals of Kentucky.

October 30, 1907

Appeal from Circuit Court, Bath County.

"To be officially reported."

Action by the Mt. Sterling Oil & Gas Company against C. S. Ratliff sheriff of Bath county, to enjoin the collection of certain taxes. From a judgment for defendant, plaintiff appeals. Reversed and remanded, with directions.

Robt. H. Winn, for appellant.

J. J Nesbitt, for appellee.

SETTLE J.

Appellant an Indiana corporation, owned prior to September 1, 1905 certain oil leaseholds in Bath and other counties of Kentucky, which it on that date sold and assigned to Guffey and Galey, Pennsylvania oil men, for a certain consideration based upon a test of production, and then paid, and an additional consideration expressed in the following clause of the written contract between the parties, viz.: "The second parties covenant to render and deliver to the first party, in its crude state, delivered in tanks or pipe lines in the vicinity of the wells an equal one-sixteenth of all the oil produced and saved after this date from any of said leaseholds this day assigned, after deducting the royalty to be rendered to the lessor. The said second parties shall, until the first party elects to take and dispose of its oil, sell the oil of the first party with their oil and account for and pay to the said first party quarterly for the oil so sold in the crude state at the wells during the preceding three months; the minimum price to be not less than twenty cents per barrel." The New Domain Oil & Gas Company subsequently became assignee of the rights of Guffey and Galey under the contract in question. In January, 1906, the board of supervisors of Bath county assessed for taxation as of September 1, 1905, in the name of appellant as owner, its interest in the Bath county oil leaseholds reserved in the assignment to Guffey and Galey, styling it upon the assessor's book, "Present value of annuities and royalties," and fixed the value thereof at $20,000, the tax upon which went into the hands of appellee as sheriff of Bath county for collection. The payment of this tax was demanded by the sheriff of appellant, who refused to pay it, and immediately thereafter it brought this action in the Bath circuit court against that officer to enjoin its collection. The petition rests appellant's claim to the relief asked on two grounds: (1) That a right to receive one-sixteenth of the oil produced from a well, the owner of the right having parted with his leasehold and not being engaged in the production of the oil, is an intangible personal asset, the situs whereof for taxation follows the domicile of the owner; (2) that the assessment by the board of supervisors, having been made without notice to appellant, is void.

The first contention is manifestly unsound. Whether the right reserved to appellant by the lease contract to one-sixteenth of the oil produced by its assignee be called personal property, a chattel real, incorporeal hereditament, or privilege, it is property and as such subject to taxation under section 4039, Ky. St. 1903, which provides: "That it shall be the duty of all persons owning any real or personal property, mineral rights or standing (branded) trees of any kind whatever on the lands of another, or any coal oil or gas privileges by leases or otherwise, or any interest therein, in this state, other than the county in which the said owners reside, or if they should reside out of the state, to list the property for taxation, personally or by an authorized agent, in the county where situated, at the same time and in the same manner as is now required by law of resident owners, or to file a descriptive list of the same between the 15th day of September, and the 15th day of October in each year, with the county court clerk of the county where said...