Northern P. Ry. Co. v. Mjelde
| Decision Date | 06 December 1913 |
| Citation | 137 P. 386,48 Mont. 287 |
| Parties | NORTHERN PAC. RY. CO. v. MJELDE, COUNTY TREASURER. |
| Court | Montana Supreme Court |
Appeal from District Court, Park County; Albert P. Stark, Judge.
Action by the Northern Pacific Railway Company against Fred J Mjelde, Treasurer of Park County. From a judgment for defendant, plaintiff appeals. Affirmed.
O. M Harvey, of Livingston, and Gunn & Rasch, of Helena, for appellant.
D. M Kelly, Atty. Gen., and W. H. Poorman, Asst. Atty. Gen., for respondent.
Under the grant of July 2, 1864, section 23, township 3 south, range 8 east, and section 31, township 4 north, range 10 east, in Park county, were transferred by the government to the Northern Pacific Railroad Company. The Northern Pacific Railway Company succeeded to the ownership of these lands, and some time prior to the first Monday of March of this year it conveyed section 23 to Bernhard Blome, and section 31 to another purchaser. Each deed contained this provision: "Excepting and reserving unto the grantors its successors and assigns, forever, all mineral of any nature whatsoever upon or in said land including coal and iron, and also the use of such surface ground as may be necessary for exploring for and mining or otherwise extracting and carrying away the same." These reservations were listed for taxation, and, to forestall action by the county treasurer, the railway company commenced this suit to cancel the assessments and to restrain the collection of the tax. It is alleged that no exploration has been made upon section 23 for minerals or coal and it is unknown whether the land contains either. With reference to section 31, the complaint alleges: "That no coal, iron, or other mineral has ever been extracted from said land, but as plaintiff is informed and believes and alleges said land contains coal." The trial court sustained a general demurrer to the complaint, and the railway company, electing to stand upon its pleading, suffered judgment to be entered against it and appealed.
We are called upon to determine whether that which the company reserved to itself in each of these parcels of land constitutes property which is subject to taxation under the Constitution and laws of this state.
That neither deed conveys the entire estate to the land described is apparent. That each carves out some interest which the grantor retains is not open to question, and that this interest is an estate in land must be conceded. The coal deposits which underlie section 31 form a part of the real estate within the definition given in section 2501, Revised Codes, and the reservation of those deposits, with the right to mine, constitutes an interest in real estate. While subsequent development may demonstrate that there are not any minerals or coal in section 23, still the right to explore for minerals, which includes the right to the possession of any portion, or all, of the surface if necessary, is an interest in the land as a whole. Section 2501, above, provides that "the term 'real estate' includes: The possession of, claim to, ownership of, or right to, the possession of land." And this would be the rule independently of statute. "The word 'property' includes moneys, credits, bonds, stocks, franchises and all matters and things real, personal and mixed, capable of private ownership." Section 17, art. 12, Constitution of Montana; Buck v. Walker, 115 Minn. 239, 132 N.W. 205, Ann. Cas. 1912D, 882, and note; Benavides v. Hunt, 79 Tex. 389, 15 S.W. 396; Gordon v. Million, 248 Mo. 155, 154 S.W. 99; Board v. Lattas Creek Coal Co. (Ind.) 100 N.E. 561. But the particular character of these property rights is not of consequence now. Each reservation is property, and all property in this state is subject to taxation, except such as is exempt. Section 2498, Rev. Codes. The only property specifically exempted is enumerated in section 2499, Revised Codes, as follows: "The property of the United States, the state, counties, cities, towns, school districts, municipal corporations, public libraries, such other property as is used exclusively for agricultural and horticultural societies, for educational purposes, places of actual religious worship, hospitals, and places of burial not used or held for private or corporate profit, and institutions of purely public charity are exempt from taxation, but no more land than is necessary for such purpose is exempt." Since these reserved rights do not fall within any of the classes of exempt property, they are subject to assessment for taxation, unless by some provision of the state Constitution they are relieved from the burden. The contention of appellant is that they are exempt by virtue of section 3, art. 12, which provides: "All mines and mining claims, both placer and rock in place, containing or bearing gold, silver, copper, lead, coal or other valuable mineral deposits, after purchase thereof from the United States, shall be taxed at the price paid the United States therefor, unless the surface ground, or some part thereof, of such mine or claim, is used for other than mining purposes, and has a separate and independent value for such other purposes, in which case said surface ground, or any part thereof, so used for other than mining purposes, shall be taxed at its value for such other purpose, as provided by law; and all machinery used in mining, and all property and surface improvements upon or appurtenant to mines and mining claims which have a value separate and independent of such mines or mining claims, and the annual net proceeds of all mines and mining claims shall be taxed as provided by law."
Our Constitution is not a grant of power, but a limitation--particularly a limitation upon legislative action. In section 2 of article 12 the framers declared what property shall be, and what other property may be, exempted from the burden of taxation. Generally speaking, the public property of the United States and of the state and its subdivisions constitutes the first class, and the property of eleemosynary and educational institutions and places of burial not used for profit comprise the second. Having thus determined what property should or might be relieved from the necessity of contributing to the expense of government, the problem before the constitutional convention was, not how to exempt mining property from taxation, but rather how to compel it to respond to the reasonable demands of the state for revenue, and at the same time protect it against such exactions as would or might discourage prospecting or development. The debates of the convention, so far as they are available in their unpublished form, disclose this fact, and the history of our mining legislation furnishes added evidence of the correctness of this conclusion. The first revenue measure adopted in 1864 specifically exempted mining claims from taxation. Bannack, Statutes, p. 411. The next statute in terms exempted mines and mining claims. Fifth Session, p. 41. The succeeding act exempted "mines and mining claims except those held under a patent from the United States." Laws 7th Session, p. 600. By an act approved February 21, 1879, the net proceeds of mines were made subject to taxation, and it was further provided: "That from and after the passage of this act, no direct tax shall be levied upon any placer claim, quartz lead, or lode, except to the extent of the price paid for any mining claim in obtaining patent therefor from the government of the United States, and the only taxation of the proceeds thereof shall be that provided in this act." Laws 11th Session, p. 65. This was succeeded by the Act of March 10, 1887, which specifically exempted from taxation "mines, except on the net proceeds thereof, and mining claims, except those held under a patent from the United States, the surface of which shall be taxed as other real estate." Compiled Statutes, Fifth Div., p. 1108. This was the status of mining property before the revenue law, at the time the constitutional convention met in 1889.
During the life of the territory, public property was always exempt; but in addition certain private property as well shared the privilege of being relieved from the burden of maintaining the government. Doubtless, as an aid to the encouragement of the mining industry, mines and mining claims were placed in the exempt class, except for the period from 1872 to 1879, during which time patented mining claims were subject to taxation as other property; but this was corrected by the act of the Eleventh Session above, and, at the time section 3 of article 12 was under consideration, mines and mining claims, as such, were exempt from taxation. The net proceeds of mines were taxed as other taxable personal property, and the surface of a patented mining claim was subject to taxation as other taxable real estate. When, then, the framers of the Constitution removed this species of property from the exempt to the taxable class, they must be held to have acted deliberately with the purpose, as disclosed by their debates, of subjecting mines and mining claims to what in their judgment was the equitable proportion of the burden of governmental expense.
Instead of section 3, art. 12, being a provision exempting property from taxation, it is in fact a revenue measure. It fixes an arbitrary valuation upon the surface of patented mining claims, as such, and provides the method by which the value of a mine shall be determined, viz., by the net value of its proceeds; but neither is relieved from producing its proportion of the revenue upon the basis thus established. While this provision does not exempt the nonproducing mine by implication at least it determines that such a mine, independently of its surface, does not have any value for the purpose of...
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