Northwestern Imp. Co. v. Morton County

• Decision Date: 12 April 1951
• Docket Number: No. 7188,7188
• Citation: 47 N.W.2d 543,78 N.D. 29
• Parties: NORTHWESTERN IMP. CO. v. MORTON COUNTY.
• Court: North Dakota Supreme Court

Page 543

47 N.W.2d 543

78 N.D. 29

NORTHWESTERN IMP. CO. v. MORTON COUNTY.

No. 7188.

Supreme Court of North Dakota.

April 12, 1951.

Syllabus by the Court.

1. Although the Legislature has a wide range of discretion in classifying property for taxation purposes, all tax legislation is subject to the rights granted to all persons by the Fourteenth Amendment to the Federal Constitution and such classification must not be unreasonable, arbitrary or discriminatory so that the burden imposed in the tax legislation does not fall alike on all properties or persons in the same situation.

2. Undeveloped mineral rights severed from the overlaying strata or surface of the land by a conveyance of such mineral rights and undeveloped mineral rights severed from the surface of the land by an express reservation of such mineral rights to the grantor in the instrument conveying the surface rights of the land are in the same class for taxation purposes and a law that levies a flat tax of three cents per acre on the mineral rights of the latter group only is an unreasonable, arbitrary, and discriminatory classification and violates the equal protection of the laws granted by the Fourteenth Amendment of the Federal Constitution and is therefore void.

E. T. Christianson, Atty. Gen., Nels G. Johnson, Special Asst. Atty. Gen., and C. J. Schauss, State's Atty., Mandan, for appellant.

E. T. Conmy and E. T. Conmy, Jr., Fargo, for respondent.

Cox, Cox & Pearce, Bismarck, as amici curiae.

ILVEDSON, District Judge.

This is an action to set aside certain tax liens claimed by Morton County on coal and iron rights held by the plaintiff on lots 3 and 4 and the east helf of the southwest quarter of section 19, township 137 north, range 82 west in Morton County, North Dakota. The tax enactment under attack in this case consists of Sections 57-4901, 57-4902 and 57-4903 of the 1949 Supplement to the NDRC 1943:

'57-4901. Privilege Tax Imposed. For the privilege of holding mineral rights in real property when severed from the surface rights therein by reservations in deeds conveying such surface rights without development thereof by mining operations, there is hereby imposed annually an excise tax of three cents per acre measured by the number of acres in the tract conveyed or in the rights reserved, in case such reservation in a reservation of mineral rights in or underlying a less acreage, in which case the lesser number of acres shall determine the tax.

'When such mineral rights are developed by mining operations, such excise tax shall cease. This excise tax shall not apply to mineral leases held for development purposes.

'57-4902. Levy and Collection. The Register of Deeds shall furnish the County Auditor with such information as is contained in his office and as will enable said Auditor to prepare a list setting forth the mineral rights as described in Section 1 of this Act (57-4901), together with the name and address of the holder of such mineral right when severed from the surface right. The County Auditor shall place such mineral reservations upon the tax rolls of his county and shall levy the tax hereby imposed against the owner of such mineral reservations as may appear from said records. Such tax so levied and shown by the tax rolls shall be collected by the county treasurer as property ad valorem taxes are collected. Such tax shall be subject to a lien upon the mineral reservation only as ad valorem taxes upon the surface rights are subject to a lien, and such lien shall be enforced in like manner as ad valorem tax liens are enforced.

'57-4903. Apportionment of Tax. Each county treasurer shall apportion such tax when collected to the school district and the township in which the mineral reservation lies, in the ratio which the tax levy of said school district and township have to the total levies of both the school district and township.'

The complaint is in form an action to quiet title with an additional allegation that the law under which the tax lien is claimed by Morton County is unconstitutional. The case was submitted to the trial court upon the pleadings and it is admitted by the defendant Morton County that all of the allegations in the complaint, with the exception of paragraph VI alleging the tax law to be unconstitutional, are the true facts. The trial court held the tax statute to be unconstitutional and the defendant now appeals to this court. The complaint states that on December 6, 1909, the Northwestern Improvement Company, a New Jersey corporation, the then owner of the property above described, sold and conveyed the property to one Olof S. Carlson, reserving, however, ownership of the mineral and mineral rights as follows: 'excepting and reserving unto the party of the first part, its successors and assigns, forever, all coal and iron upon or in said land, together with the use of such of the surface as may be necessary for exploring for, and mining and otherwise extracting and carrying away the same. But the party of the first part, its successors and assigns, shall pay to the party of the second part, or to his heirs or assigns, the market value at the time mining operations are commenced, of such portion of the surface as may be used for such operations, including any improvements thereon; the party of the second part, his heirs and assigns, shall notwithstanding have at all times the right to mine and remove such reasonable quantity of coal as may be necessary for his own domestic use.'

The complaint further states that this company thereafter sold and conveyed the said mineral rights so reserved to the plaintiff, the Northwestern Improvement Company, a Delaware corporation; that the plaintiff is now the owner of the said mineral rights and mineral reserves and has not developed them by mining operations but is holding them for later development if and when it appears they can be developed at a profit; that the defendant claims certain interests or liens on said property adverse to the plaintiff. Paragraphs V, VI, VII, and VIII of plaintiff's complaint are as follows:

V.

'That defendant's claim of an interest in and tax lien on said property is based upon a so-called privilege or excise tax which was spread and levied against said property for the year 1947 in amount $4.80, under authority of Chapter 57-49 of the 1947 Supplement to the North Dakota Revised Code of 1943 and which reads as follows:

(Sections 57-4901, 57-4902 and 57-4903 have been hereinbefore set forth in this opinion.)

VI.

'Plaintiff alleges that Chapter 57-49 of the 1947 Supplement is unconstitutional, not uniform, arbitrary, illegal and void, deprives plaintiff of its property without due process and denies plaintiff equal protection of the laws and it and the taxes levied thereunder as above set out are wholly illegal and void, because of being in contravention of and prohibited by the following constitutional provisions of the State of North Dakota and the United States of America.

"Taxes shall be uniform upon the same class of property including franchises within the territorial limits of the authority levying the tax.'--Section 176 of Constitution of State of North Dakota.

"No tax shall be levied except in pursuance of law, and every law imposing a tax shall state distinctly the object of the same, to which only it shall be applied.'--Section 175 of Constitution of North Dakota.

"All laws of a general nature shall have a uniform operation.'--Section 11 of Constitution of State of North Dakota.

"No special privileges or immunities shall ever be granted which may not be altered, revoked or repealed by the legislative assembly; nor shall any citizen or class of citizens be granted privileges or immunities which upon the same terms shall not be granted to all citizens.'--Section 20 of Constitution of the State of North Dakota.

"No person shall be * * * deprived of life, liberty or property without due process of law.'--Section 13 of Constitution of State of North Dakota.

'No state shall 'deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.'--Article XIV of the Amendments of the Constitution of the United States.'

VII.

'Plaintiff alleges that there are many mineral reservations or mineral rights in Morton County and the State of North Dakota not created by reservations in deeds conveying the surface and many leases of minerals and mineral rights where development by mining operations has not been had and is only contemplated in the future if and when such operations appear desirable and practical.

VIII.

'That this plaintiff is the owner of numerous similar mineral reservations or rights in Morton County and in the State of North Dakota and many others are similarly situated and this action is brought for the benefit of plaintiff and for others similarly situated.'

In considering this case, we reaffirm what this court said in State ex rel. Haggart v. Nichols, 66 N.D. 355, 265 N.W. 859, 860, as to the fundamental rules which must be applied in any case involving a consideration of the constitutionality of an act passed by the legislature. We held in that case:

'A legislative enactment is presumed to be constitutional. This presumption is conclusive unless it is clearly shown that the enactment contravenes some provision of the Constitution of the state or of the United States.

'It is not the function of the courts to review or revise legislative action, but to ascertain and give effect to the legislative will as expressed in the Constitution and the statutes. When a legislative enactment is held void it is not because the courts have or exercise any control over the legislative power, but because the will of the people as expressed in the Constitution is paramount to that of their representatives as expressed in the statute; and it is the duty of the judges under their oaths of office to give effect to...