Penney v. State

• Court: Alabama Supreme Court
• Writing for the Court: BOULDIN, J.
• Citation: Penney v. State, 221 Ala. 230, 128 So. 596 (Ala. 1930)
• Decision Date: 15 May 1930
• Docket Number: 6 Div. 357.
• Parties: PENNEY v. STATE.

128 So. 596

221 Ala. 230

PENNEY v. STATE.

6 Div. 357.

Supreme Court of Alabama

May 15, 1930

Appeal from Circuit Court, Marion County; Ernest Lacy, Judge.

Proceeding by the State of Alabama to assess lands of J. E. Penney for taxation. From the judgment, defendant appeals.

Affirmed.

K. V Fite, of Hamilton, and Bankhead & Bankhead, of Jasper, for appellant.

Ernest B. Fite, of Hamilton, for the State.

BOULDIN J.

The appeal is to review the judgment of the circuit court fixing the assessed values of real estate holdings of appellant in the county of Marion for taxation as of October 1, 1927.

The total real estate involved is 16,542 1/2 acres, of which 15,062 1/2 acres involve mineral interests only, 1,140 acres the fee, and 340 acres surface rights.

Witnesses for the state, after deposing to their knowledge of the lands and elements of value, were permitted, over defendant's objections, to give their opinion of the value per acre of the lands lying in a given township, covering many thousand acres.

Appellant insists this was error upon the ground that the law requires valuations for assessment to be fixed for each 40 acres or fraction thereof. Acts 1919, p. 311, § 85.

We do not find a like provision in the General Revisory Act of 1923. Whether other provisions of the later Act imply assessment lists shall be so made, we need not and do not here decide.

"The trial upon appeals to the circuit court shall be de novo and the court shall render a judgment ascertaining and fixing the assessable value of property involved." Acts 1923, p 183, § 61.

Whether this calls for ascertainment of the value of each body or parcel of land, on demand of defendant, is not presented.

The statute above quoted, we think, does not contemplate that the circuit court shall fix the valuation of each and every 40 in a great body of land. This would greatly multiply issues, and add to the costs of the trial, if it be not wholly impractical.

If the judgment fixing the value is to be on the whole or by parcels, there is no need to confine the evidence to the several 40's.

The chief value of the lands involved is in the mineral rights depending upon workable seams of coal.

After evidence that mines were in active operation in the field where these lands are located, the state was permitted, over objection, to show that Brilliant Coal Company is operating mines on lands owned by Mr. Penney.

It appeared Mr. Penney had leased to Brilliant Coal Company some 12,000 acres adjoining the lands here involved, on which the lessee assesses and pays the taxes, and on which it is operating coal mines; that the leased land was part of the body of coal lands bought largely from one owner, with later acquisitions lying within or adjacent to the same coal region.

Evidence tended to show much of the lands is underlaid by the same workable seam of coal.

The fact of active mining operations in the same region and in close proximity to these lands is matter for consideration in fixing values in connection with all the circumstances affecting such issue. This does not seem to be questioned. We find no error in admitting evidence that such mining operations were on lands owned by Mr. Penney.

The mining lease from Mr. Penney to Brilliant Coal Company was admitted in evidence over defendant's objection. This lease describing some 12,000 acres lying in township 12, range 12, and township 12, range 11, and adjoining the main body of the lands here involved lying in the same townships, is dated January 31, 1927, runs to March 31, 1951, on royalty basis of 15 cents per ton, with minimum of $10,000 per year.

The court held under advisement the admission of this lease until other evidence was introduced by defendant showing the thickness of the seam, the quantity of recoverable coal per acre, the occurrence of squeezes and faults, opinion evidence of market value of the leased lands, and its value as assessed for taxation.

Fixing the value of mineral interests in lands is beset with difficulty. Uncertainty as to the area of workable coal, the expenses incident to mining, transportation conditions, and variable market conditions, must needs be considered.

Many states have statutes regulating the valuation of mining interests for tax purposes. 3 Cooley on Taxation, § 1150.

Evidence in aid of ascertainment of value may take a wide range. Broadly speaking, whatever fact would be natural subject of inquiry by an intelligent man in the business as a prospective purchaser, and having some direct relation to value, is proper evidence.

Selling prices of similar lands in the same locality and rental values are recognized as proper subjects of inquiry in general.

The mining lease partakes both of the nature of a sale and a rental. The royalty basis probably most prevails because of the necessity for actual working of the mine to ascertain its real value.

The royalty is the agreed value of the coal in place in so far as worked under the lease. The guaranteed minimum must be regarded as a fixed annual rental agreed upon for the leasehold rights, and as a guarantee that mining operations yielding royalties will be conducted.

Appellant relies strongly on T. C., I. & R. Co. v. State, 141 Ala. 103, 37 So. 433, 435. In that case evidence was received of a lease of adjoining coal lands on a royalty basis of 5 cents per ton. This was held error. It was said: "Courts do not know what relation a given royalty in the lease of coal lands bears to the value of such lands."

It is sufficient to say that in the present record there is evidence of the number of tons of workable coal per acre in the seam being worked. The amount realized by the lessor per acre for the area mined under the lease is mere matter of calculation.

The royalty per ton has some natural relation to the quality of the coal and mining conditions obtaining. With the additional facts in evidence, we must conclude the royalty paid is an element to be...