Raydure v. Board of Supervisors

• Decision Date: 31 January 1919
• Citation: 183 Ky. 84
• Parties: Raydure v. Board of Supervisors, Estill County.
• Court: Kentucky Court of Appeals

183 Ky. 84

Raydure v. Board of Supervisors, Estill County.

Court of Appeals of Kentucky.

Decided January 31, 1919.

Appeal from Estill Circuit Court.

COPYRIGHT MATERIAL OMITTED

EDWARD C. O'REAR, B. B. JOUETT, J. C. JONES, PENDLETON & BUSH and J. T. METCALF for appellant.

CHARLES H. MORRIS, Attorney General, M. M. LOGAN, R. V. GARRED, CLARENCE MILLER and JOHN T. WALKER for appellee.

OPINION OF THE COURT BY CHIEF JUSTICE CARROLL — Reversing.

A number of legal questions are presented in this appeal, which comes up from a judgment of the Estill circuit court assessing for taxation certain oil leases owned by the appellant, Raydure.

The case was first appealed by Raydure from the decision of the board of supervisors of Estill county, to the quarterly court of the county, and from that court to the circuit court. In the quarterly court the record consisted of an agreed statement of facts and on this agreed statement the case was heard and disposed of in the quarterly court as well as the circuit court. This statement sets out that "the following is stated and adjudged to be the facts and all of the facts relevant to this appeal, and shall be treated and considered as the evidence and all of the evidence introduced and heard upon this appeal the same as if taken by the testimony of witnesses introduced in open court.

"The appellant, W. S. Raydure, is a resident of the state of Ohio, and a non-resident of Kentucky, and of Estill county, and at the time of assessment made by the board of supervisors of Estill county, Kentucky, appeared before said board and under oath listed and gave in for assessment the following property, to-wit: Oil and gas leases covering twelve hundred and seventy-two (1272) acres of land in Estill county, made up as follows:

1. Tilford McIntosh lease of 100 acres, upon which have been drilled 12 producing wells.

2. Mapel lease of 173 acres, upon which have been drilled 33 producing wells.

3. T. B. McIntosh lease of 300 acres, upon which have been drilled 15 producing wells.

4. Ed Ginter lease of 55 acres, upon which 1 producing well was drilled and one dry hole.

5. Berry Abner lease of 100 acres, upon which have been drilled 7 producing wells and 1 dry hole.

6. W. J. Crow lease of 40 acres, upon which have been drilled 12 producing wells.

7. John Puckett lease of 200 acres, upon which have been drilled 7 producing wells and 2 dry holes.

8. Charles Tipton lease of 105 acres, upon which have been drilled 24 producing wells.

Making a total of 1272 acres.

"The said appellant, Raydure, did not list these oil or gas leases voluntarily but under protest, contending that under the law he was not required to list undeveloped territory.

"He also testified before said board that from his experience and in his judgment all of said leases were fully developed and that he would not develop any of said leases any further, believing that there was no oil under the undrilled portions of same, but it is agreed that it is unknown and cannot be certainly ascertained whether there is any oil under said undeveloped portions of said lands until the same is actually drilled. But the board of supervisors was of the opinion that said undeveloped portion of said leases were very valuable. The appellee, board of supervisors, without hearing further testimony, fixed the assessment upon said property as a whole at the total sum of approximately two hundred and fifty thousand dollars ($250,000.00) on said leases. All of said leases were oil leases and said productions were of oil.

"It further appeared from the testimony of said Raydure that all of said wells were being operated and that the oil was being pumped and transported from said wells and in the process of marketing and same was subject to the direct tax fixed by the laws of Kentucky under the act of the special session of the Kentucky legislature of 1917, being chapter 9, and as amended by chapter 122 of the Acts of 1918.

"The appellee, board of supervisors allowed only five (5) acres of land to each well on the above leases and exempted said five (5) acres from taxation as connected with said wells and made the above assessment of two hundred and fifty thousand dollars ($250,000.00) on all of the above described acreage in excess of five (5) acres allowed for each well.

"And it is agreed that the leases referred to gave to said Raydure the right to enter upon said lands for the purpose of drilling for oil and gas, and if found to remove and market same, and said leases were for the term of five (5) years or so long thereafter as oil or gas is found and produced therefrom in paying quantities, the leasor to be given one-eighth (1/8) of the oil produced therefrom, free of cost, delivered in the pipe lines for market."

It appears from this statement of fact that Raydure is a non-resident of Kentucky and it is one of the contentions of his counsel that the legislature discriminated against non-resident leaseholders of oil leases, and in favor of the resident leaseholders of such leases, by making provision for the assessment and taxation of oil leases held by non-resident owners, without making any provision for the assessment or taxation of such leases when held by a resident owner. Or in other words that the legislature attempted, in the legislation presently to be noticed, to assess for taxation all oil leases held and owned by non-residents, while exempting from taxation such leases when held and owned by residents of the state. And if this contention is well founded there can be no doubt that the legislation under which this discrimination was sought to be worked was unlawful, because the legislature of the state has no power to thus discriminate between non-resident and resident holders and owners of oil leases.

The same species or class of property wherever it be situated in this state and whether it be owned by residents or non-residents of the state must be subjected to the same rate of taxation. Neither the state nor local taxing authorities have any discretion to exercise in respect to the assessment and taxation of the same species or class of property. If the property of a resident owner is exempt from assessment and taxation like property owned by the non-resident must also be exempt. This principle of uniformity and equality is so clearly declared in section 171 of the Constitution as amended that further citation of authority would seem unnecessary. This section in part provides that taxes "shall be uniform upon all property of the same class subject to taxation within the territorial limits of the authority levying the tax." Hager, State Auditor v. Walker, 128 Ky. 1.

The legislation under which the oil leases of Raydure were assessed was enacted in 1918 and may be found in section 4039, volume 3, of the Kentucky Statutes. It reads in part as follows: "It shall be the duty of all persons owning any real or other property, mineral rights, or standing trees of any kind whatever on the lands of another, or any coal, oil or gas privileges by lease or otherwise, or any interest therein, in this state, other than in the county in which the said owner resides, or if said owner should reside out of the state, to list the property for taxes 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 first day of July and the first day of October in each year with the county clerk of the county wherein said property is located, fixing a fair cash value of the same and giving the nearest resident thereto and the number of the magisterial district in which the same is located." This statute, substantially as it is now, was first enacted in 1894 (see 1894 edition of Kentucky Statutes, section 4039), and has been carried as a part of the statute law of the state since.

In its beginning the legislation provided for the filing by the non-resident owner with the clerk of the county court of the county in which the property was situated of a descriptive list, and the purpose of the legislation then and now was to identify the owner of property and secure its assessment when he happened to be a non-resident of the county in which it was situated, so that the assessing authorities might be able to list in the name of the owner the property, which it would often be difficult to do if the owner did not reside in the county where the property was located. Com. v. Holliday, 98 Ky. 617.

When the property was so listed it could only be subjected to the same rate of taxation imposed on like property owned by resident owners.

Accordingly we think no objection can be found to the legislation merely because it provided a different method for listing for taxation the property of non-resident owners from that provided for the listing of the property of resident owners.

Let us see now if there is or was at the time this case originated any statutory provision for the assessment and taxation of oil or gas leases held and owned by residents of the state or by persons who resided in the county where the lease sought to be taxed had a situs. Going back again to the Kentucky Statutes of 1894, which was the first edition issued following the adoption of the Constitution, and in which the provisions heretofore referred to prescribing the methods of listing for assessment the property, including coal, oil, or gas privileges or leases of non-residents are found, there is a schedule which contains a large number of items of property that should be listed for taxation but neither in it nor subsequent statutes was there any specific item calling for the listing for assessment of "mineral rights, trees, coal, oil or gas privileges or leases;" but there was and is a clause following the items specified, providing for the listing of the "value of all property not mentioned above," and plainly this blanket clause was...