Small v. Sun Oil Co., 37098

• Decision Date: 23 April 1969
• Docket Number: No. 37098,37098
• Citation: 222 So.2d 196
• Parties: Lucille SMALL, Tax Assessor of Hendry County; T. E. Hedges, Tax Collector of Hendry County; and Fred O. Dickinson, Comptroller of the State of Florida, Appellants, v. SUN OIL COMPANY, a corporation, Appellee.
• Court: Florida Supreme Court

Page 196

222 So.2d 196

Lucille SMALL, Tax Assessor of Hendry County; T. E. Hedges, Tax Collector of Hendry County; and Fred O. Dickinson, Comptroller of the State of Florida, Appellants, v. SUN OIL COMPANY, a corporation, Appellee.

No. 37098.

Supreme Court of Florida.

April 23, 1969.

John M. Potter, Clewiston, for appellants.

Julian D. Clarkson, of Henderson, Franklin, Starnes & Holt, Fort Myers, for appellee.

Earl Faircloth, Atty. Gen., T. T. Turnbull and Fred M. Burns, Asst. Attys. Gen., for amicus curiae.

ROBERTS, Justice.

The appellants have appealed to this court from a judgment passing directly on the validity of a state statute, as authorized by Section 4(2), Article V, Florida Constitution, F.S.A.

The statute in question, Ch. 22784, Laws of Florida, Acts of 1945, as amended by Ch. 23883, Laws of Florida, Acts of 1947, was codified as Ch. 211, Florida Statutes, F.S.A. It levies an excise tax of five percent on the production of oil and gas in this state and provides that the tax is made up of 'two separate taxes', namely, the 'first oil and gas tax' consisting of 80 percent of the total tax for the state for the use of the state's general revenue fund, and the 'second oil and gas tax' consisting of 20 percent of the total tax for the county in which the oil and gas is produced for the use of the general revenue fund of the board of county commissioners. Sec. 211.02(1)(a) and (b), Fla.Stat., F.S.A. Subsection (2) of Section 211.02 states the legislative intent in imposing 'two separate taxes' as follows:--

'(2) It is the intention of the legislature to impose the first oil and gas tax as a state excise tax and to impose the second oil and gas tax as a county excise tax to compensate the county in which oil and gas is produced for the loss of ad valorem taxes by reason of the provision of this chapter, and to make it possible for the board of county commissioners of such county to provide the additional public services that will be required in a county where oil and gas are produced.'

Section 211.13 of the Act prohibits the imposition by any other taxing unit of an additional excise tax and directs the several tax assessors of the counties and cities not to increase the value of the land for ad valorem tax purposes because of the existence of subsurface oil and gas for the reason that 'it is impossible under known valuation methods to accurately ascertain the true value of oil and gas in place and taxation thereof is more certainly accomplished after its capture or severance from the earth or water.' Sec. 211.13. The remainder of this section reads as follows:--

'The value of land for ad valorem tax purposes shall not be increased by reason of the location thereon of any producing oil or gas equipment or machinery used in and around any oil or gas well and actually used in the operation thereof and No ad valorem tax shall be imposed upon such producing equipment and machinery.' Sec. 211.13, Fla.Stat., F.S.A. (Italics supplied.)

The appellee Sun Oil Company had for many years paid an excise tax of 5 percent on the oil produced by its Hendry County well, as required by Ch. 211, supra. The controversy resulting in the instant suit arose when the appellant Lucille Small, as Tax Assessor of Hendry County, notified the appellee that an ad valorem personal property tax for the year 1966 had been assessed against certain machinery and equipment used by the appellee at its oil well in the county. The appellee filed suit to enjoin the collection of the ad valorem tax, basing its complaint on the provision of the statute quoted and italicized above. The defendant-appellants (being the county tax assessor, the county tax collector, and the State Comptroller) first defended on the ground that the items of machinery and equipment assessed for the tax were not 'producing' equipment and machinery and therefore were not entitled to the benefit of the provision in question. When this issue was resolved by the trial judge in appellee's favor, the appellants amended their Answer to allege that the provision in question was an unconstitutional exemption of personal property from ad valorem taxation contrary to Section 1, Article IX, Florida Constitution, F.S.A. The trial judge sustained this contention and held also that the exemption provision was not severable from the remainder of the statute. From his final judgment declaring the entire Act, Chapter 211, Florida Statutes, F.S.A., to be invalid, this appeal has been taken.

As noted above, the appellee had for many years paid an excise tax on the crude oil produced by it in Hendry County. Presumably, the county tax assessors and collectors in the several counties of this state in which producing oil and gas wells are located, as well as the Hendry County tax assessor, considered the county excise tax to be a fair and reasonable substitute for the ad valorem tax which would otherwise, but for the provision in question, have been assessed against the producing machinery and equipment located in the county. This would appear to be a fair assumption in view of the fact that the Act, Ch. 211, supra, has been on our statute books for over twenty years without, so far as we can tell, any question having been raised as to the validity of the provision relieving from ad valorem taxation the producing equipment and machinery--much of which, it is said in brief, is required only for measuring the crude oil for the purpose of reporting and paying the excise tax on its production. The parties to this appeal have not, however, questioned the trial judge's conclusion that the provision in question constitutes an exemption from taxation that violates Section 1 of Article IX of our constitution; and we have, accordingly, proceeded on that basic premise in considering the only question presented here, that is, whether the trial judge was correct in holding that the entire statute must fall because the invalid exemption provision was not severable from the remainder of the Act.

The rule as to severability by which he must be guided here has been long established and many times stated by this court: The fact that a portion of an Act may be unconstitutional does not mean that the entire statute must fall. If the legislative purpose expressed in the valid portions of the Act can be accomplished independently of the invalid provisions, and if, considering the Act as a whole, it cannot be said that the Legislature would not have passed the valid portion had it been known that the invalid portion would fall, then it is the duty of the court to give effect to so much of the statute as is good. State ex rel. Arpen v. Brown, 19 Fla. 563; State ex rel. Moody v. Baker, 20 Fla. 616; Wooten v. State, 1883, 24 Fla. 335, 5 So. 39, 48, 1 L.R.A. 819; English v. State, 1893, 31 Fla. 340, 12 So. 689, 692; State ex rel. Attorney-General v. Dillon, 1893, 32 Fla. 545, 14 So. 383, 394, 22 L.R.A. 124; Ex parte Pitts, 1895, 35 Fla. 149, 17 So. 76, 77; State v. Atlantic Coast Line R. Co., 1908, 56 Fla. 617, 47 So. 969, 977; Phillips v. Bell, 1922, 84 Fla. 225, 94 So. 699, 701; State ex rel. Adams v. Lee, 1936, 122 Fla. 639, 166 So. 249; State v. Calhoun County, 1936, 126 Fla. 376, 170 So. 883; State ex rel. Limpus v. Newell, Fla.1956, 85 So.2d 124; Cramp v. Board of Public Instruction of Orange Co., Fla.1962, 137 So.2d 828; and Davis v. State, 1962, 146 So.2d 892.

The fact that the offending provision is not self-contained in a separate section of the statute does not prohibit the court from applying the severability rule. State ex rel. Attorney-General v. Dillon, supra, 14 So. 383, 395; State ex rel. Adams v. Lee, supra, 166 So. 249. It might be noted also that the absence of a so-called severability clause in the statute does not prevent the court from exercising its inherent power to preserve the constitutionality of an Act by the elimination of invalid clauses if it is possible to do so under the severability rule. State v. Calhoun County, Supra, 170 So. 883, 886. When a severability clause is included in the statute, as it was in the Act Sub judice, the expressed legislative intent in this respect should be carried out unless to do so would produce an unreasonable, unconstitutional or absurd result. Louis K. Liggit Co. v. Lee, 1933, 109 Fla. 477, 149 So. 8, 9. It would seem to be especially important to carry out the legislative direction as to severability in a revenue measure. See State ex rel. Adams v. Lee, supra, 166 So. 249, 252; Louis K. Liggitt Co. v. Lee, supra, 149 So. 8. When, however, the valid and the void parts of a statute are mutually connected with and dependent upon each other as conditions, considerations, or compensations for each other, then a severance of the good from the bad would effect a result not contemplated by the Legislature; and in this situation a severability clause is not compatible with the legislative intent and cannot be applied to save the valid parts of the statute. See City of Jacksonville v. Ledwith, 1890, 26 Fla. 163, 7 So. 885, 894, 9 L.R.A. 69; cf. Hayes v. Wakler, 1907, 54 Fla. 163, 173, 44 So. 747, 750.

Applying these rules to the statute Sub judice, we have no difficulty in holding that the exemption provision in question may be eliminated without disturbing the valid portions of the Act providing for a State excise tax on oil and gas production. This purpose obviously can be accomplished independently of the exemption provision; and the legislative plan provided for the levy and collection of the tax is not affected by the exemption provision. The State of Florida is prohibited from levying an ad valorem tax on real and tangible personal property (Sec. 2, Art. IX, Fla.Const. of 1885; Sec. 1, Art. VII, Fla.Const. of 1968, F.S.A.), so that the ad valorem tax exemption could not possibly have been the inducement, monetarily, for the imposition of the state excise tax. There is nothing in the statute to indicate that the exemption was, for any...