State v. Whittenburg
| Decision Date | 24 February 1954 |
| Docket Number | No. A-4281,A-4281 |
| Citation | 265 S.W.2d 569,153 Tex. 205 |
| Parties | STATE v. WHITTENBURG et al. |
| Court | Texas Supreme Court |
Paul new, County Attorney, Denver City, Klett, Bean & Evans, Lubbock, for petitioner.
Sanders, Scott, Saunders & Smith, C. J. Humphrey, Amarillo, Adkins, Folley, Adkins, McConnell & Hankins, Amarillo, for respondents.
This suit was instituted by petitioner, the State of Texas, in behalf of itself, Yoakum County, and political subdivisions of the county, against respondents, J. A. Whittenburg, Jr., and others, for the collection of ad valorem taxes for the years 1942 to 1949 inclusive, alleged to be due and unpaid on account of respondents' ownership of mineral interests, referred to herein as oil payments, in three sections of land in Yoakum County. The trial court granted petitioner's motion for instructed verdict and rendered judgment for petitioner against respondents, J. A. Whittenburg, Jr., and Roy R. Whittenburg, as trustees of the J. A. Whittenburg Estate, for.$20,229.70, against a number of respondents described as Geo. A. Whittenburg Heirs for $10,038.72, and against several respondents described as beneficiaries of the Mattie Hedgecoke Estate for $1,428.80. A substantial part of the judgment is for penalties and interest.
The Court of Civil Appeals, holding that the evidence raises an issue or issues of fact as to the validity of the valuation and assessment of the oil payments, reversed the judgment of the trial court and remanded the cause. 259 S.W.2d 270.
On July 20, 1937, J. A. Whittenburg, Jr., and Roy R. Whittenburg, executors of the estate of J. A. Whittenburg, and others of the respondents executed to Denver Producing and Refining Company as lessee two oil and gas leases, one of Surveys Nos. 831 and 863, and the other of Survey No. 830, Block D, John H. Gibson, grantee, in Yoakum County. Each of the leases reserved to the lessors as free royalty the equal one-eighth part of all oil produced and saved from the leased premises, and a one-eighth gas royalty; and each of the leases reserved also to the lessors an additional one-fourth of the minerals to be produced by the lessee, free of cost or expense to the lessors, and delivered to the credit of the lessors in the same manner as provided for delivery of the one-eighth royalty, 'until lessors, their heirs, representatives and assigns shall have received from the net proceeds derived from the sale of said additional one-fourth interest reserved a sum of money equal to $1250.00 per acre for each and every acre in the above described lease.' Survey 830 being a school land section sold by the State with reservation of the minerals, the lease of that survey provided that the lessee should pay to the State of Texas its share of the consideration and make other payments in accordance with the requirements of the Relinquishment Act.
The valuation for taxation of the oil payment of $1,250 per acre, payable out of the one-fourth interest in the minerals, admittedly an interest in land and taxable as such, is the subject matter of the controversy herein. Oil was soon produced under the leases. The payments from production were regularly made and full payment of the $2,400,000 measuring and limiting the reservation of the one-fourth interest was completed early in 1949.
Of the $2,400,000 payable under the reservation, $2,000,000 was payable to the respondents. During the years 1938, 1939, 1940 and 1941, the respondents received the sum of $284,093.56, leaving unpaid and remaining due thereon the sum of $1,715,906.44. The remaining unpaid portion of the oil payment, the percentage this portion bore to the whole payment, rounded to even figures, and the assessed valuation for each of the years on the oil payment and the reversion is shown in the following table:
Unpaid Portion % of Whole Assessed Assessed
of Oil Payment Payment Valuation Valuation of
Reversion
1942 $1,715,906.44 86% $276,940.00 $ 500.00
1943 1,639,618.13 82% 264,800.00 500.00
1944 1,549,971.67 77% 263,940.00 500.00
1945 1,372,229.92 69% 279,080.00 500.00
1946 1,207,156.53 60% 281,540.00 500.00
1947 1,029,688.12 51% 294,580.00 40,000.00
1948 692,809.01 35% 271,160.00 307,640.00
1949 150,898.13 7 1/2% 20,000.00 438,322.00
The State made a prima facie case of the validity of the assessed valuations by introduction in evidence of the official records. Article 7326, Vernon's Annotated Civil Statutes; State v. Republic Natural Gas Co., Tex.Civ.App., 181 S.W.2d 592, writ ref. w. m. The burden then rested on the respondents, if they expected to prevail, to go forward with proof which would meet the requirements of law for avoiding the valuation. In discharge of this burden, respondents contented themselves with introduction of certain records highlighting comparative values placed on the unlimited 1/8 royalty owned by them and on the reversionary interest owned by the lessee in the 1/4 of production out of which the oil payment was to be made. They offered no testimony whatever as to the market value in the years involved of any of the three property interests-the oil payment, the reversionary interest in the 1/4 of production, or the umlimited 1/8 royalty. Neither did they offer any testimony of the market value of, or the value assessed by the Boards of Equalization on, any other like property in the county.
Article VIII, § 1 of the Vernon's Ann.St. Constitution provides that 'Taxation shall be equal and uniform' and that all property 'shall be taxed in proportion to its value, which shall be ascertained as may be provided by law.' By Article 7174, Revised Civil Statutes, 1925, the legislature has directed that 'real property shall be valued at its true and full value in money,' and by Article 7212 has directed boards of equalization to hear evidence touching the 'market value or true value' thereof. Our courts have interpreted these provisions to mean that assessed valuations shall be based on 'the reasonable cash market value' of property. Rowland v. City of Tyler, Tex.Com.App., 5 S.W.2d 756, 760.
Since the courts of this state, in common with the courts of other jurisdictions, early recognized that exact uniformity and equality of taxation was unattainable, Rosenburg v. Weeks, 67 Tex. 578, 4 S.W. 899, 901; Cooley on Taxation, 4th Edition, Vol. 1, § 259, they have sought through the years to lay down certain rules by which the force of an attack on assessed valuations, duly fixed by boards of equalization, may be measured.
It is now well settled that the assessment of property for tax purposes is a quasi-judicial function of boards of equalization and that no attack on valuations fixed by such boards can or will be sustained in the absence of proof of fraud want of jurisdiction, illegality, or the adoption of an arbitrary and fundamentally erroneous plan or scheme of valuation. State v. Houser, 138 Tex. 28, 156 S.W.2d 968, 970-971; Druesdow v. Baker, Tex.Com.App., App., 229 S.W. 493, 495. Moreover, when their official action is attacked it will be presumed that such boards discharged their duties as public agencies according to law and acted in good faith. Zachary v. City of Uvalde, Tex.Com.App., 42 S.W.2d 417; Lubbock Hotel Co. v. Lubbock Ind. School Dist., Tex.Civ.App., 85 S.W.2d 776, no writ; Hinkson v. Lorenzo Ind. School Dist., Tex.Civ.App., 109 S.W.2d 1008, writ dism.
While it has been held that a grossly excessive valuation may, in law, be sufficient to establish such fraud or illegality as to render a valuation void, Johnson v. Holland, 17 Tex.Civ.App. 210, 43 S.W. 71, writ denied; City of Sweetwater v. Biard Development Co., Tex.Civ.App., 203 S.W. 801, no writ; Simkins v. City of Corsicana, Tex.Civ.App., 86 S.W.2d 792, no writ; Howth v. French Ind. School Dist., Tex.Civ.App., 115 S.W.2d 1036; French Ind. School Dist. v. Howth, 134 Tex. 211, 134 S.W.2d 1036, it is held with equal emphasis that mere errors in judgment or the fact that a trial judge or jury differs with the valuation fixed will not suffice as a basis for avoiding the board's action. Simkins v. City of Corsicana, supra; Druesdow v. Baker, supra; State v. Houser, supra.
If a valuation fixed by a board of equalization is attacked on the ground of unlawful or arbitrary discrimination it is not sufficient to show, comparatively, that in other isolated instances, property of equal or greater value than that in suit, was valued at less, Dallas County v. Dallas Nat. Bank, 142 Tex. 439, 179 S.W.2d 288, or even that other property was omitted from the tax rolls altogether, Sam Bassett Lbr. Co. v. City of Houston, 145 Tex. 492, 198 S.W.2d 879; City of Wichita Falls v. J. J. & M. Taxman Ref. Co., Tex.Civ.App., 74 S.W.2d 524, writ refused; Howth v. City of Beaumont, Tex.Civ.App., 118 S.W.2d 350, no writ, except where the omission was the result of a deliverate and arbitrary plan or scheme to permit certain classes of property to escape their fair share of the tax burden. City of Houston v. Baker, Tex.Civ.App., 178 S.W. 820, writ refused. To prevail on the basis of unlawful discrimination it is not necessary that the taxpayer make a comparative showing with all other property in the county, Dallas County v. Dallas Nat. Bank, supra, but he must make at least a reasonable showing in that respect. Ibid.
When the attack is made because the board followed an arbitrary plan or scheme of fixing values, the taxpayer, to prevail, must show not only that the plan was an arbitrary and illegal one but also that the use of the plan worked to his substantial injury. Druesdow v. Baker, supra; Rowland v. City of Tyler, Tex.Com.App., supra; Lubbock Hotel Co. v. Lubbock Ind. School Dist., supra, 85 S.W.2d at page 778, where it is said: 'A mere theory...
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