Tree Farmers, Inc. v. Goeckner

• Decision Date: 07 October 1963
• Docket Number: No. 9184,9184
• Parties: TREE FARMERS, INC., a corporation, Plaintiff-Appellant, v. C. H. GOECKNER, County Assessor, Defendant-Respondent.
• Court: Idaho Supreme Court

Page 649

385 P.2d 649

86 Idaho 290

TREE FARMERS, INC., a corporation, Plaintiff-Appellant, v. C. H. GOECKNER, County Assessor, Defendant-Respondent.

No. 9184.

Supreme Court of Idaho.

Oct. 7, 1963.

Moffatt, Thomas, Barrett & Blanton, Boise, for appellant.

Wayne C. MacGregor, Jr., Pros. Atty., Idaho County, Grangeville, for respondent.

Ray McNichols, Orofino, Allan G. Shepard, Atty. Gen., Warren Felton, Asst. Atty. Gen., Boise, amici curiae.

McFADDEN, Justice.

Plaintiff-appellant, hereinafter referred to as appellant, is a Montana corporation, qualified to do business in Idaho. Defendant C. H. Goeckner, referred to as respondent, was at all times pertinent to this action, the duly elected qualified and acting assessor of Idaho County, Idaho.

This action was instituted by appellant to restrain respondent assessor from collection of personal property taxes for 1958 and 1959 on logs severed by appellant from United States Forest Service lands in the Lolo National Forest in Idaho County, pursuant to a contract between appellant and the Forest Service. A temporary restraining order was issued by the trial court. Later the cause was submitted to the court on facts as stipulated by the parties. The trial court entered a decree in favor of respondent assessor, ruling the assessment and tax to be valid, and dissolving the temporary restraining order. It is from this judgment or decree that this appeal was taken.

From the stipulated facts it appears that appellant and the Forest Service entered into a written contract entitled 'Timber Sale Contract', dated September 5, 1958. The contract required a performance bond which appellant submitted. By the contract the Forest Service agreed to permit appellant to cut the timber described therein from designated areas, and appellant agreed to cut, purchase, and remove such timber subject to the provisions of the agreement. The contract contains, inter alia, the following:

'2. It is hereby understood and agreed that, except as otherwise provided herein:

'a. All right, title, and interest in or to any timber included in this contract shall remain in the United States until it has been paid for, cut and scaled; and all right, title and interest in or to any timber which has been paid for, cut and scaled but not removed from the sale area by the purchaser within the period of this contract or any extension thereof shall revest in the United States.

'b. In the event any timber included in this contract is destroyed or damaged to the extent it is unmerchantable by fire, wind, flood, insects, disease, or similar cause the party holding title to the destroyed or damaged timber shall bear the loss in stumpage and required deposits resulting from such destruction or damage, and there shall be no obligation on the part of the Forest Service to supply, or on the part of the purchaser to accept and pay for, other timber in lieu of that destroyed or damaged: Provided, that damage to or loss of timber removed from the sale area before scaling shall be borne by the purchaser, and: Provided further, that this paragraph shall not be construed to relieve either party of liability for negligence.'

From the stipulation it further appears that pursuant to the contract the logs in question were cut, scaled and formally paid for in the calendar year of 1959, subsequent to the second Monday of January, subject to the deposits required by the Forest Service as security; that the cut timber was removed from Idaho County, Idaho, and transported to Montana prior to the scaling and prior to the formal payment being made by appellant; that the Forest Service required appellant to brand all logs so cut in order to identify the logs as to the area from which they were cut; that two-part load tickets were furnished by the Forest Service for each load of logs, the truck driver being required to have the lower half of such ticket in his possession until the logs were delivered to the scaling point in Montana, when the load ticket was surrendered to the Forest Service representative; that the trucks hauling the logs were stopped at various times to check the logs, identification marks and load tickets; that upon delivery of the logs to the mill in Montana, the Forest Service scaler scaled the load, after collecting the load ticket, and the scaler would stamp each log and attach a streamer to each load, whereupon appellant could then intermingle the logs with others.

The procedure of furnishing of the load-tickets, marking, scaling and paying for the logs was all in conformity with the contract provisions.

It is also stipulated that one of appellant's witnesses would testify to the following facts:

'That at the time bids are taken on Forest Service sales of timber a deposit is required and in the event the bidder received the contract, the deposit is retained by the government. This deposit is a guarantee that formal payment will be made for the timber after it has been cut and scaled. During the course of logging, the United States Forest Service bills the purchaser for lump sum amounts as additional deposits, to cover and secure payment for all timber cut, such deposits being made prior to the cutting of any timber not so secured, it being understood that at all times there must be sufficient security on hand to secure payment to the United States Forest Service for all timber cut or which may be contemplated to be cut before another bill for a future deposit is made.'

In the stipulation appellant also agreed that if the logs involved were found to be subject to assessment and taxation for the years 1958 and 1959, the method of assessment in the amount of the tax levied was correct.

Under the provisions of 16 U.S.C.A. § 500, Idaho County received 25% of all moneys received by the National Forest Service for the stumpage payments made in accordance with the contract. Appellant's contention that this was in lieu of taxes is without merit. Such payment is in the nature of an assistance grant, not in lieu of taxes; Trinity Independent School District v. Walker County, Tex.Civ.App., 287 S.W.2d 717.

The primary issue as presented by this appeal is whether Idaho County could assess and tax timber cut from National Forest Service lands by appellant when under the contract the title to the logs was reserved in the United States of America until the logs have been scaled and paid for, which in this instance occurred outside Idaho County and the State of Idaho.

Appellant contends that no legal title having passed to the appellant while the logs were in the State of Idaho, the logs were still the property of the United States and not subject to taxation by the State of Idaho. Idaho Const. Art. 7, § 4; I.C. § 63-105 and § 63-101. Appellant also contends the decision of this court in Winton Lumber Co. v. Shoshone County, 50 Idaho 130, at page 139, 294 P. 529, at page 532 is controlling here. In that case it was stated:

'The agreement of the lumber company to purchase did not vest title in it, equitable or otherwise, to the standing timber. Title to logs under the terms of that agreement [similar in import to the present agreement] would not vest until paid for, scaled and measured. None of these conditions obtained as to this 2,000,000 feet of timber on the second Monday of January, 1930. At the close of 1929, there was a balance to the credit of the lumber company of about a thousand dollars on the 1929 operations. On April 3, 1930, the company made a substantial payment. It then advanced $8,000 on account of the 2,000,000 feet it contemplated cutting that year. This timber, like the timber cut the year before, was on the second Monday of January the property of the government, exempt on that date and throughout the year.'

In 1949 I.C. § 63-105 was amended by S.L.1949, c. 269, which chapter added, among other provisions, the following:

'20. Provided, that if any property, real or personal, which is exempted from taxation on the second Monday in January shall thereafter have a changed status, either by change in ownership or otherwise, during the year, in such a manner that if the changed status had existed on the second Monday in January such property would have been taxable at that time, then such property shall be assessed in the following manner: If the status changed before April first, then for its full cash value; if between April first and July first, for three-fourths of its full cash value; if between July first and October first, then for one-half of its full cash value; and if the status changed after October first, then for one-fourth of its full cash value.'

I.C. § 63-105 was again amended, S.L.1957, c. 155, but the foregoing provision was not changed. As thus amended by S.L.1957, c. 155, I.C. § 63-105(20) is the statute under which this case is being considered (I.C. § 63-105 was later amended by S.L.1961, c. 42).

Respondent asserts, and we believe correctly, that the holding of this Court in Winton Lumber Co. v. Shoshone County, supra, must be considered in the light of the subsequent amendment of the exemption statute, and that case cannot be considered as controlling authority herein by reason of the later statutory enactment.

The trial court, in upholding the personal property tax on these logs, predicated its decision substantially upon the authority of Petition of Edward Hines Lumber Co., 196 Or. 420, 248 P.2d 720. In the Hines case the taxpayer had in its possession certain logs cut from national forest lands. Under the terms of the contract, title to the logs was vested in the federal government until they were scaled and paid for. At the time the logs were assessed by Lane county for tax purposes, they were located in the taxpayer's mill pond, and the government had sufficient money on deposit for the purchaser to pay for the logs in full, but none of the logs had been scaled by the government, as provided in the contract. It was conceded that legal title to the logs on ...