Whelan v. State

Citation155 Tex. 14,282 S.W.2d 378
Decision Date13 July 1955
Docket NumberNo. A-4921,A-4921
PartiesD. E. WHELAN et al., Petitioners, v. The STATE of Texas et al., Respondents.
CourtSupreme Court of Texas

John E. Taylor, Marshall, Morton Taylor, Sinton, Dibrell, Gardner, Dotson & Graham, Sam J. Dotson, San Antonio, Hart, Brown, Sparks & Erwin, James P. Hart, Austin, for petitioners.

C. M. Turlington, Marshall, Shirley W. Peters, Dallas, for respondents.

CALVERT, Justice.

The State of Texas and other taxing units sued D. E. and R. J. Whelan for unpaid and delinquent ad valorem taxes for the years 1950, 1951 and 1952 and for statutory penalties and interest thereon. Judgment of the trial court for the plaintiffs was affirmed by the Court of Civil Appeals. 271 S.W.2d 108.

We have concluded that the judgments of the courts below must be reversed for reasons to be hereinafter assigned; but petitioners insist, for several reasons, that judgment should be here rendered setting aside the assessments for the years in question without prejudice to the right of taxing authorities to reassess their properties for such years. It is to these matters that we must first give our attention.

Primarily, petitioners' complaint is that in arriving at assessed valuations of property in Harrison County for the years in question taxing authorities unlawfully and arbitrarily discriminated against them. In particular, they contend that whereas, admittedly, their producing oil and gas properties and other real properties were assessed at a minimum of from 30% to 33 1/3% of reasonable cash market value, other property interests were assessed, arbitrarily, at a much lower percentage of value. The general plan of the Board of Equalization was to assess at 33 1/3% of value.

The record discloses rather clearly that all non-producing oil and gas leases in the county were assessed at an arbitrary flat rate of $1 per acre, wholly irrespective of actual market value, and that cattle were assessed at an arbitrary flat rate of approximately $15 per head, wholly irrespective of actual market value. This method of assessing non-producing oil and gas leases and cattle was clearly contrary to the injunctions put upon taxing authorities by Article VIII, Section 1 of the Constitution of Texas, Vernon's Ann.St., and the statutes of this state, which require that assessed valuations be arrived at on the basis of reasonable cash market value. State v. Whittenburg, Tex., 265 S.W.2d 569, 572; Rowland v. City of Tyler, Tex.Com.App., 5 S.W.2d 756, 760. But the mere fact that taxing authorities arbitrarily disregard the true and legal basis of arriving at assessed valuations does not, of itself, entitle a litigating taxpayer to relief. To be entitled to relief he must also show that the arbitrary or unlawful plan or scheme of arriving at assessed valuations resulted in substantial injury to him. State v. Whittenburg, supra; Druesdow v. Baker, Tex.Com.App., 229 S.W. 493, affirmed Baker v. Druesdow, 263 U.S. 137, 44 S.Ct. 40, 68 L.Ed. 212; City of Arlington v. Cannon, Tex., 271 S.W.2d 414, 417. Exact uniformity and equality of taxation is an unattainable ideal. Rosenburg v. Weekes, 67 Tex. 578, 4 S.W. 899, 901; Cooley on Taxation, 4th Ed., Vol. 1, § 259.

There is no conclusive proof of substantial injury to petitioners from the arbitrary valuation of non-producing oil and gas leases at $1 per acre. The record shows there was an average of approximately 200,000 acres in non-producing leases on the tax rolls in each of the years in question. The petitioners themselves rendered 1189.84 acres in non-producing leases which were assessed at $1 per acre. Testimony indicated that non-producing leases in the county had a market value of from $5 to $200 per acre. We do not think the testimony is reasonably susceptible to the interpretation that the assessed valuation of $1 per acre placed on petitioners' non-producing leases represented one-third of their market value but that the assessed valuation of $1 per acre placed on other non-producing leases was an arbitrary value arrived at irrespective of market value. There was testimony that all non-producing leases were assessed at $1 per acre irrespective of market value and this would include petitioners' non-producing leases. There is in the record no testimony as to the market value of petitioners' non-producing leasehold interests other than the value shown on the tax rolls. In the absence of evidence and proper findings of the market value of petitioners' non-producing leasehold interests and evidence and proper findings of the market value of all other non-producing leasehold interest, we have no way of knowing and no basis for holding as a matter of law that the arbitrary assessed valuation of $1 per acre on all property of this type has resulted in substantial injury to the petitioners. It may have operated to their benefit. State v. Whittenburg, supra.

There were 35,000 head of cattle rendered in 1950, 40,000 in 1951, and 50,000 in 1952. They were assessed at from $10 to $15 per head. Petitioners neither rendered nor owned cattle. They offered opinion testimony that grown cattle had a market value in Harrison County during the period in question of from $40 to $1,000 per head. On the other hand, as pointed out by the Court of Civil Appeals, there was testimony that the cattle rendered included 'big, little, old, young and scrubs'. The burden was on petitioners to show that the arbitrary assessment of all cattle at $15 per head, one-third of a market value of $45 per head, resulted in substantial injury to them. Obviously it cannot be said that the general opinion testimony tendered by petitioners established as a matter of law that the market value of the cattle rendered was greater or substantially greater than the value placed thereon by the Board of Equalization, or that substantial injury has been established as a matter of law.

In addition to the evidence offered to show the arbitrary values placed on non-producing oil and gas leases and cattle, petitioners also offered testimony that their property was assessed at 33 1/3% of a value many times over its market value but this testimony was sharply contradicted. Also they offered testimony to show that, comparatively, their oil and gas producing properties, by virtue of a formula used by the Boards of Equalization, were assessed at a much higher percentage of market value than were similar properties owned by Hollandsworth Oil Company and Stanolind Oil & Gas Company, but this testimony was also contested. On neither basis can we hold as a matter of law that the assessed valuations of petitioners' properties are illegal and void.

The record reflects that the commissioners court of Harrison County employed an expert to assist in arriving at the value of producing oil and gas properties, but there is no conclusive showing that the members of the court, sitting as a board of equalization, abdicated their function and accepted the valuations of the expert without giving petitioners an opportunity to appear and be heard as was done in Simkins v. City of Corsicana, Tex.Civ.App., 86 S.W.2d 792, no writ history. The fact that the board, after hearing, approved the valuations substantially as fixed by the expert would not render them illegal and void. The enlistment of expert assistance in such matters is not to be condemned.

In their fourth point of error petitioners complain that the undisputed evidence shows that the 1952 assessed valuation was based on intrinsic rather than reasonable cash market value. Intrinsic value is the basis for arriving at assessed valuation only when there is evidence that the property has no market value. Harlingen Independent School Dist. v. Dunlap, Tex.Civ.App., 146 S.W.2d 235, 237, writ refused; City of Austin v. Cannizzo, Tex., 267 S.W.2d 808, 812; West Texas Hotel Co. v. City of El Paso, Tex.Civ.App., 83 S.W.2d 772, no writ history. By their sixth point petitioners assert that it was error to permit oral evidence that their taxes for 1952 were delinquent. We need not consider these matters further for they may not occur on another trial.

Petitioners' application for writ of error was granted on their fifth point directed at the refusal of the trial court to admit evidence showing the amount of taxable bank deposits omitted from the tax rolls. We have concluded that the exclusion of this evidence was error which requires a reversal of the judgments below.

Petitioners offered evidence tending to show that the omission of bank deposits from the tax rolls was deliberate, arbitrary and systematic, and resulted in this species of property escaping taxation altogether. Neither respondents nor amicus curiae really contend otherwise. What they do contend is that bank deposits are not taxable and that, even if taxable, the failure to tax such deposits would not afford petitioners any basis for relief.

We full well realize the practical difficulties and problems to be encountered in taxing bank deposits, but to hold that they are not taxable would require us to fly in the very face of the Constitution and the Statutes of this state. This no court is at liberty to do.

Article VIII, Section 1 of the Constitution declares that 'Taxation shall be equal and uniform' and that 'all property * * * shall be taxed in proportion to its value.' We are not called upon to decide whether the Legislature could define the word 'property' as used in the Constitution in such terms as to exempt money or bank deposits from taxation. The Legislature has not undertaken to so define it. On the contrary, it has, by its Acts, defined the word 'property' so as to specifically include money and bank deposits and to require their taxation. Article 7145, V.A.C.S., provides that 'all property, real, personal or mixed, * * * is subject to taxation, and the same shall be rendered and listed as herein prescribed.'

Article 7147 provides: 'Personal property, for...

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