Atlantic Refining Co. v. Oklahoma Tax Commission

COMPANY, ATLANTIC REFINING Error, Plaintiff COMMISSION,

OKLAHOMA TAX Error. Defendant

No. 38094.

Supreme Court Oklahoma.

Sept. 22, 1959.

Rehearing Dissenting Denied and Opinion April 4, Filed used the measure as the (without

puting for the cost allowing the deduction trucking an addition- or and made hauling) al assessment. paid

Atlantic tax under the additional protest requested hearing before and prescribed Oklahoma Commission Act, being the Uniform Tax Procedure Hearing Title O.S.1951 1470-1474. §§ Fowler, Cochran, Charles B. Richard W. Tax Commis- had and thereafter the Rucks, Fowler, Cochran, Baker Dudley, affirming entered its order the addi- sion City, plaintiff in Jopling, & Oklahoma duly per- and Atlantic tional assessment error. appeal fected to this Court. its Barry, City, R. F. for defend- Oklahoma The Tax contends Commission ant in error. paragraph under the last Title Carlson, Jr., Arrington, S. L. Equal the State Board of John John Matthews, Carlson, Lupardus, Holliman & ization deter jurisdiction has exclusive Bowen, Tulsa, Huffman, Tulsa, George H. whether mine as Davis, City, M. Howard Oklahoma sessed in accordance with the Gross Pro Jesse Davis, Gill, Greve, Joseph How- A. Paul excessive, duction Act is and that Atlantic’s J. Harris, Tulsa, Heady, ard H. Kenneth appeal proper. to this Court is not Kennedy, Bartlesville, Mainard Oklahoma pertinent portion fol Section 821 is as City, Kerr, Tulsa, Hawley A. C. Yates lows : Land, Lashley, Miller, Miriam Har- S. “ John * * * The State Board Richards, ry Page, Tulsa, D. W. Robert Equalization, initiative, upon its own City, Rolston, Tulsa, Oklahoma Robert Na- may, any complaint per- and Scarritt, Standeven, Enid, than Norton son who he claims that is taxed too Tulsa, City, Stanton, Oklahoma Robert J. hereunder, great a rate take shall Williams, Bartlesville, R. M. W. John testimony to determine whether Wolfe, City, amici Okahoma curiae. imposed greater, herein are or Q. Williamson, Gen., Atty. Mac than the general less ad valorem tax James Harlcin, Atty. Gen., C. Asst. State of purposes prop- for all would be on the Raymond ex Gary, rel. Gover- erty producer subject of such to taxa- nor of the State of Oklahoma. tion in district or districts where same is situated and the value of also

IRWIN, Justice. oil, leases, gas, or mineral or of the Company, The Atlantic Refining herein- mining rights, or mineral ma- Atlantic, after referred to as chinery, filed equipment, appliances production tax respect returns with to oil operation used in the actual produced by Texas, Beaver, it in mine, Cleve- any around such well or land, period McClain oil, counties for the gas, asphalt any value of the through May November said ores mineral pipe There were no any line connections other element of value in lieu of the wells or leases involved which the tax herein is levied. The due, puting the tax from power deducted said board shall have and it duty cost shall be its to raise or lower the trucking or hauling pipe imposed the oil to the rates herein to conform there- purchaser. line or the station of the appeal may An to. had from the Equal- there where are no line connections the State Board decision of thereon, any person ag- contends leasehold? Atlantic ization Court, computed cash like on “the actual Supreme grieved to the pro- pro- place value thereof at the time and effect as manner with like appeals “gross place from duction” or said vided law in other duction”, court; provided, that both the actual being Board said handling ceived, collected less after tax has been paid protest, production. no distributed, or complaint rate there- tax should with reference to contends being the of, “gross shall heard or considered.” assessed value” deducting the price, without We cannot sustain the Commis- cost handling of contending position sion’s as Atlantic is not pipe line place production to the of pro- but high, rate of the tax too is place delivery. or the of incorrectly poses the Tax Commission which upon determined the amount gross produc question Without question tax computed. should be O.S. tion of Title 68 tax levied virtue presented to the Tax 821, lieu property 19S1 in is a tax levied § 821, part construction the first of Sec. of Oil of an Prairie ad tax. Sinclair valorem in intention of 289, P.2d Company State, v. Okl. 53 175 phrases use actual cash value of “the 221; Co., Okl. Royalty State Indian 177 v. place produc- at thereof the time and 238, 601; Lead & 58 In re Skelton P.2d produc- tion” gross and “the Tax, Company’s Zinc Production Gross tion” levying the tax. 495; 134, 81 Meriwether v. 197 P. Okl. 200; Lovett, 73, Josey P.2d Okl. produc- Had thought gross Atlantic v. Oil Co. Board of Commissioners greater taxes than as were assessed Payne 266, County, 231 P. 272. general a would under have assessment, ad valorem it have could have heretofore determined 821, portion ceeded under the above production gross produced when for oil is requested Equalization the State Board purposes. tax In Prairie Oil Co. Sinclair for a determination from sub- evidence State, supra, we said Okl. [175 However, only proposes mitted. P.2d 223]: that the gross value of the oil on which the produced may to “Oil said incorrect, tax was assessed is purposes gross production taxation appeal is therefore entitled to meaning of the statute when within the Court under the Uniform Tax Procedure surface and con- brought is reasonably Act. parts of When an act are permit its a fined in such manner as susceptible give a construction will quantity as its test- measurement both, either, effect to violence ing as to value.” such adopted. Rogers should be Okla- Commission, Okl., homa Tax 263 P.2d 409. the nature of Having determined gross oil is tax and when Having disposed jurisdic next purposes, we consider production tax question tional our we will direct attention the basis governing the statute At Although merits the case. computation the tax should be made. propose lantic and the Tax Commission applicable, as so far Title 68 support thereof, pre issues and in several provides: law, sent their theories and rules of there firm, or “Every person, association only one basic to be determined: issue mining or in the engaged corporation trucking hauling Are the or oil costs for * * * State within this production, place delivery ato deduct line or crude oil or other petroleum computing gross ible therefore, or the amount received gas mineral natural other and/or monthly, file amount could gas, shall, or should casinghead ceived”, Legis- controlling with the Oklahoma pre- oath, lature intended that the same definition forms statement under applied determining gross it, showing scribed the location operated supra. oil under Section gas each mine or oil well firm, corpo- person, controlled such levying It is be noted that in during the last ration or association properties the uranium kind of preceding monthly period; Pro- did not amend the. Gross mineral, produced; gas oil or controversy duction Act in which indicates produced; and amount thereof that the said act intended for the time the actual cash value thereof existed, to stand as it and the administra- production, including placed tive construction that had been premiums and all from the sale received thereon to connection also stand. * * thereof; *, shall, at the specifically provided the 1955Uranium Act * * * equal to pay same time a tax any mineral, “that sub- substance or matter per gross value centum the five jected by to the tax the levied aforesaid the petroleum other Sections of (Gross the Statute Production crude or hereby mineral oil which is 842, Act now codified to as Sections 821 * * levied inclusive) shall subjected not be the tax by Apparently levied this Legis- Act.” the A analysis careful of the statute above lature properties believed that uranium discloses that “actual value cash thereof were in subject fact a foreign different the production” appears time and to oil. We therefore hold that the referred only portion in relating proce to definition controlling would not be dure filing monthly reports and is an legislative “gross definition of item of information which must be listed production” properties. for oil produced, with the kind of mineral produced, amount etc. The substantive en Since the did not de actment portion or the “levying” of the fine the term “gross value”, nor can the per statute reads “five the gross centum of meaning be adduced from the Gross Pro production.” of the pro a Since Act, duction we will consider intent of portion cedural purpose of an act is for usage. in its The act has implementation not, and does unless not been materially amended since its first particularly stated, qualify or limit a sub enactment, and in determining legis portion; stantive portion the substantive intent, lative it is our privilege to look to the statute is controlling and the tax should history of the times when the act was per levied on five centum “gross of the passed. Usually history strongly tends value” and not on the “cash value.” Bielke to disclose the reason legislation Crystal Sugar American Company, 206 the conditions sought to be remedied. 308, Minn. 288 N.W. 584. Am.Jur., page 224, the follow ing rule is stated: “gross pro The term value of the “ * * * gross pro in the Since, duction” was not defined in determining the meaning judi act has its statute, duction nor meaning of a of the terms However, cially determined Court. aim is to discover the connotation Legislative the 1955 Atlantic contends en which the attached gross production which levied a actment words, phrases employed, and clauses uranium, (Title Supp. the words of a statute must be taken in 848(5), which defined the “gross they term the sense in which were under- being value” as “the value of ore imme stood at the time when the statute was diately after being produced, mined or enacted, and the statute must be con- under- was it to be administered. The State Auditor was intended strued as first passed.” charged with administer- when was the duties of stood ing the original interpretation act and his P. Rail R. & Chicago, I. In the case of “gross posted of the term value” was P. Gist, road Co. price field oil in the where the field or area we held: produced. since statute, may “Courts, a construing in it took over the enforcement of the act history of propriety recur to the with consistently the term construed passed; it was times when in an identical manner. From the effective as- necessary, frequently in order objected date of the act to the date the mean- well as certain reason as rule used the Commission it. particular provisions in ing of tax, puting paid, with- the tax has been during history times “The exception, out on the strongly was enacted tends which law the field or area where act, and disclose the reasons for deductions. Those liable for the reme- sought therefore the evils recognized interpretation placed died. phrase by responsible those for the en- derived from light “Whenever can be acquiesced forcement of the act and judi- sources, such the courts will take interpretation. contempo- cial notice facts of .the interpreta held that an history, prior state of raneous ambiguous depart of an statute law, particular abuse defect charged ment with administration remedy, which the act was meant to enforcement, where such construction the apply language will then of and the observed, consistent, uniform and act to such act state of affairs.” upon acquiesced long period ed in for a Rahhal, See Okl. also Silmon v. 178 time, given great weight by of is be this 62 P.2d 501 case was wherein the above in considering court the the statute. In cited approval. with of case Lincoln National Co. v. Life Ins. history the oil business Reviewing of the Read, 156 we P.2d pipe lines were find where we in Oklahoma said: to what available, oil was moved not “The long-continued of construction spur loading rack or railroad was called department by a statute government of transported cars and tank into and loaded charged with its execution is entitled The value processor. by the ultimate rail to great weight be should not by the tax oil was determined of the overturned cogent without reasons. price posted field on the made assessment Great Northern Life Insurance Com- producer received each area and in that pany Read, Cir., F.2d 44.” The paid the same tax. price and the same by gravity Quoting case, determined price field was the Federal Court was gravity Great Northern Company all oil of the same Life Insurance of oil and Read, kind, supra, like character considered oil of we find the court used basis. based taxes quality and the was the same determining the paid were be hauled There was no except gravity price paid and the by computed on the same placed other oil, gross value of the oil in a whether known method field producers the oil line. price language gent struction “ government n ^[*] * * is entitled reasons. not page be overturned without co- a statute charged convened long-continued great weight by with many times department its execu- con- period during of administrative with the history In connection expressing dis- times, its it is well to consider how act has construction may approval. case, re- whereupon That silence of this Honorable C. John acquiescence approval City ap- garded duly in or as Andrews of Oklahoma pointed Special construction. administrative to serve stead as his Jus- provisions statutory Similar tice. construed.” so inter- From the time the administrative ANDREWS, Special (dissenting). Justice by Audi- pretation made was first State This is a It is not a tax. tor, session no action has been taken at transportation duction “in lieu” Its tax. inter- of the to disavow such exempts production facilities from effect pretation by State placed act as on the exempt ad valorem It not taxation. does Auditor and later facilities. The wording that approve we the above must determined before may regarded silence transporta- the value thereof is increased acquiescence approval ad- of the as tion. ministrative construction. casinghead oil, gas gas is sold case con Atlantic’s cannot sustain price under circumstances where the sale by the Tax tention that the act construed thereof, price represent not the cash does X, Article Commission is violative of authorized Commission is Oklahoma, which Constitution of quire paid basis the tax to be provides, upon the be uniform “Taxes shall price How- prevailing of the field. subjects.” same could class What ever, administration the for convenience in more uniform than manner in ignore the actual Commission would like to gross production are Own assessed? sale under all Such circumstances. irrespec ers same gravity of practice compliance not in with O.S. is production, when

tive the location of 1951 833. brought confined to the surface and permit mea in such manner as to indicating A sale under circumstances quantity testing as as to and its justifies surement armslength bargaining absence of value, have the basis for determin application prevailing price. same ing the amount due. In constru production of taxes But when a bona fide sale of the ing ambiguous tax this Court occurred, statutes ac- the sale should lays adopt interpretation cepted proper an measure value. uniformly the burden of we there determining best means adopted fore hold by a bona claim fide sale. There is no uni promulgated the Tax Commissionhas price paid for the at the well- form tax on that does not of oil es- was the It result collusion. head violate the Constitution. production. actual tablished the reasons, foregoing For order be based tax should affirmed. the Oklahoma Commission is price. upon such sale WILLIAMS, J., WELCH, V. C. respectfully dissent to the I therefore BLACKBIRD, JJ., concur. JOHNSON my majority by the opinion promulgated associates. J., and HALLEY and

DAVISON, C. DAVISON, say that authorized to JJ., I am JACKSON, dissent. JJ., JACKSON, concur in HALLEY and Berry certified dis- William A. his Justice dissenting views. participate in the decision these qualification

Case Details

Case Name: Atlantic Refining Co. v. Oklahoma Tax Commission

Court Name: Supreme Court of Oklahoma

Date Published: Sep 22, 1959

Citation: 360 P.2d 826

Docket Number: 38094

Court Abbreviation: Okla.