General Motors Corp. v. Oklahoma County Board of Equalization

CORPORATION, MOTORS GENERAL

Appellant, COUNTY BOARD OF

OKLAHOMA

EQUALIZATION, Keyes, George Coun- County,

ty Assessor Oklahoma Barnes, County B. Treasurer of

Joe County, Appellees, Cartwright, Eric

Jan Oklahoma,

Defendant-Intervenor/Appellee.

No. 58438.

Supreme Court of Oklahoma.

May 1983.

As Corrected June 1983. Rehearing

As Amended on Grant of 1983. Supplemented Rehearing

Opinion Opinion

Amended Denied 1983. Oct.

234 Detroit, Corp., Raleigh, Motors

P. Mich., appellant. for Gen., Cartwright, Atty. James Jan Eric Fern, Michael Scott Asst. B. Franks and Gen., City, appellees. for Attys. Oklahoma IRWIN, Justice: Authority Industries The Oklahoma trust, (OIA), pursuant created § amended, O.S.1961, seq., et “public financing for sponsored the trust” Corpo- the construction of General Motors (GMC)assembly plant in ration’s Oklahoma City. presented The issue is whether machinery (improvements, GMC’s plant subject to ad equipment) contends its inter- valorem taxation. GMC because of a tax abate- est is not taxable agreement between it and the State asserts that of Oklahoma. GMC of Okla- agencies and officials agreed that if would build its homa plant that such assembly Oklahoma subject to ad valorem plant would not be twenty years. taxation for rendering summary The trial court that Art. judgment against GMCfound Const, § 5, prohibits a contract of the Old. surrenders, contracts suspends or taxation, although away power disputed, a contract is the existence of established, contract, if it even could be law; contrary to would be void and assembly plant possession is in executory pur- contract of under an rel. and is taxable under State ex chase Dunbar, Okl., P.2d 900 Cartwright Legislature first authorized the Since the for trusts as a vehicle creation financing in numerous “public trust” throughout the state have been facilities using such by private entities constructed explains the method financing. Dunbar and such generally employed in Oklahoma financing part was used method Snider, assembly plant. Fellers, of GMC’s Joseph construction D. John James Here, McMorrow-Love, Fellers, Snider, indenture a lease contract bond Margaret public trust entered into between the Tippens, were Blankenship, Bailey & Robert help Leitch, (OIA) and GMC. OIA issued bonds.to Atty., Kevin Asst. Dist. Macy, Dist. costs of Smith, pay part of the construction City, Atty., Otis M. John incorporated con- tion was into and became paid all additional facility. GMC legal holds title to the of the tax costs. OIA abatement be- struction payments to OIA lease tween OIA and the State. property. GMC’s issue to amortize bond are sufficient Closely argument related GMC’s “purchase” will and other costs. GMC imposition of the ad im- valorem taxes $1,000 when the bonded project entire pairs obligations of its tax abatement is satisfied. indebtedness agreement is its assertion that it has been proper that the trust Dunbar we held In process. argues denied due GMC that the posses a private in which entities hold ties through Fifth Amendment the Fourteenth interest virtue of a sory and contractual of the Federal Amendment Constitution agreement public with a trust as hold lease taking property just of forbids the without to ad valorem legal subject title was er of compensation tax and that its abatement was bottomed on the taxation. Dunbar agreement property right. says is a GMC agreement theory that the Dunbar lease property rights that both contract and aris- nothing than an executo more or less was agreement ing from its tax abatement property a of sale and that ry contract protected by the Due Process Clause as sale-purchase a ex public trust held under Impairment well as of Contract constitutionally tax ecutory contract is not Clause. assembly that its exempt. GMC concedes we considered the constitu- Dunbar plant would be taxable under Dunbar but § O.S.1981, tionality of 60 178.7 enacted agreement. the tax abatement for a tax 1977. That enactment authorized says characterization of its GMC that the exemption period years for a of all inter- a “lease” or “exec- agreement with OIA as public property, ests trust but the lessee consequence as is not of utory contract” (GMC-here) public property trust agree- tax abatement understands its required pay to an annual sum in lieu of ad with GMCstates the sub- ment Oklahoma. year following taxes for each valorem and this lawsuit is stance of anniversary date of the issuance of tenth agreed to a tax abatement that Oklahoma the revenue bonds. assembly plant in return for GMC §5, 50, that Art. In Dunbar we said Okl. constructing plant in Oklahoma. GMC Const., Legislature from ex- prohibits the says it has fulfilled its that except any property taxation empting from agreement. provided in the Constitution. We held agreement was contends that the property similarly situated that since other any when made and state action lawful taxable, legislative at- statutorily any obligation agree- that impairs the which tempt delay the status of a les- to taxable §1, 10, violates Art. of the United ment public property trust see’s interest Leg- argues the States Constitution. GMC §5, with Art. su- would be in conflict Act classified islature the Public Trust pra, unconstitutional. pursu- property purposes for tax industrial § § Const., 10, 22, Art. of the Constitution Art. of the Okl. to ant to prop Legislature classify activity and create authorizes the economic improve taxation; Oklahoma; OIA, and the valu agen- erty purposes a state jobs Act, of different classes different pursuant to the ation cy which was created a Legislature has means or methods. with GMC for the abate- bargained classifying sub ment; range discretion in negotiations and contracts wide taxation, justify judicial negotiations jects and con- and to constitute the of OIA interference, must be the classification of Oklahoma. GMCalso tracts of State arbitrary clas opin- based on an unreasonable or General’s submits (69-156) Company v. rendered in in which he sification. Continental Oil ion etc., Board expressed public proper- the view that Oklahoma State trust taxa- subject ties were not to ad valorem belonging parties agree did that in the event the property

Although the exempt from taxation— any trust or of its subdivi- public a § 6, a Okl. Const.—the payment any Art. demand the sions shall prop (GMC-here) has in trust lessee would general or ad valorem tax that GMC taxation. erty subject to ad valorem pay the tax. Dunbar, supra. assume, OIA, arguendo, willWe here had not been property If the into the tax abate- agency, state entered trust, it would have from “leased” GMC; agreement with and that both property all other similar taxed as been the then current Attor- parties statutory general our under situated expressed ney General’s attempt, legisla Any of taxation. scheme properties were not view that trust otherwise, exempt property tive or subject to taxation. possession in the of a “lessee” taxation purchase executory contract of under an general legal principles, Under in property to the the record title where power to bind the public agents have no trust, exempt prop and not similar a any apparent its subdivisions state or property record title to the erty where their actual authori authority excess of trust, a private entity instead of a law; “An act is not a ty. unconstitutional §10, 22, supra. Art. would contravene one, protects no no one.” Lit it binds we also held that the State In Dunbar Worthen; Rock, etc., Railway v. tle estopped assessing the “les- not was Worthen, 97, 7 120 U.S. Huntington v. of its reliance on property because see’s” 469, Legislature L.Ed. 588. If the S.Ct. held view that such generally within the framework of the has not acted holding exempt from taxation. Our was Constitution, it has not acted. An unconsti that a state and principle on the was based rights, no creates tutional statute confers estopped from cannot be its subdivision protection. liability, and affords no no public offi- public rights when protecting 425, 6 Shelby County, 118 U.S. Norton erroneously or failed to have acted cials 1121, In 30 L.Ed. 178. Zane v. Ham S.Ct. act. 538, County, 189 U.S. 23 S.Ct. ilton enforceability consider the We will now pursu county L.Ed. bonds were issued agreement. alleged tax abatement which was later declared to ant to a statute agreement into did not introduce unconstitutional. The United States Su opinions upon certain the record but having held that the bonds preme Court General, Attorney statements of of- issued, illegally do not constitute been and of ficials of the State Federal protected which is contract correspondence organizations, various civic Am.Jur.2d, 16A Constitu Constitution. releases, representations news § 688, Law, states: tional journal In its by officials of OIA. made does not “The Federal Constitution in refer- judgment the trial court entry of invalid, ille- protect contracts which are “although its agreement said ring to the That which is not an enforceable gal ... contract, even dispute, existence is right obligation is not an contract established, void and would be if it could be meaning impaired within the can be contrary law.” prohibition. the constitutional agreement between GMC The lease cannot impairment The contract spell out the tax abatement did not OIA is based alleged contract occur where mention ad valorem did in a void statute. proviso on a contained par- stated that sentence taxes. One an unconstitu- A contract which rests on agency that as is an recognized OIA ties creates no is itself void and tional statute state, assembly plant was not sub- subsequent impaired by obligation to be under the Con- ject to ad valorem taxation However, legislation.” stitution and laws of Oklahoma. discussing has In argues application that rule Norton the retroactive decision, we said:

long abandoned both federal been courts and this abandonment is and state opinion ‘equities “In our in this Kurtzman, 411 in Lemon v. U.S. discussed case do applica- not authorize retroactive (see 36 L.Ed.2d 151 93 S.Ct. tion of our decision herein’ Ford Lemon, non-public Ford, Okl., sectarian schools had ex rel. Nesbitt v. [State 934], supra) any year a statute which P.2d performed preceding services under year. the 1980 tax Prior subsequently was declared unconstitution- to the 1979, opinion of the Attorney whether the schools al. issue was expressing the prop- conclusion that such entitled to be reimbursed for services were taxable, erty taxing performed prior holding to the court’s authorities following had been a former was unconstitutional. The the statute Su- an General who had concluded preme held the schools were entitled property tax-exempt. There- services. to be reimbursed for such fore, private the interests of entities The Lemon decision is bottomed property trust which are taxable reliance, i.e., theory the schools had under this decision shall be taxable be- performed the services under a statute that ginning year, with the 1980 tax but no unconstitutional had not been declared any public property interests in trust years nearly two the State and the shall be considered or treated as ‘omitted proceeded assumption schools to act on the property’ any preceding year.” perform that the schools would continue to alleged We are concerned here with an payment the services and that for such exemption Legislature could The services would be made. Court noted constitutionally grant. not if Surely significance of the school’s re- Legislature is without constitutional au by liance was reinforced the fact that State thority grant exemption, a tax state preliminary for a in- withdrew its motion agencies or officials of the state could not junction payments to block certain and did grant exemption. charged such GMC was injunctive suspension for the not seek relief with notice of our and the Constitution payments. officials, public may limitations of and it Lemon, Supreme discussing The Court in authority not whether assumed discretionary powers of the trial broad authority Legisla is assumed decrees, shaping equity court in said: public ture or other officials. GMC was equity jurisdiction “The essence of has charged authority with notice of the of the power been the of the Chancellor to do Attorney opinions may whose not General equity and to mould each decree to the supplant the courts. The particular necessities of the case. Flexi- gives guid his officials’ bility rigidity rather than has distin- questions concerning ance until the them guished qualities mercy it. The are decided the courts. River Grand practicality equity have made the instru- State, Okl., Authority Dam adjustment ment for nice and reconcilia- (1982). may in this 1011 GMC not invoke pri- interest and tion between proceeding the “reliance dis interest” competing vate needs as well as between cussed in Lemon. private claims.” upon by involve cases legislative court in effect followed the reason- constitutional enactments or val- This ing principle forth in when it first con- id contracts and it relies on the set Lemon taxability prop- trust that “the laws which subsist at the time sidered contract, erty executory place making held under an contract to of a purchase performed, decision in where it is to be into and Dunbar. Our Dun- enter it,” 1980, promulgated January, form a bar was United ex rel. States prospective City v. The 71 taxability. Quincy, reference Von Hoffman 238 is, legal contemplation, inoperative as (1867), quoting in it 403 18 L.Ed.

U.S. though passed”) was it had never been Loan Association v. Building and Home merely in Lemon. Lemon not abandoned Blaisdell, 78 U.S. S.Ct. exception to the rule of Nor- recognized an This 88 A.L.R. L.Ed. equity under applied a court of ton disput- of law cannot be general statement prescribed conditions. As we shall certain position, support not GMC's ed but it does demonstrate, parameters briefly con- purported tax abatement because exception many have times been Lemon law in accord with Oklahoma tract not Court; applied by recognized and this was made. at the time it those further demonstrate we shall in Dunbar is control- decision Our present not in the case at parameters are property bar and GMC’s ling in the case at bar. taxation unless the subject to ad valorem is Pennsylvania’s striking down of After legal abatement disputed tax non-public statutory program to reimburse The Federal Constitution ly enforceable. for secular educational sectarian schools contract protect unenforceable does not Kurtzman, 403 U.S. services in Lemon v. if it disputed agreement, even rights. The (Lemon 602, 91 29 L.Ed.2d 745 S.Ct. established, void because no could be I), to the Supreme Court remanded public agency or could consti public official payments for enjoined court which district exemption alleged tutionally grant the tax I, per rendered after Lemon services agreement. in the Since the ly contained prior for services mitted reimbursement unenforceable, agreement is alleged challenged scope Appellants I. Lemon sought. to the tax relief is not entitled (a equity). case in of this decree here, we find it our decision In view of peculiar II The circumstances to Lemon the force and ef- unnecessary to consider were: §10, our Constitution of Art. fect effective, the statute became 1. After power the surrender of the prohibits entered into the contracts the schools requires taxes to be uni- of taxation faith, apparent good relying upon the stat- subjects and class of form same authority. utorial Amendment to the U.S. Fourteenth Constitution. Thereafter, pre- Appellants sought 2. payment un- liminary injunction to restrain AFFIRMED.

JUDGMENT However, Appellants der the scheme. request injunction their to abandoned concur. All the Justices payment. The schools prevent the initial OPINION ON SUPPLEMENTAL performing the services authoriz- continued REHEARING sum- by ed statute. Not until a motion for Appellants filed did mary judgment was PER CURIAM: enjoin. their intent to seek to first indicate hereby supplement the .of We not, prior The schools could to Lemon 3. 1351) (54 May 1983 O.B.J. this Court , predicted the act’s unconstitu I have (54 1983 by Order of as amended un tionality assurance sufficient to with 2068) the follow- by adding thereto O.B.J. Appellees’ reliance on the statute. dermine ing: I was not “foreshadowed.” Lemon Kurtz A further review of Lemon v. had a “reliance interest” 4. The schools man, 411 93 36 U.S. S.Ct. equity fashioning considered in an to be (1973) impels the conclusion 151 L.Ed.2d calling recognition a “sensible decree Shelby County, rule v. of Norton practical realities of the situation.” the 1121, 30 L.Ed. 178 118 U.S. 6 S.Ct. urged strange amalgam (1886) (that Appellants an unconstitutional statute 5. absolutism, duties; claiming on flexibility it and rights; imposes no it no “confers office; the they did not seek to have the one hand protection; affords no it creates no payments, disgorge prior yet pleading purports seek- While our code to schools abolish payments, the distinction actions ing urged to future between at law enjoin actions in equity, party bringing rule of “A injunction under the Norton. an required action is frame his pleading to in hardship imposed would be 6. Great definite, with accord some certain theory, officers, budg- school public, state and the which he relief to claims to be programs implemented school if the ets and therewith; entitled must be accord ap- immutably rule were to be of Norton he appeal position is bound plied the date of Lemon I deci- as of theory assumed, and on which the case was sion. heard trial court.” Yellow Cab fashioning equity decree in the Allen, Okl., Company v. 377 P.2d 220 light rule of Norton and of the (1962), Okl., quoting Young, from Lenz v. demonstrated, interest” thus “reliance (1957). 307 P.2d 844 pow A chancellor has observed, Supreme Court United States do equity er to and mold a decree to the judge-made even rules of law statutory or particular necessities of a case. U.S. people rely in facts on which must hard 163; (C.A.Okl.1951) Fogaley 190 F.2d Sin shaping their con- making decisions and Bishop, clair &Oil Co. v. Gas otherwise, duct; say judges until state offi- law, (1967). P.2d 436 inBut a trial court is carry power to forward the cers have limited to issues particular framed legislature; those directives of state pleadings. Bellman v. La Gleason & circumstances, may, in elect officials some Sanders, Inc., Okl., P.2d acting judicial until authoritative to defer law, In the fashioning judgment of a secured; pronouncement has been impelled apply courts are principles less where are no fixed clear constitu- there equity. essentially precedents, tional the choice compulsion b. No on the discretion, may state one of officials perform statutory officials to duties until presumption of consti- upon the basic by the courts is otherwise directed involved duly validity tutional of a enacted statute. bar, in the case at contrast Lemon II. saying concluded Supreme Corporation c. Motors requires that in- that federalism federal had a free to whether it choice as would courts, junction, unrelated to state rely upon representations opinions shaped concern and care for the re- with constitutionality officials as to sponsibilities legisla- of the executive and “agreements.” It was un non-tax government. tive of state “In branches no act in reliance. It compulsion der short, propriety of the relief afforded declaratory judg could have obtained Court, Appellants by applying the District prior entering purported into the equitable principles, meas- familiar must be Instead, arrangement. non-tax totality against ured of circumstances upon representations the in the face of the that, general light principle and in Oklahoma, of and did Constitution and laws direction, contrary absent state officials peril. so at its they and with whom deal are entitled those strong suggestion There of pub- d. is a presumptively to a valid state stat- in II and lic weal involved Lemon other ute, good in faith and enacted no means considering in force of a eases the “reliance plainly unlawful.” unconstitutionality interest” as the against in the case The circumstances at bar are prospective a where of contract or statute fact, and, signifi- in analagous not to given by effect is court decree to a determi- in cantly than those different Lemon II. unconstitutionality. In the nation of case bar, weighed at interest to be a. Lemon II involved the fash reliance ioning equity. Corporation’s in at involves Motors indi- of a decree The case II, (denial rights only. In statutory proceeding bar is a of vidual Lemon mid-term budgets, expendí- protest seeking recovery paid). programs, of school taxes act, ceeding upon they in reliance a statute reduced made under tures 4,264 public hardship sepa- if an extreme assessments and taxes on some invoke would by a uncon- pieces property. applying decree of abruptly terminated rate of In what rules, stitutionality. in equity was effect reliance this (547): said herein the cir- determination Our asserting rights a “One under such void at do present in the case bar cumstances bring law must himself within some es- exception enunciated place within the not exception tablished the rule of Nor- [to rule of is con- II to the Norton Lemon may rights The rule no be ton]. this prior holdings of with the sistent a acquired applies under such statute Court. rights acquired per- acts well under Ass’n, Nigh, v. In Ed. Inc. pursuant formed or executed to such (1982), Okl., large a number of 642 P.2d 230 the final statute before determination of upon the con- in reliance individuals acted thereof, unconstitutionality as to this stitutionality prior statute of a acquired sought those to be under acts determining it to be unconstitution- Court’s performed thereunder.” who liability The officials al. of striking In down statute and de- the consti- good faith reliance acted clining pro- a to ameliorate effect of in- tutionality of likewise the statute was unconstitutionality, nouncement of this im- (p. 239). Both considerations volved (554): Court said protect the Court to officials pelled if “It of liability which would result follows that contention citizens given retrospec- plaintiffs must be sustained. To this Court’s hold judgment tive effect. otherwise and to sustain the of say the trial would be that con- court Bd. In ex rel. Poulos v. State State may lightly stitutional inhibitions be de- (Poulos (1982) Equal., feated and circumvented subordinate II), (1976) (Poulos III), and 552 P.2d officers, acting executive in excess of unconstitutionally inequal an established authority, provided their lawful acts system of valuation determined fully of such officers were consummated county ability The exist. various authority before the extent their function, the reliance inter governments to proper namely determined in the great taxpayers, forum— ests of numbers This we cannot do. Such a courts. liability potential officials encourage rule would citizens to rush in implicitly were involved. The Court get under a law relief doubtful be- fashioning its decree made its effective validity its could fore be tested prospective. date encourage hasty courts. It would action County Board Com’rs of officers, on the of administrative County, 188 Okl. 107 P.2d 542 Creek should where deliberation caution (1940), large delinquent tax- number encouraged It discourage instead. would their taxes payers secured a reduction of by holding prompt payment taxes adjudged uncon- under statute thereafter taxpayers prospect out to the fu- stitutional, taxpayers did not. while other legislation might they ture under which County County Commissioners special advantages. It would obtain act law continued to under the Treasurer open easy an for the evasion and avenue against filed them the action was after safeguards, defeat constitutional not constitutionality, and questioning the act's matters, only in but in others.” they by the Attor- had been advised after Conner, it, In Gordon v. 183 Okl. acting from under ney General to refrain (1938), plaintiff P.2d 118 A.L.R. 783 by the Attor- they and after were advised against sought recovery taxpayers act ad- resident ney General that had been was, During sheriff and members the board of judged, and unconstitutional. of county pro- the time the officers were commissioners under a statute au- defendant paid provision action to recover sums of a constitutional thorizing the and there- pursuant to a statute there- defendants presumption fore invalid. The is that a unconstitutional. after determined to be law is constitutional until its unconstitu- weighing of the At issue was tionality (Cita- judicially established.” paid under recovering sums put omitted.) tion duty against void statute Dunbar, ex rel. Cartwright perform statutory their duties officials to (1980) comports 618 P.2d 900 with right rely upon the statute’s and their foregoing Lemon II and the It cases. is in 324): constitutionality (p. presumed general line with the rule in Oklahoma and however, sheriff, relying “The elsewhere. See 16 Am.Jur.2d Constitution- act, provisions special appoint- of the §§ 256, 257, Law, al 688. deputies. plaintiffs ed six In this action county, seek to recover for the a sum

equal paid to the salaries two BARNES, C.J., HODGES, LAVEN- 1, 1933, deputies to the date of DER, DOOLIN, HARGRAVE, OPALA, 27, 1936), filing (April the suit and a WILSON, JJ., and ALMA D. concur. sum for their own use and bene- similar fit. ORDER FOR STAY OF MANDATE special “The trial court held that the unconstitutional, THE APPLICATION FOR STAY OF further act was MANDATE filed in that the case of v. Board this Court on the 15th held Wade County, 161 day August, by Plaintiff-Appel- Commissioners Harmon controlling Okl. lant, Corporation hereby General Motors case, the issues involved herein. In that granted as follows: ‘The members of the board it was held: THE MANDATE IN ISSUANCE OF county county commissioners of a will hereby stayed THE ABOVE CAUSE is payment penalized not be ... for the (90) period ninety days from this date county an un- salaries to officers under Plaintiff-Appellant opportunity to allow pay- constitutional local act where judgment to seek review of the of this good made in faith and ments were be- by Supreme of the Court United unconstitutional, fore the law is declared States. they proper are advised or before unconstitutionality.’ official as its Plaintiff-Appellant pro- In the event that timely judg- “No contention is made that defend- ceeds to seek review of proper Court, ants were ever advised Supreme the United States unconstitutionality as officials to the the issuance of mandate shall continue to posi- special act. Plaintiffs take the until such time the United stayed be that since this court on several occa- tion Supreme Court makes a final deter- States has held acts to unconsti- sions similar mination thereof. tutional, defendants, being chargea- law, knowledge ble with a of the

chargeable knowledge with of the uncon-

stitutionality special act involved

herein. We cannot concur in this conten- spe- unconstitutionality

tion. had never

cial act involved herein been

judicially established. Defendants were

entitled to thereon as a source of

authority for their official acts without incurring heavy

assuming the risk of was sub-

penalties the event such act

sequently declared to be in controvention

Case Details

Case Name: General Motors Corp. v. Oklahoma County Board of Equalization

Court Name: Supreme Court of Oklahoma

Date Published: Jul 26, 1983

Citation: 678 P.2d 233

Docket Number: 58438

Court Abbreviation: Okla.