59 W. Va. 605 | W. Va. | 1905
The Harvey Coal and Coke Company, a corporation, presented to the Honorable W. 1-t. Bennett, judge of the circuit court of Fayette county, a chancery bill setting up that on the 20th of May, .1893, it made a contract with Morris Harvey and others for the purchase of all the coal in the Sew-ell seam in certain land, together with the right to enter upon the surface and use so much of the surface as might be required in mining, for which the company was to pay Harvey and others ten cents per ton for all coal mined; that it had actually developed the coal mine and was engaged inmin-ing coal and making coke on the land. The bill complains that under certain legislation enacted in 1905 for the taxation of personal property C. W. Dillon, State Tax Commissioner, had issued such instructions to B. E. Bare and S. T. Carter, assessors of Faye.tte county, as would require them to assess said mining property under the head of chattels real, and that the assessors would assess it, and praying that said commissioner and assessors be enjoined from making such assessment, on the theory that it was unwarranted by law. The court sustained the demurrer to the bill, and dismissed it, and the plaintiff appeals.
The deed from Harvey and others to the plaintiff contains the following language: “That the lessors do demise, let and lease for coal mining and coke manufacturing purposes for a period of thirty years from and after the first day of January, 1893, the following tract or body of land- lying.” And the lessors “do also grant unto the lessee the sole and exclusive right and privilege of mining, shipping and selling the coal from the above leased premises from the said Sewell Seam, and the right to erect and use all buildings and structures necessary for the purposes of mining, coking and shipping the coal and coke therefrom and for all other purposes connected with or necessary for the free exercise and enjoyment of the privilege above granted or demised.” “Itis expressly agreed between the respective parties to this lease that if, at the ex
This is a very important case. It is vastly important to the State, as it involves large revenue imposed by recent legislation, and the construction and even validity of that legislation. The Tax Commissioner claims that there is a value of $200,000,000.00 in leaseholds in this State, which has never been charged with taxes. That these leaseholds involve great value is not denied. - So also it is of great importance to the owners of leaseholds, as it imposes upon them taxation. Able and elaborate oral and printed arguments by distinguished counsel demand that we write a perhaps too lengthy opinion, as well also does the gravity of the case.
As to the State’s power of taxation. In Loan Association v. Topeka, 20 Wall. 655, it is asserted that “The power to tax is the strongest, the most pervading, of all the powers of the government, reaching directly or indirectly to all classes of the people. It was said by Chief Justice Marshall in McCulloch v. State of Maryland, 4 Wheaton 431, that the “power to tax is the power to destroy.” “The power to impose taxes is one so unlimited in force, so searching in extent, that the courts scarcely venture to declare that it is subject to any restrictions whatever, except such as rest in the discretion of the authority which exercises it.” Justice Field said in State Tax on Foreign-Held Bonds, 15 Wall. 319, as follows: “It may touch property in every shape — in its natural condition, in its manufactured form, and in its varied transmutation — it may touch business in the almost infinite forms in which it is conducted — in professions, in commerce, in manufactures, in transportation.” Cooley onTaxa
In May or June, 1905, the Supreme Court of the United States decided the case known as the New York Franchise Tax Case, and' sustained the constitutionality of an act taxing the franchises of corporations. The case asserts again very wide powers of taxation in the states. I have not the text of the case. People v. Tax Commissioners,25 Sup. Ct. R. 705. In it Justice Brewer delivered the opinion holding that the intangible assets of a corporation arq subject to taxation, and that corporations owning franchises must contribute their share to the expense of government. Justice Brewer said in delivering the opinion for the court: “We had occasion to review this subject in the Adams Express case versus Ohio, where we said: ‘In the complex civilization of today a large proportion of the wealth of a community consists in intangible property, and there is nothing in the nature of things, or in the limitations of the federal constitution, which restrains the state from taxing at its real value such intangible property. It matters not in what the intangible property consists, whether privileges, corporate franchises, contracts or obligations. It is enough that it is property which, though intangible, exists, which has value, produces income, and passes current in the markets of the world. To ignore this intangible property, or to hold that it is not subject to taxation at its accepted value, is to eliminate from the reach of the taxing power a large portion of the wealth of the country.”
The Constitution of this State gives the legislature power, indeed, a mandate, to “tax all property, real and personal.” Therefore, the question is material, Does the deed in this case vest what is in law property in the Harvey Coal Company? The very suit in itself is a concession by the company
Try this property or right under these definitions. It is surely a lease, and therefore a chattel real. The fee owner carves out of his fee a particular estate and vests it in another. The coal having been developed, then, if not before, an actual estate vested as to the coal right, an entity, a distinct entity, a separate property from that remaining in the lessor. The instrument of conveyance gave certain title to the Coal Company, gave it an intangible right, that is, a right to produce personal property, a product of the land. This right savored of the realty, depended on it, was annexed to it, and so far answers the definition of a chattel real, which is personal estate. We say that the estate of the coal company isa lease for years, and if so, by all authority, is a chattel real. The parties thought they were making a lease for years, intended to do so, so far as we may judge from legal language, for they used the words of lease signification, “demise, lease and let.” The instrument calls itself a lease and calls the parties lessor and lessee. But take the document itself. It leases the tract for “a period of thirty years,” not forever. It has a specific term, gives an estate less than the fee of the lessors, leaving the whole tract at the end of the term to revert to the lessors disencumbered and freed from the leasehold estate, thus meeting another element in the definition of a chattel real, that is, that it must be of less duration than the estate of the lessor. In this case all the features of a lease for years are present, leasing language, a term, a rent, forfeiture and reversion. A grant giving right to mine lead was held to be a lease in U. S. v. Gratiat, 14 Pet. 538 — pointed authority in this case. The case holds that, “The legal understanding of a lease for years is a contract for the possession and profits, of land for a determinate period, with the recompense of rent. It is not necessary that the rent should be in money. If reserved in kind, it is rent in contemplation of law. ’ ’ And I notice that the very language of the lease is
It is said, however, that when the coal shall be exhausted there will be nothing to revert to the land owner, and that this repels the idea that the right of the company is a chattel real, as there must be a reversion or remainder to make a chattel real. The answer is that the grant is not of the very coal. The phrase of the deed is not that. It leases the coal. It lets the tract itself to be used for a special limited purpose. It gives an intangible, incorporeal thing, a right to take actual possession of the tract and use it so far as necessary to take coal and make coke. When the term in this intangible right savoring of the land ends that is at' an end, not the mere coal. There are many cases bearing on the subject, and somewhat clashing. In this, as in most other cases, there is a wilderness of decisions, and it is impossible in an opinion to attempt to analyze them. The best a court can do in the great volume of conflicting cases is to select those which, in its judgment, best suit the particular case as a basis of decision for that case. An agreement conveying all coal in a tract with right to remove for fifty years was termed alease. Hyatt v. Vincennes, 113 U. S. 408: “The possession by the citizen of, and his possessory interest in, the public land for mining, agricultural, or other purposes, constitutes a species
Mining leases and their legal effect have often been before the courts and have generally been construed to be leases creating leaseholds, and being for a term of years and not freeholds, constituting chattels real. 5 Am. & Eng. Enc. of law (2 Ed.) 1024; U. S. v. Gratiot, 14 Pet. 526; Consolidated Coal v. Peers, 150 Ill. 344; Pelton v. Minah, 11 Mont. 281; Young v. Ellis, 91 Va. 297; Ganter v. Atkinson, 35 Wis. 48.
Those cases show mere leases, and I hold that being leases they are chattels real. But the Coal company contests the position that it has alease taxable as personalty, as chattels real. It says that the deed shows a sale of the coal, and that the coal itself is taxable as real estate to the owner of the fee, and that the charge of the land to the owner of the fee covers
It seems that the above Pennsylvania cases holding that an oil or coal lease conveys an interest in the land conflicts with other Pennsylvania cases holding them to create a chattel interest saleable on execution. In Brown v. Beecher, 120 Pa.
Recurring to the contention that the deed in this case makes, not a chattel real, but a sale of the very coal itself, which is yet taxable to the surface only as realty, we are reminded of some of our own cases for authority for the proposition. Wilson v. Youst, 43 W. Va. 826; Haskell v. Sutton, 53 W. Va. 206; South Penn v. McIntire, 44 W. Va. 296; LOawson v. Kirchner, 50 W. Va. 344. Language is used in them .incidentally to the effect that a lease allowing the lessee to remove oil “is in legal effect a sale of a portion of the land. ” That language began in Wilson v. Youst, as a borrow from a Pennsylvania case. See page 839 of 43 W. Va. It is only repeated in the later cases. Chief Justice Marshall long ago said, what has been accepted always since as a rule, that language in a decision must be interpreted with reference to the case in hand. Just whether such a lease was a sale of the very coal as part of the land was not in judgment in those cases, not necessary to the decisions. Standing alone that language might be construed to mean that the execution of the lease itself at once vested the mineral as part of the body of the land in the lessee; but an examination of these cases shows that this was not the court’s decision, but the cases involving the right of a guardian or committee to lease the land of a ward or insane person, the court simply held that as under the operation of said leases the mineral would be taken from the land, and a portion of its body thus removed, it decided that such leases so operating to work a sale and severance of part of the land from the ward or insane person could only be made in the mode authorized by law, that is, under the statute for the
It was argued at bar that land is assessed as a body as land, and not the estate i'n it; that there may be a life estate, after it another life estate, after it a reversion or remainder, sometimes a contingent estate; and that these are not each separately charged to the owner of each. That is true, and why? Because the statute'has long provided that “as to real property, the person who, by himself or tenant, has the freehold in possession, whether in fee or for life, shall be deemed the owner for the purpose of taxation.” Code 1899, chapter 29, section 40. Therefore the life tenant must pay taxes during his estate, and the remainder-man or reversioner only when the particular estate ends. That may be claimed as a good reason why leaseholds in the past could, not be assessed, the charge of the corpus representing and paying for all the estate in the land.- But suppose the statute had provided for the assessment of the life estate to the life tenant and the fee to the remainder-man. Surely the legislature could have done so. 27 Am. & Eng. Enc. of Law, 609. And as reflecting a sedate purpose to tax all leaseholds for minerals compare the acts, not of tax assessment, but of revaluation of 1891, chapter 36, section 4, . of 1899, chapter 21, section 4, and of 1904,
The real estate valuation act of 1904 required each separate interest to be valued for taxation, leaving it to the legislature to tax them as it might see fit. The tax assessment act of 1904 did not tax leaseholds separately in words, but the act of 1905 carried out the policy of separate taxation contemplated by the revaluation act of 1904, and directed them to be taxed separately as personalty. It is not now the constitutional or statute policy of this State, as is argued, to assess all that pertains to or grows out of land as land. The Constitution says that both shall be taxed, all property shall, what is land as land, what the law deems personalty as personalty. Constitution and statute taken together say so. The Constitution says all property real and personal shall be taxed. Still, without legislation, nothing can be taxed; but the legislature has enacted that real and personal property, including chattels real, shall be taxed; that any assessable interest in land shall be taxed to its owner. As above stated the statute has never in words required
ANOTHER QUESTION.
The plaintiff contends that even conceding that its estate is a lease for years and a chattel real, the act of 1905 does not in fact tax a chattel real. "W e think that various parts of chapter 35, acts of 1905, amending Code chapter 29, plainly manifest an intent to tax leaseholds. Before that act chattels real were not in words mentioned for taxation; but such estates of vast value and large number, in which persons and corporations had invested hundreds of thousands of dollars of working capital or investment, not before existing, had come into existence, constituting large estates not taxed, and this fact itself tells us what must have .been the purpose of the legislature in its amendment in 1905 of the prior law, as
The argument that the law provides for a return of delinquent land is without force. Cannot a tax claim be levied on a chattel real and it be sold therefor ? A chattel real is personalty and saleable under execution. Freeman v. Dawson, 110 U. S. 264; 8 Enc. Pl. & Pr. 550; Donahue on Petroleum & Gas, 176; 17 Cyc. 953.
To sustain the claim that the act of 1905 does not at all tax chattels real, sections 77 and 78 are appealed to.. Section 77 requires that corporations, except certain ones, shall make a report to the assessor showing the following items:
“(a). The amount of capital authorized to be employed by it;
Q>). The amount of cash capital paid on each share of stock;
(e). The amount of money in hand or on deposit anywhere subject to its check or draft, on the first day of April of the current year;
(d). The amount of credits and investments other than its own capital stock held by it on said date, with their true and actual value;
(e). The quantity, location and true actual value of all its real estate, and the magisterial district in which it is located;
(/). The kinds, quantity and true value of all its tangible personal property in each magisterial district in Avhich it is located.” Section 78 directs how the items shall be entered in the tax book and then says: “The property mentioned in items (c), (d), (<?), and (f), shall constitute all the property on
But the plaintiff claims that even if chattels real.are taxable to individuals, sections 77 and 78 must exempt corporations therein specified from taxes on their chattels real. We cannot yield to a construction working such partiality, inequality and unfairness. Why exempt the property of corporations? We cannot realize that the legislature so intended. However, if it did so design, no matter how plain its language, such exemption of chattels real of corporations would be baldly unconstitutional under the State Constitution, article 10, section 1, commanding “all property” to be taxed with limited exceptions therein given. So it was held in C. & O. R. Co. v. Auditor, 19 W. Va. 438; State v. Buchanan, 24 W. Va. 362. And would it not be repugnant to the 14th amendment as denying other tax payers equality before the law? It would be arbitrary classification, based on no good reason, but against good reason. We should not give a construction to the act making it violate the Constitution. True, though the Constitution does say that all property shall be taxed, it cannot be taxed until the legislature authorizes it. Supervisors v. Tallantn, 96 Va. 723; Virginia & T. R. Co. v. Washington, 30 Grat. 471. This is because the Constitution, in this respect does not act of its own vigor, without an enabling act; but there is the statute saying that all property shall be taxed, and sections 55, 80 and 108 covering chattels real, authorizing their taxation. “Exemptions can be allowed only when the language is free of doubt, not where it is
It is insisted that tax acts must be construed strictly, and if it is doubtful whether the intent is to levy a tax on a thing, the doubt must be solved in favor of the tax payer. Brown v. Commonwealth, 98 Va. 366; Net & Twine Co. v. Worthington, 141 U. S. 414; Cooley, Taxation, 266; Rice v. U. S., 53 Fed. 910. As a general rule that is so; but there is another rule here fitting. The Constitution positively commands that all property shall be taxed, and we must construe the statute as meant to obey the Constitution, if its words will at all allow it, and this act has a section taxing all property, and specific language covering chattels real. If there were doubt, we must rather resolve it in favor of taxing leaseholds, and “impute to the general assembly an intent to obey the constitutional mandate, if its enactments fairly admit of such construction,” in the language of the court in Hart v. Smith, 159 Ind. 182, 58 L. R. A. 949. But I see no reason to invoke this presumption, as I cannot see how the statute can, with reason, be held not to tax chattels real whether of corporations or others. It would be vastly more unplausible for us to hold them not taxable than taxable. It would defeat an intent that is plain, taking the acts all in all as to this matter.
It is suggested that the statute makes no basis or measure of ascertaining the value of chattels real, and that this argues that it was not intended to tax them. I may not go too far in saying that a court has little or nothing to do with it. Valuation of chattels real is not infeasible — it can be made. For many other subjects of taxation no process of valuation is fixed by the statute. Courts and juries assess damages in much more difficult instances. That the act does not fix the method of valuation, does not invalidate it. Erie v. Penn, 21 Wall. 492.
CONSTITUTION ALITY OF THE TAX.
It is contended that taxing chattels real is contrary- to the State Constitution because double taxation. Brief of one of the counsel for the plaintiff does not claim that double taxation is unconstitutional. Considering the vast power of taxation,the weight of authority seems to say that it is not void. “Since
We have no doubt about the legality of the tax after the year 1905. It may be claimed to be different as to that year. The revaluation acts of 1891 and 1899 required that the minerals be considered in making up the value of land, and the taxing of lands for 1905 is under the valuation made under the act of 1899, as the revaluation of land made under the act of 1904, excepting chattels real from the valuation of land, does not apply to land taxes until after 1905. Hence the leaseholder may say: “ The valuation under the act of 1899 includes minerals; they are charged to the fee owner,and if my leasehold is charged, that is double taxation.” Now, the cases of Carter Oil Co. v. Tyler County, 45 W. Va. 806, and State v. South Penn Oil Co., 42 W. Va. 80, U. S. Co. v. Randolph County, 38 W. Va. 201, only held that minerals in place should be considered in fixing value of the land to its owner, and that lessees for years of coal or oil should not be taxed with their holdings as land, and did not decide that the lessee could not be taxed with them as personaltjL If the land were under coal lease, the chattel- was not charged to the surface owner, which is to say that it was excepted out of the valuation, _ because not included. The act of 1904 does in terms except chattels real; but it is only an express direction to the assessor of what already was the law, only declaratory of existing law. Both under the reassessment act of 1899 and 1904 the surface owner is taxed with the coal in the ground, because still vested in him; there is no difference between the acts as to this. The legislature in 1905 simply taxed what never had been taxed, in taxing the leaseholds of the lessee. State v. South Penn, 42 W. Va., on page 99, says this: “What, then, is the subject matter of the act of reassessment of 1891, and does the property (these oil leases) belong to such subject matter within the meaning of the act? We may expect to find the object — the main general purpose — of the act expressed in the title. The title is ‘An act to provide for the reassessment of the value of all real estate within this State.’ By a statutory rule of construction, the word ‘land’ or ‘lands’ and the words ‘real estate’ or ‘real property’ include
The point was suggested that article 13 of the State Constitution forfeits lands for omission from the tax books for five years, and that an omission of the land in the fee owner’s name forfeits the land, and along with it the leasehold. We do not see how this can make the act unconstitutional or how it can bear upon that point, this remote contingency. It is not to be contemplated. It is only a risk in the future assumed by the lessee when he takes his lease. May not the State forfeit for failure to pay taxes on the body of the land? The State need not look out for that. That comes from the omission of the parties interested. A mortgage would be likewise lost. It is the duty, not only of the surface owner, but of the owner of the particular estate, to protect his own estate from sale or forfeiture for taxes. We assert the right, and also the duty, of the lessee to have the public officer charge the tract in the owner‘s name, or his own name, for self protection. Assessment in the lessee’s name would protect from forfeiture. The lessor has made an implied covenant that he will do nothing, either of omis
FOURTEENTH AMENDMENT.
It is said, but does not seem to be urged by one of the plaintiff’s attorneys, that the statute taxing chattels real violates the 14th amendment. Wherein we are not very clearly told. It cannot be claimed that tax laws are not due process of law. King v. Mullen, 171 U. S. 404; State v. Sponaugle, 45 W. Va. 415; Witherspoon v. Duncan, 4 Wall. 210. Does it deny equal protection of the law? Does not the act treat all persons owning chattels real alike? There surely may be taxes imposed by a state on different subjects. The right to the equal protection of the laws is not denied by a state when the same law or course of proceeding would be applied to other persons under similar circumstances and conditions. Tinsley v. Anderson, 171 U. S. 101. In many cases, such as tax laws, the legislature may classify persons and things in the administration of government. It does not follow that because one man of a class is treated differently from one of another class that the equality clause of the amendment is violated. “It only requires the same means and methods to be applied impartially to all constituents of a class, so that the law shall operate equally and uniformly upon all persons in similar circumstances. ” Kentucky Railroad Tax Cases, 115 U. S. 321. Under Magoun v. Illinois, 170 U. S. 283, and other cases, the state may classify subjects of taxation and apply different methods of valuation and taxation. The amendment prescribed no rigid equality, but permits to the descretion and wisdom of the state a wide latitude. With its impolicy the federal power has no concern. It may tax one kind of property in one way and by one process of valuation, another in another, because they do not belong to the same class. In this case the land and the chattel real are separate. It may tax one class of persons in one trade in one way, another in another. Bell's Gap Co. v. Pennsylvania, 134 U. S. 232; Atchison v. Mathews, 174 U. S. 596; Florida Central v. Reynolds, 108 U. S. 471. The last case fully sustains this view in a review of the cases. See Coulter v. L. & N. R. Co., 25 Sup. Ct.
In this connection I again ask how is there any double taxation to this plaintiff? A single illegal taxation is not double.. If the lessee be charged once, how does he pay double. And the lessor owning the fee is not taxed double, and if he were, how can the lessee say that his own pocket is injured. It cannot be said that the amendment
A statute is presumed to be constitutional. We must be very, very clear that a state law imposing taxes to support the existence of the state is void because repugnant to the Constitution, before'holding it void. The Supreme Court of the Nation has always shown a great and commendable reluctance to ■ invalidate such statutes. It has not made the 14th amendment a weapon for assailing state power on a subject in which the state power is as wide as that of taxation to support its own existence. We cannot forget, we cannot be blind to the fact that vast values in coal leases, in which millions and millions of dollars are invested, have in the past contributed nothing to the public treasury. The state claims in this case that the value of leaseholds in minerals in this State rises to the enormous sum of $200,000,000. These coal operations have, in the main, come to us within the last decade, or largely so. In years past, the matter was not of so much consequence. Under the circumstances the legislature has chosen to think that this condition of things called for the new legislation involved in this case. We cannot forget • that great agitation and discussion before the people of the state has recently prevailed upon the subject of their taxation. It has been widely asserted that they have not helped to bear the burden resting till then on other shoulders. This long and warm agitation is part of the history of the state. So warm was this agitation that the legislature appointed a special commission to revise the tax laws. New acts were adopted at an extra session in 1904, and in 1905 a new act for assessing taxes was made to cure, as we have right to say, what were regarded as defects and inequality under changed conditions in a growing state. The legislature has plainly expressed its will that these chattels real shall be taxed, and it being within the taxing power of the State, it ill becomes a court to defeat and frustrate the public and legislative will. For these reasons we affirm the decree of the circuit judge.
Affirmed.