Twin Hills Golf & Country Club, Inc. v. Town of Forest Park

2005 OK 71 &

TWIN HILLS COUNTRY GOLF

CLUB, INC., Appellant, PARK, Appellee.

TOWN OF FOREST 102,265.

No.

Supreme Court of Oklahoma.

Oct. municipality for com- purposes subject mu-

mercial shall not be recog- nicipal taxes. Forest Park refused to exempt nize Twin Hills’ claimed status. ¶ 4 In March of Twin Hills filed a declaratory judgment action the district County against court Oklahoma Forest ruling Park. Twin Hills asked for a is any exempt duty obligation Thompson Gary M. and Taylor, Todd John taxation ordinances Forest Park’s OK, Derrick, City, appel- Oklahoma W. responded 21-109. Forest lant. is unconstitutional under ex Mendros, Jaye Jerry Sokolosky Okla- and rel. Nesbitt v. 1967 OK 434 P.2d OK, City, appellee. homa parties summary judg- 934. Both moved for ment. The district court sustained Forest TAYLOR, J. summary judgment Park’s motion for and ¶ impression presented in 1 The first issue summary overruled Twin Hills’ motion for plaintiff/appellant whether appeal judgment. appealed. Twin Hills We re- collect, report exempt from the duties to and appeal. tained the language remit sales tax 21-109(A) O.S.2001, provides which II.Standard Review tracts of in excess of acres an- ¶ meaning must determine the We nexed to a and used for com- 21-109(A) O.S.2001, § language of the in 11 subject mu- mercial shall not be which that certain annexed tracts of O.S.2001, nicipal that 11 taxes. We conclude land “shall not be tax 21-109(A) a vendor from does shield statutory This a es.” construction issue is by municipal obligations created sales question appellate of law to an court’s did not err in tax. We hold the district court plenary, independent and nondeferential re summary judgment in favor of the granting U.S.A., examination. Blitz Inc. v. Oklahoma Park, defendant town of Forest Oklahoma. ¶ Commission, 50, 6, 75 Tax 2003 OK P.3d 883, 885. court’s Proceedings We review the district sum Below I.Facts mary judgment de novo. Id. ¶2 Plaintiff/appellant, Twin Hills Golf & (Twin Club, Hills), Inc. County owns tract phrase III.The “shall not be in excess of aces on which it of land taxes” the first sentence country operates golf club. In the 21-109(A) O.S.2001, § means that club, operation golf country Twin annexed tracts of land Hills collects tax on taxable trans- state sales forty acres and used for commercial reports actions and remits the state sales mu- tax to the Oklahoma Tax Commission. nicipal property taxes. August defendant/appellee, In3 (Forest Park, primary goal inquiry the town of 6 The Oklahoma Park), statutory meaning language tract of into the is to land owned golf country legislature. City Twin Hills for the ascertain the intent of the Cicio, annexation, club. ob- Durant v. 50 P.3d After the Twin Hills OK Miller, 218, 220; jected Publishing to the enforcement of Forest Park’s World Co. operation tax in the 32 P.3d 834. We golf country presume Twin Hills claimed it ex club. Oklahoma collect, statutory any obligation pressed language. re- its intent in the port plain and remit sales tax of a under Where statute is unambiguous, legislative and the intent gleaned from that tracts of land in excess of of the statute will be ambiguity, the face of the statute without resort 8 Without the above A judicial construction. Id. concerns the taxation of rules real personal property. legislative cannot Real and be ascer- Where property in Oklahoma are to ad valo- plain meaning from the of the statuto- tained districts, by cities, rem taxation1 school ry language, ambiguity or conflict as when towns, counties, Const., 10, 9,§ Okla. art. exist, judicial with other statutes is shown to constitutionally ju- and other authorized local statutory rules of construction be uti- risdictions, Const., 9A, §§ Okla. art. et lized. Id. seq., by but not the State of Oklahoma.2 personal property may Real and also be sub- case, legislative 7 In this intent can ject municipal county assessments for plain meaning be ascertained the improvements, local in amounts not based on statutory language, and we need not resort value, property by when authorized judicial rules of construction. Const., Legislature. Okla. art. 7. Fur- statute, 21-109, The reads: personal property may real and be sub- A. in Tracts land taxation, ject specific such aas direct municipality are registration inheritance tax aor fee.3 pur- for industrial or commercial ¶ 9 ambiguity, Without the above subsection A is a limitation on taxes. Tracts of annexed land (real proper- taxation of certain annexed land by persons five acres which are used ty) personal property and certain on located engaged farming ranching or and all the annexed land. Each sentence agricul- farm animals and plainly prohibits prop- implements tural erty taxes for purposes upon spe- land, located on the cifically property. identified annexed The not be taxes unless prohibits first sentence municipal taxation of municipality furnishes services to these annexed tracts of land in excess of tracts are furnished to munic- used for commercial or industrial ipal residents. No land which is used for poses. prohibits The second sentence munic- agricultural purposes may be taken within 1) ipal taxation of annexed tracts of land in greater the limits of a town and taxed at a by persons engaged excess of five acres used adjacent rate than land which is to but ranching agricultural or outside the town limits. personal property and household any July land, B. On annexation after such annexed unless the 1998, the revenue and taxation ordinances furnishes services to the land. The any municipality licensing and the third and final sentence the subsection regulatory authority any municipality prohibits taxing of annexed land used for apply shall not any military agricultural purposes higher or extend to at a rate than to, property adjacent of, installation located on federal munici- but outside part pality. which has been annexed in or in whole The essence of the first sentence of by municipality. statute, form, simplest reduced to its Const., Generally, property paragraph ad valorem taxation of real The second of Okla. art. highest 9(a) is based on the fair value for the cash states: "No ad valorem tax shall be levied actually best use for which the purposes, any part for nor shall used, while ad valorem taxation of proceeds levy upon any ad valorem tax property is based on the fair cash value estimat- kind of in this State be used for State price bring ed at the it will a at fair and volun- purposes.” Const., tary sale. Okla. art. Const., 3.Okla. that the Const., paragraph 2. The first of Okla. power impose shall have the "li- 9(a) apportioned for ten mills "to be cense, franchise, revenue, excise, income, gross district, county, city, between school inheritance, legacy, collateral and direct and suc- Board, County Excise until such time as a taxes; also, stamp, registration, produc- cession regular apportionment pro- thereof is otherwise specific tion or taxes.” other Legislature.” vided for occupations, privileges consumption, ... that “[t]racts taxes. municipal taxes.” sales and use The term general tax” used to “excise is a term distin- unambig- legislative The guish from a tax. Whether a tax §A of uous in subsection 21-109 is is a tax or an excise tax is most to dis- intended obvious. apparent often so that there is no room annexing large courage municipalities from argument. category of the tax primarily agricultural tracts of land operation, determined from and the industrial in or- assigned taxing name of the tax au- revenue from der increase thority, legislature, controlling.6 i.e. a is not legislative accomplish goal, taxes. To property. Specifically, protects ¶ 13 sales tax is imposed The state property excess of protects it real upon spe sales in Oklahoma to consumers of commerce, industry and it tangible personal property cific services and property protects personal used for real O.S.2001, exempted. not 68 otherwise together with some household agriculture, §§ 1351 1354. The state sales tax is an municipal taxation. property, property tax excise rather than a tax or an Accordingly, we conclude Enid, City income tax. In re 1945 OK phrase municipal “shall not be 135, see, 348; 158 P.2d Oklahoma Tax Com O.S.2001, taxes” in first sentence 11 Mother, mission Sisters Sorrowful 21-109(A) § the described tracts of 539, 1939 OK 97 P.2d 888. subject municipal proper- land ¶ Municipalities levy 14 authorized are ty taxes. municipal and collect taxes as 11 no in the above There is Legislature may levy and collect for quoted A that concerns kind O.S.2001, government. 68 state other than the taxation municipal taxation § Accordingly, 2701. Park im- Forest has Although above property. sub- posed tax upon specific the sales of services any municipal section B concerns revenue tangible personal property to consumers ordinance, as a sales tax taxation geographical within its limits similar to the ordinance, expressly the subsection limits its tax, state sales tax. Like the state sales application military on installations federal Forest tax is Park’s sales an excise by municipality. property annexed Section property tax rather than a tax or an income 21-109(B) application in has no this case.4 tax. IV. A sales tax not a tax on argues 15 Twin Hills first sen tax; and, property; an excise it is it is 21-109(A) § declaring tence that tracts of the limitation munici- not within on acres which are an pal O.S.2001, tax 21- nexed “shall to municipal tax 109(A). exempts any obligations es”

¶ Generally, 12 taxes in Forest Oklahoma Park’s We law. categorized disagree. specific in only The statute is as to already municipal come excise taxes.5 taxes and As taxes. There no lan 21-109(A) discussed, §in guage taxes are direct taxes on from which we can glean legislative personal property prohibit real or based on the value intent other property. Income taxes are direct kinds taxes such as the munici specific period pal taxes Accordingly, on income for a of time. sales tax. we conclude 21-109(A) activities, O.S.2001, § Excise 11 taxes are indirect on does not shield a 1998, reenacting In added 6.In the Oklahoma Sales Tax subsection B Code in O.S.L., 119, ch. 21-109. 1998 stated an upon excise the sale of services tangible personal property exempt- categories not otherwise primer 5. For a on the or kinds of O.S.L., Taxation, ed., Cooley levy. ed from ch. taxation see §§ vol. 4th O.S.2001, seq. §§ at codified 1350 et 38-56. obligations vendor from the created 18 This cause does not arise out of cir- municipal sales tax. involving cumstances ad valorem taxation of inas the Nesbitt ease. As framed parties arguments, the instant contro- argument Y. We do not address versy is whether Twin required Hills is 21-109(A) O.S.2001, § is unconstitu- collect, report and remit Forest Park’s sales tional under ex rel. Nesbitt v. O.S.2001, tax. We decide that 11 § 21- Ford, 1967 OK 434 P.2d 934. 109(A) does not shield a vendor from the summary judgment, its motion for obligations created a municipal sales tax. contended that. Accordingly, we do not address Forest 21-109(A) is unconstitutional under State argument O.S.2001, § Park’s that 11 21- Ford, ex rel. Nesbitt v. 1967 OK 434 109(A) is unconstitutional under State ex rel. P.2d 934. argued Forest Park that the Nes- Nesbitt v. 434 P.2d 934. opinion bitt declared the 1963 version7 of 21-109(A) to be unconstitutional. Twin VI. Conclusion responded Hills that State ex rel. Nesbitt v. 19 We conclude that phrase “shall not controlling Ford is taxes” in the first part is a of the Oklahoma Code 21-109(A), § sentence stating years enacted several after the State ex rel. that tracts of land in forty Nesbitt v. Ford decision.8 acres which are and used for industrial pur- or commercial Ford, 17 In State ex rel. Nesbitt v. poses subject shall not be to attorney general sought writs of mandamus means that such tracts of land shall not be directing county Oklahoma, assessors in taxes; municipal property Tulsa and Canadian Counties to remove cer- O.S.2001, 21-109(A) § 11 does not shield a tain commercial and industrial obligations vendor from the created a exempt purposes status for municipal sales tax. We hold the district levy tax on the ad valorem tax rolls. The court granting summary did not err in judg- opinion State ex rel. Nesbitt Ford did not ment favor of the defendant town of For- expressly challenged declare the 1963 statute Park, est Oklahoma. Rather, to be unconstitutional. it decided that forty tracts of land in excess of SUMMARY JUDGMENT OF THE DIS- used for industrial or TRICT COURT AFFIRMED. were not exempt pur- entitled to status for poses municipal WATT, C.J., taxes under the LAVENDER, OPALA, provisions Constitution, of the Oklahoma art. TAYLOR, JJ., EDMONDSON and concur. 10, 6,10 § § 509 and art. and the territorial WINCHESTER, V.C.J., and HARGRAVE 458,11 § provisions statute and that these did KAUGER, JJ., concur in result. not Legislature authorize the exempt tracts of municipal property COLBERT, J., land from taxes. participating. not Ford, attorney Const., In State ex rel. applicable provision Nesbitt v. 10. The in Okla. 7. general challenged county "Provided, various § assessors who 6 reads: that all not applied O.S.Supp.1963, exempt § 481 so as to exempt herein from taxation under municipalities tax Oklahoma, those Territory the laws of the shall be annexed tracts of land in excess of acres. provided from taxation until otherwise by law.” Legislature 8. the Oklahoma overhauled governing municipalities by enacting statutes pre-statehood 11. The statute codified in the 1903 O.S.L., the Oklahoma Code.1977 ch. provided territorial statutes. That statute 256. "tracts of land in excess of five acres used for agricultural purposes city Const., Legisla- 9. Okla. taxes.” The first Oklahoma 50 reads: "The amended statute, pass exempting adding proviso ture any property no law territorial taxation, except within this State from "tracts of as other- land in excess of acres shall not provided Okla.Stat., city wise in this Constitution.” taxes.” 1909 ¶3 J., WINCHESTER, KAUGER, exemption with whom Twin Hills seeks obligation remit a sales tax un- concurring in V.C.J., joins, result: portion der the of 11 O.S.2001 majority’s agree result. 1 I with provides: However, I separately write because ma- of land in “Tracts jority’s analysis essentially ignores terse to a municipality which are annexed controlling finds an statute and unconstitu- used for industrial or commercial unambiguous leaving while tional statute tax- ” intact. es.... I agree majority with O.S.2001 (Forest Here, the town 21-109(A)2 applicable only Park) attempted collect taxes. that conclusion is immateri Country tax from Twin Hills Golf & Club any legal al Twin Hills without Hills). (Twin Supp.2003 Pursuant to 68 O.S. claiming tax-exemption basis for under the 2701(A),1 municipal government may levy portion The statute. the statute relied The and collect sales taxes. upon by Twin Hills is unconstitutional and part: has been since when State ex rel. Nes incorporated city “Any or town bitt v. OK 434 P.2d 934 assess, hereby levy, authorized decided. state general special and collect Nesbitt, county 4 In several assessors municipal government purposes of placed city exemptions had on the ad may levy and collect for pursuant Supp. valorem rolls to 11 O.S. government of state ...” Supp.1965 481 and 11 482.3 Provided, purposes. statute was amended in 2003. Because trial or commercial fur- pertinent portion of the statute the is substantial- that tracts of land in excess of five acres version, by ly prior persons engaged farming utilized the same references are to in or horses, mules, cattle, asses, ranching, and all the most current version. swine, goats, sheep, machinery and other and 21-109(A). 2. Title O.S.2001 thereon, goods household located taxes, city city to unless the or town Supp.1963 § 3. Title O.S. a statute deal- municipal affected furnishes services as ordi- change city ing authority the to with limits with narily city (Emphasis furnished to residents.” exemption of owners and the of certain consent supplied.) taxes, city provides: of tracts Supp.1965 § Title 11 O.S. which addresses council, discretion, city may "The in its add to petition on a annexation of three-fourths of the city territory adjacent ci1y the or other to the voters, part: pertinent in my proper, as it deem and shall have limits petition writing signed by "On in not less than city power to increase or dimmish the limits in legal by three-fourths of the voters and the judgment manner as its and such discretion (in value) owners of not less than three-fourths city. may redound to the benefit of the Provid- any territory contiguous of the ed, in no that case shall additional territo- any incorporated city or town and em- ry, except par- when subdivided into tracts or thereof, city braced within the limits the coun- less cels of than five acres with more than one city cil the or the board of of trustees of the thereon, city town, be, residence added to the writing limits may by the case ordinance shall the without consent of the owners of territory city upon annex such to such or town majority of the whole number of acres owned copy filing a of such ordinance an with accu- added, territory by except ...; residents of the to be territory provid- map rate of the when three of sides such additional terri- ed tracts of land in five excess of to, on, tory adjacent abutting by or persons engaged utilized ranching, or limits, already horses, mules, city cattle, asses, territory within the such swine, city sheep, goats, be added without limits and other Provided, agricultural implements consent hereinbefore mentioned. all further, thereon, territory sought that where the to be located not be shall separated city by city city added from the limits an or town or unless intervening strip less than four rods in width town affected furnishes services as residents; upon by strip city the land detached so it shall furnished to or town further, adjacent abutting provided, be considered as or within that tracts land in of section; provided forty of this fur- acres shall not city that tracts of land in excess taxes when located within a city when or town when used for or com- industrial city purposes."(Emphasis or supplied.) within when used indus- mercial

H concerning 481-482 were statutes enacted Sections and it re- limits, city authority change today. annex- mains so ation, exemptions for land agree 6 I construction can larger than acres used industrial or be utilized to avoid the need to resolve con- purposes. addressing the stitutional conflicts. we cannot use constitutionality exemp- an unconstitutional statute to realize this tions, analysis began the Court with Okla. goal. I present would resolve the cause Const, provides: art 50 which applying controlling statute, 68 O.S. Supp.2003 2701,7 finding ex State pass exempt- “The no law rel. Nesbitt v. ing any property this within disposition P.2d 934 is irrelevant taxation, except provided in as otherwise except extent that it reaf- this Constitution.” cause — pertinent portions firms that the of 11 O.S. Const, The Court also noted Okla. 2001 21409 are invalid. part: § which Provided, “... that all not herein exempt from taxation under Oklahoma, Territory laws

shall be taxation until other- provided by

wise law....”4 Const, It determined that under Okla. OK 74 6,§ supra, any exemptions in exis- MURG, Jr., individually Wilhelm and as Territory tence the laws Representative Personal of the Estate of until Oklahoma remained effective reduced Virginia deceased, Murg, Plaintiff/Ap- Legislature. eliminated pellant, ¶ However, neither a constitu- provision permit- tional nor a territorial law HOME, BARNSDALL NURSING ting exemption an taxes for corporation, an Oklahoma tracts of land in acres and Defendant/Appellee. used for industrial or commercial existed when adopted, the Constitution was 99,701. No. court, effect, portion the Nesbitt held that Supreme of Oklahoma. Court statute unconstitutional. Legislature revamped Code 18, 2005. Oct. codifying Supp.1963 O.S. 481 and 11 Supp.1965 § Supp.1977 O.S. 214.09(A).6 Section 21409 is indistin- guishable from those involved Nesbitt and

consequently, it was unconstitutional when it provision ing, This of the Constitution was amended all farm animals perti- and 1992. agricultural implements portion substantially unchanged. nent remains land, shall not subject municipal be unless the munic- Supp.1963 § 5. Title 11 O.S. see note ipality furnishes services these tracts as are supra; Supp.1965 § 110.S. see note su- furnished residents. pra. agricultural pur- No land which used for 21-109, Supp.1977 § 6. Title 11 O.S. within the taken limits of territory provides: entitled taxation of annexed greater and taxed at a rate than land which is "Tracts of land in excess forth adjacent to the town but outside limits.” which are annexed to a for industrial or commercial current version statute’s shall not portion substantially unchanged. remains taxes. Tracts of an- nexed land in excess of five acres which are Supp.2003 7.Title 68 O.S. by persons engage or ranch-

Case Details

Case Name: Twin Hills Golf & Country Club, Inc. v. Town of Forest Park

Court Name: Supreme Court of Oklahoma

Date Published: Oct 18, 2005

Citation: 123 P.3d 5

Docket Number: 102,265

Court Abbreviation: Okla.