Opinion
No. 36366.
November 11, 1946.
1. TAXATION.
Constitutional provision regarding uniformity of taxation does not prohibit exemption from ad valorem taxation where some principle of public policy that can support a presumption that public interest will be subserved underlies the exercise of such power and the classification of property exempted is based on some reasonable ground, and some real difference which bears a proper relation to object sought to be accomplished (Const. 1890, sec. 112).
2. TAXATION.
The statute exempting from ad valorem taxation nonproducing, existing and subsequently acquired oil, gas and mineral leases does not violate constitutional provision regarding uniformity of taxation, since such exemption is reasonably calculated to encourage investment of capital in such leases which may be in the public interest, and the statutory classification is based on a real difference between such nonproducing leases and other estates in the land (Laws 1946, ch. 409; Const. 1890, sec. 112).
3. CONSTITUTIONAL LAW.
A plaintiff not shown to be a leaseholder seeking to enjoin the enforcement of a statute containing a severability clause and exempting from taxation nonproducing oil, gas and mineral leases, may not complain of the alleged unconstitutionality of the documentary stamp tax feature of the statute (Laws 1946, ch. 409, sec. 10).
ROBERDS, J., dissenting.
APPEAL from the chancery court of Yazoo county. HON. M.B. MONTGOMERY, Chancellor.
Jackson Young, Joe H. Daniel and Milton H. Mitchell, all of Jackson, for appellant.
History of equal and uniform taxation in Mississippi. Collation of authorities:
Vicksburg Bank v. Worrell, 67 Miss. 47, 7 So. 219; Postal Telegraph-Cable Co. v. Adams, 71 Miss. 555, 14 So. 36; Adams v. Bank of Oxford, 78 Miss. 532, 29 So. 402; Chicago, R.I. P.R. Co. v. Robertson, 122 Miss. 417, 84 So. 449; City of Jackson v. Deposit Guaranty Bank Trust Co., 160 Miss. 752, 133 So. 195; Smith v. Aberdeen Corporation, 25 Miss. 458; Adams v. Mississippi State Bank, 75 Miss. 701, 23 So. 395; Marbury v. Madison, 1 Cranch. 176, 2 L.Ed. 73; Constitution of 1869, Art. 12, Secs 16, 20; Constitution of 1890, Sec. 112; Laws of 1946, Ch. 409; Mississippi and the Heart of the South, Vol. 11, p. 164; Mississippi Constitutions, by Judge George H. Ethridge.
The exemption from ad volorem taxation of leasehold and mineral interests assumed to be granted by Section 2 of the Act of 1946 violates Article 1 of the Fourteenth Amendment to the Constitution of the United States, and Section 14 and 112 of the Mississippi Constitution of 1890, in that it is arbitrary and unreasonable and discriminates against owners of other property in the same class, subject to ad valorem taxation.
Russell Investment Corporation v. Russell, 182 Miss. 385, 182 So. 102; Leavenworth v. Claughton, 197 Miss. 606, 20 So.2d 821; Mississippi Mills v. Cook, 56 Miss. 40; Adams v. Yazoo M.V.R. Co., 77 Miss. 194, 24 So. 200; Adams v. Tombigbee Mills, 78 Miss. 676, 29 So. 470; Adams v. Mississippi State Bank, supra; Adams v. Kuykendall, 83 Miss. 571, 35 So. 830; Adams v. Standard Oil Co. of Kentucky, 97 Miss. 879, 53 So. 692; Adams v. Mississippi Lumber Co., 84 Miss. 23, 36 So. 68; City of Jackson v. Mississippi Fire Ins. Co., 132 Miss. 415, 95 So. 845; Miller v. Lamar Life Ins. Co., 158 Miss. 753, 131 So. 282; City of Jackson v. Deposit Guaranty Bank Trust Co., supra; Hawkins v. Mangrum, 78 Miss. 97, 28 So. 872; Daily v. Swope, 47 Miss. 367; Gulf S.I.R. Co. v. Adams, 90 Miss. 559, 45 So. 91; Riley v. Ayer Lord Tie Co., 147 Miss. 105, 113 So. 214; Riley v. American Creosote Works (Miss.), 113 So. 217; Riley v. Gulfport Creosoting Co., (Miss.) 113 So. 218; Colgate v. Harvey, 296 U.S. 404, 56 S.Ct. 252, 80 L.Ed. 299, 102 A.L.R. 54; Le Feber Estate v. State of Wisconsin (Wis.), 271 N.W. 95, 109 A.L.R. 732; Gulf C. S.F. Co. v. Ellis, 165 U.S. 150, 175 S.Ct. 255, 41 L.Ed. 666; Appeal of Fox and Wife, 112 Pa. 337, 4 A. 149; Pollock v. Farmers' Loan Trust Co., 157 U.S. 429, 15 S.Ct. 673, 39 L.Ed. 759; Atchison, T. S.F.R. Co. v. Matthews, 174 U.S. 96, 19 S.Ct. 609, 43 L.Ed. 909; Royster Guano Co. v. Virginia, 253 U.S. 412, 40 S.Ct. 560, 64 L.Ed. 989; Mo., Kan., Texas Ry. Co. v. May, 194 U.S. 267, 24 S.Ct. 638, 48 L.Ed. 971; Baine Co. v. Pinson, 51 S.Ct. 228, 75 L.Ed. 482; Marbury v. Madison, supra; Edward Hines Yellow Pine Trustees et al. v. Stewart, 46 F.2d 910; Clearfield Bituminous Coal Corporation v. Thomas, 9 A.2d 727, 126 A.L.R. 717; Binney v. Long, 299 U.S. 280, 57 S.Ct. 206, 81 L.Ed. 239; Constitution of 1890, Sec. 112; 26 R.C.L., Taxation, Secs. 223, 224, 261; 51 Am. Jur., Taxation, Sec. 504; 2 Cooley on Taxation (4 Ed.), p. 1374, Sec. 653.
Sections 2 and 3 of the Act assume to grant an exemption from ad valorem taxation of leasehold and mineral interests created prior to the passage of the Act, on payment of a specified sum of money calculated on the basis of the number of mineral or royalty acres owned. With no relation whatever to the valuation of such property, and while not so designated, such specified sum is nevertheless and in effect a single, acreage tax, substituted for annual ad valorem taxes on said property, and thus in violation of Section 112 of the Constitution of 1890, which requires that taxation shall be uniform and equal, that property shall be assessed for taxes under general laws, and by uniform rules, according to its true value, and in proportion to its value.
Thompson v. Kreutzer, 112 Miss. 165, 72 So. 891; 51 Am. Jur., Taxation, Sec. 121.
Sections 4, et seq., of the Act impose a property or ad valorem tax, because there is levied thereby a tax calculated upon the basis of a specified amount per mineral or royalty acre, notwithstanding it is recited to be a documentary tax levied upon the filing and recording of every instrument conveying a non-producing leasehold mineral or royalty interest, and as a tax upon property it violates said Section 112 of the Constitution of 1890.
Locke v. L.N. Dantzler Lumber Co., 119 Miss. 783, 81 So. 175; State ex rel. Knox v. Gulf, M. N.R. Co., 138 Miss. 70, 104 So. 689; Stone v. General Contract Purchase Corporation, 193 Miss. 301, 7 So.2d 806; Thompson v. Kreutzer, supra; Thompson v. McLeod, 112 Miss. 383, 73 So. 193; Barnes v. Jones, 139 Miss. 675, 103 So. 773; Dawson v. Kentucky Distilleries Warehouse Co., 255 U.S. 288, 41 S.Ct. 272, 65 L.Ed. 638; Brown v. Maryland, 12 Wheat 444, 6 L.Ed. 687; Wheeler v. Weightman, 96 Kan. 50, 149 P. 977, L.R.A. 1916A, 846; Hines v. Leavenworth, 3 Kan. 186; Pollock v. Farmers' Loan Trust Co., supra; Almy v. California, 24 How. 169, 16 L.Ed. 644; Philadelphia S.M.S.S. Co. v. Pennsylvania, 122 U.S. 326, 7 S.Ct. 1118, 30 L.Ed. 1200; Postal Telegraph Cable Co. v. Adams, 155 U.S. 688, 15 S.Ct. 268, 39 L.Ed. 311; Federal Land Bank v. Crosland, 261 U.S. 374, 43 S.Ct. 385, 67 L.Ed. 703, 29 A.L.R. 1; Macallen Co. v. Massachusetts, 279 U.S. 620, 73 L.Ed. 874; Louisville Gas Electric Co. v. Coleman, 277 U.S. 32, 48 S.Ct. 423, 72 L.Ed. 770; The Eliza Lines, 199 U.S. 119, 26 S.Ct. 8, 50 L.Ed. 115, 4 Ann. Cas. 406.
If the tax imposed by Section 4, et seq., of the act is not a property or ad valorem tax, it is a documentary, excise or other form of tax in lieu of an ad valorem tax, and as such violates Section 112 of the Constitution of 1890, because it does not provide for non-producing mineral interests to be assessed and taxed according to their "true value," but rather by an arbitrary means, completely unrelated to "true value."
Fox v. Pearl River Lumber Co., 80 Miss. 1, 31 So. 583; Stern et al. v. Great Southern Land Co., 148 Miss. 649, 114 So. 739; Federal Land Bank of New Orleans v. Cooper et al., 190 Miss. 490, 200 So. 729; Pace v. State ex rel. Rice, 191 Miss. 780, 4 So.2d 270; Merrill Engineering Co. v. Capital National Bank of Jackson et al., 192 Miss. 378, 5 So.2d 666; Gulf Refining Co. v. Stone, 197 Miss. 713, 21 So.2d 19; Smith County Oil Co. v. Board of Sup'rs of Simpson County, 200 Miss. 18, 25 So.2d 457, 26 So.2d 685; Union Investment Co. v. Board of Sup'rs of Harrison County, 67 Miss. 614, 7 So. 509; Adams v. Mississippi State Bank, supra; Chicago, R.I. P.R. Co. v. Robertson, supra; Barnes v. Jones, supra; Thompson v. Kreutzer, supra; State v. Gulf, M. N.R. Co., supra; Buttram v. Gray County, Texas, et al., 62 F.2d 44; Washington Union Coal Co. v. Thurston County, 177 P. 774, 2 A.L.R. 1546; Greene County v. Lattas Creek Coal Co., 179 Ind. 212, 100 N.E. 561; Susquehanna Power Co. v. State Tax Commission, 283 U.S. 291, 51 S.Ct. 434, 75 L.Ed. 1042; Code of 1942, Secs. 9669, 9759, 9769, 9770; Constitution of 1890, Secs. 32, 112, 181; 4 Summers on Oil Gas (Perm. Ed.), p. 203, Secs. 783, 784.
Although Section 10 of the Act provides that if any section, paragraph, provision, clause or part shall be held invalid, the rest of the Act will remain in full force and effect, thus indicating that the tax and the exemption are separate and apart, nevertheless the entire Act is a single scheme or device to evade the requirements of Section 112 of the Constitution, by taxing property contrary to said provision, especially in that the effect of the entire Act is to effect a commutation of the taxes paid on a small classification of property, to-wit: non-producing mineral interests.
Constitution of 1890, Sec. 112; 51 Am. Jur. 38, 40, Secs. 3, 6: 61 C.J. 65, 66, Sec. 1.
The imposition of the tax assumed to be imposed by the Act upon the recordation of instruments creating, transferring or assigning non-producing leasehold and mineral interests after the passage of the Act is arbitrary and unreasonable and discriminates against the owners of such interest, and denies to them the equal protection of the laws by requiring the purchasers of such interest to pay such tax, while no tax is imposed upon the recordation of any instrument or class of instruments by which any other property is conveyed, transferred, or assigned, and therefore, contravenes Article 1 of the Fourteenth Amendment to the Constitution of the United States and Section 14 of the Mississippi Constitution of 1890.
Adams v. Standard Oil Co. of Kentucky, supra; Lowry v. City of Clarksdale, 154 Miss. 155, 122 So. 195; Riley v. Ayer Lord Tie Co., supra; Southern Package Corporation v. State Tax Commission, 174 Miss. 212, 164, So. 45; Federal Land Bank v. Crosland, supra; State ex rel. McCardy v. Nelson, 41 Minn. 25, 42 N.W. 548, 4 L.R.A. 300; Oakland Cemetery Ass'n. v. Ramsey County, 98 Minn. 404, 108 N.W. 857, 116 Am. St. Rep. 377; Louisville Gas E. Co. v. Coleman, supra; Pittman v. Home Owners Loan Corporation, 308 U.S. 21, 60 S.Ct. 15, 84 L.Ed. 11, 124 A.L.R. 1263; Constitution of 1890, Sec. 14; 51 Am. Jur. 1070, Sec. 1257.
The exemptions assumed to be granted by the Act violate Section 90 (h) of the Constitution of 1890, which expressly provides that the legislature shall not pass any local, private or special law, but only general laws, exempting property from taxation, since the Act is a special law enacted solely for the benefit of the oil and gas industry, which alone is assumed to be granted the exemptions.
Toombs v. Sharkey, 140 Miss. 676, 106 So. 273; Clark v. State, 169 Miss. 369, 152 So. 820; Sorenson v. Webb, 111 Miss. 87, 71 So. 273; State ex rel. Knox v. Speakes, 144 Miss. 125, 109 So. 129; Memphis C.R. Co. v. Bullen, 154 Miss. 536, 121 So. 826; Adams v. Kuykendall, supra; City of Jackson v. Deposit Guaranty Bank Trust Co., supra; Vardaman et al. v. McBee, 198 Miss. 251, 21 So.2d 661; Constitution of 1890, Secs. 14, 87, 90 (h); 25 R.C.L. 815, Sec. 66; Constitution of United States, 14th Amendment; 12 C.J. 1128, Sec. 855; 16 C.J.S., Constitutional Law, Sec. 489.
The Act assumes to grant an irrepealable exemption in contravention of Section 182 of the Constitution of 1890.
Constitution of 1890, Sec. 182.
Satterfield, Ewing Hedgepeth, of Jackson, Heidelberg Roberts, of Hattiesburg, and Greek L. Rice, Attorney General, by Wm. B. Fontaine, Assistant Attorney General, for appellees.
The exemptions granted by Chapter 409, Mississippi Laws of 1946, hereinafter referred to as the Act, are not arbitrary and do not discriminate against owners of other property subject to ad valorem taxation, but are based upon a reasonable classification of property for the purpose of exemption, and do not violate Article 1 of the Fourteenth Amendment to the Constitution of the United States or Sections 14 and 112 of the Mississippi Constitution of 1890.
Gulf Refining Co. v. Stone, 197 Miss. 713, 21 So.2d 19; Johnson v. Reeves Co., 112 Miss. 227, 72 So. 925; Miller v. State, 130 Miss. 564, 94 So. 706; L.N. Dantzler Lumber Co. v. State, 97 Miss. 355, 53 So. 1; Easterling Lumber Co. v. Pierce, 106 Miss. 672, 64 So. 461; Edwards House v. Davis, 124 Miss. 485, 86 So. 849; United States Fidelity Guaranty Co. v. Parsons, 147 Miss. 335, 112 So. 469, 53 A.L.R. 88; State ex rel. Attorney General v. School Board of Quitman County, 181 Miss. 818, 181 So. 313; Commodore Corporation v. Davis, 178 Miss. 376, 172 So. 867; Chassanoil v. City of Greenwood, 166 Miss. 848, 148 So. 781, 291 U.S. 584, 54 S.Ct. 541, 78 L.Ed. 1004; Miller v. Sherrard, 157 Miss. 124, 126 So. 903, 126 So. 906; State ex rel. Jordan v. Gilmer Grocery Co., 156 Miss. 99, 125 So. 710; Smith v. Chickasaw County, 156 Miss. 171, 125 So. 96; Staple Cotton Co-Op. Ass'n. v. Hemphill, 142 Miss. 298, 107 So. 24; State, for use of Robertson, v. Miller, 144 Miss. 614, 109 So. 900, 276 U.S. 174, 48 S.Ct. 266, 72 L.Ed. 517; Shilling v. State. 143 Miss. 709, 109 So. 737; Robinson v. State, 143 Miss. 247, 108 So. 903; State ex rel. Forman v. Wheatley, 113 Miss. 555, 74 So. 427; Waugh v. Board of Trustees of University of Mississippi, 105 Miss. 623, 62 So. 827, L.R.A. 1915D, 588, Ann. Cas. 1916E, 522, 237 U.S. 589, 35 S.Ct. 720, 59 L.Ed. 1131; State v. J.J. Newman Lumber Co., 102 Miss. 802, 59 So. 923, 103 Miss. 263, 60 So. 215, 45 L.R.A. (N.S.) 851; Hart v. State, 87 Miss. 171, 39 So. 523, 112 Am. St. Rep. 437; State ex rel. Greaves v. Henry, 87 Miss. 125, 40 So. 152, 5 L.R.A. (N.S.) 340; Newsom v. Cocke, 44 Miss. 352, 7 Am. Rep. 686; Coffman v. Bank of Kentucky, 40 Miss. 29, 90 Am. Dec. 311; Russell Investment Corporation v. Russell, 182 Miss. 385, 182 So. 102; Magnolia Bank v. Board of Sup'rs of Pike County, 111 Miss. 857, 72 So. 697; Brennan v. Mississippi Home Ins. Co., 70 Miss. 531, 13 So. 228; State ex rel. Greaves v. Henry, 87 Miss. 125, 40 So. 152; City of Jackson v. Mississippi Fire Ins. Co., 132 Miss. 415, 95 So. 845; Adams v. Yazoo M.V.R. Co., 77 Miss. 194, 24 So. 200; Mississippi Mills v. Cook, 56 Miss. 40; City of Jackson v. Deposit Guaranty Bank Trust Co., 160 Miss. 752, 133 So. 195; Miller v. Lamar Life Ins. Co., 158 Miss. 753, 131 So. 282; Stern v. Parker, 200 Miss. 27, 25 So.2d 787; Board of Sup'rs of Bolivar County v. Merck Alston, 153 Miss. 346, 120 So. 839; Clarksdale Building Loan Ass'n v. Board of Levee Commissioners, 168 Miss. 326, 150 So. 783; Equitable Finance Co. v. Board of Sup'rs. of Lee County, 146 Miss. 734, 111 So. 871; Allbritton v. City of Winona, 181 Miss. 75, 178 So. 799; State ex rel. Knox v. Gulf, M. N.R. Co., 138 Miss. 70, 104 So. 689; Lawrence v. Mississippi State Tax Commission, 162 Miss. 338, 137 So. 503, 286 U.S. 276, 52 S.Ct. 556, 76 L.Ed. 1102, 87 A.L.R. 374; Columbus Greenville R. Co. v. Miller, 154 Miss. 317, 122 So. 366, 127 So. 784, 283 U.S. 96, 51 S.Ct. 392, 75 L.Ed. 861; Stone v. General Electric Contracts Corporation, 193 Miss. 317, 7 So.2d 811; Hollandale Ice Co. v. Board of Sup'rs. of Washington County, 171 Miss. 515, 157 So. 689; Clay County v. Hogan, 145 Miss. 857, 111 So. 373; Meador v. Mac-Smith Garment Co., 188 Miss. 98, 191 So. 129; Adams v. Tombigbee Mills, 78 Miss. 676, 29 So. 470; Robertson v. Mississippi Packing Co., 134 Miss. 837, 98 So. 539; Gully v. Wilmut Gas Oil Co., 174 Miss. 794, 165 So. 620; City of Vicksburg v. Vicksburg Sanitarium, 117 Miss. 709, 78 So. 702; Rush Hospital Benev. Ass'n. v. Board of Sup'rs of Lauderdale County, 187 Miss. 204, 192 So. 829; City of Natchez v. Natchez Sanatorium Benev. Ass'n., 191 Miss. 91, 2 So.2d 798; Board of Sup'rs of Warren County v. Vicksburg Hospital, 173 Miss. 805, 163 So. 382; Board of Sup'rs of Hinds County v. Jackson Hospital Benev. Assn., 180 Miss. 129, 177 So. 27; Board of Sup'rs of Harrison County v. Gulf Coast Millitary Academy, 126 Miss. 729, 89 So. 617; Millsaps College v. City of Jackson, 136 Miss. 795, 101 So. 574; City of Jackson v. Preston, 93 Miss. 366, 47 So. 547; Board of Sup'r of Jefferson County v. Jefferson County Bank, 171 Miss. 50, 156 So. 599; State v. Dutton, 117 Miss. 391, 78 So. 146; Adams County v. Catholic Diocese of Natchez, 110 Miss. 890, 71 So. 17; Ridgeley Lodge, No. 23, I.O.O.F., v. Redus, 78 Miss. 352, 29 So. 163; Senter v. City of Tupelo, 136 Miss. 269, 101 So. 372; Frantz v. Dobson, 64 Miss. 631, 2 So. 75; Carmichael v. Southern Coal Coke Co., 301 U.S. 495, 57 S.Ct. 868, 81 L.Ed. 1245, 109 A.L.R. 1327; Lyon v. Spaeth, 20 N.W.2d 481, 162 A.L.R. 1041; Mutual Loan Co. v. Martell, 22 U.S. 225, 32 S.Ct. 74, 56 L.Ed. 175; Heath v. Worst, 207 U.S. 338, 28 S.Ct. 114, 52 L.Ed. 236; State v. Miller, 149 Wn. 545, 271 P. 826; Rast v. Van Denman, 240 U.S. 342, 60 L.Ed. 679; Colgate v. Harvey, 296 U.S. 404, 56 S.Ct. 252, 80 L.Ed. 299, 102 A.L.R. 54; Fox v. Standard Oil Co., 294 U.S. 87, 55 S.Ct. 333, 79 L.Ed. 780; Pollock v. Farmers' Loan Trust Co., 157 U.S. 429, 15 S.Ct. 673, 39 L.Ed. 759; Interstate Natural Gas Co. v. Gully, 292 U.S. 16, 78 L.Ed. 1088, 4 F. Supp. 697; Gully v. Interstate Natural Gas, 292 U.S. 16, 54 S.Ct. 565, 78 L.Ed. 1088; Yazoo M.V.R. Co. v. Board of Levee Commissioners, 132 U.S. 190, 105 S.Ct. 74, 33 L.Ed. 308; Ford v. Delta Pine Land Co., 164 U.S. 662, 17 S.Ct. 230, 41 L.Ed. 590; Code of 1942, Secs. 4492, 4520, 4633, 4922, 4937, 5215, 5224, 5670, 5773, 6196, 7313, 7584, 7600, 7619, 8436, 8489, 9416, 9697, 9698, 9699, 9700, 9701, 9702, 9703, 9710, 9714, 9760, 9976, 10116; Laws of 1926, Ch. 259; Laws of 1930, Ch. 22; Laws of 1940, Ch. 110; Laws of 1944, Chs. 128, 134, Secs. 2, 11, 12, 14, Ch. 135; Laws of 1946, Chs. 208, 224, 235, 246, 448; 11 Am. Jur. 718, 719, 776, 780, 792; 12 Am. Jur. 207-219; 51 Am. Jur. 506-508, 523; 16 C.J.S. 234, 242, 250, 1355.
The exemption of mineral interests existing prior to the passage of the Act is conditioned upon the filing and registration of an application by the owner and the payment of a sum for such filing and registration and is not conditioned upon the payment of a tax upon the interest itself or upon its essential attributes.
Yazoo M.V.R. Co. v. Thomas, 65 Miss. 553, 562, 5 So. 108; Yazoo M.V.R. Co. v. Adams, 76 Miss. 545, 25 So. 366; City of Jackson v. Deposit Guaranty Bank Trust Co., supra; Bank of Oxford v. Town of Oxford, 70 Miss. 504, 12 So. 203; Hollandale Ice Co. v. Board of Sup'rs of Washington County, supra; Green v. Craft, 28 Miss. (6 Cushm.) 70; Louisville Gas Electric Co. v. Coleman, 277 U.S. 32, 48 S.Ct. 423, 72 L.Ed. 770; Federal Land Bank v. Crosland, 261 U.S. 374, 43 S.Ct. 385, 67 L.Ed. 703; Code of 1942, Sec. 9716 et seq.; Laws of 1926, Ch. 172, Sec. 4; Laws of 1930, Ch. 22, Sec. 11; Laws of 1946, Ch. 409, Secs. 2, 3; 61 C.J. 406, 427; 51 Am. Jur. 35, 38.
The exemption of existing interests, the exemption of interests created after the passage of the Act and the levy of a mineral documentary stamp tax are three separate and separable matters and the question of the validity of the tax is not before the Court in this proceeding.
Mississippi Mills v. Cook, supra; Adams v. Standard Oil Co. of Kentucky, 97 Miss. 879, 53 So. 692; American Express Co. v. Beer, 107 Miss. 528, 65 So. 575; Stone v. General Contract Purchase Corporation, 193 Miss. 301, 7 So.2d 806; Stone v. General Electric Contracts Corporation, 193 Miss. 317, 7 So.2d 811; California Co. v. State Oil Gas Board, 200 Miss. 824, 27 So.2d 542; Crowell v. Benson, 285 U.S. 22, 52 S.Ct. 285, 76 L.Ed. 598; Code of 1942, Sec. 6136; Laws of 1940, Ch. 110, Secs. 1, 12; Laws of 1946, Ch. 409, Secs. 5, 10; 11 Am. Jur. 834-839; 50 Am. Jur. 354.
The tax levied by Section 4 of the Act is an excise or privilege tax and not a tax upon property; it is not levied in lieu of an ad valorem tax and does not arbitrarily and unreasonably discriminate against the owners of mineral interests.
Mathison v. Brister, 166 Miss. 67, 145 So. 358; Stone v. General Contract Purchase Corporation, supra; Stone v. General Electric Contracts Corporation, supra; Stone v. Universal Credit Co., 193 Miss. 354, 7 So.2d 820; Stone v. Yellow Mfg. Acceptance Corporation, 193 Miss. 338, 7 So.2d 820; C.I.T. Corporation v. Stone, 193 Miss. 344, 7 So.2d 811; Hattiesburg Grocery Co. v. Robertson, 126 Miss. 34, 88 So. 4, 25 A.L.R. 748; State ex rel. Knox v. Gulf, M. N.R. Co., 138 Miss. 70, 104 So. 689; Fernwood Lumber Co. v. Mississippi State Tax Commission, 167 Miss. 273, 149 So. 727; Texas Co. v. Wheeless, 185 Miss. 799, 187 So. 880; Enochs v. State, 133 Miss. 107, 97 So. 534; Postal Telegraph-Cable Co. v. Robertson, 116 Miss. 204, 76 So. 560; Gulf Refining Co. v. Stone, 197 Miss. 713, 21 So.2d 19; Thompson v. Kreutzer, 112 Miss. 165, 72 So. 891; Thompson v. McLeod, 112 Miss. 383, 73 So. 193; Chicago, R.I. P.R. Co. v. Robertson, 122 Miss. 417, 84 So. 449; Barnes v. Jones, 139 Miss. 675, 103 So. 773; Miller v. Lamar Life Ins. Co., 158 Miss. 753, 131 So. 282; Southern Package Corporation v. State Tax Commission, 174 Miss. 212, 164 So. 45; Board of Sup'rs of Attala County v. Kelly, 68 Miss. 40, 8 So. 376; Prairie Oil Gas Co. v. Motor, 1 F. Supp. 464; Candado Stevedoring Corporation v. Locke, 1 F. Supp. 456; Schweizer v. Mager, 297 F. Supp. 334; Karnuth v. United States, 279 U.S. 231, 73 L.Ed. 677; S.S. White Dental Co. v. Com., 212 Mass. 35, 98 N.E. 1056; Trent v. White, 181 U.S. 264, 21 S.Ct. 611, 45 L.Ed. 853; Pittman, Clerk, v. Housing Authority of Baltimore City, 25 A.2d 466; Community Public Service Co. v. James et al., 167 S.W.2d 588; Barnes v. Moragne, 145 Ala. 313, 41 So. 947; Lee v. State Tax Commission, 219 Ala. 513, 123 So. 6; Middendorf v. Goodale, 202 Ky. 118, 259 S.W. 59; L.G. E. Co. v. Shanks, 213 Ky. 762, 281 S.W. 1017; Trustees v. Hooten, 53 Okla. 530, 157 P. 293; State v. Am. Trust Co., 141 Tenn. 243, 208 S.W. 611; Pocahontas C.C. Co. v. Commonwealth, 113 Va. 108, 73 S.E. 446; Dawson v. Kentucky Distillery Warehouse Co., 255 U.S. 288, 41 S.Ct. 272, 65 L.Ed. 638; Louisville Gas Co. v. Coleman, 277 U.S. 32, 48 S.Ct. 423, 72 L.Ed. 770; Federal Land Bank v. Crosland, 207 Ala. 456, 93 So. 7, 261 U.S. 374, 43 S.Ct. 385, 67 L.Ed. 703, 29 A.L.R. 1; Pittman v. Home Owners Loan Corporation, 308 U.S. 21, 60 S.Ct. 15, 84 L.Ed. 11, 124 A.L.R. 1263; State ex rel. McCardy v. Nelson, 41 Minn. 25, 42 N.W. 548, 4 L.R.A. 300; Oakland Cemetery Ass'n. v. Ramsey County, 98 Minn. 404, 108 N.W. 857, 116 Am. St. Rep. 377; Laws of 1912, Chs. 110, 112, 113; Laws of 1918, Ch. 109; Laws of 1924, Ch. 129; Laws of 1946, Ch. 409, Sec. 4; 49 Am. Jur. 207; 51 Am. Jur. 53, 60, 61, 63, 64, 65, 112, 113, 1070; Act of Congress, 12 U.S.C.A. 31; 103 A.L.R. 101-103.
The Act is a general law applying alike to all members of the class therein fixed for the purpose of the exemptions, and hence is not a special law violating Section 90 (h) of the Mississippi Constitution.
Cox v. Wallace, 100 Miss. 525, 56 So. 461; Toombs v. Sharkey, 140 Miss. 676, 106 So. 273; Code of 1906, Secs. 371-391; Laws of 1924, Ch. 211.
The Act does not grant an irrepealable exemption in contravention of Section 182 of the Constitution of 1890.
Mississippi Mills v. Cook, supra; Railroad Co. v. Adams, supra; Adams v. Tombigbee Mills, supra; Board of Sup'rs of Harrison County v. Gulf Coast Military Academy, 126 Miss. 729, 89 So. 617; City of Jackson v. Mississippi Fire Ins. Co., supra; Musgrove v. Vicksburg N.R. Co., 50 Miss. 677; Bradstreet Co. v. City of Jackson, 81 Miss. 233, 32 So. 999; Board of Sup'rs of Attala County v. Kelly, 68 Miss. 40, 8 So. 376; Love v. Mangum, 160 Miss. 590, 135 So. 223; Massey v. Womble, 69 Miss. 347, 11 So. 188; Deposit Guaranty Bank Trust Co. v. Williams, 193 Miss. 432, 9 So.2d 638; Code of 1906, Sec. 4251, par. D; Laws of 1922, Ch. 184.
Appellant is the owner of considerable property subject to ad valorem taxation in this State. It filed its taxpayer's bill against the chancery clerk of Yazoo County, seeking to enjoin the enforcement of an Act of the Legislature known as House Bill 868, passed at the regular session in 1946. This Act, as its main feature, exempts from taxation "all non-producing leasehold interests upon all oil, gas and other minerals in, or under lands lying within the state . . . created or assigned after the effective date of this act, and also all nonproducing interests in such oil, gas and other minerals (including royalty interests therein) hereafter conveyed to a grantee or purchaser or excepted or reserved to a grantor separately and apart from the surface . . ."
The Act further provided that all such transfers or reservations must have attached to the instrument evidencing the transaction, certain documentary stamps in the sum of from three to eight cents per acre according to the length of the term of the lease or reservation.
And as to leases and reservations already in existence, it was enacted that they also should be exempt, provided the owner or owners thereof within a specified period made application therefor to the chancery clerk of the county wherein the particular lands were situated, the application to have affixed documentary stamps in the same amount as had the application been a lease or reservation.
Appellant's chief contention is that the Act in question is not a real exemption statute, but is an attempt in the guise of exemption to substitute a document tax in lieu of the ad valorem tax in contravention of Section 112, Const. 1890, and contrary to the holding of this Court in such cases as Chicago, R.I. P.R. Co. v. Robertson, 122 Miss. 417, 84 So. 449. And appellant contends further that even if intended as an exemption statute, it is invalid because there is no reasonable basis upon which it can stand. There are other subsidiary contentions.
There was a general demurrer to the bill which was sustained, and the complainant having declined to plead further the bill was dismissed. The allegations of the bill are such that it may be gathered therefrom that approximately two-thirds of the lands of the state are not at present under oil and gas or other mineral leases. The Act recites on its face that among its objects is to encourage the purchases of such leases in this State.
It is firmly settled by our decisions that Section 112, Const. 1890, does not prohibit exemptions from ad valorem taxation when there underlies the exercise of the power some principle of public policy that can support a presumption that the public interest will be subserved by the exemption granted and when the classification of the property exempted is based on some reasonable ground and some real difference which bears a just and proper relation to the object sought to be accomplished. City of Jackson v. Mississippi Fire Ins. Co., 132 Miss. 415, 95 So. 845; Miller v. Lamar Life Ins. Co., 158 Miss. 753, 131 So. 282; City of Jackson v. Deposit Guaranty Bank Trust Co., 160 Miss. 752, 133 So. 195. If this were not true, our homestead exemption statute could not be upheld or the statutes exempting all livestock; and there are several others.
The object sought to be accomplished here has been stated, and it would seem to follow as well within the bounds of reason that to exempt subsequently acquired leases from ad valorem taxation would encourage the investment of capital in them, and as such nonproducing leases do not at all interfere with the ordinary uses of the land, therein is a real difference as compared with other estates in the land, — not to mention other differences. This would leave only the question whether it would be in the interest of the general welfare of the state that investments in such leases should be encouraged even if at the expense of the ad valorem taxes thereon, and conceding for the purposes of this case that this broad matter of policy is not solely for the final determination of the legislature itself, we must conclude that at least it is a matter wherein the affirmative may be asserted with some real reason, and this is enough to place it beyond the domain of judicial interference.
As to existing leases, they could be brought under the exemption by transfer, and it might be to the public interest that many of them should be transferred to more active owners; but aside from this, it was doubtless considered by the legislature as a requirement of justice and equality that inasmuch as subsequently acquired leases would be exempt, existing leases should be permitted to be exempt also, and it cannot be said to have been wholly unreasonable and arbitrary to consider that the advantage of the exemption of subsequently acquired leases was of an importance sufficient to take along with it the exemption also of the existing leases.
It follows from what has been said that it was within the legislative province and power to exempt both the existing and the subsequently acquired leases from ad valorem taxes, and had that been all that the legislature did there would remain no further question. Appellant says, however, that the additional or further provisions as regards the document stamp tax make the entire act invalid, because, as appellant asserts, the exemption features would not have been enacted except for the document stamp tax feature.
The legislature itself has declared otherwise, for by Section 10 of the Act it is recited as follows: "If for any reason, any section, paragraph, provision, clause or part of this act shall be held unconstitutional, or invalid, that fact shall not affect or destroy any other section, paragraph, provision, clause or part of this act not in and of itself invalid, but the remaining portion thereof shall be in force without regard to that so invalidated." The exemption features, under this Section 10, may stand even though other provisions should be rejected. See American Express Co. v. Beer, 107 Miss. 528, 65 So. 575, L.R.A. 1919B, 446, Ann. Cas. 1916D, 127.
And thus we are relieved of pursuing the further questions presented, and particularly whether the documentary stamp tax is within the Constitution, and this for the reason, none other being necessary, that even if those provisions are unconstitutional, as to which we intimate no conclusion, they do not adversely affect the appellant who is not shown to be a leaseholder. This Court is definitely committed to the proposition that no person may complain of an unconstitutional enactment unless he is harmed thereby in some substantial way. Dunn v. Love, 172 Miss. 342, 359, 155 So. 331, 92 A.L.R. 1323, affirmed under case title Doty v. Love, 295 U.S. 64, 55 S.Ct. 558, 79 L.Ed. 1303, 96 A.L.R. 1438.
Affirmed.
Sydney Smith, C.J., did not participate in this decision.
DISSENTING OPINION.
Before the adoption of the Constitution of 1890 the Legislature possessed broad and extensive powers in adopting schemes for taxing property and exempting it from taxes. For instance, it enacted a statute authorizing the City of Aberdeen to assess lots within the municipality ". . . to any amount that they deem proper and necessary for the purpose of making improvements on the streets in front of said lot or lots." This Court upheld that exercise of power. Smith v. Aberdeen Corp., 25 Miss. 458, 459. It was but natural with such far-reaching powers that many discriminations and injustices crept into the statutes. It was to limit that power and to prevent such injustices that Section 112 of the Constitution of 1890 was adopted. City of Jackson v. Deposit Guaranty Bank Trust Co., 160 Miss. 752, 133 So. 195.
That Section requires taxation to be uniform and equal throughout the State and property to be taxed in proportion to its true value. That the Act under consideration (Chapter 409, General Laws 1946) does not comply with these requirements can be demonstrated, I think, by a simple example: John Doe owns 200 acres of land. The ad valorem tax thereon amounts to $80 per year. Richard Roe and others own the minerals under the land, a 20 year oil and gas lease and the royalty rights thereon. No oil is being produced on the land, but it is sufficiently near oil producing lands to make the value of the minerals and royalty rights equal to the value of the surface, which we know, from common knowledge and cases coming to this Court, is a fact in many, many instances. Richard Roe and others pay a total tax of $16 on their property. They pay that only once and that is all they ever pay so far as this Act is concerned. During the 20 years John Doe pays a total of $1,600 taxes, not counting annual interest on his money. I have used an example where the respective values are equal. Hundreds of examples might be used where the value of the mineral and royalty rights is several times that of the value of the surface. The extent of the injustice simply depends upon the comparative values. The injustice exists in every case. There is neither uniformity nor equality nor justice in this tax and the mineral and royalty interests are not taxed in proportion to their value.
Section 9770, Code of 1942, provides: "Whenever any . . . mineral, gas, oil, timber or similar interests in real estate, . . . are owned separately and apart from and independently of the rights and interests owned in the surface of such real estate, or when any person reserves any right or interest, or has any leasehold in the elements above enumerated, all of such interests shall be assessed and taxed separately from such surface rights and interest in said real estate, and shall be sold for taxes in the same manner and with the same effect as other interests in real estate are sold for taxes."
Now let's reverse the situation: The Act calls the tax on the mineral conveyance a documentary or transfer tax. There is no such tax on the deed conveying the land. The leasehold owner must pay $16 to get this lease recorded, whereas the owner of the land will pay for this service only the regular fees of the clerk for recording the deed, usually between one and two dollars. It is true that question is not involved in this case, because it is not shown that appellant owns a lease and is offering to record it, but the principle is involved, although the discrimination in this instance involves a much lesser amount than does the first illustration. Both illustrations show the injustice and lack of uniformity in the statute.
But it is said the legislature has the power to classify property and exempt that classification from taxation under certain conditions. That is true, but such exemption cannot violate the uniformity, equality and true-value provisions of the Constitution. The exemption must not be arbitrary, nor for the benefit of one individual or group of individuals, but there must underlie its exercise some justifiable benefit to the general public at large, and be based upon reasonable grounds bearing a just, proper and a rational relation to the promotion of the public welfare. The grant of an exemption rests upon the assumption that it will serve a public policy and benefit the body of the people, and not upon the idea of lessening the burdens of the individual owners of property. This Act undertakes to justify itself by enumerating therein the reasons and objects for its adoption.
The first stated object is to encourage the purchase of oil and mineral leases. It may well be doubted whether this is such a general public benefit as justifies a tax exemption. It deals purely with private property. It involves no proper general public policy, like, for instance, the ownership of homes, with the security, means of support, promotion of family life and good citizenship, resulting from such ownership.
Again, it is the prospect of discovery of oil and not the exemption of the lease from taxation which accelerates the purchase of oil leases.
The second stated object is to encourage the drilling for and production of minerals in this State. Oil, gas and other minerals are natural resources. It may well be doubted whether it is for the permanent public benefit to quickly deplete these natural resources. At least, such depletion is not in its nature the kind of public benefit which justifies the exemption of property from taxation. But aside from that idea, it cannot be said with any semblance of reason that exempting the leases and mineral rights from taxes will stimulate quick production and exhaustion of these resources. The natural result of such exemption is to delay operations. If it costs the owner nothing to retain the leases, that is certainly not a reason to hurriedly extinguish his right. The reason would defeat the object.
The third stated object is to relieve county officials of the "onerous" duty of collecting the tax. This, to say the least, is a novel public benefit. Carried to its logical conclusion it becomes absurd. If county or state officials are seen working after office hours, or they appear weary from much work, the solution is to pass an act abolishing a part of their duties, or, to have a perfect law, abolish the duties entirely and thereby bring about an ideal situation under which the county officials receive pay but do no work whatever. This may be a humane object, but it can hardly be said to be in its nature the kind of general public benefit which justifies a tax exemption. Besides, the compensation of the tax collector depends upon the amount of taxes he collects, and I have heard of no demand by these officials that a statute be enacted reducing their compensation.
Summed up: This law abitrarily exempts from taxation millions of dollars of property and throws that tax burden on other property owners without serving any proper public policy or interest. It is not uniform, it is not equal, and the classified property is not only not assessed at its true value but it is not assessed at all. In my opinion, it is unconstitutional and should be so declared.