In Re Assessment of Champlin Refining Co. , 186 Okla. 625 ( 1940 )

On January 1st of the year involved, the taxpayer, referred to as "Champlin," owned certain crude oil in storage in Garfield county. The county assessor assessed it as of that date for subsequent ad valorem taxation, and in due course after the following July 1st the regular ad valorem tax was assessed or levied or extended against the valuation of this oil, as against all other taxable property in the county.

Champlin, by proper proceedings, sought to cancel the assessment as to this oil, and now appeals from the adverse judgment of the district court.

This oil was assessed under the general statute (section 12581, O. S. 1931, 68 Okla. St. Ann. § 81), and the tax subsequently levied against it was legal and proper unless it was nontaxable and exempt by reason of the provisions of section 12434, O. S. 1931, 68 Okla. St. Ann. § 821. That section provides in effect that:

"The payment of the taxes herein imposed (referring to the gross production tax) shall be in full and in lieu of all taxes by the state, counties, cities, towns, townships, school districts and other municipalities upon * * * leases for the mining of * * * petroleum or other crude oil or other mineral oil * * * and also upon the oil * * * during the tax years in which the same is produced. * * * but * * * oil in storage * * * produced and on hand at the date as of which property is assessed for general and ad valorem taxation for any subsequent tax year, shall be assessed and taxed as other property within the taxing district in which such property is situated at the time."

Further material facts are that this oil was produced in November and December preceding the January 1st assessments, and the gross production tax thereon (section 12434, supra) was paid. By reason of that payment and the portion of the statute quoted supra, Champlin urges its contention above stated, that the oil was nontaxable and exempt from the ad valorem taxes levied and extended against it.

It would seem clear from reading the quoted act that oil in storage on January 1st of any year is properly assessed for general ad valorem taxation for the next suceeding fiscal year, beginning the following July 1st, regardless when, before January 1st, the oil was produced and the production tax thereon paid. That has been the long continued administrative construction as to state, county, and school district taxes, though the identical question, for lack of controversy thereon, has not before been considered by this court.

Champlin urges that this construction violates the legislative intent and leads to absurd consequences and reduces the legislatively intended exemption. It is urged that the intent of the Legislature since the 1916 enactment, containing the above quoted language, was expressed thereby to be that oil produced on and after July 1st, and up to and including December 31st, should all be exempt from assessment on the following January 1st. That is to say, that such oil could not be assessed at all unless it was kept on hand for the full period of from one year to 18 months, or until the second annual assessment date after production and storage. No such intention is expressed in the act. If such legislative intention had existed in 1916, it could then have been easily and definitely expressed. Likewise, at each biennial legislative session since that year, such intention could have been expressed by an enactment, if so intended and desired. That has not been done.

As to the contention of resultant absurdity, we can only observe that since statehood it has been deemed advisable and economical and necessary to have one fixed annual assessment date. Thus it may be that in many instances property which only became subject to assessment on December 31st was assessable and was assessed on January 1st, and bore its full burden of taxation for the next succeeding fiscal year, while other property which only became subject to assessment on and after January 2d, was not assessable nor assessed as of January 1st, and therefore bore no burden of taxation for the ensuing fiscal year. Whatever absurdities do or might thereby result, when viewed through the eye of equity or measured by the equities of ownership, must be held to be dispelled or overcome by the necessity for a fixed assessment date. When after July 1st the taxes for counties and municipal subdivisions are levied and assessed, they are based on the property assessments of the preceding January 1st. The necessity of having a previously fixed assessment valuation, on which to base tax levies, is readily apparent in view of the ad valorem tax system. Many items of personal property assessed on or as of January 1st may no longer be in existence when after July 1st the taxes are levied on the valuation of that personal property, and that might as well be thought to be absurd, as being a tax levied or assessed against nonexistent property. We find no controlling merit in this contention that absurd result follows the construction which we place on the language of this act.

This act must be construed according to its plain language, and so as to give effect to all of its provisions. That is, we should construe it so as to give full effect to the provision that the payment of the gross production tax shall be in full and in lieu of other taxes during the year in which the oil is produced. But we must also construe this statute so as to give full effect to the other provision, that oil placed in storage and there retained until the following January 1st shall be then assessed for general and ad valorem taxation for the subsequent fiscal year, as in the case of other property subject to such assessment for taxation.

In so doing we give effect to the legislative intent as expressed in the act. Any other or different legislative intent must be adopted and expressed by the Legislature before it can obtain, or be followed to any such change in the assessment and taxation of oil in storage as is sought to be inaugurated by Champlin in this case.

For prior decisions containing the general rules of statutory construction which we follow here see Falter v. Walker,47 Okla. 527, 149 P. 1111; Pasley v. Bank, 137 Okla. 171,278 P. 621; First National Bank v. Mills, 134 Okla. 186, 272 P. 840; In re Martin's Estate, 183 Okla. 177. 80 P.2d 561; McCain v. State Election Board, 144 Okla. 85, 289 P. 759; Atchison, T. S. F. Ry. Co. v. Myers, 114 Okla. 240, 246 P. 395.

The trial court was correct in denying the relief sought by this taxpayer, and that judgment is affirmed.

BAYLESS, C. J., and RILEY, CORN, and HURST, JJ., concur. GIBSON and DANNER, JJ., dissent. OSBORN and DAVISON, JJ., absent.