Anderson v. Sunburst Oil & Refining Co.

This is an appeal by defendant from a judgment in favor of plaintiff on a directed verdict in the sum of $1,055.93, with interest.

The record discloses that plaintiff owns certain lands in Toole county. In 1920 he leased them to Gordon Campbell for the purpose of operating for oil and gas, Campbell agreeing to deliver to plaintiff 12 1/2% of all oil produced, or to pay in cash 12 1/2% of the market value of the oil. Thereafter, and in 1922, Campbell assigned the lease to defendant. Plaintiff, in June, 1923, sold 2 1/2% of the oil and gas and during the time involved here was the owner and entitled to receive 10% of the oil, or its value. Plaintiff elected to receive his royalty in cash.

In 1927 defendant withheld from plaintiff's share of royalty in that year the sum of $1,055.93, claiming the right to do so by reason of Chapter 140, Laws of 1927, in order to pay the tax accruing in 1927, based upon the product yielded to plaintiff's royalty interest during the year 1926. The right of defendant to withhold this sum is the only question presented on the appeal.

The same question, under identical facts, was before this[1] court in the case of Byrne v. Fulton Oil Co., 85 Mont. 329,278 P. 514. It was there held that the operator is not entitled to withhold from the 1927 royalty any sum with which to meet the taxes accruing that year and based upon proceeds yielded in 1926. The majority of the Justices participating in that decision were of the view that such an interpretation of Chapter 140 would give it a retroactive operation contrary to section 3, Revised Codes 1921, which commands that "no law contained in any of the Codes or other statutes of Montana is retroactive unless expressly so declared." That case is decisive of this in favor of the judgment. Examination of the opinion in the Byrne case will disclose that the writer of this opinion, as well as Mr. Justice Ford, disagreed with the majority on the point here considered. We are still of the same view as therein stated, and join in an affirmance of the judgment in this case solely on the ground of stare decisis.

The question as to who is liable for the tax accruing in 1927 on the proceeds yielded to the royalty interest of plaintiff in 1926, under the rule announced in Homestake Exploration Corp. v. Schoregge, 81 Mont. 604, 264 P. 388, and Fulton Oil Co. v. Toole County, 86 Mont. 367, 283 P. 769, is not involved here.

The judgment is affirmed.

MR. CHIEF JUSTICE CALLAWAY and ASSOCIATE JUSTICES GALEN, FORD and MATTHEWS concur.