Prairie Oil Gas Co. v. Cruce, Governor

BROWN, J.

(dissenting). I cannot concur with by Asso

*786

dates in the final conclusion reached in this case, though with many of .the .propositions announced therein I heartily .agree.

First, I agree thait under section 21, art. 10, of the Constitution, it is the imperative duty of the state board of equalization to assess for taxation .all property belonging to public service corporations in this state subject to taxation.

Second, I agree (that for the purpose of assessing property owned, by public service corporations the state board of equalization is a board of assessors.

Third, I agree .that section 7309, Bev. Laws 1910, -which makes it the duty of tax assessors to cause -to- be placed, on the tax roHs taxable property which -has been omitted and escaped taxation, applies to and includes the state board of equalization, the same as local officers whose duty it is to assess property for taxation, and I believe the board has authority so to do, independent of said statute.

Fourth, I agree that the several statutes stating the time in which the officers who shall act are -directory, and I am in hearty accord with the proposition so- well stated in the opinion of the court and in language which can scarcely be improved on, as follows:

“The various provisions of the statute- fix the time at which each- of the several duties shall be- ©priormed by the different officers in the assessment of property and -levy of taxes, but we do not think these provisions, -constitute a limitation upon the power of -the officials so- -as -to render invalid -any acts performed -by them after the time- so fixed. There is no. doubt that these provisions were intended to- put into- force an orderly and systematic procedure governing the conduct of the various officers whose duties it is to' see to tire assessment of the property and the levy and collection of the revenues of the state, and it seems clear that these provisions are not mandatory, but are- merely directory; .and if a taxpayer has failed to perform his full duty as a- citizen

*787

by disclosing .all (his property subject to taxation, and this fact is •discovered by the taxing officers before the time has expired in which property may be lawfully assessed, and that such officers may proceed after proper notice and opportunity to be heard, to assess said property so that it may bear its just proportion of the burdens of the government. It is a matter of no material importance whether his property is assessed within the particular times prescribed by law or thereafter.”

I think the following proposition announced by the court is not applicable to the. facts in this case as disclosed by the record, viz.:

“We are of the opinion that, when said state board of equalization had valued and assessed all property of public service corporations in the state, and caused the same to be certified by (the state .auditor to the county clerks as required by section 7309, that they were 'without authority to reconvene and reconsider their action by reassessing property already assessed, or by adding thereto property which, it was claimed had been omitted except as we shall hereinafter point out. What we mean by this last statement may be illustrated thns: The board, having completed its assessment and valuation of the property, and certified the same to the county clerks, during the year 1914, could not during that year malee an additional assessment and 'certify the additional amount to the county clerks in the same manner and with ■like effect as the original assessment and certification was made.”

The proposition just quoted is based upon conditions and a state of facts difOerepit from those upon which the state board of equalization acted in the instant case. The language of the court is:

“That when said board had valued and assessed all property of public service corporations in the state, and had caused the ■same to be certified by the state auditor to the county clerks,” 'and SO' forth. . ■

In another portion of the court’s opinion, referring to the answer of the defendants, the court say:

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“There is no- reply to the answer, -and for the purposes of this proceeding the material averments and 'allegations thereof are to be taken as true.”

In this tire court is, of course, correct. Thus, considering the allegations in defendants’ answer as true, we have this character of case: The extent and v-alue of property owned by plaintiff and subject to taxation in Oklahoma, for .the- year 1914, was peculiarly within tire knowledge of .plaintiff’s officers, and was mot known to the state board of equalization, 'and .that, in making and returning to the .state auditor, the sworn list and schedule required hy statute- of property owned by the plaintiff -corporation, together with a statement of the value thereof, plaintiff fraudulently omitted to include in such lists certain -oil and gas leases o-f the approximate value o-f $10,500,000, and fraudulently stated the value of the property actually listed to he several million dollars less than its -actual value, an-d that tire board in August, 1914, was- induced, by such fraudulent omission -and false statement of values, to- assess tire- property of plaintiff so returned at $35,000,-000, which sum was -more than $10,500,000 less than the taxble value thereof; that thereafter said -assessment was certified to the county clerks as required by law, and the board did not •adjourn, but took a. recess, subject to be reconvened upon call by the Governor; that l-ate-r, about September of the same year, the board Was informed of -the- omission by -plaintiff to- li-st and return its property, tire oils and gas- leases, as well -as other property alleged to belong to it, -and -that said property was not included in tbe August -assessment, and also that plaintiff had concealed the real value -of its property rendered, and that, as a result thereof, the August assessment of said property -at $35,000,000 was greatly less than tire taxable value thereof, -and that therefore, after 'due notice to- plaintiff, -tire bo-ard, over plaintiff’s objections, proceeded to- hear and take evidence upon the questions stated, and that the evidence so- taken -showed plaintiffs had, in fact, failed and omitted to -include in its property lists, oil -and gas leases, and

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other property belonging to it, 'and subject to taxation in the state of Oklahoma, for the year 1914, .and the. taxable value of such omitted property for said year was at least $10,500,000, and was not included in the board’s previous assessment, and tha-t such evidence further showed $35,000,000, the board’s August assessment of plaintiff’s listed property, wias more than $10,500,000 less than the then taxable value of said property; that after hearing said evidence the board agreed to assess plaintiff for $10,500,000, in addition to its August assessment, and to aidd said additional sum to its previous assessment of $35,000,000, ■as the tax due .and owing by plaintiff for the year 1914, and plaintiff brought this .action to prohibit the board from doing ithe acts above stated. This court, as then composed, on the 5th day of January, 1915, in a decision by Justice Riddle, and concurred in by ail the Justices (the present Chief Justice not .sitting) denied plaintiff’s petition for the writ of prohibition. Now, I submit, if the above facts stated in the answer are to be taken as true, and. they must, then the state hoard had not ■assessed all the property of plaintiff subject to táxation a.t its meeting the - day of August, 1914..

But in this case, if we concede the board of equalization, when it assessed plaintiff’s property at $35,000,000 in August, 1914, understood, as it evidently did, it wás assessing all the property owned by plaintiff and subject to taxation in the state of .Oklahoma, and intended such 'assessment as final, and that the action of the 'state auditor in certifying this assessment down 1» 'the county clerics was without objection on the .part of the board, and that thereafter, when the board took'recess subject to. the call of the Governor, it did not have in mind any further proceedings in connection with plaintiff’s property, even then, in my judgment, it was not precluded, under the allegations in 'tire answer in this case, from further consideration of the matter of its. 'assessment of .plaintiff’s! property. To illustrate: Property owned by public service corporations is peculiarly within the' knowledge of its

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officers >and servants. The law requires, on or before the last day of February of each year, they shall make and file with the state auditor sworn lists and schedules truly stating -tire property owned by them, and -the cash value .thereof. The purpose- of the statute in requiring these lists- is to enable or 'at least -aid the state board of equalization in arriving 'at a correct valuation -and assessment of a-11 property owned1 by tire corporation. Every person is- presumed to swear -truthfully, and the board of equalization would be- justified in assuming that the sworn lists ■and schedules returned contained a full and complete '.list of its taxable property, and that the valuation -therein stated was, in •truth, the cash value of such property. It is conceded the board may act at any time, within its- -discretion, in assessing corporation property. Then let ns -suppose- that in March, immediately -after the corporation has returned and filed its lists -and schedules as required by law', the board of equalization, upon examination of these -returns, rely upon the sworn statements that they con- , tain- a list -of all property o-wned by the corporation subject to taxation in the state, and that the sworn value- therein stated is oo-rrect, -and, so relying, -p-rocCed to assess plaintiffs property stated in such returns, at the value therein stated, that the assessment is accordingly certified by the state1 -auditor to the different county clerks, as required by law, 'and within the next ten days -the board should learn the corpo-raitio-n and its officers had knowingly and intentionally -omitted from the lists a certain class of its property subject to taxation, and -liad knowingly, and intentionally misstated the value of the property returned, then, if the court’s holding in this case is correct, the board would nevertheless be precluded from a reconsideration of its -assessment, and precluded from adding to the original amount -already assessed -against the corporation the value of the property which had been omitted from the returns and not assessed at all, and thereby the- corporation, as a result of its success in perpetrating a fraud upon the board and -concealing from it taxable property -and values, escape the

*791

payment -of taxes for the current year upon the property and values omitted, though the same equated >or exceeded the value of the property actually returned and .assessed, and though, as in this, the omitted property -aggregated millions of dollars of taxable property and thousands of dollars of taxes which the corporation would be required to pay but for - the fraud successfully perpetrated.

Another illustration: Suppose a corporation returns a correct statement and list of all property owned 'by it subject to taxation, but knowingly, with a fraudulent intent to deceive the board and escape payment of taxes, -swore the cash value of the property returned was $31,000,000 (approximately the value placed -by -the -corporation upon the property returned b-y it in this case), when, in fact, it knew the cash value of such property was over $60,000,000 (as some -of the evidence- tended to- sho-w was the cash value of the property returned by plaintiff -in this case), and the -board1, relying upon the sworn valuation stated in the corporation’s return, adopted the same -and assessed the ¡property thereat, and caused their assessment to be certified by the state auditor to- the county clerks, and thereafter the- board took a recess or adjourned, with, no expectation of further consideration of the 'corporation’s taxes, and afterwards, during .the same year, and possibly the -same month, the- fraud is. brought to the knowledge of the board, and it is -discovered the corporation is assessed for even less than, half the -correct v-alue o-f its property, then, notwithstanding this fact, under -the court’s holding, the bo-ard would he fo-rever precluded, under existing laws, from reassessing the .corporation’s property, and from adding to -the already assessed value a sum equal to the 'difference between the already assessed value and the- actual taxable value at which it should have been assessed in the first instance, and- the corporation would, as a reward for the successful perpetration of. the fraud and deceit practiced by it upon the hoard, permanently escape

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■payment of one-half the taxes- which in justice it should pay; for the court says:

“The Legislature may make provision by law for a reassessment of property which, has already been -assessed at less than its fair value, but, in 'the absence -of such provision by the Legislature, no authority exists in the board to do- so, and we find no provision in the laws of this -seate, -conferring any authority upon any of the officers of the

state

whose duty it is to- assess property to reassess the same after it has once been -assessed.”

In my judgment, the law .as it existed in 1914, -and as it exists to-day, was -and is sufficient to confer upon the board of equalization power to 'assess all property of whatsoever kind, of public service corporations, owned by them in tins state, subject to taxation, and -at its full taxable value, whether the same is correctly -stated in the schedules returned by tire corporation or thereafter -discovered by the -board of equalization, and that where the board, by fraud, accident, or mistake, fails to properly tax such property, it may return at any time the- mistake is 'discovered and make a correct -assessment.

In the case of

Anderson v. Ritterbusch, Treasurer,

33 Okla. 761 , 98 Pac. 1003 , this court held, quoting from paragraphs 10 and 11 of the syllabus^ as follows:

“The “taxing po-wer/ when acting within its legitimate sphere, is one which knows no -stopping place until it has accomplished the purpose for which it exists, viz., the actual enforcement and collection from every lawful object of taxation of its pro-portion-late share of the p-uhlie -burdens; and, if prevented by any obstacles, it may return again and again until, the way being clear, the tax is collected.

“In laws for the assessment and collection of taxes due on omitted property, it is uniformity of burden, and not identity of method of enforcement, which . is required by constitutional principles.”

The duty imposed upon the board by the Constitution is

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mandatory — .that of assessing all .public service corporations in the state. The Constitution prescribes mo. bounds; it does not state when the hoard’s work shall commence or be completed. Amy statute which would so hamper or obstruct the board in the discharge of this duty so. as to prevent the complete consummation. and accomplishment thereof would be unconstitutional. The statutes do not .prescribe any time within which the board is bound to act, or which estops them from acting at any time in the discharge of the dnty imposed upon them. But the effect of .the court’s holding is that, the board having met, and by mistake has .assessed the corporation’s property at less than its valuation, has 'thereby estopped itself from a full and complete discharge of the duties imposed upon it by the Constitution and statutes of the state. The board is a continuing one, and with a. mandatory duty of .assessing -all property of public service- corporations at its fair cash value, and, in my opinion, it cannot by its own act excuse itself from a full discharge of such duty. It must perform the duty of assessing public service, corporations, and, if necessary, it is entitled to -the full term of its office in which so to do-, and, as before stated, where, by fraud, accident, or mistake, it had been prevented or Iras failed .to discharge its full duty, it may at any time during its term of office, upon discovery thereof, proceed to the full performance and discharge of such duty, and it is its duty to do so-.

The court in its opinion appears to construe the action of the ■board in December, 1914, as a reassessment of plaintiff’s, property already .assessed in August, and holding that property once assessed cannot be reassessed by the board, and that ¡the writ of prohibition will lie to. prohibit tbe board from adding to. the amount of its August assessment the $10,500,000, the sum found at the December meeting to be the value of the corporation’s property which was not previously considered by the board nor assessed by it. But I do. not understand the action of the 'board in December to be a. reassessment of tbe property value con

*794

sidered -and assessed in August. The -defendants’ -answer affirmatively -alleges -the- facts hereinbefore stated. It is further alleged that defendants -deny that the statement returned by plaintiff contains -all -of the property in the state -of Oklahoma subject to taxation. It is further -alleged:

“That these defendants deny that said assessment was made with full knowledge by the board of the character, quality, and use of the property -of the plaintiff, -and -affirm that at th-at time, and -on the 1st day -of March, 1914, -and on the 1st day of January, 1914, and on the 1st day of February, 1914, plaintiff had other -additional property in very large amounts not known to these defendants, and which they did not know of on said - day of August, 1914, when they made the- assessment last named”

Again, after admitting in August, 1914, tire board attempted to complete- its assessment of the -property of plaintiff and of all other public corporations for- that particular year, it is affirmatively alleged, at the bottom of -page 2 -and top of page 3 of said answer:

“But that, in fact, these -defendants failed in said attempt, (to the extent at least a© has -appeared at this

time,

that they failed to properly assess the property of the Prairie Oil

&

Gas Company, this plaintiff, and several other -p-ub-lic service corporations similarly ©itu-ated and of other corporations -dissimilarly situated.”

It is further -alleged on p-age 3 of the answer, in substance, 'that after tire August -assessment of the property returned by plaintiff ttre board believing it -had fully assessed all public service corporation property, levied an

ad valorem

tax of 1.3 mills for such fiscal year -on the property of plaintiff, -and that said assessment -and levy was certified by the- -state auditor -down to the proper officers, 'and that thereafter, in September, the board too-k a reces-s subject to the call of tire Governor, -and that on the - day o-f November, 1914, one C. II. Pitman represented

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■to the individual members of the board of equalization that certain property belonging to plaintiff bad been omitted and not assessed by the board for the fiscal year of 1914, and that tbe property, which was assessed was -assessed insufficiently; that on or about the 30th day of November, the board was reconvened by the Governor, and, after -due notice to plaintiff, proceeded, over plaintiffs objection, to hear evidence offered by both plaintiff and Pitman for and -against said -allegation of omitted -property and insufficient assessment. It is further alleged, in substance, that the evidence before the board at such December meeting showed such property was of the value of at le'ast $10,500,000, and that the same had been omitted and no-t assessed by the board because of the fraudulent concealment thereof by plaintiff, and that after hearing the evidence the hoard, upon motion and second, agreed to add said sum of $10,500,000 to its previous assessment of plaintiff’s property. These -affirmative allegations in defendants’ answer, if true, and, being undenied, .are to he taken -as true, show very plainly, to my mind, that .the December action of the -hoard does not amount to -a reassessment of the property assessed by it in August, but was an assessment of other -property belonging to plaintiff which was not before the board, -and was not considered or assessed by it at its- August meeting.

It is admitted in the opinion of the court that, under section 7309, Rev. Laws 1910, the state board of equalization have authority to assess property belonging to public service corporations which has been omitted -and not previously -assessed for taxes, but the court holds the board could not do so until -the. following year. I am at a loss* however, to understand how, under this statute referred to, it can -be contended the board must Wait until a subsequent year in which to render and -assess omitted property authorized to be assessed 'by them. Notice the language of s-aid section 7309:

“If any real or personal property he omitted in the assessment

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of any year or years, 'and the property thereby escape taxation, when such omission is discovered the assessor shall enter such property on the 'assessment and tax books for the year or years omitted and he shall assess the property, and extend against the same on the fax list for the current year, all arrearage of taxes properly accruing against it, including therein, in the case of personal property taxes, interest thereon at tire rate of six per cent, per annum from the time such taxes would have become delinquent, and when the omission was caused by the failure of the owner to' list the same.” '

The statute -is plain and unambiguous, and' by its provisions ■and terms it becomes the duty of the assessing officer, as soon as he discovers property authorized to' be .assessed by him has been omitted and not assessed for taxes either for previous years or for the year in which the discovery is made, to' then and there enter said property on the tax rolls and assess if and extend tire taxes on the tax list for the current year. To wait until the following year, as held by the court he must do, to enter said, property on the tax roll© or to assess the same, would, I think, be in violation of the plain and express terms of the statute. There is also splendid reason for requiring the taxing officer to proceed with the assessment as soon as he discovers tire omitted property: Eirst, the personnel of the taxing officers, which in this case was the hoard of equalization, may sustain a complete change before another year, as ha© been done in the present case at the recent election, and their successors, not having heard the evidence establishing the omission and nonassessment, could not proceed as provided by this section of the statute without again going to the trouble and expense of taking evidence, much or all of which may not he obtainable; and, second, before the following year the unassessed and untaxed property may have been removed beyond .the limits of the state and the owner thereof become insolvent; or, third, the property may have been purchased by another without notice of the nonassessment for taxation thereof. If the law regulating the assessment of taxes in this

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state is as 'Construed by the court in its opinion, then there is a very serious discrimination between tbe ordinary taxpayer and public service corporations and in favor of the latter. The property of the ordinary taxpayer is assessed according to article or items. If he has ten head of horses, and lists only five for assessment, the omission is easily discovered, and the omitted five head may be readily included in the new assessment. But public service corporations are assessed according to a. unit valuation, and, under the rule adopted by the court in this case, if the board, either by fraud, mistake, or accident, assesses the corporation's property at one-half its valuation, it is precluding from correcting its mistake, and the corporation, instead of bearing its portion of the burden of taxation, pays only one-half of the ■faxes it should pay, and the amount of the taxes so lost to the state 'and the' various municipalities in which .the corporation has property must be paid and contributed by the ordinary and common taxpayer.

In tins case I think it is clearly shown the action of the board at its December meeting simply amounted to an assessment by them of property theretofore omitted and not assessed, of the aggregate value of $10,500,000, and that the board’s action was fully ¡authorized by section 7309. It may be, and I -think if is a fact, that instead of adding said amount -to the original assessment theretofore made by tbe board, it should have entered and extended the same as an independent assessment against plaintiff in said sum, but, if it was authorized to make the assessment, the fact that it is wrongfully added to the previous -assessment was -a mere irregularity, -and cou-ld be taken advantage of by appeal only.

It would seem the court in -this case has overlooked tbe old ■and familiar maxims, almost elementary, that “one cannot take advantage of bis own wrong,” -and that “he who comes into a ■court of equity must come with clean hands.”

*798

The plaintiff appears before us in the attitude of admitting as true the allegations of fraud and deceit in the answer of defendants, and at the ©ame time seeking affirmative equitable relief to stay the correcting hand of the hoard of equalization seeking to right the alleged wrong perpetrated upon it.

I am clearly of the opinion that the former decision of this court, denying tire writ of prohibition was correct, and that petition of plaintiff for rehearing should be refused, - and that the decision of my Brethren herein granting plaintiff a rehearing and allowing a writ of prohibition prayed for is fundamentally wrong.

In view of tire pronounced interpretation by a majority of the court of tire existing laws of this state relating to the assessment and collection of taxes on the property of public service corporations, it is of vital importance to the -common and ordinary taxpayer in the state that the Legislature, now in session, hasten to enact laws by which all classes of taxpayers be required to contribute their share and portion of tire burden of taxation.