Opposition Brief — General Motors Corp. v. Oklahoma County Board of Equalization

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No. 83-1056

Inthe Supreme Court of the United States

OcTOBER TERM, 1983

GENERAL MOTORS CORPORATION,

Petitioner,

Vv.

OKLAHOMA COUNTY BOARD OF

EQUALIZATION, Er AL.,

Respondents.

On Petition for a Writ of Certiorari

To the Supreme Court of Oklahoma

BRIEF OF THE OKLAHOMA COUNTY BOARD OF

EQUALIZATION, et al., IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

ROBERT H. MACY

District Attorney of

Oklahoma County, Oklahoma

FRANK E .WALTA*

Assistant District Attorney

KEVIN C. LEITCH

Assistant District Attorney

202 Robert S. Kerr Avenue

Oklahoma City, Okla. 73102

Tel. (405) 235-5522

Attorneys for Respondent

March, 1984

*Counsel of Record

QUESTION PRESENTED

Whether Petitioner may invoke the jurisdiction of this

Court alleging impairment of contract in derogation of the

Contract, Due Process and Taking Clauses of the Federal

Constitution where:

1. Petitioner has wholly failed to show the existence

of a contract and in the face of a record which

reflects that no contract was ever made;

2. The courts below did not decide Petitioner’s claim

of impairment; and

3. Petitioner’s alleged contractual tax exemption is

void ab initio under the constitution of the State

of Oklahoma.

nition

TABLE OF CONTENTS

bk ye B=. 2 5 - | aaa eee aera NeI REO

TABLE OF AUTHORITIES ..

CONSTITUTIONAL PROVISIONS AND

STATUTES INVOLVED ._._._

SLATE OF toe CASS

REASONS FOR DENYING THE WRIT _...--

ARGUMENT:

II.

III.

No Federal Question Is Presented for This Court

to Review Because No Contract Ever Existed Be-

tween the Parties and Therefore the Case Does

Not Involve the Contract Clause =» SSS

A. No contract exists de jure _....»_-_-__

1. Parties are incapable of contracting -_

2. Parties did not consent

3. The ge hoi ere did not have a

lawful object _ Sis Sahaitaeaies tenpae

B. No contract exists de facto because no con-

sent was ever given to an exemption —.__.

The Alleged Contract Was Not Impaired by Leg-

islative Action Within the hawking: of the Fed-

Re ee ee ae educa

This Court Lacks Jurisdiction to Hear Peti-

tioner’s Arguments Based on the Contract, Due

Process and Taking Clauses of the Federal Con-

A. Contract Clause — opinion by state court _.

atti

TABLE OF CONTENTS CONTINUED PAGES)

B. Due Process, Taking Clauses — opinion by

SRD GING sok. cs ccc ubeees as

IV. Judicial Retroactivity Is Not a Valid Issue in

pS RE nia Can a 26

IAPR ss xicsncicinassinascnsssnycstevenedshnineseiespuaeclcdoveidencclapaaioice sama

APPENDIX A — Warranty Deed

APPENDIX B— Memorandum of Meeting 10-5-76

APPENDIX C — Attorney General Opinion No. 69-156

APPENDIX D— “Absolute Grant of Exclusive Right

to Use”

APPENDIX E — “Lease”

APPENDIX F — Attorney General Opinion No. 79-168

— i

TABLE OF AUTHORITIES

Cases PAGE(S)

Appleby v. City of New York,

271 U.S. 364 (1926)

Asson v. City of Burley,

670 P.2d 839 (Idaho 1983) a

Atlantic Coast Line R. v. Phillips,

332 U.S. 168 (1947)

Baldwin v. Kansas,

a ua oe (lees)

Barrows v. Jackson,

Bonney v. City of Britton,

214 P.2d 249 (Okla. 1950) 0.

Boone v. Porter,

Bowls v. Oklahoma City,

104 P. 902 (Okla. 1909)

Chemical Bank v. Wash. Public Power iaiaie ihn

666 P.2d 329 (Wash. 1983) -

City of New Orleans v. New Orleans Water Works Co. =

142 U.S. 79 (1891) __. s,

County Assessor v. Carpenter and Joiners, Local 329,

211 P.2d 790 (Okla. 1949) . Peearteei cad

Dewey v. City of Des ieee

173 U.S. 193 (1899) -

Equitable Royalty Corp. v. State,

352 P.2d 365 (Okla. 1960)

Federal Crop Insur. Corp. v. Merrill,

332 U.S. 380 (1947)

F. G. Oxley Stove Co. v. Butler Co.,

166 U.S. 648 (1897) -

General Motors Corp. v. ee”

377 U.S. 436 (1964)

———

AUTHORITIES CONTINUED aes.

Grand River Dam Auth. v. State,

645 P.2d 1011 (Okla. 1982) . Ny

Great No. Ry. v. Sunburst Oil & Ref. Co.,

ae) Ua See (108s) ee ei a

Harris v. State,

See Fe tee (Cee We) one

Illinois v. Gates,

ais Ree ft Se) | en

James v. State,

Re § Wi | Ree eee

Johu P. King Mfg. Co. v. City Council,

277 U.S. 100 (1928) : inclaptidemideneakts bicodaan 22

J.W. Perry Co. v. Norfolk,

220 U.S. 472 (1911) <A Da RAR NRIOL

Keefe v. Clark,

322 U.S. 393 (1944) _. pacino

Lake Superior Consol. Iron Mines v. ak

RE Se a | acer ony TNA ON,

Lemon v. Kurtzman,

411 U.S. 192 (1973) __. seepcabasosetchindnanc eae

Magnolia Petrol. Co. v. State,

RS FF Uf esr ee

Mississippi & Mo. R. R. v. McClure,

77 U.S. 511 (1871) - iscdndpatenseaieemanliadicdadueeemae Ta aan

Morris v. Bd. of Comm’ rs,

177 P. 900 (Okla. 1917) - Seta ae

Mountain St. Tel. & Tel. Co. v. - Ogden City,

487 P.2d 849 (Utah 1971) - es ESD)

Oklahoma City v. Shields,

ge OS) SOs oe etna le et >

Owens v. Sun Oil Co.,

482 F.2d 564 (10th Cir. 1973) 15

Perry Educ. Assn. v. Perry Local Educ. Assn.,

Pra if) Se Ob OU) ee

Rose v. Stalcup,

BO SOG CO BR) ncertceeest reece

—Vyvi—

AUTHORITIES CONTINUED PAGE(S)

Sayward v. Denny,

S| SNORT E Tc

Sears v. Fair,

ke Ee ki | ea

State v. Brand,

OG cee:

State v. Ford,

434 P.2d 934 (Okla. 1976) - panes

State ex rel. Comm’rs of Land Office \ v. Shull,

279 P.2d 339 (Okla. 1955) _ Saicaice <aisitenieiieet eee

State ex rel. Cartwright v. Dunbar,

618 P.2d 900 (Okla. 1980) «9, 10, 12, 13, 14, 29

State ex rel. Poulos v. St. Bd. of Equal.,

be Fo es | rece

Stevens v. Patten,

bo Fi Fi ) enero

Tidal Oil Co. v. Flanagan,

I le

United States v. Stewart,

ob YN Ne ORC Re ee

Utah v. United States,

284 U.S. 534 (1932) . nae Sears canna

Utah Power & Light Co. | v. United States,

Ok Ne |: See

Williams v. Bruffy,

I a alin, SO

Constitutional Provisions and Statutes

ms aa. 6) =... Se

U.S. Const. amend V _ Ra RARE

U.S. Const. amend. XIV, 1. SL en Dt passim

BE a IIE aii rairienincienodsadatancieonciseeipdeniantnasipiniaaanaigleannnn

Guna. Comme, ane. 4 0 21

OKLA. Const. art. 5, §1 __ o 21

OK ta. Const. art. 5, §50 _.._.__ 18, 26

» ee, GE Oe Oe |

Ouza. Conse. art. 6, §2 — 21

—vii—

AUTHORITIES CONTINUED PAGE(S)

Gara: Come. act. 16; 66............................. ....18, 17, 26

ei, Ce: WOO ee 26

ee OF Reeve sca

pemins S G e e

oe Ss SS fF) | | eee

Cae. Beer. Oe 86, Sort. (ieee)

Ouzs. Srar. tit. 68, 42404 (1961) —.————...._._............ 27

OKLA. Star. tit. 68, §2419 (1981) 0 4 QT

Ox.a. Srart. tit. 74,818b(e) (1981) —.. EE 1

Miscellaneous

OKLA. Atty. GEN. Oprn, 69-156 0 9, 2

Coma. Aree. Gites, Ome, FET access |

OKLA. ATTy. GEN. Opin, 79-168 9, 10, 11, 12, 13, 21

No. 83-1056

In the

Supreme Court of the United States

OctToBer TERM, 1983

GENERAL MOTORS CORPORATION,

Petitioner,

OKLAHOMA COUNTY BOARD OF

EQUALIZATION, Et AL.,

Respondents.

BRIEF OF THE OKLAHOMA COUNTY BOARD OF

EQUALIZATION, et al., IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

CONSTITUTIONAL PROVISIONS AND

STATUTES INVOLVED

The power of taxation shall never be surrendered, sus-

pended, or contracted away...

OKLA. Const. art. 10, §5.

The legislature shall pass no law exempting any property

in this state from taxation, except as otherwise provided

in this Constitution. ...

OKLA. Const. art. 5, §50.

The legislature shall pass no law granting to any . . . corpo-

ration ... any exclusive rights, privileges, or immunities

within this State.

OKLA. Const. art. 5, §51.

[N]or shall the State... make donation . . . by tax, or other-

wise, to any company, association, or corporation.

OKLA. ConstT. art. 10, §15.

All property which may be taxed ad valorem shall be as-

sesseci for taxation. ...

OKLA. Const. art. 10, §8.

No ad valorem tax shall be levied for state purposes, nor

shall any part of the proceeds of any ad valorem tax levy

upon any kind of property in this State be used for State

purposes. ...

OKLA. Const. art. 10, $9.

The powers of the government of the State of Oklahoma

shall be divided into three separate departments: the Leg-

islative, Executive and Judicial ... and neither shall exer-

cise the powers properly belonging to either of the others.

OKLA. Const. art. 4, §1.

The legislative authority of the State shall be vested in a

Legislature. ...

OKLA. Const. art. 5, §1.

The executive authority of the state shall be vested in a

... Attorney General. ...

OKLA. Const. art. 6, §1.

All property of . . . this state and of the counties and of

municipalities . . . shall be exempt from taxation.

OKLA. Const. art. 10, §6.

All property in this state, whether real or personal, ex-

cept that which is specifically exempt by law .. . shall be

subject to ad valorem taxation.

OKLA. Star. tit. 68, §2404 (1981).

Real property, for the purpose of ad valorem taxation,

shall be construed to mean the land itself .. . and all

buildings, structures and improvements. . . .

Oxza. Star. tit. 68, §2419 (1981)

The duties of the Attorney General as Chief Law Officer

of the State shall be:

(e) To give his opinion in writing upon all questions of

law submitted to him by the Legislature, or either branch

thereof, or by any state officer, board, commission or de-

partment, provided, that the Attorney General shall not

furnish opinions to any but district attorneys, the Legis-

lature or either branch thereof, or any other state official,

board, commissioner or department, and to them only upon

matters in which they are officially interested.

OKLA. Star. tit. 74, §$18b(e) (1981).

STATEMENT OF THE CASE

Respondent takes issue with Petitioner’s statement of

the case and offers the following chronology. In 1973 the

Petitioner, General Motors Corporation, acquired actual

record legal title, by Warranty Deed, to certain property

located in Oklahoma City for the express purpose of con-

structing an automobile assembly plant thereon (R. 96, Ap-

pendix A). Shortly thereafter Petitioner commenced con-

struction of the facility which construction was thereafter

temporarily suspended.

On October 4, 1976, more than three (3) years after

acquiring the property at issue and commencing construc-

tion of its automobile facility, the one and only meeting

between officials of Petitioner and officials of the State of

Oklahoma regarding taxes was held. At that meeting Philip

Hoffman, the Manager of Property Taxes for Petitioner,

met informally with several non-governmental representa-

tives of the local Chamber of Commerce, a member of the

Governor's staff, two members of the Tax Commission, the

Attorney General, and the attorney for the Oklahoma In-

dustries Authority (OLA), a public trust authority.

ay an

A memorandum of the meeting (Appendix B) prepared

by a representative of the Chamber of Commerce, reflects

that only a limited portion of the meeting related to ad

valorem taxation. Specifically, mention was made of At-

torney General’s Opinion +69-156 (Appendix C) which

concluded that leasehold interests in property which is

Owned by a public trust authority are not subject to ad

valorem taxes.

The memorandum further reflects that all individuals

present were aware that Petitioner, rather than the trust

authority, owned the property on which the Petitioner’s

plant is located and, therefore, the conclusion enunciated

by Attorney General Opinion +69-156 was inapplicable to

Petitioner (R. 800, Deposition Hoffman pp. 41, 103-104). As

a result of this obvious distinction the question arose as

to whether land and buildings were separately taxable:

“The Attorney General further stated that he would

make every effort to secure an answer related to sep-

arate ad valorem taxation of buildings and land.”

(Appendix B paragraph 3)

Despite recognition of this material factual distinction

between the assumed facts of Attorney General Opinion

269-156 and the actual facts present in the Petitioner's

circumstances, neither the Attorney General nor Petitioner

pursued an answer to this critical question.

“Q. It indicates in paragraph three that Mr. Derryberry

assured you that he would make every effort to

secure an answer related to separate ad valorem

taxation of buildings and land.

Did you ever receive such a specific answer?

aa om

A. That had regard to the technical problem of G.M.

regarding owning the land. And did I receive a

specific answer from Mr. Derryberry?

No.

Q. Did General Motors do any research in this area

in reference to the problem of separate ad valorem

taxation of buildings and land in Oklahoma City?

A. I don’t recall.”

(R. 800, Deposition Hoffman, pp. 48-49)

Had either the Attorney General or Petitioner pursued

the question raised in the only meeting related to the Pe-

titioner’s facility, they would have readily discovered that

under Oklahoma law, land, and buildings erected thereon,

are not separately taxable for ad valorem purposes. OKLA.

Srat. tit. 68, 2419.

At the meeting it was made clear to the representa-

tive of Petitioner that the State of Oklahoma did not levy

ad valorem taxes, that ad valorem taxes were purely local

taxes and that any claim to a legitimate exemption would

have to be presented to and determined by the County As-

sessor (R. 805, Deposition Merrill, Chairman of the Okla-

homa Tax Commission).

“Now, of course, as to the ad valorem tax exemptions,

I am quite sure that I made it clear to Mr. Hoffman

. that the state does not levy an ad valorem tax

. that he would have to deal with the County As-

sessor and lay claim to his exemptions and point to

the law which specifically provided that exemption

and convince the County Assessor that it was, in fact,

exempt from ad valorem taxes...” (Deposition Mer-

rill. pp. 17-18).

“ .. the state does not have an ad valorem tax, it’s

purely a local jurisdiction tax, county, school, city,

and that the administration of that is in the hands

of the County Assessor . . . it would be the County

Assessor determination whether, in fact, land was tax-

able within their county .. . that is left to his discre-

tion to deal with the taxpayer on whether a legitimate

exemption exists or not with respect to that taxpayer’s

property.” (Deposition Merrill, pp. 50-53)

Commissioner Merrill’s assertion to the representative

of Petitioner was in strict conformity with an express pro-

vision of the Oklahoma Constitution.

“No ad valorem tax shall be levied for state purpose,

nor shall any part of the proceeds of any ad valorem

tax levy upon any kind of property in this State be

used for State purposes . . .” Oxia. Const. art. 10, $9.

The record reflects that not one of the Respondents, all

of whom are taxing officials of the county, were present at

the informal gathering on October 4, 1976. No representa-

tives of the governmental body responsible for assessment,

collection and administration of ad valorem taxes were

present at the meeting.

Petitioner admits that none of the Respondents, neither

the Oklahoma County Assessor, Treasurer nor representa-

tive of the County Board of Equalization, ever made any

representation to Petitioner as to the availability of ad va-

lorem exemptions on the Petitioner’s project (R. 472).

Furthermore, Commissioner Merrill testified that no

state official present at the meeting promised Petitioner ad

valorem exemptions, nor were the officials at the meeting

in any position to make a “deal or agreement” with regard

at a

to ad valorem taxation (R. 805, Deposition Merrill, pp. 35,

57). Commissioner Merrill’s recollection of the meeting is

substantiated by the admission of Petitioner that neither

the Governor, the Attorney General, nor any tax official of

the State of Oklahoma, ever executed any agreement with

Petitioner that the Petitioner’s facility would not be subject

to ad valorem tax (R. 473-474).

On April 12, 1978, after owning the property five (5)

years, Petitioner executed and filed of record a document

entitled “Absolute Grant of Exclusive Right to Use” (Ap-

pendix D) whereby Petitioner purported to grant to the

Oklahoma Industries Authority (OIA) the right to use the

surface of the Petitioner’s property for a period of twenty

years and one day.

“ . . whereas General Motors Corporation . . . is the

owner of certain realty in Oklahoma County, State of

Oklahoma . . . General Motors herewith gives and

grants an exclusive right to use all of the herein de-

scribed realty to OIA retaining . . . the parties recog-

nize that bare legal title of surface and minerals will

remain in General Motors and will be subject to ad

valorem taxation as now and hereafter existing under

the laws of the State of Oklahoma.” (Appendix D)

Simultaneously, on April 12, 1978, the OIA executed a

document labeled “Lease” (Appendix E) whereby the OIA

leased back to Petitioner its “right to use” the surface of

the Petitioner’s property for a like term:

“... OIA has demised and leased, and by there pres-

ence does demise and lease . . . unto G.M. all of OIA’s

interest in that certain tract and parcel of land situ-

ated in Oklahoma County, State of Oklahoma...

which is an estate owned by OIA ... in accordance

seals

with an Absolute Grant of Exclusive Right to Use

from G.M. to OIA of even date herewith .. .” (Ap-

pendix E)

This purported “lease” is the only executed document

offered by Petitioner to support the existence of its alleged

“contract of exemption” from ad valorem taxation. How-

ever, this instrument, by its own terms, negates Petitioner's

contentions specifically contemplating and making express

provis.on for the payment of ad valorem taxes by Peti-

tioner:

“Section 13

(a)

(b)

(c)

(d)

G.M. shall pay all special assessments levied

against the project, and all personal property

taxes assessed...

In the event the State of Oklahoma, or any

political subdivision thereof, shall demand of

OIA or G.M. the payment of any general or

ad valorem tax of the property...

G.M. may, at its own expense and in its own

name... contest any such assessment... .

Should any such tax or assessment be deter-

mined by the Court of final jurisdiction to

which the question may have been appealed

to be due and owing then the same shall be

paid by G.M.

..» G.M. will pay any and all ad valorem taxes

assessed against the surface ownership of the

Exhibit A realty...” (Appendix E)

In the proceedings below, Petitioner admitted that it

had agreed to pay all property taxes imposed on the project

(R. 457).

- =

On July 31, 1979, pursuant to proper request and in

accordance with state law, a new Attorney General issued

Opinion +79-168, a 22-page opinion which, relying on Ok-

lahoma Constitutional provisions, statutory and case law,

concluded leasehold interests in properties owned by public

trusts are taxable. This opinion withdrew opinion +69-156

which relied on one 1906 West Virginia case.

Petitioner claims that Attorney General Opinion +79-

168 is a “legislative act” that impaired their alléged con-

tract of exemption. Respondents assert that neither opinion

was a “legislative act” and neither was applicable to Peti-

tioner in any event, since the opinions dealt with properties

title to which is held by public trusts, and in the instant

case Petitioner is the record title owner of the property at

issue.

In the proceedings below Petitioner admitted that it

represents itself to be and treats itself as the owner of the

land and buildings for financial reporting and state and

federal income tax purposes (R. 459). Further, Petitioner

admitted that it claims investment tax credits, interest and

depreciation deductions on the building as if the owner for

state and federal tax returns (R. 193).

Petitioner participated as amicus curiae in State ex rel,

Cartwright, et al., v. Dunbar, et al., 618 P.2d 900 (Okla. 1980),

wherein the Attorney General brought an action to compel

the County Assessor to place the property of two purported

“lessees” of a public trust on the ad valorem tax rolls. In

that proceeding, the alleged “lessees” claimed that the prop-

erties were owned by a public trust and, therefore, exempt

from ad valorem taxation. Further, the “lessees” sought to

challenge Attorney General Opinion 279-168 to the extent

it held leasehold interests in properties owned by public |

trusts to be taxable.

The Attorney General argued that the alleged “leases”

were a sham and that the “lessees” were taxable because

they owned the property and since there was no valid

“leasehold”, Attorney General Opinion +79-168 was neither

applicable nor properly in issue.

On January 29, 1980, the Supreme Court of Oklahoma

held in Dunbar as follows:

“Article X, Section 6 of the Oklahoma Constitution pro-

vides that ‘.. . all property of .. . this state, and of

the counties and of the municipalities . . . shall be

exempt from taxation .. .’

* * *

The critical issue is the meaning of the term ‘property

of this state, and of counties and of municipalities...’

. . . the determinative factor is ‘ownership’. There-

fore, we must determine the quantum of interest

which ‘lessees’ have in the properties. If their in-

terest is sufficient to constitute ‘ownership’ such prop-

erty is not tax exempt...

The ‘Lease Agreements’ reveal numerous obligations

and rights of the ‘lessees’ which are not ordinarily in-

cidents of a leasehold estate . . . the substance of a

transaction and not the name the parties have given

it should determine the taxable status of property ...

We conclude that .“ . Lessees .. . are the ‘owners’

even though legal title to the properties is in... a

public trust.

It is contended that the imposition of any tax upon

public trust property would be an impairment of con-

tractual obligations . . . The primary principle upon

which it is contended that public trust property is not

taxable is that it is constitutionally exempt from tax

ation because a tax-exempt entity . . . ‘owns’ such

property. The failure of the taxing authorities to place

public trust property on the tax rolls has not been

due to some legislative enactment specifying that such

property was not taxable, neither do petitioners at-

tempt to tax such property because of a legislative

change...

Therefore, no legislative enactment has impaired a

contractual obligation.

= > =

... in holding that such property is taxable, we have

not overruled any previous decisions nor is our de-

cision in conflict with any decision...

” > =

We hold that the imposition of a tax upon the prop-

erty in question would not violate the constitutional

prohibition against impairment of contractual obliga-

Gems...

In January, 1980, the Respondent County Assessor as-

sessed Petitioner on the land and buildings which constitute

the Oklahoma City project for 1980. Petitioner protested

the assessment to the Respondent Oklahoma County Board

of Equalization which upheld the assessment on September

17, 1980. On September 25, 1980, Petitioner appealed the

assessment to the District Court of Oklahoma County that

“enforcement of Attorney General Opinion #79-168”" would

constitute an impairment of contract and deprive Petitioner

of due process of law (R. 5).

M In the court below, Petitioner readily conceded that it

owns the property sought to be taxed ad valorem and that

the property is taxable under Dunbar, but for the alleged

contract of exemption.

“. . . General Motors did not contend in the District

Court and does not contend here that the State of

Oklahoma is the owner of the General Motors plant

... It is uncontested also that such an ownership in-

terest would be taxable under Dunbar, but for the tax

abatement agreement.” (Brief of Appellant G.M., p.

28; emphasis by G.M.)

In conceding its property to be taxable under Dun-

bar, supra, Petitioner conceded Attorney General Opinion

#+79-168 was inapplicable to the facts presented below and

thus had no effect on any alleged contract:

“We should first classify the issues . . . The legal theory

upon which the Attorney General based his July 31

opinion 79-168 is not the primary basis upon which

petitioners predicate their entitlement to the writ

sought in this action. A fair reading of the July 31

opinion discloses that it is based upon the conclusion

that the leasehold interest of a private lessee in public

trust property is taxable . . . In this action, petitioners

rely primarily upon the doctrine of ‘equitable owner-

chip’... We are concerned here with only the legal

issues presented on this record, not with abstract ques-

tions of law concerning the correctness of the July 31

opinion of the Attorney General. Although it may ap-

pear that this action presents the correctness of that

opinion, the issues as framed by the record are entirely

different. The Attorney General was responding to the |

narrow legal question posed, ie., whether a ‘lease- |

hold’ interest in public trust property is taxable. Tex |

liability is sought here on a broader basis, i.e., that

lessees are the ‘owners’ of their respective properties.

= =

As the discussion which follows indicates, the record

demonstrates conclusively that we are not dealing

with ‘lease-hold’ interest.” 618 P.2d at 904.

Respondents asserted in the District Court among other

things that Petitioner had no contract of exemption, the

Petitioner had expressly agreed to pay ad valorem taxes,

that Petitioner was the owner of the project, that Attorney

General Opinion =79-168 was neither applicable nor a “leg-

islative act” and that Article 10 §5 of the Oklahoma Con-

stitution precluded the existence of a valid contract of ex-

emption:

“The power of taxation shall never be surrendered,

suspended, or contracted away .. .” OKLA. Const.

art. 10, §5.

Respondents moved for Summary Judgment and the

District Court, on March 25, 1982, after reviewing the plead-

ings, briefs, affidavits, admissions, interrogatories, stipula-

tions, documents, depositions and exhibits, granted Sum-

mary Judgment to Respondents holding, among other

things:

“That Article 10 Section 5 of the Oklahoma Constitu-

tion prohibits a contract which surrenders, suspends

or contracts away the power of taxation and, although

its existence is disputed, such contract, even if it could

be established, would be void and contrary to law.”

(R. 703-704, Journal Entry)

Petitioner appealed the decision of the District Court

to the Supreme Court of Oklahoma alleging impairment of

contract. On ‘September 17, 1983, the Oklahoma Supreme

Court held:

ontiion

“GMC concedes that its assembly plant would be tax-

able under Dunbar but for the tax abatement agree-

ment.

od * *

We will now consider the enforceability of the alleged

tax abatement. GMC did not introduce the agreement

into the record ... In its journal entry of judgment

the trial court in referring to the agreement said ‘al-

though its existence is in dispute, such contract, even

if it could be established, would be void and contrary

to law.’

The lease agreement between GMC and OIA did not

spell out the tax abatement agreement but it did men-

tion ad valorem taxes . . . the parties agree that in

the event the State of Oklahoma or any of its sub-

divisions shall demand the payment of any general or

ad valorem tax that GMC would pay the tax.

The purported tax abatement contract was not in ac-

cord with Oklahcma law at the time it was made.

* ® *

Our decision in Dunbar is controlling in the case at

bar and GMC’s property is subject to ad valorem tax-

ation unless the alleged tax abatement agreement is

enforceable. The Federal Constitution does not pro-

tect unenforceable contract rights. The alleged agree-

ment is void because no public official or public agency

could constitutionally grant the tax exemption con-

tained in the agreement. Since such agreement is un-

enforceable, GMC is not entitled to the tax relief it

sought.” (See Appendix A-1 through A-8 to the Peti-

tion for Certiorari)

On July 26, 1983, on Petition for Rehearing, the Okla-

homa Supreme Court further clarified its ruling and up-

held the assessment (See Appendix A-9 through A-12 to

Petition for Writ of Certiorari). On October 4, 1983, the

Oklahoma Supreme Court supplemented its opinion on Pe-

tition for Rehearing and upheld the assessment (See Ap-

pendix A-13 through A-20 to Petition for Writ of Certiorari).

REASONS FOR DENYING THE WRIT

OF CERTIORARI

Certiorari should be denied because:

1. No contract existed, de jure or de facto, to be im-

paired.

2. State court decisions below did not decide the issue

of impairment of contract.

3. An alleged contract which is unlawful and void ab

initio under a valid pre-existing state constitutional

provision is not protected by the Contract Clause

of the Federal Constitution.

NO FEDERAL QUESTION IS PRESENTED FOR THIS

COURT TO REVIEW BECAUSE NO CONTRACT EVER

EXISTED BETWEEN THE PARTIES AND THERE-

FORE THE CASE DOES NOT INVOLVE THE CON.

TRACT CLAUSE,

Petitioner claims to be exempt from the payment of

ad yalorem taxes because of the purported “agreement” it

had with the OIA. Generally, “a taxpayer claiming im-

unity from tax has the burden of establishing his ex-

ption.” General Motors Corp. v. Washington, 377 U.S.

/ 436, 441 (1964). Because Petitioner is the proponent of the

‘ contract it has the burden of proving its existence. Owens

v. Sun Oil Co., 482 F.2d 564 (10th Cir. 1973).

ro!

A. No Contract Exists De Jure

The existence of the contract is a matter#of state law

even though this Court makes an independent examination

of the facts. Appleby v. City of New York, 271 U.S. 364

(1926); State v. Brand, 303 U.S. 95 (1938). Oxta. Star.

tit. 15, §2 (1981), provides:

It is essential to the existence of a contract that

there should be:

1. Parties capable of contracting;

2. Their consent;

3. A lawful object; and,

4. Sufficient cause or consideration.

These essential elements of a contract are not fulfilled in

this case.

1. Parties Are Incapable of Contracting

Petitioner claims that the State itself was a party to

the tax exemption agreement. However, the State neither

levies nor receives the benefit of ad valorem taxes and

would be powerless to agree to such exemption even if

taxs could be contractually waived. Such taxes pertain only

to county government.

“No ad valorem tax shall be levied for State purposes,

nor shall any part of the proceeds of any ad valorem

tax levy upon any kind of property in this State be

used for State purposes.” OKLA. Const. art. 10, §9,

para. 2.

Two recent state decisions which Petitioner attempts

to distinguish from this case, Chemical Bank y. Wash. Pub-

— =

lic Power Supply System, 666 P.2d 329 (Wash. 1983), and

Asson v. City of Burley, 670 P.2d 839 (Idaho 1983), involve

contracts made by a utility. The courts ruled that the of-

ficials executing the contracts had exceeded their constitu-

tional authority and that the contracts were void. See also,

Mountain St. Tel. & Tel. Co. v. Ogden City, 487 P.2d 849

(Utah 1971). The same circumstances are alleged in this

case; hence there is no contract.

2. Parties Did Not Consent

There existed no consent by any official, county or

state, to exempt petitioner from ad valorem taxes, as will

be subsequently shown.

3. The Purported Agreement Did Not Have a Law-

ful Object

A contract cannot be for an unlawful purpose. Unlaw-

ful contracts include those which are contrary “to an ex-

press provision of law.” OKLA. Star. tit. 15, §211 (1981).

The alleged agreement is plainly contrary to the ex-

press provisions of the constitution of the State of Okla-

homa.

“The power of taxation shall never be surrendered,

suspended, or contracted away. Taxes shall be uni-

form upon the same class of subjects.” OKLA. Const.

art. 10, §5.

It is important to note that the trial court, in sustaining

Respondent’s Motion for Summary Judgment, specifically

addressed this fundamental Oklahoma law in its findings:

“That Article 10, Section 5 of the Oklahoma constitu-

tion prohibits a contract which surrenders, suspends

_— =

or contracts, away the power of taxation and, although

its existence is disputed, such contract even if it could

be established, would be void and contrary to law.”

(Emphesis added )

The alléged agreement is also contrary to another ex--

press provision of the Constitution of the State of Okla-

homa.

“The legislature shall pass no law exempting any prop-

erty withis [sic] this state from taxation, except as

otherwise provided in this Constitution.” OKLA. Const.

art. 5, $50.

This provision was construed in County Assessor v. Car-

penter and Joiners, Local 329, 211 P.2d 790 (Okla. 1949),

as follows:

“!The Legislature] is without power to grant exemp-

tions other than those recognized by the Constitution

or to enlarge the exemptions so recognized.” 211 P.2d

at 794.

By a clear constitutional prohibition, the people of Okla-

homa have foreclosed any favoritism of taxpayers. The

purpose of the purported agreement is obviously unlawful.

In City of New Orleans v. New Orleans Water Works

Co., 142 U.S. 79 (1891), a water company claimed that the

assessment of taxes impaired its tax exemption contract

with the city. The Louisiana constitution provided, how-

ever, that the legislature had no power to exempt property

from taxation except as used for church, school or chari-

table purposes. This Court dismissed the case for lack of

federal jurisdiction:

“There are several reasons, however, why the city can-

not claim that this contract was impaired by subse-

ations,

quent legislation: first, because the contract itself...

was ultra vires and void, and was so declared by the

Supreme Court of Louisiana...” 142 U.S. at 88.

In Mississippi and Mo. R.R. v. McClure, 77 U.S. 511

(1871), this Court was called upon but declined to deter-

mine the validity of bonds which had been held by the

state supreme court to be void and forbidden by the state

constitution.

“The questibn of the validity of the bonds is not one

of federal jurisdiction ... [T]he State has passed no

law upon the subject and the Constitution of the State

. was in force when the bonds were issued.” 77

U.S. at 515, accord, Lake Superior Consol. Iron Mines

v. Lord, 271 U.S. 577 (1926).

Respondent submits the same principle applies here.

B. No Contract Exists De Facto Because No Consent Was

Ever Given to an Exemption

The record reflects no agreement to exempt Petitioner

from payment of ad valorem taxes. Significantly, Petitioner

never introduced the alleged agreement into the record.

The existence of a contract exempting one from taxation

cannot be lightly inferred.

“Even if the borough could have made a contract of

exemption .. . there is nothing to show that it did

so... . On the contrary . . . where one relies upon

an exemption both the powers to exempt and the con-

tract of exemption must be clear. Any doubt or am-

biguity must be resolved in favor of the public. Here

there is not only no language of exemption, but a

positive statement on the part of the lessee to pay

the public taxes on the land. In compelling them to

ain

do so the contract is enforced instead of impaired.”

J. W. Perry Co. v. Norfolk, 220 U.S. 472, 480 (1911).

(Emphasis added)

Contracts of exemption must be construed narrowly

and strictly. Atlantic Coast Line R. v. Phillips, 332 U.S. 168

(1947); Keefe v. Clark, 322 U.S. 393 (1944). Under Okla-

homa law, any doubt as to the intent of an agreement must

be resolved against the grant of exemption.

“Whoever insists that any particular property is not

subject to the same burden as imposed by law on the

same character of property similarly circumstanced,

has the burden of proof, and must make it clear that

by contract or otherwise the property is beyond its

reach. Claims of exemption from taxation must be

plainly and unmistakably supported by express grant.

It cannot exist by implication only. A doubt is fatal

to the claim.” Oklahoma City v. Shields, 22 Okla. 265.

293, 100 P. 559, 571 (1908).

As the statement reflects, there was no exemption

agreement with the Governor or the Attorney General of

Oklahoma, nor with the Oklahoma Tax Commission. None

of the parties here made such an agreement. Petitioner

owns the project site in fee simple and explicitly agreed in

its “Lease” tu pay all ad valorem taxes assessed on the site.

There was obviously no meeting of the minds as to a tax

exemption agreement.

| _—,

Il.

THE ALLEGED CONTRACT WAS NOT IMPAIRED BY

LEGISLATIVE ACTION WITHIN THE MEANING OF

THE FEDERAL CONSTITUTION.

Although Petitioner claims there is legislative action

on the part of the Attorney General of Oklahoma, this

position is entirely erroneous. The legislative authority of

the State is vested solely in the state legislature. OKLA.

Const. art. 5, §1. The Attorney General is an executive

officer of the State, and may not exercise any legislative

functions. OKLA. Const. art. 6, §1, art. 4 §1. He is required

by statute, to give his opinion on law at the request of

certain public officials. OKLA. Star. tit. 74, §18b(e); Grand

River Dam Auth. v. State, 645 P.2d 1011 (Okla. 1982). He

may not give advice to private citizens or corporations, but

gives opinions “not in the exercise of any power inherent

in the office to make ‘rules’ or law, but in fulfillment of his

duty to give legal advice to those who administer the gov-

ernment of the state.” Id., at 1017. The actions of the At-

torney General of Oklahoma do not constitute legislative

action.

Parenthetically, the actions complained of do not im-

pair Petitioner’s alleged contract. OKLa. Atry. Gen. OPIN.

69-159 concluded that leasehold interests in property owned

by public trusts were not taxable. OKua. Atry. Gen. OPIN.

69-156 concluded that leasehold interests in property owned

by public trusts were taxable and withdrew the contrary

conclusion in 69-156. Petitioner concedes that it was the

taxable owner of the property in question and, therefore,

that it was not a lessee. Neither Attorney General's opin-

ion applies to Petitioner. Neither opinion impairs the al-

leged contract.

—22—

It is well settled that Respondents are not estopped

by the acts of public officials who entered into an arrange-

ment or agreement to do or cause to be done what the

Oklahoma constitution does not permit. Harris v. State, 251

P.2d 700. (Okla. 1952); accord, Utah Power & Light Co. v.

United States, 243 U.S. 389 (1917). One who deals with a

public official must ascertain that he who purportedly acts

for the state stays within the scope of his authority. Fed-

eral Crop Insur. Corp. v. Merrill, 332 U.S. 380 (1947);

Harris, supra, Therefore, no estoppel can grow out of ne-

gotiations with a public official who acts beyond his powers.

United States v. Stewart, 311 U.S. 60 (1940); Bonney v.

City of Britton, 214 P.2d 249 (Okla. 1950).

Because the public officials involved here have no au-

thority to execute a contract of tax exemption, the alleged

“assurances” made to Petitioner were no more than errone-

ous and unauthorized opinions. Mere opinions of public

officials cannot estop the taxing authorities. Utah v. United

States, 284 U.S. 534 (1932); State ex rel. Comm’rs of Land

Office v. Shull, 279 P.2d 339 (Okla. 1955). Even where one

has relied upon opinions of public officials to one’s detri-

ment,.an estoppel will not lie. Federal Crop Insur. Corp. v.

Merrill, supra; James v. State, 15-P.2d 591 (Okla. 1932).

The Contract Clause is infringed only when a legislative

enactment impairs the contract. Tidal Oil Co. v. Flanagan,

263 U.S. 444, 451 (1924); Barrows v. Jackson, 364 U.S. 249,

260 (1953).

A “statute of a state” has been defined by this Court

to mean “any enactment, from whatever source originating,

to which a state gives the force of law... .” Williams v.

Bruffy, 96 U.S. 176, 182-83 (1880). See, John P. King Mfg.

—23—

Co. v. City Council, 277 U.S. 100 (1928). Dur.:g its last

term, this Court discussed the nature of legislative action

in Perry Educ. Assn. v. Perry Local Educ. Assn., US.

, 103 S.Ct. 948 (1983). The argument that a collective

bargaining agreement was legislative in character because

it was intended “to be observed and applied in the future”

was rejected. “Not every government action which has the

effect of law is legislative action.” _.. U.S. ___, 103 S.Ct.

at 953.

In this case, no action was taken by the Oklahoma

Legislature which impaired Petitioner’s “contract”. Hence,

there is no Contract Clause question presented for this

Court’s review.

II.

THIS COURT LACKS JURISDICTION TO HEAR PE-

TITIONER’S ARGUMENTS BASED UPON THE CON.

TRACT, DUE PROCESS AND TAKING CLAUSES OF

THE FEDERAL CONSTITUTION.

The present case comes before this Court on a Petition

for a Writ of Certiorari. Petitioner asserts that this Court’s

jurisdiction is founded on 28 U.S.C. §1257, which provides:

“Final judgments or decrees rendered by the highest

court of a state in which a decision could be had, may

be reviewed by the Supreme Court as follows:

7 > >

(3) By writ of certiorari, where the validity of a

treaty or statute of the United States is drawn in

question or where the validity of a State statute is

drawn in question on the ground of its being repug-

nant to the Constitution, treaties or statutes of, or

commission held or authority exercised under, the

United States or where any title, right, or immunity

eS ee

is specially set up or claimed under the Constitution,

treaties or statutes of, or commission held or author-

ity exercised under the United States.”

It is a fundamental principle that the Petitioner’s circum-

stances must fulfill the requirement of §1257 in order for

it to be heard by this Court. F. G. Oxley Stove Co. v.

Butler Co., 166 U.S. 648 (1897); Baldwin v. Kansas, 129

U.S. 52 (1889).

Petitioner seeks to come within the purview of the

provision for review “where any | tle, right, privilege or

immunity is specially set up or claimed under the Con-

stitution. ...” From the earliest days of this Court, it has

been held that the claim to a constitutional right must have

been presented to and decided by the state court whose

judgment is being reviewed.

“We held early on that §25 of the Judiciary Act of 1789

[the ancestor of §1257] furnished us with no jurisdic-

tion unless a federal question had been both raised

and decided in the state court below. As Justice Story

wrote in Crowell v. Randell, 10 Pet. 368, 391, 9 L.Ed.

458 (1836), ‘If both of these requirements do not ap-

pear on the record, the appellate jurisdiction fails.’”

Illinois v. Gates, _.. U.S. ._., 103 S.Ct. 2317, 2321

(1983).

The federal right must be declared explicitly in the

state court; it must be claimed “unmistakably”. F. G. Oxley

Stove Co. v. Butler Co., 166 U.S. 648 (1897). The federal

right must be passed upon by the state court.

“(I]t must appear from the record, by clear and neces-

sary intendment, that the federal question was di-

rectly involved, so that the state court would not have

given judgment without deciding it... .” Sayward v.

Denny, 158 U.S. 180, 184 (1895).

A. Contract Clause — Opinion by State Court

Petitioner has artfully, but in a grossly misleading

manner, informed this Court:

“In reaching its decision, the Oklahoma Supreme Court

assumed that petitioner and the State did in fact enter

into a contract pursuant to which the Oklahoma City

plant was to be exempt from property taxes for

twenty years. (Pet., 8)

This statement was obviously inserted to convince this

Court that a contract existed in order to invoke jurisdic-

tion under the federal Constitution. The Oklahoma Su-

preme Court in fact states in pertinent part:

“We will assume, arguendo, that OIA, a state agency,

entered into the tax abatement agreement with GMC

.. (Pet., A-7) (Emphasis added).

Thus, the Oklahoma Supreme Court was clearly addressing

the lack of power of state officials to enter into such con-

tract, rather than assuming a contract existed which could

be arguably used for federal jurisdictional purposes.

B. Due Process, Taking Clauses — Opinion by State Court

Further, the Due Process and Taking Clause arguments

were not unmistakably presented to the Oklahoma Supreme

Court. The Petition-in-Error did not mention the Taking

Clause of the U. S. Constitution, Amendment V. Petitioner’s

Brief-in-Chief in the court below propounded the Due Proc-

ess Clause in three scant pages and referred weakly but

once to the Taking Clause. The briefs in the trial court

never covered either clause. Surely it cannot be said that

the Due Process and Taking Clauses were clearly preserited

x oe

below. Furthermore, neither clause was passed upon by the

Oklahoma Supreme Court. The court explicitly ruled, “In

view of our decision here, we find it unnecessary to con-

sider the force and effect of . . . the Fourteenth Amend-

ment to the U.S. Constitution.” This Court should not re-

view a constitutional decision that never occurred. The Ok-

lahoma Supreme Court manifestly gave judgment without

deciding the Due Process and Taking Clause issues. Under

such circumstances, this Court has no jurisdiction to con-

sider the issue now. Dewey v. City of Des Moines, 173 U.S.

193 (1899). By refusing to hear Petitioner’s Fifth Amend-

ment arguments, this Court will be sure to avoid the con-

sideration of a constitutional argument on an inadequate

record and to maintain the proper relationship between

state and federal courts. Illinois v. Gates, _ U.S. , 103

S.Ct. 2317, 2323 (1983).

IV.

JUDICIAL RETROACTIVITY IS NOT A VALID ISSUE

IN THIS CASE.

The petition is largely devoted to the issue of whether

the decision of the Oklahoma Supreme Court wes correct

in light of Lemon v. Kurtzman, 411 U.S. 192 (1973), and

Great No. Ry. v. Sunburst Oil & Ref. Co., 287 U.S. 358

(1932). Those cases, concerning the nonretroactivity of the

judicial decision, do not apply here. The Oklahoma con-

stitution has always prohibited contracts of tax exemption.

Oxua. Const. art. 5 §50; art. 10 §5. Further, the constitu-

tion and statutes of the State of Oklahoma explicitly state

that all property which can be taxed must be taxed.

“All property which may be taxed ad valorem shall be

assessed for taxation. ..” Ox a. Cows. art. 10 §8.

—27-—

“All property in this state, whether real or personal,

except that which is specifically exempt by law...

shall be subject to ad valorem taxation.” OKLA. STAT.

tit. 68 $2404 (1981).

“Real property, for the purpose of ad valorem taxation,

shall be construed to mean the land itself... and all

buildings, structures and improvements. .. .” OKLA.

STAT. tit. 68 §2419 (1981).

In addition, the granting of a tax abatement to the Peti-

tioner would accomplish indirectly what the Oklahoma Con-

stitution affirmatively prohibits.

“The legislature shall pass no law granting to any . .

corporation . . . any exclusive rights, privileges, or

immunities with the State.” Oxia. Const. art. 5 §51,

“(Njor shall the State ... make donation . . . by tax,

or otherwise, to any company, association, or corpora-

tion.” OKLA. Const. art. 10, §15.

Thus, the ruling of the lower court was constitutionally

compelled and anticipated, and no contradictory precedent

exists.

A direct foreshadowing of the decision below is the

case of State v. Ford, 434 P.2d 934 (Okla. 1976), in which

the court held that a statute exempting industrial tracts

of 40 acres or larger was unconstitutional.

“That part of 11 O.S. Supp. 1965, Sec. 481 which pro-

vides that ‘tracts of land in excess of forty acres shall

not be subject to city taxes when located within a

city or town and when used for industrial or com-

mercial purposes’ is not authorized by Art. 10, Sec. 6,

and the territorial statute, Sec. 458, supra, unless au-

thorized under 11 O.S. 1861 Sec. 6, and constitutes

no authority for classifying such tracts as exempt

from city taxes.” 434 P.2d at 938.

The Attorney General also foreshadowed Petitioner’s

being a taxable owner in OKLA. ATtry. GEN. OPIN. 74-229:

“Title to the facility is indeed normally held by the

industrial public trust authority during the time in

which its revenue bond indebtedness is outstanding

to allow the trust to grant a mortgage and security

for the bondholders; however, in almost all situations

the private industrial concern has an option to pur-

chase the facility for a nominal sum after the retire-

ment of all indebtedness by the private concern and

thus has equitable ownership of the facility during the

debt term.” 7 Oxta. Atty. Gen. Opin. 210, 212 (Em-

phasis added).

The Oklahoma Supreme Court has repeatedly held in a long

series of cases, that the equitable owner is subject to full

tax liability or property purchased from an exempt govern-

mental entity.!

The most recent case foreshadowing the decision be-

low is State ex rel. Poulos v. St. Bd. of Equal., 552 P.2d

1134 (Okla. 1975), in which the court stated:

“The legislature has recognized that a system which

does not equalize ad valorem assessments throughout

the state is unfair and invidiously discriminatory. It

is provided by the School Code of 1971, 70 O.S. 1971

$18-102:

‘The Legislature recognizes that it would be unfair

to the taxpaying citizens of the state to base a

1 Rose Vv. Stalcup, 190 P. 396 (Okla. 1920); Morris v. Bd. of Comm'rs,

177 P. 900 (Okla. 1917); Boome v. Porter, 146 P. 584 (Okla. 1915);

Bowls V. Oklaboma City, 104 P. 902 (Okla. 1909); accord, Sears v.

Fair, 397 P.2d 134 (Okla. 1964); Equitable Royalty Corp. V. State, 352

P.2d 365 (Okla. 1960); Magnolia Petroleum Co. v. Slate, 322 P.2d 188

(Okla. 1957); Stevens v. Patten, 50 P.2d 1106 (Okla 1935).

—29—

system of state financial aid to schools upon the

amounts of local ad valorem taxes collected for

education as this act does without equalizing ad

valorem assessments throughout the state. It is the

intention of the Legislature every parcel and item

of taxable property in the state will be assessed at

the same percentage of its fair cash value.’” 552

P.2d at 1136 (Emphasis added).

CONCLUSION

Succinctly, Petitioner seeks to invoke jurisdiction of

this Court based upon impairment of a contract, but with-

out showing the existence of the purported “contract” either

in fact or in law. Section 13 of the lease agreement, upon

which Petitioner so heavily relies, certainly cannot be con-

sidered an agreement of tax exemption, but rather an agree-

ment by Petitioner to pay all taxes imposed.

The opinion of the Attorney General is just that — an

Opinion as to the law. It is not binding upon any privately

owned corporation such as Petitioner’s, but rather is in-

tended to provide legal guidance for public officials in the

performance of their duties.

On January 29, 1980, the Supreme Court of Oklahoma

in State ex rel. Cartwright v. Dunbar, 618 P.2d 900 (Okla.

1980), ruled that the substance of a transaction, not the

label given it by the parties, controls the legal nature of

the transaction and that purported “lessees” of public trusts

were the equitable, legal and taxable owners of the in-

dustrial facility. Petitioner participated therein as amicus

curiae. In January, 1980, Respondent County Assessor as-

sessed Petitioner for the land and buildings which consti-

—30—

tute the Oklahoma City project. Respondent’s action was

plainly foretold by the constitutional, statutory and com-

mon laws of Oklahoma.

Nonetheless, Petitioner chose to rely upon an opinion

of the Attorney General which, ironically, was not even

applicable to its particular circumstances.

Finally, Petitioner acted without benefit of a single ju-

dicial decision to support its view, and in the face of un-

equivocal provisions to the contrary existing in the con-

stitution and statutes of the State of Oklahoma.

Upon this record, Petitioner now seeks review via Cer-

tiorari. Respondent respectfully submits that the record of

this case justifies and requires denial of the Petition.

Respectfitily submitted,

ROBERT H. MACY

District Attorney of

Oklahoma County, Oklahoma

FRANK E .WALTA

Assistant District Attorney

Counsel of Record

202 Robert S. Kerr Avenue

Oklahoma City, Okla. 73102

Attorneys for Respondent

March, 1984

APPENDIX A

[Filed July 23, 3:13 p.m. 1973]

WARRANTY DEED

KNOW ALL MEN BY THESE PRESENTS:

That LAWYERS TITLE INSURANCE CORPORATION,

a Virgina Corporation, Party of the First Part, in considera-

tion of the sum of TEN DOLLARS ($10.00) and other good

and valuable consideration, in hand paid, the receipt of

which is hereby acknowledged, does hereby grant, bargain,

sell and convey unto GENERAL MOTORS CORPORA-

TION, a Delaware corporation, whose address is 3044 West

Grand Boulevard, Detroit, Michigan, Party of the Second

Part, the following described real property and premises,

situated in Oklahoma County, State of Oklahoma, to-wit:

A parcel of Land located in the South One-Half (S/2)

of Section 27, Township 11 North, Range 2 West of the

Indian Meridian and the North One-half (N/2) of the

North One-Half (N/2) of Section 34, Township 11

North, Range 2 West of the Indian Meridian, all in

Oklahoma County, Oklahoma, said parcel being more

particularly described as follows:

BEGINNING at the SW Corner of Section 27, T 11 N,

R 2W; Thence North 0° 21’ 48” West along the West

line of said Section 27 a distance of 2632.18 feet; Thence

South 89° 43’ 51” East a distance of 5245.81 feet to a

point on the East line of said Section 27; Thence South

0° 12’ 16” East along the East line of Section 27 a dis-

tance of 2635.83 feet to SE Corner of Section 27, said

point also being the NE Corner of Section 34, T 11 N,

R 2 W; Thence North 89° 41’ 24” West along the North

line of said Section 34 a distance of 50.00 feet; Thence

South 0° 26° 14” East parallel to and 50.00 feet West of

the East line of said Section 34 a distance of 491.45 feet

to a point; Thence South 3° 58’ 14” West a distance of

518.85 feet; Thence North 89° 39’ 34” West 800.00 feet;

[APPENDIX)

Thence South 79° 01’ 50” West a distance of 127.47 feet;

Thence North 89° 39’ 34” West a distance of 1571.52

feet; Thence Northwesterly on a curve to the right hav-

ing a radius of 28,472.89 feet a distance of 1341.54 feet;

Thence South 81° 39’ 38” West a distance of 126.92 feet;

Thence Northwesterly on a curve to the right having

a radius of 28,497.89 feet a distance of 1068.50 feet;

Thence North 8° 26’ 26” West a distance of 304.06 feet;

Thence North 2° 57’ 37” West a distance of 585.78 feet;

Thence North 0° 23’ 09” West parallel to and 50.00 feet

East of the West line of said Section 34 a distance of

60.00 feet; Thence North 89° 41’ 24” West along the

North line of said Section 34 a distance of 50.00 feet to

the Northwest Corner of Section 34, T11 N, R 2 W,

said point also being the Southwest Corner of Section

27, T 11 N, R 2W and the point of beginning; LESS

AND EXCEPT THE FOLLOWING:

(CONSIDERATION LESS THAN $100.00)

together with all the improvements thereon and appurten-

ances thereunto appertaining.

TO HAVE AND TO HOLD said real estate, together

with all and singular the rights and appurtenances there-

unto in anywise belonging, subject to those exceptions 1

through 43 listed herein above, and Grantor does hereby

bind itself, its successors and assigns, to warrant and fore-

ever defend all and singular the said real estate unto

Grantee and its successors and assigns, against every per-

son whomsoever lawfully claiming or to claim the same or

any part thereof, by, through, or under Grantor, but not

otherwise.

Signed and delivered this 6th day of June, 1973.

LAWYERS TITLE INSURANCE CORPORATION

By (s) Marvin C. Bowling, Jr.

Vice President

(APPENDIX?

[SEAL]

ATTEST:

(s) Hazel T. Cole

Assistant Secretary

[Notary Certification omitted this printing]

APPENDIX B

October 5, 1976

MEMO TO: Phil Hoffman

FROM: Harry Birdwell

RE: Developments in the October 4th meeting at

the Oklahoma State Tax Commission Build-

ing regarding Tax Relief for the Proposed

GM Facility in Oklahoma City

1/ Sam Hammons, Administrative Assistant to Gover-

nor Boren, pledged the Governor’s support for negotiable

tax relief measures for GM. Hammons also further indi-

cated that Governor Boren would have been present per-

sonally had he not presently been in Korea.

2/ Two of the three members of the Oklahoma State

Tax Commission, Commissioners Leininger and Merrill, re-

peated the Commission’s established policy of exempting

construction materials from the 4% Oklahoma City sales

tax, so long as record title of industrial buildings remains

in a public trust organized under Title 60 Section 176 of

the Oklahoma Statutes.

3/ Oklahoma Attorney General Larry Derryberry re-

iterated the Attorney General’s opinion issued by former

Attoney General G. T. Blankenship on March 17, 1969, deal-

ing with the tax exempt status of real property which is

held by public trust created in strict accordance with Title

60 Sections 176 and 177. The Attorney General further

stated that he would make every effort to secure an an-

swer related to separate ad valorem taxation of buildings

and land.

4/ Commissioner Merrill discussed the free port tax-

ation in Oklahoma, indicating that goods not detained in

Oklahoma for more than nine months shall not be taxed

as inventory items.

(APPENDIX)

5/ All other participants in the meeting pledged their

full and unconditional support to assist GM in achieving

reasonable and desirable tax relief.

(s) Harry Birdwell

APPENDIX C

THE ATTORNEY GENERAL

OF OKLAHOMA

Oklahoma City, Oklahoma 73105

G. T. BLANKENSHIP

ATTORNEY GENERAL

March 17, 1969

The Honorable Dewey F. Bartlett

Governor of Oklahoma

State Capitol Building

Oklahoma City, Oklahoma

Opinion No. 69-156

Dear Sir:

The Attorney General has had under consideration

your recent letter in which you advise:

“The Authority would acquire a parcel of land lo-

cated in Oklahoma City from private persons. .. . The

Authority would then enter into a Lease Agreement

with an industrial tenant. The agreement would re-

quire the industrial tenant to pay for all buildings,

structures, fixtures, machinery, equipment, other tang-

ible personal property, facilities and improvements

necessary for the construction and equipping of a man-

ufacturing facility. Title to all such property would

be vested in the Authority subject to the industrial

tenants’ leasehold therein. The industrial tenant would

pay as rent a portion of the land’s cost over a three

year period but would lease the land and the improve-

ments just mentioned for 25 years within a 25 year

renewal option. The industrial tenant would have the

right to purchase the facilities at any time. In addi-

tion, the industrial tenant would pay as rent an

amount which reflects the tenant’s contribution to the

community’s welfare made in the expectation that

[APPENDIX)

neither the project nor the tenant’s interest therein

would be subject to ad valorem taxation... .”

You request an opinion with respect to the following ques-

tions:

“1. Are the land, buildings, structures, machinery,

equipment, fixtures, other personal property, facilities,

improvements, or any of them, owned by the Author-

ity and subject to a Lease Agreement along the lines

discussed above, subject to ad valorem taxation by the

State of Oklahoma, the County of Oklahoma County,

the City of Oklahoma City, or any other agency or

instrumentality of the State of Oklahoma?

“2. Is the leasehold or possessory interest of the

industrial tenant in such land, buildings, structures,

machinery, equipment, fixtures, other personal prop-

erty, facilities, improvements, or any of them, owned

by the Authority and subject to a Lease Agreement

along the lines discussed above, subject to ad valorem

taxation by the State of Oklahoma, the County of Ok-

lahoma County, the City of Oklahoma City, or any

other agency or instrumentality of the State of Ok-

lahoma?”

With regard to your question No. 1, Article X, Section

6, of the Constitution of this State, in pertinent part, pro-

vides:

“. . . all property of the United States and of this

State and of counties and of municipalities of this

State, . . . shall be exempt from taxation.”

Other pertinent provisions are 68 O.S. Supp.1968, §2405,

which provides:

“The following property shall be exempt from tax-

ation ... (b) All property of this State, and of the

counties, school districts, and municipalities of this

State... .”

{APPENDIX}

Title 68 O.S. Supp.1968, § 2404, states:

“All property in this State, whether real or per-

sonal, except that which is specifically exempt by law,

and except that which is relieved of ad valorem tax-

ation by reason of the payment of an in lieu tax, shall

be subject to an ad valorem taxation.”

Title 68 O.S. Supp.1968, § 2419, states:

“Real property, for the purpose of ad valorem tax-

ation, shall be construed to mean the land itself, and

all rights and privileges thereto belonging or in any

wise appertaining, such as permanent irrigation, or

any other right or privilege that adds value to real

property, and all mines, minerals, quarries and trees

on or under the same, and all buildings, structures

and improvements or other fixtures of whatsoever

kind thereon, exclusive of such machinery and fix-

tures on the same as are, for the purpose of ad valorem

taxation, defined as personal property.”

Title 68 O.S. Supp.1968, § 2426, provides:

“(a) Property subject to ad valorem taxation shall,

unless otherwise provided, be listed for taxation by

the owner thereof or his duly authorized agent.

“(b) Property belonging to or controlled by the

following shall be listed by the following persons or

their duly authorized agents:

“

“(4) A person for whose benefit it is held in trust,

by the trustee... .”

Assuming that the Oklahoma Industrial Authority has been

in all respects created in strict accordance with 60 OS.

1961, §§ 176 and 177; that the title to the project will vest

in the Authority; and that the beneficial interest in the trust

estate has been acquired on behalf of Oklahoma County.

[APPENDIX]

it is the opinion of the Attorney General that the answer

to your question No. 1 must be in the negative in that no

part of any property owned by the Authority will be, under

the existing law, subject to ad valorem taxation by the

State of Oklahoma, County of Oklahoma, Oklahoma City,

or any other agency ur instrumentality of the State of Ok-

lahoma.

Article I, Section 1.2 of the Lease Agreement provides:

“.. , the term “Project” does not include (i) fix-

tures, machinery, equipment, other personal property,

facilities and improvements, title to which has been

retained by the Company pursuant to Section 3.2, (ii)

fixtures, machinery, equipment, other personal prop-

erties, facilities and improvements removed by the

Company from the Project pursuant to Section 3.3,

(iii) land (whether improved or unimproved), build-

ings, structures, or any parts thereof, removed by the

Company from the Project pursuant to Section 3.4,

or (iv) raw material, in-process products or finished

goods.”

Accordingly, as to all the enumerated items, the opinion

expressed above will not apply and all such items will be

subject to taxation in accordance with general law.

With respect to your question No. 2, on August 27, 1968,

the citizens of Oklahoma adopted an amendment to Article

X, Section 6A of the State Constitution, to become effective

January 1, 1969, exempting from ad valorem or other taxes,

intangible personal property as defined therein.

In pertinent part, the amendment provides exemption

from taxation for:

“(f) All interests in property held in trust or on

deposit within or without this State, and whether or

not evidenced by certificates, shares, or other written

evidence of beneficial ownership.”

[APPENDIX

Leasehold interest such as that here involved and evi-

denced by a written instrument have variously been de-

fined as “intangible personal property,” “chattels real,” and

“incorporeal in nature.” (See Words & Phrases, Permanent

Ed., Vol. 24A, pp. 284 and 285)

In State v. Bare, 60 W.Va. 483, 56 S.E. 390, 393, the

Court, in the body of its opinion, treated the question of

taxation of a leasehold interest as follows:

“A ‘leasehold’ is the right to use property upon

which a lease is held for the purpose of the lease. It

is intangible property, which the law recognizes as

having value, but which is incorporeal in its nature.

It is not the property upon which the lease is held

nor the property used in its exercise. In determining

the taxable value of the leasehold, the pecuniary value

of the property used in connection therewith or the

use of which coristitutes the leasehold estate may not

be taken into consideration. The land which consti-

tutes the subject of the leasehold is taxed, not as a

leasehold, nor in the name of the lessee, but as land,

in the name of the owner, and is not to be taxed over

again in the neme of the lessee, on the theory that it

constitutes part of the leasehold. Nor are the improve-

ments on the land, whether they belong to the land-

owner or the lessee, to be taxed under the designation

of ‘leasehold.’ If they belong to the owner of the land,

they are charged to him, either as land or as personal

property. Their value is not to be included in, or taken

to make up, the value of the intangible thing, the

leasehold.”

Accordingly, since the leasehold interest of an industrial

tenant is deemed to be personal intangible property and to

fall within the purview of the recently adopted amendment

to Article X, § 6A of the Constitution of this State, it is the

opinion of the Attorney General that such leasehold interest

is not subject to ad valorem taxation by the State of Okla-

(APPENDIX)

homa or by Oklahoma County or any other agency or in-

strumentality of this State that may now or hereafter be

authorized to impose such taxes on real or personal prop-

erty situated within their jurisdiction.

Sincerely,

FOR THE ATTORNEY GENERA.

(s) Carl G. Engling

ASSISTANT ATTORNEY GENERAL

APPROVED IN CONFERENCE

(s) G. T. Blankenship

ATTORNEY GENERAL

APPENDIX D

[Recorded or filed April 12, 1978]

ABSOLUTE GRANT

OF EXCLUSIVE RIGHT TO USE

WITNESS this Agreement effective as of 1 April 1978.

WHEREAS, General Motors Corporation, organized

and existing under the laws of the State of Delaware, duly

qualified to do business in the State of Oklahoma, (herein-

after referred to as “General Motors”) which corporate

address is 3044 West Grand Boulevard, Detroit, Michigan

48202, is the owner of certain realty in Oklahoma County,

State of Oklahoma, more particularly described on Exhibit

“A” attached hereto; and

WHEREAS, Oklahoma Industries Authority, an agency

of the State of Oklahoma, as grantee, (hereinafter called

“OIA”) is desirous of obtaining a grant of an exclusive

right to use said realty;

WITNESS THIS AGREEMENT:

General Motors herewith gives and grants an exclusive

right to use all of the herein described realty to OIA re-

taining, only, the bare legal title of surface and minerals

of record. The parties recognize that the bare legal title

of surface and minerals will remain in General Motors and

will be subject to ad valorem taxation as now and hereafter

existing under the laws of the State of Oklahoma.

The purpose of this Absolute Grant of Exclusive Right

to Use for a twenty (20) year plus one (1) day period (and

for such longer period of time as is requisite to retire the

bonds as is envisioned by the lease agreement of even date)

is to enable OIA to erect thereon certain improvements

contemplated between the parties and to lease improve-

ments on the estate granted herein for a period of twenty

(20) years from OIA to General Motors under one certain

lease agreement of even date herewith.

[APPENDIX]

The exclusive right to use and grant herein made from

General Motors to OIA is without representation or war-

ranty as to previous mineral conveyances, if any; easements

and rights of way of record, if any; zoning regulations, if

any; and OIA recognizes that it is familiar with said con-

ditions and will likewise make no warranties in the lease

from OIA to General Motors as is contemplated.

The parties, by this document are severing an exclusive

right to use in favor of OIA which will be the subject of

said lease agreement from OIA to General Motors and Gen-

eral Motors is retaining the bare legal title of the surface

and mineral estate all in accordance with lease of even date.

The parties recognize that as a result of this Grant an

estate for years and absolute right to use will be created

in OIA and the only remaining incident of ownership is

the surface and minerals will be the record title in General

Motors and the severance for all other purposes including

ownership of all improvements whether surface or subsur-

face in OIA; the parties recognize that as a result of this

severance of the surface and minerals from the Grant herein

made will mean that the improvements will not become a

part of the realty and will at all times be owned exclusively

by OIA and shall not become a part of the surface and min-

eral title herein retained by General Motors.

The parties agree to cooperate in implementing the

sense of this severance by any further documentation re-

quired to ensure that the surface and mineral title retained

by grantor will be absolute.

All of the remainder of the rights and remedies of the

parties will be governed by that certain lease with OIA as

lessor and General Motors as lessee of even date herewith.

Any common law or statutory merger principle will

not be applicable to the lease from OIA to General Motors

dated simultaneously herewith.

Dated this 12th day of April, 1978.

CAPPENDIX}

GRANTOR:

GENERAL MOTORS CORPORATION

By (s) P. J. Coletta

Vice President

ATTEST:

(s) Marguerite Novelli

Assistant Secretary

GRANTEE:

OKLAHOMA INDUSTRIES

AUTHORITY

By (s) Edward L. Gaylord

Chairman

(s) Harry Birdwell

Assistant Secretary

[Notary Certifications and “Exhibit A” (land

description) attached to original, omitted this

printing]

APPENDIX E

LEASE

This lease, executed in duplicate as of this 1st day of

April, 1978, by and between Oklahoma Industries Author-

ity, an agency of the State of Oklahoma; hereinafter called

“Lessor”, and General Motors Corporation . . . hereinafter

called “Lessee”’;

WITNESSETH:

Section 1 For and in consideration of the rents to be

paid and the covenants and agreements to be per-

formed on the part of Lessee, as hereinafter set out,

Lessor has demised and leased, and by these presents

does demise and lease for the term, hereinafter set

forth, unto Lessee all of Lessors interest in that certain

tract and parcel of land situated in Oklahoma County,

State of Oklahoma, and being more particularly de-

scribed in Exhibit A, which is an estate owned by

Lessor severed from the surface and minerals in ac-

cordance with an Absolute Grant of Exclusive Right

to Use from Lessee to Lessor of even date herewith,

together with all improvements thereon equipment of

the Lessor located and to be installed therein. .. .

(b) As used herein, the term “the project” shall mean

collectively the said real estate, the building and im-

provements subsurface, surface .. . and all machinery

and equipment... .

erection of all or any part of the improvements, and

the acquisition of any machinery and equipment may

be done by Lessee .. . . Lessee agrees to construct,

acquire, install and complete the project with all rea-

sonable dispatch....

. . >

[APPENDIX)

(e) the total cost to Lessor oi the project .. . shall

in no event exceed one million dollars, ($1,000,000.00)

should such total be exceeded, the required excess

funds shall be provided by Lessee... .

Section 3 (a) The term of this lease shall be twenty

(20) years from the date hereof.

Section 4 To provide the funds referred to in Section

2(e) above, Lessor will issue or cause to be issued a

series of coupon bonds... in the total principal amount

of $1,000,000. . . . The annual rental to be paid by Les-

see for the project shall be:

(a) A sum equal to the annual debt service re-

quirements of Lessor to pay interest on the

bonds .. . the last payment. . . will be the

amount required to pay the principal out-

standing at maturity... .

Section 5 (a) Lessor shall not be required or obli-

gated at any time to repair or maintain the project....

Section 6 Lessor covenants that it is lawfully seized

of the demised property of an Absolute Grant and Ex-

clusive Right to Use for a period of twenty (20) years

and one (1) day....

> * *

Section 9 Possession of the demised property will be

delivered to Lessee upon the commencement of the

term of this Lease... .

Section 11 Lessee shall retain ... at its expense...

such fire, windstorm and extended coverage insurance

as a prudent operator in the industry would maintain

{APPENDIX}

Section 13 (a) Lessee shall pay ail special assessments

levied against the Project, and all personal property

taxes assessed against all equipment and personal prop-

erty of Lessee (not owned by Lessor under the terms

of this Lease) placed on the Project during the term

of the Lease. In the event of the creation of any spe-

cial assessment district within which is situated all or

any portion of the Project, Lessee at its option may

protest in the name of Lessor under the applicable

provisions of law the creation of such proposed assess-

ment district without reference to or permission of the

Lessor.

(b) In the event the State of Oklahoma, or any po-

litical subdivision thereof, shall demand of Lessor or

Lessee the payment of any general or ad valorem tax

on the property owned by Lessor, the party so notified

shall promptly notify the other of such circumstance.

name and behalf, or in the name and behalf of Lessor,

in good faith contest any such tax or assessment and,

in the event of such contest, may permit the tax or

assessment so contested to remain unpaid during the

period of such contest or any appeal therefrom, if, dur-

ing such period, enforcement of such contested item is

effectively stayed, or the title of Lessor to any part of

the Project is not otherwise materially endangered or

subjected to loss or forfeiture. Lessor shall cooperate

fully with Lessee in any such contest. Should any such

tax or assessment be determined by the court of final

jurisdiction to which the question may have been ap-

pealed to be due and owing, then the same shall be

paid by Lessee.

(d) The parties recognize that as the Lessor is an

agency of the State of Oklahoma, the Project here de-

mised is not subject to ad valorem taxation under the

Constitution and laws of the State of Oklahoma. Since

(\APPENDIX)

the bare legal title (surface and minerals) to the Ex-

hibit “A” realty (with all other rights to said realty

having been severed in favor of Lessor under the Ab-

solute Grant of Exclusive Right to Use of even date)

remains in Lessee, Lessee will pay any and all ad va-

lorem taxes assessed against the surface ownership of

the Exhibit “A” realty promptly and in accordance

with law now and hereafter existing as provided by

law.

However, Lessee recognizes that it will use, re-

quire and impact municipal, county and school district

services located in several counties. Accordingly, Les-

see agrees that it will pay the above mentioned ad

valorem taxes on the surface, plus thereafter com-

mencing on the first day of December, 1979, and on a

like date of each year thereafter during the term of

this Lease, the sum of $500,000.00 in addition to the

rentals herein set out as rentals in lieu of ad valorem

taxes which shall be distributed by the Lessor to such

of those entities entitled to an apportionment of the

same as the Lessor may determine to be in the areas

and communities affected and as the Lessor determines

to be in the public and communities’ interests.

(e) Should the State of Oklahoma (i) assess or collect

taxes from either Lessor or Lessee on the basis of the

value of the whole or any part of the Project (being

the leasehold estate herein delineated); or (ii) collect

such taxes on any other basis designed to produce rev-

enue in lieu of ad valorem taxes to be applied for the

purposes to which ad valorem taxes are committed as

of the date of this Lease; or (iii) abolish the levy of a

tax upon tangible real or personal property calculated

upon its value, then and in case of such events (a) of

this Section shall become inoperative and the tax that

shall be determined as the obligation of the Lessor

because of the existence of the Project shall be paid

by Lessee. Lessee may contest any such intended tax

[APPENDIX]

or levy thereof in like manner and with like prerog-

atives as provided by Section 13(c) hereof.

. * *

Section 20 If all or substantially all of the Project is

taken under the power of eminent domain...

7 . *

(b) If the net condemnation award is in excess of

the sum needed to pay and retire all such outstanding

bonds . . . such excess shall be paid to Lessee.

. . 7

Section 22 Lessor gives and grants to Lessee the right

to purchase the project at any time... at a purchase

price which should be the amount required to pay all

outstanding principal of the bonds... plus interest...

plus any applicable redemption premium, plus all ex-

penses incidental to the redemption and retirement...

plus $1,000...

In witness whereof, Lessor and Lessee have duly exe-

cuted and fixed their hands and seals to this Lease this

12th day of April, 1978.

OKLAHOMA INDUSTRIES AUTHORITY

By (s) Edward L. Gaylord

Chairman

Attest: (s) Harry Birdwell

Assistant Secretary

GENERAL MOTORS CORPORATION

By (s) P. J. Coletta

Vice President

Attest: (s) Marguerite Novelli

Assistant Secretary

APPENDIX F

[Seal of the State of Oklahoma]

JAN Eric CARTWRIGHT

ATTORNEY GENERAL

STATE OF OKLAHOMA

State Capitol, Oklahoma City, Oklahoma 73105

July 31, 1979

The Honorable Helen Arnold

State Representaitve

218 E. 29

Tulsa, OK 74114

Opinion No. 79-168

Representative Arnold:

The Attorney General is in receipt of your request for an

opinion...

a7 * *

Any discussion of tax exemptions must begin with the gen-

eral principle that all property in the State of Oklahoma

is presumptively taxable. Article V, § 50, of the Oklahoma

Constitution states:

“The Legislature shall pass no law exempting any prop-

erty withis [sic] this State from taxation, except as

otherwise provided in this Constitution.” (Emphasis

added)

From statehood to its most recent pronouncements, the Ok-

lahoma Supreme Court has, in an unbroken chain of au-

thority, held to the rule that statutes exempting property

from taxation are to be strictly construed against the ex-

emptions. London Square Village v. Okla. County Equali-

zation and Excise Board, 559 P.2d 1224 (1977); Dairy Queen

of Oklahoma v. Oklahoma Tax Commission, 205 Okl. 473,

238 P.2d 800 (1951); Board of Equalization v. Bonner, 185

Okl. 431, 93 P.2d 1077 (1930); Oklahoma City v. Shields,

(APPENDIX)

22 Okl. 265, 100 P. 559 (1908). If property of a public trust

is to be exempted from taxation, the exemption must arise

from a fair reading of the plain language of the Constitu-

tion.

* 7 7

The Oklahoma Supreme Court has never been asked to rule

upon the precise issue of whether a private lessee of a pub-

lic trust is entitled to a tar exemption for the leasehold

interest. While there is a prior Attorney General's Opinion,

No. 69-156, addressing the subject in the context of Art. X,

§6A(f), we do not find the opinion a correct recital of

Oklahoma law and, for reasons hereafter discussed, with-

draw it.

Opinion No. 69-156 focused on the nature of the leasehold

interest. The Opinion concludes, relying on a West Vir-

ginia case State v. Bare, 60 W.Va. 483, 56 S.E. 390 (1906),

that the leasehold is “intangible property” and thus within

the Art. X, §6A(f) exemption.*

When the public trust leases governmentally owned prop-

erty, the unitary ownership fragments, leaving only the re-

version to qualify for the ad valorem tax exemption. The

vast majority of jurisdictions have held, when presented

with the question of taxability of property interests divided

between public owners and private owners, that the inter-

est of the private owner is not exempt from taxation.

The actual meaning of the word “owned” in the phrase

“property owned by a county” was considered in the case

of Mitchell Aero, Inc. v. City of Milwaukee, 168 N.W. 2d

3 This conclusion is inconsistent with virtually the entire body of prop-

erty law developed at the common law, the vast majority of case author-

ity from other jurisdictions, and the decisions of the Oklahoma Supreme

{[APPENDIX)

183 (Wisc. 1969). The property in dispute consisted of two

hangers constructed by Aero on land owned by the county.

The case, which traced the judicial evolution of ownership

in Wisconsin from adherence to bare legal-title language

to an emphasis on beneficial ownership as the proper inter-

pretation of the phrase for tax exemption purposes, con-

cluded that for a municipality to qualify for exemption

under the statute, there had to be real or true ownership,

not paper title only....

Moreover, the Oklahoma Supreme Court, when called upon

to address the tax exempt status of governmental entities,

has consistently held to an ownership test... .

> al .

The following general principles may be summarized. Only

the property actually owned by the public trust or its gov-

ernmental beneficiary or such rights therein as have not

been conveyed away are exempt from taxation. All inter-

ests in the property whether real or personal held by any

entity not entitled to an exemption in its own right are

Subject to taxation. A leasehold estate is an interest in

property which, if held by one not separately and inde-

pendently entitled to a tax exemption, is taxable for all

purposes including ad valorem taxes.

It is, therefore, the opinion of the Attorney General that

private lessees of public trust property, whether real or

personal, have a separate, indentifiable property interest

which is not by reason of any retained trust or govern-

mental beneficial ownership exempt from taxation under

either $6 or §6A(f) of Article X of the Constitution of

the State of Oklahoma, and that each lessee’s entitlement

to an exemption from taxation for any other reason cog-

nizable under the Constitution, including charitable use, is

to be determined as a matter of fact on a case by case basis

by reference to the nature of the lessee’s use of the prop-

[APPENDIX]

erty. Attorney General’s Opinion No. 69-156 is withdrawn.

(All emphasis added)

Sincerely,

(s) Jan Eric Cartwright

Attorney General of Oklahoma

(s) John F. Percival

Assistant Attorney General

JFP: pe

[Approved in Conference]

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.