# Opposition Brief — General Motors Corp. v. Oklahoma County Board of Equalization > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385011_1003%3A02 ## Record - **Collection:** Supreme Court brief - **Document type:** Opposition Brief - **Published:** January 1, 1984 - **Citation:** 466 U.S. 909 ## Text 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: I. 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- ee A. Contract Clause — opinion by state court _. 15 15 16 16 17 17 19 21 23 25 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, 5 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) 16 17 20 24 22 22 28 28 16 18 18 26 28 22 24 15 ——— 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) 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 = ... 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 a 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; 2a [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 3a (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. 2b (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 2c [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... .” 3c {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. 4c [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.” 5c [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- Z 6c (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. 2d [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. 3d 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... . (c) the preparation of plans and specifications, the 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.... . . > 2e [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 3e {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. (c) Lessee may, at its own expense and in its own 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 4e (\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 5e [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, 2f (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 3f {[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- 4f [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] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385011_1003%3A02. Public record. Not legal advice.