Jameson Petroleum Co. v. State

STURTEVANT, J.

This is an action to recover taxes which it is alleged were illegally assessed for the year 1931 and paid under protest. The trial court sustained the demurrer of the defendants to the plaintiff’s amended complaint. The plaintiff declined to amend and judgment was entered against it. From that judgment the plaintiff has appealed.

As stated by the plaintiff on the first page of its opening brief, the only issue involved is that of law as to whether or not oil leases and mineral rights are real property when considered in the light of section 16 of article XIII of the Constitution, the Bank and Corporation Franchise Tax Act (Stats. 1929, p. 19, as amended), and sections 3617 and 3820 of the Political Code.

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Except certain exempted properties (not involved in this action) all property, real, personal and mixed, and capable of private ownership is taxable. (Const., art. XIII, sec. 1.) Franchises of every kind and nature are taxable. (Subd. d, see. 14.) After enumerating certain specific franchises not involved in this litigation, subdivision (d) of section 14 of article XIII of the Constitution provides: “All franchises, other than those expressly provided for in this section, shall be assessed at their actual cash value, in the manner provided by law, and shall be taxed at the rate of one per centum each year, and the taxes collected thereon shall be exclusively for the benefit of the state.” In 1928 section 16 was added to said article. Among other things, it provides: “Sec. 16. Taxation of banks, franchises, etc. Notwithstanding any other provision of this Constitution: ... 2. (a) All financial, mercantile, manufacturing and business corporations doing business within the limits of this state, subject to be taxed pursuant to subdivision (d) of section 14 of this article, in lieu of the tax thereby provided for, shall annually pay to the state for the privilege of exercising their corporate franchises within the state a tax according to or measured by their net income. The amount of such state tax shall be equivalent to four per cent of their net income. Such tax shall be subject to offset, in a manner to be prescribed by law, in the amount of personal property taxes paid by such corporations to the state or political subdivisions thereof, but the offset shall not exceed ninety per cent of such state tax. ... 3. The legislature, two-thirds of all of the members elected to each of two houses voting in favor thereof, may change by law the rates of tax, or the percentage, amount or nature of offset provided for in paragraphs 1 and 2 hereof.” The next legislature that met after the adoption of section 16 of article XIII of the Constitution enacted the statute known as Bank and Corporation Franchise Tax Act, Statutes of 1929, page 19. Among other things, section 4 thereof provides as follows: ‘ ‘ Sec. 4. Every financial, mercantile, manufacturing and business corporation doing business within the limits of this state, of the classes referred to in subdivision 2 (a) of section 16 of article XIII of the Constitution of this state, shall annually pay to the state, for the privilege of exercising its corporate