The roundup record. [volume] (Roundup, Mont.) 1908-1929, 1912-08-16

Alter having had the matter under
advisement for a number of weeks
tie board of county commission.
ers of Musselshell county last Satur.
day took final action in regard to the
assessment OF Northern Pacific coal
reservations and ordered that the item
some 1927 ,000-be stricken from the
assessment list, This action Of the
commissioners was prompted by a re-
versa OF an opinion given by Attor-
ney General Galen some weeks ago.
In the previous opinion Mr.. Galen de-
clared that the coal reservations rep
esented taxable property. After going
into the matter deeper, however. he
now reverses himself and says, that
the opposite is true. Unless some of
the taxpayers OF the county care to
take the matter into court and make
a test case out of it, chances are that
the coal reservations will remain un-
taxed in this county for years to come
or until the state legislature decides
to make some changes in the present
laws concerning this point.
The opinion of Attorney General
Galen is given below in full
Helena, Mont, August 8, 1912.
Hon. desmond j. O'Nell,
County Attorney,
Roundup, Mont
Dear Sir
On July 29th. in reply to your letter
of July 25th, rendered you an opinion
i'll which held that the coal and min
ing rights reserved by the Norther Pa
cific Railway Company in the lands
sold by ii is property subject to taxa
ion under the laws of this State.
Since writing that opinion, have CIV
en- the matter careful consideration
with reference to the manner in which
such assessment should be made, and
have now reached the conclusion that
my opinion to you under date of July
10Th was incorrect and should be re-
versed
There is no question but that the
coal and mining rights reserved by
the Northern Pacific constitute pro-
perty. and if not exempt should be
taxed; but it is my opinion that they
are exempted from taxation by the
provisions OF Section 3. Article XII, Of
the Constitution. This section pro-
vldes in substance that all mines and
mining claims, after purchase from the
/
price paid the United States therefor.
unless the surface ground is used for
other purposes and has Il separate
value for such purposes. in which case
such surface ground so used for other
purposes shall be taxed at It's value for
such purpose; and that the annual net
proceeds of all mines and mining
claims shall be taxed as provided by
law This section OF the Constitution
IS identical with the provisions of
Sec. $500. of the Revised Codes, and
must be construed TO provide an eXclu.
siNe method for taxing mines and min
ing claims. The Legislature, in view
of this provision of the Constitution,
enacted Sec. 1868 to 2571 inclusive, by
which sections a method is provided
for determining the annual net pro-
ceeds of mines for the purpose of tax.
alton. The minerals underlying the
surface are not taxable as such, but
only the net proceeds derived there
rom. In the case of the Montana Coal
Il Coke Co., VS.. Livingston, q Mont
50, the Supreme Court held that the
net proceeds derived from a coal mine
are subject to taxation. In case oil
/ Hale VS.. Jefferson County, 80 Mont
! 1877, 1O1 Pac. 373, the Supreme Cour,
held that "A ditch appurtenant to a
i placer claim, and used for no other
purpose, is not subject to taxation, and
/ in its opinion in that case stated that
Sec. 3, Art. XII Of the Constitution
was enacted "to encourage the acquis
ton and profitable development Oi
mines by requiring the owners TO pay
taxes upon the annual net proceeds ol
profits only, in addition to the cost Of
acquisition" This is a direct express
sion from the Supreme Court to the
effect that coal and minerals in theii
natural state are not taxable, but that
only the net proceeds derived there
from are subject 10 taxation.
have also taken occasion to read
the records of the Constitutional Con
yentiOn at which this section of the
Constitution was adopted, and especi
ally manuscript pages 1884 to 1860, and
/ it is apparent therefrom that the fran
ers Of the Constitution intended by
this Section to tax only the net pro
ceeds of the mines and not the miner
ais in their natural state underlying
the surface. The trainers of the Con
stitutiOn recognized the fact that i
would be practically impossible Il
place fair value upon mineral under
lying the surface, and that in many, /
not in every instance, the assessmen
would be purely speculative and woul,
work hardship upon the prospecto
and those engaged in developing tn
mineral resources of the country, an,
for that reason the right of taxation
Of mines and mining claims was limi,
ID to the surface with the improve
inents thereon and the annual net pre-
ceeds derived from the mine.