Title: IN THE MATTER OF THE ASSESSMENTS FOR THE YEAR 2005 OF CERTAIN REAL PROPERTY
Citation: 161 P.3d 303, 2007 OK 25
Docket Number: 
State: Oklahoma
Issuer: Oklahoma Supreme Court
Date: April 24, 2007

IN THE MATTER OF THE ASSESSMENTS FOR THE YEAR 2005 OF CERTAIN REAL PROPERTY Annotate this Case IN THE MATTER OF THE ASSESSMENTS FOR THE YEAR 2005 OF CERTAIN REAL PROPERTY 2007 OK 25 161 P.3d 303 Case Number: 102828 Decided: 04/24/2007 THE SUPREME COURT OF THE STATE OF OKLAHOMA IN THE MATTER OF THE ASSESSMENTS FOR THE YEAR 2005 OF CERTAIN REAL PROPERTY OWNED BY ASKINS PROPERTIES, L.L.C. ASKINS PROPERTIES, L.L.C., Petitioner/Appellant, v. OKLAHOMA COUNTY ASSESSOR and the BOARD OF EQUALIZATION OF OKLAHOMA COUNTY, Defendants/Appellees. APPEAL FROM THE DISTRICT COURT OF OKLAHOMA COUNTY, STATE OF OKLAHOMA HONORABLE NOMA D. GURICH, TRIAL JUDGE ¶0 James Askins and Debra Askins (Askins) are co-trustees and sole beneficiaries of the James Askins and Debra Askins Revocable Trust (Trust). The Trust held title to two pieces of real property in Oklahoma County. In December 2004 the Askins as co-trustees executed a quit claim deed conveying title to the two properties to Petitioner/Appellant, Askins Properties, L.L.C. (AP), a limited liability company in which the Askins are sole owners of one hundred percent (100%) of the membership units. Defendant/Appellee, the Oklahoma County Assessor increased the fair cash value of each property more than five percent (5%) for 2005 ad valorem tax purposes. OKLA.CONST. art. 10, § 8B provides that "the fair cash value of any parcel of locally assessed real property shall not increase by more than five percent (5%) in any taxable year." However, § 8B provides an exception to this yearly cap "[i]f title to the property is transferred, changed, or conveyed to another person, the property shall be assessed for that year based on the fair cash value as set forth in [OKLA.CONST. art. 10, § 8]." AP protested the assessments with Defendant/Appellee, the Oklahoma County Board of Equalization, but the Board denied the protests. AP appealed to the district court and both sides sought summary judgment. The trial court granted summary judgment for Defendants and against AP. As part of its ruling the trial court held that TRIAL COURT JUDGMENT REVERSED AND MATTER REMANDED WITH DIRECTION TO THE TRIAL COURT TO ENTER JUDGMENT IN FAVOR OF PETITIONER/APPELLANT, ASKINS PROPERTIES, L.L.C. William K. Elias and Linda Jo Blan-Byford, Elias, Books, Brown & Nelson, P.C., Oklahoma City, Oklahoma for Petitioner/Appellant. Gretchen Crawford, Assistant District Attorney, Oklahoma County District Attorney's Office, Oklahoma City, Oklahoma for Defendants/Appellees. Sandra D. Rinehart, Senior Assistant Attorney General, Office of the Oklahoma Attorney General, Oklahoma City, Oklahoma for Oklahoma Attorney General W. A. Drew Edmondson. LAVENDER, J. ¶1 We decide in this case whether the trial court erred in denying summary judgment to Petitioner/Appellant, Askins Properties, L.L.C. (AP) and granting summary judgment to Defendants/Appellees, the Oklahoma County Assessor and the Oklahoma County Board of Equalization (County or Assessor and Board, respectively). The case also requires us to decide if the trial court erred in ruling FACTUAL BACKGROUND AND PROCEDURAL HISTORY ¶2 James Askins and Debra Askins (Askins) are co-trustees and sole beneficiaries of the James Askins and Debra Askins Revocable Trust (Trust). As pertinent here, the Trust held title to two pieces of real property in Oklahoma County. In December 2004 the Askins, as co-trustees of the Trust, signed a quit claim deed conveying title to the properties to AP, a limited liability company in which the Askins are sole owners of one hundred percent (100%) of the membership units. ¶3 The Assessor increased the fair cash value of each property over the 2004 value more than five percent (5%) for 2005 ad valorem tax purposes. OKLA.CONST. art. 10, § 8B provides that "the fair cash value of any parcel of locally assessed real property shall not increase by more than five percent (5%) in any taxable year." However, an exception found in § 8B to the five percent (5%) yearly cap/limit is that "[i]f title to the property is transferred, changed, or conveyed to another person, the property shall be assessed for that year based on the fair cash value as set forth in [OKLA.CONST. art. 10, § 8]." AP filed protests with the Board. The Board denied the protests and sustained the values set by the Assessor. As allowed by ¶4 In the trial court both AP and the County sought summary judgment. The parties essentially agreed there was no substantial controversy as to any material fact and that the matter should be determined as a matter of law. Our review of the record shows there is no substantial controversy as to any material fact and the matter may be determined as a matter of law. ¶5 The parties also viewed the case as turning on whether or not a certain 2002 amendment to ¶6 The trial court granted summary judgment to the County and against AP. AP appealed the trial court's judgment, an appeal we previously retained for disposition. ¶7 We hold the trial court erred, reverse the trial court judgment and remand to the trial court with direction to enter judgment for AP. We also hold § 2802.1(A)(4)(g) is constitutional, at least to the extent it is applied to the summary judgment record presented in this case. STANDARD OF REVIEW ¶8 Summary judgment is reviewed de novo, i.e., an appellate court engages in a plenary, independent and non-deferential re-examination of the trial court's ruling. In re Estate of MacFarline, ANALYSIS ¶9 Article 10, § 8B of the Oklahoma Constitution was adopted by the Oklahoma people at an election held in November 1996. Section 8B provides: Despite any provision to the contrary, the fair cash value of any parcel of locally assessed real property shall not increase by more than five percent (5%) in any taxable year. The provisions of this section shall not apply in any year when title to the property is transferred, changed, or conveyed to another person (emphasis added). A. For purposes of implementing Section 8B of Article X of the Oklahoma Constitution: 1. "Any person" means any person or entity, whether real or artificial, other than the present owner; 2. "Any year when title to the property is transferred, changed, or conveyed to another person or when improvements have been made to the property" means the year next preceding the January 1 assessment date; 3. "Improvement" means a valuable addition made to property amounting to more than normal repairs, replacement, maintenance or upkeep; and 4. "Transfers, change or conveyance of title" means all types of transfers, changes or conveyances of any interest, whether legal or equitable. However, "transfers, change or conveyance of title" shall not include the following: a. deeds recorded prior to January 1, 1996, b. deeds which secure a debt or other obligation, c. deeds which, without additional consideration, confirm, correct, modify or supplement a deed previously recorded, d. deeds between husband and wife, or parent and child, or any persons related within the second degree of consanguinity, without actual consideration therefor, or deeds between any person and an express revocable trust created by such person or such person's spouse, e. deeds of release of property which is security for a debt or other obligation, f. deeds of partition, unless, for consideration, some of the parties take shares greater in value than their undivided interests, g. deeds made pursuant to mergers of partnerships, limited liability companies or corporations, or deeds pursuant to which property is transferred from a person to a partnership, limited liability company or corporation of which the transferor or the transferor's spouse, parent, child, or other person related within the second degree of consanguinity to the transferor, or trust for primary benefit of such persons, are the only owners of the partnership, limited liability company or corporation, h. deeds made by a subsidiary corporation to its parent corporation for no consideration other than the cancellation or surrender of the subsidiary's stock, or i. any deed executed pursuant to a foreclosure proceeding in which the grantee is the holder of a mortgage on the property being foreclosed, or any deed executed pursuant to a power of sale in which the grantee is the party exercising such power of sale or any deed executed in favor of the holder of a mortgage on the property in consideration for the release of the borrower from liability on the indebtedness secured by such mortgage except as to cash consideration paid. B. This section shall be applied effective from the date of the passage of Section 8B of Article X of the Oklahoma Constitution. C. The Oklahoma Tax Commission shall promulgate rules necessary to implement Section 8B of Article X of the Oklahoma Constitution and this section. ¶10 Initially, we must set forth what is and is not properly before us for decision in this case given the factual record existent. As it was stated in the Second Syllabus by the Court in In re Mayes-Rogers Counties Conservancy District Formation, ¶11 Thus, we do not opine about any transfer other than the one before us. In other words, one where two individuals as co-trustees and sole beneficiaries of a trust own real property - and are thus at a minimum the equitable/beneficial owners of the property - transfer the property to a limited liability company in which the same two individuals are the sole owners of one hundred percent (100%) of the membership units of the limited liability company. ¶12 In Fent v. Oklahoma Capitol Improvement Authority, In considering a statute's constitutionality, courts are guided by well established principles. A heavy burden is cast on those challenging a legislative enactment to show its unconstitutionality and every presumption is to be indulged in favor of the constitutionality of a statute. If two possible interpretations of a statute are possible, only one of which would render it unconstitutional, a court is bound to give the statute an interpretation that will render it constitutional, unless constitutional infirmity is shown beyond a reasonable doubt. A court is bound to accept an interpretation that avoids constitutional doubt as to the legality of a legislative enactment. It is also firmly recognized that it is not the place of this Court, or any court, to concern itself with a statute's propriety, desirability, wisdom, or its practicality as a working proposition. .... Such questions are plainly and definitely established by our fundamental law as functions of the legislative branch of government. Respect for the integrity of our tripartite scheme for distribution of governmental powers commands that the judiciary abstain from intrusion into legislative policymaking. A court's function, when the constitutionality of a statute is put at issue, is limited to a determination of the validity or invalidity of the legislative provision and a court's function extends no farther in our system of government. Fent The Constitution, the bulwark to which all statutes must yield, must be construed with reference to the fundamental principals which support it. Effect must be given to the intent of its framers and of the people adopting it. This intent is to be found in the instrument itself; and when the text of a constitutional provision is not ambiguous, the courts, in giving construction thereto, are not at liberty to search for its meaning beyond the instrument. Draper [W]e do not look to the Constitution to determine whether the Legislature is authorized to do an act but rather to see whether it is prohibited. If there is any doubt as to the Legislature's power to act in any given situation, the doubt should be resolved in favor of the validity of the action taken by the Legislature. Restrictions and limitations upon legislative power are to be construed strictly, and are not to be extended to include matters not covered or implied by the language used. Draper ¶13 The express and plain purpose of § 8B is to put a five percent (5%) cap or limit on the increase in the fair cash value of real property in any year unless ownership of the property is transferred to another person or improvements are made to the property (the latter exception not being involved here). When only legal title is transferred but the equitable ownership is in the same two persons both before and after a deed is executed concerning the property we do not believe the intent of the constitutional provision had in mind the lifting of the five percent (5%) fair cash value cap. The Court on more than one occasion has considered tax related matters involving legal title and equitable title being in different persons or entities and we believe such case law points the way to a proper resolution in the instant case. ¶14 In Bowls v. Oklahoma City, ¶15 As far as the instant record is concerned, the same two people controlling the property before the execution of the quit claim deed control the property after that deed was signed. In our view, the Legislature had the authority to promulgate a statute - given the lack of definition in § 8B as to what would constitute for purposes of the constitutional provision a transfer, conveyance or change of title to another person - that would provide that where a transfer is only of the legal title, but the equitable/beneficial ownership remains in the same two persons that the five percent (5%) cap/limit increase on the fair cash value for ad valorem tax purposes would remain intact. ¶16 It was stated in In re Initiative Petition No. 281, State Question No. 441, Whether a provision of a Constitution be self-executing or not be self-executing, supplemental legislation facilitating the carrying into effect of the rights secured, and safeguarding the rights against abuses, may be desirable; but such legislation must be in harmony with the spirit of the Constitution and must not curtail the rights reserved or exceed the limitations specified. The bottom line questions in this case are of course, does § 8B contemplate, and did the Legislature have authority to recognize such contemplation in § 2802.1(A)(4)(g), the exclusion from what would be considered a transfer of title to another person a conveyance where only the legal title is changed, but equitable ownership of the property is in the same two individuals both before and after the transfer? We believe the answer to both questions is plainly yes. Thus, to the extent § 2802.1(A)(4)(g) protected the real properties involved here and the Askins from an increase of more than five percent (5%) in the fair cash value for 2005 ad valorem tax purposes, the statute is constitutional as it merely shields those individuals intended to be protected by the central purpose of § 8B. When applied to the substance of the transfer involved here, i.e., legal title is conveyed but equitable title remains in the exact same two individuals, we believe no viable argument can be made that § 2802.1(A)(4)(g) exceeded legislative authority; instead, the provision implements the dictate(s) of § 8B and provides harmonizing legislation securing the right protected therein. To that extent at a minimum § 2802.1(A)(4)(g) is a constitutionally authorized enactment wholly consistent with the purpose and intent of § 8B. The trial court erred in ruling otherwise and in granting summary judgment for the County and against AP. CONCLUSION ¶17 The trial court erred in granting summary judgment to the County and erred in ruling § 2802.1(A)(4)(g) violative of the Oklahoma Constitution. Instead, the summary judgment record shows that AP was entitled to summary judgment. Further, we hold § 2802.1(A)(4)(g) is constitutional to the extent it is applied to the instant summary judgment record which shows that although legal title was transferred to AP, the equitable/beneficial title or ownership was in the same two individuals both before and after the transfer, the Askins. ¶18 Accordingly, the trial court judgment is REVERSED and this matter is REMANDED WITH DIRECTION TO THE TRIAL COURT TO GRANT JUDGMENT IN FAVOR OF PETITIONER/APPELLANT, ASKINS PROPERTIES, L.L.C. ¶19 WINCHESTER, C.J., EDMONDSON, V.C.J., LAVENDER, HARGRAVE, KAUGER, WATT, TAYLOR and COLBERT, JJ., concur. ¶20 OPALA, J., concurring in judgment. FOOT