Court Opinion

ID: 3453712
Source: CourtListenerOpinion
Date Created: 2016-07-05 20:23:29.010782+00
Date Added: 2024-06-11T14:00:03.071453
License: Public Domain

I agree with what Judge Thomas has so well said in his dissenting opinion, but the decision of the majority is fraught with such importance that I deem it appropriate to say a few additional words.
The thing that was leased is the thing that was taxed. The tax was assessed, not on the estate of the lessee in the right, but on the right itself. The statute *Page 280 
creates a lien for the tax upon that right. It is intangible, but none the less real. Indeed, we have frequently declared that mineral leases consisting of mere intangible rights are real estate. Union Gas  Oil Co. v. Wiedeman Oil Co., 211 Ky. 361,  277 S.W. 323; Shadoin v. Sellars, 223 Ky. 751,4 S.W.2d 717.
The lease involved in this case lapsed, or was forfeited, which extinguished the rights of the lessee, but the thing that was leased and assessed, and upon which the lien for taxes existed, endures, and the right of the commonwealth to proceed against that thing was not extinguished. The statute plainly says the tax lien shall not be defeated by "any means whatever." Section 4021. Ownership of the property changed, but the property continued intact. The tax lien is not lost, except by the statute of limitations, so long as the thing exists. Its transfer to another owner, whether by contract or operation of law, does not affect the lien of the commonwealth. The property passes to its new owner cum onere. The question as to how long the right to take coal from the property is in lien for the taxes is readily answered. It is coextensive with the taxing power. The tax is levied annually on a right to take coal, but the valuation of that right is measured by the unexpired term of the lease, with due consideration to the burdens of the lease and the forfeiture provision thereof, which might terminate it, if the obligations of the lease should not be performed. Its termination, however, is subject to the dominant right of the stale to collect its taxes.
The right of forfeiture for nonperformance affects the value of the lease, but it does not affect the right of the commonwealth to a lien for its taxes on the right as it existed at the time it was taxed. When the tax debtor defaulted, the lien for taxes could be enforced by a sale of the same rights that were taxed; that is to say, the rights that existed in the lessee on the date the tax was levied. If that may be said to be an illusory remedy and of small value because no one would buy such a right at a tax sale, the answer is obvious. It is for the Legislature to provide a better security for taxes on intangibles. It is not for us to say that, because a precarious security is provided, none shall be enforced, but even the poor security that the commonwealth has shall be taken away. *Page 281 
The result of the majority decision is that property of substantial value escapes taxation. If the principle may be applied on a small scale, it may be applied on a large scale, and tax dodgers will not be slow to see the opportunity. The consequences of the precedent now made may prove most unfortunate. Suppose, for illustration, that a holder of a large coal area should lease his entire property to an irresponsible lessee on terms substantially similar to those contained in the lease here involved. The lessor would not be required to list the property for taxation, because he had leased it, and the holder of the lease alone would be required to list it. Moss v. Board, 203 Ky. 813, 263 S.W. 368. Two or three years later, when the taxes came due, the lessee would default, forfeit the lease, and thereby extinguish the commonwealth's remedy for the collection of taxes on a great boundary of coal rights of immense value. It already appears that the same right that was formerly held under lease, freed by the majority opinion of the taxes for two years, has been sold by the owner to another lessee. It is abhorrent to me that a landowner should be allowed to lease, reclaim, and again lease his mineral property for profit, and yet the state be disabled from enforcing its tax lien on the subject-matter of the transaction.
The majority opinion says that the lessee "had a limited estate, and, when his estate terminated by the happening of the condition on which it depended, it was at an end, and there was nothing for the lien of the commonwealth to rest on." Within that plausible pronouncement is contained the seeds of fallacy and error that have produced a wrong result. It is not the "limited estate" of the lessee that is the subject of the tax and the lien. If so, the reasoning would be sound. The tax is levied, and the lien to secure it is created on the identical property out of which the lessor carved and conferred on the lessee the "limited estate." That property, which was the subject-matter of both the lease and the lien for taxes, has not vanished. When the lease was granted, it operated as a severance of the mineral estate, and created a separate taxable unit. Com. v. Garrett, 202 Ky. 548; Moss v. Board of Supervisors, 203 Ky. 813, 263 S.W. 368; Raydure v. Board of Supervisors, 183 Ky. 84, 209 S.W. 19. When the lease lapsed, that mineral *Page 282 
estate merged again in the fee, and was subject to a repeated severance. But its merger with the fee did not destroy the lien for taxes. The commonwealth could follow the property (Martin v. City of Lexington, 183 Ky. 714, 210 S.W. 483), even though it was commingled with other property and its identity lost.
In Middendorf v. Gooddale, 202 Ky. 118, 259 S.W. 59, the court quoted section 171 of the Constitution, and said:
    "The property tax is ordinarily an ad valorem tax, but whatever its form, it is levied by virtue of an assessment, and payable annually; that is, a tax which must be paid, on the property subject to taxation, by the owner, year by year; and this annual burden of taxation will rest on the property so long as it exists and remains within the territorial limits of the authority levying the tax. And this would be so, even if the ownership of the property were changed, as in that event the tax would have to be paid by the person owning it when the tax was assessed and levied. It is likewise true of the property tax that its payment is not optional with the person against whom, or whose property, it is assessed. Its payment is compulsory and if not voluntarily made in a given time, the property taxed may, after the necessary advertisement, be summarily seized and sold by the tax collector for the tax due and costs of sale, together with the penalty imposed by the statute for its nonpayment within the required period."
I am utterly unable to reconcile the reasoning thus lucidly expressed with the rationale of the majority opinion. If the statute had distinctly provided that the owner of the reversion in cases where the reverter had occurred should be liable for the taxes, I cannot see that the right would be any clearer. The power of the state te enact such a law cannot be doubted. That the existing law is equal to that seems to be the plain import of the present statute.
Judges Thomas and Logan concur. *Page 283