State v. Moore , 12 Cal. 56 ( 1859 )

Terry, C. J.,

delivered the opinion of the Court—Baldwin, J., and Field, J., concurring.

Defendant is the owner of a certain mining claim, for which he paid the sum of twenty thousand dollars, and upon which, since the purchase, he has expended the sum of five hundred dollars in opening a tunnel.

These sums were assessed against him, as money invested in the business of mining. The object of this action is to test the legality of this assessment, and the questions presented are : 1st. Whether, under the Constitution, it is in the power of the Legislature to tax mining claims; and, 2d. Whether money invested in the purchase and opening of such claims, is within the provisions of that portion of the Revenue Act which provides for the levy of a tax on “ all capital loaned, invested or employed in any trade, commerce or business whatsoever.’’

Upon the first of these propositions we entertain no doubt. The only objection to the power of the Legislature to impose such a tax arises from the fact that the mines are the property of the Government, and are exempt from taxation under the Act admitting California into the Union. This fact, however, if admitted, does not, in our view, militate against the right to levy a tax upon the interest of the possessor of such claim. The whole course of legislation and judicial decisions in this State, since its organization, has recognized a qualified ownership of the mines in private individuals. Contracts affecting mining claims have been constantly enforced; remedies have been afforded to those whose possession has been disturbed, or whose claims have been trespassed upon by others, and the right of the locator to sell, hypothecate, or in any manner dispose of his property in a mining claim, has been upheld, as well by legislative enactment as by judicial decisions.

In Tarter v. Spring Creek Company, 5 Cal. 395, the Court held that “ the policy of this State, as derived from her Legislature, is to permit settlers, in all capacities, to occupy the public lands, and, by such occupation, to acquire the right of undisturbed enjoyment againstj all the world but the true owner.”

In evidence of this, Acts have been passed to protect the possession of agricultural lands acquired by mere occupancy; to license miners ; to provide for the recovery of mining claims, etc., “ and that an appropriation of a portion of the public domain, or any of its incidents,” establishes a quasi private proprietorship which entitles the holder to be protected in its quiet enjoyment.

In the Merced Mining Company v. Fremont, 7 Cal., we held that the possessor of a mining claim “ by his appropriation acquires a vested interest in the exclusive occupation and enjoyment of the land as against all the world, subject only to the right of the Government by whose license and permission his possession was acquired; and his right to protect the property for the time being, is as full and perfect as if he were the tenant of the superior proprietor for year or for life;” and in McKeon v. Bisbee, 9 Cal. 137, we held that the interest of the possessor of a mining claim was property under the law, and subject to be seized and sold under execution.

The Legislature recognized a proprietary interest in the possessor of mining claims by authorizing their hypothecation. See Wood’s Dig., page 108, art. 416.

The term “ property in lands ” is not confined to title in fee, but is sufficiently comprehensive to include any usufructuary interest, whether it be a leasehold or a mere right of possession. Several persons may have, in the same land, a property which is subject to taxation, and it: is not perceived that the fact, that the property of the Government is exempt from taxation, affects the right to tax the interest which private individuals have acquired in the same property. Exemption from tax-' ation is a privilege of the Government, not an incident to the property.

In the hands of the Government, the lands are exempt, but the moment the title vests in a private individual, it becomes liable to the burthens which are imposed on other property of like character.. If the acquisition of the fee by a private person subjects the property to taxation, it follows that the acquisition of a lesser estate would equally subject such estate.

There is no force in the objection that the value of a mining claim, which depends upon the amount of precious metals it contains, must necessarily be left to conjecture.

The universal standard of value is the amount of money which can be realized by a sale of the property, and this will apply as well to mining claims as other lands. Sales and hypothecations of mining claims are of every day’s occurrence, and we apprehend their value can be ascertained with sufficient accuracy.

Upon the second proposition it is contended that though mining claims are by the statute expressly exempted from taxation, yet the money expended in their purchase and working is liable, as so much capital invested in the business of mining.

This rule would be manifestly unequal, and would in a large class of cases be productive of palpable injustice, hardship and oppression ; it would, exempt the first locator of a claim from taxation, while his vendee would be compelled to pay a percentage upon the purchase price, although the value of the claim at the date of the assessment might not be a tithe of the sum. The claim may yield no return whatever ; may prove entirely valueless for any purpose; yet the price paid would, under the rule contended for, be a permanent “ investment of capital,” and the party compelled to pay yearly a percentage on the amount.

Or take the case of a party who, after locating a claim, sells a moiety to another for a large sum, the interest of each is equally valuable and- equally protected by the Government, yet one is required to contribute to the support of the Government in return for the benefits afforded, while the other, who is in the enjoyment of the same benefits, contributes nothing. We think a consequence so manifestly absurd, unjust and oppressive, was never intended by the Legislature.

We do not understand a sum paid for the purchase of specific property to be so much capital invested. The mere purchase of property can in no just sense be said to be an investment of capital in the business for which the property is adapted or might be used. The purchaser parts with all interest in the money paid; he has no longer any claim upon it; and if the transaction constitute an investment of capital, the value of the property, and not the sum paid for it, is the amount of the “ capital invested.” As well might the purchaser of a farm be required to pay taxes on the price paid as so much “ capital invested in the business ” of farming, as the purchaser of a mining claim upon the cost of such claim.

For the purposes of taxation there is no distinction between a thing and its value ; it is the value which is assessed, and upon which the tax is imposed, and an exemption of certain property from taxation exempts its value also.

Our conclusions are : 1st. That the interest of the occupant of a mining claim is property liable to be subjected, at the will of the Legislature, to such burthens as are imposed on other property. 2d. That the Legislature having expressly exempted mining claims from the operation of the Revenue Act, we cannot presume that it intended indirectly to subject them, by levying a tax on the price paid for them, which would, as we have shown, be a partial and unequal mode of ascertaining the value, and, in a majority of cases, be productive of great injustice.

It follows that the judgment of the Court below is erroneous, and it is reversed with costs. ■