(specially concurring).
I concur.
It has been commonly said that concurring and dissenting judicial opinions should be stated in two words: I concur or I dissent. The opinion must be severely restricted in length to accommodate the expense involved in publication and to avoid dicta, ambiguity and confusion. I violate that aphorism. When a party below presents a matter of first impression on appeal, the argument should be answered to meet the challenge of tomorrow.
The Director of the Revenue Division takes the position that Taxpayer is liable for the Resources Excise Tax because Taxpayer “owned” the sand and gravel produced from Highway Department designated pits. This concept of liability is based upon the doctrine of “profit a prendre.” This theory was not raised before the hearing examiner.
“Profit a prendre” is defined as “[a] right exercised by one man in the soil of another, accompanied with participation in the profits of the soil thereof. A right to take a part of the soil or produce of the land.” Black’s Law Dictionary, 1376 (Rev. 4th Ed. 1968). This doctrine constitutes an interest in real property in the nature of an incorporeal hereditament. (Anything, the subject of property, which is inheritable and not tangible or visible). Atlantic Oil Company v. County of Los Angeles, 69 Cal.2d 585, 72 Cal.Rptr. 886, 446 P.2d 1006 (1968). It is created by grant; it cannot be created by parole. Builders Supplies Company of Goldsboro, N. C. v. Gainey, 14 N.C.App. 678, 189 S.E.2d 657 (1972),. aff’d 282 N.C. 261, 192 S.E.2d 449 (1972); 25 Am.Jur.2d Easements and Licenses, § 4 (1966). It comes within the purview of the Statute of Frauds.
To subject taxpayer to double taxation, the Director relies on Babler Bros. Inc. v. Hebener, 267 Or. 414, 517 P.2d 653 (1973). Babler was engaged in road and highway construction. It secured a contract from the Oregon State Highway Department to construct a section of highway. Babler entered into a contract with Hebner to purchase rock from Hebner’s quarry and agreed to remove the rock, crush and stockpile it on Hebner’s premises. In a controversy between Babler and Hebner, the trial court found that Babler had title to the rock, under the concept of “profit a prendre” when severed from the land.
The Director says:
. Though there is no third party, the facts and holding in [Babler] are analogous to the situation in the instant case. . ...
The authorities cited do not approach this problem except by way of assignment. They do establish that “profit a prendre” requires a severance and removal by the purchaser or an assignee. The analogy is far fetched. For a historical review, see Hahner, An Analysis of Profits A Prendre, 25 Or.L.Rev. 217 (1946).
In the instant case, the State Highway Department, not Taxpayer, had a contract with the owner of the land to remove sand and gravel. When it was severed, title was in the Highway Department, not Taxpayer.
For Taxpayer to fall within the doctrine, Taxpayer must obtain from the owner of the soil, in writing, the power and privilege to sever and remove the sand and gravel. No such legal relationship existed. All of these rights were vested in the State Highway Department which entered into leases or permits for sand and gravel with the owners. One lease provided:
2. The right and privilege of the lessee to remove the material shall be exclusive in the sense that the lessor will not grant said rights and privileges to any one else during the term of this lease.
* * * * * *
4. This lease is non-assignable. Lessee may permit a contractor operating under a contract entered into with Lessee, to remove designated material as specified by lessee. . . [Emphasis added.]
In a 16 page Decision and Order, the Director began a process of reasoning, based on custom and practice, that third party contractors, not the Highway Department were going to sever the sand and gravel used for highway projects; that the lease prohibited an assignment of the agreement to third parties, but it was not designed to prohibit contractors, performing construction services for the Highway Department, from entering designated premises and severing sand and gravel; that the non-assignment clauses must be read to prohibit a total assignment of all rights; that it is not inconsistent with the non-assignment clause to assign non-exclusive partial rights to contractors for limited purposes.
The Director concluded that since the Highway Department transferred or • assigned some of its rights to Taxpayer and submitted a letter saying Taxpayer owned the severed material, Taxpayer was subject to the resources tax. I disagree.
The Highway Department did not assign any rights to Taxpayer. To permit a contractor to remove designated material as specified by the Highway Department is not an assignment of an interest in real estate. The Highway Department designated the pit to be sure that the sand and gravel removed would meet its specifications. This material could not be used by Taxpayer without approval. When removed, it was owned by the Highway Department. When used by Taxpayer, the sand and gravel were part of its construction process.
“Profit A Prendre” requires a severance and removal by the purchaser or some one to whom an assignment of all or a portion of this interest in real estate is made, provided, however, that the agreement with the owner of the land does not demand that any assignment be approved by the owner. The Director even denied that “The landlords here apparently are not concerned with whom is going to sever the sand and gravel . . One sand and gravel permit with an Indian Pueblo agency provided:
7. Assignment. — The Permittee [Highway Department] agrees not to assign the Permit or any interest therein by an operating agreement or otherwise, not to sublet any portion of the permitted premises, except with the approval of the Secretary of the Interior or his authorized representative. [Emphasis added.]
In effect, the Highway Department severed and removed the sand and gravel by use of Taxpayer’s personnel and equipment rather than its own. When severed and removed, the material was owned by the State, not the Taxpayer.
A “severer” means any person engaged in the business of severing natural resources. Section 7-25-3, N.M.S.A.1978. An excise tax is imposed on the “severer” of natural resources. Section 7-25-4. The Director decided that Taxpayer was engaged in the business of building roads and highways for the New Mexico State Highway Department. He was uncertain of his position with reference to the resource tax. He decided that- Taxpayer was liable for the resources tax or the service tax. If the Taxpayer “owned” the severed material, Taxpayer was subject to the resource tax. The Director, however, did not decide that Taxpayer was engaged in the business of severing natural resources. The reason is that Taxpayer was, in effect, acting only for and on behalf of the Highway Department.
The blame for this problem rests solely with the fault of the Revenue Department personnel. I shall not restate the harassment under which Taxpayer travelled from May, 1977 to the present time. The Director was not satisfied with the fact that Taxpayer always paid its gross receipts tax. It had to discover additional methods of taxation to wrench taxes from Taxpayer without concern for the old adage that “the power to tax is the power to destroy.” The Director and the hearing officer should not interpret words and phrases to suit their fancy. They should not seek to create out of the various agreements a status “in the nature of third party beneficiary contracts.” Instead they should use a logical, reasonable and practical interpretation of facts and law in favor of the Taxpayer. Every reasonable doubt should be exercised in favor of Taxpayer, especially those who have accepted the burdens of taxation with alacrity and honesty.
The Revenue Department should not seek unfairly to impose, not only additional burdens of taxation, but also subject Taxpayer to payment of attorney fees, costs and expenses. The Revenue Department should assume payment of these obligations. If the Revenue Department wanted to assume the appearance - of impartiality, it would agree to be bound by the Administrative Procedures Act, § 12-8-1, et seq., N.M.S.A. 1978. This was suggested long ago to no avail.