(dissenting).
I think the opinion prepared by Mr. Justice Davis is erroneous in holding that the payments made to plaintiff constitute royalties taxable as net proceeds.
A copy of the agreement between plaintiff and Swansea Mines, Inc. was attached to the complaint and made a part of it. By its terms Swansea Mines, Inc. was given the exclusive right to purchase the mining claims described. The purchase price was fixed by the agreement at $45,000 of which $5,481.31 had already been paid when the agreement was made, leaving a balance due of $39,518.69.
Swansea Mines, Inc. was to make payments to the plaintiff out of the net smelter returns, which varied in percentage according to the value of the ore shipped. The contract contained this significant provision •. 1 ‘ The payments hereinabove provided for are not royalties but are payments upon the purchase price for said mining claims and appurtenances, and second party [Swansea Mines, Inc.] in making its return of net proceeds from operations hereunder to the Board of Equalization of the State of Montana shaE not include any of such payments as royalty deductions in such returns.”
I think we must take the contract as it is written and as meaning what it says. The payments made to plaintiff are not royalty but constitute a part of the purchase price of the mine. That being so, the interest of plaintiff was and is not a royalty interest.
Thornton on Oil and Gas, Vol. 2, section 363, page 644, recognizes the distinction between royalty and purchase money. *286He there states: “In the discussion hereafter a distinction will be drawn between ‘rent’ as such and ‘purchase money’ under an instrument selling mineral and oil beneath the surface of a specified tract; and in such an instance whatever would not be a ‘rent’ cannot be a ‘royalty’ but must be ‘purchase money’.” And on page 688, section 390, the same author says: “The consideration of a lease or an instrument giving a right to take mineral, oil or gas from the premises, may not be rent at all, but purchase money for the mineral or oil taken out of the earth. Thus where the owner of land sold all the mineral under it, granting to the vendee the right to enter on the premises and dig, explore therein, and occupy them with all necessary structures, and mine and remove all coal, paying to the vendor a certain price per ton of coal removed, payable quarterly, it was held that the stipulated price was purchase money of the real estate, not of the mineral removed, for which the vendor had a lien on the coal not mined and removed, the payment of so much per ton being only a mode of determining the amount of the purchase money to be paid.”
It is to be noted that plaintiff does not receive its percentage of the net smelter returns for an indefinite period. It receives it for a limited time only, that is, until the purchase price of the mines is paid. When the purchase price is paid plaintiff has no further right or interest in the real estate. I am aware that ordinarily royalty is a share of the product or profit paid to the owner of land for permitting the operator to use his property. But here the amount is paid not for permitting the use of the property but for the purchase price thereof.
The agreement between the parties to the effect that the payments are not royalties but purchase price was not and is not opposed to public policy. In substance it is equivalent to an agreement that if the percentage of net smelter returns paid to plaintiff as purchase price of the mines is taxable as net proceeds, then the operator, Swansea Mines, Inc. would pay the tax thereon.
Agreements with respect to taxes are frequently made be*287tween buyer and seller. I concede that such agreements are not binding on the State. Hence we must still determine whether plaintiff is in fact the owner of a royalty interest. The nature of the payments, i. e., whether they constitute royalties, must be determined from all the circumstances under which they are made rather than by the name by which they were called. Soderquist v. Glander, 156 Ohio St. 287, 102 N. E. (2d) 465.
It is my view that the $1,516.05 was purchase money and not royalty. The fact that it is purchase money is shown by the statement of both the owner and operator in the agreement, as well as by the other terms of the agreement, showing the purpose of the payments.
Furthermore, if the sums here in question may be treated as royalty in a certain sense, they are not royalties within the meaning of R. C. M. 1947, section 84-5406, relating to the taxation of royalties as net proceeds of a mine. Only royalties which constitute an interest in mining property are assessable and taxable on the basis of net proceeds. Section 84-5406 was enacted after this court gave the legislature the green light in the case of Homestake Exploration Co. v. Schoregge, 81 Mont. 604, 264 Pac. 388, 393, to tax separate interests in mining property to the several owners of each interest, where this court said: “* * * the separate interests which different persons may own in the same property is properly assessable and taxable to the true owner of the particular interest, and it is unlawful to tax a person for property he does not own.” That principle was reaffirmed in the case of Byrne v. Fulton Oil Co., 85 Mont. 329, 278 Pac. 514, and recognized in Northern Pacific Ry. Co. v. Musselshell County, 96 Mont. 544, 32 Pac. (2d) 1. The constitutional method of taxing mines on the net proceeds is a substitute for or a tax in lieu of the ad valorem tax on the value of the mine or mining interest. Byrne v. Fulton Oil Co., supra, and cases therein cited on the point. Unless a royalty represents an interest in the real estate it is not taxable and there can be no substituted method of taxing by assessing the net proceeds.
A royalty interest in order to be assessable under E. C. M. *2881947, section 84-5406 on the net proceeds yielded to it must be an interest in a mine. That is the only interest that it is permissible to tax under section 3 of Article XII of our Constitution. If we are here dealing with a royalty in any sense, it certainly cannot be said that it represents any certain interest in real property, or, if so, what .that interest is. Under the contract plaintiff obtains five per cent of the net smelter returns which have an average gross value of not exceeding $8 per ton; it gets ten per cent of the smelter returns having a gross value in excess of $8 per ton and not exceeding $20 per ton; it gets 15 per cent of the net smelter returns when the gross value is in excess of $20.00 and not in excess of $40.00 per ton; it gets 20 per cent of the net smelter returns which have a gross value in excess of $40.00 and not in excess of $60.00 per ton; it gets a 25 per cent of the net smelter returns having a gross value in excess of $60.00 per ton. It likewise gets 10 per cent of the net smelter returns on all concentrate or bullion derived from crude ore, which will have an average gross value in excess of $8.00 per ton.
Hence, no one can read the contract and ascertain what interest in the land, if any, the plaintiff retained if that interest be classified as a royalty interest. As before stated, I believe that the royalty interest may not be taxed under section 4 of Article XII of the Constitution, unless that royalty interest be a definite interest in a mine. The provisions of our Constitution are both mandatory and prohibitory, unless declared to be otherwise. Sec. 29, Art. III. Unless a royalty constitutes an interest in a mine, it cannot be taxed under section 4 of Article XII on the net proceeds. Wherever this court has sustained a tax against the royalty interest it has been when that interest constituted an interest in the real estate. Compare Forbes v. Mid-Northern Oil Co., 100 Mont. 10, 45 Pac. (2d) 673; Willard v. Federal Surety Co., 91 Mont. 465, 8 Pac. (2d) 633, and Northern Pacific Ry. Co. v. Gas Development Co., 103 Mont. 214, 62 Pac. (2d) 204. On this point I see no difference in principle between this case and one in which the operator of the mine *289makes an assignment of net smelter returns varying in percentage according to the value of the ore, to secure a merchant for furnishing groceries. Certainly the merchant would have no interest in the real estate and no interest in the mine.
Likewise, if we treat those payments as installments on the purchase price of the mine, as I think we must, then the tax here imposed results in a lack of uniformity of assessments upon the same class of subjects contrary to Article XII, sections 1 and 11 of our Constitution, and contrary to the Fourteenth Amendment to the Constitution of the United States.
One person may sell his mine for $45,000 in cash. If the transaction is completed after the first Monday in March he pays no tax whatever on the $45,000 for that year. If the transaction be made before the first Monday in March he pays only on a seven per cent valuation, R. C. M. 1947, section 84-302, since it comes under Class 5 of section 84-301. Another person may sell his mine for $45,000 to be paid by a percentage of net smelter returns as here. If the smelter returns be considered as royalty and subject to a net proceeds tax, then it would carry a 100 per cent valuation for tax purposes as soon as paid. The unconstitutional discrimination is patent.
In my opinion where the net smelter returns become the means of measuring the periodical installments on the purchase price of a mine, as here, they are not to be considered as royalty or net proceeds and are not subject to the provisions of the law treating of the taxation of net proceeds from royalty interests.
I think the court erred in sustaining the demurrer to the complaint and in entering the judgment of dismissal and that the judgment should be reversed.