(dissenting).
It is my view that the appellants should be required to pay the taxes involved in this action for the good reason that by the express terms of their contract they agreed to pay them. It is my further view that by requiring under the provisions of Minn. St. 93.20, subd. 27,1 that the lessee of state-owned mining property as a consideration for the lease “pay all taxes, general and specific, which may be assessed against said land * * * in all respects as if said land was owned in fee” by him, the legislature intended that the land so leased should lose its exemption and be placed on the tax rolls to bear its share of the tax burden the same as privately owned land. In my opinion, this provision comprehends that the obligation to pay such taxes is personal on the part of the lessee.
By their brief the appellants concede that by the provisions of Minn. St. 1957, § 273.19,2 state-owned land under lease for a term of 3 or more years shall be considered the property of the lessee for purposes of taxation. They agree that the undertaking to pay taxes as provided by paragraph 18 of the lease was adopted pursuant to the provisions of Minn. St. 93.20, subd. 27. Notwithstanding the express agreement to pay taxes, they contend that because of the nature of real estate taxes there can be no personal obligation for their payment. They argue that since a fee owner cannot be held personally liable for real estate taxes, neither can they. They cite Chun King Sales, Inc. v. County of St. *26Louis, 256 Minn. 375, 380, 98 N. W. (2d) 194, 198, to the effect that—
“Real estate taxes are assessed and enforced against the land itself. They are not charges against the owner of the estate. Proceedings to enforce them are strictly in rem.”
They argue that paragraph 18, so far as it requires payment of real estate taxes, creates an ambiguity and that since the lease was prepared by the state it must be construed against it.
The words of paragraph 18 of the contract which are prescribed by § 93.20, subd. 27, clearly provide for the payment of taxes by the lessee. The lessee is to pay “all taxes” assessed against the land “in all respects as if said land was owned in fee” by the tenant. This provision was designed with the object in mind3 of denying the lessee the benefit of sovereign immunity from taxes.4 We should further view it in light of the presumption that by requiring the tax assumption clause the legislature did not intend an absurd result and that the legislature intends to favor the public as against private interest.5 If, as the defendants have ar*27gued, the lessee can have no personal obligation because ad valorem taxes are in rem, there would be no purpose in having the tax assumption clause in the contract. I cannot concede that the legislature was indulging in an idle jest when it required that the tax assumption clause be made a part of state iron mining leases; nor can I agree that the lessee in undertaking to pay all taxes was making an empty promise. By the tax assumption clause the parties were talking about the tax the lessee should be required to pay for the 50-year term on his leasehold interest. How was that tax to be fixed? The tax assumption clause answers that question. It provides that it is to be fixed in an amount equal to the tax on the fee or the whole interest in the land.
The trial court in an able and perceptive memorandum has correctly analyzed the issue. He said:
“These actions are brought by the State of Minnesota, acting in its proprietary capacity, to recover damages for breach of a covenant in an Iron Ore Mining Lease. This covenant is set forth in Paragraph 18 of the lease. The language of Paragraph 18 and of the other provisions of the lease is prescribed by statute, Minnesota Statutes 1949, Section 93.20 as amended by Laws of Minnesota for 1951, Chapter 616 (now M.S.A. Section 93.20). Therefore, in interpreting and construing this lease, the Court is guided by the basic rules of statutory construction, namely, that every law should be construed, if possible, to give effect to all its provisions, and that the legislature intends the entire statute to be effective and certain, and does not intend a result which is unreasonable.
“Applying these rules to this statutory lease, the Court is of the opinion that Paragraph 18 imposes a personal obligation on the lessee who ‘covenants and agrees to pay all taxes, general and specific, which may be assessed against said land * *
“First of all, this is the meaning and import of all the language in Paragraph 18 if we ascribe to the words their usual meaning, even after giving due consideration to the words ‘in all respects as if said land was owned in fee by the party of the second part.’ Furthermore, if the legislature did not intend Paragraph 18 to impose personal liability upon a lessee of State-owned mineral lands for the payment of such taxes, then *28Paragraph 18 and the statute which prescribed it were meaningless and of no purpose. The taxes herein were imposed on the property and assessed pursuant to the provisions of M.S.A. 273.19 and M.S.A. 273.01, and not by the statute which created Paragraph 18. It should also be noted that Paragraph 25 of the lease (now M.S.A. 93.20, Subd. 34) provides that if any sum owing by the lessee for rental, royalty or taxes remains unpaid after 60 days, it shall be the duty of the Commissioner of Conservation to cancel the lease. Thus, with the State owning the land, and with the taxes being imposed on the property by M.S.A. 273.19, and with the State’s remedy of cancellation of the lease for non-payment of taxes being set forth in Paragraph 25, Paragraph 18 of the lease was entirely unnecessary unless it was for the purpose of imposing on the lessee an obligation in personam for the payment of such taxes. In imposing such obligation in personam, Paragraph 18 was necessary in order to provide a way to recover from lessees the unpaid taxes on State-owned mineral lands, since the usual remedy of foreclosure of tax hen was inapplicable. See also Marble v. Oliver Iron Mining Co., 172 Minn. 26, 215 N. W. 71. In Fryberger v. Inland Steel Co., 174 Minn. 139, 218 N. W. 553, the Court said at page 141:
“ ‘The purpose of that tax assumption clause was made as far-reaching and inclusive as could be. It was to put the lessee in the position, with respect to all taxes, of an owner in fee. The state did not purpose to permit its lessee to participate in nor derive any benefit from the immunity of its own property from taxation. Subletting or assignment by the lessee was contemplated and is quite usual. With respect to the incidence of taxes on the leasehold, the lessee was to be dealt with as an owner in fee. So any tax on the resulting interest of Crosby in the demised land was covered by his agreement in the lease to pay all taxes, general or specific, the same as though he had been the owner in fee instead of lessee.’ ”
It seems to me that the determination of the trial court is supported both by reason and authority. When a state enters into a contract in its proprietary capacity as it' has done here, its rights and liabilities are the same as those of a private person. Chun King Sales, Inc. v. County *29of St. Louis, 256 Minn. 375, 98 N. W. (2d) 194. The parties stand in the same relationship as any private parties to a similar contract. In construing this particular contract we should be guided by the rule expressed in Marble v. Oliver Iron Min. Co. 172 Minn. 263, 264, 215 N. W. 71, where we examined a mining lease which provided: “The lessee further covenants to pay all taxes and assessments, ordinary and extraordinary, general and specific, * * (Italics supplied.) The lease was between private parties and involved the obligation to pay a royalty tax. The defendant contended that the tax was not a tax upon lands. In paying respect to the general rule of construction that where more than one meaning is permissible, the most favorable to the lessee must prevail, we said (172 Minn. 267, 215 N. W. 72):
“* * * Be that as it may, all [the authorities] are agreed that the true meaning of an instrument like a lease is not to be gathered from some isolated phrase or sentence, but that such phrase or sentence must be considered in connection with the whole writing; that the language used should be interpreted in view of the surrounding circumstances, the situation of the parties, and the object or purpose of the agreement.”
The later case of Fryberger v. Inland Steel Co. 174 Minn. 139, 218 N. W. 553, which the trial court referred to in his memorandum, also involved royalty taxes, but grew out of a dispute between a sublessee of a lease of state-owned mineral property and an assignee of royalties reserved by the lessor. We there again pointed out that the royalty tax was a charge against the land and discussed the provision of the lease found in paragraph 18 of the contract before us. That lease also provided that the lessee, sublessees, or grantees, were to (174 Minn. 140, 218 N. W. 554) “pay all taxes, general and specific, which may be assessed against said land, * * * in all respects as if said land were owned in fee” by the lessee. (Italics supplied.) In discussing this provision as it applied to royalty tax, we said (174 Minn. 141, 218 N. W. 554):
“* * * As indicated in the Marble case, the purpose of the parties to Minnesota mineral leases and assignments thereof ordinarily has been to pass on, from lessor to lessee and from lessee to sublessee, the entire tax burden, whatever form it may take.”
*30The royalty tax involved in that case was not in effect at the time the state’s lease was executed. We held, nevertheless, that under the broad provision of the lease to pay all taxes, general and specific, the lessee had assumed the obligation of the additional tax burden. In considering the purpose of the agreement, and the reason for it, we made this significant statement which cannot be overlooked:
“* * * The state did not purpose to permit its lessee to participate in nor derive any benefit from the immunity of its own property from taxation.”
Yet that is precisely what the majority opinion will permit the lessee to do.
In the Fryberger case this court went on to state (174 Minn. 141, 218 N. W. 554):
“* * * with respect to the incidence of taxes on the leasehold, the lessee was to be dealt with as an owner in fee.”
The majority concludes from this statement that “the holder of the leasehold is treated the same as an owner in fee” who has no personal liability. It is at this point that we come to the crux of the controversy. In referring to the incidence of the tax, the court in the Fryberger case did not have in mind a statutory impediment to in personam duty or the consequential aspects of tax liability. It seems to me that the majority overlooks the fact that the court was talking about “the incidence of taxes on the leasehold,” or the burden of the tax which should fall upon the owner of the leasehold. The court was discussing the extent of the tax obligation assumed under the terms of the contract and in explaining the extent of that liability pointed out that the burden of tax upon the leasehold or “chattel real,” as the interest is referred to in the Marble case, was the same in kind and amount as if he were the owner in fee. By this decision the court said that the burden of tax which the lessee was to pay was to be measured not by the value of the leasehold or lesser possessory interest but by the value of the whole interest in the land. In other words the term “as if said land was owned in fee” defines the kind and scope of taxes which the lessee is personally obligated to pay. The lone dissent in the Fryberger case did not agree with what *31the majority had said and expressed the point of view which the majority has here adopted. The dissent recites (174 Minn. 142, 218 N. W. 555):
“The only covenant on the part of [the lessee] with respect to taxes was to pay the taxes as if he were owner. As such he would never be called upon to pay any tax under L. 1923, p. 258, c. 226. Defendant [assignee of the lessee] did not directly covenant to pay taxes. It only agreed to step in [the lessee’s] shoes so far as concerned the payment of taxes, and [the lessee] could never be called upon to pay royalty tax.”
It seems to me that the trial court has so clearly analyzed this issue in that part of its quoted memorandum that to further labor the point would be carrying coals to Newcastle. However, the consequences of the majority opinion as it may relate to leases of other state-owned mining properties are of such importance as to warrant further comment.
While it is true that real estate taxes are a charge against the land, that fact does not prevent a lessee from entering into a valid undertaking with the owner to pay such taxes. It must be acknowledged that the agreement by a lessee to pay real estate and other taxes is a common provision to be found in leases. If the obligation to pay taxes in a leasing agreement between private parties may be enforceable, there is no good reason why the same provision should not be enforceable in a contract in which the state is the lessor. Both Minn. St. 1957, § 273.19, and Minn. St. 93.20, subd. 27, express the policy that when state-owned lands are appropriated to private use, the exemption from taxation no longer applies.6 It must be recognized that the legislature was aware of the fact that real property taxes lie at the foundation of the tax structure of the state. The tax is levied annually at a regular time and operates uniformly according to fixed statutory rules. That this tax be fully collected is of vital importance to the various units of government among which it must be distributed. By requiring under the provisions of *32§ 93.20, subd. 27, that the lessee of an iron mining lease as part of the consideration for the lease “pay all taxes, general and specific, which may be assessed against said land,” the legislature intended that the land so leased should lose its exemption, be placed on the tax rolls, and bear its share of the tax burden the same as privately owned land. It seems to me that nothing could be more reasonable than to require an undertaking which would secure the certain payment of taxes on state-owned land given over to private use. Since there would be no point in the state’s collection of delinquent taxes against its own property by in rem proceedings, the obvious method to insure the certain collection of such taxes was for the legislature to provide as it did by § 93.20, subd. 27, that the lessee assume that obligation. If this does not mean that the obligation is personal on the part of the lessees, it means nothing.
The majority opinion relies on the language of § 272.01 as an aid to the result it has reached in construing § 93.20, subd. 27. It is only necessary to observe that the purpose of § 272.01 was to bring certain property which was formerly exempt from taxes within the class of taxable property. It extends the principle of liability for payment of taxes to a new class of subjects. This does not imply in any way that the principle was not already established as respects of leases of state-owned iron mines. For the foregoing reasons, I respectfully dissent.
This provision has not been changed since its amendment by L. 1951, c. 616, § 1.
Minn. St. 1957, § 273.19, provided: “Property held under a lease for a term of three or more years, or under a contract for the purchase thereof, when the property belongs to the state, or to any religious, scientific, or benevolent society or institution, incorporated or unincorporated, or to any railroad company or other corporation whose property is not taxed in the same manner as other property, or when the property is school or other state lands, shall be considered, for all purposes of taxation, as the property of the person so holding the same.” This section was amended by Ex. Sess. L. 1959, c. 1, § 2, and now relates only to real property not taxable under the new subd. 2 of Minn. St. 272.01, enacted by Ex. Sess. L. 1959, c. 1, § 1.
Minn. St. 645.16 provides in part: “The object of all interpretation and construction of laws is to ascertain and effectuate the intention of the legislature. Every law shall be construed, if possible, to give effect to all its provisions.
“When the words of a law in their application to an existing situation are clear and free from all ambiguity, the letter of the law shall not be disregarded under the pretext of pursuing the spirit.
“When the words of a law are not explicit, the intention of the legislature may be ascertained by considering, among other matters: * * * * *
“(4) The object to be attained.”
Fryberger v. Inland Steel Co. 174 Minn. 139, 218 N. W. 553.
§ 645.17 provides: “In ascertaining the intention of the legislature the courts may be guided by the following presumptions:
“(1) The legislature does not intend a result that is absurd, impossible of execution, or unreasonable;
* * * $ $
“(5) The legislature intends to favor the public interest as against any private interest.”
Minn. Const, art. 9, § 1, provides that public property used 'exclusively for any public purpose shall be exempt from taxation. That exemption does not apply to public property used for private purposes. Chun King Sales, Inc. v. County of St. Louis, 256 Minn. 375, 98 N. W. (2d) 194.