{ "id": 142196, "name": "Nelson WELCH and Nina Welch, Plaintiffs-Appellants, v. SANDOVAL COUNTY VALUATION PROTESTS BOARD and Office of the Sandoval County Assessor, Defendants-Appellees", "name_abbreviation": "Welch v. Sandoval County Valuation Protests Board", "decision_date": "1997-07-31", "docket_number": "No. 17850", "first_page": "722", "last_page": "726", "citations": [ { "type": "official", "cite": "123 N.M. 722" }, { "type": "parallel", "cite": "945 P.2d 452" }, { "type": "parallel", "cite": "1997-NMCA-086" } ], "court": { "name_abbreviation": "N.M. Ct. App.", "id": 9025, "name": "Court of Appeals of New Mexico" }, "jurisdiction": { "id": 52, "name_long": "New Mexico", "name": "N.M." }, "cites_to": [ { "cite": "54 A.L.R.3d 402", "category": "reporters:specialty", "reporter": "A.L.R. 3d", "year": 1973, "pin_cites": [ { "page": "\u00a7 16" } ], "opinion_index": 0 }, { "cite": "208 U.S. 489", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 3642187 ], "weight": 3, "year": 1908, "pin_cites": [ { "page": "500", "parenthetical": "state can tax lessee even though fee interest of lessor is exempt from property tax" }, { "page": "377-78", "parenthetical": "state can tax lessee even though fee interest of lessor is exempt from property tax" }, { "parenthetical": "state can tax lessee even though fee interest of lessor is exempt from property tax" } ], "opinion_index": 0, "case_paths": [ "/us/208/0489-01" ] }, { "cite": "188 Ariz. 550", "category": "reporters:state", "reporter": "Ariz.", "case_ids": [ 195752 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/ariz/188/0550-01" ] }, { "cite": "543 F.2d 1253", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 1024876 ], "opinion_index": 0, "case_paths": [ "/f2d/543/1253-01" ] }, { "cite": "88 N.M. 548", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 2838191 ], "weight": 2, "year": 1975, "pin_cites": [ { "page": "553" }, { "page": "1181" } ], "opinion_index": 0, "case_paths": [ "/nm/88/0548-01" ] }, { "cite": "91 N.M. 215", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1571118 ], "weight": 2, "pin_cites": [ { "page": "219-20" }, { "page": "947-48" } ], "opinion_index": 0, "case_paths": [ "/nm/91/0215-01" ] }, { "cite": "33 Stat. 1048", "category": "laws:leg_session", "reporter": "Stat.", "opinion_index": 0 }, { "cite": "471 U.S. 222", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 6200061 ], "weight": 3, "year": 1985, "pin_cites": [ { "page": "227", "parenthetical": "internal quotation marks deleted" }, { "page": "1920", "parenthetical": "internal quotation marks deleted" }, { "parenthetical": "internal quotation marks deleted" } ], "opinion_index": 0, "case_paths": [ "/us/471/0222-01" ] }, { "cite": "326 So.2d 425", "category": "reporters:state_regional", "reporter": "So. 2d", "case_ids": [ 9664048 ], "weight": 2, "pin_cites": [ { "page": "435-36" }, { "page": "436" } ], "opinion_index": 0, "case_paths": [ "/so2d/326/0425-01" ] }, { "cite": "505 U.S. 1", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 1481159 ], "weight": 3, "year": 1992, "pin_cites": [ { "page": "11", "parenthetical": "standard of equal-protection review is especially deferential in tax context" }, { "page": "2332", "parenthetical": "standard of equal-protection review is especially deferential in tax context" }, { "parenthetical": "standard of equal-protection review is especially deferential in tax context" } ], "opinion_index": 0, "case_paths": [ "/us/505/0001-01" ] }, { "cite": "439 U.S. 170", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 11329081 ], "weight": 3, "year": 1978, "pin_cites": [ { "page": "174", "parenthetical": "lines drawn in social welfare legislation \"necessarily are sometimes arbitrary\" yet do not deny equal protection" }, { "page": "473-74", "parenthetical": "lines drawn in social welfare legislation \"necessarily are sometimes arbitrary\" yet do not deny equal protection" }, { "parenthetical": "lines drawn in social welfare legislation \"necessarily are sometimes arbitrary\" yet do not deny equal protection" } ], "opinion_index": 0, "case_paths": [ "/us/439/0170-01" ] }, { "cite": "94 N.M. 202", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1573072 ], "weight": 5, "pin_cites": [ { "page": "210" }, { "page": "522" }, { "page": "210" }, { "page": "522", "parenthetical": "same" } ], "opinion_index": 0, "case_paths": [ "/nm/94/0202-01" ] }, { "cite": "77 Ky. 115", "category": "reporters:state", "reporter": "Ky.", "case_ids": [ 2346645 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/ky/77/0115-01" ] }, { "cite": "248 S.W. 486", "category": "reporters:state_regional", "reporter": "S.W.", "weight": 3, "year": 1922, "pin_cites": [ { "page": "487" }, { "page": "487" } ], "opinion_index": 0 }, { "cite": "198 Ky. 1", "category": "reporters:state", "reporter": "Ky.", "case_ids": [ 4768502 ], "year": 1922, "opinion_index": 0, "case_paths": [ "/ky/198/0001-01" ] }, { "cite": "374 A.2d 1094", "category": "reporters:state_regional", "reporter": "A.2d", "year": 1977, "pin_cites": [ { "parenthetical": "statutory language clearly refers to original term of lease" } ], "opinion_index": 0 }, { "cite": "172 Conn. 439", "category": "reporters:state", "reporter": "Conn.", "case_ids": [ 507023 ], "year": 1977, "pin_cites": [ { "parenthetical": "statutory language clearly refers to original term of lease" } ], "opinion_index": 0, "case_paths": [ "/conn/172/0439-01" ] }, { "cite": "563 N.W.2d 429", "category": "reporters:state_regional", "reporter": "N.W.2d", "case_ids": [ 11984729 ], "year": 1997, "pin_cites": [ { "page": "432", "parenthetical": "\"[T]he legislative intent [is] to tax otherwise exempt property when it is leased to nonexempt entities for the required term.\"" } ], "opinion_index": 0, "case_paths": [ "/nw2d/563/0429-01" ] }, { "cite": "12 S.W. 317", "category": "reporters:state_regional", "reporter": "S.W.", "year": 1889, "pin_cites": [ { "parenthetical": "identifying the \"lease\" with the original contract and apparently measuring the term of the lease by the original term stated in the contract" } ], "opinion_index": 0 }, { "cite": "74 Tex. 557", "category": "reporters:state", "reporter": "Tex.", "case_ids": [ 2186824 ], "year": 1889, "pin_cites": [ { "parenthetical": "identifying the \"lease\" with the original contract and apparently measuring the term of the lease by the original term stated in the contract" } ], "opinion_index": 0, "case_paths": [ "/tex/74/0557-01" ] }, { "cite": "43 N.E. 329", "category": "reporters:state_regional", "reporter": "N.E.", "weight": 3, "year": 1896, "pin_cites": [ { "page": "330" }, { "page": "330" } ], "opinion_index": 0 }, { "cite": "54 Ohio St. 264", "category": "reporters:state", "reporter": "Ohio St.", "case_ids": [ 50819 ], "year": 1896, "opinion_index": 0, "case_paths": [ "/ohio-st/54/0264-01" ] }, { "cite": "120 N.M. 734", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1559009 ], "weight": 2, "pin_cites": [ { "page": "736" }, { "page": "268" } ], "opinion_index": 0, "case_paths": [ "/nm/120/0734-01" ] } ], "analysis": { "cardinality": 866, "char_count": 16740, "ocr_confidence": 0.751, "pagerank": { "raw": 1.0068978346913974e-07, "percentile": 0.5409008401648127 }, "sha256": "8807c6231d87add3eda13e5000e4e0164d3e5b01735432639f9570be380ecb9c", "simhash": "1:9e7d3dea79c17e3e", "word_count": 2791 }, "last_updated": "2023-07-14T16:56:16.892471+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "ALARID and BUSTAMANTE, JJ., concur." ], "parties": [ "Nelson WELCH and Nina Welch, Plaintiffs-Appellants, v. SANDOVAL COUNTY VALUATION PROTESTS BOARD and Office of the Sandoval County Assessor, Defendants-Appellees." ], "opinions": [ { "text": "OPINION\nHARTZ, Chief Judge.\n(1) Pursuant to New Mexico\u2019s statehood compact with the United States, the New Mexico Constitution forbids the State from imposing upon an Indian tribe any property tax with respect to the tribe\u2019s reservation lands. N.M. Const, art. XXI, \u00a7 2. Under our Property Tax Code, NMSA 1978, eh. 7, arts. 35 to 38 (Repl.Pamp.1995), Indian tribes therefore come within the definition of \u201cexempt entity.\u201d See \u00a7 7-36-4(A)(2). Nonexempt entities \u2014 that is, all persons who are not exempt entities, \u00a7 7-36-4(A)(4) \u2014 may benefit from a tribe\u2019s immunity from taxation. The Code for the most part exempts from taxation any \u201cfractional interest\u201d of a nonexempt entity in real property of an exempt entity. See \u00a7 7-36-4(B). The term \u201cfractional interest\u201d is defined by the Act as \u201ca tangible interest in real property ... that is less than the total of the interests existing in the property,\u201d subject to certain exceptions. Section 7-36-4(A)(l). The exception at issue on this appeal is for a \u201clessee\u2019s interest under a lease when the term of the lease is more than seventy-five years.\u201d Id.\n(2) This appeal presents the following questions: (1) If a lease had an original term of more than 75 years but has less than 75 years remaining, is the leasehold interest a \u201cfractional interest\u201d under the statutory definition? (2) If such an interest is not a \u201cfractional interest,\u201d does the Code violate constitutional guarantees of equal protection and uniform taxation? and (3) Does the State have the constitutional authority to impose a property tax on a lease of reservation land by a non-Indian? Answering \u201cno\u201d to the first two questions and \u201cyes\u201d to the third, we affirm the imposition of the property tax in this ease.\nBACKGROUND\n(3)In 1969 the Pueblo ,de Cochiti, an Indian tribe, leased 7000 acres of reservation land for 99 years under a master lease to a private corporation. The master lease provides for subleases for residential lots. Nelson and Nina Welch (Taxpayers) entered into such a sublease for two lots. The sublease obligates Taxpayers to pay any taxes that may be imposed on the leasehold interest. In May 1996 Taxpayers filed a protest of the assessment of their property with the Sandoval County Valuation Protest Board (the Board). The Board rejected Taxpayers\u2019 claim that their leasehold interest in the land was exempt from taxation. Taxpayers appeal pursuant to NMSA 1978, Section 7-38-28. There being no disputed material facts, the sole concern is whether the decision of the Board was \u201cnot in accordance with law.\u201d Section 7-38-28(B)(3).\nDISCUSSION\nA. Definition of \u201cFractional Interest\u201d\n(4) Most leases are \u201cfractional interests\u201d under the Property Tax Code. See \u00a7 7-36-4(A)(l). But the definition of \u201cfractional interest\u201d excludes \u201cthe lessee\u2019s interest under a lease when the term of the lease is more than seventy-five years.\u201d Id. Taxpayers contend that even if the original term of a lease exceeds 75 years, once the remaining term of the lease is 75 years or less, the lessee\u2019s interest becomes a fractional interest. They argue that this is the only reasonable construction of the statutory language because otherwise the law would create illogical distinctions, such as exempting a taxpayer during the first year of a 70-year lease while taxing a taxpayer in the sixth year of a 75-year lease, even though their interests in their respective properties are identical for all practical purposes. (This argument also forms the basis of their constitutional chailenge to the statutory definition if we reject their interpretation.)\n(5) Although Taxpayers\u2019 argument is not without force, we are not persuaded. Unless the context suggests some specialized meaning, we interpret a statute in accordance with the common meaning of the statutory language. See Levarlo v. Ysidro Villa-real Labor Agency, 120 N.M. 734, 736, 906 P.2d 266, 268 (Ct.App.1995). The question before us is the meaning of the phrase \u201cthe term of the lease.\u201d In particular, how is that phrase to be interpreted during the course of the lease, after the lease has been entered into but before it has expired? In our view, the common usage of the phrase is the full, original term of the lease, not the time remaining under the lease. An apartment tenant with a one-year lease describes the lease as a one-year lease throughout the course of the tenancy, regardless of whether the tenant is about to move to the apartment or has lived there one week, one month, or eleven months. After the tenant has been there eleven months, a friend would find it peculiar for the tenant to describe the lease as a \u201cone-month lease\u201d simply because there is only one month remaining on the one-year term. Likewise, those in business who, for example, lease space in a shopping center will describe their leases as five-year leases, regardless of how brief the time before the lease expires. In short, one thinks of the \u201clease\u201d as the entire agreement between the lessor and lessee, and the \u201cterm of the lease\u201d as the length of the tenancy set forth in that agreement.\n(6)Such a reading appears to have been assumed in similar circumstances by courts of other jurisdictions. Several states now have, or once had, statutes similar to Section 7-36-4 in that they impose a property tax on a leasehold interest exceeding a certain term when the owner of the fee is exempt from taxation but the lessee is not. Although we have found no reported decision in which the court has addressed an argument by the taxpayer that the property tax can no longer be assessed once the remaining term of the lease is less than the statutory threshold (a fact which may in itself suggest the common meaning of the statutory language), the language in several opinions indicates that such an argument would fail.\n(7)The most suggestive of these opinions is Zumstein v. Consolidated Coal & Mining Co., 54 Ohio St. 264, 43 N.E. 329 (1896). The Ohio statute provided that \u201c \u2018[a]ll lands held under lease for any term exceeding fourteen years [belonging to a municipality, etc.] shall be considered for all purposes of taxation as the property of the person or persons holding the same.\u2019\u201d Id. at 330 (quoting Ohio Rev. Stat. \u00a7 2733). There were two leases under consideration. One was a 20-year lease beginning in 1881; the other was a 15-year lease beginning in 1882. Because the tax years at issue were 1881 to 1887, the case covered years in which fourteen or fewer years remained on at least one of the leases. The question before the court was whether the tax could be imposed on the fee. The court ruled in favor of the taxpayer on that point. But the court appeared to assume that the leasehold interests were taxable for each of the tax years, stating that the \u201ctaxability [of the properties] results from the fact that they are held under leases from the city for terms exceeding 14 years.\u201d Id. at 330. The Court was undoubtedly referring to the original term, because the remaining term was less than 14 years for some tax years under consideration. See also Trammell v. Faught, 74 Tex. 557, 12 S.W. 317 (1889) (identifying the \u201clease\u201d with the original contract and apparently measuring the term of the lease by the original term stated in the contract); In Matter of Appeal of Denial of Real Estate Tax Exemption for Black Hills Legal Services, 563 N.W.2d 429, 432 (S.D. 1997) (\u201c[T]he legislative intent [is] to tax otherwise exempt property when it is leased to nonexempt entities for the required term.\u201d); Farms Country Club v. Carini, 172 Conn. 439, 374 A.2d 1094 (1977) (statutory language clearly refers to original term of lease).\n(8)We also note supporting authority from a somewhat different area of the law. In Foreman Automobile Co. v. Morris, 198 Ky. 1, 248 S.W. 486 (1922), the issue was whether a lessee forfeited a lease by assigning its interest without approval of the lessor. A Kentucky statute provided for forfeiture in those circumstances if the assignment was by a tenant \u201cwho has a term less than two years.\u201d Id. at 487 (quoting Ky.Stat. \u00a7 2292). The court reaffirmed its holding in Grizzle v. Pennington, 77 Ky. 115, 14 Bush 115, \u201cthat a tenant who originally had a term for two years or more could not be dispossessed under this section of the Statutes, even though he had occupied the premises .for a portion of the time and the remaining portion was less than two years.\u201d Foreman Auto. Co., 248 S.W. at 487.\n(9) To be sure, we have found no holding directly in point. But neither have Taxpayers provided any authority indicating a different interpretation of the phrase \u201cterm of the lease.\u201d The above authority, although it might be characterized as merely suggestive, confirms our view that the natural reading of the statutory language is that the \u201cterm of the lease\u201d is the term stated in the original contract.\n(10) Nor do we believe that interpreting \u201cterm\u201d to mean the \u201coriginal term\u201d creates such an absurd result that the legislature must surely have intended Taxpayers\u2019 interpretation of the statutory language. The legislature apparently elected to tax only those leases (from an exempt entity to a nonexempt entity) whose duration is so long that the lessor could be said to have relinquished the fundamental attributes of its fee ownership. This is essentially what Taxpayers say in their brief in chief when they describe the goal of the provision as \u201craising revenue from interests in real property that were of sufficient duration to be the functional \u2022 equivalent of a real property interest.\u201d Once the legislature has decided to impose the property tax on such leasehold interests, we see' nothing absurd in the imposition of that tax every year until the land reverts to the exempt entity at the expiration of the lease. (Of course, the value of the leasehold estate may diminish as the end of the term approaches, but valuation issues are not before us on this appeal.)\n(11) Thus, in our view, the meaning of the statutory language is clear. Whether the statute as thus interpreted creates unconstitutional distinctions is the issue we next address. B. Equal Protection and Uniform Taxation\n(12) As previously noted, Taxpayers contend that Section 7-36-4 draws an unconstitutional distinction between two lessees of exempt real property who have the identical length of time remaining on their leases. One whose lease had an original term greater than 75 years is subject to a property tax on the leasehold interest, whereas one whose lease had an original term of less than 75 years would not be subject to such tax. Taxpayers claim that this distinction violates their rights to equal protection under the law, see U.S. Const, amend. 14, \u00a7 1; N.M. Const, art. II, \u00a7 18, and the requirement that \u201ctaxes shall be equal and uniform upon subjects of taxation of the same class.\u201d N.M. Const, art. VIII, \u00a7 1. In this context the test for validity is the same under each of the three constitutional provisions. See Anaconda Co. v. Property Tax Dep\u2019t, 94 N.M. 202, 210, 608 P.2d 514, 522 (Ct.App.1979). A classification under the tax laws satisfies the constitutional requirements if there is a rational basis for the classification. See id.\n(13) A rational basis exists for the classification created by Section 7-36-4. The purpose of the statute is to tax leases that are so long as to be the practical equivalent of a fee interest. Logic alone cannot determine what that length of time is. A broad range of choices was available to the legislature. One might describe as arbitrary the selection of a specific time within that range to mark the dividing line, but any such choice is nevertheless rational. See Califano v. Aznavorian, 439 U.S. 170, 174, 99 S.Ct. 471, 473-74, 58 L.Ed.2d 435 (1978) (lines drawn in social welfare legislation \u201cnecessarily are sometimes arbitrary\u201d yet do not deny equal protection); cf. Nordlinger v. Hahn, 505 U.S. 1, 11, 112 S.Ct. 2326, 2332, 120 L.Ed.2d 1 (1992) (standard of equal-protection review is especially deferential in tax context); Anaconda, 94 N.M. at 210, 608 P.2d at 522 (same). Certainly, 75 years is within the range of reasonable choices.\n(14) Taxpayers argue that Section 7-36-4 creates an irrational classification because one with a 76-year lease is taxed every year of the lease, whereas one with a 74-year lease is never taxed. In particular, when both lessees have, say, 20 years left on their leases, only the one with the 76-year lease must pay property taxes, yet both have the same remaining leasehold interest. The argument has some attraction. But it goes too far when it suggests that a statute cannot consider the past when setting forth the legal consequences of a particular present situation. From laws on teacher tenure to habitual-offender sentencing, statutes appropriately consider what got a person to where he, she, or it is at the time a legal consequence is imposed. In deciding when or how to impose a property tax, it is not irrational for the legislature to consider the original term of the lease rather than only the remaining term. In Williams v. Jones, 326 So.2d 425, 435-36 (Fla.1975), the court construed a Florida statute as providing that leases with original terms of 99 years or more should be taxed as if the lessee owned the fee interest, whereas shorter leases should be taxed on the basis of their economic value. The court wrote: \u201cSince a lease for a term of 99 years or more is tantamount to ownership of the fee, we do not construe this to be an unreasonable classification by the Legislature.\u201d Id. at 436.\n(15) Finally, Taxpayers contend that the 75-year exception from the definition of \u201cfractional interest\u201d unconstitutionally discriminates against them because the master lease with the Pueblo de Cochiti is the only lease in the state subject to the provision. Presumably, they are claiming an invidious discrimination based on race \u2014 the race of the members of the leasing pueblo. On the present record, which includes no evidence regarding other leases of exempt property, this claim must fail. \u201c[A] neutral state law that produces disproportionate effects along racial lines ... violates the Equal Protection Clause of the Fourteenth Amendment [only upon] [p]roof of racially discriminatory intent or purpose[.]\u201d Hunter v. Underwood, 471 U.S. 222, 227, 105 S.Ct. 1916, 1920, 85 L.Ed.2d 222 (1985) (internal quotation marks deleted). The record establishes neither a disproportionate effect on Indians nor a discriminatory intent or purpose.\nC. Taxation of Leases on Indian Land\n(16) Taxpayers\u2019 third contention is that taxation of a leasehold interest on Indian land is prohibited by 33 Stat. 1048, 1069 (1905), which states that \u201cthe lands now held by the various villages or pueblos of Pueblo Indians ... within Pueblo reservations or lands, in the Territory of New Mexico ... shall be free and exempt from taxation of any sort whatsoever.\u201d (The state constitution has language to the same effect. N.M. Const, art. XXI, \u00a7 2.) We disagree. The leasehold interest acquired from the Pueblo de Cochiti is not \u201cland[s] ... held by ... Pueblo Indians.\u201d It is property of the lessee. See Cutter Flying Serv. v. Property Tax Dep\u2019t, 91 N.M. 215, 219-20, 572 P.2d 943, 947-48 (Ct.App.1977) (opinion of Hernandez, J.) (discussing property taxation of leases at municipal airport). New Mexico has the authority to tax the property of non-Indian lessees of Indian land, even if the property is located on the reservation. See Prince v. Board of Educ., 88 N.M. 548, 553, 543 P.2d 1176, 1181 (1975). Consequently, we reject Taxpayers\u2019 contention that the 1905 statute bars taxation of their leasehold interest. See Fort Mojave Tribe v. San Bernardino County, 543 F.2d 1253 (9th Cir.1976); Pimalco, Inc. v. Maricopa County, 188 Ariz. 550, 937 P.2d 1198 (Ct.App.1997); see generally Jetton v. University of the South, 208 U.S. 489, 500, 28 S.Ct. 375, 377-78, 52 L.Ed. 584 (1908) (state can tax lessee even though fee interest of lessor is exempt from property tax); see generally Maurice T. Brunner, Annotation, Comment Note: Availability of tax exemption to property held on lease from exempt owner, 54 A.L.R.3d 402, \u00a7 16 (1973).\nCONCLUSION\n(17) For the above reasons, we affirm the decision of the Sandoval County Valuation Protests Board.\n(18) IT IS SO ORDERED.\nALARID and BUSTAMANTE, JJ., concur.", "type": "majority", "author": "HARTZ, Chief Judge." } ], "attorneys": [ "Christina J. Bruff, Albuquerque, for Plaintiffs-Appellants.", "Theodore C. Baca, Bernalillo, Robert J. Desiderio, Albuquerque, for Defendants-Appellees." ], "corrections": "", "head_matter": "1997-NMCA-086\n945 P.2d 452\nNelson WELCH and Nina Welch, Plaintiffs-Appellants, v. SANDOVAL COUNTY VALUATION PROTESTS BOARD and Office of the Sandoval County Assessor, Defendants-Appellees.\nNo. 17850.\nCourt of Appeals of New Mexico.\nJuly 31, 1997.\nCertiorari Denied Sept. 17, 1997.\nChristina J. Bruff, Albuquerque, for Plaintiffs-Appellants.\nTheodore C. Baca, Bernalillo, Robert J. Desiderio, Albuquerque, for Defendants-Appellees." }, "file_name": "0722-01", "first_page_order": 766, "last_page_order": 770 }