In the Matter of the Protest of Barker, Robert E. and R. Gay for the Year 2011 in Neosho County, Kansas
The Kansas Court of Appeals recently decided the 2011 Protest of Robert E. Barker. At issue in the Barker case was the question of whether a county may separately impose taxes on the royalty interest and the working interest. Robert Barker initially leased a working interest in his parents' land in Neosho County, while his parents retained a 3/16 royalty interest. Eventually, Mr. Barker's parents passed away, and he and his wife inherited their interest in the property as joint tenants. The County, however, continued to tax the working and royalty interests separately. The Barkers appealed this practice, but the Kansas Court of Tax Appeals found in favor of the County, stating that the practice was proper because the lease belonged to Mr. Barker individually, while the royalty belonged to both Barkers as joint tenants.
The Barkers appealed this decision to the Kansas Court of Appeals, and the Court found in favor of the Barkers. The Court stated that the doctrine of merger can work to merge ownership in cases involving joint tenancy, so long as it does not work to disadvantage a prior owner. The Court also found that the lease no longer served a purpose and was terminated upon Mr. Barker's mother's death. Therefore, it found it proper to merge the interests.
Of note, the Court’s ruling provides some basic, broadly applicable definition of interests. For example, in Kansas, an oil and gas lease “conveys a license to explore or a profit a prende.” Unlike ordinary easements, a profit a prende grants the right “to take product from the land” in addition to the right to go onto the land. An easements and a profit a prende are both servitudes and both are subject to the doctrine of merger. The ruling also clarifies that, in Kansas, oil and gas leasehold interests are personal property except for specific instances covered by statute.