RIGHT OF SURRENDER-LACK OF MUTUALITY.

An oil and gas lease provided that the lessee was to complete a well within three months from its date or pay a stipulated rental until a well should be completed. The lease gave the lessee the right at any time on the payment of $1 to surrender the lease for cancellation and thereafter all payments and liabilities should cease and terminate. Such a lease or contract is wanting in mutuality because for a nominal sum the lessee is given the right to annul it at any time and end all liability thereafter accruing under the lease. The lessee of such a lease can not enforce its terms by injunction as courts refuse to grant equitable relief where, if granted, one of the parties may nullify the action so taken by the exercise of a discretionary right which either the law or his contract has conferred upon him.

Advance Oil Co. v. Hunt (Indiana App.), 116 Northeastern 340, p. 343.

CASH BONUS-SURRENDER.

A cash bonus of $120 in an oil and gas lease supports each and every provision in the lease and the lease being an indivisible contract the cash bonus not only supports the full term of the lease, but the option of the lessee to keep the lease alive by tendering delay rentals.

INJUNCTION TO PREVENT VIOLATION OF LEASE.

An injunction may issue in a proper case to prevent the violation of a lease, where the remedy at law is not plain, practical, and efficient to secure the ends of justice as the equitable remedy of injunction. But equity will not intervene to prevent the invasion of a right where such invasion would only entitle the complainant to nominal damages, or in cases where it is doubtful or a matter of speculation as to whether any damages will result to the complaining parties. On this rule a lessee of an oil and gas lease who takes no immediate steps to develop the leased premises on notice from the lessor that producing oil wells have been drilled and are being operated on adjoining lands within 300 feet of the line of the leased premises can not by injunction prevent the lessor from releasing the premises and can not by injunction prevent the second lessee from drilling for oil upon the premises.

Advance Oil Co. v. Hunt (Indiana App), 116 Northeastern 340,

p. 343.

MINING PROPERTIES.

TAXATION.

CORPORATION EXCISE TAX LAW-INCOME.

There is no presumption that Congress by the act of August 5, 1909 (36 Stat., 112), changed its idea of what the word "income" means. It must be assumed that the word "income" in this law means the same thing as it does in income tax laws. It was natural for Congress to decide that the tax which it was to impose upon the privilege should be measured either by the amount of business done thereunder or by the proved value of the privilege, as either would be a logical basis for such taxation. If the former had been the adopted theory, the tax would have been measured by the total receipts or by the total sales, or by some combination of these measures, and any thought of profits would be foreign to the scheme of measures. But this theory was not adopted. On the contrary, all ordinary expenses and losses in the conduct of the business were expressly to be deducted and only the remainder to be taxed. Whether this remainder be called net income or net profits is of no consequence, as by either name it is the same thing. It is of the essence of the law that the corporation doing a business of $100,000 and making $50,000 profit is to be taxed at 1 per cent upon that profit, less the exemption of $450, while a corporation doing a business of $10,000,000 and making no profit at all is not to be taxed. It is clear to a demonstration that Congress deliberately intended to tax the franchise according to its actual value to the user as determined by the annual profit derived therefrom without regard to its value as indicated by the amount of business done.

Biwabik Mining Co. v. United States, 242 Fed. 9, p. 14.

BASIS FOR CORPORATION EXCISE TAX.

The act of Congress of August 5, 1909 (36 Stat., 112), known as the corporation excise tax, does not provide for a tax upon income, or what the tax upon income shall be. The statutory computation rests upon the assumption that it is well known what income is as distinguished from other matters, as otherwise it would be impossible to state the gross income which is the foundation of such statutory computation.

Biwabik Mining Co. v. United States, 242 Fed. 9, p. 14.

GAINS DERIVED FROM MINING.

A mining corporation engaged in mining operations is not merely occupied in converting its capital assets from one form to another, and while a sale outright of its mining property might be fairly described as a conversion of the capital from land into money, the process of mining is in a sense equivalent to a manufacturing process, and however the operation may be described the transaction is undoubtedly business within the meaning of the corporation tax law, and the gains derived from such business are properly the income from business derived from capital, from labor, or from both combined. Baumbach v. Sargent Land Co., 242 U. S. 503, p. 521.

INDEPENDENT REVENUE FROM MINING PROPERTY.

Under the constitution of Utah (art. 13, sec. 4) requiring the taxation of mining property and surface improvements that have a value separate and independent of the mine, the fact that the owner of a mine may derive some revenue or other benefit from some part of the property used in connection with and as a part of a mine is not conclusive upon the question as to whether it is assessable for taxation as separate and independent property.

Ontario Silver Mining Co. v. Hixon (Utah), 164 Pacific 498, p. 499.

PROPERTY OF INDEPENDENT VALUE.

Mining property, regardless of where it is situated, is not assessable under the constitution of Utah (art. 13, sec. 4) unless it has a value separate and independent from the mine.

Ontario Silver Mining Co. v. Hixon (Utah), 164 Pacific 498, p. 499.

SALE OR CONVERSION OF CAPITAL NOT TAXABLE.

For the purpose of taxation it may be assumed that the receipts and accumulations of a business corporation are of two characters— those which constitute its gross income and those which represent the sale or conversion of its capital. It is clear that the receipts and accumulations of a business corporation representing the sale or conversion of its capital do not constitute taxable income under the corporation excise tax of the act of Congress of August 5, 1909. (36 Stat. 112.)

Biwabik Mining Co. v. United States, 242 Fed. 9, p. 15.

ALLOWANCE FOR DEPRECIATION ON ORES MINED.

Under the corporation tax law of August 5, 1909 (36 Stat. 11), the ordinary depletion of a mine resulting from the mining and removal of ore in the ordinary mining operations can not be regarded as a

depreciation of the mining property for which a deduction may be made from the income or from the sales of ore made.

Baumbach v. Sargent Land Co., 242 U. S. 503, p. 523.

ASSESSMENT INCREASED RELIEF-STATUTORY REMEDY.

A producing mine was duly assessed for taxes by the county assessor as provided by law. Subsequently the State board of equalization raised the total assessed valuation of the property of the county, and thereafter the county assessor, acting under authority, placed the additional assessment upon the mine in question. The mining company under such circumstances can not pay the amount oftaxes under the original assessment and enjoin the sale of the property for the collection of the remainder. The statute itself provides a plain, speedy, and adequate remedy at law for the hearing or determining of such grievances as those of the mining company. It was the duty of the mining company to pay the whole of the tax and to proceed for relief under section 5750 of the Revised Statutes of 1908. Kendrick v. A. Y. & Minnie Mining Co. (Colorado), 164 Pacific 1161.

POWER OF TAX COMMISSION TO REDUCE ASSESSMENT.

The statute of Minnesota (Gen. Stats. 1913, sec. 2344, subdiv. 5) confers upon the State tax commission the power to raise or lower the assessed valuation of property assessed for taxes, and under this statute the commission has the power, after a hearing, to reduce the valuation for taxation purposes of unmined ore contained in certain mines and the ore in stack piles.

State v. Lord (Minnesota), 162 Northwestern 675, p. 676.

COMMISSION'S REFUSAL TO REDUCE ASSESSMENT.

The refusal of the Minnesota State Tax Commission on a hearing to reduce an assessment on mining property, to order the mining company to produce its books showing the cost of mining and likewise its refusal to compel witnesses for the mining company to answer certain questions on the same subject, present no grounds for reversal on an appeal by the State from an order of the commission reducing an assessment for taxes on unmined ore and ore in stack piles.

State v. Lord (Minnesota), 162 Northwestern 675, p. 676.

VALUATION OF IRON MINE-SALE PRICE.

The statute of Michigan (Comp. Laws 1897, sec. 3850) provides that the cash value of property for the purpose of assessment means the usual selling price at the place where the property is situated, being the price which could be obtained therefor at a private sale

16543°-17-Bull. 159-8

and not at a forced or auction sale. The statute also provides that the assessor in determining the value shall also consider the advantages and disadvantages of the location, the quantity in value of mines, minerals, quarries, or other valuable deposits known to be available. "The usual selling price" at the place where the property is, when assessed, no guide, to an assessor in case the property is singular in character and is seldom, if ever, sold. But where none of the tests found in the legislative definition affords any aid in ascertaining the cash value of property, the property for that reason can not escape taxation and the legislative tests can not be the only one and can not be exclusive of others. Sales of mines are rarely made, and there is no market for the fee of iron mines and no usual selling price for them. It is not likely that a dozen similar sales would offer a reliable data for the valuation of an unsold iron mine. Where by approved methods the State had determined the value of a particular mine to be more than $1,000,000, in which valuation the superintendent of the mine, a man of experience concurred, the fact that the mine was subsequently sold for $600,000 cash is not alone sufficient to challenge the assessment made. The taxing officers could assume that in the sale as made the vendor and vendee, owing to their peculiar relation and with the use made of the ore had eliminated the factor of nonvisible ore, a factor that should be employed by the taxing officers in considering the valuable deposits available in the land.

Cleveland-Cliff Iron Co. v. Republic Township (Michigan), 163 Northwestern 90,

p. 93.

VALUE OF ORE STIPULATED-TAXABLE INCOME.

Where an iron mine was stripped of the overlying surface and the mining done by simply quarrying and the quantity of ore can be measured with substantial accuracy, the selling price of ore mined and sold in any one year is not income within the meaning of the corporation excise tax act of August 5, 1909 (36 Stat. 112), especially where the price stipulated the extent and value of the ore in the ground on January 1 of the taxing year. Under such circumstances the mining is quarrying operations and involves no elements of uncertainty except those from contingencies which affect the value of all raw material, and the business more nearly proximates manufacturing than it does mining as this term is commonly understood. Biwabik Mining Co. v. United States 242 Fed. 9,

p. 15.

RECEIPTS FROM SALE OF LEASE-NOT TAXABLE INCOME.

The receipts from the sale of the entire interest in a lease by the lessee of a mine are receipts from the sale of capital assets and not from net income, and such receipts are not taxable under the corpo