Allied Timber Co. v. Department of Revenue
Decision Date | 07 June 1983 |
Docket Number | No. TC,TC |
Citation | 296 Or. 412,677 P.2d 33 |
Parties | ALLIED TIMBER COMPANY, Plaintiff-Respondent, v. DEPARTMENT OF REVENUE, State of Oregon, Defendant-Appellant. 1594; SC 29102. |
Court | Oregon Supreme Court |
G.F. Bartz, Asst. Atty. Gen., Salem, argued the cause for defendant-appellant. With him on brief was Dave Frohnmayer, Atty. Gen.
Ridgway K. Foley, Jr., and Roy D. Lambert, Portland, argued the cause for plaintiff-respondent. With them on the brief was Schwabe, Williamson, Wyatt, Moore & Roberts.
In Banc.
The Port of Cascade Locks owned land, and under ORS 307.090(1) that land would ordinarily be exempt from taxation. 1 The land was leased to plaintiff, which was the owner of the improvements thereon. As a result of the leasing, the land, as well as the improvements, was subject to taxation by reason of ORS 307.110(1). 2
During five years of the leasehold period, namely, the tax years 1973-1974 through 1977-1978, the assessor mailed notices of assessment and taxation to the plaintiff. Each notice contained a statement in bold face type that the assessments were for improvements only. The statements showed the assessed value of the improvements. Although, for the purpose of this litigation, it is now stipulated that the values were overstated, plaintiff did not appeal. Plaintiff paid taxes in accordance with the value of the improvements shown on the notices.
The assessor failed, during those five years, to assess the land and to include the land on the assessment roll. Apparently finally realizing that the land was taxable under ORS 307.110(1), the assessor sent to the plaintiff notice that the land would be treated as "omitted property" under ORS 311.207, which requires such property to be placed on the tax rolls for the current tax year and for five preceding years. By its contract with the Port, the plaintiff was required to pay the taxes on both land and improvements.
At this point, the plaintiff reviewed its holdings and concluded that it had actually paid taxes in each year in an amount which equalled or exceeded the total amount of taxes for both land and improvements. Plaintiff then appealed the assessment for omitted property tax, contending that it was entitled to recoupment for the overpayment of taxes upon the improvements. 3
The Department of Revenue held against the plaintiff, which then appealed to the Oregon Tax Court. Both in that court and in this, plaintiff has conceded that the doctrine of recoupment has no application unless the described course of events constitutes but one "transaction." 4 The Oregon Tax Court held for the plaintiff. After first recognizing that recoupment is recognized in general in this state, that court, in a written opinion, stated:
Defendant appealed to this court under ORS 305.445. Defendant contends that the assessment and taxation of land and the assessment and taxation of improvements upon the land are separate transactions when the land and the improvements are under separate ownership and, consequently, the doctrine of recoupment cannot apply. The plaintiff contends that the separate assessments of the land and the improvements are so significantly related that this must be considered to be but one transaction, thereby making recoupment available.
ORS 308.115(2) commands that when an improvement is owned separately from the land on which it stands, the improvement must be assessed and taxed in the name of the owner of the improvement. 5 ORS 308.215(1) requires the assessor to prepare the assessment roll in form which separates the value of improvements from the value of land. 6 Under ORS 311.250 the tax collector must mail or deliver to each person shown on the tax roll as an owner of real property a written statement of property taxes payable. The failure of the taxpayer to receive the required statement does not invalidate the assessment, levy, tax, or proceeding to collect the tax. The definition for tax purposes of real property is found in ORS 307.010(1). The definition is by inclusion:
" 'Land,' 'real estate' and 'real property' include the land itself, above or under water; all buildings, structures, improvements, machinery, equipment or fixtures erected upon, under, above or affixed to the same; all mines, minerals, quarries and trees in, under or upon the land; all water rights and water powers and all other rights and privileges in any wise appertaining to the land; and any estate, right, title or interest whatever in the land or real property, less than the fee simple."
From these statutes it appears that the Port was the owner of real property, i.e., the land, and that the plaintiff was the owner of real property, i.e., the improvements. The assessor was required to assess each separately and to prepare the roll to show separately the value of the land and the improvements. The Port and the plaintiff should have been shown on the roll to each be an owner of distinct "real property." The collector should have sent separate statements of the tax payable. ORS 311.250(1). 7
The plaintiff should not have been shown on the roll as the owner of the land, and nothing indicates that it was so shown. The tax collector had no duty to send to the plaintiff a written statement of the tax payable on the land. Nothing indicates that during the five year period the tax collector sent any such statement to the plaintiff.
On the other hand, the plaintiff was shown on the roll to be the owner of the improvement, and statements were sent to the plaintiff for the tax payable on the improvements, and the improvements only, as shown in bold face type. This was according to the law.
There is no in personam liability for the payment of taxes upon real property in Oregon. If taxes are not paid, collection is by way of foreclosure. This plaintiff had no statutory liability for these taxes and insofar as the statutes are concerned was a stranger to the tax relationship between the Port and the tax assessor and the tax collector. 8
According to the statutes reviewed above, we must conclude that there were two separate transactions involved. One was the assessment and levy on the improvements owned by the plaintiff, and the plaintiff, as owner of the improvements, had to pay the tax thereon if plaintiff would avoid loss of the improvements by foreclosure. The other transaction was the assessment and levy on the land owned by the Port, and because that land became subject to taxation when it was leased, the Port, in the first instance, would have had to pay the tax to avoid collection by foreclosure. That the assessor "omitted" the land for the years in question did not change those distinct tax relationships.
This court has noted the place of recoupment in the law. In Krausse v. Greenfield, 61 Or. 502, 507, 123 P. 392 (1912), it is stated:
* * * "
Historically, recoupment was considered a matter of defense. It was a shield rather than a sword. 9 It is usually spoken of in terms of its utilization by a "defendant." For example, in National Cash Register Co. v. Joseph, 299 N.Y. 200, 86 N.E.2d 561 (1949), it is stated:
(Emphasis added)
In the case at bar it is the plaintiff which asserts a right to invoke the doctrine. The taxpayer does not invoke the doctrine to defend itself against a claim by the tax collector. As stated above, there is no in personam liability for the tax on this land. The tax collector has no claim to assert against this plaintiff. Were the tax on the land not paid, the tax collector would proceed by way of foreclosure against the land, which is not owned by this plaintiff. The collector did notify plaintiff that the land leased by ...
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