American Cablevision of Rochester, Inc. v. Jacobs

• Decision Date: 12 April 1984
• Citation: 474 N.Y.S.2d 653,101 A.D.2d 65
• Parties: In the Matter of AMERICAN CABLEVISION OF ROCHESTER, INC., Respondent, v. Paul H. JACOBS, Assessor of the City of Rochester, County of Monroe, State of New York, and William G. Coppard, et al., Constituting the Board of Assessment Review of the City of Rochester, New York, Appellants.
• Court: New York Supreme Court — Appellate Division

Page 653

474 N.Y.S.2d 653

101 A.D.2d 65

In the Matter of AMERICAN CABLEVISION OF ROCHESTER, INC., Respondent, v. Paul H. JACOBS, Assessor of the City of Rochester, County of Monroe, State of New York, and William G. Coppard, et al. Constituting the Board of Assessment Review of the City of Rochester, New York, Appellants.

Supreme Court, Appellate Division,

Fourth Department.

April 12, 1984.

Louis N. Kash, Corp. Counsel, Rochester (Susan Hauser, Rochester, of counsel), for appellants.

Mayberry, Kurlander, Burgess, Licht & Lunn, Rochester, Attorneys (Richard Mayberry, Rochester, of counsel), for respondent.

Before DILLON, P.J., and CALLAHAN, DOERR, GREEN and MOULE, JJ.

GREEN, Justice.

On this appeal, the issue is whether transmission and distribution cables, owned by respondent and situated on private property in the City of Rochester pursuant to easements, constitute taxable real property under subdivision 12 of section 102, of the Real Property Tax Law. ¹ We conclude, on the unanimous decision of the Court of Appeals in Matter of Manhattan Cable TV Servs. Div. of Sterling Information Servs. v. Freyberg, 49 N.Y.2d 868, 427 N.Y.S.2d 933, 405 N.E.2d 178, that since respondent's transmission and distribution cables are significantly different from telephone and telegraph equipment in both structure and function, they cannot be taxed as real property, as a matter of law.

Respondent is in the business of furnishing television programming to subscribers for a fee. A cable television system consists of a master antenna which receives various broadcast signals. These signals are then transmitted through coaxial cables ("trunk lines") connected to respondent's central originating facility (the "head end"). The proposed signal is then transmitted through cables and various feedera and drop lines that branch off the cables, to the subscribers' television sets. Each subscriber pays an installation fee and thereafter, a monthly service charge.

In the Manhattan Cable case, the Court of Appeals held, as a matter of law, that the movable equipment ² at either end of the system was not taxable under paragraph [d] of subdivision 12 of section 102 of the Real Property Tax Law. They concluded:

We are satisfied from the record before us that there are significant differences, in both structure and function, between cable television equipment and telephone and telegraph equipment--the former, for example, allowing only one-way communication. These differences, as a matter of law, preclude taxation of petitioner's equipment upon the theory that it is "telephone or telegraph" equipment within the meaning of the statute. (Cf. New York State Cable Tel. Assn. v. State Tax Comm., 59 A.D.2d 81, 83, 397 N.Y.S.2d 205.)

(49 N.Y.2d 868, supra, p. 869, 427 N.Y.S.2d 933, 405 N.E.2d 178).

This holding was in sharp contrast to the finding by Special Term (90 Misc.2d 135, 393 N.Y.S.2d 877), affirmed without opinion by the Appellate Division (68 A.D.2d 873, 414 N.Y.S.2d 1007), that "cables by which petitioner transmits its programming are similar in their characteristics to telephone and telegraph lines" because they "run through the same subway ducts as the lines of local telegraph and telephone companies" (90 Misc.2d 135, 137, 393 N.Y.S.2d 877). In reversing, the Court of Appeals relied upon New York State Cable Tel. Assn. v. State Tax Comm., 59 A.D.2d 81, 397 N.Y.S.2d 205, where the issue was whether sales tax upon telephone and telegraph service (Tax Law, § 1105, subd. b) was payable upon charges for cable television service. The Appellate Division, Third Department, held that it was not because:

In our view, the ordinary person reading the language in subdivision (b) of section 1105 referring to telephone and telegraph service would not ordinarily conclude that cable television service was intended to be included therein. While both telephony and telegraphy on the one hand, and cable television service on the other, involve dissemination by electronic means of communications as the latter term is used in its broadest sense, we do not believe it is commonly understood that the former includes the latter. In the construction of tax laws, a clearer manifestation of legislative intent should be required before the administrative agency can be allowed to encompass within one category of communication a different category of communication which to the mind of the ordinary individual would not be included therein. (New York State Cable Tel. Assn. v. State Tax Comm., supra, p. 83, 397 N.Y.S.2d 205.)

The same reasoning applies with equal force here.

Any tax, whether on sales or real property, must be authorized by statute. The holdings of the Court of Appeals and the Third Department indicate that cable television is not embraced by statutory provisions dealing with telephone and telegraph companies. That is precisely the issue we are faced with here. Since cable equipment is not functionally analogous to telephone and telegraph equipment, it may not be taxed under a statute which applies only to telephone and telegraph equipment (Matter of Manhattan Cable TV Servs., Div. of Sterling Information Servs. v. Freyberg, supra; Matter of Crystal v. City of Syracuse, 47 A.D.2d 29, 364 N.Y.S.2d 618 [opn. by Simons, J.], affd. 38 N.Y.2d 883, 382 N.Y.S.2d 745, 346 N.E.2d 546; Matter of Ceracche Tel. Corp. v. Public Serv. Comm., 49 Misc.2d 554, 267 N.Y.S.2d 554).

The fact of the matter is that respondent's transmission cables are not "telephone lines, wires, poles and appurtenances" and therefore are not taxable under paragraph [d], nor are they taxable under paragraph [e], which applies only to utility "mains, pipes and tanks." Since the words "telephone" and "telegraph" are not defined in the statute, they must be given their ordinary meaning (see Quotron Systems v. Gallman, 39 N.Y.2d 428, 431, 384 N.Y.S.2d 147, 348 N.E.2d 604). Any ambiguities in the statute must be resolved in favor of the respondent taxpayer and against the City (American Locker Co. v. City of New York, 308 N.Y. 264, 269, 125 N.E.2d 421; McKinney's Cons.Laws of N.Y., Book 1, Statutes, § 313, subd. c).

Moreover, since cable television is not a utility (Matter of Manhattan Cable TV Servs., Div. of Sterling Information Servs. v. Freyberg, 49 N.Y.2d 868, 870, 427 N.Y.S.2d 933, 405 N.E.2d 178, supra; Executive Law, art. 28), paragraph [e] does not apply. A tax law must be interpreted as it would be read by the ordinary person (Matter of Holmes Elec. Protective Co. v. McGoldrick, 262 App.Div. 514, 518, 30 N.Y.S.2d 589; affd. 288 N.Y. 635, 42 N.E.2d 737). The ordinary person reading the language of paragraphs [d] and [e] would not conclude that cable television equipment, whether movable or not, was intended to be included within the statute.

For this reason, recent attempts to tax various technological equipment as "telephone and telegraph lines, wires, poles and appurtenances" have been unsuccessful (see Matter of Quotron Systems v. Irizarry, 48 N.Y.2d 795, 423 N.Y.S.2d 918, 399 N.E.2d 948 [stock ticker tape quotation transmission over leased telegraph and telephone lines]; Bunker Ramo Corp. v. Tax Comm. of City of N.Y., 48 N.Y.2d 798, 423 N.Y.S.2d 923, 399 N.E.2d 953 [electronic data processing and digital computer service transmitted from a computer center via AT & T lines to terminal equipment in the subscriber's premises]; Matter of Crossman Cadillac v. Board of Assessors of County of Nassau, 44 N.Y.2d 963, 408 N.Y.S.2d 326, 380 N.E.2d 157; affg. 60 A.D.2d 842, 400 N.Y.S.2d 850 [privately owned telephone system installed in business premises including 26 phones, an apparatus cabinet and 10 trunk relays]; Matter of Metropolitan Bank of Syracuse v. Department of Assessment of City of Syracuse, 44 N.Y.2d 864, 407 N.Y.S.2d 694, 379 N.E.2d 220; affg. 57 A.D.2d 1055, 395 N.Y.S.2d 569 [alarm system including surveillance cameras, and a...