Camp v. Delta Air Lines, Inc.

• Decision Date: 04 April 1974
• Docket Number: Nos. 28597,28598,s. 28597
• Citation: 232 Ga. 37,205 S.E.2d 194
• Parties: Jack L. CAMP et al. v. DELTA AIR LINES, INC., et al. John A. BLACKMON v. DELTA AIR LINES, INC., et al.
• Court: Georgia Supreme Court

Page 194

205 S.E.2d 194

232 Ga. 37

Jack L. CAMP et al. v. DELTA AIR LINES, INC., et al.

John A. BLACKMON v. DELTA AIR LINES, INC., et al.

Nos. 28597, 28598.

Supreme Court of Georgia.

April 4, 1974.

Gambrell, Russell, Killorin, Wade & Forbes, Theodore M. Forbes, Jr., E. Smythe Gambrell, Guy Parker, Charles M. Lokey, Atlanta, for appellees.

Arthur K. Bolton, Atty. Gen., Richard L. Chambers, H. Perry Michael, Asst. Attys. Gen., Atlanta, for appellants.

Syllabus Opinion by the Court

INGRAM, Justice.

The single question presented by these two appeals is whether Delta Air Lines Inc., is subject to ad valorem taxation for space rented in the terminal of Hartsfield Atlanta International Airport under an agreement between Delta and the City of Atlanta.

The facts leading up to the present litigation are substantially as follows: In May of 1961, Delta entered into an agreement with the City of Atlanta for occupancy of space in the newly-constructed terminal building at the airport. From then until 1969 Delta was not taxed and did not return taxes for this property. In August of 1969, however, the tax assessors (Joint City of Atlanta-Fulton County Board of Tax Assessors) advised Delta that there would be added a new item to Delta's list of taxable property, which being 'leasehold interests . . . exclusive space in Atlanta Airport Terminal.' The property was assessed at $3,100,000. Delta then protested to the tax assessors both the taxability of the property and its assessed value, but this protest was ineffectual because in June of 1970, payment of $198,714.40 by Delta was demanded for taxes claimed due and owing on the alleged 'leasehold interest.' It was at this point that Delta brought suit against the tax assessors and the Revenue Commissioner of Georgia seeking to enjoin the assessment and collection of taxes with respect to the rented airport terminal property. Both Delta and the defendants filed motions for summary judgment on the issue whether Delta had a taxable interest in the airport property. It is from the grant of Delta's motion for summary judgment and the denial of the defendants' motion that the defendants have now appealed to this court. The appeal in Case No. 28597 is that filed by the City of Atlanta-Fulton County Tax Assessors, and the appeal in Case No. 28598 is that of the State Revenue Commissioner. Both appeals assert identical errors on the judgments of the trial court and consequently will be treated together in this opinion.

The appellants state the issue presented for decision is whether 'the lease between Delta Air Lines, Inc., and the City of Atlanta . . . merely granted to Delta Air Lines, Inc., a usufruct which was not subject to ad valorem taxation, . . . (or whether) the lease granted an estate for years which was a property right in Delta Air Lines, Inc. which was subject to ad valorem taxation.'

What is a usufruct? Code § 61-101 provides that: 'When the owner of real estate grants to another simply the right to possess and enjoy the use of such real estate, either for a fixed time or at the will of the grantor, and the tenant accepts the grant, the relation of landlord and tenant exists between them. In such case no estate passes out of the landlord, and the tenant has only a usufruct, which he may not convey except by the landlord's consent and which is not subject to levy and sale; and all renting or leasing of such real estate for a period of time less than five years shall be held to convey only the right to possess and enjoy such real estate, and to pass no estate out of the landlord, and to give only the usufruct, unless the contrary shall be agreed upon by the parties to the contract and so stated therein.' A different relationship exists under an estate for years. The Code states that, 'An estate for years is one which is limited in its duration to a period fixed or which may be made fixed and certain. If it is in lands, if passes as realty. It may be for any number of years, provided the limitation is within the rule against perpetuities.' Code § 85-801. See, also, Code § 85-803.

An estate for years is a taxable estate. Delta Air Lines, Inc. v. Coleman, 219 Ga. 12, 131 S.E.2d 768. On the other hand, a mere usufruct, sometimes referred to as a license to use, is not a taxable estate. Whitehead v. Kennedy, 206 Ga. 760, 58 S.E.2d 832. Briefly stated, the reason a usufruct is not considered to be a taxable estate is because the fee estate in the property remains with the lessor and is undisturbed by the agreement for the lessee to use the property. A leading case dealing with whether a particular agreement creates a usufruct or an estate for years is Warehouses, Inc. v. Wetherbee, 203 Ga. 483, 46 S.E.2d 894. As in the construction of all agreements, the cardinal rule to be used by the court is that the terms of the instrument itself must be scrutinized to ascertain what interest the parties intended to be conveyed or demised by it. See, also, Hutcheson v. Hodnett, 115 Ga. 990, 42 S.E. 422 (1902).

We note that, under the provisions of Code § 61-101, where the term of the lease is less...