Carolina Cotton & Woolen Mills Co v. Commonwealth

• Decision Date: 17 January 1924
• Court: Virginia Supreme Court
• Parties: CAROLINA COTTON & WOOLEN MILLS CO. v. COMMONWEALTH et al.

121 S.E. 65

CAROLINA COTTON & WOOLEN MILLS CO.

v.COMMONWEALTH et al.

Supreme Court of Appeals of Virginia.

Jan. 17, 1924.

[Ed. Note.—For other definitions, see Words and Phrases, First and Second Series, Real Estate.]

Error to Circuit Court, Henry County.

Application by the Carolina Cotton & Woolen Mills Company against the Commonwealth and others, for the correction of alleged erroneous assessments of taxes. From an adverse judgment, applicant brings error. Reversed and rendered.

Gravely & Carter, of Martinsville, for plaintiff in error.

J. Vaughan Gary, of Richmond, for the Commonwealth.

WEST, J. The Carolina Cotton & Woolen Mills Company complains of a judgment denying its application for the correction of alleged erroneous assessments of taxes against it in the years 1920, 1921, and 1922.

The Carolina Cotton & Woolen Mills Company, a corporation organized under the laws of the state of North Carolina, owns and operates a large cotton mill plant at Fieldale, Henry county, Va.

The company's plant consists of mill, bleachery, filter plant, and power house, erected and used for the purpose of manufacturing cotton cloth, and is equipped with the necessary machinery for that purpose, most of which is heavy and bolted to the floors of the buildings.

In 1920 the assistant assessor of lands, according to his testimony, assessed the improvements on the company's land, including the machinery in the buildings, at the aggregate sum of $210,000, but his land book shows no separate entry of the value of the machinery, but simply the $210,000 in the column for improvements. In 1921 the commissioner of the revenue for district No. 2 added nothing to the land book for that year on account of improvements and it does not appear that any improvements had been made since the assessment of lands in 1920.

In the year 1922, the commissioner of the revenue added to the assessment of the company for additional machinery installed in its plant to February 1, 1922, the sum of $85,000, placing this sum in the column for machinery on the land boot.

In the summer of 1922, the examiner of records, being of the opinion that the machinery in the buildings should be assessed as capital invested in business, assessed the company with its value on the 1st day of February, 1920, $433,932, as omitted capital for 1920, and its value on the 1st day of February, 1921, $484,347, as omitted capital for 1921, and also reported to the commissioner of the revenue for assessment for the year 1922, as capital, the sum of $686,685, in addition to the capital reported by the company as the value of the machinery on February 1, 1922.

On September 27, 1922, the commissioner of the revenue for district No. 2 in Henry county, upon the report of the examiner of records, assessed and charged the companywith state taxes amounting to $7,334.70, and county levies amounting to $2,55S.70, on capital for the then current year 1922; with state taxes, penalties, and interest amounting to $4,495.71, and county levies, penalties, and interest amounting to $1,586.72, on omitted capital for the year 1921; and with state taxes, penalties, and interest amounting to $4,260.12, and county levies, penalties, and interest amounting to $1,503.58, on omitted capital for the year 1920.

Upon the final hearing the court refused to grant relief against the assessments reported by the examiner of records, and entered the judgment complained of.

The company contends that the machinery in the plant at Fieldale is real estate, assessable as such only, that it was so assessed, but, if not assessed as real estate, it cannot now be assessed as capital.

The commonwealth insists that the machinery was properly assessable as capital and not as real estate, that, if it was assessable as real estate, it was not so assessed for the years 1920, 1921, and 1922, and that the assessment of the machinery as omitted capital for these years is legal, valid, and binding.

The assignments of error can be disposed of by the consideration of two questions:

(1) Is the company's machinery properly assessable as real estate?

(2) If so, was it so assessed for the years 1920, 1921, and 1922?

Both questions must be answered in the affirmative.

As appears from the evidence, the company's plant is located on its own land, and was erected to be indefinitely and permanently used for the manufacture of cotton cloth. The buildings are of brick with subfloors of concrete and cement, with double-wooden floors on top of the concrete floors. The machinery is very heavy, and is securely attached to the buildings by iron bolts or rods extending in some instances through the wooden floors only, but in others through the wooden and concrete floors, and 40 per cent, of the machinery is bolted to concrete foundations, extending several feet below the floors. The wires and pipes connecting the machinery with the power house are laid in the concrete floors, and according to the testimony of two witnesses the machinery could not be removed from the buildings without substantial injury thereto, and is essential for the purposes for which the buildings are occupied; the buildings and machinery together constituting the complete manufacturing plant.

In the case of Green v. Phillips, 67 Va. (26 Grat.) 752, 21 Am. Rep. 323, Judge Christian, speaking for the court, quoted with approval from Lord Mansfield in Lawton v. Salmon, 1 H. Bl. 259, as follows:

"Whatever is essential to the purposes for which the building is used will be considered as a fixture, although the connection between them is such that it may be severed without physical or lasting injury to either."

Proceeding, Judge Christian says:

"In accordance with this doctrine, it has been repeatedly held that a steam engine, erected for the purpose of furnishing the motive power of a manufactory, is to be regarded as a fixture, or, in other words, as a part of the manufactory itself; and there are numerous cases which hold that the machinery of a manufactory is to-be regarded as part of the realty, whether it is attached to the body of the building, or merely connected with the other machinery by running bands or gearing, which may be thrown off at pleasure, without...