Clayton County Bd. of Tax Assessors v. City of Atlanta, DOBBS-PASCHAL

• Decision Date: 01 December 1982
• Docket Number: DOBBS-PASCHAL,64736 and 64861,Nos. 64735,s. 64735
• Citation: 298 S.E.2d 544,164 Ga.App. 864
• Parties: CLAYTON COUNTY BOARD OF TAX ASSESSORS v. CITY OF ATLANTA (Two Cases). CITY OF ATLANTA v. CLAYTON COUNTY BOARD OF TAX ASSESSORS. (Two Cases). CLAYTON COUNTY BOARD OF TAX ASSESSORS v.MIDFIELD CORPORATION.
• Court: Georgia Court of Appeals

Page 544

298 S.E.2d 544

164 Ga.App. 864

CLAYTON COUNTY BOARD OF TAX ASSESSORS v. CITY OF ATLANTA (Two Cases).

CITY OF ATLANTA v. CLAYTON COUNTY BOARD OF TAX ASSESSORS. (Two Cases).

CLAYTON COUNTY BOARD OF TAX ASSESSORS v. DOBBS-PASCHAL MIDFIELD CORPORATION.

Nos. 64735, 64736 and 64861.

Court of Appeals of Georgia.

Dec. 1, 1982.

C. Crandle Bray, Donald M. Comer, Riverdale, for appellant in Nos. 64735 and 64736.

Marva J. Brooks, Joe M. Harris, Jr., David D. Blum, Atlanta, for appellee in No. 64735.

Thomas C. Harney, Deborrah A. Sutter, Atlanta, for appellee in No. 64736.

Marva J. Brooks, Joe M. Harris, Jr., David D. Blum, Atlanta, for appellant in No. 64861.

Donald M. Comer, Riverdale, for appellee in No. 64861.

BIRDSONG, Judge.

This is a consolidation of three separate appeals from orders of the superior court dealing with the taxability of certain property located within the Hartsfield Atlanta International Airport complex ("Hartsfield"). We will treat each appeal in separate divisions of this opinion.

1. Case No. 64736 is an appeal by the Clayton County Board of Tax Assessors ("County") from the superior court's order adjudging nontaxable the interest of Dobbs-Paschal Midfield Corporation ("Dobbs") in the central commissary facilities at Hartsfield leased from the City of Atlanta ("City"). The court, after trial without a jury, concluded that the interest of Dobbs in the subject property is "merely a nontaxable usufruct in, or license to use, the commissary building and this interest is not subject to ad valorem taxes by Clayton County. The restrictions imposed by the lease agreement and concession agreement upon Dobbs's use and occupancy of the commissary are inconsistent with a taxable estate for years." The County recites three enumerations of error, challenging each conclusion of law reached by the trial court. However, both parties agree in their briefs that this appeal presents only one issue: whether the interest of Dobbs in the subject property constitutes an estate for years or merely a usufruct or lesser interest.

The following constitutes the findings of fact by the trial court and are not challenged by the County: (1) the subject property is located in the County and is known as the Commissary Building; (2) the City owns and has title to the Commissary Building and the land on which it stands; (3) Dobbs entered into a concession agreement with the City whereby the City granted Dobbs the right and obligation to occupy and use concession space at Hartsfield to construct or purchase all necessary improvements and to finish, equip, operate, and maintain such premises to provide the inside concessions to the Hartsfield terminal; (4) pursuant to such agreement, Dobbs, as principal concessionaire, is required to provide a warehouse facility to serve as a central receiving point and a delivery system for the deliveries of all supplies, etc., used or sold in the inside concession at Hartsfield; (5) Dobbs leased from the City the subject property on which the commissary building now stands; (6) pursuant to the lease agreement, Dobbs constructed the commissary building pursuant to plans, designs, and specifications approved by the City and the Commissioner of Aviation; (7) the City has reimbursed Dobbs for all costs in the construction of the building; (8) the commissary building, which is a warehouse, office, and commissary, may be used by Dobbs, pursuant to the lease, only as a commissary in connection with its business as principal concessionaire at Hartsfield; (9) the subject lease incorporates and relies upon the concession agreement; (10) the lease and concession agreement give the City the right to future and continuous approval, inspection and supervision of Dobbs' operation of the commissary, and both documents contain numerous specific restrictions relating, without limitation, to external and internal improvements and structural changes, garbage disposal, movement of goods and personnel, advertising, security, and the ability of Dobbs to alienate or mortgage its interest in and obligations under the lease; (11) because of these restrictions, the operation and use of the commissary by Dobbs is specifically, narrowly, and strictly limited; (12) Dobbs performs several public functions for the City in connection with the operation of the commissary; (13) Dobbs makes no profit on the commissary operation; and (14) the stated lease term is fifteen years, but the City has an absolute right to terminate the concession agreement after seven years.

Additional facts adduced at trial show that Dobbs is responsible under the lease for payment of utilities and insurance. The lease also provides that Dobbs is liable for "any taxes and any assessment legally levied or assessed ... on the leasehold interest of [Dobbs]" or on any improvements thereon.

It is well settled that "[a]n estate for years is a taxable estate. [Cit.] On the other hand, a mere usufruct, sometimes referred to as a mere license to use, is not a taxable estate." Camp v. Delta Air Lines, 232 Ga. 37, 39, 205 S.E.2d 194. Although there is a presumption that an estate for years exists where the term of a lease exceeds five years, the presumption may be overcome by the facts surrounding the lease. Camp, supra. "The [lease] contract must, therefore, be construed to determine the intention of the parties." Henson v. Airways Service, 220 Ga. 44, 49, 136 S.E.2d 747.

"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, it passes as realty. It may be for any number of years, provided the limitation is within the rule against perpetuities." Code Ann. § 85-801. A usufruct is distinguishable from an estate for years. "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...." Code Ann. § 61-101.

We have examined the provisions of and evidence concerning the lease in question and conclude that the trial court was correct in determining that the lease conveyed a usufruct only and did not convey an estate for years. The lease clearly conveyed "only a circumscribed and limited 'use of the premises and facilities' characteristic of a usufruct." Camp, supra, 232 Ga. p. 40, 205 S.E.2d 194. The lease in this case is analogous to the lease addressed in Camp, supra. "[Dobbs] subletting and assignment rights are restricted in a manner inconsistent with an estate for years which normally can be alienated without the grantor's consent. [Dobbs] is required by the agreement to secure the city's approval before making improvements to the rented space and it may not erect signs or other advertising without city approval." Camp, supra, p. 41, 205 S.E.2d 194. This conclusion is supported by the holdings in both Henson, supra, and Southern Airways Co. v. DeKalb County, 216 Ga. 358, 365, 116 S.E.2d 602. The crux of these decisions was the fact that each lease "granted a limited and restricted use of the premises ... to furnish such 'facilities and services' customarily furnished at similar airport terminals." Henson, supra, 220 Ga. p. 50, 136 S.E.2d 747. The lessees did "not have 'an estate for years, carry[ing] with it the right to use in as absolute a manner as a greater estate.' " Camp, supra, 232 Ga. p. 41, 205 S.E.2d 194. "[T]he restrictions imposed upon [Dobbs'] use of the premises ... the lease are so pervasive as to be fundamentally inconsistent with the concept of an estate for years." Allright Parking v. Joint City-County Board of Tax Assessors, 244 Ga. 378, 387, 260 S.E.2d 315.

The present case is unlike Buoy v. Chatham Co. Bd. of Tax Assessors, 142 Ga.App. 172, 235 S.E.2d 556. In reaching the conclusion that the lease in that case conveyed an estate for years, the court stated: "Reading the lease in its entirety, there was a clear intent to grant to the appellants the right to build and operate a motel on the lessor's lands and the latter did not purport to exercise any dominion or control over the operation of the motel. This lack of dominion or control is what distinguishes this case from [Southern Airways, supra, Henson, supra, and Camp, supra]." Buoy, supra, p. 173, 235 S.E.2d 556.

Since the lease under consideration conveyed to Dobbs a mere usufruct, its interest is not taxable. Whitehead v. Kennedy, 206 Ga. 760, 58 S.E.2d 832. Consequently, the trial court correctly reversed the decision of the Board of Equalization and determined that Dobbs' interest is not taxable.

2. Case No. 64735 involves the County's appeal from an order of the trial court holding that the City's interest in the property described in Division 1 of this opinion is not taxable.

Code Ann. § 2-4604 (Constitution, Art. VII, Sec. I, Para. IV) provides that the "General Assembly may, by law, exempt from taxation all public property ...." Code Ann. § 91A-1102 provides, in part, that "all public property" is exempt from ad valorem property taxes but that "[n]o public real property which is owned by a political subdivision of this State and which is situated outside the territorial limits of the political subdivision shall be exempt from ad valorem taxation unless the property is: (i) Developed by grading or other improvements to the extent of at least 25 per cent. of the total land area and facilities are located on the property which are actively used for a public or governmental purpose; [or] (ii) 300 acres of [sic] less in area...." The property in question is a 9.5 acre portion of the 3,700 acre Hartsfield property. Since the parcel under consideration is a part of a larger tract in excess of...