Consolidated Diesel Elec. Corp. v. City of Stamford

• Decision Date: 16 January 1968
• Citation: 238 A.2d 410,156 Conn. 33
• Court: Connecticut Supreme Court
• Parties: CONSOLIDATED DIESEL ELECTRIC CORPORATION v. CITY OF STAMFORD.

Page 410

238 A.2d 410

156 Conn. 33

CONSOLIDATED DIESEL ELECTRIC CORPORATION v. CITY OF STAMFORD.

Supreme Court of Connecticut.

Jan. 16, 1968.

Samuel J. Bernstein, Stamford, with whom was Joseph P. Zone, Stamford, for plaintiff.

Ronald M. Schwartz, Asst. Corp. Counsel, with whom, on the brief, was W. Patrick Ryan, Corp. Counsel, for defendant.

Before ALCORN, HOUSE, THIM, RYAN and COVELLO, JJ.

HOUSE, Associate Justice.

This case is before us on a stipulation of facts and a reservation for the advice of this court pursuant to Practice Book, §§ 738 and 739. The plaintiff is engaged in the business of manufacturing and assembling power equipment in the city of Stamford and in the course of its business manufactures items for the United States air force pursuant to the terms of several contracts. Each contract contained the following provision: 'Upon the making of any progress payments under this contract, title to all parts materials, inventories, work in process and non-durable goods theretofore acquired or produced by the Contractor for the performance of this contract, and properly chargeable thereto under sound accounting practice, shall forthwith vest in the Government; and title to all like property thereafter acquired or produced by the Contractor for the performance of this contract and properly chargeable thereto as aforesaid shall vest in the Government forthwith upon said acquisition or production: Provided, that nothing herein shall deprive the Contractor of any further progress or final payments due or to become due hereunder; or relieve the Contractor or the Government of any of their respective rights or obligations under this contract.' For the purpose of local property taxation the assessor for the city of Stamford assessed to the plaintiff various equipment, parts, materials, work in process and nondurable tools which were on its premises in Stamford and which were in various stages of completion and came within the purview of the quoted contract provision. It is agreed that title to all of this personal property so assessed to the plaintiff was vested in the United States government and that, if it is taxable at all by the city of Stamford, it is taxable in its entirety and as assessed. The advice of this court is sought in answer to three specific questions ¹ which involve a determination as to whether the subject personal property is taxable to the plaintiff despite the fact that title to it is vested in the United States government, whether § 12-58 of the General Statutes authorizes Stamford to tax the possessory interest of the plaintiff in the property, and whether the plaintiff is the 'owner' of the property within the meaning of § 12-58.

'The legislature has the power, within constitutional limitations not here involved, to 'choose the subject matter of taxation and to fix the method and extent of a tax.' First Federal Savings & Loan Assn. of New Haven v. Connelly, 142 Conn. 483, 490, 115 A.2d 455, 458, and cases cited therein. Municipalities have no powers of taxation except those expressly given to them by the legislature. Chamberlain v. City of Bridgeport, 88 Conn. 480, 490, 91 A. 380, and cases cited therein. Their powers of taxation can be lawfully exercised only in strict conformity to the terms by which they were given. City of Hartford v. Poindexter, 84 Conn. 121, 132, 79 A. 79; Thames Mfg. Co. v. Lathrop, 7 Conn. 550, 556. When a taxing statute is being considered, ambiguities are resolved in favor of the taxpayer. Connelly v. Waterbury National Bank, 136 Conn. 503, 510, 72 A.2d 645; Curtis v. Corbin, 93 Conn. 648, 656, 107 A. 506.' Security Mills, Inc. v. Town of Norwich, 145 Conn. 375, 377, 143 A.2d 451, 453. With these general principles in mind, two provisions of the General Statutes are relevant to the questions which the parties pose. Section 12-58 of the General Statutes provides that the property of any manufacturing business 'shall be assessed in the name of the owner or owners in the town * * * where the business is carried on.' Section 12-81 of the General Statutes provides in part: 'The following-described property shall be exempt from taxation: (1) * * * Property belonging to, or held in trust for, the United States, the taxation of which has not been authorized by congress.' The principal questions therefore are whether the plaintiff was the 'owner' of the property after title to it had vested in the United States government so that despite the vesting of title the property was nevertheless taxable to the plaintiff under General Statutes § 12-58 or whether upon the vesting of title it became property 'belonging to, or held in trust for, the United States' and accordingly exempt from taxation under the specific provisions of General Statutes § 12-81(1) and the landmark case of M'Culloch v. Maryland, 17 U.S. (4 Wheat.) 316, 4 L.Ed. 579.

We conclude that, when title vested in the United States government, the government became the owner of the property as that term is used in our taxing statutes. Title to property means in its ordinary sense the right to, or ownership in, the property. 'This is the ordinary acceptation of the term. When we say, a man has the title to * * * (property), we mean, he is the onwer of it, and vice versa. And this corresponds with the legal meaning.' Shelton v. Alcox, 11 Conn. 240, 249; 84 C.J.S. Taxation § 94; see Liberman v. Beckwith, 79 Conn. 317, 321, 65 A. 153. Ownership is an essential incident of title and 'according to the commonly approved usage of the language' (General Statutes, § 1-1), an owner is 'one that owns; one that has the legal or rightful title whether the possessor or not.' Webster, Third New International Dictionary. By the transfer of title, the legal and beneficial interests in the property were vested in the government, and the plaintiff had nothing except the right to the use and possession pursuant to the contract. Accordingly, the plaintiff was no longer the 'owner' of the property as that term is used in § 12-58 of the General Statutes. Instead, it became property 'belonging to' the United States, whose ownership interest in it is exempt from local taxation under the provisions of § 12-81(1) of the General Statutes. See General Dynamics Corporation v. County of Los Angeles, 51 Cal.2d 59, 330 P.2d 794; Martin Co. v. State Tax Commission, 225 Md. 404, 171 A.2d 479; Continental Motors Corporation v. Town of Muskegon, 365 Mich. 191, 112 N.W.2d 429; Craig v. Ingalls Shipbuilding Corporation, 192 Miss. 254, 5 So.2d 676.

We find no merit to the defendant's contention that the title was vested in the government for security purposes only...