Delta Air Lines, Inc. v. Coleman, 21988
| Decision Date | 09 May 1963 |
| Docket Number | No. 21988,21988 |
| Citation | 131 S.E.2d 768,219 Ga. 12 |
| Parties | DELTA AIR LINES, INC. v. Robert E. COLEMAN, Tax Comm'r, et al. |
| Court | Georgia Supreme Court |
Syllabus by the Court
1. A leasehold estate which one acquires in public property is subject to taxation like any other privately owned property.
2. Any estate in property which is subject to taxation must be taxed on the basis of its fair market value and this, of course, includes a leasehold estate.
3. The facts in this case show no discrimination against the holder and owner of the leasehold estate violative of the
equal protection clauses of the State and Federal Constitutions.
Powell, Goldstein, Frazer & Murphy, B. D. Murphy, John T. Marshall, James N. Frazer, Atlanta, for plaintiff in error.
John R. McCannon, Kemp & Watson, John L. Watson, Jr., Jonesboro, for defendants in error.
Ellsworth Hall, Jr., Macon, Robert Culpepper, Jr., Camilla, George P. Dillard, Herbert O. Edwards, Robert E. Mozley, Decatur, Edward B. Liles, B. N. Nightingale, Brunswick, Harold Sheats, J. C. Murphy, Standish Thompson, Atlanta, for party at interest, not party to record, on motion for rehearing.
The City of Atlanta owns a tract of land in Clayton County, Georgia, which contains approximately 50 acres. For a stated amount, payable annually, it leased such tract to Delta Air Lines, Inc., a private corporation for 30 years from January 1, 1960, with the right to renew the lease for an additional 20 years if the lessee elects to do so. The city agreed to construct or cause to be constructed certain improvements on the be constructed certain improvements on the hangars, office space and maintenance and storage facilities for the lessee's use, the probable cost of which would be $6,500,000, and the lessee agreed to pay it an additional amount at specified times for the use of such improvements. For the years 1961 and 1962 the lessee returned its leasehold interest in the property for ad valorem taxes in Clayton County and valued it for tax purposes at $100,000. For each of those years the county's board of tax assessors increased or changed the lessee's tax return by substituting for the value at which it returned its leasehold interest the following: '$1,625,000--Building, $40,900--Land.' On May 31, 1961, Delta Air Lines, Inc. filed a suit in the Superior Court of Clayton County against Robert E. Coleman, as tax commissioner of that county; and also against F. A. Black, W. W. Wells and L. S. Terrell, as the members of that county's board of tax assessors. In addition to the facts stated above, its amended petition, so far as need be pointed out, alleges: The property it leased from the City of Atlanta is public property; and being such, it is exempt from ad valorem taxation. The only interest petitioner has in the leased premises is the leasehold interest it acquired from the City of Atlanta and being only a leasehold interest in public property it is not subject to ad valorem taxes. It is further alleged that if the leasehold interest which petitioner acquired from the City of Atlanta is subject to ad valorem taxation in Clayton County, it is subject to taxation only on the market value of the unexpired term of the lease and such value does not exceed $400,000. Petitioner returned it for taxes in 1961 and 1962 at $100,000, which was 25% of its actual market value, the basis on which the defendant tax assessors of Clayton County customarily and regularly assess all other real estate. The defendant tax assessors for each such year increased its value from $100,000 to $1,665,900, which is more than four times the fair market value of its leasehold interest in the property. Since the defendant tax assessors assessed for taxes the entire interest in the leased property, it is an effort on the defendants' part to tax an interest in the leased property which the petitioner does not own and in which it has only a leasehold interest. The petition further alleges that there are a large number of leasehold estates in private property in Clayton County and the defendants have with respect to those properties assessed for taxation the entire fee interest against the respective private owner thereof and no effort has been made by the defendants to tax the leasehold estates in those properties. The property here involved and a tract of land in Clayton County which is owned by the United States and known as the Atlanta General Depot, or the Conley General Depot, on which a private corporation holds a lease, are the only exceptions to the defendants' intentional and systematic practice of assessing for taxation the entire fee interest in the property against the respective owner thereof and making no assessment against the owner of the leasehold interest therein. Such official assessments for ad valorem taxation of petitioner's leasehold interest at the sum of $1,665,900 is violative of the equal protection clause of the fourteenth amendment to the Constitution of the United States and such action of the defendant tax assessors is violative of such equal protection clause because the defendants have intentionally and systematically assessed other similar property at 25% of its true market value, whereas the assessments against the petitioner is at a rate of more than four times the true market value of the property. For such reason, the official assessments and the action of the defendants is violative of Art. I, Sec. I, Par. II of the Constitution of the State of Georgia, which provides that, 'Protection to person and property is the paramount duty of government, and shall be impartial and complete.' Code § 2-102.
The amended petition prayed for process and service; for a judgment adjudicating and declaring that the leasehold interest the petitioner acquired from the City of Atlanta is exempt from ad valorem taxation; for an injunction temporarily and permanently restraining and prohibiting collection of the taxes assessed against the leasehold interest it acquired from the City of Atlanta; for a judgment adjudicating and declaring that petitioner's leasehold, if subject to ad valorem taxes, must be taxed on the basis of its fair market value and like other similar property in Clayton County is assessed for taxes; for a judgment adjudicating and declaring that the official assessments made against petitioner's leasehold interest at a valuation of more than its actual value, while the defendant tax assessors intentionally and systematically assess other similar property, including real estate, at 25% of its true value, is violative of the equal protection clause of the fourteenth amendment of the Constitution of the United States and Art. I, Sec. I, Par. II of the Constitution of Georgia; and for a judgment adjudicating and declaring the defendant tax assessors' official action in assessing for ad valorem taxation petitioner's leasehold, while intentionally and systematically refraining from assessing other leasehold estates in private property, is violative of the equal protection clauses of the Constitution of the United States and the Constitution of Georgia.
The defendants answered the amended petition and admitted that the City of Atlanta is the owner of the subject property; that the city leased it to the petitioner for the period and for the consideration alleged in the petition; but denied that the petitioner's leasehold interest in the property is exempt from ad valorem taxes as claimed by the petitioner. The parties stipulated that all allegations in the plaintiff's petition except those which were denied by the defendants' answer were true and that no proof thereof would be required. They also stipulated that no separate assessments were made against leasehold estates acquired in privately owned lands in Clayton County. The case resulted in a judgment declaring and adjudicating that the leasehold interest which the petitioner acquired from the City of Atlanta was subject to ad valorem taxes in Clayton County; that the assessments made against the petitioner's leasehold interest in the property which it acquired from the City of Atlanta were null and void and for such reason should be vacated and set aside and new assessments against the petitioner's leasehold estate should be made by the tax assessors of Clayton County not later than a specified date; and that in determining and fixing the value of the petitioner's leasehold estate they might consider the value of the land and the buildings thereon including the cost of fixtures and improvements placed thereon and also facts which show whether or not the business operated thereon by the petitioner is profitable as well as any other relevant factors and circumstances, used only of course for the purpose of illustrating and throwing light on the value of the leasehold interest, reporting such valuation to the petitioner on or before a stated date. The plaintiff excepted to that judgment.
1. All public property is exempt from taxation (Code Ann. § 92-201, Ga.L.1946, p. 12); but it is exempt only so long as it remains in public ownership. When it is sold and put into private hands, the natural implication is that it goes there with the ordinary incidents of private property and therefore is subject to being taxed. In this State there can be several separate and distinct estates in the same parcel of land, and Code § 92-104 requires the owner of any estate in land less than the fee to return it for taxes and pay taxes on it as on other property. A leasehold is an estate in land less than the fee; it is severed from the fee and classified for tax purposes as realty. Code Ann. § 92-114. When the City of Atlanta conveyed to the Delta Corporation a leasehold estate in the land here involved, it completely disposed of a distinct estate in its land for a valuable consideration, and Delta acquired it and holds it as a private owner. When any estate in public property is disposed...
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