Eastern Air Lines, Inc. v. Joint City-County Bd. of Tax Assessors

• Decision Date: 22 May 1984
• Docket Number: No. 40865,CITY-COUNTY,40865
• Citation: 253 Ga. 18,315 S.E.2d 890
• Parties: EASTERN AIR LINES, INC. v. JOINTBOARD OF TAX ASSESSORS et al.
• Court: Georgia Supreme Court

Page 890

315 S.E.2d 890

253 Ga. 18

EASTERN AIR LINES, INC. v. JOINT CITY-COUNTY BOARD OF TAX ASSESSORS et al.

No. 40865.

Supreme Court of Georgia.

May 22, 1984.

Theodore M. Forbes, Jr., Frederick G. Boynton, Thomas E. McCarter, Gambrell & Russell, Atlanta, for Eastern Air Lines, Inc.

Gary S. Walker, Marva Jones Brooks Atlanta, for Joint City-County Bd. of Tax Assessors et al.

GREGORY, Justice.

On June 8, 1961, Eastern Air Lines entered into a thirty-year lease agreement with the City of Atlanta, under the terms of which Eastern has the use of hangar property located at Hartsfield Atlanta International Airport. On March 22, 1977, the parties entered into a second thirty-year agreement to lease fuel tanks located at the airport to Eastern. On September 1, 1981, the Joint City-County Board of Tax Assessors (Board) valued Eastern's interests in these properties in excess of ten million dollars for the purposes of ad valorem taxation. Eastern filed a written protest and demanded arbitration, arguing that the property interests created by the lease agreements are not subject to ad valorem taxation. The arbitrators rejected this argument and rendered a decision valuing Eastern's interests in the properties in excess of eight million dollars. Eastern appealed this decision to the Superior Court of Fulton County, maintaining the lease agreements conveyed usufructs only which are not taxable interests. Whitehead v. Kennedy, 206 Ga. 706, 58 S.E.2d 832 (1950). Both parties moved for summary judgment. The trial court denied Eastern's motion for summary judgment and granted the Board's motion. The trial court found the lease agreements conveyed estates for years which are subject to ad valorem taxation. Delta Air Lines v. Coleman, 219 Ga. 12, 131 S.E.2d 768 (1963). We reverse.

1. The Board is correct in pointing out that where, as here, the term of a lease is for a period greater than five years, a rebuttable presumption arises that the parties intended to create an estate for years rather than a usufruct. Camp v. Delta Air Lines, Inc., 232 Ga. 37, 205 S.E.2d 194 (1974); Warehouses, Inc. v. Wetherbee, 203 Ga. 483, 46 S.E.2d 894 (1948). See also OCGA § 44-7-1(b). To resolve whether the presumption has been overcome in this case, we must examine the terms of the lease agreements and determine what interests the parties intended to convey. Camp v. Delta Air Lines, supra.

2. "The relationship of landlord and tenant is created when an owner of property grants to another person ... the right simply to possess and enjoy the use of such real estate, either for a fixed time or at the will of the grantor. In such a case no estate passes out of the landlord and the tenant has only a usufruct which may not be conveyed except by the landlord's consent and which is not subject to levy and sale." OCGA § 44-7-1(a). In contrast, "[a]n estate for years is one which is limited in its duration to a period which is fixed or which may be made fixed and certain ..." OCGA § 44-6-100(a). "As applied to realty, an estate for years does not involve the relationship of landlord and tenant, in which relationship the tenant has no estate but merely has a right of use which is very similar to the right of a hirer of personalty." OCGA § 44-6-101 (Code Ann. § 85-802). "An estate for years carries with it the right to use the property in as absolute a manner as may be done with a greater estate, provided that the property or the person who is entitled to the remainder or reversion interest is not injured by such use." OCGA § 44-6-103.

3. The preamble to the lease agreement for the hangar property and the various amendments to this lease clearly state that "the City is agreeable to making [this] land available for use by Eastern." [Emphasis supplied.] Other provisions of the lease agreement indicate that Eastern's use of this property is subject to numerous restrictions. For example, the hangar property may be used incident...