Gordon v. Bd. of Civil Auth. for Morristown

• Citation: 2006 VT 94,910 A.2d 836
• Decision Date: 01 September 2006
• Docket Number: No. 05-245.,05-245.
• Parties: William GORDON v. BOARD OF CIVIL AUTHORITY FOR TOWN OF MORRISTOWN.
• Court: United States State Supreme Court of Vermont

910 A.2d 836

2006 VT 94

William GORDON v. BOARD OF CIVIL AUTHORITY FOR TOWN OF MORRISTOWN.

No. 05-245.

Supreme Court of Vermont.

September 1, 2006.

Ronald I. Merelman, Stowe, for Plaintiff-Appellee.

Shapleigh Smith, Jr. and Douglas D. Le Brun of Dinse, Knapp & McAndrew, P.C., Burlington, and Richard C. Sargent, Morrisville, for Defendant-Appellant.

William H. Sorrell, Attorney General, and Charles L. Merriman, Special Assistant Attorney General, Montpelier, for Amicus Curiae State of Vermont.

Present: REIBER, C.J., DOOLEY, JOHNSON, SKOGLUND and BURGESS, JJ.

¶ 1. BURGESS, J.

This case arises out of the Town of Morristown's assessment of real estate property taxes against an airplane hangar owned by William Gordon. The property on which the hangar sits is leased to Gordon by the State, which owns the land. Gordon challenged the tax assessment in Lamoille Superior Court, which held that the hangar was personalty, therefore not taxable as real property, and granted summary judgment in favor of Gordon. The Town appeals. Because we conclude that the superior court erred in concluding that the hangar was not taxable real property assessed to Gordon under 32 V.S.A. § 3608, we reverse.

¶ 2. The hangar is a bare, noninsulated wood frame structure with an aluminum roof and electric power. Gordon purchased the hangar from Elizabeth Darden on July 19, 2001. Four days later, with the State's consent as lessor, Darden assigned to Gordon the lease for the underlying land. The lease began in 1993 and is currently in its third five-year renewable term.

¶ 3. The lease called for the construction of the hangar within the first year of the lease and provides that the lessee retains title to all improvements constructed or installed on the leased premises. The lease also provides that upon termination, the State, as lessor, may require the lessee to remove or relocate the hangar, or to relinquish title of the hangar to the State. Gordon agreed in the lease to pay all taxes assessed on the premises, and on any buildings, structures, betterments, or other improvements. The lease contains restrictions on Gordon's use of the premises, ability to improve the premises, and ability to transfer the lease. The State reserved the right to terminate the lease with thirty days notice.

¶ 4. Gordon appealed the assessment of the hangar to the Morristown Board of Listers, which affirmed the assessment, and then to the Morristown Board of Civil Authority, which also affirmed. Gordon then appealed to the Lamoille Superior Court, where the parties filed cross-motions for summary judgment; Gordon's was granted. We review a decision on a motion for summary judgment de novo, employing the same standard as the trial court. Hardwick Recycling & Salvage, Inc. v. Acadia Ins. Co., 2004 VT 124, ¶ 14, 177 Vt. 421, 869 A.2d 82. To prevail on a motion for summary judgment, the moving party must show there is no genuine issue as to any material fact, and that it is entitled to judgment as a matter of law. V.R.C.P. 56(c)(3).

¶ 5. In evaluating the tax status of the hangar, the superior court applied the test set out in Sherburne Corp. v. Town of Sherburne, 124 Vt. 481, 484, 207 A.2d 125, 127 (1965), to determine whether the hangar was a fixture on the land and thus part of the real estate. The court found, based on the lease terms, no intention by the lessor or lessee to make the hangar a permanent part of the realty, and so concluded the hangar was not real property under the Sherburne test.¹ Based on that finding, the court held that the hangar could not be taxed as real estate and granted Gordon's motion for summary judgment.

¶ 6. On appeal, the Town argues that the fixture test applied in Sherburne is inapplicable to determining whether the hangar is real property because the issue is governed by 32 V.S.A. § 3608, the statute governing real estate taxation of buildings on leased land or land not owned by the owner of the building. The Town asserts that the hangar is a building under the language of § 3608, and that Gordon is responsible for the tax under 32 V.S.A. § 3651, the statute requiring taxable real estate to be set in the grand list to the last owner or possessor in each tax year. Gordon argues that even if the hangar is considered real property, it is attached to the State's land and therefore not taxable to him. Alternately, he argues that the tax is not properly assessed to him because the State holds all indicia of ownership in the hangar.

¶ 7. We first address the Town's argument that the hangar was appropriately assessed under 32 V.S.A § 3608, which provides: "Buildings on leased land or on land not owned by the owner of the buildings shall be set in the list as real estate." The superior court declined to apply § 3608 because it concluded that, under the fixture test of Sherburne, the hangar was not considered part of the underlying real estate and therefore the Town had no authority to tax it. We disagree with the trial court's conclusion that § 3608 is inapplicable, or that this matter is subject to further analysis according to the law of fixtures. The fixture test applied in Sherburne is used to determine if property falls generally under the definition of real property under common law.² See Sherburne, 124 Vt. at 484, 207 A.2d at 127 ("By applying these tests . . . we can decide what the character of the property at issue is under the law generally, without the pressures brought to that determination by possible tax consequences or the identity of the parties.").

¶ 8. By enacting § 3608, the Legislature specifically included buildings on leased land in the definition of taxable real estate, and recognized that a building can be taxed separately from the land upon which it sits. It is irrelevant whether a building falls under the general common law definition of real estate. The authority of towns to impose taxes, and on what property, comes from the Legislature. Estey v. Starr, 56 Vt. 690, 693 (1884) ("The usual powers exercised by towns to raise money by taxation are not inherent in the town, but exist because the legislature has conferred them."); Town of Bennington v. Park, 50 Vt. 178, 202 (1877) ("Every power [towns] exercise in the local administration of their affairs, is expressly delegated to them by legislative enactment."). Because the Legislature has chosen to define taxable real estate, this Court may not disregard that choice in favor of a common-law definition of real estate for tax purposes. See Hitchcock Clinic, Inc. v. Mackie, 160 Vt. 610, 611, 648 A.2d 817, 819 (1993) (mem.) ("This Court may not extend common-law principles to extinguish express statutory language."); MAPCO Ammonia Pipeline, Inc. v. State Bd. of Equalization & Assessment, 238 Neb. 565, 471 N.W.2d 734, 748 (1991) ("[A] legislature can statutorily change the usually accepted common-law definition of real estate and can designate subjects to be assessed and taxed as real estate."); Portland Terminal Co. v. Hinds, 141 Me. 68, 39 A.2d 5,9 (1944) ("[I]t is within legislative authority, for the purposes of taxation, to provide that real estate shall be assessed as personalty or that personalty shall be taxed as realty.").

¶ 9. We also agree with the Town that the hangar is a building. The term "building" is often used in a broad sense, referring to any structure enclosing a space or sheltering contents. In re John A. Russell Corp., 2003 VT 93, ¶ 37, 176 Vt. 520, 838 A.2d 906 (mem.). The hangar, as a structure designed to enclose an area for sheltering airplanes, is a building. Because the hangar is a building on leased land, § 3608 requires that it be set in the grand list as real estate.

¶ 10. The superior court alternatively stated, and Gordon argues, that even if the hangar was real property it would be attached to the underlying land owned by the State, and therefore exempt from taxation pursuant to 32 V.S.A. § 3802(1) (exempting from taxation real and personal property owned by the State). Again, this reasoning depends on the trial court's application of the inapplicable law of fixtures. Section 3608 contemplates two separate listings when a building is located on land not owned by the owner of the building: one for the building, and one for the land. There is nothing in the statutory scheme to support the theory that the tax-exempt status of the landowner must be transferred to the building owner. See Trustees of Vt. Wild Land Found. v. Town of Pittsford, 137 Vt. 439, 444, 407 A.2d 174, 177...