Grosvenor v. Supervisor of Assessments of Montgomery County, 166

• Decision Date: 01 March 1974
• Docket Number: No. 166,166
• Citation: 271 Md. 232,315 A.2d 758
• Parties: G. H. GROSVENOR and E. M. Grosvenor v. SUPERVISOR OF ASSESSMENT OF MONTGOMERY COUNTY et al.
• Court: Maryland Court of Appeals

Page 232

271 Md. 232

315 A.2d 758

G. H. GROSVENOR and E. M. Grosvenor v. SUPERVISOR OF ASSESSMENT OF MONTGOMERY COUNTY et al.

No. 166.

Court of Appeals of Maryland.

March 1, 1974.

David Mcdonald, Silver Spring (David E. Manoogian and MacDonald & Manoogian, Silver Spring, on the brief), for appellants.

K. Donald Proctor, Asst. Atty. Gen. (Francis B. Burch, Atty. Gen., Baltimore, on the brief), for Supervisor of Assessments of Montgomery County, part of appellees.

H. Christopher Malone, Asst. County Atty. (Richard S. McKernon, County Atty. and Robert G. Tobin, Deputy County Atty., Rockville, on the brief), for Montgomery County, Md., other appellee.

Argued before MURPHY, C. J., and ^*BARNES, SINGLEY, SMITH, DIGGES, LEVINE and ELDRIDGE, JJ.

ELDRIDGE, Judge.

The appellants, owners of real estate in Montgomery County, Maryland, contest the assessment and taxation of their property in 1970 for the years 1967, 1968 and 1969 under Maryland's 'Escaped Property' statute, Maryland Code (1957, 1969 Repl.Vol.), Art. 81, § 34. It is claimed that the property was not 'escaped property' within the meaning of the statutory provision.

The subject property consists of a 46.9 acre tract of land, improved by two houses and a garage, which appellants have owned for over forty years. Prior to 1967, appellants each year had paid the taxes imposed on the property. On May 1, 1967, appellants leased the property to an organization calling itself 'National University.' The lease was for a fifteen year term, and contained the priviso that after three years either party had an absolute right to terminate upon 90 days' notice. The lease also provided that the lessee was to pay the property taxes. The name of the lessee was later changed to 'Potomac University,' and later changed again to 'National Graduate University.'

The lessee University on June 12, 1967, filed with the Superior of Assessments a petition for a tax exemption under what was then Art. 81, § 9(8) of the Code. ¹ This section exempts from taxation real property 'owned and used exclusively' by educational institutions. The petition was granted, and the property was treated as exempt for the years 1967, 1968 and 1969.

In early 1970, a question arose concerning the propriety of the tax exemption in light of the provision in the tax laws that the lessee shall not be treated as the owner of property for tax purposes unless the lease is for ninety-nine years or if for a shorter term, is perpetually renewable. ² The Attorney General issued an opinion that the exemption should not have been granted, and the Supervisor of Assessments, on June 3, 1970, rescinded the exemption.

Thereafter, the Superior of Assessments sent appellants an 'Escaped Property Notice of Assessment' for each of the levy years 1967, 1968 and 1969. The Supervisor enclosed a legal memorandum to the effect that the property was subject to assessment and taxation for those years as 'escaped property' under § 34 of Article 81. Appellants were told that tax bills would be rendered in the near future. Appellants thereupon formally protested the Supervisor's notices proposing to assess the property for the back years. ³

After a hearing on appellants' protest, the assessments were finalized by the Supervisor of Assessment. Upon appellants' successive appeals, the Supervisor's decision was upheld by the Appeal Tax Court for Montgomery County and then by the Maryland Tax Court.

Appellants do not here challenge the Supervisor's decision rescinding the tax exemption. All parties to the appeal agree that the Supervisor made a mistake in 1967 when he granted the exemption, although there is some disagreement as to whether appellants or their agents in any way submitted misleading information which induced the mistake. Consequently, no issue concerning the legality of the tax exemption is before us. Moreover, we shall assume arguendo that the Supervisor mistakenly granted the exemption entirely on his own, without any submission of misleading information or other fault on the part of the appellants or those in privity with them. The issue, then, is whether the Supervisor who erroneously granted an exemption is authorized by statute to later subject the property to taxation for the exempt years.

The Maryland 'Escaped Property' statute, Code (1957, 1969 Repl.Vol.), Art. 81, § 34, provides:

'In case any property which by law is subject to assessment and taxation has escaped, such property shall be entered upon the assessment rolls at any time and shall be subject to taxation for current and previous years, not exceeding four years in all, in the same manner as other property is subject to taxation. The levy for each and every year by the county commissioners of the several counties and by any city shall be deemed and taken to have covered and embraced all property which was not assessed, but which ought to have been assessed, for the year for which any such levy was made.' ⁴

The appellants argue that to come within the above statutory provision, the property must have escaped both 'assessment' and 'taxation.' The property here involved, they insist, did not escape assessment but was in fact 'assessed.' It was 'assessed,' appellants claim, because it was known to the Supervisor and listed in his records. Turning to the element of taxation, appellants acknowledge that the property was not taxed but claim that it did not 'escape' taxation. The word 'escape,' in their opinion, does not encompass the deliberate, although mistaken, act of the Supervisor in granting an exemption. In sum, appellants assert that to come within § 34, property must escape both assessment and taxation and that this property escaped neither assessment nor taxation. Appellants' theory seems to be that only property which was unknown to the tax assessor, either by oversight or because the taxpayer withheld information, is encompassed by the statute.

Appellants' position, in our view, is not supported by the language of the statute or the decided cases. Moreover, their construction of the statute, if adopted, would create an illogical distinction with respect to properties which should have been taxed for prior years but were not.

In arguing that their property did not escape 'assessment' but was in fact assessed in 1967, 1968 and 1969, appellants rely on the facts that the property was known to the Supervisor during that time, that he carried work sheets or cards on the property during the period, that he made a decision to exempt the property, and that this decision was marked on the work sheets or cards. Appellants insist that the property was therefore on the 'assessments rolls' and that the 'exemption from taxation was a direct product of the assessment process.'

It is true that the term 'assessment' as used in tax statutes has been given a somewhat fluid and imprecise meaning. Nevertheless, as normally used, 'assessment' is incident to the actual imposition of taxes. It would be a non sequitur to refer to an 'assessment' giving rise to a tax exemption. As Chief Judge McSherry stated for the Court in Consolidated Gas Co. v. Mayor and City Council of Baltimore, 101 Md. 541, 558, 61 A. 532, 538-539 (1905):

'. . . 'An assessment, strictly speaking, is an official estimate of the sums which are to constitute the basis of an apportionment of a tax between the individual subjects of taxation within the district. As the word is more commonly employed, an assessment consists in the two processes of listing the persons, property, &c., to be taxed, and of estimating the sums which are to be the guide in an apportionment of the tax between them.' Cooley, Tax, 258; New York v. Weaver, 100 U.S. (10 Otto) 539, 25 L.Ed. 705; 3 Cyc. 1111.'

We more recently set forth the same definition in Casey Dev. Corp. v. Montgomery County, 212 Md. 138, 149, 129 A.2d 63, 67 (1957), adding: 'The assessment and the levy are separate and distinct elements of the taxing process.' 212 Md. at 146, 129 A.2d at 68. See also, e. g., Whitehead v. Henson, 223 Ga. 329, 155 S.E.2d 391, 393 (1967) ('the assessment is the amount on which the taxpayer pays taxes.'); Webb v. Bidwell, 15 Minn. 479, 483 (1870) (an assessment took place 'when the amount or proportion of tax to which each parcel of real estate was subject, was fixed and determined.'); Iowa Nat. Bank v. Stewart, 214 Iowa 1229, 232 N.W. 445, 451 (1930) ('The assessment consists in the listing of the property to be taxed and the estimation of the sums which are to constitute the basis of the apportionment of the tax . . .'); Northwestern Imp. Co. v. Henneford, 184 Wash. 502, 51 P.2d 1083, 1085 (1935) ("Assessment is the listing and valuation of property liable to taxation. . . ."); Broad & Sansom Realty Co. v. Fidelity Bldg. Corp., 292 Pa. 287, 291, 141 A. 34, 35 (1928) ('Assessed, as used in our taxing statute and as here used, means a certain sum of money, fixed under a given rate on property valuation, due and payable as taxes.'); People v. Priest, 169 N.Y. 432, 435, 62 N.E. 567, 568 (1902); Pipola v. Chicco, 169 F.Supp. 229, 231 (S.D.N.Y.1959). While these definitions of the word 'assessment' vary somewhat, the cases all recognize that assessment is part of the process resulting in the payment of or demand for tax money.

The very section of the Maryland Code dealing with property tax exemptions, and the section under which the subject property was granted an exemption, shows that it is a distortion to refer to an assessment giving rise to a tax exemption. Section 9 of Art. 81 begins: 'The following real and tangible personal property shall be exempt from assessment and from State, county and city ordinary taxation . . ..' (Emphasis supplied.) Thus, exemptions are from assessment and taxation. Property cannot, under Maryland law, receive an exemption from taxation but not from assessment.

The ordinary meaning of 'assessment,' therefore, would preclude a holding that appellants' property was 'assessed' but...