Mesa Verde Co. v. Board of County Com'rs of Montezuma County

• Decision Date: 27 March 1972
• Docket Number: No. 24834,24834
• Citation: 495 P.2d 229,178 Colo. 49
• Parties: MESA VERDE COMPANY, a Colorado corporation, Plaintiff-Appellant, v. The BOARD OF COUNTY COMMISSIONERS OF the COUNTY OF MONTEZUMA et al., Defendants-Appellees.
• Court: Colorado Supreme Court

Page 229

495 P.2d 229

178 Colo. 49

MESA VERDE COMPANY, a Colorado corporation, Plaintiff-Appellant, v. The BOARD OF COUNTY COMMISSIONERS OF the COUNTY OF MONTEZUMA et al., Defendants-Appellees.

No. 24834.

Supreme Court of Colorado, En Banc.

March 27, 1972.

Rehearing Denied April 17, 1972.

Calkins, Kramer, Grimshaw & Harring, Russell P. Kramer, Denver, for plaintiff-appellant.

Zall, Zall & Henry, Denver, William A. Thompson, Jr., Cortez, for defendants-appellees.

PRINGLE, Chief Justice.

The parties in this action appear in the same order as in the trial court. This lawsuit began when the plaintiff below, the Mesa Verde Company, filed a complaint in Montezuma County District Court seeking a refund of the ad valorem taxes which it had paid to Montezuma County from 1962--1967. The Mesa Verde Company, which is appealing from the trial court's decision, will hereinafter be referred to by name or as appellant. Defendants at the trial court, the Board of County Commissioners of Montezuma County, M. W. Wolff, County Assessor and Russell E. Hindmarsh, County Treasurer, will be referred to as appellees.

The facts are undisputed. Mesa Verde Corporation is a Colorado corporation which, as the only concessioner within Mesa Verde National Park, has provided facilities and services for public use in the Park since 1937. During the time period pertinent to this case, Mesa Verde Company's operations were conducted under two substantially identical contracts with the United States Department of Interior. Pursuant to certain conditions found in these contracts, Mesa Verde Company comstructed buildings within the Park at various times to carry on its service business to the public. These structures were designated in the contracts as 'Concessioner's Improvements.' Since 1937 they have been assessed for ad valorem tax purposes by Montezuma County. Mesa Verde Company consistently paid these taxes under protects, claiming that the 'improvements' were exempt from taxation because they were owned by the Federal Government. Ownership interests in the improvements are described in both contracts as follows:

'It is the intention of the parties that the Concessioner shall have a possessory interest in all concessioner's improvements Consisting of all incidents of ownership, except legal title which shall be vested in the United States. However, such possessory interest shall not be construed to include or imply authority privilege, or right to operate or engage in any business or other activity and shall in its exercise and enjoyment, be wholly subject to the other applicable provisions of this contract and to the laws and regulations relating to the park. The said possessory interest shall not be extinguished by the expiration or other termination of this contract, and may not be terminated or taken for public use without just compensation.' (Emphasis added)

The contract also provides in Sec. 12(a)(1) as follows:

'(1) If for any reason, the Concessioner shall cease to be authorized to conduct the operations authorized hereunder, or any of them, and thereafter such operations are to be conducted by a successor, whether private person or any agency of the government, (1) the Concessioner will sell and transfer to the successor designated by the Secretary its possessory interest in concessioners' improvements and all other property of the Concessioner used or held for use in connection with such operations; and (2) the Secretary will require such successor, as a condition to the granting of a permit or contract to operate, to purchase from the Concessioner such possessory interest and other property, and to the Concessioner the fair value thereof. The fair value of a possessory interest shall be deemed to be The sound value of the improvement to which it relates at the time of transfer of such possessory interest, without regard to the term of the contract. * * *' (Emphasis added)

In 1967, appellant filed a petition with the Board of Equalization of Montezuma County seeking a refund of taxes previously paid under protest. After considering the petition, the Board of Equalization ruled that appellant's improvements were subject to ad valorem taxation by Montezuma County. The Board reasoned that because Mesa Verde Company (1) received compensation for those improvements that were removed or abandoned, (2) occasionally mortgaged the improvements, (3) depreciated the improvements for income tax purposes, and (4) selected the contractor for the construction of the improvements, it had 'all incidents of ownership of the improvements.'

On July 30, 1968, appellant then instituted the present action by filing a complaint in Montezuma District Court requesting a refund of taxes paid under protest from 1937--1967. Because certain of these claims were barred by the six-year Statute of Limitations, Mesa Verde Company conceded that its right to a refund of taxes paid should be limited to those payments made between 1962 and 1967, totalling $27,715.50. The Montezuma County District Court ruled that it must look 'behind the shadow of the United States' title to the substantive ownership of plaintiff.' It then found that except for freedom of alienation, plaintiff had substantially all the incidents of ownership of these improvements. The court then ordered appellant's complaint dismissed.

Mesa Verde Company appeals from this judgment and order of the trial court. Appellant argues that it is not subject to ad valorem taxation because the United States, and not Mesa Verde Company, is the owner of the improvements. We disagree with this contention and affirm the ruling of the trial court.

The only issue in this case is whether the improvements used by Mesa Verde Company within Mesa Verde National Park are subject to ad valorem taxation by Montezuma County. This issue, in turn, requires this Court to address itself to the central question presented by this appeal--Is the United States or the Mesa Verde Company the 'owner' of the improvements? As we have previously stated in City and County of Denver v. Security Life and Accident Company, Colo., 477 P.2d 369, whether possessory rights can be taxed is a question of ownership. If Mesa Verde Company owns the improvements, the company is subject to ad valorem taxation. If the United States owns the improvements it is immune from state taxation. McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316, 4 L.Ed. 579.

Whenever it is claimed that a state tax has been assessed against federal property in violation of the Government's constitutional immunity, a reviewing court must look through form and labels in order to ascertain the real ownership interest involved. City of Detroit v. Murray Corp. of America, 355 U.S. 489, 492, 78 S.Ct. 458, 460, 2 L.Ed.2d 441, 445; See also Millinery Center Building Corp. v. Commissioner of Internal Revenue, 350 U.S. 456, 76 S.Ct. 493, 100 L.Ed. 545. In this case the nature of Mesa Verde Company's ownership interest in the improvements is ascertainable from the express terms of the contracts between appellant and the Secretary of the Interior, applicable federal and state statutes, and the actions of the parties under the contracts.

The contracts entered into by appellant and the Secretary of Interior grant to Mesa Verde Company a 'possessory interest in all concessioner's improvements consisting of all incidents of ownership . . . subject to the other applicable provisions of this contract and to the laws relating to the park.' These other contractual provisions make clear the parties' intention to accord Mesa Verde Company a large amount of decisional...