Narragansett Mut. Fire Ins. Co. v. Burnham, 6853.

• Citation: 154 A. 909
• Decision Date: 27 May 1931
• Docket Number: No. 6853.,6853.
• Parties: NARRAGANSETT MUT. FIRE INS. CO. v. BURNHAM et al.
• Court: United States State Supreme Court of Rhode Island

154 A. 909

NARRAGANSETT MUT. FIRE INS. CO.

v. BURNHAM et al.

No. 6853.

Supreme Court of Rhode Island.

May 27, 1931.

Exceptions from Superior Court, Providence and Bristol Counties; Edward W. Blodgett, Presiding Judge.

Petition by the Narragansett Mutual Fire Insurance Company against Walter W. Burnham and others for relief from an assessment of a tax which was paid under protest. Decision in the superior court was for the petitioner, and respondents bring exceptions.

Exceptions overruled, and case remitted.

Tillinghast & Collins and Colin MacR. Makepeace, all of Providence, for petitioner.

John C. Mahoney, John T. Walsh, Francis D. McManus, Francis J. McCabe, and Edward J. McQuade, all of Providence, for respondents.

MURDOCK, J.

This is a petition brought by virtue of section 15, chapter 60, General Laws 1923, for relief from an assessment of a tax which was paid under protest. In the superior court decision was for the petitioner, and the case is before us on respondents' exception to this decision.

The petitioner, a Rhode Island corporation, in conformity with the statute (chapter 60, G. L. 1923), brought in to the board of tax assessors of the city of Providence a true and exact account of its ratable estate, and on a separate sheet disclosed the fact it was the owner of ten five thousand seven hundred fiftieths of the equitable ownership and beneficial interest in certain property in the city of Cleveland, state of Ohio, represented by "a land trust certificate," and stated that it had been advised that such interest was not taxable. The board of tax assessors placed a value of $9,700 on this certificate, and included it in the list of the petitioner's taxable intangible personal property.

An examination of the facts as to the creation of the interest or property rights of the petitioner in the property which is the subject-matter of this controversy is necessary in the determination of the question of its taxability.

The Union Trust Company of Cleveland, Ohio, acquired title to certain real estate in the city of Cleveland on which it was proposed to erect a Union Railroad Passenger Station. This property was deeded to the Cleveland Union Terminal Company by said Union Trust Company, excepting in its deed the title, above certain specified planes, of a part of said premises and reserving certain easements, including easements of support and access in the premises below said planes. These premises and rights were then leased to the Cleveland Terminals Building Company, an Ohio corporation, for ninety-nine years, with the right of perpetual renewal, at an annual rental of $316,250; and, as further consideration for the leasing of said premises, the lessee covenanted to pay all taxes and assessments imposed upon the leased property and the sum of $7,500 per annum as compensation of the trustee under the trust hereinafter described. The lease contains an option of purchase at any time on sixty days' notice at a price which varies with the time when such option is exercised. Immediately after the execution and recording of this lease said Union Trust Company executed and recorded a document called "Agreement and Declaration of Trust," article 1 of which provides: "The trustee hereby declares that it holds and will hold as trustee for the use and benefit of all present and future holders of certificates of equitable ownership issued hereunder (hereinafter called 'Land Trust Certificates'), the title to, and rights in, the premises, reserved by the trustee in its deed to the Cleveland Union Terminals Co. * * *"

The equitable ownership was divided into 5,750 "indivisible equal shares" to be represented by the certificates above described. Certificate holders have no voice in the management of the trust estate or control over the trustee. The declaration of trust provides: "The trustee shall have the exclusive right to control the trust estate as it may deem for the best interests of the beneficiaries, free from all control by the beneficiaries, as fully and to the same extent as though the trustee were the sole legal and equitable owner thereof, and shall not be subject to any obligations to the beneficiaries other than such as are expressly assumed hereunder."

The said certificates have no maturity date, and they carry no promise to pay interest. The trustee agrees simply to divide at stated times all the net income pro rata among the holders of the certificates, and on the termination of the trust to pay to the certificate holders their distributive shares. It is the contention of the petitioner that these trust certificates are simply evidence of ownership of an equitable interest in real estate in the state of Ohio, and that consequently the board of tax assessors of the city of Providence had no jurisdiction to impose a tax thereon. If the relation between the trustee and the petitioner is simply that of trustee and cestui que trust, this contention is sustained by Anthony v. Caswell, 15 R, I. 159, 1 A. 290. This is tacitly conceded by the respondents who, however, contend that said land trust certificates represent an interest or property separate and distinct from the real estate in Ohio which constitutes the trust res, on the theory that said...