Portland Terminal Co. v. Assessors.

• Decision Date: 01 September 1944
• Citation: 39 A.2d 5
• Parties: PORTLAND TERMINAL CO. v. HINDS et al., Assessors.
• Court: Maine Supreme Court

39 A.2d 5

PORTLAND TERMINAL CO.

v.HINDS et al., Assessors.

Supreme Judicial Court of Maine.

Sept. 1, 1944.

Exceptions from Superior Court, Cumberland County.

Proceeding by the Portland Terminal Company for abatement of taxes. To review a decree sustaining petitioner's appeal from an order of Leo P. Hinds and others, Assessors for the City of Portland, denying abatement, the assessors bring exceptions.

Exceptions overruled.

Before STURGIS, C. J., and THAXTER, HUDSON, MANSER, and CHAPMAN, JJ.

Edward W. Wheeler, of Brunswick, and Frank A. Farrington, of Augusta, for appellants.

W. Mayo Payson, of Portland, for appellee.

CHAPMAN, Justice.

The above case comes to this court upon exceptions by the appellees to the decree of the Superior Court sustaining the appeal of the appellant from the refusal of the appellees, in their capacity as assessors for the City of Portland, to grant an abatement of taxes assessed against it.

The essential facts are as follows: Upon land owned by the appellant, the Portland Terminal Company, a railroad corporation, were forty-one buildings owned by parties other than the appellant and occupied by such owners. These buildings were established and maintained by the respective owners upon land leased by the Portland Terminal Company to such owners. As to all but one of the buildings, the lease of the land occupied by the building was revocable by the lessor, and the building was removable by the lessee at the termination of the lease. In the excepted case the lease was for a stated term which had not expired at the time of the assessment which is in question, and the building was to remain the property of the lessee during the term of the lease and, at its expiration, to become the property of the lessor. This lease only was recorded in the Cumberland Registry of Deeds.

A part of the buildings were upon land within the located right of the Portland Terminal Company as a railroad corporation. Other buildings were upon land outside such railroad location. So much of the land as was located within the right of way was exempt from taxation by reason of R.S.1930, Chap. 12, Sec. 29. That which was without the right of way was taxable in the same manner as other real estate. R.S. Chap. 13, Sec. 4.

Fourteen of the buildings were in existence in 1927 and, in that year, were assessed to the respective owners all of whom, with one exception, were other than the Portland Terminal Company. Since 1927 all of the fourteen buildings have been assessed to the Portland Terminal Company.

In 1938 the building owned by the Portland Terminal Company was conveyed by that corporation; but ownership of the land on which it was located was retained.

Twenty-seven of the said forty-one buildings were erected subsequently to 1927 by the respective owners. In each case application for building permit was made to the Inspector of Buildings for the City of Portland, which application included the name of the contractor, the name and address of the owner of the building, the location of the land on which the building was to be erected and the nature of its construction. This information was, in each case, communicated by the Inspector of Buildings to the Assessors for the City of Portland.

For the year 1942 these forty-one buildings were assessed to the Portland Terminal Company. Upon the land itself, which was within the right of way, no tax was assessed. On the land outside of the right of way tax was assessed, together with that assessed upon the building. The Portland Terminal Company paid the taxes so assessed and filed with the Assessors application for abatement of so much of the said taxes as were assessed against the buildings, on the ground that it was not the owner or occupant of the buildings.

The Assessors denied the application, whereupon the Portland Terminal Company filed its appeal to the Superior Court. The justice of that court sustained the appeal and to that ruling the Assessors filed exceptions to this court.

Examination of the statutes relative to taxation discloses that R.S. Chap. 13, Sec. 3, provides as follows:

“Real estate, for the purposes of taxation, except as provided in section six, includes all lands in the state, *** and all buildings erected on or affixed to the same, ***.”

Amendments by Chap. 210, P.L.1939, and Chap. 317, Sec. 4, P.L.1942, Sp.Sess., add to this statute the following:

“Buildings on leased land or on land not owned by the owner of the buildings, when situated in any city, town or plantation shall be considered real estate for purposes of taxation and shall be taxed in the town, city or plantation where said land is located; but when such buildings are located in the unorganized territory they shall be assessed and taxed as personal property in the place where located on April 1st annually.”

In the solution of the problem submitted, we are bound by certain principles universally recognized in all jurisdictions. First among these principles is that all taxing power in the municipality is derived from legislative enactment, there being no such thing as taxation by implication. 61 Corpus Juris, 81.

Our highest court has said:

“The power of taxation is legislative, and cannot be exercised otherwise than under the authority of the legislature.” Meriwether v. Garrett, 102 U.S. 472, 501, 26 L.Ed. 197.

Our own court likewise has said:

“In this state the full power of taxation is vested in the Legislature and is measured, not by grant, but by limitation.” In re Opinion of the Justices, 123 Me. 573, 121 A. 902, 904.

As a corollary to this principle, no tax assessment against other than the owner of the property is valid except by authority of legislative enactment. Morrill v. Lovett, 95 Me. 165, 49 A. 666, 56 L.R.A. 634. Further:

“It is well-settled and familiar law that statutes imposing taxes are to be construed most strongly against the government, and in favor of the citizen, and are not to be extended by implication beyond the clear import of the language used.” Commonwealth v. Hutzler, 124 Va. 138, 97 S.E. 775, 776.

By R.S. Chap. 13, Secs. 9 and 25, property of the kind under consideration is taxable to the owner or the party in possession. Admittedly the appellant was not in possession. If the buildings were taxable to the appellant, it was by reason of its ownership of the land upon which they were located.

The exact issue presented has not been previously before this court. The question has been passed upon, however, in other jurisdictions and although the tax statutes of the different states are not the same, we believe that the principle upon which the decisions have been based is applicable to the case before us.

Opposite results have been reached in the adjudicated cases, but the courts of those jurisdictions have been, for the most part, in agreement that the conclusion reached depends upon the view taken as to the nature of the interest of the building owner. In those jurisdictions where the interest of the building owner is considered a mere contractual right operative only between the parties thereto, it has been generally held that the building is taxable to the lessor as the owner of the entire property while in those jurisdictions where the interest of the building owner attains to the status of a separable and distinct estate, the building is taxable to the building owner. This reasoning would seem to be a logical application of the rule that property is taxable to its owner.

The appellees have cited in support of their contention a line of cases in Massachusetts, namely-Milligan v. Drury, 130 Mass. 428; McGee v. City of Salem, 149 Mass. 238, 21 N.E. 386; and Massachusetts General Hospital v. Inhabitants of Belmont, 238 Mass. 396, 131 N.E. 72.

That court held that the building is taxable as a unit with the land to the landowner and, considered only from that conclusion, the cases are authority for the position of the appellees; but the conclusion arrived at is definitely based upon the view of that court, often referred to as the Massachusetts Rule, that any agreement between the landowner and the building owner as to the status of the building owner's interest as a separate estate, is operative only as between the parties to that agreement. It was pointed out in Peaks v. Hutchinson, 96 Me. 530, 53 A. 38, 59 L.R.A. 279, that our court has not accepted this view as to the nature of the building owner's interest.

In Appeal of Mesta Mach. Co. case, 347 Pa. St. 191, 32 A.2d 236, also cited by the appellees, the same conclusion was reached, as in the Massachusetts cases, where the United States Government installed machinery in a mill. Although it was agreed between the owner of the mill, which also owned the land on which it was located, and the Federal officials, that the machinery should remain the personal property of the United States, it was held that the machinery was part of the real estate and taxable as a part thereof to the landowner; but, as in the Massachusetts cases, the reasoning was upon the view that, except as between the parties to the agreement, there was no interest in the machinery separable from the real estate. The rule in Pennsylvania as to the general nature of the interest in buildings and fixtures is similar to that in Massachusetts. Hoskin v. Woodward, 45 Pa. St. 42.

In Comstock v. Town of Waterford, 85 Conn. 6, 81 A. 1059, 37 L.R.A.,N.S., 1166, likewise cited by the appellees, the same conclusion was reached as in the Massachusetts and...