Reynolds Aluminum Co. v. Multnomah County

• Jurisdiction: Oregon
• Decision Date: 21 September 1955
• Citation: Reynolds Aluminum Co. v. Multnomah County, 287 P.2d 921, 206 Or. 602 (Or. 1955)
• Parties: REYNOLDS ALUMINUM COMPANY, a corporation, Appellant, v. MULTNOMAH COUNTY, Terry D. Schrunk, as Sheriff and Tax Collector of Multnomah County, Wiley W. Smith, as Assessor of Multnomah County, and Si Cohn, as County Clerk of Multnomah County, Respondents.
• Court: Oregon Supreme Court

Page 921

287 P.2d 921

206 Or. 602

REYNOLDS ALUMINUM COMPANY, a corporation, Appellant, v. MULTNOMAH COUNTY, Terry D. Schrunk, as Sheriff and Tax Collector of Multnomah County, Wiley W. Smith, as Assessor of Multnomah County, and Si Cohn, as County Clerk of Multnomah County, Respondents.

Supreme Court of Oregon.

Argued and Submitted June 29, 1955.

Decided Sept. 21, 1955.

Allan Hart, Jr., Portland, for appellant. On the brief were Hart & Veazie, Portland.

Bernard Shevach, Portland, for respondents. With him on the brief were William M. Langley, Dist. Atty., Willis West, Deputy Dist. Atty., and Maguire, Shields, Morrison & Bailey, Portland.

Before WARNER, C. J., and TOOZE, LUSK, LATOURETTE and PERRY, JJ.

TOOZE, Justice.

This is a suit to enjoin the enforcement and collection of certain personal property taxes for the year 1950, brought by Reynolds Aluminum Company, a corporation, as plaintiff, against Multnomah county, Terry D. Schrunk, as sheriff and tax collector, Wiley W. Smith, as assessor, and Si Cohn, as county clerk, respectively, of Multnomah county, as defendants. Decree was entered in favor of defendants, and plaintiff appeals.

The personal property tax involved in this litigation is against the machinery and equipment of an aluminum manufacturing plant located at Troutdale, in Multnomah county, Oregon, now owned by plaintiff.

The Troutdale plant was constructed for the United States government in 1942 by Defense Plant Corporation. A few years later the Defense Plant Corporation was dissolved, and Reconstruction Finance Corporation succeeded to the ownership of the plant. About August, 1949, for reasons not material here, Reconstruction Finance Corporation conveyed title to the plant to the United States.

In 1946, Reconstruction Finance Corporation, (acting through the War Assets Administrator) leased the Troutdale plant (and three other aluminum plants) to Reynolds Metals Company, a corporation. Reynolds Metals Company immediately took possession of the plant under this lease and commenced manufacturing operations therein.

In the latter part of 1949, after Reynolds Metals Company had been in possession of the Troutdale plant as lessee for about three years, an opportunity arose to purchase this and the three other plants owned by the United States. The purchase agreement, entitled 'Letter of Intent', was executed on December 21, 1949. This letter of intent provided that the four plants in question were purchased by the plaintiff, Reynolds Aluminum Company, a corporation, and a wholly-owned subsidiary of Reynolds Metals Company.

No question is involved in this case concerning taxes levied against the real property at the Troutdale plant. By congressional act, all real property owned by Reconstruction Finance Corporation and Defense Plant Corporation was made subject to state and local taxation, 15 U.S.C.A. § 607. Therefore, the land and land improvements at Troutdale were taxable while the plant was owned by Reconstruction Finance Corporation and Defendant Plant Corporation, and they were carried on the Multnomah county assessment roll beginning in 1942.

The manufacturing machinery and equipment (classified as tangible personal property by ORS 307.020(3)) of the Troutdale plant were placed on the Multnomah county assessment roll as of 1 o'clock a. m. of January 1, 1950, as the property of plaintiff, and at an assessed value of $3,410,000. The tax levied thereon and here in issue is the sum of $199,144, plus interest. The time for assessments against real and personal property is fixed (for the year 1950) by the provisions of § 110-335, O.C.L.A., as amended by ch. 440, § 4, Oregon Laws 1941. This section of the statute was later amended: ch. 701, Oregon Laws 1953, ORS 308.210, but the time for assessment remains the same; viz., January 1 of each year, at 1 a. m.

In its brief filed in this court, plaintiff states the issues before us as follows:

'The general issues are, first, whether an allegedly 'preliminary' purchase and sale agreement, entered into on December 21, 1949 between appellant as vendee and the United States as vendor, automatically and immediately transferred the equitable and beneficial ownership of the machinery and equipment at the above plant from the United States to appellant, so that the federal constitution gave conditional sanction to taxation of this machinery and equipment on January 1, 1950, or whether the real ownership of the machinery and equipment remained in the United States until June 29, 1950, when the United States conveyed the plant to the company by a deed and bill of sale; and second, if this first question is resolved against appellant, whether the Oregon statutes in effect in 1950 authorized the taxation of personal property in these circumstances, subject to the condition on which the United States Supreme Court has sanctioned such taxation.'

The solution of the problem rests entirely upon the interpretation we place upon the provisions of the letter of intent. Although entitled 'Letter of Intent', nevertheless, upon the formal acceptance of its terms by the plaintiff and Reynolds Metals Company, on December 21, 1949, it became, in our opinion, a contract for the sale and purchase of the Troutdale plant (along with the three other aluminum plants). In construing this contract, we must construe it as a whole, applying the well-understood and established rules for the construction of written instruments.

It is unnecessary to set forth the contract in full. We will quote a few of the express provisions contained therein which, we believe, will be sufficient to establish the status of the personal property in question as to ownership for taxation purposes. From a factual standpoint, the primary question is whether equitable title to the property rested in plaintiff on and prior to January 1, 1950. This must be determined from the agreement itself. The contract provides 'Dec. 15, 1949

'25000

'Reynolds Aluminum Company

'Reynolds Metals Building

'Third and Grace Streets

'Richmond 19, Virginia

'Attention: Mr. Richard S. Reynolds, Jr., President

'Re: Plancor 226-X, Hurricane Creek, Arkansas;

'Plancor 226-K, Jones Mills, Arkansas;

'Plancor 226-O, Troutdale, Oregon;

'Plancor 652, McCook, Illinois

'Gentlemen:

'General Services Administration (hereinafter referred to as Seller) hereby sells to Reynolds Aluminum Company (hereinafter referred to as Purchaser), a wholly owned subsidiary of Reynolds Metals Company, and Purchaser hereby buys the Hurricane Creek, Arkansas, Alumina Plant known as Plancor 226-X; the Jones Mills, Arkansas, Aluminum Reduction Plant known as Plancor 226-K; the Troutdale, Oregon, Aluminum Reduction Plant known as Plancor 226-O; and the McCook, Illinois, Aluminum Sheet Mill known as Plancor 652, all of which plants are now under lease to Reynolds Metals Company. The plants sold shall in each instance include the land as described in the lease (and in those instances in which the land is not specifically described in the lease, as presently included within the plancor) together with all buildings, improvements, machinery, equipment, and all other property of every kind owned by the Government presently covered by the leases between Seller and Reynolds Metals Company, and any easements, water rights or rights of way now owned or hereafter acquired by the United States of America or Seller appurtenant to said plants (all of which property hereby sold is hereinafter referred to as the Plants), subject to the following terms and conditions:

'(1) The aggregate purchase price is Fifty Million Eighty-One Thousand Nine Hundred Fifty-Eight Dollars ($50,081,958.00). Two Million Five Hundred Eighty-One Thousand Nine Hundred Fifty-Eight Dollars ($2,581,958.00), shall be payable on the execution of this agreement together with interest at the rate of four percent (4%) from July 1, 1949 to date of payment; amounts of rental paid by purchaser for the period beginning July 1, 1949 which are to be credited on the down payment shall not bear interest. The balance of the purchase price, Forty-Seven Million Five Hundred Thousand Dollars ($47,500.000.00), shall be payable in annual installments as follows:

* * *

* * *

'(2) Reynolds Metals Company will lease the plants from Reynolds Aluminum Company for a period of twenty-five (25) years for an annual consideration not less than the amount required to meet the annual payments of principal and interest required to be made by Reynolds Aluminum Company. Such lease shall also include the obligation on the part of Reynolds Metals Company to pay the taxes on the plants, to insure them or cause them to be insured to meet the requirements of the purchase money mortgages hereinafter mentioned and to maintain the plants in the condition they are in at the time of the execution of the lease, ordinary wear and tear excepted. The above lease shall contain a provision that so long as there remains any unpaid balance of the purchase price the lease will not be cancelable except with the consent of Seller.

* * *

* * *

'(4) Title to the plants will be conveyed by deed or deeds of conveyance and by bill or bills of sale, effective as of July 1, 1949, and Purchaser will execute simultaneously purchase money mortgages on the real property and personal property hereby sold to secure payment of the unpaid balance of the purchase price. Each such mortgage shall secure the entire unpaid balance of the purchase price of all four plants.

'(5) Delivery of the deeds, and bills of sale if required, and purchase money mortgages shall supersede and terminate the present leases of the plants between Seller and Reynolds Metals Company as of July 1, 1949, but shall in no way affect any rights or obligations of Seller or Reynolds Metals Company under said leases which had accrued as of said date.

'(6) Transfer of title shall be made subject to and including a National Security Clause mutually satisfactory to the Government and to...