Sisk v. Board of Assessors of Essex

• Decision Date: 06 February 1998
• Citation: 426 Mass. 651,689 N.E.2d 1340
• Parties: John L. SISK & another 1 v. BOARD OF ASSESSORS OF ESSEX.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 1340

689 N.E.2d 1340

426 Mass. 651

John L. SISK & another ¹ v. BOARD OF ASSESSORS OF ESSEX.

Supreme Judicial Court of Massachusetts,

Suffolk.

Argued Dec. 2, 1997.

Decided Feb. 6, 1998.

Ieuan G. Mahoney, Boston, for plaintiffs.

Brian P. Cassidy, St. Salem (Heather S. Ramsey, with him), for defendant.

Before WILKINS, C.J., and ABRAMS, LYNCH, GREANEY, FRIED, MARSHALL and IRELAND, JJ.

LYNCH, Justice.

John L. and Anne L. Sisk (taxpayers) appeal from a decision of the Appellate Tax Board (board), denying their application for abatement of real estate taxes for fiscal year 1996. The board rejected the taxpayers' contention that the defendant assessors' valuation methods resulted in an overvaluation of the property. We granted the taxpayers' application for direct appellate review.

1. Facts. The town of Essex (town) owns the land on which the taxpayers have a summer cottage. The taxpayers' lot is in a subdivision of a 130-acre plot, known as Conomo Point and Robbins Island. Currently, the town leases ² an area of approximately 19.8 acres to various individuals, including the taxpayers. The lease provides that the taxpayers may occupy their dwelling from April 15 to October 15, except under special circumstances.

The taxpayers' house at 113 Conomo Point Road is on a 6,715 square foot lot, which abuts the Essex River. The taxpayers enjoy the benefit of a waterways license, in the town's name, to maintain a float and a ramp on the river. As of January 1, 1995, the assessors valued the land at 113 Conomo Point Road at $177,500, and the building at $80,900, for a total assessed value of $258,400.

The taxpayers concede that, under G.L. c. 59, § 2B, they should be taxed "as if" they were the owners of the property in fee, free from all encumbrances. The taxpayers argue, however, that § 2B does not alter the fair cash value standards of G.L. c. 59, § 38, and that the board contravened those standards by not considering that they are restricted from occupying the premises year round by the lease and by town-imposed restriction. They also argue that the comparable sales used by the assessors to value their property were inapposite because the properties were dissimilar, and finally that the board's decision contravenes public policy.

The assessors argue, and the board agreed, that, because the limit placed on occupation of the property is embodied in a lease, that restriction is not to be considered when determining the value of the property for local taxation purposes. The assessors also contend that the taxpayers' challenge to the comparable sales method of valuation is not properly before this court because it was not raised before the board. ³ We affirm.

2. General Laws c. 59, § 2B. ⁴ The taxpayers, as lessees of town-owned land have an independent statutory duty to pay real estate taxes pursuant to G.L. c. 59, § 2B. Section 2B states, in pertinent part:

"[R]eal estate owned in fee or otherwise held in trust for the benefit of the United States, the commonwealth, or a county, city or town, or any instrumentality thereof, if ... leased or occupied for other than public purposes, shall for the privilege of such use, lease or occupancy, be valued, classified, assessed and taxed annually as of January first to the user, lessee or occupant in the same manner and to the same extent as if such user, lessee or occupant were the owner thereof in fee, whether or not there is any agreement by such user, lessee or occupant to pay taxes assessed under this section" (emphasis supplied).

The taxpayers argued before the board that assessments under G.L. c. 59, § 2B, must comply with the "fair cash value" standard of G.L. c. 59, § 38.

The taxpayers assert several grounds to support their position that the assessors did not comply with the fair cash value requirement. ⁵ Primarily they contend that the assessors' failure to consider that the lease contained restrictions on the use of the property that negatively affected its value violated principles of valuation in these circumstances. ⁶

In declining to give effect to the taxpayers' argument that the lease constituted a restriction on the property that negatively affected its value, the board reasoned that consideration of the taxpayers' leasehold interest in the property was contrary to the plain wording of G.L. c. 59, § 2B. We agree. Section 2B clearly states that land leased from a municipality must be "valued, classified, assessed and taxed ... as if ... [the] lessee ... were the owner thereof in fee." Following well-established principles of interpretation, we give effect to the "usual and ordinary" meaning of words in a statute. See Horst v. Commissioner of Revenue, 389 Mass. 177, 179, 449 N.E.2d 667 (1983). Consideration of the taxpayers' lease when valuing the property contradicts the express language and meaning of G.L. c. 59, § 2B, which requires valuation of the property "as if" the taxpayers were the owner in fee.

Furthermore, it is well established that a tax assessed on the land, however payable, is a tax based on the value of the entire parcel as one entire interest and not merely on a leasehold interest. Donovan v. Haverhill, 247 Mass. 69, 71, 141 N.E. 564 (1923). See Worcester v. Boston, 179 Mass. 41, 48, 60 N.E. 410 (1901); Parker v. Baxter, 68 Mass. 185, 2 Gray 185, 189 (1854). Moreover, we have previously rejected a taxpayers' argument that a lease constituted an encumbrance that diminished the property's value for tax assessment purposes. Donovan v. Haverhill, supra. There the court stated:

"Manifestly the entire estate to be taxed may be made up of various tenancies, vested and contingent, as well as leasehold interests, the value of which in many cases it would be impracticable to determine. It is plain a deduction of the surrender value of a long term lease from the market value of the estate, ascertained by a sale of the land free of the lease, in many instances would seriously impair the taxable valuation of the estate considered as a whole; and that the entire estate would escape taxation to the extent of the tax upon the value of the leasehold interest to the estate for the purpose of extinguishment. We do not think a determination of the fair cash valuation of real estate requires the assessors to make such a deduction." Id. at 72, 141 N.E. 564.

It follows that a proper valuation of the taxpayers' real property requires the assessors to consider the value of the entire estate unencumbered by the lease.

3. Asserted restriction apart from lease. The taxpayers' argument that a town-imposed restriction on occupancy diminishes the value of the parcel adds nothing to their contention that the lease restriction on occupancy has the same effect. The taxpayers have not shown that any restriction on occupancy exists apart from the lease. The fact that the town imposed the restriction in the lease does not transform the restriction into a governmentally imposed restriction that should be considered for valuation purposes. Cf. Boston Edison Co. v. Assessors of Watertown, 387 Mass. 298, 304, 439 N.E.2d 763 (1982); Community Dev. Co. of Gardner...