Verizon New England Inc. v. Bd. of Assessors of Boston , 09–P–2342.

• Citation: 81 Mass.App.Ct. 444,963 N.E.2d 1210
• Decision Date: 19 March 2012
• Docket Number: No. 09–P–2342.,09–P–2342.
• Parties: VERIZON NEW ENGLAND INC. v. BOARD OF ASSESSORS OF BOSTON & others.1
• Court: Appeals Court of Massachusetts

81 Mass.App.Ct. 444

963 N.E.2d 1210

VERIZON NEW ENGLAND INC.

v.BOARD OF ASSESSORS OF BOSTON & others.1

No. 09–P–2342.

Appeals Court of Massachusetts, Suffolk.

Submitted Nov. 9, 2010.Decided March 19, 2012.

William A. Hazel, Boston, for the taxpayer.

Anthony M. Ambriano, Boston, for board of assessors of Boston & another.

Martha Coakley, Attorney General, Daniel J. Hammond, Assistant Attorney General, & Daniel A. Shapiro, for Commissioner of Revenue, submitted a brief.Present: McHUGH, SIKORA, & FECTEAU, JJ.²McHUGH, J.

Verizon New England Inc. (Verizon) appeals from a decision of the Appellate Tax Board (board) concluding that poles and wires (which the parties refer to as “aerial plant”) erected on public ways, as well as construction work in progress (CWIP), are subject to taxation by the cities of Boston and Newton for fiscal year (FY) 2003 through FY 2009. For the reasons that follow, we vacate the board's order.

Background. The record, significant portions of which are based on an agreed statement of facts and allied exhibits, reveals that Verizon is a New York corporation. Verizon has been authorized to do business in the Commonwealth since 1884, initially as the New England Telephone & Telegraph Company and later under its current name. Verizon provides telephone, telegraph, and other telecommunications services throughout the Commonwealth and owns, wholly or in combination with others, poles, wires, conduits, machinery, and other equipment in many, if not all, of the Commonwealth's cities and towns.

The Newton and Boston boards of assessors (collectively, assessors), like their counterparts across the Commonwealth, are charged with assessing personal property for purposes of local taxation. To ensure uniformity in valuation of similar property that telephone and telegraph companies own in many different cities and towns, G.L. c. 59, § 39, as appearing in St.1955, c. 344, § 1, requires the Commissioner of Revenue (commissioner) to determine annually the “valuation at which the machinery, poles, wires and underground conduits, wires and pipes of all telephone and telegraph companies shall be assessed.”

To facilitate compliance with § 39, telephone and telegraph companies annually provide the commissioner with a list, on a form the commissioner issues in accordance with G.L. c. 59, § 41, stating the original cost of the personal property the commissioner indicates is subject to central valuation. ³ The commissioner then values the property described on the forms and, by May 15 of each year, certifies those values to the assessors of cities and towns where the property is located. G.L. c. 59, § 39. Subject to any changes that occur as the result of appeals, the values so certified are the values the assessors must use to assess and tax the property for the fiscal year beginning the following July.

The commissioner's form contains instructions that, among other things, describe the property the companies must list. For the years in question, the forms stated that “corporations ... will be valued only on poles and wires over private property, underground conduits, wires and pipes in public or private property, and machinery used [for particular purposes].... G.L. c. 59, § 39; G.L. c. 59, § 5, cl. 16(1); G.L. c. 59, § 18(5).” ⁴ Accordingly, when Verizon filed the required forms, it did not list the cost of its aerial plant over public ways or its CWIP.

Newton filed a timely appeal from the values the commissioner had assigned for FY 2003 through FY 2008, and Boston and Verizon filed appeals from the values the commissioner had assigned for FY 2005 through FY 2009. Among the questions raised in all of the appeals was whether aerial plant over public ways and CWIP were taxable.

The board bifurcated the appeals. Phase one dealt with several issues other than valuation, including whether aerial plant over public ways was taxable. Phase two focused on valuation and other discrete issues, including whether CWIP was taxable. After hearings, the board issued its phase one order on March 3, 2008, ruling that aerial plant over public ways was taxable. ⁵ On August 4, 2009, the board issued a decision that CWIP was taxable.⁶ On October 1, 2009, the board issued its findings of fact and report on both phases. This appeal followed in timely fashion.

Discussion. a. Aerial plant over public ways. The board based its conclusion that aerial plant over public ways is taxable primarily on G.L. c. 59, § 18, First. Chapter 59, § 18, is one of three sections of the General Laws that together provide the broad framework for taxing real and personal property within the Commonwealth.⁷ The First clause, as amended through St.1978, c. 581, § 4, reads as follows:

“First, All tangible personal property, including that of persons not inhabitants of the commonwealth ... shall, unless exempted by [G.L. c. 59] section five, be taxed to the owner in the town where it is situated on January first.” ⁸

In the board's view, then, the broad language of § 18, First, created a general rule that all tangible personal property, including Verizon's poles and wires on public ways, is subject to property taxation. Verizon's argument to the contrary proceeds as follows. In a number of cases decided long ago, the Supreme Judicial Court held that personal property owned by corporations is not taxable without explicit statutory authorization. Chapter 59, § 18, First, is not an explicit statutory authorization because it does not mention corporate property. Only two other clauses in § 18 explicitly mention corporate property and neither authorized taxation of aerial plant over public ways during a fiscal year at issue in these proceedings.⁹

Urging that the board's approach is correct, the assessors argue that, although Verizon's reading of the statutes and the cases is essentially accurate, the rationale on which the cases rested has been undercut by an evolution in the Commonwealth's approach to corporate taxation. That evolution, in the assessors' view, effectively broadened the reach of G.L. c. 59, § 18, First, and justifies the result the board reached here. Principally for three reasons, we do not agree.

First of all, G.L. c. 59, § 18, First, has been in existence in one form or another for more than 150 years and the Supreme Judicial Court has uniformly construed the word “owner” as appearing in that clause to exclude corporations. See Boston & Sandwich Glass Co. v. Boston, 45 Mass. 181, 4 Met. 181, 183–186 (1842) (construing Rev. Stats. 1836, c. 7, and subsequent amendment, St. 1839, c. 139, § 1); Middlesex R.R. v. Charlestown, 90 Mass. 330, 8 Allen 330, 333 (1864) (construing Gen. Stats. 1860, c. 11, § 12, First). As the court observed in Worcester v. Board of Appeal in Tax Matters, 184 Mass. 460, 464, 69 N.E. 330 (1904):

“In a word, the general provisions of law for taxation of personal property were not applicable to corporations. Except as to machinery, which is specially mentioned [in what is now § 18, Second], the personal property was reached through the shareholders.... And this interpretation [of the taxing statutes] ... was adopted ... plainly and simply upon the ground that the opposite interpretation would result in a form of double taxation.”

To be sure, when those cases were decided, the predecessor to the current § 18, First, was narrower and imposed a tax only on “goods, wares, merchandise, and other stock in trade ... including stock employed in the business of manufacturing or of the mechanic arts,” as the provision appeared in Gen. Stats. 1860, c. 11, § 12, First, or “goods ... or other stock in trade, including stock employed in manufactories,” as the language appeared in the statute the court discussed in Amesbury Woollen & Cotton Mfg. Co. v. Amesbury, 17 Mass. 461, 462 (1821). But the focus of those cases was on the scope of the word “owner,” a word, the cases held, that did not include corporations. By 1918, when the Legislature broadened § 18, First, to reach “all tangible personal property,” as it does today, see St.1918, c. 129, § 1,¹⁰ that construction of “owner” had been in place for nearly one hundred years. Neither the 1918 legislation nor anything the Legislature has done since changed, qualified, or expanded that term. See Boston v. Mac–Gray Co., 371 Mass. 825, 828, 359 N.E.2d 946 (1977) (“In matters of taxation [the court] should follow the pattern of [its] decisions, leaving to the Legislature the opportunity to make responsive adjustments in the scope of the tax statutes”).

That the word “owner” remains unchanged and unqualified cannot be attributed to legislative oversight. In 1937, a special legislative commission composed of a Senator, several Representatives, and several individuals appointed by the Governor was charged with analyzing the Massachusetts tax system and recommending changes. In its report, the commission stated that “[s]ince [1813,] real estate of a corporation and its machinery (from 1832 to 1936) has [ sic ] been subject to local taxation, but all other forms of personal property belonging to corporations have been wholly free from direct taxation.” 1938 House Doc. No. 1703, at 45 (Report of the Special Commission on Taxation and Public Expenditures: Part III, The Tax Structure). Thirty-two years later, another special commission, similarly composed, said essentially the same thing. See 1971 Senate Doc. No. 1281, at 73–74 (Second Report of the Special Commission to Develop a Master Tax Plan Relative to the Massachusetts Revenue Structure). The Legislature made no change to c. 59, § 18, First, in response to either report.

The second reason for our conclusion that the general terms of § 18, First, do not reach aerial plant on public ways rests on the care and precision the Legislature has used in other sections dealing with taxation of wires and poles. The Legislature first addressed the subject in 1902 when it enacted G.L. c. 18, Tenth, which read in material part as...