Wilmington Suburban Water Corp. v. Board of Assessment for New Castle County

• Citation: 291 A.2d 293
• Parties: WILMINGTON SUBURBAN WATER CORPORATION, Appellant, v. BOARD OF ASSESSMENT FOR NEW CASTLE COUNTY et al., Appellees. NEW CASTLE COUNTY WATER COMPANY et al., Appellants, v. NEW CASTLE COUNTY BOARD OF ASSESSMENT REVIEW et al., Appellees.
• Decision Date: 26 April 1972
• Court: Superior Court of Delaware

Page 293

291 A.2d 293

WILMINGTON SUBURBAN WATER CORPORATION, Appellant, v. BOARD OF ASSESSMENT FOR NEW CASTLE COUNTY et al., Appellees.

NEW CASTLE COUNTY WATER COMPANY et al., Appellants, v. NEW CASTLE COUNTY BOARD OF ASSESSMENT REVIEW et al., Appellees.

Superior Court of Delaware, New Castle County.

April 26, 1972.

H. James Conaway, Jr., Edward B. Maxwell, 2nd, Young, Conaway, Stargatt & Taylor, Wilmington, for appellants.

Robert E. Daley, Wilmington, for appellees.

OPINION

O'HARA, Judge.

This action is an appeal to the Superior Court from a decision of the New Castle County Board of Assessment ('Board') holding certain trade equipment taxable as real property. Appellants are a group of companies ^* that furnish water for commercial and residential uses within New Castle County. In the conduct of their operations appellants maintain various pipes, mains and storage tanks used in connection with a water distribution system extending throughout the County. The appellant water companies contend in this proceeding that the aforementioned equipment, presently assessed and taxed against the companies by the County, is personal property and, therefore, not properly subject to taxation under the terms of 9 Del.C. § 8101. That statute in express language provides:

'All real property situated in this State shall be liable to taxation and assessment for public purposes by the county in which the property is located, except as otherwise provided in this chapter.'

In the alternative, the appellants argue that should it be determined adversely to the water companies that the various equipment may be deemed real property fixtures under the common law, then it is nontheless certain that statutory interpretation of 9 Del.C. § 8102 demonstrates that it was considered otherwise by the legislature. That section relied upon by appellants reads as follows:

'No county or other political subdivision of the State shall levy, assess or collect any tax upon personal property, whether tangible or intangible.

This section shall not be construed as having any effect upon any lands held under lease or demise or upon any buildings, improvements, equipment, or structures of any nature made or erected upon lands so held under lease or demise, or upon any poles or wires maintained thereon other than for enclosing lands.'

Appellants' position apparently is that the statute's omission of the subject items among those enumerated exceptions to the broad personal property exemption by implication places appellants' pipes and tanks within the principal clause of § 8102 exempting personalty. Appellants' argument begins with the premise that the qualifications of § 8102 are all inclusive. In this connection, appellants reason that the reference to sui generis items (i.e. the poles and wires) in the non-exempt provision to § 8102 warrants the inference that the subject tanks and pipes were contemplated by the legislature and deliberately omitted therefrom. Accordingly, appellants conclude from this exclusion that the general exemption of § 8102 is applicable.

A complete description of the subject property may be fairly summarized as follows. The water companies own distributional equipment of basically two types, water storage facilities existing above ground and pipelines buried beneath the soil at varying depths throughout the County. Some of the land occupied by the pipelines is owned by the water companies themselves. However, with respect to the greater portion of their pipelines, the water companies have been required to negotiate with both public authorities and private landowners regarding their installation. Pursuant to these negotiations a number of distinct arrangements have been agreed upon whereby the water companies have acquired certain licenses or privileges to occupy property for the conduct of their operations.

The nature of each such relationship and the attendant reciprocal rights and duties arising thereunder allegedly has a significant bearing on the water companies' argument and is the subject of a lengthy stipulation of fact. Therefore, this part of the record will be set forth in some detail. Portions of the water companies pipelines lie under state owned land subject to State Highway Department interim permits and franchises of thirty years duration for which the companies pay an annual fee. Under the terms of the franchise agreements, should the water companies fail to provide service to persons along the highways, the franchise shall be revoked and the water companies required to remove their equipment. In the event of non-use of any of the pipes, main or conduits the franchise provides that the permit may be terminated and the companies' equipment may be removed at their own expense.

The water companies have laid pipes, mains and conduits within the limits of railroad rights-of-way belonging to the Pennsylvania Railroad Company pursuant to occupancy agreements referring to the companies as licensees and providing for a right of removal in the water companies. Certain of the water companies have located their pipelines on private land and have obtained rights in the nature of easements with a right of removal at the option of the companies. The companies maintain that they have frequently exercised their prerogative to remove their pipelines as part of the continuing process of repair and replacement.

The water companies also own large storage facilities on property owned by themselves or held under lease. These storage facilities consist of both ground and elevated tanks. The elevated tanks are steel and stand or rest upon metal legs which are bolted to foundations of concrete. The ground storage tanks apparently are not fastened or bolted in any way to the real property, but rest upon the ground by the force of gravity supported in position by a concrete ring or a stone bern type of foundation. These structures, though large, are capable of being removed and, in fact, at least one was so removed from the water company's property in 1968 after a useful life of approximately 30 years. The one tank remaining and situated on leased property, is guaranteed long term occupancy if desired by the terms of a 99 year leasehold interest.

The term 'real property' is not defined in 9 Del.C. § 8101. When a revenue statute, like any other statute, does not define its terms, it is proper to refer to the common law. 3 Sutherland, Statutory Construction, 5301, p. 5. At common law the concept of real property included fixtures, articles which by reason of their annexation to land were regarded as part of the freehold. Warrington v. Hignutt, 3 Terry 274, 31 A.2d 480 (Del.Super.1943). A chattel is sufficiently annexed to the realty, and therefore taxable as a fixture under 9 Del.C. § 8101, where all the surrounding circumstances indicate an Intent on the part of the...