New York Guaranty & Indemnity Co. v. Tacoma Railway & Motor Co.

93 F. 51, 35 C.C.A. 192, 1899 U.S. App. LEXIS 1984

• Court: Court of Appeals for the Ninth Circuit
• Decided: February 20, 1899
• Docket: No. 473
• Status: Published

Opinion

ROSS, Circuit Judge,

after stating the facts as above, delivered the opinion of the court.

On the part of the appellant it is contended — First,, that the assessment of the land in question was void because embracing two separate tracts of diverse ownership; included in which is the second contention, that its assessment as a single parcel, without specifying the name of the known owner of the leased portion thereof, was void; third, that the assessment of the land was invalid, in so far as that part of it held under lease is concerned, on the ground that such part was embraced in the Northern Pacific Railroad Company’s right of way, which was taxable under the laws of the state of Washington, and actually listed, assessed, and taxed at a certain sum per mile and • the taxes thereon paid;' fourth, that the power plant situated on the power-plant site in question was actually returned by the motor company in its lists of personal property for the years in question as personal property, and was actually so assessed, and the taxes paid, for which reason, it is claimed, the assessment of the same as improvements upon real estate was, pro tanto, a duplication of the personal assessment; and, lastly, that the power plant was properly assessable only as personal property, and its assessment as improvements upon real estate therefore void.

1. The assessments for the years 1891 and 1892 wére made under the provisions of the revenue law of the state of Washington approved March 9, 1891, which, so far as the point now under consideration is concerned, are as follows:

. “Sec. 45. Tbe assessor shall make out in tbe real property 'assessment book, in numerical order, complete lists of all lands or lots subject to taxation, showing (he names of the owners, if known to him, and if unknown, so stated opposite each tract or lot in pencil memorandum, the number of acres, and the lots or parts of lots, or blocks, included in each description of property.

The assessments for the year 1893 were made under the provisions of the ad: of March 15, 1893, section 45 of which is as follows:

“Sec. 45. The assessor shall list all real property according to the smallest legal subdivision as near as practicable, and where land has been platted into lots and blocks, he shall list each lot or fraction thereof separately. The assessor shall make out in the real property assessment books, in numerical order, complete lists of all lands or lots subject to taxation, showing the names of the owners, if to him known, and if unknown, so stated opposite each tract or lot in pencil memorandum, the number of acres, and lots or parts of lots included in each description of property. * * S:”

The assessment for the year 1895 was made under the provisions already quoted from the revenue law of 1893, which, however, had been amended by section 4 of an act approved March 23, 1895, by the insertion of the following provision at the end of the first sentence of section 45 of the act of 1893:

“Provided, that when .several lots in any block, or several blocks in any plat of any addition, subdivision or townsite, or several tracts of land, shall be owned by any one person, firm, syndicate or corporation, the assessor may group such lots and blocks and tracts so far as practicable.”

There can he no doubt that these statutory provisions, under and by virtue of which the assessments in question were made, require separate assessment of tracts of land of diverse ownership. Obedience to such requirement is essential to the validity of the proceedings. “It cannot,” says Judge Cooley in his work on Taxation (2d Ed., p. 400), “be held in any case that it is unimportant to the taxpayer whether this requirement is complied with or not. Indeed, it is made solely for his benefit; it being wholly immaterial, so far as the interest: of the state is concerned, whether separate estates are or are not separately assessed.” The supreme court of the state of Washington, where the lands in question are situated, distinctly held in the case of Lockwood v. Roys, 11 Wash. 697, 703, 40 Pac. 346, that:

“A separate valuation of distinct parcels of land, when required by the statute, is made for the benefit of the owner, and involves a substantial right, and that when he is deprived of such substantial right the assessment is invalid and void.”

That the decision of such a question by the highest court of the state, in respect to the assessment for taxes of land within the state, is binding on the federal courts, is well settled. The court below, however, held that the motor company was the owner, for the purposes of taxation, of the entire power-plant site, saying in its opinion:

“By the terms of the lease, the railway and motor company was obliged to pay the taxes on the leased ground, and was the occupant, and was the owner in fee and occupant of that part of the ground covered by the power plant and car barn, not included in the lease. Therefore it was the owner, for the purposes of taxation, of the whole property.”

The case shows that the power plant covers the entire power-plant-site, and that the improvements on the land form an inseparable mass, incapable of division for use or valuation. They were so erected by the motor company upon the land, to one portion of which it held the fee, and for the remaining portion a lease for the term of 25 years, by the terms of which lease it covenanted to pay all taxes levied on such leased premises. We agree with the court below that, under such circumstances, the motor company may be properly treated, for the purposes of taxation, as owner of the property. It is not essential, under all circumstances, that the fee be in the party against whom the assessment is made. Thus, in Pike v. Wassell, 94 U. S. 711, certain lands held by Pike had been condemned and sold under the confiscation act of July 17, 1862 (12 Stat. 589), which forfeiture, as to him, was complete and absolute, but the ownership of which property, after his death, was vested in his heirs by virtue of the joint resolution of congress passed contemporaneously with the act of confiscation. The defendants to the suit held under the confiscation sale, and, having refused to pay the taxes levied upon the property, Pike’s children sought by the suit to compel the defendants to pay them during the life of their father. The court.said:

“It only remains to inquire whether the children, of Albert Pike stand in such a relation to the property confiscated, and not affected by the attachment proceedings, that they may maintain an action to require the defendants to keep down the taxes during the life of their father. There can be no doubt but the defendants, as tenants for life, are bound in law to pay the taxes upon the property during the continuance of their estate. Varney v. Stevens, 22 Me. 334; Cairns v. Chabert, 3 Edw. Ch. 312. This the defendants do not dispute; but. they insist that, until the death of the father, the children have no interest in the property, and therefore cannot appear to protect the inheritance. It is true, as a general rule, that, so long as the ancestor lives, the heirs have no interest in his estate; but the question here is as to the rights which the confiscation act has conferred upon the heirs apparent or presumptive of one whose estate in' lands has been condemned and sold. In Wallach v. Van Biswick, 92 U. S. 202, without undertaking to determine where the fee dwelt during the life estate, we decided that it was withheld from confiscation exclusively for the benefit of the heirs. They, and they alone, could take it at the termination of the life estate. The children of Albert Pike, as his heirs apparent, are also apparently the next in succession to the estate. Either they or their representatives must take the title when their father dies. If they do not hold the fee, they are certainly the only persons now living who represent those for whose benefit the joint resolution of congress was passed. They, at least, appear to have the estate in expectancy. Under these circumstances, as there is no one else to look after the interests of the succession, we think they may properly be permitted to do whatever is necessary to protect it from forfeiture or incumbrance. The defendants admit that they have determined not to pay the taxes upon the property. The danger of incumbrance by reason of this failure to perform their duties as tenants for life is therefore imminent, and the case a proper one for a court of equity to interfere and grant appropriate relief., In Cairns v. Chabert, supra, when the tenant for life failed to keep down the taxes, an order was made for the appointment of a receiver of so much of the rents and income of the estate as should be necessary to pay off and discharge the amounts then in arrear. We see no reason why similar relief may not be granted in respect to the accruing taxes, in case the tenants fail to perform their duties in that behalf; but, without undertaking to direct specifically as to the form in which the protection asked shall be secured, we shall reverse the decree, and remand the cause to the circuit court, with instructions to proceed in conformity to this opinion, as law and justice may require.”

. In Kennedy v. Railroad Co., 62 Ill. 395, by an act of the legislature . of the state a person or company operating a railroad was made liable for taxes apon the rolling stock used upon such road, without reference to the ownership of the road or the rolling stock so used. By a written agreement with the Pullman Palace-Car Company, the railroad company employed on its road sleeping cars of the car company, hauled the same, furnished fuel and lights, kept them in running order, and received its ordinary fare for the transportation of passengers in them. The car company was hound by the agreement to keep in repair the carpets, upholstery, and bedding, excepting repairs necessary from accident and casualty while upon the run of the road, received a fare for extra accommodation, and furnished its own employés to receive the same, and wait npon the passengers. It was held that, although the general property in the cars was in the car company, yet the railroad company had such a community of interest and such a qualified property in them for the time being, that, for the purposes of taxation, they must be regarded, under the statute, as belonging to the rolling stock of the railroad company, and subject to be taxed as such. The court said, among other things:

“There are not unfrequently eases in the law where one having a less estate in property than that of the absolute ownership fulfills the condition of being owner. The requirement, too, of the statute, is to list, not the rolling-stock which the company owns, but the rolling stock ‘belonging’ to the company. Wo are of opinion that the appellee has such a. qualified property in these sleeping ears that, for taxable purposes, they may be regarded, within the fair meaning of the statute, as ‘belonging’ to the rolling stock of the railroad company, and that they are subject to be taxed'as forming a portion of the same. * S: * We do not conceive, as is objected, that this would involve the result of double taxation of both the railroad company and the car company. The liability of the railroad company to pay taxes on the cars, as a portion of its rolling stock, would operate to exempt the company from liability to pay the taxes as owner of the cars. The railroad company would be viewed as the owner pro hac vice.”

We are of opinion that the motor company’s exclusive possession and enjoyment for the period of 25 years of the leased portion of the power-plant site, with a covenant binding it to pay the taxes thereon, “fulfills the condition of being owner” for the purposes of taxation.

2. This conclusion upon the question of ownership also disposes of appellants’ contention that the power plant was only properly assessable as personal property, for that contention is based entirely upon that provision of the Washington statutes declaring that:

“Personal property, for the purposes of taxation, shall be construed to embrace and include i: * * all invprovements upon lands the fee of which is still vested in the United States or in the state of Washington or in any railroad company or corporation. * * *” 1 Hill’s Ann. Oode, § 1020.

But section 1051 of the same statutes provides, among other things, that:

“All the real estate, Including the stations and other buildings and structures thereon, other than that denominated railroad track, belonging to any railroad, shall be listed as lands or lots, as the case may be, in the county where the same are located.”

And there are general provisions of the same statutes to the effect that:

“Real property, for the purposes of taxation, shall be construed to include the land itself * * * and all buildings, structures and improvements * * * and that in assessing any tract or lot of real property, the value of the land, exclusive of improvements, shall be determined, and also the value of all improvements and structures thereon, and the aggregate value of the property, including all structures and other improvements.” 1 Hill’s Ann. Code, §§ 1019, 1059.

It is not necessary to decide whether the term “improvements,” used in section 1020, should be given the broad interpretation claimed for it on the part of the appellants, for the reason that as the motor company is to be regarded, for the purposes of taxation, as the owner of the leased portion of the power-plant site, in so far as concerns the assessment of the land itself, it must necessarily be so regarded in so far as concerns the improvements thereon, erected at its own expense and for its own use, under the provisions of the lease already mentioned.

3. Another statute of the state in force when the assessments in question were made provides as follows:

“All lands occupied and claimed exclusively as the right of way for railroads by railroad companies or corporations, with all the tracks and all the substructures and superstructures which support the same, must be assessed as a whole and as real estate, without separating the same into lands and improvements, at a certain sum per mile. * * *” 1 Hill’s Ann. Code, § 1046,

The findings of the master, as approved by the court, show that the leased portion of the power-plant site “was embraced within what was designated by the Northern Pacific Railroad Company as the right of way of the Northern Pacific Railroad, but it was in the actual use and occupation of the Tacoma Railway & Motor Company for the purposes of a power plant.” This actual use and occupation by the motor company, as elsewhere appears in the findings, was under the 25-year lease,- and was not only unconnected with the business of the railroad company, but was altogether antagonistic to its occupation as the right of way of that company. Under such circumstances, it is plain that it could not be properly taxed, under the statute cited, as a part of the Northern Pacific Company’s right of way, and there is no finding or evidence that it was in fact so assessed.

4. The power plant, consisting, as it does, of improvements on land of which the motor company must, for the purposes of taxation, be deemed the owner, was properly assessable as “improvements” thereon. Under the provisions of section 1059 of the Washington statute, above cited, whether such proper assessment, or the lien for the unpaid taxes thereon, could be in any way affected by the improper assessment of such improvements as personal property, and the-payment of such taxes, need not be decided, for the reason that the record does not sufficiently show that the power plant was in fact assessed to the motor company as personal property. In finding 19 the master found, among other things, that “all said power plant and everything situate upon said land was assessed by the city of Tacoma in the years 1892 and 1893, and by the county of Pierce in the years 1891 to 1896, inclusive, as personal property, and the taxes were paid on the same as personal property”; and in finding 20, that “all of the taxes described in the bill and in the evidence as having been charged and levied upon improvements upon the land described in the hill constitute a double assessment, in that said assessment on what is designated therein as on improvements is a duplication of the assessment of personal property returned and assessed for each and all of said years.” To these specific portions of findings 19 and 20 the defendants excepted, which exceptions were sustained by the court below. Hu t an exception to a similar clause embodied in finding 18 of Ihe master (relating, however, only to the assessment made by Pierce county) is covered by a general ruling of the court immediately following the foregoing specific rulings, stating that "all other exceptions to the findings and report of the master in chancery are overruled.” It is not to he supposed that the court, after considering specifically the portions of finding 19 and 20 to which exceptions were taken, and after, by its ruling thereon, holding, in effect, that the evidence was insufficient to show that the improvements had been assessed to the motor company as personal property, intended, in the next breath, to hold the exact opposite. It is quite evident, we think, that the court inadvertently overlooked the fact that the clause of finding 19 that it had specifically considered and ruled upon was also embraced in another finding. Indeed, the findings should have contained hut one statement of the same fact. It is just such unnecessary repetitions that add to the bulk of judicial proceedings, resulting in unnecessary costs to the parties thereto, and unnecessary labor to the courts. Moreover, the appellants, by their assignment of errors, call in question, among other things, the ruling of the court in sustaining the exception to the same matter embraced in findings 19 and 20. Under the circumstances stated, we think we are justified in examining the evidence to see whether the appellants proved that the improvements upon the power-plant site were in fact assessed as personal property. As has been seen from the statement of facts, the improvements on the power-plant site were assessed by the county of Pierce for each of the years 1891, 1892, and 1893 at $15,000, and for the year 1895 at $12,300; and for each of the years 1892 and 1893 they were assessed by the city of Tacoma at $18,000. It has further been seen that those improvements consist of a power house, car barn, and certain machinery; the plant covering the entire site, and forming an inseparable mass, incapable of division for use or valuation. The tax lists for the years 1892 and 1893 handed in by the motor company to the assessor of Pierce county contain various items of personal property, including "machinery,” valued at $40,000. Its statement for the year 1893 handed to the assessor of the city of Tacoma included "personal property” valued at $84,170; and for the year 1893, "personal property, inside of Tacoma,” valued at $50,500. In so far as ihe county assessments are concerned, it is quite certain that the term "machinery” cannot be held to include the power house and car barn, inseparably connected with which, according to the findings, is the machinery of the power plant. When to this is added the further fact that the maximum county assessment of the machinery of the power plant, together with and including the house and barn, was only $15,000, whereas the "machinery” alone of the personal property lists was assessed at $40,000, clear proof ought to- he required as to the identity of the two assessments. We think it clear that the evidence does not furnish it in respect to the assessments hy the county of Pierce; nor, in our opinion, is it sufficient to show that the city assessment of “personal property” to the amounts of $84,170 and $50,500 for the years 1892 and 1893, respectively, included the power plant, assessed during each of the same years at $15,000 as “improvements on real estate.” The judgment is affirmed. ■