Summary
In City of Dayton v. Haines, Aud., 156 Ohio St. 366, 102 N.E.2d 590, vacant land owned by a city and leased to the federal government for grain storage was held taxable on the ground that the use for a public purpose must be such that it may be considered as use by the one whose ownership renders the property public property.
Summary of this case from Cleveland v. CarneyOpinion
No. 32615
Decided December 12, 1951.
Taxation — Public property exempt, when — Use for public purpose — Section 5351, General Code — Municipally owned public airport — Portion leased to federal agency for storing grain — Use for grain storage not incidental, or for public purpose.
1. Where vacant land, which forms a portion of a public airport which is owned by a municipal corporation, is leased by the municipality, for a term of years at a substantial annual rental, to an agency or instrumentality of the federal government for the purpose of storing grain, and such agency or instrumentality erects grain storage bins thereon and uses the leased premises solely for grain storage, such use is not incidental to the owner's use of the airport for airport purposes and does not constitute a use by the owner for a public purpose so as to entitle the owner to exemption from taxation of the leased premises, under the provisions of Section 5351, General Code.
2. In order that property may qualify for tax exemption under the provisions of Section 5351, General Code, as "public property used for a public purpose," the use for a public purpose must be such that it may be considered as use by the one whose ownership constitutes the property public property.
APPEAL from the Board of Tax Appeals.
This is an appeal by the city of Dayton from a decision of the Board of Tax Appeals denying the appellant's application for exemption from taxation for the tax year 1950 of 14.42 acres of land which forms part of the tract owned and operated by appellant as a public municipal airport at Vandalia, Ohio.
The entire airport premises consisting of several hundred acres was deeded by the United States of America to the city of Dayton in March 1949. That deed provided in part:
"1. That, except as provided in subparagraph (6) of the next succeeding unnumbered paragraph, the land, buildings, structures, improvements and equipment in which this instrument transfers any interest shall be used for public airport purposes for the use and benefit of the public, on reasonable terms and without unjust discrimination and without grant or exercise of any exclusive right for use of the airport within the meaning of the terms `exclusive right' as used in subparagraph (4) of the next succeeding paragraph. As used in this instrument, the term `airport' shall be deemed to include at least all such land, buildings, structures, improvements and equipment.
"* * *
"2. (1) That insofar as it is within its powers, the party of the second part shall adequately clear and protect the aerial approaches to the airport by removing, lowering, relocating, marking or lighting or otherwise mitigating existing airport hazards and by preventing the establishment or creation of future airport hazards.
"* * *
"2. (6) That no property transferred by this instrument shall be used, leased, sold, salvaged, or disposed of by the party of the second part for other than airport purposes without the written consent of the Civil Aeronautics Administrator, which shall be granted only if said administrator determines that the property can be used, leased, sold, salvaged or disposed of for other than airport purposes without materially and adversely affecting the development, improvement, operation or maintenance of the airport at which such property is located. * * *"
On August 10, 1949, the city of Dayton leased the 14.42 acres in question to the Montgomery County Agricultural Conservation Association for a minimum term of three years at an annual rental of $180. The lessee is an organization formed by the farmers of the county under the authority of an act of Congress commonly referred to as the Agricultural Adjustment Act. It functions in connection with the Commodity Credit Corporation in maintaining parity of prices of agricultural products.
The lease contains, among others, the following provisions:
"2. That the lessee shall use said premises as a site for bins for storage of grain and for no other purpose whatsoever, unless the lessor shall consent in writing to a change of use * * *.
"3. That the lessee shall, at its expense, construct, maintain, operate, and, at the termination of this lease, remove said bins and contents * * *."
The lessee constructed or permitted to be constructed upon the leased premises 130 metal grain storage bins having a total storage capacity of 320,000 bushels. The maximum height of the bins is 18 feet. The title to the bins is admittedly in the Commodity Credit Corporation and no effort is made to levy a tax against the city of Dayton with respect to the bins. The dispute involves only the right to levy a tax against the city with respect to the land, exclusive of buildings or improvements.
The city of Dayton made application for exemption from taxation of the 14.42-acre tract for the tax year of 1950 upon the ground that it was public property used for a public purpose. The application was denied by the Board of Tax Appeals.
Appeal was perfected to this court as permitted by statute.
Mr. Herbert S. Beane, city attorney, and Mr. Joseph P. Duffy, for appellant.
Mr. Mathias H. Heck, prosecuting attorney, for appellee county auditor. Mr. C. William O'Neill, attorney general, Mr. Robert E. Leach and Mr. Hugh A. Sherer, for appellee Board of Tax Appeals.
Pursuant to the power granted by Section 2, Article XII of the Constitution of Ohio, the General Assembly enacted Section 5351, General Code, which provides in part:
"Real or personal property belonging exclusively to the state or United States, and public property used for a public purpose, shall be exempt from taxation." (Emphasis supplied.)
Is the land in question, comprising 14.42 acres, "public property used for a public purpose"?
Ownership by the city of Dayton constitutes the land public property. City of Toledo v. Jenkins et al., Board of Tax Appeals, 143 Ohio St. 141, 54 N.E.2d 656.
The appellant urges two, not wholly consistent, grounds for claiming that the land is used for a public purpose: (1) That the leased area is being used by appellant for public airport purposes and (2) that the storage of grain by the lessee is use by the federal government.
Appellant relies upon Toledo v. Jenkins, supra, in support of its first proposition as stated above. In that case the city of Toledo owned the airport, excepting one building. It rented out portions of its buildings and hangars. In discussing the effect of such use by others, Judge Williams in the opinion said:
"Public utilities are created to render service to the public and for the service a charge is made. Any incidental use allied to the main public purpose is likewise public. Renting space in buildings to others to promote aviation by extending service at the airport to all the public using its facilities would be a use incidental to the main public purpose. Moreover, the mere fact that revenue is received for the space so rented does not change the public aspect, so long as the purpose of the utility is subserved and the objective is not primarily to obtain revenue. It is the `primary and principal' use that controls and the fact that incidental revenue is derived from the property does not in and of itself alter the public character of the use to which the property is put. For authorities see annotation 101 A.L.R., 790. So all the real estate necessary and incidental to the operation of a municipally owned and controlled airport unit would in its operation be concerned with a public use."
In applying the principles so stated, the opinion discusses use of the hangars by individuals and the use of office space in the airport buildings by the United States Department of Agriculture "presumably for a weather bureau," by the United States Department of Commerce "presumably for aeronautic purposes," by two air lines and by a school in which flying was taught. Such uses were not considered as changing the public aspect of the use of the airport. They were considered incidental to the main purpose. On the other hand, exemption was denied with respect to other items, which formed part of the airport premises, including a house and garage occupied by the manager as a residence, together with 1.06 acres of land on which the house and garage were located, and a residence occupied by a serviceman and his garage. It is interesting to note that a barn which was a part of the three-structure unit which included the serviceman's residence and garage was considered exempt because it was used for storage of tools used on the airport.
The facts of the instant case are manifestly different from those in the Toledo case, supra. The storage of grain in large metal bins 18 feet in height cannot, as we see it, be considered incidental to the operation of an airport. The purpose of the utility, to wit, operation of the airport, is not thereby subserved. On the contrary, it is reasonable to conclude that the presence of 130 such structures in an area of 14.42 acres is wholly inconsistent with any possible use of that area for airport purposes. Certainly an emergency landing could not be made in that area.
Furthermore, the leasing by appellant of the area in question is inconsistent with the claim of use for a public purpose. In argument appellant's counsel asserted that the rental is merely nominal and of no controlling importance. The record is silent as to what a reasonable rental would be and it is also silent as to the physical characteristics of the area. We must, therefore, conclude that $180 per year, which is approximately $12 per acre, is substantial and constitutes fair rental for this vacant and unimproved land. The appellant does not use the area. It is used by a tenant.
In this connection appellant claims that in the Toledo case, supra, the acreage, not occupied by runways, was sowed with alfalfa which was cut and sold on the market and that such use did not prevent exemption from taxation. Appellant says that the Dayton land is used to store grain; that the Toledo land was used to grow alfalfa; and that money was received by the owner in both instances. Appellant urges that the situations are identical in principle. That argument overlooks the facts that in the Toledo case the city did not part with possession of or control over the land sowed to alfalfa, that it chose to grow alfalfa rather than weeds — as Judge Williams suggested — and that the growing of alfalfa did not in any way interfere with use of the land for airport purposes.
We now turn to the claim of appellant that storage of grain on the premises by an instrumentality of the federal government is a use for a public purpose, which, coupled with appellant's public ownership, satisfies the exemption requirements. We are not called upon to characterize the use made of the premises by the Montgomery County Agricultural Conservation Association or the Commodity Credit Corporation or any other agency of the federal government. The use made by such agency is not a use by appellant. The United States Government, acting through one or more of its agencies or instrumentalities, is the tenant of appellant, paying an annual rental for the privilege of use. Appellant has devoted this property to commercial use as much as though the rental were several times that stipulated in the lease.
To satisfy the requirements of that portion of Section 5351, General Code, here involved, the user of the property and the owner thereof must coincide, that is, the use for a public purpose must be such that it may be considered as use by the one whose ownership constitutes the property public property. Under the facts of this case that requirement is not satisfied.
The law is well settled that property to be exempt from payment of taxes must come squarely within the exemption provisions of the law. In Re Estate of Taylor, 139 Ohio St. 417, 40 N.E.2d 936; Crown Hill Cemetery Assn. v. Evatt, Tax Commr., 143 Ohio St. 399, 55 N.E.2d 660.
Appellant has not established a right to exemption. The decision of the Board of Tax Appeals is affirmed.
Decision affirmed.
WEYGANDT, C.J., MATTHIAS and HART, JJ., concur.
ZIMMERMAN, STEWART and TAFT, JJ., dissent.
Section 5351, General Code, expressly exempts from taxation "public property used for a public purpose." The General Assembly has not seen fit to elaborate on or limit the quoted words.
The real estate involved herein is undoubtedly "public property," the ownership thereof and the title thereto being in the city of Dayton. It was "used for a public purpose," since it was devoted exclusively to carrying out provisions of the Agriculture Adjustment Act, a measure passed by the Congress of the United States.
To say, as does the majority opinion, that both the ownership and the public use of property must be in and by the same public body to come within the applicable exemption provisions of Section 5351, General Code, imparts to the statute an interpretation which the language actually employed will not support, and constitutes judicial legislation.
Under the law as written, the real estate in issue should, in my opinion, have been accorded a tax exempt status, and the Board of Tax Appeals was clearly wrong in denying exemption.
The statutory provisions for tax exemption here involved require only that the property be "public property used for a public purpose."
Where one public body owns land and leases it to another public body, it is obvious that the land does not thereby cease to be public property. While the elements of ownership may thereafter be partly vested in the lessor and partly in the lessee, if both lessor and lessee are public bodies, there will certainly be nothing but a public ownership of the property.
Since admittedly both the lessor and the lessee in the instant case are public bodies, then it necessarily follows that the property for which tax exemption is sought in the instant case is public property.
If the question were presented to us for decision, I believe that it would be debatable whether the use here made of this property by the agencies of the federal government was a use for a public purpose. However, that question is not before us since both parties concede that such use was for a public purpose.
We have therefore a situation where the only uses made of the property for which tax exemption is sought were uses for admittedly public purposes.
Thus, since the property was public property and used only for public purposes, it comes squarely within the words of the statute providing for tax exemption.
The question of whether the use by someone other than the lessor is a use incidental to a use by the lessor for public purposes may be important, as in City of Toledo v. Jenkins et al., Board of Tax Appeals, 143 Ohio St. 141, 54 N.E.2d 656, either where such use by one other than the lessor is a commercial or nonpublic use or where such one other than the lessor is not a public body. However, to say that use by a lessee public body for a public purpose must be a use incidental to a use for a public purpose by a lessor public body, is to read into the statute requirements which it does not contain. The rule of strict construction of statutory and constitutional provisions for tax exemption certainly does not justify a court in adding to such statutory or constitutional provisions requirements which are not called for by their words.