Court Opinion

ID: 9756324
Source: CourtListenerOpinion
Date Created: 2023-08-28 21:23:22.284354+00
Date Added: 2024-06-11T07:28:19.583655
License: Public Domain

Barnes, J.,

dissenting:

Although I agree with much — indeed most — of the majority opinion as an abstract matter, I dissent because the majority (1) largely ignores what the Department of Assessments actually did in the present case; (2) analogizes the lease to an easement which Maryland Code (1957) Art. 81, § 19 (a) provides, and prior decisions of this Court hold, shall not be separately assessed; and, (3) gives an oblique blessing to the argument of the Tax Court that the Department was acting to reach “Escaped” property, pursuant to Art. 81, §§ 34 and 36.
(1)
In the present case, there is no dispute that the Department did not reassess the value of the Macht property, giving consideration to the lease, either as resulting in a diminution in its value by the leasing of the air rights for the long period of the lease or as a source of income which, upon an income theory of valuation, might result in an increase in the value of the property. The assessment here involved was designated as “Air Rights Only" (Emphasis supplied), and was a separate assessment. Indeed, Max L. Cohen, who is a senior assessor with the Department, worked on the assessment of the Macht property, 11/13 East Fayette Street, the Blaustein Building, as well as many other business properties in the general area of these properties. In his deposition, he stated that “we placed the assessment against air *617rights as such because of it being a specific lease and a specific parcel of property that . . . came out of the agreement.” When asked by counsel for the Machts whether, according to the records of the Department, there was any difference in the land assessment per square foot for the Macht property and the property which is immediately adjacent to the east, Mr. Cohen stated “There’s no difference.” This evidence is uncontradicted. It indicates that what has happened in this case is that the normal assessment of the Macht property — comparable in every way to that of the adjacent property to the east — which presumably reflected the full cash value of each respective property including all of the rights in those properties, has been maintained and continued by the Department but that a separate and additional assessment for the air rights only has been made for the Macht property in addition to the existing assessment. The Board of Municipal and Zoning Appeals of Baltimore City (Board), upon the Machts’ appeal, reversed the Department and, to my mind, quite properly stated:
“We have no doubt but that the General Assembly of Maryland can enact legislation providing for the assessment and taxation of ‘Air Rights’, separate and apart from other rights held by the owner in the land. However, the Legislature has not chosen to provide for the assessment and taxation of ‘Air Rights’ separate and apart from other rights, and consequently since it has not, the political subdivisions have no power granted to them to create this classification or any other classification not authorized by the Legislature. See State Tax Commission v. Wakefield, 222 Md. 543, 161 A. 2d, 676, and Supervisor of Assessment for Montgomery County v. Alsop, 232 Md. 188, 192 A. 2d, 494.
“We do not mean to imply that ‘Air Rights’ are exempt from their fair share of taxes. We *618do hold that the aggregate of rights in and to land totalling absolute ownership thereof, as well as the aggregate interest in buildings and improvements totalling absolute ownership thereof, each respectively must be assessed and taxed as an entirety.
“We hold that the Department has no authority to assess ‘Air Rights’ only as property separate and distinct from all other interests in real property to which such ‘Air Rights’ pertain.”
What the Department has done in the instant case is to attempt to create a “classification” or “sub-classification” of land, i.e., “Air Rights Only.” This is a power which the General Assembly of Maryland has been given exclusively by Article 15 of the Declaration of Rights of the Maryland Constitution. The General Assembly has exercised this exclusive power in Art. 81 of the Code. In § 8 (1), it is provided that all real property in Maryland shall be “subject to assessment to the owner”; § 8 (6) provides that leasehold and other limited interests in real property shall not be subject to taxation except in certain enumerated instances in which the leasehold or other limited interest owner is treated as though he held the entire interest, taxes are assessed and levied to such holder of the limited interest as if he were the entire owner and the remaining interests are exempt from taxation. It is provided in § 19 (a) that in valuing and assessing real property, the land itself and the buildings or other improvements on the land shall be valued and assessed separately, but with a provision that in the “case of the separate ownership of the surface of land and of minerals or mineral rights therein, the assessing authority may, in its discretion, make separate rate assessments of the value of the surface and of such minerals or mineral rights.” (Emphasis supplied)
It is apparent that the General Assembly has not authorized any assessing authority to make a separate val*619uation and assessment of “Air Rights” and, by enumerating the instances in which separate assessments of less than all of the rights in land may be made, has by implication excluded any others. Inclusio unius est exclusio alterius. See American Security & Trust Co. v. New Amsterdam Casualty Co., 246 Md. 36, 40-41, 227 A. 2d 214, 216-17 (1967).
Our predecessors have indicated (consistent with the statutory provisions in Art. 81) that land subject to an easement created by the owner for the benefit of adjacent land continues to be subject to assessment without regard to the easement which is not subject to separate assessment, the assessing authority having no interest in private arrangements made between the landowner and the owner of the easement. Hill v. Williams, 104 Md. 595, 65 A. 413 (1906). Hill has been cited by the Court with approval in e.g., Johns Hopkins University v. County Commissioners of Montgomery County, 185 Md. 614, 617, 45 A. 2d 747, 748 (1946) and Meade Heights v. State Tax Commission, 202 Md. 20, 28, 95 A. 2d 280, 284 (1953).
As the majority observes, the Machts do not contend that the Department may not consider the value of the airspace lease in making the assessment for their property and concludes from this that it “sees no reason why land, improvements and airspace could not be separately valued for assessment purposes, so long as the sum of the elements did not exceed the sum of the value of the whole.” With respect, this appears to me to be a non sequitur. True, land and improvements are separately assessed by virtue of the requirement of Art. 81, § 19. As already set out, however, there is no provision in Art. 81 that “Air Rights” — admittedly part of the rights in the land itself — shall be valued and assessed apart from the land; and by providing for separate valuation and assessment of mineral rights, the separate valuation and assessment of rights in the land other than minerals and buildings and other improvements are forbidden by Art. 81.
The difference between the majority and me on this *620point is not a matter of semantics or mere form. By compliance with the provisions of Art. 81 in regard to valuing and assessing the land — including a consideration of the air rights as a possible element of value — the assessing authority must necessarily consider the diminution in the value of the land from the restriction of the use of the air rights for a very substantial period of time as well as any addition to the value of the land from a capitalization of net rental from the lease of those air rights. Logically, but not at all necessarily, in an arm’s length transaction — and there is no suggestion that the lease involved in the instant case is not such a transaction — the diminution in value by the lease of the air rights should be roughly equivalent to the value of the rent reserved in the lease. At least, the Machts should have the opportunity to establish the factor of such diminution in value. It is clear, however, that they have had no such opportunity and the assessors, in fact, gave no consideration to such a factor.
(2)
As I see it, the majority leans on a broken reed in analogizing the grant of air rights to a negative easement. As already pointed out, the decision of this Court in Hill v. Williams, supra, holds that there can be no valuation or assessment separate from the valuation and assessment of the fee simple interest in a fee simple property. The Department did indeed attempt to make a separate valuation and assessment of “Air Rights Only”; and if the grant of air rights is an “easement,” its action is prohibited by the holding in Hill.
(3)
The majority suggests (but does not hold) that there might be merit in the argument advanced by the Tax Court that the “Air Rights” could be valued and assessed as “Escaped property,” pursuant to Art. 81, §§ 34 and 36. The escaped property procedure only applies *621to property “which was not assessed, but which ought to have been assessed.” The uncontradicted evidence is that the Macht land was assessed and this land included the air rights above the surface of the land. The lease of the air rights was duly recorded and the Department not only had constructive notice of the lease, but actual knowledge of its existence when the assessment of the land in the present case was made. There was no “subsequent discovery” of the air rights. See Mid Towne Plymouth, Inc. v. State Dept. of Assessments & Taxation, 228 Md. 66, 178 A. 2d 422 (1962). As already observed, the appraisers could have considered the diminution of the value of the land resulting from the lease of the air rights, as well as any increase in its value resulting from the rent reserved in the lease, when the assessment of the value of the land was made. It is not the fault of the Machts that this was not done. I cannot perceive how any later separate assessment of “Air Rights Only” could possibly be an assessment of “Escaped property” under the provisions of Art. 81, §§34 and 36.
For these reasons I would reverse the order of the Tax Court reversing the order of the Board of Municipal and Zoning Appeals and reinstate the order of that Board reversing the assessment in this case.
I am authorized to state that Judge Digges concurs in the views herein expressed.