Court Opinion

ID: 9687140
Source: CourtListenerOpinion
Date Created: 2023-08-24 16:16:48.039986+00
Date Added: 2024-06-11T18:18:24.489865
License: Public Domain

Levin, J.
(dissenting). The general property tax law provides that "all buildings and fixtures thereon” are taxable as "real property.”1 The majority states that "[according to the act, if the house drops in the case at bar are fixtures, then they are taxable to the owner or occupant of the realty. On the other hand, if the house drops are personalty, then they are assessable against the owner of the house drops”2 as "personal property.”3
The majority states that the house drops are fixtures within the meaning of two of the three factors determinative of whether property is a fixture: The parties have agreed that the house drops are "annexed to the realty” and "adapt[ed]” to the use of the realty.4 Accordingly, the analysis must focus on the third factor, whether it was intended that the house drops become a "permanent accession” to the realty.5 The majority concludes that Continental Cablevision did not establish that it "intended to relinquish ownership and control over the house drops”6 and thus failed to establish that it intended that the house drops would become permanent accessions to the realty. The majority summarizes its analysis:
[I]n the instant case, upon examination of petitioner’s subscription agreement, its business and accounting practices, and the treatment afforded *751to other utilities in the area of taxation, we hold that the findings of the Tax Tribunal are supported by competent, material, and substantial evidence.[7]
In my opinion, the only evidence that might support the findings of the Tax Tribunal is the failure of the subscription agreement to provide unequivocally that title, ownership, and control of the house drops are vested in the owners of the realty. Substantial other evidence tends to support Continental’s claim that it did relinquish title, ownership, and control.
i
The treatment of gas and electric utility house drops for ad valorem tax purposes, provided by statute,8 does not bear on whether Continental intended that cable television house drops installed for its subscribers would become permanent accessions to the realty. Nor is it pertinent to an inquiry focusing on Continental’s intention whether there is a "justifiable rationale” for treating house drops differently than other utility drops for purposes of taxation.9 Those are considerations for the Legislature.
n
Continental’s accounting practices are not inconsistent with its assertion that it intended that the house drops become permanent accessions to the realty. Although Continental may have preferred to expense the difference between the $40 cost of installation of a house drop and the $14.95 paid by *752the subscriber for installation of a house drop in the year in which the expenditure was made, the Internal Revenue Service apparently takes the position that the difference cannot be expensed but may be depreciated. The federal income tax treatment does not depend on whether Continental retains ownership10 or, alternatively, whether ownership is vested in the owners of the realty. Even if title to the house drops were to be vested incontrovertibly in the owners of the realty, Continental would be entitled to claim depreciation deductions for the unamortized portion of the difference and could not accelerate the timing of depreciation allowances.
Since, the federal income tax treatment and Continental’s accounting practices in that regard are controlled by federal law, Continental’s attempts to comply with that law as administered by the Internal Revenue Service are not any evidence at all on the question presented whether Continental intended that the house drops become permanent accessions to the realty.
III
The provisions of the subscription agreement reserving to Continental the right, during the term of the agreement, to repair and replace all components, including house drops, connected to its cable system, and precluding the customer, during the term of the agreement, from interfering with the system, are not inconsistent with Continental’s assertion that the house drops had become permanent accessions to the realty. These provisions of the subscription agreement seek to provide a means of maintaining the integrity of the cable system and of complying with Federal *753Communications Commission regulations11 designed to prevent signal leakage that might interfere with other communications including flight control systems. Continental’s efforts to comply with federal regulations do not tend to negative Continental’s assertion that it intended that the house drops become permanent accessions to the realty.
Continental would have the same obligation to comply with fcc regulations if the house drops had been installed by the owner of the realty. Continental’s obligation arises under federal law when the house drop — without regard to who installs, owns, or otherwise controls it — is connected into its cable system.
The subscriber-owner of the realty can terminate the asserted ownership and control of Continental at will, after any notice that is provided for in the subscription agreement. Once the subscription agreement is terminated, the subscriber-owner of the realty may do whatever he may wish with the house drop. Continental would then have no further right to maintain, repair, or alter the house drop. Continental has never sought to exercise rights over house drops following termination of service to a subscriber and has never removed a house drop except to repair or replace it. Continental expressly reserves ownership in and the right to remove the converter, thereby indicating, under established rules of contract construction, that it did not intend to retain ownership of the house drops.
IV
There is no reason to suppose that Continental would desire to retain ownership of the house *754drops.12 There is no advantage to Continental in retaining ownership13 or in retaining control beyond such control as may be required by fcc regulations during such periods of time that a house drop is connected to Continental’s cable system.
Continental has every reason to relinquish ownership and all other control. No law bars it from doing so. If it is felt that there is an avoidance of taxation14 that requires a governmental response, the appropriate forum for that effort is the Legislature.15 Until the Legislature acts and as long as the question turns on and focuses on Continental’s intention, Continental is free to draft the subscription agreement to effect a transfer of ownership and control. There is no reason to question the bona fides of Continental’s assertion that it has relinquished title, ownership, and control of the house drops.16 There is no basis in the record for concluding that Continental acted inconsistently *755with its assertion that it intended that the house drops become permanent accessions to the realty.
I would reverse and remand this cause to the Tax Tribunal for further proceedings consistent with this opinion.

 MCL 211.2; MSA 7.2 (emphasis added).

 Ante, p 735.

 MCL 211.8(a); MSA 7.8(a).

 See Peninsular Stove Co v Young, 247 Mich 580, 582; 226 NW 225 (1929).

 Ante, p 736.

 Ante, p 737.

 Ante, p 749.

 See MCL 211.8(g); MSA 7.8(g).

 Ante, p 747.

 3 CCH Federal Tax Reporter, ¶ 1715.23.

 47 CFR 76.601 et seq.

 Suppose a house drop falls to the ground through no fault of Continental, that this occurs after a subscription agreement terminates, and a person is injured. The majority’s analysis might subject Continental to tort liability therefor.

 The experience is that few subscribers or owners interfere with house drops after a subscription agreement terminates, and the house drops will ordinarily be in place should the subscriber-owner or a subsequent subscriber-owner desire Continental to reconnect into its cable television system.
The majority notes that where there is an existing house drop, the connection charge is $10 rather than $14.95. Ante, p 743. The majority states "that petitioner has made a conscious business decision to leave the house drops intact as an incentive to future residents to subscribe.” Id. That does not, however, negative an intention to transfer title, ownership, and control to the owner of the realty.

 Continental could require its subscribers to pay, directly or indirectly, any property tax that might be assessed against it.

 The majority does not predicate its decision on an asserted need to prevent tax avoidance. It holds rather that the house drops are not fixtures because Continental did not intend to relinquish ownership and control.

 See T-V Transmission, Inc v Pawnee Co Bd of Equalization, 215 Neb 363; 338 NW2d 752 (1983).