Court Opinion

ID: 9728157
Source: CourtListenerOpinion
Date Created: 2023-08-26 14:00:20.205149+00
Date Added: 2024-06-11T18:25:44.496464
License: Public Domain

Robert W. Hansen, J.
(dissenting). Yesterday it was the county of Milwaukee that sought to expand its airport facilities, without using public monies for construction costs, by arranging to have an airport tenant build two hangars at private expense on public land with the hangars to revert to the county after a period of leasehold use. Tomorrow it almost predictably will be the city of Milwaukee that will seek to expand its harbor or similar facility by arranging for an expansion, using private funds to build on public land expanded warehouse or transshipment facilities, such facilities to revert to the city after a period of leasehold use. Today the city wins, tomorrow the county, in the effort to tax such privately *666financed public improvements on public land. The apparent winner: The hard-pressed taxpayer, adding at least a mite to the tax base, city or county, in each case. However, the victory may well be pyrrhic if the result is that airport, harbor or similar public facilities can be expanded only with public funds used for the construction of new or improved public-serving facilities.
However, it is not for this court, or any court, to weigh or choose between the public policy alternatives involved. That is for the legislative branch of our government. The sole question before us is whether the hangars the city seeks to tax are county property or privately owned property. The facts are stipulated and adequately summarized in the majority opinion. The controlling Wisconsin cases are set forth in the majority opinion. Paths diverge only in the application of such prior holdings to the fact situation here presented.
It is conceded by the city that legal title to the hangars is in the county of Milwaukee. It is, however, substance, not form that controls. True ownership for tax exemption purposes involves more than bare-bones legal title.1 The ownership referred to must include or must mean beneficial or actual ownership, not merely technical legal title.2 Particularly, in cases involving the state or its subdivisions, it is such true ownership, rather than the use of the property which is to determine whether or not the property is exempt.3
The majority reverses no earlier ruling in this area, so the writer joins in analyzing such applicable prior holdings of this court in this general area. The majority *667starts with the Aberg Case,4 finding a “striking resemblance” between the terms of the lease in that case and the lease here involved. There a private business conveyed certain land with improvements by bill of sale to the board of regents of the state university in consideration for a leaseback for a term of thirty years. Here the land involved was county property before the county of Milwaukee arranged for the building of the hangars at Aero expense. Here the land itself remained and remains publicly owned, nontaxable property. In Aberg this court refused to permit the city assessor to assess the leasehold interest against the lessee and thus divide up the property for the purposes of taxation. That is exactly what is being permitted in the case before us.
The majority quotes with greater enthusiasm the Wisconsin University Building Cory. Case.5 There this court held exempt from city real estate taxes property held by a dummy corporation because, although title to the real estate was in the name of the dummy corporation, the land was held for the benefit of the university. This the majority terms a “more realistic view.” That may well be true, but how it helps undergird a finding of taxability in the case before us is not at all clear. If the building there served a public purpose, the hangars here serve a similar public purpose. Airports are not universities, but both are public in purpose. The most applicable quote from the dummy corporation case: “When public property is involved, exemption is the rule and taxation the exception.” 6
Next the majority cites the Wolf River Case.7 There an electric power company operating for profit owned 1400 acres of land not yet ready for development or exploita*668tion in its business. It conveyed this land to the Valley Camp Association to be used as a Boy Scout camp. The deed provided for a right of reentry if the land was ever used for other purposes. More importantly, the deed provided for the right of the power company to repurchase the property at the same price for which it was sold. Transparently, this arrangement put the property in tax-exempt cold storage only until the company wanted it back. Then the right to repurchase could be exercised. Nonetheless, this court held the property, for as long as the camping association held it, tax exempt. In the case before us, the land is forever and ever public land and the hangars were conveyed by bill of sale to the county, subject only to the right of Mitchell Aero, Inc., to occupy and use the lease for a fixed period of time. In finding the power company not to be the true owner when it retained the right to repurchase the property at the same price it had “sold” it, seems to stretch the true ownership test in favor of nontaxability. In the case before us, the stretching is in the opposite direction.
The next case cited in the majority opinion, and for us the last one dissected, is the Jelco Case.8 There the state sued for recovery of motor vehicle registration fees allegedly owed on certain school buses. The applicable statute required the “owner” to pay such fees.9 Legal title to the buses involved had been given to the school districts in which they were used. However, such districts were required to transfer legal ownership back to the private owner, the defendant, after a certain time. In actual effect the school districts “owned” the buses for only ten months of each year, the school year. The holding that the school districts involved were the “owners” of the buses might have its critics. However, at both legal title and what the decision called “exclusive possession and dominion over the buses” for ten of each twelve *669months during the contractual period 10 were in the school districts. This seems hardly on all fours with a situation where a full legal title to the hangars was transferred to the county, and the right to use was in effect no more than the right of a lessee under a lease.
In each of these four cases various indicia of ownership were considered and evaluated. Such weighing and weighting to determine true ownership is not always easy. However, it would be the writer’s opinion that the four parties in interest found to be the true owners — the university board of regents in the first two cases, the scout camping association and school districts in the other two, had fewer indicia of ownership than the county of Milwaukee has in the case before us. The four parties in interest found not to be true owners in the four cases ■ — the private corporation, the dummy corporation, the power company and the school bus renters — all appear to have had more indicia of ownership than the Aero company holds here.
In testing not alone the form but also the substance of the transaction here involved, it appears to the writer that upon the execution of the bill of sale from Aero to the county of Milwaukee covering the two hangars, the true owner of such hangars became the county. The lease between Aero and the county has some unique features, but the status of Aero is no more than that of a lessee. Its so-called reversionary interest is no more than an equitable adjustment in the event of abandonment of the airport, condemnation by the county or breach of lease by the county. If Aero breaches the lease, its interest in the hangars becomes zero. If the state or federal government condemn the buildings, Aero’s only claim for losses sustained is against such governments. No modification of the buildings can be performed by Aero without the written consent of the county. Use of the hangars is restricted by the lease and subject to the *670approval of the airport director. Aero’s rights to use the property as lessee are set forth in the lease, as might well have been done in identical language if the county had built the hangars with public funds and then leased its hangars to Aero. The rent would likely have been higher in such case because the lease undoubtedly includes an amortization of the cost of the initial construction during the period of the lease. However, this factor of reduced rental and some risk of loss does not change the status of the county as true owner, and of Aero as lessee only.
The majority opinion and this dissent accept the true ownership test in determining taxability. This disposes of the city’s contention that, regardless of who owns the property, a possessory interest such as a leasehold is taxable. This part of the Aberg decision has neither been repealed by the legislature nor reversed by this court.11
If the county of Milwaukee is the true owner of the two hangars, as this dissent argues it is, the hangars are exempt under sec. 70.11 (3), Stats. There is an exception to such tax exemption in sec. 70.11 (2) reading: “[T]his exemption shall not apply to land conveyed after August 17, 1961, to any such governmental unit or for its benefit while the grantor or others for his benefit are permitted to occupy the land or part thereof in consideration for the conveyance.” (Emphasis supplied.) This exception explicitly is limited to land. The city here has assessed the hangars as personal property and it can hardly now claim them to be “land.” Another statute, sec. 70.174, provides that improvements on government owned land *671may be assessed either as real or personal property to the person making the same, or to the occupant thereof or the person receiving benefits therefrom. However, this statute is limited to “land within this state owned by the United States.” (Emphasis supplied.) It has no application here. In the absence of a provision authorizing taxation of improvements on lands leased from municipal-taxing authorities, sec. 70.11 (2) controls and exemption follows if the true owner is in fact a county or municipality. Unless and until the legislature speaks, this court is bound by the language of sec. 70.11 (2).
The majority opinion equates ownership with possessing a bundle of sticks, stating that one or more of the sticks may be separated from the bundle and the remainder of the bundle may still constitute ownership. The majority states that what combination of rights less than the whole bundle will constitute ownership is a question which must be determined in each case. With all this the writer agrees. Then the majority counts the sticks, and finds only one stick, that of title, in the hands of the county. By our count, only one stick, that of the right to use under the lease for a specified period of time, remains in the hands of Aero. In making out a case against Aero one needs more than such single stick (the right to occupy under a lease) to constitute ownership. The writer would reverse and remand, with instructions to enter judgment for the plaintiff as prayed for in the complaint.

 American Motors Corp. v. Kenosha (1957), 274 Wis. 315, 80 N. W. 2d 363, affirmed 356 U. S. 21, 78 Sup. Ct. 559, 2 L. Ed. 2d 578.

 Aberg v. Moe (1929), 198 Wis. 349, 224 N. W. 132, 226 N. W. 301.

 State ex rel. Wisconsin University Building Corp. v. Bareis (1950), 257 Wis. 497, 44 N. W. 2d 259.

 Aberg v. Moe, supra.

 Wisconsin University Building Corp. v. Bareis, supra.

 Id. at page 501.

 Wolf River v. Wisconsin Michigan Power Co. (1935), 217 Wis. 518, 259 N. W. 710, 98 A. L. R. 1369.

 State v. Jelco (1957), 1 Wis. 2d 630, 85 N. W. 2d 487, 86 N. W. 2d 428.

 Sec. 85.01 (4) (g), Stats. 1951.

 State v. Jelco, supra, at page 636.

 “No doubt the legislature might empower the assessor to assess the leasehold interest against the lessees and so divide up the property for the purposes of taxation. That, however, has never heen the policy of our law so far as we know except for a brief period when the state undertook to tax the respective interests of the mortgagor and mortgagee separately. The entire property, including all interests in it, is assessed to the owner of the property as defined in the statute . . .” Aberg v. Moe, supra, at page 359.