TAXATION ‑- REAL ESTATE SALES TAX ‑- APPLICATION TO EASEMENTS FOR PIPELINES ‑- RIGHT OF WAYS

TAXATION ‑- REAL ESTATE SALES TAX ‑- APPLICATION TO EASEMENTS FOR PIPELINES ‑- RIGHT OF WAYS

Excise tax on real estate sales applies to easements for pipelines over lands described in contract granted to pipeline corporation for consideration determined by length and number of pipelines.

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                                                                October 26, 1955

Honorable Thurman E. Ward
Prosecuting Attorney
Klickitat County
Goldendale, Washington                                                                                                              Cite as:  AGO 55-57 No. 151

Dear Sir:

            You have requested our opinion on the question which, paraphrased, is whether the excise tax on real estate sales applies to a right of way for a pipeline or pipelines, for the transportation of oil or gas or the products thereof, on, over and through certain lands, described in the contract, granted and conveyed unto a pipeline corporation, its successors and assigns, for an indefinite period, the same to include certain other rights set forth in the contract, for a consideration determined by length of pipeline and number of pipelines, the contract containing the usual acknowledgment form.

            We conclude that the right of way contract provides for the sale of an estate or interest in real property and is taxable under chapter 28.45 RCW.

                                                                     ANALYSIS

            RCW 28.45.010 provides in part as follows:

             [[Orig. Op. Page 2]]

            "As used in this chapter the term 'sale' shall have its ordinary meaning and shall include any conveyance, grant, assignment, quit claim [[quitclaim]]or transferof the ownership of or title to real property, including standing timber,or any estate or interest therein for a valuable consideration, * * *" (Underscoring ours)

            Ordinance No. 3 of your county, as amended, contains the same provision as is quoted above.

            The enclosed copy of right of way contract meets the requirements of the above statute and ordinance for a "sale".  It is a grant and conveyance unto the grantee, its successors and assigns, of a right of way for pipeline or pipelines, for the transportation of oil or gas or the products thereof, on, over and through certain described lands, including the right of ingress and egress, and other specified rights for the purposes set forth in the contract.  The consideration is set forth, the term is for an indefinite period, from the construction of the first pipeline so long thereafter as a pipeline is maintained, and may be perpetual.  The contract has the usual acknowledgment form for an instrument effecting real estate.

            An analysis of this contract discloses that it is a contract for an easement appurtenant rather than an easement in gross.  An easement is never presumed to be in gross or a mere personal right when it can be fairly construed to be appurtenant to some other estate.  Thompson on Real Property, Vol. 1, § 324;Pioneer Sand and Gravel Company v. Seattle Const. and Dry Dock Co., 102 Wash. 608, 173 Pac. 508.

            For an estate or interest to be in real property, it is not required that the estate or interest be in the soil of the land or to any corporeal interest in it, but it may be an incorporeal right in the corpus which is considered an interest in the land itself.  Thompson on Real Property, Vol. 1, § 328.

            An easement to be appurtenant requires a dominant and servient estate, and it is not essential that the dominant and servient estates shall be contiguous.  Thompson on Real Property, Vol. 1, § 325.  Kalinowski v. Jacobowski, 52 Wash. 359, 100 Pac. 852.

             [[Orig. Op. Page 3]]

            The dominant estate may be real property, or it may be a work which the easement is designed to serve, Thompson on Real Property, Vol. 1, § 342.  Ladd v. Boston, 24 N.E. 858, 21 Am. St. 481;Lindenmuth v. Safe Harbor Water Power Corporation, 163 Atl. 159, 89 A.L.R. 1180.

            In the case referred to us for opinion it may be assumed that the dominant estate to which the right of way over the lands in the contract is appurtenant is real property or a work on real property, such as a refinery, well, pumping station or other work, constructed or to be constructed, either contiguous to the servient estate or separated by other real property.

            The supreme court of our state has had the question of easements before it on several occasions and is in accord with the general views expressed herein.  SeeMcCue v. Bellingham Bay Water Co., 50 Wash. 156; 31 Pac. 461;Roberts v. White River Water Power Co., 30 Wash. 430; Everett Water Co. v. Powers, 37 Wash. 143, 79 Pac. 617;Humphrey v. Krutz, 77 Wash. 152, 137 Pac. 806 andKalinowski v. Jacobowski, supra.

            It is clear from an analysis of the right of way contract submitted to us and an application of the pertinent laws relating to easements, both general law and the law set forth in cases of the supreme court of the state of Washington, that the contract submitted is a conveyance and grant of an easement, appurtenant to real property of the grantee, or appurtenant to a work constructed or to be constructed by the grantee, to which the servient estate, the land over which the pipeline will be built, is subject.  Under RCW 28.45.010, the conveyance and grant is a conveyance or grant of the ownership of or title to an interest or estate in real property, for a valuable consideration, and is subject to the real estate excise tax.

            It should be pointed out that under the second paragraph of the right of way contract, the total selling price is not determinable until the easement is finally located.  We have found nothing in the present Model Ordinance which covers this situation, so that a procedural problem is presented which will have to be dealt with pursuant to RCW 28.45.035.

             [[Orig. Op. Page 4]]

            We hope the foregoing analysis will prove helpful to you.

Very truly yours,

DON EASTVOLD
Attorney General

W. DELMORE McDOWELL
Assistant Attorney General