TAXATION ‑- REAL PROPERTY TAX ‑- EXECUTORY LAND CONTRACTS ‑- MUNICIPAL CORPORATION EXEMPTION

TAXATION ‑- REAL PROPERTY TAX ‑- EXECUTORY LAND CONTRACTS ‑- MUNICIPAL CORPORATION EXEMPTION

Real property being purchased from a private individual by a municipal corporation under a typical land contract with a forfeiture clause is subject to tax assessment until title passes to the municipality.

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                                                                    May 6, 1952

Honorable Ronald R. Hull
Prosecuting Attorney
Yakima County
Yakima, Washington                                                                                                              Cite as:  AGO 51-53 No. 299

Attention:  Lon Boyle, Deputy

Dear Sir:

            You have requested an opinion as to whether:  first, the assessor of Yakima County should continue tax assessment of certain property being purchased by the Town of Harrah and, second, whether the treasurer of Yakima County should collect the taxes now due upon such land.

            The conclusion reached is that the assessor should continue assessment of the property until title passes to the Town of Harrah and that the county treasurer should collect the taxes now due.

                                                                     ANALYSIS

            You relate:

            "* * * Under date of November 8, 1949, the town of Harrah, as purchaser, contracted to purchase the property from the owners for a consideration of $12,500, paying $5,000 cash, and the $7,500  [[Orig. Op. Page 2]] balance, with five percent interest, payable $1,500 principal, plus interest, on November 10, 1949, and annually thereafter.  The purchase agreement is the customary real estate contract form, with forfeiture clause in event of default, and with the usual provision that the purchaser is 'to pay regularly, seasonably, and before the same become delinquent all taxes, assessments, etc.'

            "The property had been assessed in 1948 to the private owner, and the levy fixed for the tax payable in 1949 before the municipality contracted to purchase.  The assessor has continued to assess the property to the title holder for the taxes payable in 1950 and 1951.  * * *"

            Rem. Rev. Stat. Supp. 11111 (§ 18, chapter 206, Laws of 1939) states:

            "All real and personal property now existing, or that shall be hereafter created or brought into this state, shall be subject to assessment and taxation for state, county and other taxing district purposes as provided by law, * * *

            "The following property, to the extent herein limited, shall be exempt from taxation:

            "First.  All lands used exclusively for public burying grounds or cemeteries, all churches * * *

            "Second.  All property, whether real or personal, belonging exclusively to the United States, the state, any county or municipal corporation."

            It is to be noted that the exemption granted to cemeteries and churches extends to "all land used exclusively" for the enumerated purposes.  This would seem to exempt such land from taxation regardless of the status of its legal or equitable title since no requirements as to title are mentioned; use of the land being a critical factor.  This is substantiated by the holding in Ex rel. Bracher v. Salvation Army, 305 Ill. 545, 137 N.E. 430, (1922) where a statute similar to ours was construed as exempting from taxation property held under a contract of purchase by the Salvation Army.

             [[Orig. Op. Page 3]]

            The wording of the second exemption in this section of the statute significantly differs from the exemption set forth above.  The second exemption includes "all property * * * belonging exclusively" to municipal corporations.  "Belonging exclusively" connotes the entire and complete ownership of the land by the exempted holder thereof and does not seem to encompass situations where a contract purchaser holds the beneficial or equitable title assuming such is possible under the holdings of our court.

            Manifestly, under the rule of Ashford v. Reese, 132 Wash. 649, 233 Pac. 29 (1925) that a contract purchaser of realty acquires no title or interest, either legal or equitable, the land which is the subject of this opinion could not be said to "belong exclusively" to the Town of Harrah.  Of course, theAshford rule as handed down has been frequently criticized and probably modified.  InGriffith v. Whittier, 37 Wn. (2d) 351, 223 P. (2d) 1062 (1950), the court stated that whatever may have been meant by the Ashford rule "it is now abundantly clear that the purchaser under an executory contract has a valid and subsisting interest in property that is the subject matter of such a contract."  In 22 Washington Law Review 110, there is a collection of cases recognizing many equitable rights in the vendee in land which is the subject of real estate contracts.  Nevertheless, theAshford rule has not been overruled by the court and even though it be taken to be the law that the Town of Harrah, as contract purchaser, has many equitable rights in the land it is purchasing, it cannot be said the land "belongs exclusively" to the Town of Harrah, for whatever may be the nature of the contract purchaser's right, there remains in the vendor a considerable interest in the land, especially in a contract providing for forfeiture such as this contract does.  See 156 A.L.R. 1301.  Furthermore, it is a long established rule that statutes exempting persons or property from taxation are to be strictly construed.  Thurston County v. Sisters of Charity of the House of Providence, 14 Wash. 264, 44 Pac. 252 (1896);Norwegian Lutheran Church of America v. Wooster, 126 Wash. 581, 30 P. (2d) 381 (1934).  A strict construction of the statutory exemption given land belonging exclusively to municipal corporations would certainly not extend that exemption to land being purchased under contract by a town.

            Much the same question as that posed here was answered in an opinion of August 16, 1929, by the attorney general to the state tax commission.  There a city was purchasing on contract land outside its limits for use as a municipal airport.  Our opinion was that until title vested in the city the property remained subject to taxation.  A copy of that opinion is herewith enclosed.

             [[Orig. Op. Page 4]]

            Since in the foregoing it has been concluded that the land is not exempt from taxation because of the status of its title, there is no occasion to here discuss the consequences of the fact that the municipality contracted to purchase the land after the levy was fixed for the tax payable in 1949.

            We are of the opinion upon the facts related that the land being purchased by the Town of Harrah should continue to be assessed for taxes until title passes to the town.

Very truly yours,

SMITH TROY
Attorney General

DON CARY SMITH
Assistant Attorney General