Allright Pаrking of Georgia, Inc. (Allright) brought this suit on July 7,1977, to contest a determination by the Joint City of Atlanta-Fulton County Board of Tax Assessors (Board of Tax Assessors) that Allright’s interest in certain real estate under an agreement of May 28, 1976, with the Metropolitan Atlanta Rapid Transit Authority (MARTA) is subject to ad valorem property taxation.
Allright leased the subject property from the State of Georgia in 1972, for a term of 73 years. See Ga. L. 1972, pp. 58-132, as amended by Ga. L. 1974, pp. 1247-1407. The property consists of approximately 10 acres in downtown Atlanta, which are bounded generally on the southeast by the Forsyth Street Viaduct, on the northeast by the Western & Atlantic Railroad, on the northwest by Foundry Street, and on the west by the Central of Georgia Railroad. Under the lease, Allright was required to pay ad valorem taxes on "its interest or estate” in the property. Allright paid the City of Atlanta and Fulton County ad valorem taxes on this property for the years 1973-1976. In 1976, Allright’s leasehold interest was valued at $2,541,900 and assessed at $1,016,760. On this basis, the 1976 city and county taxes paid by Allright on this property totaled $60,409.53.
On April 5, 1976, MARTA acquired fee simple title to this property from the State of Georgia, pursuant to an agreement entered into between them in 1975. On Aрril 8, 1976, the City of Atlanta, acting on behalf of MARTA, filed a condemnation action against Allright’s interest in the property. The City of Atlanta, MARTA, and Allright negotiated a settlement in compromise of the condemnation proceeding. In the settlement agreement,
Initially, Allright’s interest in the property as of January 1, 1977, was valued by the Board of Tax Assessors at $2,055,330 and assessed at $822,130. On this basis, Allright’s city and county ad valorem tax bill would have been $49,231.26. However, Allright demanded arbitration as to the valuation and assessment on the property, and, through arbitration proceedings, the valuation and assessment subsequently were reduced to $1,350,000 and $540,000, respectively. The city and county ad valorem tax assessment on this basis is $32,362.78.
Allright also filed a protest before the Board of Tax Assessors, taking exception to the board’s determination that Allright’s interest in the property was subject to ad valorem taxation. Before the board, Allright’s position was that its interest in the property is a mere usufruct, which is not subject to ad vаlorem taxation
(Whitehead v. Kennedy,
In the complaint, Allright alleged that its interest in the property is a nontaxable usufruct. The Board of Tax Assessors answered, denying the allegations of the complaint. Subsequently, MARTA was allowed to intervene as a party-plaintiff.
Allright’s city ad valorem tax bill became delinquent after August 15, 1977, and Allright paid it on that date. Allright paid its county ad valorem tax bill on September 29, 1977, and these taxes subsequently became delinquent after October 15, 1977.
The parties eventually agreed to try the case upon a stipulation of facts at a bench trial on November 3, 1978. On October 18, 1978, the defеndants filed a motion to dismiss for lack of jurisdiction under Code Ann. § 92-6413
Following a hearing, the triаl court ruled that Allright’s interest in the subject property is a nontaxable usufruct, rather than a taxable estate for years. However, the trial court also ruled that under Code Ann. § 92-6413 it lacked jurisdiction to entertain this action, because Allright had not paid its 1977 ad valorem taxes on the property prior to filing suit. The court also ruled that the plaintiffs’ attacks on the constitutionality of Code Ann. § 92-6413 werе not raised in a timely fashion. Accordingly, the complaint was dismissed by the trial court.
In Case No. 34961, the plaintiffs appeal the trial court’s ruling that their failure to comply with Code Ann. § 92-6413 deprived it of jurisdiction in this case. In Case No. 34998, the defendants cross appeal the trial court’s ruling that Allright’s interest in the property is a nontaxable usufruct. Held:
1. At the outset, it is necessary to undertake a rather exhaustive review of the material provisions of the 1976 amendment to the lease:
Allright’s interest in the property is reduced from 73
Section 4a provides, "Notwithstanding any provision of the Existing Lease to the contrary, it is acknowledged and agreed that, upon execution of this Agreement, Tenant’s interest in the Premises shall be only a usufruct..., that no estate in or title to the Premises shall under any circumstances vest in Tenаnt by virtue of this Agreement, and that Tenant shall upon even date herewith, by separate instrument . . . convey to and release in favor of Landlord any estate in or title to the Premises presently vested in Tenant by virtue of the Existing Lease. It is the intent of Landlord and Tenant that this Agreement gives Tenant a usufruct and not an estate for years.”
The tenant agrees to pay the landlord a rental equal to 50% of the tenant’s monthly gross receipts from any and all uses of the premises. (Section 5). The landlord is not required to make any repairs or improvements to the premises, to maintain the premises, or to incur any expenses in connection therewith. (Section 5b). The tenant is required to pay all utilities supplied to the premises in connection with the tenant’s use of the premises. (Seсtion 6). The tenant agrees to pay "all personal property taxes and all governmental charges of any nature whatsoever, general or special, ordinary or extraordinary, which may be levied or assessed upon, or which may become a lien upon the Premises or Tenant’s rights to occupy the Premises . . .” (Section 7).
The landlord is not required to make any repairs or alterations to the premises or in any manner to supply maintenance for any portion of the premises. (Section 12). The tenant shall erect no improvements upon the premises without the landlord’s prior written approval, which approval shall not be unreasonably withheld. (Section 13). The tenant agrees to procure, maintain, and pay for insurance on the premises to protect MARTA’s liability and to insure the property in MARTA’s name against all reasonable and insurable risks. (Section 17).
During construction on the premises, the tenant is required to carry workers’ compensation insurance in an amount necessary to protect landlord and tenant from all liability. (Section 34). If the tenant is not in default of any of its obligations under the lease, the tenant then can mortgage or encumber its interest as security for any debt, the proceeds of which are used to directly increase the value of the premises. (Section 35). Under Section 13, the tenant must obtain the landlord’s approval before erecting any improvement on the property, and any improvement so erected shall upon completion become part of the premises, title to vest in the landlord.
The tenant shall have the right to sublet all or a portion of the premises to a subtenant, and the tenant shall have the right to assign or transfer any or all of its rights under the lease, provided that the written consent of the landlord is first obtained. (Section 42). The landlord may declare a default upon the appointment of a receiver to take possession of all or substantially all of the assets of the tenant, a general assignment by the tenant for the benefit of creditors, or any action taken or suffered by the tenant under any insolvency, bankruptcy, or any other debtor relief act. (Section 43).
2. As stated by the appellants, this case presents two primary questions for our consideration — a substantive question and a procedural one. The threshold question we have to address is the procedural one: Did the plaintiffs’ failure to comply with Code Ann. § 92-6413, by paying their 1977 taxes based on their 1976 assessment prior to filing suit, deprive the superior court of jurisdiction in this case? If this question is answered in the affirmative, the case is at an end.
The appellants make а rather strong argument that since Allright’s interest in the property as of January 1, 1977, was of such a different nature than its interest in the property in 1976, Code Ann. § 92-6413 would not require
Assuming, without deciding, that Code Ann. § 92-6413 is applicable in this case, we hold that Allright’s failure to pay its 1977 taxes based on the 1976 assessment prior to filing suit was a jurisdictional defect which had been cured by the time the defendants’ motion to dismiss for lack of jurisdiction was filed. Therefore, the trial court erred in dismissing the complaint on this jurisdictional ground.
3. Now we reach the substantive question in this appeal: Is Allright’s interest in the subject property a nontaxable usufruct or a taxable estate for years?
The most recent explication by this court of the distinctions between an estate for years and a usufruct is found in
Camp v. Delta Airlines,
"What is a usufruct? Code § 61-101 provides that: 'When the owner of real estate grants to another simply the right to possess and enjoy the use of such real estate, either for a fixed time or at the will of the grantor, and the tenant accepts the grant, the relation of landlord and tenant exists between them. In such case no estate passes out of the landlord, and the tenant has only a usufruct, which he may not convey except by the landlord’s consent and which is not subject to levy and sale; and all renting or leasing of such real estate for a period of time less than five years shall be held to convey only the right to possess and
"An estate for years is a taxable estate.
Delta Air Lines v. Coleman,
"We note that, under the provisions of Code § 61-101, where the term of the lease is less than five years a rebuttable presumption arises that only a usufruct is created by the instrument. A concomitant presumption, recognized by this court in Warehouses, Inc. v. Wetherbee, supra, is that where the term of the lease is for more than five years, there is a presumption that an estate for years is created by the agreement of the parties. In each instance, the agreement involved must be carefully searched for the intention of the parties.” 232 Ga. at pp. 38-39.
Thus the lease between Allright and MARTA, being for а term of 35 years, presumptively creates an estate for years. Do the terms of the lease rebut this presumption and establish that the parties intended only a usufruct?
Answering this question is made more difficult by reаson of the fact that various sections of the lease are indicative of the grant of an estate for years, whereas other sections of the lease are characteristic of the grant of a usufruct only.
For instance, under Sections 5b and 12 of the lease, the landlord is not required to repair or maintain the premises; and under Section 29, the tenant is required to keep the premises in "good and sanitary order, condition and repair.” Under Section 7, the tenant pays all taxes and governmental charges of any nature whatsoever against the premises. Under Section 17, the tenant is required to maintain insurance on the premises at its own expense. The foregoing sections of the lease are indicative of the grant of an estate for yеars to Allright. S
eeDeltaAir Lines v. Coleman,
However, under Section 3 of the lease, the landlord is given "sole discretion” to determine those portions of the premises "if any” which Allright is entitled to use and occupy during the construction and operation of MARTA and other "public projects.” Under Section 13, Allright is prohibited from erecting any improvements on the property without the landlord’s prior approval. Section 42 prevents Allright from subletting or assigning its interest in the property without the landlord’s approval. These sections of the lease are indicative of the grant of a
Therefore, the judgment of the trial court is reversed insofar as it rules that the complaint must be dismissed for lack of jurisdiction under Code Ann. § 92-6413. The judgment is affirmed insofar as it rules that Allright’s interest in the property is a nontaxable usufruct.
Judgment affirmed in part and reversed in part.