7 Or. Tax 74 | Or. T.C. | 1977
Appeal dismissed.
The above-entitled suits were consolidated for purposes of trial. Each plaintiff appealed from an order of the Department of Revenue which held that certain irrigation equipment, located in Morrow County, Oregon, was not entitled to the classification of "inventory" as defined in ORS
The facts have been stipulated.
Each of the plaintiffs is the owner of a number of "center pivot sprinkler systems," irrigation devices which sprinkle water over the farm produce growing in the plaintiffs' fields. The water is taken from the Columbia River at pumping stations. Water is moved from the pumping stations to plaintiffs' farms through mainline pipe which is of large diameter and may be several miles long. Depending on the length of the mainline pipe, one or more booster stations are utilized to maintain the flow of water. When a mainline pipe reaches a plaintiff's farm, it terminates at a distribution point from which a number of smaller pipes spread throughout the farm. The distribution pipes are further subdivided from point to point until a pipe *76 approximately six inches in diameter reaches a field which is to be irrigated. At some point or points in the field, a vertical pipe, called a "riser," is installed, its open end standing 12 feet above the surface of the ground. From the pumping station to the riser the process is considered to be the "conveyance of water." "Fieldward" of the riser, the process is designated "sprinkling."
The "center pivot" is a piece of self-propelled machinery approximately one-quarter mile long, made up of towers, pipes and motors. In operation, a center pivot rotates around the riser and sprinkles a circular tract of land encompassing from 125 to 150 acres.
The center pivot has a number of components. Beginning at the riser, the first part is the pivot base, a four-sided pyramidal steel skeleton, approximately 12 feet high and 10 feet wide along each side at the bottom. The pivot base is designed to be moved from field to field, as a part of the center pivot. It rests on a concrete pad which surrounds the riser and is held in place by chains sunk in the concrete which are usually connected to the pivot base by turnbuckles. The base serves two purposes: it centers the end of the center pivot's pipe above the riser and steadies it for connection to the riser; it serves to steady the center pivot as it rotates around the riser.
The end of a center pivot's pipe is connected to a riser by means of a dresser coupling (a waterproof coupling for unthreaded pipe consisting of a rubber gasket fitted over the ends of the two pipes, connected by a clamp which holds the rubber gasket in place). The center pivot pipe leads away from the riser, about 12 feet above and parallel with the ground. Spaced along the pipe are sprinkler heads which distribute the water. The pipe is supported and moved by 10 to 12 "towers" spaced approximately 125 feet apart. Each tower is a steel A-frame with rubber-tired wheels located at the base of each leg of the "A." Each tower is independently powered and the mechanism is so contrived *77 that, upon being placed in use, the tower farthest from the pivot base moves first. As the outer tower gets out of alignment with the next tower, a control device activates the next inner tower's motor, moving it into alignment with the outer tower. Succeeding towers along the line toward the riser follow the same pattern. Each tower moves along the distance required to maintain the irrigation pipe in a straight line as it rotates around the riser.
Center pivots may be moved from field to field, depending upon the nature of the crops. The crops produced by the plaintiffs' operations, irrigated by use of center pivots, include potatoes, wheat, barley, corn, milo, cover crops, watermelons and soybeans.
The installation from the river to and including the riser is permanently affixed to or buried in the ground. The questions of classification and taxability of this part of the property are not before the court. Plaintiffs are seeking the tax advantages of ORS
*78"(1) There shall be exempt from taxation a percentage of the true cash value of the taxpayer's inventory as indicated for each tax year beginning on July 1 of the following years: * * * 1975 . . . 50 percent * * *.
"(2) For tax years beginning on July 1, 1980, and thereafter, all inventory shall be exempt from ad valorem taxation.
"(3) As used in subsection (1) of this section, 'inventory' means [a] farm machinery used in the planting, cultivating, or harvesting of farm crops, [b] all livestock and [c] items of tangible personal property described as materials, supplies, containers, goods in process, finished goods and other personal property owned by or in possession of the taxpayer, that are or will become part of the stock in trade of the taxpayer held for sale in the ordinary course of his business." (Emphasis and bracketed letters supplied.)
In its opinions and orders denying plaintiffs' center pivots the status of "inventory," defendant has delved deeply into the problem of classification of the subject property as fixtures (real property) or as personalty. Defendant has deemed the answer to this question to be determinative because of its conclusion that inventory, as a matter of definition,must be personalty. It then found the statute to be ambiguous and, following the accepted rule of strict construction of tax exemptions, excluded center pivots from the benefits of ORS
This court, although impressed by defendant's thoughtful research, believes that it has failed to "see the forest for the trees."2 It has not correctly grasped the legislative intent expressed in ORS
A careful examination of ORS
[1, 2.] In construing statutes, courts will attribute to words their customary or popular sense or their technical meaning if a technical word is used. But since legislative intent must be ascertained and followed, courts recognize the legislative power to specify a new definition for a particular word. For the purposes of the statutory section in which it is placed, such definition will be made effective if understandable.
[3.] The distinction between real and personal property is irrelevant here. Farm machinery may be real property or it may be personal,4 but no one questions that the center pivots here considered are farm machinery used in the cultivation of farm crops. These come within the special definition of "inventory" as conceived and intended by the legislature for the purposes of ORS
Defendant's several orders are set aside and held for naught. In the stipulation filed in this court on February 15, 1977, the parties, through their counsel, agreed that "if a decision is rendered in favor of plaintiffs, the cases shall be returned to the defendant for further proceedings looking to the determination of value of Center Pivots improperly included in the assessment of land farmed by plaintiffs." Accordingly, orders of remand shall be prepared by plaintiffs, following the procedure for a decree in the court's rule 27. Each party shall bear its own costs.
