Appeal from the Order of the Court of Common Pleas of Venango County in case of Venango Federal Savings and Loan Association v. County of Venango, City of Oil City and Oil City Area School District, Equity No. 4, 1981.
Henry W. Gent, III, Gent, Daniels, Thompson & Gent, for appellant.
Robert W. McFate, for appellee, Oil City Area School District, with him T. Gregory Williams, for appellee, County of Venango, and F. Walter Bloom, III, for appellee, City of Oil City.
Judges Blatt, Craig and Doyle, sitting as a panel of three. Opinion by Judge Craig.
[ 73 Pa. Commw. Page 314]
In this case, the general question is:
Under deeds conveying a "term" of thirty-three years in land, and containing a habendum clause which states that "any improvements thereon will automatically revert to and revest in" the grantor at the end of that term, where the grantee has erected buildings on the land, may the local taxing bodies subject the grantee's interest in the land and buildings to real estate tax assessment?
The facts embodied in that question, established by stipulation, are undisputed. Venango Federal Savings and Loan Association has succeeded to the original grantee's interest by sheriff sale, and the Commonwealth has succeeded to the interests of the original grantor, with respect to this 1.38 acres of land in the third class City of Franklin, Venango County.
[ 73 Pa. Commw. Page 315]
The court of common pleas, with a scholarly opinion by Judge Breene, upheld the taxability of the grantee's interests, and Venango Federal Savings and Loan Association is the appellant here.
The taxability of real estate for third class city and school district purposes follows the statute governing taxability for county purposes,*fn1 and the applicable county assessment law*fn2 subjects "[a]ll real estate" to taxation, including "buildings, lands, lots of ground, and ground rents. . . ."
Under a substantial line of cases, the interests of a grantee or lessee under a term or estate for years is subject to taxation where there are indicia that the title to the improvements, as well as the leasehold itself, remains in the lessee during the term. Frequently, the touchstone has been the ability of the lessee to remove the structures. In Co-star Marine Tax Assessment Appeal, 33 Pa. Commonwealth Ct. 447, 450, 382 A.2d 156, 157 (1978), we summarized and cited that line of cases as follows:
It is the intention of the parties to a lease which governs to whom the property belongs. City of Philadelphia v. Straub, 106 F.2d 172 (3rd Cir. 1939). Moreover, as a matter of law, structures which are built by a lessee, with the right to remove them at the conclusion of the lease are taxable separately to the lessee-owner of the structure as real estate owned by the lessee. Pennsylvania Stave Company's Appeal, 236 Pa. 97, 84 A. 761 (1912); Board of ...