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September 27, 1927
<br />
<br />for the maintenance~of this Oommi~sion, of which $3611 was spent i~ 1925- it seems to me this
<br />is a large amount to expend for the sm~ll results obtained, hence I would like to do a little
<br />investigating to gui~e the 0ouncil in making its ~pprepriations.
<br /> Yours respectfully,
<br />
<br /> James A. Mulvey."
<br />
<br /> On motion of Mm. M~upin, the matter was continued on the table until the next regular
<br />meeting of the 0ouncil.
<br /> The following communication was read from the City Attorney in reference to petition
<br />referred to him by the 0ounoil September 13th relative to tax on m~chinery:
<br /> ,,September 27th, 1927.
<br />
<br />Hon. 0ity Oounci~
<br />Portsmouth, Va.
<br />
<br />Gentlemen:
<br /> At your last meeting you referred to me the petition of Isaac Foss, Incorporated,
<br />a~d others requestSng that the present tax ordinance be amended so that machinery now taxed
<br />as real estate at $2.70 per hundred be made subject to the machinery tax of $.20 per hundred.
<br /> I beg to report on this m~tter as. follows:
<br /> Section 22~ of the-Code of Virginia provides: "The assessors shall immediately
<br />after-their appointment proceed to examine all land and lots assessable by them, with the im-
<br />provements thereon, within their respective counties, districts and corporations, and shall
<br />upon examination, ascertain and assess the fair m~rket value thereof, and at the s~me time
<br />shall note whether the oWner is white or colored; they shall include in their assessment all
<br />buildings, and in manufacturing, mining, and simile= establishments, the machinery and fixtures
<br />attached thereto sh~ll be assessed a~nd shown separately upon the assessors books etc."
<br /> Section 2298 of the 0ode provides for the assessment of machinery by the commission-
<br />ers of the. Revenue between the qainquennial assessments. It provides as follows:- "The Oommis-
<br />sioner, in assessing the value of machinery and other fixtures to real estate, in mining,
<br />m-~,,facturing, or similar establishments, sh~ll ascertaln~ the value of all machinery and fixtures
<br />attabhed thereto, and include the aggregate value -~hereof as improvements on real estate in
<br />the same manner and to the s~me effect as in the c~se of buildings and enclosures added to real
<br />estate, under the provisions of this ohapter,.but if the m~chinery a~nd other fixtures aforesaid
<br />shall be the property of one person, and the real estate, in or u~on which the machinery and
<br />fixtures shall be used, be the property of another, the said machinery ~nd fixtures shall be
<br />assessed and taxed against the owner thereof as personal property, ~nd so listed by the commis-
<br />sioner."
<br />
<br /> The machinery therefore which has been assessed as a pazt of the real estate has
<br />carried the real estate rate of taxation, and section'8 of the State Tax Bill prior to its
<br />amendment in 19~6 provided that "All machinery and tools not taxed as real estate" shouldbe
<br />assessed as capital. Capital has been heretofore assessed at $.~ per hundred for state pur-
<br />poses and $.30 per hundred for city purposes.
<br />
<br /> Now while we h~d machinery assessed in two different classes with two different
<br /> rates, yet as said in the case of Bmchs~an 0ounty et al vs. Rit~er Lumber Compan7 et als,
<br /> Va. 617 "the legislature ~td n~t mean by clanse 6 Acts 1916 p. ~5 (which is Sectzon 8 of Tax
<br /> Bill) to leave it to the option of the tax officials to tax some m~chinery and tools as real
<br /> estate,.and to tax other machinery and tools as capital.. What is meant that m~chinery-and
<br /> tools which were properly taxed em re~l estate should not again be taxed as capital~ In this
<br /> case it was held that por~ble band saw mills carried from place to place as the exigencies
<br /> of a lumber manufacturing corporation may require were taxable as capital ~nd not as real
<br /> estate because not permanently attached to the freehold. The 0curt in distin%~uishing the
<br /> classes of machinery stated, "Machinery etc., taxable as real estate is so attached to the
<br /> freehold as to become a part of it- such annexations that if made on the soil of ~nother in
<br /> the.absemoe of stipulation to the oontrarybecome the property of the owner of the soil, as
<br /> factory buildings and the like."
<br />
<br /> This same subject was also passed on in,the case of 0amolin~ Gotten and Woolen
<br />Mills Company vs. Commonwealth, 138 Va. The sytlibus of this case reads as follows: (1) Mach-
<br />ineryused for the purpose of manufac~aring cotton cloth, most of which w~ heavy and bolted
<br />to the floors of the buildings, and which could not be moved from the buildings without sub-
<br />stantial injury thereto, an9 which was essential for the purposes f6r which the buildings were
<br />occupied, is real estate under 0ode Sections 2298 and ~245 f~r the pumpose cf taxation. (2)
<br />~here machinery is permanent in its character and essential for the purpose ~4T whloh the build-
<br />lng is occupied it must he-regsmded ~s realty and pass with the buildimgs,.~ud whatever is
<br />essential to the purpose for which t~he building is used will be considered ~1 fixture, alehough
<br />the connection between ~hem is such that it may be severed without physical or lasting.injury
<br />to either."
<br />
<br /> Thus you will see there is a distinction between ~he m~chinery which was assSssed
<br />real es~tate and the machinery assessed as eapit~l, and it was held in the ~arollna Cotton
<br />Nii1 case referred ~o above that the'General AsSembly has the Power to claSsifY subjects cf
<br />tax~tion.
<br />
<br /> - The General Assembly in t926 amended section 8 of the Tax Bill and provided:
<br />"No maohlnery or tools used in such trade or business ~hall be hereafter assessed as real es-
<br />tate or as capital. All such machinery and tools shall be listed for local tax~tion, exclusive-
<br />
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