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Chadwick-BaRoss, Inc. v. City of Westbrook

Supreme Judicial Court of Maine

April 21, 2016

CHADWICK-BaROSS, INC.
v.
CITY OF WESTBROOK et al

         Argued February 10, 2016.

         On the briefs:

          David B. McConnell, Esq., and Joseph C. Siviski, Esq., Perkins Thompson, P.A., Portland, for appellant Chadwick-BaRoss, Inc.

         Natalie L. Burns, Esq., and Roy T. Pierce, Esq., Jensen Baird Gardner & Henry, Portland, for appellees City of Westbrook and Elizabeth Sawyer.

         At oral argument: David B. McConnell, Esq., for appellant Chadwick-BaRoss, Inc.

         Roy T. Pierce, Esq., for appellees City of Westbrook and Elizabeth Sawyer.

         Panel: SAUFLEY, C.J., and ALEXANDER, MEAD, GORMAN, JABAR, and HJELM, JJ.

          OPINION

         SAUFLEY, C.J.

          [¶1] In this appeal, we are asked to determine whether the Superior Court (Cumberland County, Mills, J. ) erred in concluding that equipment owned by a business taxpayer--but leased to others--did not fall clearly within the personal property tax exemption for stock-in-trade. See 36 M.R.S. § 655(1)(B) (2015). Chadwick-BaRoss, Inc., appeals from a summary judgment entered in favor of the City of Westbrook and its tax assessor on Chadwick-BaRoss's complaint seeking a declaratory judgment that it did not owe personal property taxes on heavy equipment that it leased to others. We conclude, as did the Superior Court, that the equipment does not fall " unmistakably within the spirit and intent," Hurricane Island Outward Bound v. Town of Vinalhaven, 372 A.2d 1043, 1046 (Me. 1977), of the Legislature's tax exemption for " [s]tock-in-trade," 36 M.R.S. § 655(1)(B), and we affirm the judgment.

         I. BACKGROUND

          [¶2] The following facts, supported by the statements of material facts and referenced evidence in the summary judgment record, are viewed in the light most favorable to Chadwick-BaRoss. See Victor Bravo Aviation, LLC v. State Tax Assessor, 2011 ME 50, ¶ 10, 17 A.3d 1237 (reviewing " the grant of summary judgment de novo, viewing the facts in the light most favorable to the nonprevailing party to determine whether the court correctly concluded that there were no genuine issues of material fact and that the prevailing party was entitled to judgment as a matter of law" ).

          [¶3] Chadwick-BaRoss is a Maine corporation with a principal place of business in Westbrook. It is a heavy-equipment dealer that sells equipment at retail to customers, and occasionally leases that equipment.

          [¶4] After receiving a 2012 personal property tax declaration form from Chadwick-BaRoss, the City sent a letter to the company in May 2012 asking it to include additional equipment that Chadwick-BaRoss owned but that, on the tax day of April 1, 2012, was held in the physical possession of others pursuant to lease agreements. The City asked for a response by June 8, 2012, but it received no response and sent a follow-up letter on October 22, 2012, again seeking a list of all equipment that had been on lease to others on April 1, 2012. Chadwick-BaRoss's president responded by letter that, although twelve identified pieces of equipment (nine wheel loaders, one compact wheel loader, one arctic hauler, and one skid steer) were in the hands of customers pursuant to " interim rental agreements," Chadwick-BaRoss considered those items to be inventory available for immediate sale and therefore exempt from the personal property tax pursuant to 36 M.R.S. § 655(1)(B).

          [¶5] The equipment at issue was in the physical possession of Chadwick-BaRoss customers[1] pursuant to standard agreements entitled " EQUIPMENT RENTAL AGREEMENT." The standard agreement form specified a term for the rental in weeks or months, established a rental rate, and authorized repossession if the customer failed to pay the rent that it owed. The agreement included the following provision: " Chadwick BaRoss has the right to exchange the Equipment at any time for Equipment of equal capacity at no additional expense to Customer. If Customer has an option to purchase, that option, if not exercised, will lapse concurrent with the exchange." The agreement also stated, " The Equipment will at all times be located at Customer's job site . . . and will not be ...


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