Case Name: APL Limited v. Washington State Department of Revenue
• Plaintiff(s) and Defendant
The Plaintiffs are APL Limited, American President Lines LTD, and Eagle Marine Services LTD. Defendant is Washington State Department of Revenue
In 1985, the plaintiffs entered into a lease agreement with the Port of Seattle for premises to handle their container ships at terminal 5. Cranes were installed. The cranes have been used for more than 20 years in the premises (Lai et al 274). The plaintiffs sued the state for refund of sales taxes paid on the rental for the cranes. The state’s motion was granted that argued against the suit citing the cranes were personal property and thus they are subject to sales taxes. APL appealed the decision.
• Legal Issue
The main legal issue was whether the cranes installed on Terminal 5 premises were personal property or real property to determine if they could be subjected to sales taxes by the state.
• Ruling of the Court
The appellate court ruled that the trial summary judgement was inappropriate and reversed their decision in support of plaintiff, APL limited validating the demand for refund of sales taxes on the rental cranes.
Based on the ruling and case facts, it is clear that the intention of the parties is important in determining whether the cranes were real property or personal property. Initially, the trial court only relied on the degree of the cranes being attached to buildings, which was inappropriate. The appellate court argues that the intention of APL should be considered to determine whether the cranes are real property or personal property.
The cranes are personal property rather than the real property because the perceived argument of the intention of APL was incorrect. APL limited intended to construct the cranes and embed them into the concretes to remain immovable. The cranes were also building on steel structures and reinforced with concrete just like buildings that are classified as personal property. Physical assessment indicates that cranes were embedded to the building structures and it was incorrect to classify the cranes as real property (Flynn 272). In addition, it is also impossible to determine the intention of the APL limited because it is subject to bias. The notion that APL limited intended to use the cranes as real property cannot be easily determined. The legal test for determining the intention of the companies in the use of property is inconclusive.
The legal case is between APL limited, the plaintiff and Washington State Department of Revenue, the defendant whereby APL Limited had appealed a summary judgement decision by the trial court. The summary judgement supported the defendant argument that the cranes installed in the premises of APL limited were personal property and they would be subject to sales taxes. The case follows the lease agreement made between Port of Seattle and APL limited for the installation and construction of cranes on Terminal 5 to assist in the loading and unloading of their container ships. The cranes were constructed using strong steal structures and concrete reinforcements. The cranes have been used in the premises for more than 20 years.
Initially, APL limited sued the Washington state for refund of the sales taxes changed for the rental of the cranes. However, Washington State won the case by arguing that the cranes were part of the company’s personal property and they were subject to sales taxes. APL limited appealed the decision and argued their intention was not considered in the initial trial court’s decision. The appellate court agreed with APL limited that the intention of the parties must always be considered in determining whether the cranes were either real property or personal property.
Some of the arguments the defendant, Washington State could use includes that the intention of the party used in the appellate court’s decision is subjective to bias and thus, it cannot be used to make the decision (Limpert 12). The physical assessment of the cranes should be considered as the cranes had operated for more than 20 years as personal property and thus, they should be subjected to sales taxes.
Flynn, Michael. “The significance of the land/chattels distinction in an infrastructure context.” Tax Specialist vol. 20, 2017, p.272.
Lai, Lawrence W., et al. “‘Unclear’ initial delineation of property boundaries and the third Coase Theorem.” Land Use Policy, vol. 47, 2015, pp. 273-281.
Limpert, Philip A. “Condemnation Proceedings–Right of Tenant to Compensation for Fixtures Annexed to Condemned Land.” St. John’s Law Review, vol.6, 2014, p.12.