Court: Supreme Court of Louisiana; October 30, 1988; Louisiana; State Supreme Court
Baumer Foods, Inc. purchased equipment from out of state and registered a "Declaration of Immovables" for the equipment under Louisiana Civil Code Article 467, claiming it as part of their property in New Orleans. The City of New Orleans sought to collect use taxes on this equipment, stipulating a tax amount of $19,909.61. The trial court dismissed the city's claim, concluding the equipment was not subject to the city use tax, a decision upheld by the court of appeal. The Supreme Court of Louisiana granted certiorari to review this ruling, focusing on two issues: (1) whether the property law in Article 467 applies to the term "tangible personal property" in the city's tax code, and (2) whether the use tax applied to the out-of-state equipment. The court noted that "tangible personal property" aligns with the definition of corporeal movables in the Louisiana Civil Code, and previously established that the property law under Article 467 allows movable items to be treated as immovable for tax purposes. Article 467 permits owners to declare machinery and equipment as part of immovable property, provided it is registered in the parish's conveyance records.
Four conditions must be satisfied for machinery, appliances, and equipment to be classified as immovable by declaration under Article 467: (1) ownership of both the immovable and the equipment must be in the same person; (2) the immovable cannot be a private residence; (3) the equipment must be placed on the immovable for its service and improvement; and (4) a declaration must be registered in the parish's conveyance records. For Baumer to succeed in its claim, it must demonstrate that the equipment was no longer movable at the time the tax was applied; subsequent immobilization is not relevant for tax purposes. The city code indicates that the use tax applies to property purchased for use within the city once the property has been delivered and comes to rest there. The tax attaches at the moment of delivery if the equipment is movable at that time. Article 467 requires that the equipment be actively used for the service and improvement of the immovable, rather than simply placed there with the intent of use. The actual use of the equipment must be established, as evidenced by Baumer's testimony that significant preparation was necessary before the equipment could be utilized. Since the equipment could not be used immediately upon delivery and did not meet the service and improvement requirement at that time, it did not become immovable by declaration under Article 467 when the tax was assessed. Consequently, the equipment is classified as corporeal movable property, and the city use tax was appropriately applied.
The city is awarded a judgment of $19,909.61 against Baumer, along with a request for interest, penalties, and attorney fees under City Code § 56-66 due to Baumer's failure to pay the tax. The court of appeal previously ruled in favor of Baumer, not addressing these additional claims. The case is remanded to the court of appeal to consider the applicability of interest, penalties, and attorney fees following further briefing and argument. The judgment of the court of appeal is reversed, and it is directed to render a judgment for the specified amount along with any additional amounts it deems appropriate. Chief Justice Dixon respectfully dissents. The excerpt also references Louisiana law regarding the authority of political subdivisions to tax and the definitions surrounding tangible personal property and immovable property as per applicable statutes and case law.
