BOARD OF ASSESSORS OF NEWTON vs. PICKWICK LTD., INC. (and a companion case [Note 1]).

REARDON, J. These appeals are brought by the board of assessors of the city of Newton (assessors) under G. L. c. 58A, Section 13, from decisions of the Appellate Tax Board (board) upon petitions filed by Pickwick Ltd., Inc. (lessee) and the Massachusetts Bay Transportation Authority [Note 2] (authority) granting abatement of taxes on real property located in the city of Newton assessed to the petitioners. The petitioners claim that they are exempt from taxation upon property of the authority because the original act of the Metropolitan Transit Authority, St. 1947, c. 544, Section 14, as amended by St. 1949, c. 572, Section 6, expressly exempts all the property of the authority. The board made findings of fact and report, and filed an opinion pursuant to Rule 32 of the board.

The parties agreed to the following statement of facts. On January 1, 1962, and on January 1, 1963, the authority was owner in fee and the lessee was tenant under a written lease of premises at 70 Union Street in Newton, sometimes known as the Newton Centre Station. During 1962 and 1963 the property was occupied and used by the lessee "exclusively and entirely as a retail store selling clothing and other allied goods and for no other purpose." The assessors assessed a tax on the property to the lessee for 1962 and to the authority for 1963. Each filed a petition under formal procedure with the board following the refusal of the assessors to abate the taxes for 1962 and 1963 on the respective applications of the lessee and the authority.

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Both petitions were consolidated for hearing before the board. [Note 3]

In addition to the statement of agreed facts, the board found as a fact that the authority "sometime prior to 1962 acquired all of the property of the Highland Branch Railroad and extended its rapid transit system over the railroad lines formerly belonging to Highland, a section of which runs through . . . Newton." Included in the acquisition was the railroad station. The board further found as a fact "that the subject property is held by the Authority for a public purpose, and is used by a private business . . . in a way that does not serve the public purpose."

1. The question presented by these appeals is whether the authority or its lessee is exempt from taxation upon property owned by the authority not directly employed in providing public transportation but used by a lessee as a retail store selling clothes and other related goods.

At the outset it should be noted that an exemption from taxation is a matter of legislative grace and may be recognized only when the taxpayer shows that he comes within either the express words or the necessary implication of some statute conferring this privilege upon him. Animal Rescue League of Boston v. Assessors of Bourne, 310 Mass. 330, 332. Boston Chamber of Commerce v. Assessors of Boston, 315 Mass. 712, 716. Sylvester v. Assessors of Braintree, 344 Mass. 263, 264-265. The authority bases its claim that the assessors acted improperly in assessing the subject property under the provisions of Section 14 of St. 1947, c. 544, as amended by St. 1949, c. 572, Section 6, which provides: "The authority and all its real and personal property shall be exempt from taxation and from betterments and special assessments; and the authority shall not be required to pay any tax, excise or assessment to or for the commonwealth or any of its political subdivisions." The assessors argue,

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to the contrary, that Section 14, by its terms, is directed toward the tax liability of the authority and cannot be construed so as to apply to anyone other than the authority.

The original Section 14 as contained in St. 1947, c. 544, provided that all real estate of the authority not employed in providing public transportation should be subject to taxation by the city or town in which it is located "in the same manner and to the same extent as if privately owned." The amendment of this section to its present form by St. 1949, c. 572, Section 6, extended the authority's tax exemption to encompass all the authority's real and personal property whether or not used in the transit system. The 1949 amendment of Section 14 was one of a number of steps taken by the Legislature to alleviate the financial burden on the authority. Its purpose was to avoid an increase in the fare structure and to do away with the necessity of a levy on the cities and towns serviced by the authority to meet annually recurring deficits. [Note 4]

In taking these steps, the Legislature must have intended that lessees of the authority, by necessary implication, were to enjoy the same exemption enjoyed by the authority. If the exemption did not include lessees of the authority, the lessee, by availing itself of G. L. c. 59, Section 15, [Note 5] could reduce its rental payments to the authority by the amount of the tax. Gloucester Ice & Cold Storage Co. v. Assessors of Gloucester, 337 Mass. 23. Atlantic Ref. Co. v. Commonwealth,

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339 Mass. 12. Gloucester Community Pier Assn. Inc. v. Dehydrating Process Co. of Gloucester, Inc. 339 Mass. 14. This is not necessary in the instant cases as the authority has alleged that the terms of the lease require that it bear any taxes assessed on the property. The authority, by indemnifying the leaseholder by statutory fiat or by the terms of a lease, would, in effect, be paying taxes on its property. Such a construction would completely negate the legislative intent to exempt all of the authority's property from taxation in the 1949 amendment of Section 14 and is to be avoided. Opinion of the Justices, 275 Mass. 575, 578. Commissioner of Corps. & Taxn. v. Chilton Club, 318 Mass. 285, 288.

This compels us to conclude that Section 14, as amended, allows a lessee of the authority a tax exemption similar to that enjoyed by the authority. That the Legislature has chosen on other occasions [Note 6] expressly to exempt leaseholders from taxation does not necessarily preclude a similar intent in the present circumstances.

2. Nor do the terms of G. L. c. 59, Section 3A, as appearing in St. 1951, c. 667, Section 1, [Note 7] on the authority of which the taxes here disputed were assessed, alter this conclusion. "It is for the Legislature to decide to what extent it will assist the execution of a public purpose." Gloucester Ice & Cold Storage Co. v. Assessors of Gloucester, 337 Mass. 23, 27. Here the Legislature, in furtherance of its intent to relieve the financial difficulties facing the authority, by virtue of St. 1949, c. 572, Section 6, expressly exempted all real property of the authority, which exemption by necessary implication included lessees of the authority pursuing private purposes. This specific exemption of the site from taxation renders

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G. L. c. 59, Section 3A, inapplicable, even if this section were otherwise applicable. Cabot v. Assessors of Boston, 335 Mass. 53, 63-64. For the same reason, decisions subjecting to taxation lessees operating private businesses for profit on publicly owned property under G. L. c. 59, Section 3A, on the ground that the Legislature made no express provision for tax exemption of private tenants, are distinguishable. Dehydrating Process Co. of Gloucester, Inc. v. Gloucester, 334 Mass. 287. Atlantic Ref. Co. v. Assessors of Newton, 342 Mass. 200.

3. The assessors contend that to construe St. 1949, c. 572, Section 6, amending St. 1947, c. 544, Section 14, as explicitly exempting both the authority and its lessee from taxation violates Part II, c. 1, Section 1, art. 4, of the Constitution of the Commonwealth requiring that taxes on property be "proportional and reasonable." The public purpose is of controlling significance in construing an express exemption from taxation. Cabot v. Assessors of Boston, 335 Mass. 53, 64-65. See Horrigan v. Mayor of Pittsfield, 298 Mass. 492, 497-498; Allydonn Realty Corp. v. Holyoke Housing Authy. 304 Mass. 288, 297.

We cannot say that the exemption provided by St. 1949, c. 572, Section 6, does not primarily benefit the public by alleviating some of the authority's financial burdens even though the property was operated by a lessee in the pursuit of its own ends. The exemption was reasonably incident to the plan adopted by the Legislature designed to remove the crushing financial burden which had fallen upon the authority. Cabot v. Assessors of Boston, 335 Mass. 53, 64-65, and cases cited. That such an exemption would place one business in a favored position is not determinative of the issue of constitutionality. Boston Fish Mkt. Corp. v. Boston, 224 Mass. 31, 34-35.

Decisions affirmed.