Water heater.

Water is either leaking past that shut-off valve, or is backfeeding (from cold line to hot) through something else such as a tempering/mixing valve.

Yeah, shutoff valves often cake with deposits and leak. You'll need to shut off the main water supply and put a cap on the line supplying the water heater (maybe the hot side too, if a single handle faucet somewhere is backfeeding) as a temporary fix until you can get a new heater and shutoff valve.

Thank you.

Turn off the water, cut the hot out, and cold in and put a sharkbite stop on both. Disconnect the tank and get ready for a new one. Electric or gas?

The reason I ask is that a lot of people get rid of electric that still have a good tank, cause the elements go bad or they have build up in the bottom. Maybe you can get an interim one at the land fill? Just a thought.

Also check out scratch and dent. Dents dont usually matter.