Case Title: Gordon v. Hiett

Citation: 214 Kan. 690, 522 P.2d 942

Docket Number: 47,242

State: kansas

Court: Kansas Supreme Court

Date: 1974-05-11T00:00:00Z

Document:
214 Kan. 690 (1974)
522 P.2d 942
MARVIN F. GORDON, Appellant,
v.
SUE HIETT, TREASURER, SHAWNEE COUNTY, KANSAS, Appellee.
No. 47,242

Supreme Court of Kansas.
Opinion filed May 11, 1974.
Myron Listrom, of Sloan, Listrom, Eisenbarth, Sloan and Glassman, of Topeka, argued the cause and was on the brief for the appellant.
Matthew J. Dowd, county counselor, argued the cause, and Ray D. Siehndel, legal intern, was with him on the brief for the appellee.
*691 The opinion of the court was delivered by
OWSLEY, J.:
This is an action instituted by the plaintiff pursuant to K.S.A. 79-2005 (now K.S.A. 1973 Supp. 79-2005) for taxes paid for the year 1969 under protest. The plaintiff alleges his property was illegally assessed for tax purposes at forty-three percent of the fair market value, which resulted in a tax so excessive in relation to the assessment of all other property in Shawnee County, Kansas, as to constitute constructive fraud and discrimination against plaintiff and his property. The defendant denies the taxing officials of Shawnee County arbitrarily and fraudulently assigned a value for tax assessment purposes against plaintiff's property in an amount which was not the actual fair market value of said property or which in any way interfered with or discriminated against plaintiff, and further specifically denies there was any illegal valuation assigned to plaintiff's property for tax purposes. Judgment was entered for the defendant and plaintiff appeals.
The trial court made findings of fact and conclusions of law and plaintiff challenges the conclusions of law. Since the findings of fact are accepted by the parties as supported by substantial competent evidence, the record does not reveal the evidence before the trial court. The findings of fact and conclusions of law are as follows:
"FINDINGS OF FACT
"CONCLUSIONS OF LAW
The plaintiff lists three points on appeal. Each of the points is aimed at the validity of the assessment of plaintiff's property; hence, they will be considered as raising an identical question of law.
It should immediately be apparent to all persons involved in tax matters in this state that this case is distinctive in that the admissibility of the ratio studies authorized by K.S.A. 79-1436 (now K.S.A. 1973 Supp. 79-1436) as evidence, is not involved. The determinative feature in many of our like cases has been the use of the ratio studies as evidence. (Cities Service Oil Co. v. Murphy, 202 Kan. 282, 447 P.2d 791; Sebits v. Jones, 202 Kan. 435, 449 P.2d 551; Panhandle Eastern Pipe Line Co. v. Dwyer, 207 Kan. 417, 485 P.2d 149; Northern Natural Gas Co. v. Williams, 208 Kan. 407, 493 P.2d 568.)
*693 The cases principally relied on by plaintiff are Kansas City Southern Rly. Co. v. Board of County Comm'rs, 183 Kan. 675, 331 P.2d 899; Addington v. Board of County Commissioners, 191 Kan. 528, 382 P.2d 315; and Beardmore v. Ling, 203 Kan. 802, 457 P.2d 117. The Kansas City Southern case merely held the taxpayer's petition stated a cause of action. The petition alleged that the railroad was assessed at sixty percent of its true value while other property in the county was assessed at twenty-one percent. The court stated that the alleged acts on the part of the commission, when coupled with the alleged knowledge it had at the time were so arbitrary, oppressive, and grossly discriminatory as to constitute constructive fraud. At the time this case was decided the statutes of this state required that all property, real or personal, be assessed at its actual value in money (G.S. 1949, 79-1406), and required that both real and personal property be assessed at its true value (G.S. 1949, 79-1401).
In Addington, the plaintiff's grain elevator in Morton County was assessed at thirty percent of its true value in accordance with the grain elevator schedule compiled by the director of property valuation, while the median ratio of the assessed value of real estate in the same county was twelve percent of actual value. In reversing the lower court's judgment and holding the assessment of the Addington elevator property to be discriminatory, we said:
We again point out that at the time of the decision in Addington *694 the statutes of Kansas required real and personal property to be assessed at its true value.
In Beardmore, the evidence disclosed that the taxpayers' oil and gas properties were assessed at thirty percent of justifiable value as the statutes then required, while at the same time real estate was knowingly assessed by the same taxing officials at fourteen percent of its justifiable value. We held that the gross discrepancy between the assessed value of Beardmores' oil and gas properties and the assessed value of real estate in Hodgeman County constituted constructive fraud in the sight of the law. Prior to the decision in Beardmore the legislature enacted K.S.A. 79-1439 (Vol. 6, 1964), (now K.S.A. 79-1439), which states:
In the instant case the admitted facts disclose the taxpayer's property for the year 1969 had a fair market value of $198,200. The plaintiff's property for the year 1969 had an assessed value of $86,560. The assessed value was forty-three percent of the market value. The admitted facts also disclose that for the year 1969 real property in Shawnee County was assessed at from six percent to forty-five percent of fair market value and that the median for real property was fifteen percent of fair market value. Notwithstanding these findings, the trial court held there was not a systematic, arbitrary or intentional appraisal of the plaintiff's property at a substantially higher valuation than other properties within the same taxing district, and particularly property of a like nature. The court further stated the plaintiff had not carried his burden of proof to convince the court the assessment was so grossly discriminatory as to amount to constructive fraud.
It is the law of this jurisdiction that the assessment of property, when done in accordance with the law, is an administrative function in which courts will not interfere or substitute their judgment. If, however, the taxing officials do not perform their duties in accordance with the law the issue presented to the court is not the exercise of administrative judgment, but the legality of their acts. Builders, Inc. v. Board of County Commissioners, 191 Kan. 379, 381 P.2d 527; Mobil Oil Corporation v. Medcalf, 207 Kan. 100, 483 P.2d 1111.)
*695 The Constitution of the State of Kansas states: "The legislature shall provide for a uniform and equal rate of assessment and taxation, ..." (Art. 11, Sec. 1.) Since the power of taxation is a legislative function and the legislature is specifically charged with providing equal rate of assessment it has authority to provide the means and agencies to enforce its responsibility. Silven v. Osage County, 76 Kan. 687, 92 Pac. 604.) In furtherance of this purpose the legislature directed all property, real and personal, be assessed at thirty percent of the fair market value. We are concerned with the right of the taxing officials to assess the property at any figure other than thirty percent of the fair market value. It is natural that the legislative directive of thirty percent and the constitutional mandate of uniformity would reach its battleground in the courts. The defendant argues that in no event should the court lower the assessed value to less than thirty percent of fair market value. To do otherwise would override the legislative mandate and impose the criminal sanctions of K.S.A. 79-1418.
In Northern Natural Gas Co. v. Williams, supra, we emphasized for the first time in a long series of tax cases that discrimination is not rectified by creating more discrimination. It was recognized that in the involved county, urban property, personal property, oil and gas leases, and public utilities were assessed at thirty percent of justifiable value. To grant the relief requested by Northern by lowering its assessment to the median ratio of twenty-one percent applicable to all real estate in the county, would discriminate against other property assessed at thirty percent of justifiable value.
Property assessed at thirty percent of justifiable value exists throughout the state, including Shawnee County. To grant the relief requested by the taxpayer in this case to the median of fifteen percent of fair market value of real property would result in creating discrimination against those whose property is assessed at thirty percent.
The constitutional requirement of uniformity takes preference over a legislative directive to assess at a fixed percentage of justifiable value. (Addington v. Board of County Commissioners, supra.) Uniformity of tax burdens can never be achieved in this state between a taxpayer within a county and between taxpayers in different counties by adjusting individual assessments to the median ratio of real property in each county. We are inclined, in the interest of uniformity throughout the state, to stress the legislative directive *696 to assess at thirty percent of justifiable value. An individual assessment is usually challenged by a showing that the median ratio for real property for that county is substantially below the challenged assessment. To permit relief on that basis creates further discrimination against all taxpayers in every county who are assessed at the legislative directed rate of thirty percent. It also promotes a continuous trend by the involved county to further depart from the legislature's mandate. Means must be sought to avoid these results. It can best be done by bold action of assessors, reviewing authorities, and the courts to promote uniform assessment at the statutory rate. Authority to achieve this end is not lacking. The director of property valuation by K.S.A. 79-1404, Sixteenth, has the power to require any county board of equalization to raise or lower the value of any property "... to the end that all property shall be valued and assessed in the same manner...." Similarly, the State Board of Tax Appeals, sitting as a state board of equalization, has power to equalize the assessment of all property in the state. (K.S.A. 79-1409.)
The power delegated by the legislature to the director of property valuation to equalize taxes by blanket order was approved by this court in the recent case of State, ex rel., v. Dwyer, 208 Kan. 437, 493 P.2d 1095. The order was directed to the county commissioners of ninety-six counties to adopt a resolution that the county assessor apply to each class of rural agricultural investment land the valuation percent changes for the year of 1971 as shown in the directive. The court said:
In the instant case the taxpayer's property has a fixed and stipulated value. To assess the property at any percentage creates discrimination against property not assessed at the same percentage. Conceding some discrimination is inherent in our conclusion it would seem logical that adherence to the statutory directive of thirty percent of justifiable value should dominate. Any conclusion other than this would enhance discrimination rather than deter discrimination. If we must judicially acknowledge discrimination exists we prefer that those discriminated against are not those assessed at the rate designated by the legislature.
*697 We distinguish the Kansas City Southern case on the basis the case was decided on whether the petition stated a cause of action. It has no precedential value in this case in the absence of factual findings. We distinguish Addington on the basis the thirty percent rule was not in effect and no property in Morton County was assessed at its true value. In Beardmore, the statutory directive of thirty percent of justifiable value was in existence. The taxpayers' oil and gas properties were assessed at thirty percent as compared to the median real estate assessment of fourteen percent. No argument was made that other real and personal property in Hodgeman County was assessed at thirty percent of true value. We must disapprove the result in Beardmore to the extent that it is in conflict with the decision in this case.
We direct attention to K.S.A. 1973 Supp. 79-1447, which provides:
Retention of local ad valorem tax reduction fund otherwise payable to counties for failure to comply with K.S.A. 79-1439 is a drastic sanction. Criminal sanctions against taxing officials who knowingly and willfully assess property other than as provided by law are set forth in K.S.A. 79-1426 and are punishable by fine, imprisonment and forfeiture of office. These sanctions exemplify the unyielding attitude of the legislature to enforce the thirty percent law.
*698 When a taxpayer's property is appraised for tax purposes at a fixed sum there can be no justification for assessing the same at forty-three percent, rather than the statutory rate of thirty percent. To do so constitutes arbitrary, oppressive action by the taxing officials with sufficient discrimination to constitute constructive fraud. Accordingly, we must reverse the trial court and direct an assessment of the taxpayer's property at the statutory rate. Computation of plaintiff's recovery for taxes paid under protest should be made accordingly.
Reversed with directions.
FATZER, C.J., concurring in part and dissenting in part:
I concur in the court's reversal of this case affording the taxpayer relief, but I would direct that his recovery for taxes paid under protest be computed for a greater amount than ordered by the majority opinion.
Since 1963, the rule announced in Addington v. Board of County Commissioners, 191 Kan. 528, 382 P.2d 315, has been the law of this state, which has been consistently followed and reapplied, and I see no sound or compelling reason why it should be disregarded or distinguished on the basis set forth in the court's opinion. In Addington we cited and relied upon Sioux City Bridge v. Dakota County, 260 U.S. 441, 67 L. Ed. 340, 43 S. Ct. 190, 28 A.L.R. 979, where it was said:
Neither do I see any sound or compelling reason why Beardmore v. Ling, 203 Kan. 802, 457 P.2d 117 (1969), should likewise be cast aside and overruled; nor do I agree that Kansas City Southern Rly. Co. v. Board of County Comm'rs, 183 Kan. 675, 331 P.2d 899 (1958), is to be distinguished on the basis stated in the court's opinion, or that it has no precedential value in the instant case  impliedly or otherwise.
The court, by directing an assessment of plaintiff's property at the statutory rate (30 percent of fair market value), has entered *699 the forbidden area of assessing property instead of leaving that task to the proper taxing authorities. The fact there may have been other taxpayers in Shawnee County whose property was assessed at a higher rate than the prevailing median rate and who did not pay their taxes under protest, affords no reason for denying the plaintiff his right to have his assessment reduced to the same percentage of fair market value as those whose property was assessed at the median ratio of 15 percent of fair market value. He is entitled to have his tax recovery computed accordingly.