Case Name: Deitch Company, Appellant, v. Board of Property Assessment
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1965-02-25
Citations: 417 Pa. 213
Docket Number: Appeal, No. 270
Parties: Deitch Company, Appellant, v. Board of Property Assessment.
Judges: Before Bell, C. J., Musmanno, Jones, Cohen, Eagen, O’Brien and Roberts, JJ.
Reporter: Pennsylvania State Reports
Volume: 417
Pages: 213–233

Head Matter:
Deitch Company, Appellant, v. Board of Property Assessment.
Argued October 7, 1964.
Before Bell, C. J., Musmanno, Jones, Cohen, Eagen, O’Brien and Roberts, JJ.
reargument refused March 24, 1965.
David L. Cohen, with him Alexander Cooper., and Cooper, Goodman & Schwartz, for appellant.
James Victor Voss, Assistant County Solicitor, with him Francis A. Barry, First Assistant County Solicitor, and Maurice Louik, County Solicitor, for appellee.
February 25, 1965:

Opinion:
Opinion by
Mr. Justice Roberts,
The Deitch Company owned property in the Borough of Sharpsburg, Allegheny County, which was assessed by the Board of Property Assessment, Appeals and Review, at $185,420 for the triennium beginning in the year 1959. This assessment consisted of a land valuation in the amount of $108,680 and a building and machinery valuation in the amount of $76,740. The initial assessment was higher, but an appeal to the Board resulted in reduction of the land valuation.
The appellant-owner sought further relief in an appeal to the Court of Common Pleas of Allegheny County. By stipulation of counsel, the only issue tried before that court was the valuation of the land. Appel lant contended that the assessment exceeded the fair market value of the land and that it did not comply with the requirements of uniformity imposed by law. The Board offered into evidence a certified transcript of the assessment of the property involved. Appellant then called a real estate expert who testified that the fair market value of the land was $20,200, and who further testified concerning the fair market values of several other properties. In arriving at these valuations, the expert witness indicated that he considered, among other things, sale and holding prices in the area, physical factors, location, and access to and from the properties involved. He also testified as to the assessed valuations of each of the properties and constructed ratios based on a comparison of assessed values to market values. The ratios so constructed ranged from 46% to 72% of market value.
In rebuttal, the Board offered the testimony of one of its assessors, not as an expert witness, but for the sole purpose of showing who made the assessment and what factors were considered. The assessor testified that after considering use, location, topography, a few sales in the vicinity, and comparable assessments, he recommended a land assessment of $124,400 which the Board reduced to $108,680.
The court below dismissed the appeal on two grounds: first, that appellant, with the consent of appellee, did not attack the complete assessment as required by North Park Village, Inc. v. Bd. of Property Assessments, 408 Pa. 433, 184 A. 2d 253 (1962), and secondly, that the evidence presented by appellant had fallen short of the evidence required to meet its burden of proof. The court's opinion concerning the lat ter point is somewhat unclear but appears to indicate that, in its view, the taxpayer must produce testimony with respect to comparable properties in order to construct a ratio of assessed value to market value. The opinion further appears to define comparable properties as properties which are similar properties of the same nature in the neighborhood of the taxpayer's property.
The trial of this case in conformity with the understanding of counsel for both parties and of the court that only the assessment on land was being attacked was improper. The parties may not, by stipulation or otherwise, circumvent our holding in North Park Village. Although the lower court in its opinion correctly recognized the rule established by that decision, it incorrectly allowed itself to be governed by the stipulation rather than the rule. The limits of such a stipulation in assessment cases is discussed in Pittsburgh Miracle Mile Town & Country Shopping Center, Inc. v. Bd. of Property Assessment, 417 Pa. 243, 209 A. 2d 394 (1965).
Furthermore, the apparent misconception of the court below with respect to the relevance of comparability in the determination of an equalization ratio is shared by other courts and boards of assessment. We therefore feel compelled to clarify the guidelines which are applicable in assessment cases.
Under the Act of May 22, 1933, P. L. 853, §402, as amended, 72 P.S. §5020-402, real estate in Allegheny County is to be assessed at its actual value. The term actual value means the market value and market value has been defined as a price which a purchaser, willing but not obliged to buy, would pay an owner willing, but not obliged to sell, taking into consideration all uses to which the property is adapted and might in reason be applied. Buhl Foundation v. Bd. of Property Assessment, 407 Pa. 567, 570, 180 A. 2d 900, 902 (1962). However, we, too, recognize what the Legislature has recognized — that, as a practical matter, in Allegheny County, as in many other counties, real estate is frequently assessed at a percentage which is less than market value. Thus, the Act just cited further provides that the assessors should accomplish equalization of the subject property in accordance with other assessments in the taxing district. And more importantly, Article IX, §1, of the Constitution of Pennsylvania provides that all taxes must be uniform on the same class of subjects within the territorial limits of the authority levying the tax.
In Brooks Bldg. Tax Assessment Case, 391 Pa. 94, 137 A. 2d 273 (1958), the taxpayer produced evidence that several properties were assessed at ratios ranging from 40.2% to 57.2% while his property was assessed at 91%. The lower court in that case denied relief on the ground that the taxpayer had not proved that there was a fixed percentage of full value that had been applied to the great majority of the properties in the taxing district. In reversing that ruling, this Court concluded that "if an assessor, without actual fraud, negligently, foolishly, or capriciously assessed some properties at 10% of actual value, other similar properties at 20%, other similar properties at 50%, others at 75% and plaintiff's at 90%, it would be unjust and ridiculous to hold that since there was no fixed ratio of assessed value generally throughout the district, plaintiff failed to prove a lack or violation of uniformity, which the Constitution requires." Id. at 98, 137 A. 2d at 275. In arriving at that conclusion, we construed the uniformity provision of the Constitution of Pennsylvania to require that taxes "must be applied with uniformity upon similar kinds of business or property and with substantial equality of the tax burden to all members of the same class . . . ." Id. at 99, 137 A. 2d at 275. We therefore held that the tax payer had met its burden of proof by producing evidence of the market value of its property and of similar properties of the same nature in the neighborhood and by proving the assessments of each of those properties and the ratio of assessed value to actual or market value. We remanded the case to the lower court for further proceedings without reaching the question of the amount of relief to which the taxpayer was entitled or the method by which any reduction should be computed.
In Rick Appeal, 402 Pa. 209, 167 A. 2d 261 (1961), we made it clear that a taxpayer is not entitled to have his assessment reduced to the lowest ratio of assessed value to market value to which he could point in the taxing district if such lowest ratio does not reflect the common assessment level which prevails in the district as a whole. Although in Rich the taxpayer showed that his property had been assessed at 67.2% of its full value, while 76 newly-constructed houses were assessed at only 35%, we denied relief. The rationale underlying our decision was that a property owner is not entitled to have a property assessed at a rate comparable to what has been done in the instances of a few properties out of a total of more than 30,000 properties, where the evidence shows that the under-assessments are not representative of the district as a whole, and that the taxpayer has, in fact, not been assessed at more than the common level in the district. See Notes, "Inequality in Property Tax Assessments: New Cures For an Old Ill," 75 Harv. L. Rev. 1374, 1384-85 (1962).
From these previous decisions there emerges the principle that a taxpayer should pay no more or no less than his proportionate share of the cost of government. Implementation of this principle would require that an owner's assessment be reduced so as to conform with the common level of assessment in the taxing district. In Siegal v. City of Newark, 38 N.J. 57, 183 A. 2d 21 (1962), the Supreme Court of New Jersey reached the same conclusion: "Hence, as to assessments made, the injured taxpayer is remitted to a different remedy, to wit, a reduction of his assessment to the 'common level' of assessments in the taxing district. The thesis is that the taxpayer is injured by so much of the tax bill as exceeds his pro rata share of the burden of local government. True, there may remain some residual harm in that the dollar value of the reduction may be recaptured in another year from all properties including that of the successful appellant. But perfect relief is inherently impossible. If the taxpayer pays no more than his fair share for the year in question, practical justice is achieved. Surely, if the taxpayer who appeals is permitted to pay less than his fair share, the injustice to those who were overassessed but did not complain would be compounded. Hence, we held in Kents that an excessive assessment should be reduced to what it would have been if all taxable real property had been assessed equally." Id. at 61, 183 A. 2d at 23.
Of course, the question arises as to the definition of the term, "common level". Where the evidence shows that the assessors have applied a fixed ratio of assessed to market value throughout the taxing district, then that ratio would constitute the common level. However, where the evidence indicates that no such fixed ratio has been applied, and that ratios vary widely in the district, the average of such ratios may be considered the "common level". Siegal v. City of Newark, supra, at 64, 183 A. 2d at 24. Furthermore, it may be that the evidence will show some percentage of assessed to market value about which the bulk of individual assessments tend to cluster, in which event such percentage might be acceptable as the common level. Ibid.
Of course, a multitude of suits resulting in a reduction of many assessments to a common level, might prove self-defeating since an extremely large number of such reductions might ultimately lower the common level in the district. It is, therefore, imperative that assessors act to correct both underassessments and overassessments as expeditiously as possible in order to prevent serious reduction of the revenues upon which governmental bodies depend.
The proceedings in the trial court are de novo and the proper order of proof in cases such as the present one has long been established. The procedure requires that the taxing authority first present its assessment record into evidence. Such presentation makes out a prima facie case for the validity of the assessment in the sense that it fixes the time when the burden of coming forward with evidence shifts to the taxpayer. If the taxpayer fails to respond with credible, relevant evidence, then the taxing body prevails. But once the taxpayer produces sufficient proof to overcome its initially allotted status, the prima facie significance of the Board's assessment figure has served its procedural purpose, and its value as an evidentiary device is ended. Thereafter, such record, of itself, loses the weight previously accorded to it and may not then influence the court's determination of the assessment's correctness. See Kemble's Estate, 280 Pa. 441, 447, 124 Atl. 694, 696 (1924); Ritter's Appeal, 147 Pa. Superior Ct. 236, 24 A. 2d 470 (1942). Of course, the taxpayer still carries the burden of persuading the court of the merits of his appeal, but that burden is not increased by the presence of the assessment record in evidence.
Of course, the taxing authority always has the right to rebut the owner's evidence and in such a case the weight to be given to all the evidence is always for the court to determine. The taxing authority cannot, however, rely solely on its assessment record in the face of countervailing evidence unless it is willing to run the risk of having the owner's proof believed by the court. Where the taxpayer's testimony is relevant, credible and unrebutted, it must be given due weight and cannot be ignored by the court. It must necessarily be accepted. McKnight Shopping Center, Inc. v. Bd. of Property Assessment, 417 Pa. 234, 242, 209 A. 2d 389, 393 (1965) ; Kaemmerling's Appeal, 282 Pa. 78, 83, 127 Atl. 439, 441 (1925); Kemble's Estate, 280 Pa. 441, 447, 124 A. 2d 694, 696 (1924).
In presenting his case, the taxpayer must first offer proof with respect to the actual or market value of the property. For this purpose, many factors may be relevant. Park Drive Manor, Inc. Tax Assessment Case, 380 Pa. 134, 136, 110 A. 2d 392, 394 (1955). The determination must be ultimately made, on the basis of competent testimony, as to the worth of the property in the market at a fair sale. Buhl Foundation v. Bd. of Property Assessment, supra. Recent sales of comparable properties, that is, properties of a similar nature, are, of course, persuasive in helping to establish the market value. However, the properties compared need not be identical. In comparing such properties, the aim is to show their relative values by bringing out characteristic qualities, whether similar or divergent. Comparison based on sales may be made according to location, age, income, expense, use, size, type of construction, and in numerous other ways. McKnight Shopping Center, Inc. v. Bd. of Property Assessment, 417 Pa. 234, 209 A. 2d 389 (1965).
In determining, however, whether the constitutional requirement with respect to uniformity has been complied with in a taxing district, all properties are comparable in constructing the appropriate ratio of assessed value to market value. This is because the uniformity requirement of the Constitution of Pennsylvania has been construed to require that all real estate is a class which is entitled to uniform treatment. Buhl Foundation v. Bd. of Property Assessment, supra; Delaware L. & W. R.R. Tax Assessment (No. 1), 224 Pa. 240, 73 Atl. 429 (1909). In establishing such ratio in a particular district, the property owner, the taxing authority, and the courts may rely on any relevant evidence.
The evidence supplied by the taxpayer in Brooks illustrates one method by which a taxpayer can meet his burden of proving a lack of uniformity, but we do not consider it to be the only method. It would be equally satisfactory to produce evidence regarding the ratios of assessed values to market values as the latter are reflected in actual sales of any other real estate in the taxing district for a reasonable period prior to the assessment date. Thus, for example, the taxpayer's expert witness or witnesses could select a number of recent representative sales and offer testimony with respect to such sales as proof of the ratio in the taxing district. We do not, of course, mean to suggest that the taxpayer must produce evidence with respect to every recent sale in the district. Furthermore, any other competent evidence of an overall current ratio based on sales within the taxing district which is available may be introduced. We reiterate that the taxing district involved is Allegheny County, and that such evidence, if offered, should be directed to the ratio for that county.
In conclusion, in determining the correctness of the assessment in the present case, the court below must first decide on the basis of the competent, credible, and relevant evidence produced by all parties, what the fair market value of the property involved is. Of course, if the assessment is in excess of that value, it must be reduced. Secondly, the court must determine the appropriate ratio of assessed value to market value which exists in Allegheny County. The court must then apply the ratio thus found to the market value of the property in order to arrive at the proper assessment.
The order of the court below is vacated and the case is remanded for further proceedings consistent with this opinion.
Appellant also called, at a later time, the president of the Deitch Company, who testified that the market value of the land was $20,000.
"Because of the varying values and ratios fixed by the witnesses, we deem it wise not to attempt to fix the assessment in this Court." 391 at 102, 137 A. 2d at 276.
We did not in any way imply that the method employed by the taxpayer in Brooks is the exclusive method of meeting the burden of proof. See discussion in text, infra.
For an extensive discussion on this point see Notes, "Inequality in Property Tax Assessments: New Cures for an Old Ill," 75 Harv. L. Rev. 1374 (1962).
Kemble's Estate, 280 Pa. 441, 447, 124 Atl. 694, 696 (1924) ; Pennsylvania Stave Co.'s Appeal, 236 Pa. 97, 102, 84 Atl. 761, 763 (1912).
This is, of course, the essence of "prima facie evidence". See Black's Law Dictionary 1353-54 (1957).