Case Name: State ex rel. Northwestern Mutual Life Insurance Company, Respondent, vs. Weiher, City Clerk, and others, Appellants
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1922-06-06
Citations: 177 Wis. 445
Docket Number: 
Parties: State ex rel. Northwestern Mutual Life Insurance Company, Respondent, vs. Weiher, City Clerk, and others, Appellants.
Judges: Crowniiart, J., dissents.
Reporter: Wisconsin Reports
Volume: 177
Pages: 445–455

Head Matter:
State ex rel. Northwestern Mutual Life Insurance Company, Respondent, vs. Weiher, City Clerk, and others, Appellants.
May 10
June 6, 1922.
Taxation: Assessment of office building: Variance between intrinsic value and sale value: Aids to assessor: Basic price per cubic foot: When use is allowable.
1. Under sec. 70.32, Stats. 1921, requiring real property to be assessed at the full value which could ordinarily be obtained therefor at private sale, a large office building having an intrinsic value in excess of the sum it would sell for, because built for a specific purpose, can only be valued at its- sale value; and cost, depreciation, cost of reproduction, location, etc., can be considered only in arriving at the market value.
2. In valuing large business buildings for taxation it was not improper for the assessor to use a basic price per cubic foot found 'by experience to roughly represent the value of the average large office building, where this was merely a starting point, to which was added or deducted the proper amount, depending on the character of the construction of the building, the amount of depreciation, obsolescence, location, and other elements that would ’affect the 'sale value.
Crowniiart, J., dissents.
Appeal from a judgment of the circuit court for Milwaukee county: E. T. Fairchild,-Circuit Judge.
Affirmed.
Certiorari to review the assessed valuation of the building of the relator. The circuit court changed the valuation from $2,750,000 to $1,350,000. Construction of the building was begun in 1911, and it was completed in 1915 at a cost of $3,156,228.03. The present reproduction cost would be about $4,000,000. The ground on which the building is located was assessed at $350,000, and that assessment is not challenged. . . 1
For. the appellants there was a brief by John M. Niven, city attorney, and Walter J. Mattison, assistant city attorney, and oral'argument by Mr. Mattison.
For the respondent there was a brief by Geo. Lines and Sarh T. Stvansen, both of Milwaukee, and oral argument by Mr. Swansen. \

Opinion:
Vinje, C. J.
In the brief of the appellant we find this statement:
"No question is raised as to the power of the court to reduce the assessment, for the reason that all parties are agreed that the question at issue is purely one of law. If the rule for assessing property sought by petitioner is sus- , tained, then the valuation fixed by the circuit court is undoubtedly the proper figure. On the other hand, if the rule of valuation adopted by the assessor and the board of review is found by the court to be in full compliance with the statute, then the assessment must remain at the figure .adopted by the board of review."
The respondent concurs in this view, and so does the court. The legal question for determination then is, Did the court adopt the statutory method of assessment or did the assessor adopt it? The statute provides (sec. 70.32):
"Real property shall be valued by the assessor from actual view or -from the best information that the assessor can practicably obtain, at the full value which could ordinarily be obtained therefor at private sale. In determining the value the assessor shall consider, as to each piece, its advantage or disadvantage of location," etc.
It is not possible to state with absolute accuracy the precise rule adopted by the assessor. He took as the basis for his computation a valuation of fifty-three cents per cubic foot, that value having been found by experience to roughly represent the value of the average large office building in Milwaukee. Taking such figure as a basis he took into consideration the location of the building; the cost of construction; the cost of reproduction; the purpose for which the building was used, and all other elements which naturally reflected the value either upward or downward. So far his method does not run counter, to the statute. But when he came to fix the assessed value upon the basis named he fixed it at a sum which, as we understand it, would fairly reflect the intrinsic worth of the building based upon the elements mentioned, and not upon a price which in his judgment could be obtained for the building if offered for sale. The claim is that the building has an intrinsic worth in excess of the sum it would sell for because it was built for a specific purpose and if sold would have to be sold for a use or purpose for which it was not built, hence its selling price would not reflect its actual value based upon its reasonable intrinsic worth. This is true; and herein would lie the difficulty of solving the question of the proper assessed value but for the statutory rule and the construction given it by this court, if that can be said to be construction which but repeats the language of the statute.
The statutory rule of assessment of real estate is to assess it at its sale value and not at its intrinsic value if that differs from the sale value. As was said in State ex rel. Oshkosh Country Club v. Petrick, 172 Wis. 82, 84, 178 N. W. 251, the statute "requires. that property shall be assessed with reference to purposes for which it may be sold rather than the purposes to which it presently may be devoted." That the case of State ex rel. Gisholt M. Co. v. Norsman, 168 Wis. 442, 169 N. W. 429, was considered to be in harmony with this view is evidenced by this statement of the court in State ex rel. Oshkosh Country Club v. Petrick, 172 Wis. 82, 84, 178 N. W. 251:
"In the Gisholt Case the property was devoted to. manufacturing purposes and the company was a going concern with an established business. That it could be sold as such at private sale was not questioned. But because sales of such property were few and far between (as testified to by the president of the company), it was ruled that the original cost of the property less depreciation might be considered in fixing the value thereof for taxation purposes."
In other words, the selling value was made the test. To arrive at that test, for reasons stated, the factor of cost less depreciation could be taken into consideration. In the case at bar the factors of cost, depreciation, cost of reproduction, location, etc., are competent factors to arrive at the market price of the building, but not to arrive at what it may be considered intrinsically worth to the owner or to a supposed purchaser that does not in reality exist. The argument that the owner may be considered as standing in the place of a purchaser who, if desiring to buy, would pay its reasonable inti-insic worth, forgets the statutory test, namely, What will it bring if the owner is the seller and somebody else is the buyer? The statute does not contemplate that the owner shall be both seller, and buyer. No safe test could be arrived at upon such a basis. It would consist in only the judgment of the assessor unchecked by external actual facts as to sales or market value. The argument is also made that an owner is not supposed to build to lose, hence he would pay its cost or at least its reasonable intrinsic worth. This may be true enough generally speaking, but we do know that many persons do build in such a way, owing to size of building, mode of construction, location, or all three, that a loss does result even in normal times. It is also urged that the building under an assessment of market value only is considered for a purpose .for which it was not intended and is therefore not assessed at its full value based upon the purpose for which it was constructed. This also is true; but since the statute fixes the test, and has maintained it as it is for half a century or more, we must assume the legislature is well satisfied with it. At any rate the courts cannot change it. That it is the best test that can possibly be devised we have no doubt. As to the great mass of taxable real estate it furnishes the only fair and safe touchstone — one that extrinsic facts— actual sales of like or similar property — can conclusively establish; thus in as large a measure as possible eliminating the mere judgment of the assessor, and enabling an owner or the assessor, as the case may be, to prove the valuation by facts which he has had no' part in establishing or shaping and which do not lie solely in any man's judgment. It is true that in cases such as this too low a valuation seems at first blush to be established for taxation purposes. But it must be borne in mind that the state asks a tax only upon the business value of the property of its citizens, if that term may be used, because such value is readily ascertainable for reasons already stated, and that buildings built in such a manner that they cannot be resold for their fair intrinsic worth or near their actual cost will not often be constructed. In this case we have a fine, substantial, artistic building, gracing half a block in the city of Milwaukee, built to meet the peculiar needs of its owner, and not well adapted for other uses. The state says, Tax it at its sale value. It is not ultimately a question of cost, of cost of reproduction, of revenue derived from its use, of location, but of all these and of all other, elements that go to determine sale value. The -assessor used these elements to determine the real fair intrinsic worth of the building to one who might need it just as it is. The court used these elements in arriving at its sale value, taking into' consideration the actual situation as it existed in Milwaukee at the time. The latter is the statutory rule and governs.
The relator has criticised quite severely the use of the. basic fifty-three cents per cubic foot for large business buildings in Milwaukee. As we understand it, the fifty-three cents per cubic foot was a starting point merely, to which was added or deducted the proper amount, depending upon the character of the construction of the building, the amount of depreciation, obsolescence, the location, and many other elements'that would affect the sale value of the building. So used, the basic fifty-three cents per cubic foot was not an arbitrary assessment, but it was a very useful and fair method of insuring such uniformity of valuation as the circumstances would permit. '
A few cases from other jurisdictions have been cited to us on both sides, but we have not adverted to them because our own statutory rule controls as to what rule of assessment of real estate shall obtain in this state.
By the Court. — Judgment affirmed.