Title: Bair v. Estate of Biggins
Citation: 356 N.W.2d 551
Docket Number: 83-1121
State: Iowa
Issuer: Iowa Supreme Court
Date: October 17, 1984

356 N.W.2d 551 (1984) G.D. BAIR, Director of Revenue of Iowa Department of Revenue, Appellant, v. ESTATE OF Martha BIGGINS, Deceased, Ruth Geisinger, Executor, Appellee. No. 83-1121. Supreme Court of Iowa. October 17, 1984. *552 Thomas J. Miller, Atty. Gen., Harry M. Griger, Sp. Asst. Atty. Gen., and Thomas M. Donahue, Asst. Atty. Gen., for appellant. Thomas L. McCullough of McCullough Law Firm, Sac City, for appellee. Considered by UHLENHOPP, P.J., and McGIVERIN, LARSON, SCHULTZ, and WOLLE, JJ. UHLENHOPP, Justice. This appeal involves the authority of an administrative agency to challenge an appraisal of property by county appraisers in order to bring the valuation into conformity with statute, notwithstanding the absence of such challenges in other estates in the past. Martha Biggins died on October 17, 1980. She owned 160 acres of farmland and had a half interest in another 80 acres, all in Buena Vista County, Iowa. The executor filed a preliminary inheritance tax report and listed the land at $1500 per acre. The Buena Vista County inheritance tax appraisers valued the land at the same figure. Proceeding under section 450.31 of the Iowa Code of 1979, the Director of Revenue objected in district court to the appraisal. Section 450.31 provides that such objections shall be tried in equity. The standard of valuation of property as provided in sections 450.31 and 450.37 is "its value on the market in the ordinary course of trade." (We note that these sections were subsequently amended. 1983 Iowa Acts, ch. 177.) The appraisers' report was before the court at the trial. In addition, three valuation witnesses testified. Much of the testimony of one of them, decedent's grandson, was not received because of noncompliance with a procedural rule. He did testify that he thought the appraisal was fair "in comparison with what the appraisers had appraised other Buena Vista County land for." One of the inheritance tax appraisers, Daniel T. Flores, also testified. His testimony includes the following: The trial court summarized Flores' testimony thus: The third witness, Donald E. Reed, a revenue department employee, possesses extensive qualifications, has conducted numerous appraisals, made an in-depth study of this land and of sales of comparable farms, and prepared a lengthy and detailed report. He made adjustments for cash versus contract sales, and considered numerous other factors. The five farms which he found comparable respectively sold for adjusted per acre prices of $2512, $2804, $2882, $2952, and $3172. After detailing his qualifications, his examination of this farm and of comparable farms which had been sold, and the factors he considered, he testified: Q. Mr. Reed, what is your professional opinion of the market value of the subject property on October 17th, 1980? A. My opinion would be the same as when I made the appraisal; that it would *554 beas the appraisal indicates, it would be $587,200 or $2520 per acre. The evidence clearly demonstrates that the county appraisers' valuation of $1500 is substantially below the market value of the Biggins land. The trial court found as a fact: If we may conclude that the county appraisers have customarily valued farmland below market value, this action appears to be a test case to determine whether past practice is now obligatory, or whether the department can insist on application of the statutory market value standard. The trial court aptly presented the problem as follows in its decision: Sec. 450.32, The Code, provides that if the Court finds (1) the amount at which the property is appraised is its value on the market in the ordinary course of trade, and (2) the appraisement was fairly and in good faith made, it shall approve the appraisement. The Court would have to find affirmatively on both (1) and (2) in order to approve the appraisal. The Court has made an affirmative finding only as to (2) that the appraisal was fairly and in good faith made. The court then resolved the problem thus: The director appealed. We face two principal questions. May the director insist upon appraisal of farmland at its value on the market in the ordinary course of trade despite past practice? What was the market value of this land at the time in question? I. The executor contends for several reasons that the director must stay with past practice. We have considered the reasons but find them without merit. We address three of them. One argument is that the director, head of an administrative body, lacks power to alter a long-standing administrative application of a statute, especially after intervening legislative sessions have occurred without amendment of the statute. This argument does not have support in the authorities. If an agency concludes that its application of a statute is in error, it is not required to go on indefinitely misapplying the statute; it may alter the application. Calbeck v. Travelers Insurance Co., 370 U.S. 114, 82 S. Ct. 1196, 8 L. Ed. 2d 368 (1962); Automobile Club of Michigan v. Commissioner of Internal Revenue, 353 U.S. 180, 77 S. Ct. 707, 1 L. Ed. 2d 746 (1957); Alstate Construction Co. v. Durkin, 345 U.S. 13, 73 S. Ct. 565, 97 L. Ed. 745 (1952); New York Telephone Co. v. FCC, 631 F.2d 1059 (2nd Cir.1980); Association of Clerical Employees v. Brotherhood of R. &amp; S.S. Clerks, 85 F.2d 152 (7th Cir.1936); Utah Hotel Co. v. Industrial Comm'n, 107 Utah 24, 151 P.2d 467 (1944). See United States v. Missouri P. Ry., 278 U.S. 269, 49 S. Ct. 133, 73 L. Ed. 322 (1928). This is true despite the absence of legislative change in the statute in the meantime. Helvering v. Wilshire Oil Co., 308 U.S. 90, 60 S. Ct. 18, 84 L. Ed. 101 (1939). Another argument is unfairness of undervaluing the property of one taxpayer or class of taxpayers and valuing the property of another taxpayer or class of taxpayers at full value. The executor relies on Chicago &amp; N.W. Ry. v. Iowa State Tax Comm'n, 257 Iowa 1359, 137 N.W.2d 246 (1965). In that case the State Tax Commission had the complex task of valuing railroads for property tax purposes. It employed a formula to arrive at an initial value, and then discounted that initial value by judgment factors. The evidence showed that in applying the judgment factors year after year, the Commission regularly discriminated against the North Western. "The 1963 assessments show the commission applied a 3% reduction of the formula value in [North Western's] case, while it applied a 28% to 36% reduction to the other four railroads. Like discrepancies and general valuation reduction discriminations were shown for preceding years." Id. at 1372, 137 N.W.2d 253. North Western challenged the assessments under section 441.37(1) of the Iowa Code of 1962 ("That said assessment is not equitable as compared with assessments of other like property in the assessment district."). This court held: Id. at 1373, 137 N.W.2d at 254. The situation before us now is different in several respects. One is that the *556 director did not make disparate valuations. The director is endeavoring to undo an undervaluation made by local appraisers. Again, the factual setting is not parallel. Buena Vista is but one county. No showing is made that appraisals are too low throughout the rest of the state; some county appraisers may be valuing farmland according to the statutory standard so that estates there are the actual victims of discrimination, if discrimination exists. Too, discrimination against other estates may exist within Buena Vista County itself. A decedent who dies owning only certificates of deposit or corporate bonds which are listed on exchanges does not have the advantage of a substantial discount in valuation; the assets have a definite dollar value. The discrimination is against such estates; they, not the Biggins estate, are in the position of North Western Railway. If special provision is to be made for certain kinds of property within constitutional limits, the task is for the General Assembly and not for the county appraisers. Finally, in this case the director is asking that the farmland be valued at its value according to the legal measure of valuation. In the North Western case this court did not order that North Western's property be valued below the legal measure but rather, that it too be valued in accordance with that measure. We hold that the director cannot be prohibited from insisting on the statutory valuation standard on the basis of the North Western case. Finally, a convincing argument cannot be made that the director is estopped by not having challenged farmland appraisals in the past. We pass by the question of estopping the state, and proceed to the estoppel requirement that the party asserting estoppel must establish that he took action or refrained from taking action in reliance on a representation of the other party. S &amp; M Finance Co. v. Iowa State Tax Comm'n, 162 N.W.2d 505 (Iowa 1968). No evidence appears that this decedent placed or retained her assets in farmland in reliance on a practice of low appraisals in Buena Vista County. Although the case is in equity, the trial court could not disregard the provisions of the statute on valuation. Madrid Lumber Co. v. Boone County, 255 Iowa 380, 387, 121 N.W.2d 523, 527 (1963) ("Courts of equity can no more disregard statutory requirements than can a court of law."); 27 Am.Jur.2d Equity § 124 (1966). As the trial court correctly found that the appraisal was less than the market value of the land, it should have set the appraisal aside and adjudged the proper value. Iowa Code § 450.32 (1979). II. Since the proceeding is in equity, we review de novo. In Re Siebel's Estate, 207 Iowa 100, 222 N.W. 361 (1928). In the event of reversal, as here, we determine the taxable value. In Re Scherf's Estate, 240 Iowa 1001, 38 N.W.2d 578 (1949). The executor's main effort was to prevent the director from changing the past method of appraising farmland. As to the second issue, value, the testimony of the expert Reed is entitled to substantially greater weight than the other evidence in the case. The county appraisers' valuation was considerably lower than the market value of the land. The executor did not produce evidence of how much higher than the appraisers' valuation the market value of the land actually was. The Reed testimony constitutes the evidence in this record of the market value. A preponderance of the evidence establishes the market value of the Biggins' property was $587,200, and we so find. We return the case to the district court with directions to set aside the prior judgment and to enter a new one adjudging the value in that amount. REVERSED AND REMANDED.