Opinion ID: 2018775
Heading Depth: 1
Heading Rank: 4

Heading: Excess home office property

Text: On its 1975 annual statement Sierra listed two tracts of property as home office property that is no longer needed for that purpose, located in Twin Falls County, Idaho. Tract 1 was listed at a book value of $340,720 and tract 2 was listed at a book value of $435,851 for a total book value on the two tracts of $776,571. Prior to the June 1976 hearing Sierra sold both tracts of land to Chisum Homes, a large construction firm headquartered in Las Vegas, Nevada. Fred Frazier, the president of Sierra, testified that Sierra sold the two tracts for a total price of $1,141,000 of which price Sierra received 40 percent in cash (i. e. $456,400) and a purchase money mortgage secured by tracts 1 and 2 for the balance of the purchase price (i. e. $684,600). The commissioner concluded that tract 1 was improved real estate and that the mortgage, as secured by tract 1, was a secure and well invested asset which was admissible in the determination of Sierra's financial condition. However, the commissioner concluded that tract 2 was unimproved real estate and that the mortgage, as secured by tract two, was not a secure or well invested asset and was not admissible in determining Sierra's financial condition. The mortgage [5] received by Sierra from Chisum Homes was not introduced into evidence. Furthermore, there is no evidence in the record, and the commissioner has made no finding, of the value of that part of the mortgage allegedly secured by tract two. On the basis of the evidence before us this Court cannot ascertain what value, if any, should be placed on the mortgage amount secured by tract 2. We conclude that there is not a preponderance of evidence to support the commissioner's determination to nonadmit the mortgage secured by tract 2. The following simple arithmetic calculation, based on the evidence before us, further demonstrates that no basis exists upon which the commissioner could nonadmit the mortgage secured by tract 2. On its 1975 annual statement Sierra listed tracts 1 and 2 at a book value of $776,571. Sierra received $456,400 cash from the sale of those assets. Subtracting the cash received of $456,400 from the stated book value of $776,571 leaves a remaining stated book value on the 1975 annual statement of $320,171 to reflect the value of the purchase money mortgage Sierra received from Chisum Homes. This purchase money mortgage was secured by tract 1 as well as tract 2. Tract 1, itself, had a book value of $343,720, and the commissioner neither disputed the value placed on tract 1 nor the admissibility of the mortgage asset secured by tract 1. Consequently, the purchase money mortgage received from Chisum Homes and secured by tract 1 was more than adequate, together with the cash received from Chisum Homes, to cover the entire $776,571 book value Sierra had listed on its 1975 annual statement for the excess home office property. We conclude that there was no basis upon which the commissioner was authorized to nonadmit any part of the $776,571 value listed for tracts 1 and 2 on Sierra's 1975 annual statement. Accordingly, we shall consider such asset admissible in our determination of whether or not the commissioner was authorized to suspend Sierra's Certificate of Authority.