Opinion ID: 2094444
Heading Depth: 1
Heading Rank: 3

Heading: Questions touching the validity of the assessment of real estate for county and school taxation by the board of assessment of New Castle County

Text: Questions 9(a), 9(b), and 9(c): 9. (a) Was the real property in the Mount Pleasant Special School District reassessed by the New Castle County Board of Assessment at its true value in money within the meaning of Section 8307(a), Chapter 83, Title 9, Delaware Code Annotated? (b) If the real property in the Mount Pleasant Special School District was not reassessed at its true value in money within the meaning of Section 8307(a), Chapter 83, Title 9, Delaware Code Annotated, was the reassessment valid? (c) Did the Board of Assessment of New Castle County, in making the reassessment for 1954, unlawfully delegate in any respect its statutory duty to make the reassessment and thereby make such reassessment illegal and invalid for all purposes? Plaintiff's last objection is to the assessment upon which her taxes are to be based. It is a sweeping one. She asserts that the whole reassessment of real property in New Castle County made during the years 1951-1953 by the New Castle County Board of Assessment is unconstitutional and otherwise illegal. Before noticing the particular reasons advanced by plaintiff in support of this contention, we think it desirable to emphasize the general principle applicable to a taxpayer's class suit to enjoin an entire assessment of all real estate within the jurisdiction of a Board of Assessment. Such a suit is not one in which the taxpayer seeks to remedy a particular inequality applicable to his own assessment. To determine such a complaint the law provides for a hearing and determination by the Board of Assessment. This proceeding is in the nature of a process of appeal or review. 9 Del.C. § 8319. The case of Murphy v. Mayor, etc., of City of Wilmington, 6 Houst. 108, 138, indicates that this process of review may be supplemented by certiorari from the Superior Court. What the taxpayer is seeking here is to set aside the entire assessment on the ground that the Board has completely disregarded the applicable constitutional and statutory provisions in the performance of its duty. In such a case the burden resting upon the taxpayer is a very heavy one. He cannot sustain it by showing that his own assessment is unreasonably high. So far as concerns such a complaint, an adequate remedy at law is provided. In Narehood v. Pearson, 374 Pa. 299, 96 A.2d 895, 898, the Supreme Court of Pennsylvania said: Where there is an adequate remedy at law in this class of case, this Court has repeatedly said that Equity should intervene only where there is either want of a power to make the assessment or to levy a tax, or the tax is levied without authority of law, or where there is an utter disregard of imperative constitutional requirements.  Thus in the instant case the taxpayer says that the assessment of her property represents an increase of 110 per cent over the prior valuation; whereas the increase in assessment of a neighboring apartment house is about 35 per cent. If injustice has been done, she had a remedy by way of an appeal to the Board of Assessment. We turn now to the argument of the plaintiff in support of her contention that the entire assessment is void. We have before said that the Board employed the J. M. Cleminshaw Co., an appraisal firm, to make a general revaluation of properties in New Castle County. Since what they did is assailed as illegal, we must consider the method used in making the revaluations. It was elaborate and detailed, and is too long to quote in full. It may be summarized as follows: 1. An elaborate construction cost analysis was made. 2. Each house was measured and the type of construction recorded. 3. Recent data on sales were sought and presumably obtained. 4. A final field inspection and review was made for the purpose, among other things, of determining functional depreciation resulting from good houses in poor locations, houses of obsolete design, etc. 5. In the case of commercial and special purpose buildings, earnings were examined to establish a fair basis for rental capitalization. 6. Special methods were used to value industrial plants, fixed machinery and equipment, and public utility buildings. 7. Land value tables were prepared and owners, realtors, banks, and others asked to supply information relative to sales. From the data thus assembled the Cleminshaw Co. submitted to the Board of Assessment its valuations. The Board of Assessment considered these valuations and then applied to all of them a factor of 70 per cent. The resulting figures represent the Board's final valuations for assessment purposes. The foregoing describes the general method of the reassessment of properties in rural New Castle County. In the City of Wilmington the Cleminshaw Co. inspected and revalued a thousand sample properties by the same procedure. The record fails to show just how the Board made use of these valuations. With respect to new construction the Board of Assessment itself made the valuations. These valuations were made on the same basis as in prior years, and in a general way followed the method of construction cost analysis above described. As to such properties, however, the Board appears to have found that its procedure for assessment needed correction in order to bring the valuations made by it in line with the Cleminshaw valuations. It accordingly increased its own valuations thus arrived at by 40 per cent. Plaintiff's first objection is that the method of valuation adopted violates the statutory requirement that real property must be assessed at its true value in money. 9 Del.C. § 8307(a). Plaintiff insists that under our law, as under many assessment laws, the test of true value in money is market value. This argument is supported by the citation of many authorities from other states. We find it unnecessary to discuss them. Our statute, unlike many other statutes, does not prescribe a single standard of value. In construing this statute our courts have followed the general principle that all elements entering into the value of property are pertinent and relevant and to be considered by the assessors in valuing it. Council of Newark v. Claringbold, 5 Boyce, 133, 90 A. 1130, affirmed 5 Boyce 507, 94 A. 1102, in an opinion approving and adopting the opinion of the court below. The method adopted by the Cleminshaw Co. and of the Board of Assessment was therefore entirely proper. Reproduction cost less depreciation was the first step; but other pertinent factors were considered and given weight. Even in those states which prescribe market value as the sole standard, it is recognized that cost less depreciation is a usual and standard method of approaching market value and is an important element in fixing that value. See, for example, Central Railroad Co. of N. J. v. State Board, 49 N.J.L. 1, 7 A. 306. And in the light of the obvious difficulties attending a general reassessment of real estate within a county, use of reproduction cost less depreciation, corrected so far as possible by other pertinent factors, seems entirely sound. See the discussion in 1 Bonbright, Valuation of Property, pp. 459-460. In Alexander v. Mayor & Board, Miss., 1953, 68 So.2d 434, 439, a contract with an appraisal firm providing for a method of appraisal similar to that in this case was assailed and upheld. Commenting on the Constitution of Mississippi requiring reassessment of property at its true value, Const. 1890, § 112, the Supreme Court of that State said: This provision is amply complied with in the contract, the obvious purpose of which is to obtain a realistic and up-to-date valuation of properties in the city in the light of established economic facts. The contract expressly provides that replacement, physical and sound values of the properties will be shown, and that building costs and other relevant factors will be used in such computations. It is also to be observed that the valuations of the Cleminshaw Co. were the valuations of expert appraisers. Certainly a presumption of competency and fairness attaches to their work. We find nothing of substance in this objection. The second point urged against the Cleminshaw valuation is that the Board by employing them and approving their findings has unlawfully delegated its duty to make the assessment itself. Plaintiff cites and relies upon the general principle that a Board of Assessment, in valuing and assessing real estate for the purposes of taxation, is performing discretionary or quasi-judicial duties and the performance of such duties as may not be delegated to others. 51 Am.Jur. Taxation, Sec. 664; annotation at 107 A.L.R. 1482. Plaintiff's argument is almost reducible to a contention that the Board of Assessment of New Castle County, confronted with the necessity of a general reassessment of real estate within the county, was prevented from employing expert help by the application of the principle of non-delegation of power. When the magnitude of the task before the Board is considered, it is apparent that if such an objection be sound, a general reassessment of properties, admittedly desirable and necessary, could never be accomplished within any reasonable period of time. As a practical matter, it would be a physical impossibility. The Court takes judicial notice of the substantial increase in the population of New Castle County within recent times and of the greatly increased value of real estate. In these circumstances we think that the method adopted by the Board under authority of the Levy Court of New Castle County was entirely legal and proper. Indeed, it may be said to have been the only feasible method that could have been adopted. The employment of expert appraisers in modern times to assist a Board of Assessment in obtaining a reasonable and uniform assessment and valuation of real estate for taxation is nothing new. It is particularly appropriate to the valuation of properties in urban and industrial centers. The use of expert appraisers does not necessarily involve the delegation of the assessors' authority. It is entirely legal to obtain such assistance, provided that the Board makes the final decision. That the Board in this case made the final decision is clear. Although it might have approved the Cleminshaw valuations as submitted, it actually reduced them by 30 per cent. The final assessment, therefore, was the Board's own. Hence there was no delegation of power. There are numerous cases in accord with the general views above expressed. In the recent case of Conroy v. City of Battle Creek, 314 Mich. 210, 22 N.W.2d 275, 278, the employment of expert appraisers was assailed as an unlawful delegation of municipal powers to a stranger. Rejecting this argument, the Supreme Court of Michigan said: The valuation of real estate and improvements has always been difficult and presents many problems, and even with the applied science for valuation and appraisal, the true value cannot be obtained with mathematical exactitude, but by the application of these modern rules as developed, a much fairer degree of accuracy is arrived at than existed theretofore. There is no vice in seeking expert information from others than residents of the city itself. It seems almost impossible for one assessor in the city of the size of Battle Creek to obtain all this correct information and to know without assistance the correct factors and rules in order to arrive at a fair valuation. It is an implied power of the commission to obtain such expert knowledge from what in good faith it evidently must have believed a reliable source. It must be assumed that the company will make a very careful study of local conditions including costs by gathering all information as to past sales and all other local data. There even might be some advantage in obtaining such information through persons free from all local influences whatsoever. We again repeat that the contract provided that the city assessor was to have the last word and final decision, although assisted by experts. There was no delegation of power whatsoever, and it was not ultra vires for the city to obtain this expert information. To the same effect are Barrett v. Munger, 201 Misc. 985, 115 N.Y.S.2d 708 (involving a Cleminshaw appraisal), and Daniels v. Board of Review, 243 Iowa 405, 52 N.W.2d 1. Plaintiff attempts to turn to her advantage the use of the 70 per cent factor. She contends, if we understand the argument, that this reduction was arbitrary and improper. Presumably the Board thought the Cleminshaw figures somewhat high. If so, it was its duty to exercise its best judgment to arrive at more reasonable figures. We must assume that they did exercise such judgment. And in any view of the matter, plaintiff can make nothing of the reduction. Since the figure applied to all taxpayers alike, its use wrought no injustice and is quite immaterial to the present point. Greene v. Louisville & Interurban R. R. Co., 244 U.S. 499, 37 S.Ct. 673, 680, 61 L.Ed. 1280. As was said in Hammermill Paper Co. v. City of Erie, 372 Pa. 85, 92 A.2d 422, 425: This    is a method often employed. We are of the opinion that the Board in employing the services of an expert appraisal firm did not unlawfully delegate its duties, and that it committed no legal error in using the figure of 70 per cent of the Cleminshaw valuations. The third point made by plaintiff in assailing the assessment is that the methods of the Board in valuing Wilmington properties and in valuing new constructions was a different method from that employed by Cleminshaw; that the use of different methods to value property of like character is destructive to uniformity and in violation of the constitutional mandate, Art. VIII, § 1, that all taxes shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax; and that the entire assessment is therefore illegal. This argument ignores the fact that the 40 per cent increase in the valuation of the new construction by the Board of Assessment was specifically designed to insure uniformity. The following fact appears in the record: That the Board, commencing July 6, 1953, and to be completed on or about April 1, 1954, reassessed each piece of real property in New Castle County revalued by Cleminshaw at 70% of the valuation as determined by Cleminshaw and reassessed each such piece of real property previously valued and assessed by it by increasing its assessment 40%, the percentage of increase determined by the Board to be required to bring its prior assessment in line with the reassessments based on the Cleminshaw valuations. It thus appears that the Board, realizing that its own revaluations had not achieved uniformity with Cleminshaw's, determined that a 40 per cent increase in its valuations was required to secure uniformity. Having made such a determination, it made the necessary increase. The use of a general percentage of increase in similar situations has been approved. A like factual situation was presented to the court in the case of Citizens Committee etc. v. Warner, 127 Colo. 121, 254 P.2d 1005, 1009. This case involved a general reappraisement of properties in Pueblo County, Colorado. Valuations were determined as follows: `(b) On lands within the business districts of Pueblo, exclusive of improvements, the reappraisal value was used where such lands had been reappraised; where not reappraised because of time limitations, a uniform increase of 25% over the 1951 assessed valuation was added thereto in order that the 1952 assessed valuation thereon would be equalized with those that had been reappraised; `(c) That on all other real property within the said Pueblo County the reappraised values were used where made; in the Aberdeen area of Pueblo, the assessed valuations were increased such an amount as would equalize their value with that of similar property within the said City of Pueblo; on lands other than those above-mentioned, the 1951 assessed valuations were used by me in making up the 1952 assessment role for Pueblo County'. The Supreme Court of Colorado upheld the assessment. It said: From the foregoing it will be noted that all personal property was valued in accordance with the March 1, 1952, appraisal; that an unspecified portion of the lands in the business district had been reappraised, from which it was determined that the values thereby fixed were such as to require, as a mathematical calculation, a twenty-five per cent increase over the 1951 valuation on lands not reappraised, in order to equalize same with those that had; that on all other real estate, reappraised values were used where made, and in the Aberdeen area, the valuations were increased in such `amount as would equalize their value with that of similar property.' It is clear that, in the absence of actually completed reappraisal itself, every effort was made to attain equality and uniformity. from such calculations, based on the experience of reappraisal, the final results doubtless closely approximated what would have been shown by the completed reappraisal. As to the Wilmington properties, the plaintiff fails to show just what the Board did. It was obviously the duty of the plaintiff to adduce facts in support of her claim of discriminatroy methods of valuation. She has not done so, and her claim as to Wilmington must fail. In any general reassessment of real estate for the purpose of taxation uniformity is the important and vital end to be obtained. The requirement of uniformity in the rate of taxation necessarily requires a reasonable measure of uniformity in the method of valuation. Deliberate discrimination between the taxpayers in the valuation of similar property is a violation of the constitutional requirement. This principle is well settled and is not to be questioned. 51 Am.Jur. Taxation § 172. If the taxpayer can show that he has been discriminated against in such a manner, he has his remedy. The cases cited by the plaintiff are of this kind. See, for example, Raymond v. Chicago Edison Co., 207 U.S. 20, 28 S.Ct. 7; Utah-Idaho Sugar Co. v. Salt Lake County, 60 Utah 491, 210 P. 106, 27 A.L.R. 874; Cumberland Coal Co. v. Board of Revision, 284 U.S. 23, 52 S.Ct. 48, 76 L.Ed. 146. Nothing of that sort appears here. On the contrary, such evidence as is before us indicates that the Board adopted fair and reasonable methods to insure uniformity. This is all that is necessary. We are of opinion that none of the objections to the assessment is well taken. A final observation should be added. The Board of Assessment must certify to the Levy Court the total of its assessed valuation not later than May 1 (9 Del.C. § 8315) and the Levy Court must prepare its budget, fix the tax rate and levy the tax not later than May 15 (9 Del.C. §§ 8001-8003). Consequently, in the labor of briefing, arguing, and deciding this important case, counsel and the Court have been subject to severe pressure of time. This opinion has attempted to deal, as adequately as possible, with the many legal questions presented. Some subsidiary or incidental arguments have not been specifically dealt with, but they have not been overlooked. We are satisfied that the plaintiff's case has no legal merit. Order answering the certified questions in accordance with the foregoing opinion.