Opinion ID: 1198748
Heading Depth: 2
Heading Rank: 4

Heading: Constitutional Issues Publici Juris.

Text: The respondent assessors argue that even if they do not have standing under generally applicable law to attack the constitutionality of the statute and the State Board's orders, the matter is publici juris, and therefore, this court should determine the constitutional issues. This claim of public interest is based on the respondents' assertion that if taxpayers later succeed in challenging the constitutionality of the State Board's action, the counties' revenues will be insufficient. They argue that chaos could result if we do not determine whether the 1976 Act is constitutional. We deem the matter to be of sufficient public interest and importance to require that we consider two constitutional issues which have been fully briefed and ably argued by the parties and amici curiae.
It is asserted that the 1976 statute, by requiring county assessors to achieve any increase ordered by the State Board only by changes to individual valuations for assessments of property . . ., [11] effectively empowers the State Board to make original assessments in violation of Colo. Const. Art. X, Sec. 15. That section declares that the state board of equalization shall have no power of original assessment. Assessment is the act of placing a value for tax purposes upon the property of a particular taxpayer. Equalization, on the other hand, is the act of raising or lowering the total valuation placed upon a class, or subclass, of property in the aggregate. Equalization deals with all the property of a class or subclass within a designated territorial limit, such as a county, without regard to who owns the individual parcels making up the class or subclass. Assessment relates to individual properties; equalization relates to classes of property collectively. Union Pacific R. Co. v. Board of Commissioners, 35 F.2d 785, 790 (10th Cir. 1929) (interpreting Colorado law). Here the State Board did not attempt to single out or raise the assessed valuation of any individual taxpayer. That task was left to the county assessors. Rather the State Board dealt only with aggregate values, and . . . this cannot be deemed an act of original assessment. MacGinnis v. Denver Land Co., 90 Colo. 72, 77, 6 P.2d 919, 921 (1931). In our view the State Board's order here under consideration is not an original assessment. Nor does the statute under attack purport to authorize the State Board to make any original assessment. Quite the contrary, the statute, and the State Board's order, respect the county assessors' function of making original assessments. The statute plainly states that it is the assessor who is to make any changes to individual valuations for assessments of property [12] within each affected class or subclass. Neither the statute nor the State Board's order goes beyond requiring increases in aggregate valuation for assessment of any class or subclass of property affected. We hold that neither the statute nor the board's order offends the constitutional proviso that the State Board have no power of original assessment.
Respondent assessors and amici curiae have argued that the 1976 Act's requirement that increases ordered by the State Board be achieved by county assessors only by changing individual valuations for assessments of property [13] denies taxpayers due process. Therefore, they contend, the statute violates the Fourteenth Amendment to the United States Constitution and Colorado Constitution, Article II, Section 25. In essence, the respondents argue that due process requires limiting the State Board's authority to increase valuations only to horizontal increases, i. e., increases imposed proportionally on all property of a particular class or subclass in the county. It is asserted that the assessed valuation assigned to the property of an individual taxpayer may not be increased without proportionally increasing the assessed valuations of all property of that class in the county, unless the particular taxpayer whose assessment is raised is afforded a full due process hearing before the assessment increase. When called upon to declare a statute unconstitutional, courts must approach their responsibility with self-restraint born of recognition that the General Assembly which has solemnly enacted the statute is an equal, coordinate branch of government. Thus courts should never declare a statute void, unless the nullity and invalidity of the act are placed, in their judgment, beyond reasonable doubt. Milheim v. Moffat Tunnel District, 72 Colo. 268, 273, 211 P. 649, 651 (1922). As Chief Justice Pringle stated in People v. Sneed, 183 Colo. 96, 99, 514 P.2d 776, 778 (1973), courts do not seek reasons to find statutes unconstitutional. Rather, it is our duty to presume that the statute involved is constitutional. It is fundamental that one who asserts that a statute is unconstitutional has the burden of proving its invalidity beyond a reasonable doubt. See, e. g., Harris v. Heckers, 185 Colo. 40, 41, 521 P.2d 766, 768 (1974). Where alleged denial of due process is the ground of attack upon a statute, special considerations apply. Due process is not an absolute concept. In cases such as this one, due process requires balancing the individual taxpayer's right to a fair and timely hearing regarding the increase in his assessment against the public necessity for fair assessment and prompt payment of taxes in all the counties of the state. The essence of due process is fair procedure. But no particular or perfect procedure is required so long as the elements of opportunity for hearing and judicial review are present. We are not unmindful of the General Assembly's efforts over many years to achieve statewide parity of property valuation for tax assessment purposes. Unless all county assessors value taxable property in their respective counties at approximately the same percentage of its actual valuation, the property tax falls more heavily, and therefore unfairly, on those who own property in counties where the assessors have followed the legislative mandate. Therefore, in balancing the equities for due process purposes, one factor we consider is that the 1976 Act apparently is a one-time catch-up provision designed to force county assessors who habitually have undervalued property to evaluate and assess on the same basis as other counties. It should be noted that this opinion must be read in the context of this 1976 Act and its limited application. We recognize, too, that the due process standard is less stringent where the threatened taking involves property rights than where it involves personal liberty. Thus in a situation analogous to this case, the United States Supreme Court observed: Where only property rights are involved, mere postponement of the judicial enquiry is not a denial of due process, if the opportunity given for the ultimate judicial determination of the liability is adequate. . . . [citing cases]. Delay in the judicial determination of property rights is not uncommon where it is essential that governmental needs be immediately satisfied. . . . Phillips v. Commissioner of Internal Revenue, 283 U.S. 589, 596-97, 51 S.Ct. 608, 611, 75 L.Ed. 1289, 1297 (1931). See also Mitchell v. W. T. Grant Co., 416 U.S. 600, 611, 94 S.Ct. 1895, 1902, 40 L.Ed.2d 406, 416 (1974). The gist of the due process argument, asserted on behalf of taxpayers by the respondents and amici curiae, is that a taxpayer who might be unfairly treated when the assessor makes the adjustment in his assessment as required by the statute, will have no right to a hearing and judicial review before paying the tax. [14] Stated more broadly, the due process issue is whether the total statutory scheme provides an adequate opportunity to contest and appeal an upward adjustment in an assessment when the adjustment was not a result of the assessor's original valuation for that year but was required after review by the State Board. The statutes provide in detail for a notice, protest and appeal procedure through which a taxpayer may contest a county assessor's original assessment and obtain judicial review if desired. Sections 39-5-122, 39-5-129, 39-8-102 to 109, C.R.S.1973. This procedure, however, does not apply here, not only because the times specified in the statute have passed, but also because here we do not deal with an assessor's original assessments. Rather the potential increases here in contention will result from adjustments ordered by the State Board rather than original assessments. Where a tax is erroneously or illegally levied, the statutes, through an abatement and refund procedure, provide the taxpayer a right to protest to the county treasurer and a full hearing before the county commissioners followed by access to the courts after exhausting the statutory administrative remedies. See sections 39-1-113 and XX-XX-XXX, C.R.S.1973. One of the grounds for abatement or refund expressed in section 39-10-114 is erroneous valuation for assessment. For the reasons discussed below, we hold that this procedure fully protects the due process rights of taxpayers adversely affected by the 1976 Act and the State Board order. In an analogous situation involving the federal income tax, the Supreme Court held that due process was not denied by requiring a taxpayer to pay the tax and claim a refund as a prerequisite to litigating the validity of the tax. Dodge v. Osborn, 240 U.S. 118, 120-22, 36 S.Ct. 275, 276-77, 60 L.Ed. 557, 559-560 (1916). As stated in Phillips v. Commissioner of Internal Revenue, 283 U.S. 589, 595, 51 S.Ct. 608, 611, 75 L.Ed. 1289, 1296 (1931): Where, as here, adequate opportunity is afforded for a later judicial determination of the legal rights, summary proceedings to secure prompt performance of pecuniary obligations to the government have been consistently sustained. [Citing cases.] Property rights must yield provisionally to governmental need. . . . In Phillips the Court held: Where only property rights are involved, mere postponement of the judicial enquiry is not a denial of due process, if the opportunity given for ultimate judicial determination of the liability is adequate. Id. at 596-97, 51 S.Ct. at 611, 75 L.Ed. at 1297. [15] Similarly, where a taxpayer complained that the county assessor had failed to give the required timely notice of an increased assessment, thus depriving it of its statutory right to litigate validity of the assessment before paying the tax, no federally guaranteed rights were abridged because the Colorado statutes allowed the plain, adequate and complete remedy of litigating the right to a refund after paying the taxes. Singer Sewing Machine Co. v. Benedict, 229 U.S. 481, 33 S.Ct. 942, 57 L.Ed. 1288 (1913). This court has consistently held that failure to provide a hearing and review before adjustments by the State Board of Equalization take effect does not constitute a deprivation of property without due process of law. E. G., People v. Hively, 139 Colo. 49, 59, 336 P.2d 721, 727 (1959). See also Colorado Tax Commission v. Pitcher, 56 Colo. 343, 369, 138 P. 509, 518 (1914) where we declared the rule that actual notice to the individual taxpayer is not required as a condition precedent to action by state boards of equalization. . . . In the very recent case of Modular Communities, Inc. v. McKnight, Colo., 550 P.2d 866 (1976), we rejected a contention similar to that here urged. There the taxpayer, in May, 1971, had received from the county assessor a mailed notice that the assessed valuation on its mobile home park was $192,320. However, on January 1, 1972, the taxpayer received a tax bill indicating the tax was based on an assessed valuation of $352,050. Upon inquiry, the taxpayer was told that the $159,730 increase in assessed valuation was correct and the notice it had received seven months earlier had been erroneous. The taxpayer paid the tax and filed a district court action seeking a refund. It complained that the seven-month delay in giving notice of the increased assessment deprived it of the normal procedures for protest and review. This court held, however, that the abatement and refund remedies provided after payment of the tax are adequate where the taxpayer's knowledge of the excessive charge is acquired subsequent to the usual statutory deadlines for protests. 550 P.2d at 867, citing the predecessor of section 39-10-114, C.R.S.1973. In our view these abatement and refund remedies are likewise adequate to answer the due process questions raised here. The respondent assessors and amici curiae argue, however, that the taxpayer's right, after the assessor raises his assessment in response to a State Board order, to seek abatement or refund, is not adequate because the taxpayer is not afforded an opportunity to contest an assessment increase which the taxpayer claims is higher than it should be but which is admittedly not illegal or erroneous. They argue that the procedures for protesting an original assessment allow taxpayers to dispute the assessor's valuation on the mere ground that it is too high, and that due process is denied in the statutory abatement and refund procedure because it allows litigation only if the taxes have been levied erroneously or illegally. Section 39-10-114, C.R.S.1973. For this proposition the respondents rely on a dictum in Northcutt v. Burton, 127 Colo. 145, 254 P.2d 1013 (1953). There, in interpreting the predecessor of section 39-10-114, [16] this court said: The term `erroneous assessment' as used in this section, implies more than mere over-assessment and refers to a tax levy that for any reason is wholly illegal or invalid. 127 Colo. at 152, 254 P.2d at 1017. However, no such issue was before the court in that case. Northcutt was a taxpayers' suit seeking to prohibit county officers from enforcing an allegedly void property reappraisal. It was not a tax abatement or refund action, and thus the court was not called upon to decide the scope of section 39-10-114's predecessor section. [17] The statute in plain terms clearly provides administrative remedies for correction of any substantial injustice resulting from erroneous valuation for assessment of a taxpayer's property. These remedies are made available both before and after payment of the tax. The statute provides: Abatement, cancellation of taxes. (1) If taxes have been levied erroneously or illegally, whether due to erroneous valuation for assessment, irregularity in levying, or clerical error, the treasurer shall report the amount thereof to the board of county commissioners, who shall proceed to abate such taxes in the manner provided by law. If such taxes have been collected by the treasurer, the board of county commissioners shall authorize refund of the same in the manner provided by law. Section 39-10-114(1), C.R.S.1973. In addition, section 39-1-113 provides the taxpayer a hearing on his abatement and refund claim before the county commissioners. Upon exhaustion of these administrative remedies, the taxpayer may file suit in district court. Normally, by the time this occurs, the tax due date will have arrived, and therefore, the usual procedure is to pay the tax under protest and sue for a refund. Holly Sugar Corp. v. Board of Commissioners, 10 F.2d 506, 507 (D.Colo.1926); Kendrick v. A. Y. & Minnie Mining & Milling Co., 63 Colo. 214, 164 P. 1161 (1917). Due process does not require that exactly the same procedures and remedies be afforded one who pays the tax and then seeks a refund as are granted to one who litigates before paying the tax. For example, the federal income, estate and gift tax laws provide an administrative review in the Internal Revenue Service followed by a non-jury trial in the tax court prior to paying the tax, but to gain access to the United States District Court or obtain a jury trial, the taxpayer must pay the tax and sue for a refund. [18] We decline to follow the dictum in Northcutt which narrowly restricted the abatement and refund remedies, since section 39-10-114 in plain language allows an abatement and refund remedy based on an erroneous valuation for assessment. [19] Therefore, the abatement and refund remedy is plenary, and no due process denial is here involved. Practical considerations, as well as constitutional law principles, support the result here reached. The respondent assessors' argument boils down to the contention that individual taxpayers' respective assessed valuations cannot be adjusted upward by the county assessor following State Board review of the county assessment roll, without according every taxpayer the full panoply of month-by-month protest and statutory review procedures provided following each year's assessment. Not only because of the time schedules involved, but also because of the sheer number of the taxpayer, such a rule would impose impossible obligations on taxing authorities. As Mr. Justice Holmes declared in Bi-Metallic Co. v. Colorado, 239 U.S. 441, 445-46, 36 S.Ct. 141, 142, 60 L.Ed. 372, 375 (1915): Where a rule of conduct applies to more than a few people it is impracticable that every one should have a direct voice in its adoption. The Constitution does not require all public acts to be done in town meeting or an assembly or the whole. General statutes within the state power are passed that affect the person or property of individuals, sometimes to the point of ruin, without giving them a chance to be heard. Their rights are protected in the only way that they can be in a complex society, by their power, immediate or remote, over those who make the rule. . . . There must be a limit to individual argument in such matters if government is to go on. A writ in the nature of mandamus is appropriate. The rule is made absolute. GROVES, J., specially concurs. KELLEY, J., does not participate.