Opinion ID: 2261399
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Heading Rank: 3

Heading: The Reasonableness of The Assessed Value

Text: Shawmut Inn further challenges the 1975 assessment of its property upon the grounds that, assuming that the appraisal techniques utilized that year by the local assessors were valid, their conclusion as to the valuation of the Shawmut Inn property is unreasonable because it was not supported by competent evidence. Specifically, the Plaintiff contends that its property was valued in excess of its just value because the assessors failed to consider a number of important factors. Three of the arguments advanced by the Plaintiff merit discussion. A presumption of good faith and conformity to the requirements of the law attaches to assessors' work. Sweet, Inc. v. City of Auburn, supra, 134 Me. at 33, 180 A. at 805; Frank v. Assessors of Skowhegan, supra at 171. To overcome this presumption, the taxpayer must show that the judgment of the assessors as to the amount of the tax was irrational or so unreasonable in the light of the circumstances that the property is substantially overvalued and an injustice results, or that there is an unjust discrimination, or that the assessment was in some way fraudulent, dishonest or illegal. Sears, Roebuck & Co. v. Inhabitants of the City of Presque Isle, 150 Me. 181, 189, 107 A.2d 475, 479 (1954). Initially Shawmut Inn argues that in determining value by the cost approach, the assessors failed to adequately depreciate the property. It points out that according to the Assessors' Cards, reductions from cost were given for physical depreciation and functional obsolescence, but that no reduction was given for economic obsolescence. The Town's witness, Scrontras, testified that the one factor reflected on the Assessors' Cards next to the space for economic obsolescence indicates that the assessors considered, but gave no value to, that depreciation factor. The contention of Shawmut Inn is that in valuing property by the cost method, a reduction must be given for economic obsolescence and that where such a reduction is not given, the assessed value is necessarily in excess of the just value of the property. We do not agree. Depreciation, like the market value of property, cannot be proved with mathematical certainty and must ultimately remain in the realm of opinion, estimate and judgment. Kittery Electric Light Co. v. Assessors of the Town of Kittery, supra, 219 A.2d at 738. We reaffirm the principle that The proving of a mere error of human judgment, . . . will not support a claim of overrating; `there must be something moresomething which in effect amounts to an intentional violation of the essential principle of practical uniformity.' Shawmut Manufacturing Co. v. Town of Benton, 123 Me. 121, 130, 122 A. 49, 53 (1923) (quoting with approval the words of Chief Justice Taft in Sioux City Bridge Co. v. Dakota County, 260 U.S. 441, 447, 43 S.Ct. 190, 192, 67 L.Ed. 340, 343 (1923).) See also, Frank v. Assessors of Skowhegan, supra at 174; Sweet, Inc. v. City of Auburn, supra, 134 Me. at 33, 180 A. at 805. The local assessors, with their special knowledge of local economic conditions, were in the best position to evaluate the effect of economic obsolescence on the value of the Shawmut Inn property. The record is clear that the assessors gave consideration to this element of depreciation, but concluded that a reduction should be given only for physical depreciation and functional obsolescence. We find their judgment controlling on this point. The second contention of Shawmut Inn is that the local assessors failed to consider a serious sewerage problem which would have drastically reduced the market value of the Inn in 1975. The record does not support that contention. Abbott Pendergast, a Kennebunkport assessor, testified that the assessors were indeed aware of the sewerage problem. We can assume that the local assessors considered the problem in reaching their conclusions. Frank v. Assessors of Skowhegan, supra at 171. It is the third contention of Shawmut Inn that the sale of its capital stock on April 3, 1975, is the best evidence of the market value of the Inn as of April 1, 1975. Shawmut Inn further argues that the weight of this evidence is not diminished by the fact that the sale was effected by the sale of the corporation's stock, since the subject property constituted the corporation's only substantial asset. The sale price of property has been regarded by courts as having varying degrees of evidentiary weight in determining the property's value for tax assessment purposes. For instance, in Ohio it has been held that the best evidence of true value of real property is an actual, recent sale of the property in an arm's-length transaction. Conalco, Inc. v. Monroe County Board of Revision, 50 Ohio St.2d 129, 130, 363 N.E.2d 722, 723 (1977). In New Hampshire the sale price of a piece of property stands as evidence of its value in a tax abatement action unless it is found that the sale was not consummated in a fair market. Poorvu v. City of Nashua, 118 N.H. 632, 633, 392 A.2d 138, 139 (1978). See also Annot., Sale Price of Real Property as Evidence in Determining Value for Tax Assessment Purposes, 89 A.L.R.3d 1126 (1979). We have defined market value as the price a willing buyer would pay a willing seller at a fair public sale. Frank v. Assessors of Skowhegan, supra at 173. An actual sale, we have observed, shows what is paid, not what is the exact value. A sale may represent sentimental value or value as an investment, possible future value, or it may represent use, location, or any one or more of many things. Sears, Roebuck & Co. v. Inhabitants of the City of Presque Isle, supra, 150 Me. at 188-89, 107 A.2d at 479; Sweet, Inc. v. City of Auburn, supra, 134 Me. at 32, 180 A. at 804-05. We agree that a recent public sale of real property is evidence of market value. Cf. Kittery Electric Light Co. v. Assessors of the Town of Kittery, supra at 737. The weight to be given to the sale price, however, depends upon the petitioner's ability to show that the sale price was indicative of the price a willing buyer would pay in a free and open market. In the case before us we cannot give the April 3, 1975, sale price the controlling weight for which Shawmut Inn contends. The fact remains that the sale was consummated between shareholders in a close corporation. We have no way of knowing what price the same property might have brought had it been offered for public sale. We conclude there has been no showing that the assessed value of the Shawmut Inn property, as reduced by the local assessors upon the Plaintiff's petition for tax abatement, was so unreasonable as to violate the constitutional mandate of justness and equality. The Superior Court did not err in denying Shawmut Inn's appeal from the County Commissioners' refusal to grant a further abatement. The entry will be: Remanded to the Superior Court for entry of an order dismissing the appeal as to Assessors of the Town of Kennebunkport and Commissioners of the County of York. Appeal denied. Judgment affirmed. All concurring.