Court Opinion

ID: 9629352
Source: CourtListenerOpinion
Date Created: 2023-08-22 09:41:03.185856+00
Date Added: 2024-06-11T18:07:18.037155
License: Public Domain

McFADDEN, Chief Justice
(dissenting).
The record before this court discloses that the appellant Janss Corporation had been negotiating with the Union Pacific *932Railroad Company for a period of some six months prior to the time that the sale of the real property generally denominated “Sun Valley” was consummated on December 10, 1964. The record discloses that this was an “at arm’s length” transaction between these two large corporations, with the purchase price of the real property involved in this proceeding being approximately $1,800,000. The respondent has presented no evidence which would in any way denigrate that this price was arrived at by the two corporations dealing at arm’s length, with no residual considerations, conditions, or agreements whatsoever. Within a month of the date of this transaction, by law the property of the county was to be assessed, i. e., on January 10, 1965, which assessed valuation would be the basis for the computation of the tax rolls for the year 1965.
Prior to 1965, the valuation of this property as assessed to the Union Pacific Corporation was approximately $4,000,000. When the assessment notices for 1965 came out in the spring of 1965, the assessed valuation on this property was in excess of $4,000,000. Negotiations were commenced on behalf of the appellant for an adjustment of this figure and continued for some extended length of time and eventually the assessed valuation of the real property was set at $3,089,000 for 1965, i. e., as of January 10, 1965.
The taxes based on this valuation were paid under protest for the year 1965, and again for the year 1966. However, Blaine County, represented by its then assessor, suggested that it would be too great a load on the county to reduce the assessment level on this property from the four million dollar figure to approximately two million dollars in the one year, and appellant corporation then recognized the burden that would be cast upon the county if such a drastic reduction took place, and it was agreeable to the appellant corporation' that with the additional construction to be commenced during the months following, there would be a levelling off of the assessed valuation, and did agree to not press its protest of the assessed valuation for 1965, but that it would still feel free to press for readjustment of the figure for 1966.
The issue presented by this appeal is primarily whether the actual cash purchase price of an extensive real estate development such as Sun Valley should be given a dominant role in determination of the assessed valuation of the property for tax purposes.
It is my conclusion that the trial court, as well as the assessor and state tax commissioner, erred in their approach to a resolution of this issue, which error is compounded by the majority opinion of this court.
The trial court in its findings of fact determined that for the tax year of 1965 the appellant and the county assessor of Blaine County, together with representatives of the State Tax Commission made a thorough examination of the property and agreed that the full cash value of the property involved for the tax year 1965 for tax purposes was the sum of $3,089,-000; that during the period from December 1964 through the beginning of the tax year '1966 the property involved greatly increased in value; that the county assessor correctly determined the full cash value of the property for 1966 as the sum of $3,089,000 and that there was insufficient evidence presented to establish any different value for the property of that year of 1966.
The parties to this action stipulated that the trial court should hear the appeal from the State Tax Commission on the transcript of the proceedings before that body, together with all exhibits and all county records and work sheets. Thus the findings of fact of the trial court are not binding on this court on appeal. Jaussaud v. Samuels, 58 Idaho 191, 71 P.2d 426 (1937); Hale v. McCammon Ditch Co., 72 Idaho 478, 244 P.2d 151 (1951); D & M Development Co. v. Sherwood & Roberts Inc., 93 Idaho 200, 457 P.2d 439 (1969).
*933The county assessor who was in office in 1966 and who made the assessment for that year, by affidavit filed in the district court, stated:
“ * * * The real property assessment on the property located in Blaine County which had been purchased by the Janss Corporation in December, 1964, was assessed as of January 1, 1965, by the Assessor of Blaine County, Jack Irwin, at a figure of $3,089,000. During the year of 1965 physical additions, (lodge-condominiums) were made which were assessed at their actual sale price. The Blaine County Assessor’s office did not, however, change the assessment on the property beginning with the 1st day of January, 1966. The basic purchase was continued at an assessment of $3,089,000 as was stated in the hearing because it did not appear that there had been any change in value on those portions of the property which had not been improved during that year.”
Ir_ a subsequent affidavit, the assessor explained the last sentence of the foregoing quotation, as follows:
“By this statement affiant intended to mean that all depreciation attributable to such property for the tax year 1966, beginning January, 1966, had been completely offset by ‘cost to cure’ improvements and by general property value increases during the preceding year.”
The statutes of this state provide that all property within this state not expressly exempted is subject to taxation (I.C. § 63-101), and during 1965 all real and personal property subject to assessment and taxation must be assessed at its full cash value (I.C. § 63-102.) The term “cash value” (or “value” or “full cash value”) meant the value of the property would be taken in payment of a just debt from a solvent debtor, or the amount the property would sell for at a voluntary sale made in the ordinary course of business (I.C. § 63-111). When there is a sale at arm’s length between'a willing buyer and a willing seller, as of the time of such sale there is but little need to resort to any “appraisal” of the property, for there is a price which has been established, and as was stated in Anderson’s Red & White Store v. Kootenai County, 70 Idaho 260, at 265, 215 P.2d 815 at 818,
“We have a number of statutory provisions intended to guide and direct the assessor in making assessments. Those which may be considered directly involved here are: Secs. 63-102, 63-111, 63-202, 63-1203, 63-1206, and 63-1207, I.C. These statutes indicate that, for ad valorem taxation, all property is to be assessed at its ‘full cash value’ as of the date of the assessment. Property which is bought and sold for cash on the current market has a market value, which, as to such property, becomes the dominant factor in its valuation. Secs. 63-111 and 63-202, I.C. As to property which has no current market, other factors (such as earning power, replacement cost less depreciation, or consensus of opinion of taxpayers, Sec. 63-202, I.C.) become the more important. * *
See also: Appeal of Sears, Roebuck & Co., 74 Idaho 39, 256 P.2d 526 (1953).
In C. C. Anderson Stores Co. v. State Tax Com’n, 91 Idaho 413, 422 P.2d 337 (1967), this court again recognized the principle that “property which is bought and sold for cash on the current market has a market value, which as to such property, becomes the dominant factor in its valuation." (Emphasis added.) 91 Idaho at 415, 422 P.2d at 339.
Respondent urges, however, that there was no current market for this property —that it was a resort, unique in scope and plant, and hence there was no “market value,” and thus the other factors must be employed in determining its valuation for assessment purposes. However there was a “market” for this property as was evidenced by the fact that it was sold, at a sale untainted by any side agreements, conditions or residual considerations. In such a situation, it is my conclusion that a true “cash value” was established by such sale, *934which under the statutes and the prior decisions of this court was the true value of the property as of the date of sale. This situation is significantly different from a fact situation involving a recent isolated sale of a similar property, rather than the property which is being assessed. In such cases, it truly cannot be said that such an isolated sale of a similar property establishes the market value of the assessed property. The statutory date for the valuation of this property was the second Monday of January (I.C. § 63-102), and under the facts here, that date was January 11, 1965. Unless there was some material change between the date of sale, December 10, 1964, and January 11, 1965, it is difficult to reconcile the action of the taxing authority in allocating only 30% weight to the actual sale price.
It is recognized that a valuation established by a sale is meaningful only as of the time of sale, and that as time passes, other elements come into play: depreciation, additions, improvements, changing economic conditions on a national or local level or both, and the many other factors. As time passes, the dominant role of the original sale price becomes of lesser importance.
The amendments to the various statutes enacted in 1965 (S.L.1965, Ch. 312), effective December 31, 1965 (S.L.1965, Ch. 312, § 34), in my opinion did not materially change the emphasis or weight to be given sale price in attempting to establish, valuation of the property for purposes of taxation. The Tax Commission in conformity with I.C. § 63-202 as amended by S.L.1965, Ch. 312, § 9, enacted regulations effective January 1, 1966, dealing with real property valuation. In part those regulations provide :
, "For ad valorem tax purposes, the appraiser is concerned with determining the full cash value of a given property. Recognized techniques have been developed which, when properly used, should reflect full cash value. When a market is non existent, these techniques, if properly used, will approximate the value.
These techniques are:
The Cost Approach, or Summation Method * * *
The Income Approach, or Income Capitalization Method
The Market Data Approach, or Comparative Method * * (Emphasis added.)
The Tax Commission recognized that the ultimate objective was first to determine "full cash value.”
In State ex rel. Park Investment v. Board of Tax Appeals, 175 Ohio St. 410, 195 N.E. 2d 908 (Ohio Sup.Ct. 1964), the court stated in reply to the question presented of what is the value or true value in money of real property:
“In the last analysis the value or true value in money of any property is the amount for which that property would sell on the open market by a willing seller to a willing buyer. In essence, the value of the property is the amount of money for which it may be exchanged, i. e., the sales price.
Respondent urges that the sales price is only one of many things which must be taken into account in determining value.
The confusion in the area of valuation arises from a failure to differentiate between the ultimate result which is sought to be attained, namely, the value of the property in question, and the methods which may be used to determine such value in the absence of an actual sale.
The best method of determining value, when such information is available, is an actual sale of such property between one who is willing to sell but not compelled to do so and one who is willing to buy but not compelled to do so. (Citations omitted.) This, without question, will usually determine the monetary value of the property. However, such information is not usually available, and thus *935an appraisal becomes necessary. It is in this appraisal that the various methods of evaluation, such as income yield or reproduction cost, come into action. Yet, no matter what method of evaluation is used, the ultimate result of such an appraisal must be to determine the amount which such property should bring if sold on the open market.” 195 N.E.2d at 910.
See also: Selig v. Board of Revision, Mahoning County, 12 Ohio App.2d 157, 231 N.E.2d 479, 483-484 (Ct.App.Ohio, 1967); 29 Am.Jur.2d Evidence § 395 p. 445-6.
In this case the assessor who valued the property for 1966 employed the same criteria used for the 1965 assessment, which established the base price. If the base price was in error for 1965, this error was carried over to the valuation in 1966. It is my conclusion that the judgment of the trial court should be reversed, and the determination made as to the valuation in 1966 based on a correction of the 1965 valuation, even though there was no protest pursued as concerned the 1965 taxes paid.
McQUADE, J., concurs in this dissent.