Court Opinion

ID: 9678977
Source: CourtListenerOpinion
Date Created: 2023-08-24 06:37:32.123555+00
Date Added: 2024-06-11T18:17:09.297345
License: Public Domain

Soubis, J.
(dissenting). I do not agree with Mr. Justice Adams’ opinion that if there he any evidence found in the record to support the findings of the State tax commission, that ends judicial review of the commission’s proceedings for errors of law. The commission’s proceedings, in my opinion, are sub*372ject to the same scope of judicial review provided by the administrative procedures act1 for other administrative agencies. That act establishes, in subsection 8(6) (e) thereof, the quantum of evidence necessary to sustain an agency decision. The standard established is that agency findings, inferences, conclusions, or decisions must be supported by competent, material and substantial evidence. It is not enough that there is in the record some evidence, a scintilla, to sustain the agency’s determination against an “errors of law” claim, as Justice Adams holds.
Applying the act’s requirements to the record of proceedings before the State tax commission, I conclude that the commission’s findings are not supported by competent, material, and substantial evidence and that they are contrary to the overwhelming weight of the evidence. Indeed, I conclude there is no competent evidence to support the commission’s decision. Therefore, I conclude that the commission’s decision based upon such unsupported findings constituted an error of law.
I.
The second paragraph of article 6, § 28 of our Constitution of 1963 limits the scope of judicial review of such proceedings:
“In the absence of fraud, error of law or the adoption of wrong principles, no appeal may be taken to any court from any final agency provided for the administration of property tax laws from any decisions relating to valuation or allocation.”
As I understand Justice Adams’ opinion, he does not dispute the proposition that the sufficiency of *373evidence to support a tribunal’s fact finding.is a question of law. In any event, in this State the sufficiency of evidence is a question of law appropriate to a reviewing court’s consideration even when review is by certiorari and, therefore, limited to errors of law. This does not mean that the reviewing court considers the evidence for the purpose of making its own findings of fact, hut only that the evidence is examined to determine, as a matter of law, whether it supports (by the standard set by law) the facts found by the tribunal whose action is being reviewed. In Jones v. Eastern Michigan Motorbuses (1939), 287 Mich 619, 643, Mr. Justice North, writing for six members of the Court, examined the issue at length in the context of this Court’s scope of review of nonjury law cases under former Court Rule No 64 (1933) (pp 647, 648) :
“Even when appeal in law cases was by the common-law writ of error, the long-established practice in this jurisdiction permitted review of testimony as to essential facts, if under such writ of error there was an assignment that the finding or judgment of the court was contrary to the clear or overwhelming weight of evidence. CL 1929, § 14266 (Stat Ann § 27.995); Kotzke v. Kotzke’s Estate, 205 Mich 184; Hamburger v. Bank of Detroit, 218 Mich 173. Under Court Rule No 64 (1933) in its review on appeal in nonjury law cases this court does nothing more nor less than to determine whether ‘the judgment is against the preponderance of the evidence’, in event such an assignment of error is urged. It is difficult to conceive how this practice under the rule upon appeal differs materially from the former practice of this court upon issuance of its writ of error. This is true notwithstanding decisions almost without number can be found wherein in substance it is stated that the writ of error brings up for review only questions of law, not questions of fact. * * *
*374“Under Court Rule No 64 (1933) it may be said that the determination by this court of whether the judgment is against the preponderance of the evidence’ is a question of law rather than one of fact. This is true because, generally speaking, a judgment in a law case which is entered in favor of the party having the burden of proof, notwithstanding the preponderance of the evidence is to the contrary, is a judgment entered in violation of law.”
In Jerry McCarthy Highland Chevrolet Company, Inc., v. Department of Revenue (1958), 351 Mich 558, this Court considered the nature of judicial review of an administrative agency’s decision in light of a statute which limited appeals to the circuit court to questions of law. Absent statutory authority to test administrative agency findings of fact on a great weight or similar standard, the Court concluded nonetheless that the evidence could be considered on review for errors of law to determine whether the record contained any competent evidence to support the facts found by the agency.
Article 6, section 28 of our Constitution does not specify the quantum of evidence necessary to sustain a finding of fact by agencies such as the State tax commission against a claim of error of law. Absent such specification in our Constitution or by statute, I would have to agree with Justice Adams, on the strength of McCarthy, supra, that the commission’s decisions reviewed for errors of law would have to be sustained if there were any evidence, competent evidence, that is, in the record to support the findings of fact upon which the decisions were based. That is the very least that due process requires. Dation v. Ford Motor Co. (1946), 314 Mich 152.
However, I have concluded that the administrative procedures act is applicable to State tax commission proceedings, notwithstanding Dossin’s Food Products, Inc. v. State Tax Commission (1960), 360 *375Mich 312, and that statute requires more than any evidence to sustain findings of fact made by administrative agencies when subjected to judicial review.
It is true that a majority of this Court held in Dossin’s, supra, that the administrative procedures act is not applicable to State tax commission proceedings. The majority reached its conclusion by finding conflict between the general property tax act,2 and the administrative procedures act, and by reasoning that the general property tax act is a specific statute; that the subsequently enacted administrative procedures act is a general statute; and that the repeal of a specific statute by a general statute will not be implied or assumed. At our invitation, the parties hereto have submitted supplementary briefs addressed to the issue whether Dossin’s holding that the State tax commission is not subject to the administrative procedures act should be overruled.
The dissenting opinion in Dossin’s continues to be more persuasive to me than the majority view. The fact is that this Court has overruled Dossin’s sub silentio, in In re Appeal of General Motors Corporation (1965), 376 Mich 373, 382, in which the Court, speaking through Justice Adams, unanimously ruled that the State tax commission was bound by the standards of proof provided by the administrative procedures act and that on remand of that case only such additional evidence should be considered as would be competent under the authority of section 5 of that act. No one suggests that the commission may be subject to some, but not all, provisions of that act.
The scope of judicial review of administrative agency decisions provided by section 8 of the admin*376istrative procedures act is not broader than the errors of law permitted by article 6, section 28 of our Constitution to be considered in reviewing State tax commission decisions. It does not seem to be disputed that the constitutional reference to “errors of law” is identical with the errors of law appropriate to consideration on review by certiorari. Mr. Justice Black, in dissent, in Imlay Township Primary School District No. 5 v. State Board of Education (1960), 359 Mich 478, 489,3 ably demonstrated that subsection 8(6) allows review only of questions of law, as on certiorari. He listed in the margin4 of his opinion the specific limitations subsection 8(6) imposed upon judicial review and stated his conclusion that each item of authorized review presented a question of law. Pertinent to the case at bar is the following reasoning from Justice Black’s opinion in support of his stated conclusion (pp 491-493):
“The appeal provided under section 8 is by petition. The petition, once it is filed and served and due return is made, brings up the administrative record as on certiorari issued by authority of section 2 of Court Rule No 43 (1945) (likewise author*377ity of art 7, § 10, Const 1908) to review tire allegedly grievous action of some ‘corporate body or board or officers thereof.’ As on certiorari issued under said section 2 the petition and returned administrative record bring to circuit no question of fact and authorize no determination, de novo or otherwise, of ‘factual issues.’ Listed in the margin are the specific limitations section 8(6) imposes upon judicial review. Each item of authorized review presents a question of law.
“Possibly my Brothers have assumed that subsection (e) — authorizing determination whether the questioned administrative decision is ‘contrary to the overwhelming weight of the evidence’ — authorizes judicial determination of an issue or issues of fact.. If that were so I would share the concern voiced in Mr. Justice Carr’s opinion. It is not so, however, and thus the alarm is false. Subsection (e) brings up questions of law only, it having been held — properly and with lengthily considered care — that the question whether there is any evidence of record supporting a finding of fact, or whether such finding is contrary to preponderance or (as here) ‘oyer-whelming weight’ of the evidence of record, presents a question of law and not of fact (Jones v. Eastern Michigan Motorbuses, 287 Mich 619; followed on this point in Barnes v. Beck, 348 Mich 286, 290). If such was not the law, a new and possibly unconstitutional task might have been cast upon the judiciary in every case where, by similar statute (section 38 of the employment security act is another example) the circuit court is called upon to determine whether an administrative decision satisfies the variously worded legal test of preponderant or overwhelming-weight.” !
Thus, subsection 8(6) (e) of the act establishes a quantum of evidence standard to be considered upon judicial review for errors of law broader than the otherwise applicable “any evidence” rule of the McCarthy Case, supra. The result is an error of law *378if the commission’s findings are “unsupported by competent, material, and substantial evidence in view of the entire record as submitted, or contrary to tbe overwhelming weight of the evidence.” Lest anyone be alarmed that judges hereafter will assert a right to determine facts de novo in section 8 proceedings, we could adopt here that special “Thou shalt not” commandment Justice Black proposed5 in his opinion in Imlay, supra.
II.
Applying the administrative procedures act’s quantum of evidence standard necessary to support agency decisions, I conclude that the State tax commission’s decision was predicated upon findings of fact not supported by competent, material, and substantial evidence and that its findings were contrary to the overwhelming weight of the evidence presented. Furthermore, as I read this record, the commission’s decision does not satisfy even the “any evidence” standard applied by Justice Adams. In short, I find no competent evidence to support the commission’s decision of valuation and assessment.
The commission valued taxpayer’s property on a capitalization of income basis. This clearly is demonstrated by the cross-examination of Robert Case, a commission appraiser, part of which is quoted in Justice Adams’ opinion, supra, p 356. While it is true that calculations were made of the reproduction cost of the' property, it is crystal clear from Mr. Case’s testimony and, as well, from the written decision .of the commission, also quoted in Justice *379Adams’ opinion, that the commission relied upon its capitalization of income calculations. In the written decision, reference is made to the reproduction cost appraisal merely as substantiation of the capitalization of income appraisal. But the commission’s own records and its witness’ testimony dispute the claimed substantiation. Its staff report discloses that taxpayer’s land was appraised at $5,688,-006 and its buildings, on a current reproduction cost basis before depreciation and obsolescence, at $51,-742,222. Mr. Case testified, on cross-examination by taxpayer’s counsel, that the reproduction cost was reduced by 50% for depreciation and that the resulting amount was reduced further by 50% for obsolescence. The 50% obsolescence factor was selected, rather than 40% or 60%, for example, in order to bring the reproduction cost figure down to the value previously determined on a capitalization of income basis. His testimony concerning the justification for the 50% obsolescence factor destroys any basis whatever for the commission’s claim that its computation of reproduction cost less depreciation and obsolescence “substantiated” its valuation by capitalization of income. The pertinent portions of that testimony are set forth in the margin.6
*380That means that the commission’s decision, if it is to be sustained from its own computations of value, must find evidentiary support from its capitalization of income appraisal and not from its reproduction cost appraisal. Mr. Case prepared the commission’s appraisal of value by capitalization of income. As far as the record before us discloses, only one other commission employee, David Riser, worked with Mr. Case on the capitalization of earnings appraisal, and be was not called as a witness. The *381appraisal, therefore, must stand or fall on the testimony offered by Mr. Case in its support. His testimony discloses that the report was based upon assumed facts, essential to its conclusion, for which there is no evidentiary support in this record and, therefore, that the commission’s adoption of its valuation conclusion as its own decision was an error of law requiring judicial reversal.
Justice Adams notes that all methods for determining- true cash value, including capitalization of earnings, require the exercise of judgment. Decisions based upon hunches, conjecture, factually unsupported assumptions, hardly can be described fairly as the exercise of judgment. Opinions or conclusions normally are not considered competent evidence unless they relate to matters beyond the ken of the fact finder, unless they are offered in the form of the opinion of an expert, and unless the factual basis for the expert’s opinion is supported in all essential respects by some evidence. This is not a matter of credibility; it is a matter of competence and, therefore, goes to the admissibility of the opinion evidence for any purpose.
Here, Mr. Case disavowed any pretense to expertise in the field of valuation by capitalization of earnings. His disavowal was more than a reluctance based upon false modesty to assert expertise; he affirmatively denied he was an expert.7 Whatever *382bis familiarity with appraisal procedures and manuals, bis own testimony supports bis disclaimer of expertise. Therefore, the commission’s staff report, of which be claimed authorship, because it is in its essential form an expression of opinion, of judgment, should not have been admitted in evidence and adopted by the commission as its own decision.
Even if we assume Mr. Case’s qualifications to offer opinion testimony, the underlying assumptions upon which his opinion is based are not supported by facts in this record. For example Mr. Case testified that he used a 5.5% rate of return as the base rate for capitalizing earnings to determine the value of taxpayer’s property. He admitted that the rate selected does not represent the average rate of return expected by a prudent investor in real estate; that he did not know of any sales of investment real estate made on the basis of a 5.5% rate of return;8 *383that it was, instead, the average rate then expected “in a prime return situation where there is very-little risk involved in the investment of money. *384* * # It takes into consideration all over investments, types of investments like bine chip stocks and municipal bonds and et cetera, et cetera, where money can be returned on a basis of its investment with very little risk involved in gaining this return.”
The only evidence in this record of the rate of return a prudent real estate investor in the Detroit area normally expected came from William it. Lued-ders, taxpayer’s expert witness, whose qualifications were conceded. Evidence was introduced through him of comparable contemporaneous actual real estate investments in and near Detroit at rates of return from 8.8% to 10.7%, free and clear net, that is, after property taxes but before depreciation.9 Mr. Luedders testified that in computing his valuation of taxpayer’s property by capitalizing earnings, he used a 9% free and clear net rate, stating that in his opinion it was a conservative rate of return.
*385The proper rate of return for capitalization purposes is the only disputed issue between taxpayer and the commission. They are practically in agreement on the only other element in the capitalization formula — the estimated earnings of the property before real estate taxes, the commission’s estimate being almost $50,000 less than the taxpayer’s. But the difference between 5.5% and 9% represents the difference in value between $19,460,667 and $13,588,-913, using Mr. Case’s estimate of earnings before property taxes and an allowance of 2.6% he added to the prime rate to compensate for property taxes.10
Absent any evidence to support use of Mr. Case’s 5.5% factor for capitalizing earnings on real estate investments,11 I conclude that the commission com*386mitted an error of law in using it. The only competent evidence put the rate between 8.8% and 10.7% free and clear net. I would, therefore, reverse the commission’s decision and remand for the purpose of recomputing the valuation and assessment of taxpayer’s property at a capitalization rate within that range in accordaance with the procedures described herein.
III.
I do not disgree with Justice Adams’ conclusion that there was sufficient evidence to support the commission’s determination that assessments in 1963, 1964 and 1965 were at about 50% of true cash value. Some of the evidence, indeed, was elicited during cross-examination by taxpayer’s counsel. That taxpayer offered strong evidence that the ratio was much lower does not merit reversal on this point, not because there was some evidence to support the commission’s finding but, rather, because we cannot say that it was contrary to the overwhelming weight of the evidence.
I do not agree with Justice Adams’ suggestion, however, that we can consider the commission’s claim that studies not a part of this record support its finding. If not made a part of the record of the commission’s hearing, they may not be used by the commission or by us. Nor do I believe it to be the taxpayer’s'burden to ferret out of the commission’s files all of the studies, reports, and other data that the commission conceivably might rely upon in *387reaching its decision. In proceedings before the State tax commission, a taxpayer has a difficult enough time as it is putting in his own case, rebutting the taxing municipality’s case and, as well, attacking the weaknesses in an adverse report of the State tax commission’s staff. See Pavilion Apartments, Inc., v. State Tax Commission (1964), 373 Mich 601. The shoe is on the other foot, and just as binding, when the taxing municipality is defending its assessment against a taxpayer’s objections and a report of the State tax commission’s staff adverse to it. This situation arises, as it does in some other administrative agency proceedings, because the contest sometimes is a tripartite one between the taxpayer, the taxing municipality and the commission’s own staff. It is exacerbated by the fact that the commission’s staff position in the dispute is not presented formally at the hearing by it or in its behalf by counsel but, rather, normally is elicited by the taxpayer or city whose position it supports. When the commission’s staff report supports neither of the principal contestants, as in this case of Fisher, absent an adversary presentation by the staff itself or on its behalf by counsel, it seems to me quite unrealistic to place the burden upon either of them to introduce in evidence all of the underlying data supporting the adverse staff report. In such circumstances, if the State’s interests are to be protected adequately and our concepts of due process not distorted, the commission’s staff must be represented actively as a party to the proceedings by counsel.
At the very least, however, if the commission’s staff is not represented at the hearing, the burden of introducing its report and supporting evidence, when in conflict with both of the principal contestants, should be placed squarely upon the commission. I thought we had decided in Pavilion, supra, that *388administrative agencies, specifically this very commission, were not entitled to “stray at will from the record in reaching [their] decision”. Mazza v. Cavicchia (1954), 15 NJ 498, 514 (105 A2d 545, 554), quoted in Pavilion, supra. Unless Pavilion means that the administrative agency must introduce formally in evidence all documentary and testimonial facts it intends to rely upon in making its decision, it means nothing of value to taxpayers or to taxing authorities. If it does not mean that, the taxpayer or taxing municipality must then ferret out of the agency’s files, if they can, every scrap of paper and other evidence the agency conceivably might use, even evidence adverse to their own claims, so that they can “challenge the validity of any studies, reports or findings of the commission’s staff, and * * * cross-examine the persons preparing the same,” in the words of Justice Adams, supra— even if they have no way of knowing then how the commission might in the future make use of the data found in reaching its decision! If that is what our decision in Pavilion means, it was a Pyrrhic victory for the taxpayer.
I would hold in this case that the commission, having failed to introduce in evidence its staff studies of assessment levels, was not entitled to consider them in reaching its decision.
IV.
I agree with Justice Adams’ opinion regarding the city of Detroit’s cross-appeal.
For the reasons set forth above, I would reverse and remand for the purpose of recomputing the valuation and assessment of taxpayer’s property at a capitalization rate within the range established by the competent evidence in this record as discussed *389in Part II of this opinion. I wonld also assess costs in favor of the taxpayer. , j
Dethmers, C. J., and O’Hara, J., concurred with Souris, J.

 CLS 1961, §24.101 et seq. (Stat Ann 1961 Rev § 3.560 [21.1] et seq.).

 PA 1893, No 206 (CL 1948, § 211.1 et seq. [Stat Ann 1960 Rev § 7.1 et seq.]).

 The Court’s majority in Imlay held that appeals from the State board of education were not subject to the administrative procedures act for very much the same reasons Dossin’s majority later held the State tax commission’s proceedings were not subject to the act. Justice Black, on the other hand, disagreed and, thus, turned to consideration of the nature of review provided by the act.

 “'(6) The [circuit] court may affirm the decision of the agency or remand the case for further proceedings; or it may reverse or modify the decision if the substantial rights of the petitioners may have been prejudiced because the administrative findings, inferences, conclusions or decisions arc:
(a) In violation of constitutional provisions; or
(b) In excess of the statutory authority or jurisdiction of the agency; or
(c) Made upon unlawful procedure; or
(d) Affected by other error of law; or
(e) Unsupported by competent, material, and substantial evidence in view of the entire record as submitted, or contrary to the overwhelming weight of the evidence; or
(f) Arbitrary or capricious.’ ”

 “Of course', if my Brothers are yet queasy or uneasy about judicial intentions, below, they eould insert a special 'Thou shalt not’ commandment in their opinion of concern; a general order that no circuit judge engaged in reviewing an administrative reeord under said section 8 may decide or determine anything aside from a point or points of law presented under said section 8, subd (6).”

 “Q. [Mr. Sonigman] Now, where is the amount that you have taken off for obsoleseenee, have you got any breakdown of that?
“A. [Mr. Case] The obsoleseenee factor in the report refers to 50% obsolescence in addition to a 2% per year rate of depreciation.
“Q. How did you arrive at the 50% obsoleseenee factor?
“A. From the ineome projections that we made to the value of the property to bring it down to the indicated current market value on the basis of the ineome projections that we made. * * *
“Q. Now, how is that done, will you explain that to me? What do you mean by 50%? 50% of what? Of the replacement cost?
“A. That’s correct, the depreciated replacement cost.
“Q. So first you figure the replacement eost, then you took a depreciation factor of what percentage, do you recall? * * *
“Q. So therefore as a matter of personal judgment you decided that 50% would be a sound depreciation factor?
“A. For this building, yes.
*380“Q. And then hoiv did you arrive at the 50% for obsolescence, explain it.
“A. We arrived at the 50% obsolescence by taking the reduction in value necessary to bring it down to the ineome approach on the value of the propety.
“Q. So in other words, using the income approach basis you arrived at a value that was less than the reproduction cost less depreciation, is that right?
“A. Considerably so.
“Q. How much was that valuation less than the reproduction cost less depreciation ? * * *
“A. $51,000,000.
“Q. $51,000,000 and then after depreciation you say you took off 50% as a matter of judgment, that got you down to $26,000,000, is that right ?
“A. Well, the figures I am quoting to you relate — include both the depreciation rate applied and the obsolescence factor applied to reduce the replacement eost figure of $51,000,000 down to the figure used of $13,870,000.
“Q. I understand that but I am trying to arrive — I am trying to demonstrate how you arrived at it, so if you will just listen to the questions we will get to the same answer. First, you divided the $51,742,000 in half, is that right? To get the depreciation?
“A. That was the depreciation deduction, correct.
“Q. And that gets you close to $26,000,000, is that right?
“A. Approximately.
“Q. All right. Then you cut that down by half again as an obsolescence factor to get the $13,870,000?
“A. That’s correct.
“Q. Now, what caused you to take the 50% figure for obsolescence?
“A. Well, in order for us to bring our appraisal down to the value that we arrived at from projecting the ineome of the property it was necessary, to apply that amount of obsolescence to bring it down to that range.
“Q,. Well, why was it necessary to use 50% instead of 40 or 60?
_ “-4. _ Well, if we used 40 or 60 then we would not be in correlation with our income projections as to the value of the property,”

 “Q. Mr. Case, in the preparation of your report you purported to be an expert on valuation on the capitalization of income method, did you not?
“Mr. Plisbow [counsel for the cityj : I will object to that, I don’t think Mr. Case ever said that he was an expert in any field, he was an employee of the State tax commission.
“Mr. Honigman: I want to know whether he is an expert or not, we are going to find out right now.
“Mr. Plisbow: You tried to make an expert of him.
“Mr. Honigman: He is going to have to make the elaim himself, one way or the other. I don’t care which it is.
“A, There are all kinds of definitions of expert but -I tMnk I *382have a number of years to go in the appraisal field before I will qualify as an expert.
“Q. So in your opinion, you are not expert on a capitalization of income method?
“A. Not an expert, no.
“Q. And your testimony would not — eould not be qualified as expert testimony for that purpose?
“A. I would say no.”

 Mr. Case’s eross-examination on this point reveals devastatingly the absence of any foundation for his use of the 5.5% prime money rate for capitalizing earnings on a real estate investment. It also reveals that the very appraisal manual he purported to use supports taxpayer’s evidence that the capitalization rate used should have been between 7% and 10%:
“Q. Do you know of any sales of investment real estate made on the basis of a 5.5% return?
“A. I haven’t been involved in the sales of any property.
“Q. Do you know of any? Just answer the question.
“A. No.
“Q. All right. Do you know what the prevailing rate of return from real estate investments in this type of property was during the time that you were making this appraisal? Will you answer yes or no. You either do or don’t know, Mr. Case.
“A. I would say yes.
“Q. You do know what was the prevailing rate of return on investment real estate property at that time?
‘■‘d- You are talking about overall rate?
*383“Q. Well, the word prevailing means the typical rate of return for this type of property expected by investors at this time, at the time you were making the appraisal.
“A. Well, this rate varies considerably depending upon the property itself.
“Q. What was the range of variance?
“A. I would say for an office structure between — depending upon what the situation is with the property — between 6 and 8%.
“Q. All right, then it is not 5.5%? 5.5%, you want to change now to 6 to 8, is that right?
“A. No, I am not going to change it. You asked me for a range and I gave it. I could just as well have said 5.5% to 8% depending upon the risk involved.
“Q. Do you know of any property that was bought at 5.5% during the period that you are talking of?
“A. No.
“Q. Do you know of any that was bought at 6%?
“A. No.
“Q. Or 7%? Do you know of any that was bought at 8%?
“A. No.
“Q. Do you know of any that was bought at 9%?
“A. No.
“Q. Do you know of any that was bought at 10% ?
“A. No.
“Q. Do you know of any that was bought at 15%?
“A. No.
“Q. So you don’t know of any sales of investment property and what investment return they showed in that general period?
“A. Well, we used as—
“Q. (Interposing): Just answer that, do you or don’t you? Yes or not. You either do or you don’t.
“A. "We took other comparable buildings into consideration and the sale of those buildings into consideration in this report.
“Q. Dine. Now, do you know of any buildings that you took into consideration?
“A. I would have to refer to my list in my report.
“Q. Will you take a look at the list in your report and toll us if you took any buildings into consideration?
“A. We listed 4 other buildings here that we had taken a look at the selling price: One was the Penobscot building, the other one was the United Artists building, Maccabees building and the Pirst National building.
“Q. All right. Do you know what rate of return was shown on each of these buildings?
“A. At the time of their sale and at the time I did this appraisal the rate of return, no it is not included in my report, I wouldn’t recall it.
“Q. So that at no time did you know what the prevailing investment expectancy was at the time you were making your appraisal?
*384“A. I would say only from our appraisal manuals tliat are available and I don’t recall ferreting out tbe rate of return on each individual building that we have included here in the report.
“Q. Do you know what manuals you used in cheeking for prevailing rates for capitalization of income method?
"A. Well, we used Boeckh’s Appraisal Manual and Marshall Stevens.
“Q. What do you know what figure Boeckh’s uses?
“A. For?
“Q. For an offiee building of this type.
“A. As I recall it ranges between 6 and 8%.
“Mr. Bonigman: Get Booekh’s Manual.
“Chairman Barr: We will take a 5-minute break for the girl.

“(Bearing recessed at 11 :S0 o’clock a.m.)

“After Becess

“Q. (By Mr. Bonigman): Let me show you, Mr. Case, Boeckh’s Manual, page 998, what percentage return does that show for this type of property?

“(extending manual to witness)

“A. For modern offiee buildings centrally located, well located high class, they show a range of office buildings of 6 to 10%.
“Q. And then it says 'older offiee buildings’?
“A. Older offiee buildings well located — 7 to 10 %.”

 The sales considered included the David Whitney building, Gris-wold building, First National building, Lafayette building, Book building, Dnited Artists building, and the Francis Palms building, all in Detroit; Pittsfield Village in Ann Arbor; and Federal department store in Ferndale. The sales occurred between 1957 and 1965 and ranged in sales price from $715,000 to $11,750,000.

 Because investments in real estate carry the burden of property taxes not payable on other investments, an allowance has to be made for such additional determinable expense item. Accordingly, Mr. Case added to his 5.5% prime money rate factor 2.6% as an allowance for property taxes, thus bringing up to 8.1% the factor to be applied to estimated earnings he/ore property taxes. The allowance was correctly made in light of evidence that the prevailing tax rate was $53 per thousand of assessed value and assessments were averaging 50% of true cash value. Mr. Luedders, on the other hand, deducted from his estimate of earnings the taxes actually imposed by the city and to the resulting net earnings af ter property taxes, ho applied his 9% free and clear net rate to determine value. However, the city taxes actually imposed were based upon the city’s inflated assessment which precipitated this litigation. To simplify matters for comparison purposes, we may use Mr. Case’s estimate of earnings before property taxes and his 2.6% allowance for such taxes added to Mr. Luedder’s 9% capitalization rate. The computations may be expressed thus:
100 ($1,576,314 — True Cash Value X .026) --!-g-g-$19,460,667
100 ($1,576,314 — True Cash Value X .026) - — ----g-$13,588,913

 The commission’s staff report prepared by Mr. Case has appended its district supervisors’ comments. They merit quotation in full for the light they east, even within the commission, upon the use of a 5.5% prime money rate in appraisal of this property:
“District Supervisors [’] Comments: The appraisal is primarily an income approach. The Cap. rate of 5-1/2% is rather low and it is doubtful if this building eould be sold for this even con*386sidering the benefits of depreciation. There is a possibility that the income can be increased over the $400,000 that we projected. Our appraisal also assumes a 50% assessment level. In this case a $3,500,000 reduction. It is extremely speculative that the net income could be increased to the $700,000 necessary to allow a yield on this of 7% which would give a 10% equity return plus the benefits-of depreciation.”