Court Opinion

ID: 9567351
Source: CourtListenerOpinion
Date Created: 2023-08-21 19:52:50.683584+00
Date Added: 2024-06-11T10:00:33.624140
License: Public Domain

Schroeder, C.J.,
dissenting: In my opinion, the petitioner has failed to sustain his burden of proof, and the constitutional validity of K.S.A. 1981 Supp. 79-343 should be upheld. A construction of the specific statute involved as well as recognition of this court’s traditional commitment to upholding legislation if possible dictate that result. A comparative analysis of three Martin opinions further illustrates my position: State ex rel. Stephan v. Martin, 227 Kan. 456, 608 P.2d 880 (1980) (hereafter referred to as Martin I); the opinion herein, State ex rel. Stephan v. Martin, (hereafter referred to as Martin II); and State ex rel. Stephan v. *770Martin, 230 Kan. 747, 641 P.2d 1011 (1982) (hereafter referred to as Martin III).
This case (Martin II) is before the court on a stipulation of facts. The court in its opinion concedes as much. 230 Kan. at 760. The first five stipulations concern merely a recital of the parties and references to the constitution and the enactment of 1981 Senate Bill No. 26, now K.S.A. 1981 Supp. 79-343. The stipulation of facts material herein then further provides:
“6. Respondent must presume the constitutionality of statutes and, unless a court of competent jurisdiction declares unconstitutional the provisions of 1981 Senate Bill No. 26, Respondent will proceed to act under the authority of the provisions of section 1 of 1981 Senate Bill No. 26.
“7. The Kansas Supreme Court has original jurisdiction in proceedings in quo warranto, pursuant to Article 3, Section 3 of the Kansas Constitution and K.S.A. 60-1202, but where substantive factual questions are presented, the Supreme Court may transfer an original action to the appropriate district court or dismiss the same, pursuant to Rule 9.01 of the Rules of the Supreme Court.
“8. Exhibit A, attached to the petition, is a true copy of Senate Bill No. 26, as signed by the Governor and certified by the Secretary of State.
“9. At this time, the Director of Property Valuation has not prepared nor distributed any guide to be used in 1982 for the valuation of farm machinery and equipment.
“10. At this time, no county appraiser or any other person has appraised or assessed any personal property under the provisions of 1981 Senate Bill No. 26.
“11. The 1981 Kansas Legislature was aware of the case of State ex rel. Stephan o. Martin, 227 Kan. 456, 608 P.2d 880 (1980) and the provisions of K.S.A. 1979 Supp. 79-342, which were held to violate the provisions of art. 11, § 1 of the Kansas Constitution therein.” (Emphasis added.)
No material facts, other than those quoted above, and no other evidence are before the court in this case, except the following. On motion of the attorney general an order was entered which permitted the filing of complete copies of the 1981 Kansas Appraisal Guide for Miscellaneous Personal Property and the 1981 Kansas Appraisal Guide for Construction Equipment. The court can take judicial notice of these guides because they are official state documents prepared by a state official. The respondent, director of property valuation, also filed an affidavit with his answer to the petition which reads in part:
“That, as of this date, affiant has not completed the personal property guides for farm machinery and equipment required to be devised or prescribed under the provisions of K.S.A. 75-5105a and 1981 Senate Bill No. 26. Affiant further states that, when issued and distributed pursuant to law, said farm machinery and equipment guides will instruct county appraisers to apply all pertinent statutory *771factors enumerated in K.S.A. 79-503, in valuing farm machinery and equipment, if the guides does not properly take any or all of such factors into account for the purpose of valuing such equipment at fair market value in money.”
My reasons for noting this affidavit will be discussed later.
K.S.A. 1981 Supp. 79-343, pertinent to construction of the act, reads:
“(a)(1) The fair market value for all powered farm machinery and equipment, for the purposes of ad valorem taxation, shall be the average loan value of such machinery and equipment in its model year of manufacture, based upon nationally published guides or other trade sources, hereinafter referred to as the initial value thereof, reduced by 10% of such value per year of age from the model year of manufacture of such machinery and equipment, not to exceed a total of 80%
“(2) The fair market value for all non-powered farm machinery and equipment, for the purposes of ad valorem taxation, shall be the average loan value of such machinery and equipment in its model year of manufacture, based upon nationally published guides or other trade sources, hereinafter referred to as the initial value thereof, reduced by 20% of such value per year of age from the model year of manufacture of such machinery and equipment, not to exceed a total of 80%
“(3) The fair market value determined for farm machinery and equipment under the foregoing provisions shall be utilized in the personal property guides devised or prescribed by the director of property valuation under the provisions of K.S.A. 75-5105a, and amendments thereto, and furnished to the counties for use in valuing such property for taxation.
“(4) It shall be the duty of the county appraiser to value all farm machinery and equipment utilizing the guides devised or prescribed by the director of property valuation based upon values established under the provisions of parts (1) and (2) of this subsection except that the appraiser shall deviate from the value so established when the value assigned to such property in accordance with parts (1) and (2) of this subsection does not reflect the fair market value of the particular property involved as provided for by parts (1) and (2) of this subsection.
“(b) The term ‘farm machinery and equipment’ shall not include any passenger vehicle, truck, truck tractor, trailer, semitrailer or pole trailer, other than a farm trailer, as said terms are defined by K.S.A. 1980 Supp. 8-126 and amendments thereto.” (Emphasis added.)
Application of rules of construction frequently stated and applied by the Supreme Court of Kansas to give effect to the legislative intention expressed in a statute requires a determination that the uniform and equal requirements of Article 11, Section 1, of the Kansas Constitution are not violated. The court, however, goes completely outside the record in its opinion in this case to muster evidence on its own and, based on such evidence, finds the provisions of K.S.A. 1981 Supp. 79-343 are in substance the same as the provisions of K.S.A. 1979 Supp. 79-342, held to be *772unconstitutional in Martin I. The court quotes at length (four full pages) from that opinion. 227 Kan. at 458-62.
The legislature in K.S.A. 1979 Supp. 79-342 directed the county appraiser to determine fair market value of farm machinery and equipment by utilizing the estimated average value of farm machinery and equipment as indicated by the 1979 Kansas Appraisal Guide for farm machinery and equipment as devised and prescribed by the director of property valuation. The estimated average value was assumed to be the fair market value from which the county appraiser was directed to subtract 20%, before assessing it at 30% of fair market value pursuant to K.S.A. 79-1439. Martin I, 227 Kan. at 460, 462-63.
The court, by way of advice to the legislature, said in Martin I, 227 Kan. at 466:
“This law is inseparably linked to the appraisal guide; if the legislature found the guide was wrong, action should have been taken to correct the guide.” (Emphasis added.)
Thereafter, the 1981 Kansas Legislature, in its wisdom, determined that the farm machinery and equipment guide prescribed by the director of property valuation pursuant to K.S.A. 75-5105a did not establish the fair market value in money for farm machinery and equipment. Accordingly, the legislature enacted Senate Bill No. 26, now K.S.A. 1981 Supp. 79-343.
It is well established that courts must presume the legislature will not do a vain act. At the time the legislature enacted K.S.A. 1981 Supp. 79-343, this court’s ruling in Martin I had been made, and the opinion w’as available to members of the legislature who presumably were guided by that opinion in enacting K.S.A. 1981 Supp. 79-343.
K.S.A. 1981 Supp. 79-343, in contrast to K.S.A. 1979 Supp. 79-342, is not a legislative attempt to start with fair market value and reduce the assessment by any percentage. It is rather an attempt to legislatively establish a mode of determining the actual fair market value. K.S.A. 1981 Supp. 79-343 provides that the property valuation director shall establish the average loan value of farm machinery and equipment in its year of manufacture, and annually therefrom deduct a percentage set forth in the statute. The petitioner is arguing that this method simply cannot lead to fair market value of any given piece of farm machinery or equipment. This conclusion is not supported by substantial competent *773evidence because the appraisal guide for farm machinery and equipment has not been published. K.S.A. 1981 Supp. 79-343 does not tell the property valuation director how to determine the average loan value. He is directed to take into consideration in determining the average loan value “nationally published guides or other trade sources” and base his determination as to average loan value on those sources of information. However, until and unless this court can examine those nationally published guides or “other” trade sources, this court cannot conclude, as a matter of law, that the method of arriving at the value of farm machinery and equipment provided for by K.S.A. 1981 Supp. 79-343 will not result in a valuation which reflects fair market value.
K.S.A. 1981 Supp. 79-343 differs in other respects from K.S.A. 1979 Supp. 79-342. The previous legislation, for example, provided for different valuations of identical items of personal property depending upon the occupation of the owner of that property. K.S.A. 1981 Supp. 79-343 does not contain that questionable distinction.
K.S.A. 1979 Supp. 79-342 was clearly enacted for the purpose of reducing the personal property tax burden upon farmers, a specific class of property owners. It was enacted to reduce the value upon which the personal property tax would be based. Since the act did not apply to all other forms of property, the court concluded that it established a different basis of assessment for farm machinery and equipment and therefore was unconstitutional. From the language of K.S.A. 1981 Supp. 79-343, it can be seen the legislative purpose here was not to reduce the tax burden on any given class of property owners, nor was the purpose to provide for a different basis of assessment for farm machinery and equipment. The purpose was merely to provide for what the legislature believed to be an acceptable and reasonable mode of assessment or method of determining fair market value.
Nowhere in the legislative enactment under consideration is the director of property valuation or the county appraiser instructed to ignore the provisions of K.S.A. 79-503 or any other statute made incumbent upon them by the legislature in making a determination of fair market value for purposes of ad valorem taxation. In fact, the director of property valuation is specifically enjoined to utilize the “initial value” to prepare the personal property guides “under the provisions of K.S.A. 75-5105a” in *774subparagraph (a)(3) above. In K.S.A. 79-503 the taxing officials are given the general definition of fair market value and told by the legislature:
“Sales in and of themselves shall not be the sole criteria of fair market value but shall be used in connection with cost, income and such other factors as may be appropriate including but not by way of exclusion:
“(a) The proper classification of lands and improvements;
“(b) the size thereof;
“(c) the effect of location on value;
“(d) depreciation, including physical deterioration or functional, economic or social obsolescence;
“(e) cost of reproduction or improvements;
“(f) productivity;
“(g) earning capacity as indicated by lease price or by capitalization of net income;
“(h) rental or reasonable rental values;
“(i) sales value on open market with due allowance to abnormal inflationary factors influencing such values; and
“(j) comparison with value of other property of known or recognized value. The ratio study shall not be used as an appraisal for appraisal purposes." (Emphasis added.)
All statutes relating to any given subject matter must be read in pari materia; that is, each statute must be read in light of other statutes dealing with the same subject matter, and each must be interpreted, if possible, in such a fashion as to be consistent with those other statutes.
In K.S.A. 79-503 the appraiser is directed to utilize those factors enumerated which are applicable in determining fair market value, but those factors are “not by way of exclusion.” Here, in K.S.A. 1981 Supp. 79-343 the legislature added another factor to be utilized — the average loan value. Clearly, this is an appropriate other factor authorized by K.S.A. 79-503 and its addition was within the legislative domain. No evidence has been presented by the petitioner that utilization of average loan value on farm machinery and equipment as a factor to consider will lead to an improper determination of fair market value in money. The petitioner’s position is simply that the 1981 enactment under consideration is unconstitutional per se.
Throughout K.S.A. 1981 Supp. 79-343 is the legislative theme that the average loan value of farm machinery and equipment shall be utilized in devising and prescribing the personal property guides for farm machinery and equipment by the director of property valuation which are to be furnished to the counties for *775use in valuing such property for taxation. The statute does not direct that the values determined in accordance with part (1) and (2) of Section (a) be the sole or exclusive considerations made by the director in developing the personal property guides. In Webster’s Third New International Dictionary (1961), “utilize” is defined as:
“To make useful; turn to profitable account or use.”
It was the legislative intent that, in preparing the guides for assessment of farm machinery and equipment, the director make use of the figures derived by the method prescribed in the statute as a starting point in developing the guides. This interpretation is further substantiated because the legislature specifically refers to the average loan value ascertained by the director as the initial value.
Once the personal property valuation guides are forwarded to the county appraiser for use, the county appraiser is under a duty to “utilize” the guides in valuing farm machinery and equipment. The county appraiser is not bound simply to perform the ministerial or clerical function of assigning the figures in the published guides to various pieces of farm machinery and basing the tax assessments upon those figures. If any schedule published by the director of property valuation does not accurately reflect fair market value, the county appraiser is under a duty to deviate from that schedule and to value the property in accordance with the statutory criteria.
This court, in Garvey Grain, Inc. v. McDonald, 203 Kan. 1, 12-13, 453 P.2d 59 (1969), observed:
“[I]t would hardly seem necessary to state that if an assessment schedule failed to direct local taxing officials to consider and apply any pertinent statutory factors in determining justifiable value, the schedule would be erroneous as a matter of law. And if through adherence to that manifestly unlawful schedule, the evidence showed the assessor made a palpably excessive overvaluation of the property to be assessed, such act, although made in good faith, would be illegal and amount to constructive fraud or the equivalent of fraud on the rights of the taxpayer.”
Absent evidence to the contrary, it must be presumed that public officials will follow the law. It therefore must be presumed that the director of property valuation will take into consideration all of the statutory factors applicable in determining the values to be published in the appraisal guide for farm machinery and equipment. This is consistent with the affidavit filed by the *776respondent, the director of property valuation. It must also be presumed the county appraiser will take into consideration all of the statutory factors applicable in valuing farm machinery and equipment.
A legislative enactment providing a mode of assessment to establish fair market value is subject to attack as being invalid per se only if it can be shown that the method prescribed in such legislation cannot, as a matter of law, arrive at fair market value. This court has recognized many times that the legislature may exercise its sound discretion in establishing differing modes of assessments for different kinds of property. Such a legislative enactment will pass muster so long as the rate of taxation is equal, so long as the method of assessment and classification is reasonable and not arbitrary, and so long as the basis of assessment is equal. Bank v. Geary County, 102 Kan. 334, 170 Pac. 33 (1918); Hunt v. Allen County, 82 Kan. 824, 109 Pac. 106 (1910); In re Page, 60 Kan. 842, 58 Pac. 478 (1899); Comm’rs of Ottawa Co. v. Nelson, 19 Kan. 234 (1877); Francis, Treas., v. A.T. & S.F. Rld. Co., 19 Kan. 303 (1877); Gulf Railroad Co. v. Morris, 7 Kan. 210 (1871). The mere fact that there are differing modes of assessment, or modes of arriving at fair market value, does not render a statutory method void as contrary to Article 11, Section 1 of the Kansas Constitution, so long as the mode of assessment is reasonably calculated to arrive at fair market value.
There is nothing inherently wrong with the use of a depreciation schedule in determining the fair market value of property for taxation, unless it can be affirmatively shown that depreciated values are substantially different than fair market value.
Much of the personal property valued for tax purposes in the State of Kansas is valued on a depreciation schedule of one type or another. For example, the 1981 Kansas Appraisal Guide for Construction Equipment has on the inside cover sheet of that guide, the following paragraph:
“The County Assessors must adjust either up or down the valuation produced by applying the state guide, if in his judgment such an adjustment is necessary in order for him to comply with the statutory requirements of assessing said property at thirty per cent of its fair market value in money.”
The introduction page contains the following statement as the fourth paragraph:
“For equipment not listed in the guide, it is necessary to secure the ‘current model year retail selling price’ and adjust with the following schedule:
*777EQUIPMENT NOT IN GUIDE
Model Year 1981 80 79 78 77 76 75 74 73 72 71
Percent Good .80 .65 .60 .55 .50 .45 .40 .35 .30 .25 .20”
Thus, a depreciated value method is used in determining the fair market value for purposes of ad valorem tax for construction equipment.
The use of a depreciation schedule in valuing other types of personal property in Kansas is not uncommon and is a generally accepted way of arriving at fair market value. Legislative acts are presumed to be constitutional, and the petitioner has the burden of proving them otherwise. See State, ex rel., v. Fadely, 180 Kan. 652, 308 P.2d 537 (1957); Associated Rly. Equipment Owners v. Wilson, 167 Kan. 608, 208 P.2d 604 (1949); State, ex rel., v. Board of Regents, 167 Kan. 587, 207 P.2d 373 (1949). If there is any reasonable way to construe legislation in such a fashion that it is constitutionally valid, the court must adopt such a construction. See Syl. ¶ 1 in the court’s opinion.
An analysis of the law applied in making a determination of the constitutionality of the statute in this case will reveal, in my opinion, an inconsistency with the determination of constitutionality in other similar tax statute cases. Within this term of the Supreme Court, the attorney general argued two quo warranto actions filed against the director of property valuation: Martin II, and Martin III, 230 Kan. 747, 641 P.2d 1011 (1982). In both of these quo warranto actions our court was called upon to construe the respective legislative enactments to determine whether they met the uniform and equal requirements of Article 11, Section 1 of the Kansas Constitution. In other words, the taxation of tangible personal property, here farm machinery and equipment (Martin II), and the taxation of oil and gas leases and properties (Martin III), does not fall within any of the allowable constitutional classifications or exemptions. Therefore, that taxation is subject to K.S.A. 79-101, which states:
“All property in this state, real and personal, not expressly exempt therefrom, shall be subject to taxation in the manner prescribed by this act.”
K.S.A. 79-329 through 79-334 as amended set forth the various statutory provisions for listing, valuation and assessment of oil and gas leases and properties; 79-329 declares such leases and properties to be personal property; 79-501 provides for all real *778property and tangible personal property to be appraised at fair market value; 79-503 defines fair market value while 79-1439 provides that all such property shall be appraised uniformly and equally at its fair market value in money as defined in 79-503 and assessed at 30% thereof. See Martin III, 230 Kan. at 754. K.S.A. 79-1412a sets forth the duty of the county appraiser to supervise the listing and assessment annually of all real estate and personal property in the county subject to taxation except state assessed property.
Martin III was presented to the court on a stipulation of facts, as was the case in Martin II. In Martin III the court confined its opinion to the facts stipulated; whereas, in Martin II the court went outside the record to muster evidence on its own. The court did not recite it was taking judicial notice of evidence outside the record because “nationally published guides or other trade sources” are not publications concerning which the court can take judicial notice. The court, however, cites a reference merely “for example” and then makes a finding in the following language:
“The average loan values shown throughout the guide are nearly 30% less than the average resale prices and about 15% less than the average ‘as is’ prices. It is readily apparent that the average loan value, while having some correlation with fair market value, is not the price ‘a well informed buyer is justified in paying and a well informed seller is justified in accepting.’ See K.S.A. 79-503.” (Martin II, 230 Kan. at 767.)
In Martin III the court liberally construed the act and recognized the interpretation the director of property valuation placed on the act. In Martin II the court narrowly construed the act and made no mention of the director’s affidavit or a similar statement made in his response to the petition.
Martin III indicates the extent to which the court will go in upholding legislation. Further illustration of the extent to which the court will go to uphold legislation in recognizing the authority of the legislature is State ex rel. Tomasic v. Kansas City, Kansas Port Authority, 230 Kan. 404, 636 P.2d 760 (1982). There the legislature gave certain taxpayers a complete exemption from ad valorem taxes covered under the same constitutional provision considered by the court in this case.
Consistency in application of rules of construction when the constitutional validity of a legislative enactment is under consideration would require holding K.S.A. 1981 Supp. 79-343 consti*779tutional and giving the ad valorem taxpayers in Martin II and Martin III equal treatment.
It is respectfully submitted K.S.A. 1981 Supp. 79-343 should be held constitutionally valid.