Court Opinion

ID: 3511849
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:22:38.411486+00
Date Added: 2024-06-11T13:09:40.453372
License: Public Domain

1 Reported in 269 N.W. 37.
Defendant appeals from the order denying its motion for a new trial in the delinquent tax proceedings to enforce the taxes for the years 1932 and 1933 as to lot 105 in block 17, Duluth Proper, Third Division, commonly known as Nos. 617-619, West Superior street, in the city of Duluth. The defenses were excessive valuation of the lot and discrimination. By stipulation the 1933 tax is to abide the decision in respect to the 1932 tax, since there is no assessment of real estate in the odd-numbered years. There was no evidence offered of discrimination, and the sole assignment of error attacks the finding that the true and full value of the lot was $13,500 as not sustained by the evidence. It is conceded that the building thereon was of the value assessed, viz., $2,000.
The lot in question, 50 by 140 feet, is on the upper or northerly side of West Superior street, about in the middle of the block between Sixth and Seventh avenues west. It is improved by a one-story brick building of 50 by 50 feet. There is no basement or heating plant. It is divided into four stores, each with a frontage of 12 1/2 feet. The rear of the lot is rocky and slants upward to the alley, which is well above Superior street at that point. The assessor assessed the true and full value of the lot, exclusive of the building, at $18,650.
1 Mason Minn. St. 1927, § 1980, contains the rules to be applied in the taxation of all property, among which this, in subd. 5, is here pertinent: *Page 117 
" 'True and full value' shall mean the usual selling price at the place where the property to which the term is applied shall be at the time of the assessment; being the price which could be obtained therefor at private sale, and not at forced or auction sale."
And § 1992, as far as here applicable, provides:
"All property shall be assessed at its true and full value in money. In determining such value, the assessor shall not adopt a lower or different standard of value because the same is to serve as a basis of taxation, nor shall he adopt as a criterion of value the price for which the said property would sell at auction or at a forced sale, * * * but he shall value each article or description of property by itself, and at such sum or price as he believes the same to be fairly worth in money," etc.
In 1927 § 1992-1 was enacted, reading:
"It shall be the duty of every assessor and board, in determining the value of lands for the purpose of taxation and in fixing the assessed value thereof, to consider and give due weight to every element and factor affecting the market value thereof, including its location with reference to roads and streets and the location of roads and streets thereon or over the same."
Of course the statutory directions for the assessors are also for the courts when it comes to finding the true and full value of property in delinquent tax proceedings.
It is plain from the statutes above quoted that the aim is to assess property at its market or sales value as distinguished from its cost price or intrinsic value. A lot or parcel of land may be improved by an expensive manufacturing structure capable of producing great revenue when built, but conditions may have changed so that it cannot be operated except at a loss, and it has only a wrecking value. Such a case was presented in State v. Russell-Miller Milling Co. 182 Minn. 543, 235 N.W. 22. But where there has been a long continued financial depression which has so affected real estate that no sales or dealings in real estate have taken place in the vicinity of the lot or parcel of land to be valued for assessment *Page 118 
purposes, it is almost impossible to ascertain the market or sales value thereof. When property does not move, whether from want of willing sellers or willing buyers, its sales value in money must necessarily become much a matter of judgment based upon many factors, whose weight may not influence alike the minds of persons qualified to judge. The one upon whom the duty eventually falls to determine such value must fix it "at such sum or price as he believes the same to be fairly worth in money." When the court finds the value of real estate in a delinquent tax proceeding such finding must be based upon the testimony adduced at the trial. It is not for this court to overthrow the finding of value of the trial court unless manifestly against the weight of the evidence.
Defendant called two real estate agents as to value, Stephenson and Bowman. Stephenson, who had had charge of the property for some years, had tried to sell it for $6,500, but received only a tentative offer of $5,500, with a down payment of $500. The deal did not go through. The net rentals for the years 1931 to 1934 averaged only $199.50 a year. It does, however, appear that at intervals each store rented for from $20 to $40 a month. It might seem that the division of the building into four narrow stores affected the rentability thereof. Mr. Stephenson valued the property at $6,000 and Mr. Bowman as high as $6,500. This included the building. Of late years Mr. Bowman had also engaged in other business than real estate. Mr. Stephenson was apparently a young man of limited experience in business. The state called the assessor, Mr. Scott, and his assistant, who testified that they considered the true and full value of the lot in May, 1932, to be $18,650. Mr. Scott had been assessor of the city of Duluth for 25 years. He had been in the real estate business in Duluth for 20 years preceding becoming assessor. He kept track of transfers and sales as recorded so as to be in touch with values. His assistant had been such for more than ten years, appraising particularly improvements as they were made. At intervals he had done work for the state tax commission, appraising for taxing purposes lands in certain municipalities and taxing districts. The record discloses also that this property was assessed in 1914 for more than $44,000. It concededly was at one *Page 119 
time sold for $40,000, was mortgaged for $15,000, later for $10,000, and in 1930 for $6,000, through the foreclosure of which mortgage defendant obtained title, bidding it in at the sale for $6,087. It should also be stated that the lot fronts the main business street of the city and is near the depot and wharfs. The new federal buildings and the courthouse are within a very short distance. On each corner of block 17 is a hotel, The Lennox, on the southeasterly corner, being a substantial six-story building. It is true that Scott and his assistant both admitted that they did not know whether or not the property could be sold for $7,000. It appears that much of the business property on Superior street is under long-term leases, which may account for the scarcity of sales of titles in fee. The witnesses agreed that for years there had been no sales of which they had knowledge in said block 17, or in adjoining block 18, or in the immediate vicinity, which could serve as a guide to the sales value of the lot in question. Although there are no sales to establish market value of lands, they must be assessed. As said in State v. Fritch, 175 Minn. 478, 479,221 N.W. 725, 726:
"Taxes have to be levied, and to that end assessors must make valuation of real estate every two years regardless of whether any of the lands could or could not then be sold. * * * Where there have been no actual sales for a long period of time, there is no way of determining values except by the judgment and opinion of men acquainted with the lands, their adaptability for use, and the circumstances of the surrounding community. The trial court could also take into account the qualification of the witnesses and their attitude towards the litigants."
The three cases in this state cited and relied on by defendant are In re Taxes of Potlach Timber Co. 160 Minn. 209,199 N.W. 968; State v. Russell-Miller Milling Co. 182 Minn. 543,235 N.W. 22; State ex rel. City of South St. Paul v. McNiven, 183 Minn. 539, 237 N.W. 410. In the first two the finding of value was held not sustained. In the Potlach Timber Company case, by a divided court — three to two — the commissioners did not have a vote. In the Russell-Miller Milling Company case the chief value was in the improvements *Page 120 
— the mill. Conditions had so changed that the mill, though once very profitable, could not be operated except at a loss, and unsuccessful efforts had been made to sell the property for one-third of the court's valuation. In that case the assessor as a witness admitted that he had taken the intrinsic value instead of the sales value in making the assessment. The McNiven case is not in point, for there the decision of the tax commission in reducing an assessment was sustained.
Defendant and amici curiae stress the consideration to be given the income derived from improved property in fixing its sales value, and to that end cite State ex rel. N.W. Mut. L. Ins. Co. v. Weiher, 177 Wis. 445, 188 N.W. 598, quoted from with approval both in the Potlach and the Russell-Miller cases. Of course income is a large factor in arriving at sales value of property; it is not the sole criterion. And the Weiher case is not an authority for overthrowing the finding of the court here. There the court's finding of value of the building was sustained. The assessment of the land upon which the building stood was not questioned. The assessor had valued the building principally on its intrinsic value and not on its sales value. Because real estate is improved and its income can be determined, it must still be assessed on its market or sales value the same as its adjoining unimproved parcel. The facts that go to establish sales value in the one case must also do so in the other insofar as proved.
We think sufficient from the contents of the record has been pointed out to show that the evidence sustains the finding of the trial court that defendant's lot, exclusive of the building, was of the true and full value of $13,500 on May 1, 1932.
The order is affirmed.