Court Opinion

ID: 9518709
Source: CourtListenerOpinion
Date Created: 2023-08-07 00:59:58.962513+00
Date Added: 2024-06-11T12:31:17.639391
License: Public Domain

Mr. Justice House dissenting: A leasehold cannot have a value as high as the fee since the fee value is the sum of the leasehold value plus the value of the reversion. Admittedly the assessor assessed the leasehold as the value of the fee. Therefore, the assessment was necessarily too high. I must dissent. The majority opinion does not attempt to justify the assessor’s use of fee valuation, but, instead, applies an artificial formula by capitalizing and discounting the rentals reserved in the lease which produces a higher leasehold valuation than did the assessor. This method is foreign to the plain wording of the statute. Section 20(2) of the Revenue Code (Ill. Rev. Stat. 1965, chap. 120, par. 501(2),) reads: “Each taxable leasehold estate shall be valued at its fair cash value, estimated at the price it would bring at a fair, voluntary sale.” Fair cash value has always been held by this court to be synonomous with fair cash market value. Here, the fair cash market value to be determined is the value of the leasehold, not the value of the fee. The statute never contemplated the value of rental payments to measure the value of the leasehold in such a manner as to result in a leasehold value equal to, or in excess of, the fee value. It specifically provides that the leasehold be valued “at the price it would bring at a fair, voluntary sale.” (Emphasis added.) The seemingly easy answer that the assessor’s fee value is too low is not available. It was fixed in conformity with fee values of other real property and to single out this property for a higher percentage of value would be a violation of uniformity. (There may be a question of the legality of classification in singling out certain leasehold interests for taxation while exempting others, but the question is not raised and cannot at this time be pursued.) It seems obvious that a leasehold interest cannot have the same value as the fee interest of the property upon which the lease is granted. To the lessee, rental payments are a liability assumed by it in order to obtain possession of the facilities. It violates all principles of taxation to impose an assessment measured solely by a liability which produces a greater valuation than the fee itself. The ultimate test is the fair cash value of the leasehold in the open market with the rental burden to be assumed by the purchaser. As presented, I agree that American’s leasehold is not exempt from taxation, but I strongly disagree with a method of fixing valuation which produces a higher value than the fee. The record is not sufficient to determine the value of the taxable leasehold and the cause should be remanded for application of the relevant facts to the principles of leasehold valuation pointed out. In the event it is too late to now rectify the situation here, I would urge that in the next case involving this problem we return to principles long established.