Court Opinion

ID: 8193722
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:16:52.339681+00
Date Added: 2024-06-11T16:40:26.540999
License: Public Domain

Crownhart, J.
(dissenting). The Northwestern Úutu-al Life Insurance Company’s building in Milwaukee was valued by the assessor for the year 1921 at $2,750,000. This valuation was contested by the company before the board of review, and such valuation was sustained. The record was taken on certiorari to the circuit court, Edward T. Fairchild, Judge, and the circuit court reduced the assessment to $1,700,000.
’The building was commenced in 1911 and completed in 1915 at a construction cost of $3,156,228. It was specially *451designed and built to meet the requirements of the insurance company. There is nothing in the record to indicate that the building is not in every way satisfactory for the purposes for which it was built.
The city of Milwaukee has'a tax commissioner and an engineering department, experts in taxation matters.
The question presented for decision in this case must be approached in the light of well-settled principles' of law governing the jurisdiction of courts in reviewing the findings of boards of review on certiorari. The duties of boards of review are quasi-judicial and courts have no jurisdiction to disturb their findings or determinations except where they act in bad faith or exceed their jurisdiction. Brown v. Oneida Co. 103 Wis. 149, 79 N. W. 216. Judicial review of the action of boards of review on certiorari extends only to jurisdictional errors. State ex rel. Miller v. Thompson, 151 Wis. 184, 138 N. W. 628; State ex rel. M. A. Hanna D. Co. v. Willcuts, 143 Wis. 449, 128 N. W. 97. If a board of review does not act arbitrarily or dishonestly and the evidence presented before it is sufficient to furnish any substantial basis for the valuation found by the board, its decision will not be disturbed. State ex rel. Kimberly-Clark Co. v. Williams, 160 Wis. 648, 152 N. W. 450.
Under the limitations fixed by the above authorities, the controlling questions in the instant case are:
(1) Did the board of review act arbitrarily or dishonestly in assessing the relator’s property ?
(2) Was there any evidence presented before the board of review which would reasonably sustain the assessment it made?
The record is entirely barren of any evidence indicating that the board of review acted arbitrarily or dishonestly. On the contrary, there is ample evidence that the district assessor who appraised the property, and the members of the committee who co-operated with him, carefully examined it and endeavored to fix its value in the same manner *452and on the same basis as other property of like character throughout the city. The unit value used was the same as that applied to other office buildings, except as this assessment was reduced to allow for a difference in location. The effect of this course was to equalize the assessment of the relator’s property with that of other office buildings in the city, and there is no evidence to show that this class of property was assessed on any different or higher basis than the general mass of property in the city. The question of whether either the assessor or the board of review acted arbitrarily or dishonestly may therefore be dismissed.
The relator’s chief complaint is that the rule adopted for determining the value of its building was that of original cost and not what it would ordinarily bring at private sale, but the plain inference from the record is that the element of cost was used in connection with other factors for the purpose of arriving at selling value. The building in question was located and constructed to meet the special needs of relator’s business and has been constantly used by it since erected. For this reason the relator has never offered to sell the property and has received no offer for it. In other words, there was no established market value for the property. Under these circumstances both the assessor and board of review were compelled to resort to other elements, and in doing so the original cost of construction and an estimate of the cost of reproduction were naturally sought, but neither of them was used exclusively in fixing the value. On the contrary, the assessment was materially less than the original cost and from twenty-five per cent, to forty per cent, below the estimated cost of reproduction in present condition. Moreover, the fifty-three cents per cubic foot unit value used was not derived from the cost of constructing this particular building, but is the average unit cost for office buildings generally in the city of Milwaukee. As most of these buildings were of less expensive type than relator’s building, it cannot complain of the unit price used.
*453In the absence of an established market value, original and reproduction cost are proper elements to be considered, especially in the case of a building recently constructed, in good condition and in present use, for the purpose for which it was built. Cost is recognized as an important factor in valuation by all authorities on the subject and is not without sanction in law. “Cost of construction and acquisition, though not an incontestable evidence of exchangeable value, is nevertheless almost always an important particular in the mass of circumstances laying the basis of a rational judgment touching the value of anything as an. article of sale.” 1 Cooley, Taxation, 756; Sloan v. Baird, 162 N. Y. 327, 56 N. E. 752; State ex rel. Gisholt M. Co. v. Norsman, 168 Wis. 442, 169 N. W. 429.
Moreover, the assessment in the instant case was not determined on the basis of cost exclusively, but location and other conditions were taken into account. The fact that the final valuation arrived at is substantially less than either original cost or replacement cost in present condition sufficiently shows that other factors were considered. I conclude from the foregoing that the evidence produced before the board of review in support of the assessment made was amply sufficient to sustain it.
Evidence was offered by the relator tending to show that the assessment was excessive, couched in the statutory language of sec. 70.32, prescribing the basis of valuation for assessment purposes. But when the witnesses were requested to explain how they arrived at the values to which they testified, it developed that their judgments were based upon what the building in its present form would yield if the inclosed office space were rented on an estimated square-foot basis. This method of valuation contemplates a use of the building in its present condition, exclusive of corridor and vault space, for ordinary office purposes, and excludes the possibility of sale or rearrangement to increase the earning capacity. It ignores the monumental character of *454the building altogether, makes no allowances for the spacious halls and corridors, the superior quality of material used in construction, or the luxurious appointments. The very construction of this building within ten years past and of similar buildings elsewhere throughout the country implies a demand therefor. It is a matter of common knowledge that many trust and insurance companies, railroad and industrial concerns build and occupy structures of this character. It is not unreasonable to assume that buildings of a type so commonly used would be salable in the market at some reasonable ratio to- replacement cost.
The basis of valuation presented by the relator is that of capitalization of net earnings. While net earnings constitute a very important element of value, it cannot safely be used as the sole basis. It does not apply at all to many classes of property which are constantly, bought and sold, and bulk large on assessment rolls. Take, for example, the whole class of luxurious residences, high-grade automobiles, expensive pleasure boats, statuary, paintings, and jewelry, which produce no net income and therefore cannot be valued on this basis. A magnificent building has some of the same elements as these specimens, of art which may or may not be reflected in its earnings.. Indeed, it is doubtful whether the method of valuation suggested by the relator is as well calculated tO’ secure the real value of the property in question as the method adopted by the assessors and board of review. However that may be, the evidence presented before the board of review was sufficient to sustain the-assessment as made, and it was error for the trial court to set it aside.
The insurance company, through its board of directors, men of excellent judgment, conservative in making investments, used $3,156,228, trust funds of their policy-holders, in erecting a building necessary and useful for its purposes. To say that this property, almost immediately after being built, is worth in the market but little over one half of its cost, is to impeach the judgment and good sense of the *455officers of this company. I do not attribute to these men any lack of judgment and acumen in the management of the trust funds of the company.
The truth is, that because of the increased cost of building materials and labor the building is presently worth much more than its cost. What can be obtained for the building at private sale it is impossible to say with certainty until the building is put upon the market and offered for sale. What can ordinarily be obtained for the building .at private sale assumes a person desiring to sell this kind of a building and a purchaser desiring to buy. In these days of great trust companies, insurance companies, banks, and other large business enterprises, buildings of this character are not monuments of folly but are investments of worth.
I think the judgment of the circuit court should be reversed, and the assessment made by the board of review should stand.