Court Opinion

ID: 6258196
Source: CourtListenerOpinion
Date Created: 2022-02-17 21:52:13.542044+00
Date Added: 2024-06-11T08:59:37.671205
License: Public Domain

Dissenting Opinion by
Mr. Justice Cohen :
The subject property consists of approximately 65 acres of land, of which 32 acres are agreed to be usable. A shopping center which was completed in 1957 was built upon the land. The next year the property was assessed at a total of $2,342,240 of which $287,240 was allocated on the records as the assessment of the land. For the 1959 triennial assessment, the valuation was increased to $3,101,400. The records disclose that the increase was in the valuation of the land so that the land was assessed at $1,046,400.
At the trial of the case in the court below, the parties stipulated that there was no controversy as to the valuation of the buildings. After hearing, the lower court determined that appellant failed to meet its burden of proof necessary to establish that the land assessment lacked uniformity with the other assessments in the county in contravention of Art. IX, §1, Pennsylvania Constitution of 1874 and dismissed the appeal.
*439While I recognize that the majority correctly decided the briefed and argued issues, I would, vacate the lower court’s action and remand the record for further proceedings because of the stipulation which left only the question of the land valuation for the court’s determination. The Act of 1939, incorporating the valuation of the Act of 1933, May 22, P. L. 853, as amended, 72 P.S. §5020-402, and the cases decided — Buhl Foundation v. Board of Property Assessment, Appeals and Review, 407 Pa. 567, 180 A. 2d 900 (1962), and Broolcs Building Tax Assessment Case, 391 Pa. 94, 137 A. 2d 273 (1958), require that each property be assessed at its actual — -i.e., fair market value. This does not mean the total of the fair market value of the component parts such as the building, land, fixtures, roads, black toppings, sewers, drainage, facilities, or any other individual items which go to make up or are on the property. Rather, the statutory provision speaks in terms of the “property” — i.e., the entire property and not the sum of its constituent elements.
Just as in Elgart v. Philadelphia, 395 Pa. 343, 149 A. 2d 641 (1959), where we pointed out that the valuation of a parcel of land might exceed the sum of the value of the individual contiguous tracts comprising it, so it is evident that the fair market value of the different components that make up the total property might not reflect the fair market value of the entire property. See McSorley v. Avalon Borough School District, 291 Pa. 252, 139 Atl. 848 (1927).
If raw land which has a fair market value of $1,000 is improved with black top which costs $1,000 and a building which costs $1,000 the fair market value of the property does not necessarily then become $3,000. The type of improvements to the property which were made may not have enhanced its fair market value in the amount of the costs of improvements and accordingly, the fair market value of the entire property in*440stead of being $8,000 might possibly be only $2500. Conversely, if the improvements were wisely made, it is possible that land having a fair market value of $1,000 to which $2,000 of improvements had been added, might have an enhanced fair market value of $3,500 or $4,000. Thus, it can readily be seen that an addition of the so-called fair market value of the component parts may not add up to the fair market value of the total property.
In an action to determine the actual (fair market) value of a property for assessment purposes, it is improper, as was done in this instance, to stipulate that there was no controversy as to the valuation of the improvements and to limit the testimony in the contest to only the question of the land valuation. The reason for this is readily apparent if we resort once again to another simple example.
The unimproved land might have a fair market value of $1,000; the actual cost of the building might be $1,000; and the fair market value of the entire property might be $2500. If it were stipulated by the parties that the value of the building was $1,000, that amount would be subtracted from the fair market value of $2500, and the contest would concern only the $1500 assessment of the land. It might be clearly demonstrable by the party contesting the assessment that the fair market value of the land is only $1,000. The party would then contend, therefore, that the total assessment of the property for $2500 is excessive and does not represent the “true” fair market value of $2,000 which the contestant arrives at by adding $1,000 for the fair market value of the land, and $1,000 for the improvements. Thus, by a deceptively simple process, a taxpayer can distort in his favor the true fair market value of the property or the taxing authority might also do the same.
Accordingly, it is the fair market value of the entire property which must be determined in assessing a prop*441erty and not the sum of its parts. This is not a novel proposition in the law of this Commonwealth. In the Buhl case, we held that the depreciated reproduction cost of the building had no probative value for any purpose in fixing the fair market value of improved real estate for tax purposes. The reason is clear. Reproduction cost new less depreciation has no relationship to the fair market value. Separated from the land, the building has no market value beyond salvage which in most cases does not compensate for the cost of removal.
To the same effect is Algon Realty Co. Tax Assessment Appeal, 329 Pa. 321, 198 Atl. 49 (1938). These cases indicate the well-established policy of our court to require the consideration of the entire property, both land and improvements, in determining the propriety of an assessment. While, as a practical matter, valuations of the component parts of the property might be resorted to as a guide by the assessing officers in establishing the fair market value of the total unit in an effort to obtain uniformity, they are not, however, rigid separate determinations binding upon the parties which can be stipulated either in or out of a case as was done here.
Fair market value is a totality; it is reflected by the price which a purchaser, willing but not obligated to buy, would pay an owner, willing but not obligated to sell, taking into consideration all uses to which the property is adopted and might in reason be applied. Buhl Foundation, supra, and Brooks Building Tax Assessment Case, supra. It is only this totality which may be considered in assessing property, and it is only the totality of the assessment which may be the subject of an appeal.
I would vacate and remand the record for proceedings in conformance with this dissent.