Court Opinion

ID: 9729682
Source: CourtListenerOpinion
Date Created: 2023-08-26 14:46:20.694114+00
Date Added: 2024-06-11T18:26:00.489462
License: Public Domain

LIPEZ, Justice,
with whom RUDMAN, Justice, joins, dissenting.
Because I believe that the Board improperly considered “value in use” in its determination of the just value of the computer equipment on April 1,1991 and April 1,1992, I respectfully dissent. The Constitution of the State of Maine requires that:
All taxes upon real and personal estate, assessed by authority of this State, shall be apportioned and assessed equally according to the just value thereof.
Me. Const, art. IX, § 8; see also 36 M.R.S.A. § 201 (1990). It is well-established under Maine law that “just value” is synonymous with true or market value. Shaumut Inn v. Town of Kennebunkport, 428 A.2d 384, 389 (Me.1981); Frank v. Assessors of Skowhegan, 329 A.2d 167, 173 (Me.1974); Kittery Elec. Light Co. v. Assessors of Town of Kittery, 219 A.2d 728, 734 (Me.1966); Sweet, Inc. v. City of Auburn, 134 Me. 28, 31, 180 A. 803, 804 (1935). “Market value” is that price a willing buyer would pay a similarly willing seller at a fair public sale. Frank, 329 A.2d at 173. The relevant marketplace must be one in which normal conditions exist. Id.
As the assessor for the City conceded, the concept of market value is distinct from that of value-in-use. Value-in-use is based on the value of property to its current user, which may result in a value higher than that established by the marketplace. McGraw-Edison Co. v. Washington Cty., 132 Pa.Cmwlth. 437, 573 A.2d 248, 251 (1990). Several courts *666have rejected the value-in-use concept as un-reflective of the market value on which an assessment must be based. Noble v. IBM Credit Corp., Nos. 40738-40739, 1993 WL 557199, 1993 Wash.Tax LEXIS 582 (June 10, 1993); McGraw-Edison, 573 A.2d at 251; Pittsburgh-Des Moines Steel v. McLaughlin, 77 Pa.Cmwlth. 565, 466 A.2d 1092, 1095 n. 5 (1983); Rollsworth Tri-City Trust v. Somersworth, 126 N.H. 333, 493 A.2d 462, 464 (1985) (“[W]orth to the owner alone is not the appropriate standard for taxation.”). “It is well-settled that only the value-in-exchange, or fair market value concept, is relevant in tax assessment cases.” McGraw-Edison, 573 A.2d at 251 (footnote omitted). The general rule of property taxation is that the value of the property is the basis of taxation and the standard of valuation is actual, market or fair cash value. 72 Am.Jur.2d State and Local Taxation § 753 (1974).
The assessor for the City acknowledged his reliance on the value in use concept in assessing equipment located in the City. He quoted from Property Appraisal and Assessment Administration, published by the International Association of Assessing Officers in 1990, in which he emphasized the distinction between value-in-use and value-in-exchange:
Kinds of value: Adam Smith’s distinction between value in use and value in exchange is important. The property may have one value in use and a significantly different value in exchange. The value in use embodies the premise that the object’s value is related to its current use.... Value in exchange, however, is determined by the market. Value in exchange is a relative value in that the good must be compared to other substitute goods and services in a competitive open market.
The assessor specifically stated to the Board that: “we are dealing with a value-in-use concept.”
It is also apparent that the Board relied on the concept of value-in-use in making the assessment here at issue. In its decision, it states:
Depreciation of more than 50% over the first two years, as suggested by IBM Credit, does not recognize the residual value in use. Furthermore, the figures contained in the April, 1991 and April, 1992 editions of Computer Price Watch, while reflective of the value to people trading in the used computer market, do not account for the added use value. The Board finds depreciation of 20% per year reflects the decline in value due to advances in technology as well as the residual use value of the subject property.
(emphasis added). Although local assessors properly have latitude in choosing among assessment methods that are relevant to the determination of market value as defined by our cases, they cannot use a methodology that is irrelevant to the market value of the personal property at issue. Because the market value, not the value-in-use, is the benchmark on which assessments are based, the Board erred in utilizing value-in-use as a basis for determining the depreciation of the computer equipment.1

. The lease payments cited by the court are relevant only to the valuation of the lease (the present value of the right to receive monthly payments for the remaining term of the lease) and the value of the equipment on the first day of the lease (in this case the present value of the right to receive 36 monthly payments plus an estimation of the market value of the equipment at the end of the 36 months). The lease, in this case, was a financing technique. The lease payments are irrelevant to the determination of just value of equipment on April 1, 1991 and April 1, 1992.