McLean Trucking Co., In re, 66

• Decision Date: 16 June 1972
• Docket Number: No. 66,66
• Citation: 281 N.C. 375,189 S.E.2d 194
• Court: North Carolina Supreme Court
• Parties: In the Matter of Appeal of McLEAN TRUCKING COMPANY, Winston- Salem, North Carolina, From An Action of the Forsyth County Board of Equalization and Review Relating To the Valuation and Situs of Certain of McLean's Tractors and Trailers for Purposes of 1970 Ad Valorem Taxes.

Page 194

189 S.E.2d 194

281 N.C. 375

In the Matter of Appeal of McLEAN TRUCKING COMPANY, Winston-

Salem, North Carolina, From An Action of the Forsyth County

Board of Equalization and Review Relating To the Valuation

and Situs of Certain of McLean's Tractors and Trailers for

Purposes of 1970 Ad Valorem Taxes.

No. 66.

Supreme Court of North Carolina.

June 16, 1972.

Appeals by McLean Trucking Company, the County of Forsyth and the City of Winston-Salem from Armstrong, J., at the 19 April 1971 'A' Session of Forsyth, heard prior to determination by the Court of Appeals. This case was docketed and argued as Case No. 86 at the Fall Term 1971.

This is a companion to Case No. 65 of the same name, decided 10 May 1972, N.C., 188 S.E.2d 452, that case involving the tax year 1969, whereas the present case involves the tax year 1970. Except for differences in the number of vehicles and in the valuations thereof, the facts in the two cases are the same with reference to the types of vehicles, their location and their use by the taxpayer (McLean) and will not be repeated here.

At the appropriate time, McLean listed 635 tractors and 1409 trailers for county taxes for 1970 in Broadbay Township, Forsyth County. In so doing McLean listed these vehicles at 9.62% Of what McLean contended was their total tax valuation, this being an apportionment of such valuation on the basis of the ratio of the interstate miles traveled by McLean vehicles in North Carolina to the total interstate miles traveled by all McLean vehicles in all states in 1969, including miles traveled by vehicles which never come into North Carolina and which, for that reason, are not among the vehicles so listed by McLean.

In due time the Tax Supervisor appraised the vehicles, changed the listing from Broadbay Township to Winston Township, assessed them at the full assessment ratio, 58% Of the appraised value, and refused to apportion such assessed valuation on any basis whatever.

In due time McLean sought relief from the County Board of Equalization and Review, contending that: (1) The appraised valuation was excessive; (2) the correct valuation should be apportioned on the basis above mentioned; and (3) the tax situs of these vehicles was Broadbay Township. The County Board of Equalization and Review affirmed the determinations of the Tax Supervisor in all of these respects.

In due time McLean appealed to the State Board of Assessment, which conducted a hearing and received evidence, The State Board of Assessment made the following finding of fact:

Unnumbered Findings

McLean is a common carrier of property operating over fixed and regular routes in North Carolina and twenty-three other states. For the past several years the North Carolina portion of McLean's interstate mileage has been approximately 10%. In 1969, the figure was 9.62%.

This appeal relates to 635 tractors having a book value of $5,161,199 and 1460 trailers having a book value of $4,359,513. The county has valued the tractors at $6,295,810 and the trailers at $5,327,931.

Numbered Findings

(1) Appellant's tractors were appraised by the county on the basis of 'average retail value' as reflected in the 'Used Truck Blue Book' published by National Market Reports, Inc.

(2) Used tractors will not usually sell for the said average retail value unless they have been reconditioned by the dealer at a cost of approximately 20% To 25% Of the said average retail value.

(3) The schedule used by the county to value appellant's trailers was developed from conversations with representatives of one or more trailer sales firms.

(4) The entire schedule is keyed to a selling price of $8,000 for a 1970 forty-five foot tandem trailer.

(5) Depreciation is computed on the basis of 20% Of the selling price for the first year and 10% Of the remaining balance for each subsequent year subject to a residual.

(6) The county made no inspection of appellant's vehicles.

(7) In 1970, appellant purchased 225 forty-five foot trailers at an average price of $6,104.81.

(8) Appellant's book value figures are based upon actual cost less depreciation as allowed by the ICC; i.e., 12 1/2% Per year to a residual of 15% For trailers and 16 2/3% To a residual of 10% For tractors.

(9) The only vehicles known to have been stored in appellant's Broadbay Township 'place of storage' during 1969 were some which had been sold by appellant but were awaiting pick up by the purchaser.

(10) Of appellant's 2,918 interstate trailers, 1,409 serve the system at large and 1,509 are assigned to the various terminals throughout the McLean system.

(11) Of the 1,509 assigned trailers, 203 are assigned to North Carolina terminals.

(12) None of the said 203 trailers, except the 51 assigned to the Winston-Salem terminal, have been listed for taxation in any county in North Carolina.

(13) The 9.62% Mileage figure was computed on the basis of the interstate mileage driven by all of appellant's 1,166 interstate tractors.

(14) The vehicles involved in this appeal have been subjected to ad valorem taxation on an apportionment basis in numerous taxing jurisdictions in other states.

Upon these findings, the State Board of Assessment concluded: (1) The appraisal methods used by the county resulted in a valuation of the vehicles, tractors and trailers, in excess of their fair market value and, in this instance, the book value is the best indication of the fair market value; (2) the taxable situs of the property is Winston Township; and (3) McLean is entitled to be taxed on these vehicles in a manner recognizing that they have acquired a partial situs outside North Carolina.

Upon these conclusions, the State Board of Assessment held that the fair market value of McLean's entire interstate fleet of 1,166 tractors was $8,884,945, the fair market value of its entire fleet of 1,409 unassigned trailers was $4,207,178, that 9.62% (the ratio of miles traveled in North Carolina by interstate vehicles, to total miles traveled by all interstate vehicles) was the proper proportion of these valuations attributable to Forsyth County, that the fair market value of 51 trailers assigned to the Winston-Salem terminal (100% Attributable to Forysth County) was $152,335, making a total valuation attributable to Forsyth County of $1,411,798.

The State Board of Assessment further held that trailers having a total fair market value of $453,975 were assigned to terminals in other counties of North Carolina and were attributable for tax purposes to those counties. It, therefore, ordered the taxing officials of Forsyth County and of the City of Winston-Salem to recompute 1970 taxes assessed upon McLean on account of such properties in accord with the above figures; i.e., applying the 58% Assessment ratio to such apportioned value and then applying to that result the tax rate. It further ordered that McLean list in the appropriate other North Carolina counties for 1970 and other years not barred by statute the above mentioned trailers so assigned to those counties.

The county and the city petitioned the superior court to review the order of the State Board of Assessment and reverse it, reinstating the action taken by the county taxing authorities. McLean also petitioned the superior court to review the order of the State Board of Assessment and to modify it in the following respects: (1) To include a finding that the true market value of the interstate equipment is that to which McLean's expert witnesses testified; (2) to include a finding and determination that the tax situs of the property (apportioned) is Broadbay Township; and (3) with reference to trailers assigned to McLean's other terminals in North Carolina, to delete the reference in the board's order to any tax years other than 1970.

In the superior court McLean tendered a judgment, which would have affirmed the decision of the State Board of Assessment in all respects except (1) the determination and order concerning the tax situs and listing of trailers assigned to other terminals in North Carolina, and (2) the determination that the situs of the interstate tractors and trailers was in Winston Township. Thus, McLean abandoned in the superior court its exception to the valuation of its vehicles by the State Board of Assessment.

The county and the city tendered a judgment in conformity to their contentions in their petition for review.

The superior court entered judgment: (1) Affirming the decision of the State Board of Assessment that the proper tax situs of the interstate equipment is Winston Township; (2) affirming the State Board of Assessment's determination of the value of the vehicles; (3) reversing that portion of the final decision of the State Board of Assessment which ordered McLean to list in counties in North Carolina, other than Forsyth, trailers assigned to terminals located in such counties; and (4) remanding the matter to the State Board of Assessment for further consideration of that portion of its order relating to the apportionment of the value of interstate tractors and trailers for taxation.

The superior court directed the State Board of Assessment to 'take such additional evidence, if any, as it shall determine necessary in order to make appropriate Findings of Fact and Conclusions of Law,' and to determine the apportionment issue in accordance with principles of law laid down in Billings Transfer Corporation v. Davidson, 276 N.C. 19, 170 S.E.2d 873, and other applicable law.

McLean appealed from the judgment of the superior court, contending: (1) The decision of the board on the matter of apportionment is supported by sufficient findings and conclusions and (2) the interstate vehicles have a tax situs in Broadbay Township.

The county and city appealed from the judgment of the superior court, contending (1) The court erred in affirming the findings and conclusions of the State Board of Assessment concerning the total valuation of McLean's interstate equipment; (2) the court...