Kittery Elec. Light Co. v. Assessors of Town of Kittery

• Decision Date: 16 May 1966
• Citation: 219 A.2d 728
• Parties: KITTERY ELECTRIC LIGHT CO. v. ASSESSORS OF the TOWN OF KITTERY and Inhabitants of the Town of Kittery.
• Court: Maine Supreme Court

Page 728

219 A.2d 728

KITTERY ELECTRIC LIGHT CO. v. ASSESSORS OF the TOWN OF KITTERY and Inhabitants of the Town of Kittery.

Supreme Judicial Court of Maine.

May 16, 1966.

Pierce, Atwood, Scribner, Allen & McKusick, by Vincent L. McKusick and Sigrid E. Tompkins, Portland, for plaintiff.

Charles W. Smith, Saco, Francis F. Neal, Kittery, for defendants.

Before WILLIAMSON, C. J., WEBBER, TAPLEY, MARDEN and DUFRESNE, JJ.

RESCRIPT

DUFRESNE, Justice.

Kittery Electric Light Co., plaintiff, appeals from the action of the Justice below denying in part plaintiff's request for abatement of taxes, while the defendant assessors and inhabitants of the town of Kittery cross-appeal because of the partial grant thereof.

The plaintiff's appeal docketed in this court at No. 1452 brings up for review the action of the Superior Court in relation to the 1960 tax assessment. Its 1961 assessment is involved in the companion appeal docketed in this court at No. 1453. 219 A.2d 744. This second appeal relating to the 1961 tax assessment will be disposed of in a separate opinion.

The plaintiff corporation hereinafter referred to as the Company, on April 1, 1960, was operating in the public utility field and furnishing electricity to customers in the towns of Kittery, Eliot and York, Maine, with 75 per cent of its business in Maine being in the town of Kittery. The plaintiff's property in Kittery, at the assessment date of April 1, 1960, consisted of its distribution and transmission system, encompassing poles, cables, wires, conductors, transformers, loops, meters, 3 substations, certain lands, but no buildings. The company filed timely with the assessors of Kittery its 'true and perfect' list of all its estates, not by law exempt from taxation, under R.S. c. 91-A, § 34, now 36 M.R.S.A. § 706. In the list so filed, the company made a detailed showing of an aggregate total gross book cost of.$807,473, deducting therefrom under the legend of accrued depreciation $161,495, and claimed as current market value of its property subject to taxation, the net book cost thereof, or $645,978. The parties stipulated at trial that these figures were correct representations of the company's gross and net book costs. The assessors submitted a tax bill based on a valuation of $368,000 as to all the property of the company excepting land values. They reached that result in the following manner. They first adopted the aggregate gross book cost of.$807,473 as submitted by the company. They then subtracted therefrom $7,343 as representing the value of the company land; this appears from the stipulation of the parties. The balance of $800,130 was rounded out to $800,000; this amount in the judgment of the assessors represented the true or fair market value of all the company's property, excepting land. The assessors then applied the ratio of 46% on said amount on the theory that assessments in Kittery of non-residential properties represented 46% of true market value thereof. Hence, the base figure of $368,000 plus land values, was used to compute the company's tax at the rate of $62. per $1,000. The company's petition to the assessors for abatement under R.S.1954, c. 91-A, § 48, now 36 M.R.S.A. § 841, was denied by them, and it appealed to the Superior Court under R.S.1954, c. 91-A, § 51, now 36 M.R.S.A. § 845. After hearing, the Justice below found that the true or fair market value of the company's property including land, was in the amount of $674,118. He applied the ratio of 40% to bring the company's property to the level at which he found residential properties assessed in relation to true value. From this base figure, he computed the tax at $16,718.11 instead of $23,132.20 as assessed by the assessors and granted an abatement for the difference of $6,414.08 by giving judgment in said amount with costs in favor of the company against the defendant municipality since the company had paid the tax. R.S.1954, c. 91-A, § 55, now 36 M.R.S.A. § 849. The presiding Justice found the true and fair market value of the company's properties by reducing the gross book cost of the company's depreciable property by the sum of $133,355, or 16 2/3% of the gross book cost thereof, as accrued depreciation, instead of reducing the same by $161,495 or 20% of the gross book cost.

Both parties have appealed to this Court, and they agree that, so far as the 1960 taxes involved in this appeal are concerned, all formalities required in order to perfect their respective appeal to this court, have been complied with, and all statutory prerequisites on appeal to the Superior Court have also been taken.

The plaintiff contends that it was error in law and fact for the Court below not to accept the company's net book cost as the true and fair market value of its property, and also in refusing to accept the 30% ratio claimed by the plaintiff as being the common average ratio of assessment values of residential properties to true values in the town of Kittery in the year 1960. The defendants on the other hand contend that it was error in law and fact to grant any abatement under the evidence in the case.

To resolve the respective contentions of the parties and determine whether there was competent evidence to support the decision of the Justice below, it is impelling initially to examine the applicable law.

The constitutional mandate reads: '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.' (Emphasis supplied.) Constitution of Maine, Art. IX, § 8.

The statutory implementation of the constitutional provision is worded as follows: 'The assessors shall ascertain as nearly as may be the nature, amount and value as of the first day of each April of the reas estate and personal property subject to be taxed, and shall estimate and record separately the land value, exclusive of buildings, of each parcel of real estate.' (Emphasis again supplied.) R.S.1954, c. 91-A, § 36, now 36 M.R.S.A. § 708.

Our Court has provided a great number of guidelines in testing the legal adequacy of tax assessments with reference to the constitutional concepts of equal apportionment and just value.

The constitutional 'just value' standard required by the law of the land has been judicially synonymized with 'market value', 'true value', 'real value', and the problem with this fundamental directive lies not so much with the meaning to be given to the terminology as to its application to the particular facts of varied situations. Sweet Inc. v. City of Auburn, 134 Me. 28, 31, 180 A. 803, 104 A.L.R. 784.

An assessment value which substantially reflects just or market value fully answers the constitutional order, even though it may not be absolutely correct, as perfection is not expected. If the assessors have been 'honest with themselves, fair with the public, and true to their oath of office,' in their endeavor to reach just values and apportionments to the best of their ability, their judgment thereon controls. But if their opinion and judgment are 'so unreasonable in the light of the circumstances that the property is substantially overvalued and an injustice results, or that there is an unjust discrimination, or that the assessment was in some way fraudulent, dishonest or illegal,' then relief will be forthcoming. Sears, Roebuck & Company v. Inhabitants' of City of Presque Isle et al., 150 Me. 181, 107 A.2d 475.

To assess property at its just value is only one of the fundamental requirements of law. The assessment must further represent the owner's equal portion of the burden of taxation, and if the assessors have not appraised at full true value but only at a fixed percentage of true value, then such treatment must be uniform and equal on all real estate and tangible property, so much so that if both cannot be obtained, then equality must prevail. Sears, Roebuck & Company v. Inhabitants of City of Presque Isle et al., supra.

Where 'it is impossible to secure both the standards of the true value, and the uniformity and equality required by law, the latter requirement is to be preferred as the just and ultimate purpose of the law.' Delaware, Lackawanna and Western R. Co. v. Neeld, 23 N.J. 561, 130 A.2d 6; Sioux City Bridge Co. v. Dakota County, 260 U.S. 441, 43 S.Ct. 190, 67 L.Ed. 340, 28 A.L.R. 979.

The following language of the Kansas court enunciates the preliminary considerations basic to our problem in the instant case:

'Uniformity in taxing implies equality in the burden of taxation, and this equality cannot exist without uniformity in the basis of assessment as well as in the rate of taxation. The duty to assess at full value is not supreme but yields to the duty to avoid discrimination. * * * It makes no difference what basis of valuation is used, that is, what percentage of full value may be adopted, provided it be applied to all alike. The adoption of full value has no different effect in distributing the burden than would be gained by adopting thirty per cent, twenty-one per cent or twelve per cent as a basis, so long as either was applied uniformly. Uniformity of taxation does not permit a systematic, arbitrary or intentional valuation of the property of one or a few taxpayers at a substantially higher valuation than that placed on other property within the same taxing district; however, this uniformity and equality in a constitutional and statutory sense does not require mathematical exactitude in the assessment valuation of property for taxtion.' Addington v. Board of County Commissioners, 191 Kan. 528, 382 P.2d 315 (1963).

Another basic prefatory rule to have in mind pending solution of our problem is the recurring judicial pronouncement that a presumption of validity attaches to tax assessments and value findings of assessors and that the burden is upon the owner to show overvaluation or illegal apportionment and not on the assessors or municipality to establish...