South Carolina Tax Com'n v. South Carolina Tax Bd. of Review

• Citation: 278 S.C. 556,299 S.E.2d 489
• Decision Date: 11 January 1983
• Docket Number: No. 21853,21853
• Court: United States State Supreme Court of South Carolina
• Parties: SOUTH CAROLINA TAX COMMISSION, Respondent, v. SOUTH CAROLINA TAX BOARD OF REVIEW, Guignard Land Company, Incorporated, and Merry Companies, Incorporated, Appellants.

Page 489

299 S.E.2d 489

278 S.C. 556

SOUTH CAROLINA TAX COMMISSION, Respondent, v. SOUTH CAROLINA TAX BOARD OF REVIEW, Guignard Land Company, Incorporated, and Merry Companies, Incorporated, Appellants.

No. 21853.

Supreme Court of South Carolina.

Jan. 11, 1983.

Claude M. Scarborough, Jr., Stephen G. Morrison and Rhett P. Dove, III, of Nelson, Mullins, Grier & Scarborough, Columbia, for appellants.

Atty. Gen. Daniel R. McLeod, Deputy Atty. Gen. Joe L. Allen, Jr., and Asst. Atty. Gen. Jackson E. Fields, Jr., Columbia, for respondent.

HARWELL, Justice:

Appellants allege that the circuit court erred by holding that respondent correctly assessed ad valorem taxes on appellant Guignard's personal property in accordance with the formula in South Carolina Code Ann. § 12-37-930 (1976).

After reviewing the record, we conclude that the February 4, 1980 order of Judge Ralph King Anderson properly sets forth and disposes of all issues submitted to this Court. Let his order be reprinted herewith as our directive.

LEWIS, C.J., and LITTLEJOHN, NESS and GREGORY, JJ., concur.

ORDER OF JUDGE ANDERSON

The South Carolina Tax Commission instituted this action under the Administrative Procedures Act, § 1-23-310, et seq. It seeks an Order to vacate or set aside a finding or decision of the South Carolina Tax Board of Review. The matter was heard on Thursday, January 10, 1980 in a regular term of court for non-jury matters.

Guignard Land Co., Inc. is the owner of certain property that is leased to Merry Companies, Inc. for five years. Payments under the lease are $30,000 per month and Merry has the option at the end of the five-year period to purchase the property for an additional $1,000,000.

The Tax Commission, following the provisions of § 12-37-930, found the fair market value of the property here in issue, machinery and equipment, to be $2,566,742. This valuation results by subtracting the annual allowance for obsolescence and depreciation provided by the statute from the property's original cost of $3,288,073. Guignard, through and by Merry, excepts to that value contending the same to be either $1,500,000 or $1,229,230. The Tax Board of Review agreed and found the value to be $1,229,230.

The Board found that the $2,800,000 was the term sales price of the property. A discount factor for interest was applied thereto that resulted in an alleged sales price of a little over $2,000,000. From that was subtracted the agreed value of the land of $350,000 and the alleged value of other property not here involved. This calculation resulted in the purported valuation of $1,229,230.

The Commission's position is that the method provided by § 12-37-930 is controlling and that the Board exceeded its authority by departing therefrom. The Commission further contends, notwithstanding the above, that the companies have failed to satisfy the burden necessary to establish that the statutory method overvalued the property.

By way of stipulation the questions were presented as follows:

(1) Whether Article III, Section 29 of the South Carolina Constitution mandating that taxes upon property (real and personal) "shall be laid upon actual value of the property taxes" is violated as to taxpayer if the fair market value formula of South Carolina Code Ann. § 12-37-930 (1976) for assessing the value of manufacturing equipment ("determined by reducing the original cost by an allowance for depreciation") exceeds what a willing-buyer and willing-seller, not acting under compulsion, would pay for the property following reasonable exposure to the market.

(b) Whether the proviso in South Carolina Code Ann. § 12-37-930 (1976) for assessing the value of manufacturing equipment mandates that the taxpayer own the equipment used in the manufacturing business in order that the equipment's fair market value be "determined by reducing the original cost by an allowance for depreciation."

The first question clearly is without the jurisdiction of the Tax Commission or the Tax Board of Review. The Commission recognized its limitation and held that the legislatively prescribed procedure controlled. The Board, in failing to agree, exceeded its authority. The substantive effect of the Board's decision was that the method prescribed by § 12-37-930 to value the property here involved constitutionally affronts Article III, Section 29, a power beyond its jurisdiction. The rule is that:

"An order cannot be made by an administrative body which would materially alter or add to the law. Banks v. Batesburg Hauling Co., 202 S.C. 273, 24 S.E.2d 496." Lee v. Michigan Millers Mut. Ins. Co., 250 S.C. 462, 158 S.E.2d 774.

It is equally settled that the Board can only act pursuant to powers granted.

"An administrative agency has only such powers as have been conferred upon it by law and must act within the granted authority for an authorized purpose. It may not validly act in excess of its powers, nor has it any discretion as to the recognition of or obedience to a statute. The agency must obey a law found upon the statute books until in a proper proceeding its constitutionality is judicially passed upon." 2 Am.Jur.2d, Adm. Law, § 188, p. 21.

"The authority and powers of reviewing boards and officers must be strictly confined to the limits marked out by the statutory or constitutional provisions from which their existence is derived; and acts in excess of their jurisdiction are void." 84 C.J.S. Taxation, § 519, p. 995.

"Particular reviewing boards or officers may make corrections in the assessment or assessment roll or tax book under the circumstances and to the extent provided by statute, but not otherwise." 84 C.J.S. Taxation, § 520, p. 998.

"It appears, therefore, and we so hold, that the General Assembly of the State has full power and authority to prescribe the duties and powers of county auditors, county treasurers, the comptroller general, and the South Carolina tax commission." Bank of Johnston v. Prince, 136 S.C. 439, 134 S.E. 387.

The General Assembly provided in § 12-37-930 the method for valuing the property and...