1975 Tax Assessments Against Oneida Coal Co., In re

• Decision Date: 17 July 1987
• Docket Number: No. 17315,17315
• Citation: 178 W.Va. 485,360 S.E.2d 560
• Court: West Virginia Supreme Court
• Parties: In re 1975 TAX ASSESSMENTS AGAINST ONEIDA COAL CO., et al.

Page 560

360 S.E.2d 560

178 W.Va. 485

In re 1975 TAX ASSESSMENTS AGAINST ONEIDA COAL CO., et al.

No. 17315.

Supreme Court of Appeals of

West Virginia.

July 17, 1987.

Dissenting Opinion Sept. 18, 1987.

Syllabus by the Court.

1. "The equal and uniform clause of Section 1 of Article X of the West Virginia Constitution requires a taxpayer whose property is assessed at true and actual value to show more than the fact that other property is valued at less than true and actual value. To obtain relief, he must prove that the undervaluation was intentional and systematic." Syl. pt. 1, Kline v. McCloud, 174 W.Va. 369, 326 S.E.2d 715 (1984).

2. "The price paid for property in an arm's length transaction, while not conclusive, is relevant evidence of its true and actual value. Such evidence may not be rejected in favor of a Tax Commissioner's old appraisal." Syl. pt. 2, Kline v. McCloud, 174 W.Va. 369, 326 S.E.2d 715 (1984).

3. "The term 'value,' as used in article 10, section 1 of the West Virginia Constitution, means the 'worth in money' of a piece of property-its market value." Syl. pt. 3, Killen v. Logan County Commission, 170 W.Va. 602, 295 S.E.2d 689 (1982).

4. "It is a general rule that valuations for taxation purposes fixed by an assessing officer are presumed to be correct. The burden of showing an assessment to be erroneous is, of course, upon the taxpayer, and proof of such fact must be clear." Syl. pt. 7, In re Tax Assessments Against Pocahontas Land Co., 172 W.Va. 53, 303 S.E.2d 691 (1983).

Jack Alsop, P.A., Webster Springs, for Webster Co. Comm.

Ernest V. Morton, Jr., Webster Springs, for Allegheny-Pitt.

Dan O. Callaghan Richwood, for Allegheny-Pitt Coal & East Ky. Energy.

W.T. Weber, Jr., Weston, for Shamrock Coal Co. and Oneida Coal.

PER CURIAM:

This is an appeal by the County Commission of Webster County from orders entered by the Circuit Court of Webster County reducing the assessed valuation of certain real estate for the purpose of ad valorem taxation. By agreement of the parties, several cases involving the same issue of tax assessments based on deed values for different appellees have been consolidated for purposes of this appeal.

The circuit court issued the rulings now before us in cases brought by several landowners challenging the valuation placed on their respective properties by the Assessor for Webster County (hereinafter assessor) and upheld by the County Commission of Webster County sitting as the Board of Equalization and Review ¹ (hereinafter board of review) for the tax years 1976 through 1986. The appellee taxpayers are the following coal corporations who own both fee and mineral estates in Webster County: Allegheny-Pittsburgh Coal Company (hereinafter Allegheny-Pittsburgh) for valuations during the years 1976 through 1983; Shamrock Coal Company, Inc. (hereinafter Shamrock) and Oneida Coal Company, Inc. (hereinafter Oneida) for valuations during 1981 through 1986; and East Kentucky Energy Corporation (hereinafter East Ky. Energy) for valuations during the years 1984 through 1986.

Allegheny-Pittsburgh owned 7,374 acres of property in fee, surface, minerals, or various combinations of these estates, which it purchased in September, 1974, for a total consideration of $24,624,500, as shown by the declaration of consideration of value in the various deeds. For the tax years 1976 through 1983 this property was assessed annually at $12,312,250, or 50% of the purchase price listed as consideration in the original deeds. ²

On July 15, 1982, Allegheny-Pittsburgh sold its property in Webster County to appellee, East Ky. Energy, for $29,842,500, and the annual assessed valuation thereafter was $14,921,250, which represented 50% of the purchase price as contained in the 1982 deed.

Appellees Oneida and Shamrock are wholly owned subsidiaries of Elk River Resources, Inc. On May 12, 1981, Shamrock conveyed 7,783 acres of coal in Webster County to Oneida without consideration as a result of the companies' corporate affiliation. The assessment on this property for tax years 1981 through 1986 was derived from the purchase price paid when Shamrock acquired the property on December 21, 1977, from Preston W. Carroll and his wife, as well as other properties situate in Braxton and Nicholas Counties. The assessor appraised the proportionate Webster County share of this conveyance at $5,867,600 and the assessed value at $2,933,800 or 50% of the appraisal value.

The appellees appealed the valuations by the board of review to the circuit court on the grounds that the assessments violated the equal and uniform clause of article X, section 1 of the West Virginia Constitution, and the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution. The appellees charged that the practice by the assessor and board of review of basing assessments on the consideration recited in deeds of conveyance intentionally discriminates against landowners who recently purchased property.

Article 10, section 1 of the West Virginia Constitution provides that "[s]ubject to the exceptions in this section contained, taxation shall be equal and uniform throughout the State, and all property, both real and personal, shall be taxed in proportion to its value to be ascertained as directed by law." W.Va.Code, 11-3-1 holds that:

All property shall be assessed annually as of the first day of July at its true and actual value; that is to say, at the price for which such property would sell if voluntarily offered for sale by the owner thereof, upon such terms as such property, the value of which is sought to be ascertained, is usually sold, and not the price which might be realized if such property were sold at a forced sale....

In syllabus point 3 of Killen v. Logan County Commission, 170 W.Va. 602, 295 S.E.2d 689 (1982), we held that "[t]he term 'value,' as used in article 10, section 1 of the West Virginia Constitution, means the 'worth of money' of a piece of property-its market value." ³

The appellees presented expert evidence that the true and actual value of their property is lower than the purchase price stated in the deeds of conveyance. The appellees are more concerned, however, with the undervaluation of comparable Webster County properties. The appellees therefore argue that the primary issue presented by this case is whether the assessments of their property and comparable properties are equal and uniform under the United States and West Virginia Constitutions. The appellees contend that the board of review should have adopted the valuation of coal appraisals recommended in 1975 by the State Tax Commissioner of $360 per acre for coal and $300 per acre for surface, or even lower figures presented by their experts.

For the coal property owned by Shamrock and then Oneida, proof was offered by witnesses that in 1984 the appraised value was $119 per acre for an aggregate value of $926,177. Appellee Oneida now asserts by cross assignment of error that the true and actual value is $119 per acre and not $360 per acre as recommended by the State Tax Commissioner and adopted by the circuit court below.

Appellees, Allegheny-Pittsburgh and East Ky. Energy, challenged the assessor's valuations by presenting evidence of the assessed value of comparable properties. Based on this comparison, East Ky. Energy contended before the board of review and circuit court that the appraisal value for all of its Webster County property should be $1,049,872.43 or $142.37 per acre, instead of the $29,842,500 price paid to Allegheny-Pittsburgh in 1982. East Ky. Energy has not appealed the circuit court's final ruling regarding the value of its coal and surface property.

It was the policy of the assessor's office during the relevant time period to assess all recently transferred property on the basis of 50 percent of the declaration of consideration of value. There appears to be no dispute that this method was uniformly followed for all such property. With respect to property which had not been recently conveyed, the assessor testified that the assessed values were raised by ten per cent in the years 1976, 1982 and 1984. The appellees contend that the assessor failed to equally and uniformly apply the ten per cent increase to all relevant property.

The appellant county commission, which adopted the assessor's valuations of all appellees' property while sitting as the board of review, argued on appeal to the circuit court and in their petition now before this Court that the tax assessments reflect the "true and actual" value of appellees' property, and that the assessor's method of valuation was valid and was uniformly applied.

The trial court ruled that the assessor and board of review, while justified in making the initial assessments of appellees' property, based on the actual purchase price, subsequently violated the equal and uniform clause of article X, section 1 by failing either to raise the assessments of comparable property to appellee's level, or to lower appellee's assessments to the level of substantially similar coal property. The court chose to lower the appellee's assessment by ordering the substitution of the tax commissioner's appraisal value of $360 per acre for coal property and $300 per acre for surface property.

In Kline v. McCloud, 174 W.Va. 369, 326 S.E.2d 715 (1984), the taxpayer, Westvaco Corporation, raised the same argument asserted by the appellees: use of recent deed values would violate the equal and uniform taxation clause of our State Constitution, W.Va. Const., art. X, section 1. The petition in Kline, supra, was brought by citizens and taxpayers in Randolph County who had tried to have the appraisal of property owned by Westvaco Corporation raised to reflect the actual purchase price. In that case the Assessor of Randolph County testified that he routinely used the 1965 State Tax Department appraisal, regardless of sale price, in order to maintain equality of taxation.

...