Department of Property Valuation v. Trico Elec. Co-op., Inc.

• Decision Date: 01 March 1976
• Docket Number: No. 12018,12018
• Citation: 113 Ariz. 68,546 P.2d 804
• Parties: DEPARTMENT OF PROPERTY VALUATION of the State of Arizona, Appellant, v. TRICO ELECTRIC COOPERATIVE, INC., an Arizona, Public Service Corporation, Appellee.
• Court: Arizona Supreme Court

Page 804

546 P.2d 804

113 Ariz. 68

DEPARTMENT OF PROPERTY VALUATION of the State of Arizona, Appellant, v. TRICO ELECTRIC COOPERATIVE, INC., an Arizona, Public Service Corporation, Appellee.

No. 12018.

Supreme Court of Arizona, In Banc.

March 1, 1976.

Rehearing Denied April 6, 1976.

Gary K. Nelson, Former Atty. Gen., Bruce E. Babbitt, Atty. Gen., by James D. Winter and Mary Z. Chandler, Asst. Attys. Gen., Phoenix, for appellant.

Johnson, Hayes & Dowdall, Ltd. by Anthony D. Terry and Norman S. Hull, Tucson, for appellee.

HAYS, Justice.

The appellant, Department of Property Valuation of the State of Arizona (the Department), appeals from a judgment of the Superior Court which reduced the valuation of Trico Electric Cooperative, Inc. (Trico) for purposes of property tax assessment for the years 1970, 1971 and 1972. This court has jurisdiction pursuant to Rule 47(e)(5), Rules of the Supreme Court.

Trico is a nonprofit corporation which was created to distribute electricity in certain rural areas of Pima, Santa Cruz and Pinal Counties. It is wholly owned by the subscribers who purchase its electricity. The Department made a determination of Trico's full cash value for the years 1970, 1971 and 1972, from which valuation Trico appealed to the State Board of Property Tax Appeals (the Board). The Board reduced the Department's 1970 valuation of Trico from $3,420,000 to $3,050,000; its 1971 valuation from $4,425,000 to $3,933.000; and its 1972 valuation from $4,695,000 to $4,325,000, and the Department appealed to the Superior Court pursuant to ARS § 42--123(B)(6). Trico also brought an appeal from the Board's decision in the Superior Court. Trico contended that the full cash value did not exceed $2,250,000 for 1970, $2,900,000 for 1971, and $3,000,000 for 1972. The Superior Court, after a trial by jury determined that the full cash value of Trico was $2,892,500 for 1970, $3,530,900 for 1971, and $3,797,000 for 1972, and awarded judgment in favor of Trico for the amounts of excess tax levied, with interest.

The Department presents two questions on appeal:

1. Did the trial court err in its denial of appellant's motion to strike Exhibit 14 and the testimony of Mr. Jorgensen?

2. Was the verdict justified by the evidence?

We will first consider the Department's second question on appeal. The Department and Trico were both required to sustain a burden of proof in the Superior Court. When the taxpayer challenges the assessment in superior court, he has the burden of proving that the assessment is excessive and must 'present evidence from which the trial court can determine the full cash value of the property in question.' Graham County v. Graham County Electric Coop., Inc., 109 Ariz. 468, 512 P.2d 11 (1973). It therefore follows that the Department must bear the burden of proving that the assessment is insufficient when it appeals from a decision of the Board, as it did in the instant case. The Superior Court, in considering the evidence offered by the parties, may not make an independent evaluation of full cash value until two conditions have been met. The first condition is the requirement that evidence be presented to rebut the statutory presumption that '(t)he valuation or classification as approved by the appropriate state or county authority shall be presumed to be correct and lawful.' ARS § 42--152(B); See also former ARS § 42--147(B). This presumption is one of fact, however, and is overcome when "evidence contradicting the presumption is received . . . and the trial court is bound to follow the usual rules of evidence in reaching the ultimate conclusion of fact." Graham County v. Graham County Electric Coop., Inc., supra. The second condition to be satisfied before the Superior Court may make an independent valuation of full cash value, is contained in the requirement that it first determine whether the 'valuation is excessive or insufficient, . . .' ARS § 42--152(C). Such a 'preliminary finding . . . is . . . a condition precedent to the court's assumption of jurisdiction to make its own evaluation.' Navajo County v. Four Corners Pipe Line Co., 106 Ariz. 511, 479 P.2d 174 (1970). The evidence of excessiveness or insufficiency 'may also be a part or all of the evidence in determining the full cash value.' Graham County v. Graham County Electric Coop., Inc., supra.

The trial court heard evidence presented by Trico's two appraisers, the general manager of Trico and the general manager of Arizona Electric Power Cooperative relating to the excessiveness of the Board's valuation, and to Trico's full cash value. George Robert Faust, one of Trico's appraisers, testified that he employed the standards mandated by the Arizona statutes in determining full cash value. See ARS § 42--201(4). He further...