Appanoose County Rural Taxpayers Ass'n v. Iowa State Tax Commission

• Decision Date: 09 April 1968
• Docket Number: No. 52836,52836
• Court: Iowa Supreme Court
• Parties: The APPANOOSE COUNTY RURAL TAXPAYERS ASSOC., Inc., and Richard A. Berger, Joe N. Wilson, Ralph L. Turner, and Donald W. Davis, Freeholders and taxpayers of Appanoose County, for themselves and on behalf of all taxpayers of Appanoose County, Iowa similarly situated, Appellants, v. IOWA STATE TAX COMMISSION, and Lynn Potter, E. A. Burrows, Jr., and X. T. Prentis as members of said Commission, Appellees.

Page 176

158 N.W.2d 176

261 Iowa 1191

The APPANOOSE COUNTY RURAL TAXPAYERS ASSOC., Inc., and Richard A. Berger, Joe N. Wilson, Ralph L. Turner, and Donald W. Davis, Freeholders and taxpayers of Appanoose County, for themselves and on behalf of all taxpayers of Appanoose County, Iowa similarly situated, Appellants, v. IOWA STATE TAX COMMISSION, and Lynn Potter, E. A. Burrows, Jr., and X. T. Prentis as members of said Commission, Appellees.

No. 52836.

Supreme Court of Iowa.

April 9, 1968.

McGrane & Haugan, Des Moines, Life, Davis & Life, Oskaloosa, and Hugh W. Lundy, Albia, for appellants.

Richard C. Turner, Atty. Gen., George W. Murray, Sp. Asst. Atty. Gen., and Harry Griger, Asst. Atty. Gen., Des Moines, for appellees.

BECKER, Justice.

Plaintiffs are an incorporated taxpayer's association and four individual tavpayers of Appanoose county. They seek declaratory and injunctive relief alleging the defendant Iowa State Tax Commission and its members, as such, acted arbitrarily and illegally in ordering the county board of review to adjust the assessed value of the real estate in Appanoose county by increasing the valuations of all agricultural land 20 percent and decreasing the valuations of all agricultural buildings 25 percent. Defendants filed motion to dismiss and motion to strike. The trial court sustained their motion to dismiss on all grounds and passed the motion to strike as moot under the circumstances.

I. A brief review of the assessment procedures in Iowa is provided in Hougen v. George, 254 Iowa 1055, 1058, 120 N.W.2d 497. Rather than repeat the summary here we will note plaintiffs allege the county assessor and county board of review prepared and transmitted to the state tax commission an abstract of the real and personal property in the county containing the items required by Iowa Code, 1966, section 441.45.

Iowa Code, 1966, provides for state action after county officials have performed their statutory duties: '441.46 State board of review. The state tax commission shall constitute the state board of review, and shall meet at the seat of government on the second Monday of July in each year.

'441.47 Adjusted valuations. The state board of review shall adjust the valuation of property in the several counties adding to or deducting from the valuation of each kind or class of property such percentage in each case as will bring the same to its taxable value as fixed in this chapter and chapters 427 to 443 inclusive. It shall also adjust the valuations as between each kind or class of property in any city assessed by a city assessor and each kind or class of property in the same county assessed by the county assessor.'

Section 421.17, dealing with the powers and duties of the state tax commission, gives it supervisory powers over local taxing bodies to the end that all assessments of property and taxes levied thereon be made relatively just and uniform in substantial compliance with the law. In Des Moines Gas Co. v. Saverude, 190 Iowa 165, 170, 180 N.W. 193, 195, we said: 'The duty of the state board of equalization is to adjust the value of property of the several kinds, adding to or deducting from the valuation of each kind or claim such percentage, in each case, as will bring the same to its reasonable value. Its function is to equalize the value of property between the several counties, not to review the action of the assessor or of the local board of review, or of the district court on appeal.' (emphasis supplied)

II. Plaintiffs allege Appanoose county hired the J. M. Cleminshaw Company, a professional property appraisal firm, to reappraise and revalue all taxable real property in the county. This was done pursuant to order of the state tax commission. The professional appraisement was completed in accordance with the law and regulations of the commission. The results (with certain irrelevant exceptions) were approved by the county assessor and county board of review. The abstract as furnished contained assessed valuations of all real property based on 27 percent of fair market value as thus determined.

Plaintiffs also allege the commission sitting as a board of review then notified the auditor of Appanoose county of proposed adjustments including a 20 percent increase on all agricultural land and a 20 percent decrease on all mercantile land. On hearing the 20 percent decrease in mercantile property was withdrawn but the increase on agricultural land was effectual for 1966, 1967 and 1968.

Thereafter the state tax commission sitting as such ordered a 25 percent decrease in the value of all agricultural buildings. This order was entered February 22, 1966. When the Appanoose county board did not comply, another order to the same effect was formally issued May 24, 1966 and this time the county did comply.

Plaintiffs state the alleged purpose of the commission orders was to adjust the valuations of those classes of property in the several counties to bring the valuations of those classes of property in Appanoose county to their taxable value as fixed in Chapters 427 through 443, Code of Iowa, 1962; the commission refused to disclose the data, computations and information used as a basis for the orders. The sole reasons given for the orders were the county valuations were in error and not in line with those established in other counties for similar classes of property. Plaintiffs then alleged as conclusion that the actions of defendants were arbitrary, capricious, illegal and discriminatory for the following reasons:

'(a) The increase ordered in agricultural land places a discriminatory rate of 72% Of actual value on agricultural land while other property in Appanoose County bears the legal rate of 60% Of actual value.

'(b) The decrease ordered in agricultural buildings places a discriminatory rate of 45% Of actual value on agricultural buildings while other property in Appanoose County bears the legal rate of 60% Of actual value.

'(c) The adjustments created an inequalization of the property tax burden of Appanoose County, Iowa.

'(d) The Commission's order of adjustment of May 24, 1966, relative to agricultural buildings was issued without authority, the Commission having no statutory authority to order such adjustments.

'(e) The December 29, 1965, order of the Board of Review is void for the reason that Section 441.47, Code of Iowa, 1962, is unconstitutional and void in that said Section fails to establish standards for adjustments and further constitutes an unlawful delegation of power in that same attempts to give the Board of Review authority to assess property in excess of 60% Of actual value as limited in Section 421.21, Code of Iowa, 1962.'

Defendants' motion to dismiss was 'sustained on all grounds', which may be summarized as follows:

1. Plaintiffs have no standing to sue.

2. Plaintiffs have failed to allege wherein the commision's actions were illegal, void, arbitrary or otherwise capricious.

3. There is no appeal from the commission's exclusive jurisdiction to enter the order of which plaintiffs complain.

4. The petition asks for relief that neither the commission nor this court can grant.

5. A final order of equalization by the board of review is not appealable.

6. The May 24th order of the commission was carried out by the local board of review and failure to appeal that order as by statute provided is fatal.

III. Defendants assert a voluntary taxpayer's association has no standing to bring an action of this type on behalf of its members. The cases cited involve unincorporated associations. One plaintiff is a corporation. A corporation is treated as an entity separate from its stockholder or stockholders under all ordinary circumstances. Inn Operations, Inc. v. River Hills Motor Inn Co., Iowa, 152 N.W.2d 808, 815. The corporation does not claim to be a taxpayer. The other four plaintiffs allege they are taxpayers. If the individuals have standing to sue, the corporation would be subject to motion to dismiss as an improper party under Rule 27, R.C.P. but the cause as to the individual taxpayers would remain. Misjoinder of parties is not ground for dismissal of action under rule 27. See Comment in Cook, Iowa Rules of Civil Procedure, p. 186.

The individual plaintiffs argue they have a right to maintain this action as taxpayers, their action being in form and effect a class action. It is alleged they are residents, freeholders, and taxpayers of Appanoose county whose situation is similar and interest identical to that of many other residents, freeholders and taxpayers of the county. In Pierce v. Green, 229 Iowa 22, 44, 294 N.W. 237, 250, 131 A.L.R. 335, we said: 'There are a great many decisions in which discrimination against a taxpayer, or a class, or large numbers of taxpayers caused them to pay a disproportionate share of the tax burden, either because of the law itself, or because of the arbitrary, systematic and intentional administration of the law. In these cases, because there was no plain, speedy, and adequate remedy at law, relief was granted in equity. In many of these cases relief was granted because the due process or equal protection of the law clauses of the 14th amendment were violated.'

The four individual taxpayer plaintiffs have standing to bring action under the principles set forth in Pierce v. Green, supra, and this is a class action under Rule 42, R.C.P.

IV. Defendant's second ground for motion to dismiss is essentially failure to state a cause of action. They assert plaintiffs have failed to allege by well pleaded ultimate facts wherein the commission's action was illegal, void, arbitrary or otherwise capricious.

'A motion to dismiss is sustainable only where it appears to a certainty a plaintiff would not be entitled to any relief under any state of facts which could be proved in support of the claims asserted by him.' Newton v. City of Grundy Center, 246 Iowa 916, 920, 70 N.W.2d 162, 164.

Plaintiffs have alleged the assessment was...