Arizona Dept. of Revenue v. Navopache Elec. Co-op, Inc.

Decision Date27 February 1986
Docket NumberINC,CA-CIV,No. 1,CO-O,1
PartiesARIZONA DEPARTMENT OF REVENUE, and J. Elliot Hibbs, Director, Plaintiffs-Appellants, v. NAVOPACHE ELECTRIC, an Arizona corporation, Defendant-Appellee. 7660.
CourtArizona Court of Appeals

Robert K. Corbin, Atty. Gen. by James D. Winter and Sandra L. Bondy, Asst. Atty. Gen., Phoenix, for plaintiffs-appellants.

Martinez & Curtis, P.C. by Michael A. Curtis and Jay M. Martinez, Phoenix, for defendant-appellee.


This is an appeal from an order of the superior court dismissing appellant's appeal from a decision by the State Board of Tax Appeals. Since service of the notice of appeal was accomplished by registered mail and was not received by appellee within 10 days from the date the tax appeal was filed, the trial court concluded that it lacked jurisdiction and dismissed the appeal. The issue we must resolve is whether service of the notice of appeal by mail as authorized by A.R.S. § 42-151(D) is complete upon mailing. 1 However, in resolving this issue, it must first be determined whether the superior court proceeding is an appeal, thereby vesting the court with "appellate jurisdiction in a trial de novo," or whether it constitutes a completely new proceeding, thereby vesting the court with "original jurisdiction." We conclude that A.R.S. § 42-151(D) is a procedural notice statute and that this statute, in conjunction with A.R.S. § 42-152, vests the trial court with appellate jurisdiction in a trial de novo context. As such, service by mail was complete upon mailing and the trial court had jurisdiction to proceed and hear this tax appeal. The order of dismissal is vacated.

The facts are not in dispute. Appellant, the Arizona Department of Revenue (Department), is required to make yearly appraisals of gas and electric utility properties for purposes of property taxation pursuant to A.R.S. § 42-124.01. The Department made its valuation of appellee's property for the tax year 1983. Appellee appealed the Department's 1983 valuation to the State Board of Tax Appeals (Board) which concluded, after hearing, that the full cash value determined by the Department was excessive "based on economic functional obsolescence and upon equity considerations." The value was reduced accordingly. 2 The Department then filed a special action with the Arizona Supreme Court contesting the Board's action, however, the court declined to accept jurisdiction.

On October 11, 1983, the Department filed a Notice of Appeal and a Summons with the superior court pursuant to A.R.S. §§ 42-151 and 42-123(B)(7). The clerk of the superior court affixed a "new complaints" stamp upon the notice of appeal and designated it as a "tax appeal" from the State Board of Tax Appeals. The Department sent a copy of both documents to appellee by registered mail on October 21, 1983. Appellee's statutory agent signed for the documents on October 24, 1983. On October 25, 1983, the Department filed an affidavit of service by registered mail in which it stated that service was made upon appellee's statutory agent in Show Low, Arizona, "... pursuant to Rule 4(e)(2)(a) of the Arizona Rules of Civil Procedure."

Appellee filed a motion to dismiss the appeal challenging the method, sufficiency, and timeliness of service of process, and contending that because of such asserted deficiencies the superior court lacked jurisdiction. The Department responded by contending that "Rule 5(c) of the Rules of Civil Procedure for Superior Courts provides that service by mail is complete upon mailing." After hearing oral arguments, the trial court granted appellee's motion to dismiss and entered an order of dismissal. The Department filed a timely notice of appeal with this court asserting, inter alia, the impropriety of the dismissal below.


The first substantive issue raised by the parties is how A.R.S. § 42-151(D) should be construed. 3 Appellee argues that because A.R.S. § 42-151(D) is a "taxing statute" it must be strictly construed against the state and in favor of the taxpayer. Honeywell Information Systems, Inc. v. Maricopa County, 118 Ariz. 171, 575 P.2d 801 (App.1978). The Department, on the other hand, argues that while A.R.S. § 42- 151(D) is a taxing statute, it is a "procedural" taxing statute with only a "neutral" effect and should therefore not be construed against either party.

We believe that the real question is one of application of the statute rather than one of construction. A.R.S. § 42-151(D) neither imposes nor does it regulate a tax. It merely provides the procedural mechanism by which an appeal of a decision by the State Board of Tax Appeals may be taken to the superior court. The burden of compliance with the statute simply falls upon the party taking the appeal and it makes no difference whether that party is the taxpayer or the Department. Unlike the statutes in the cases cited in appellee's brief, A.R.S. § 42-151(D) does not impose nor does it regulate a tax which would warrant a strict construction of that statute against the state. The fact or form of imposition of a tax is not in issue here. Thus, because the requirements of A.R.S. § 42-151(D) in any given appeal apply equally to both parties to the appeal, a strict construction against either party is inappropriate.


The legislature has provided a specific method by which an appeal is to be taken from a decision of the Board. A.R.S. § 42-151 "provide[s] a procedure for taking and hearing of appeals on valuation or classification of property." Minutes of Meeting, Committee on Ways and Means, H.B. 32 (March 2, 1971). The purpose of the statute is "to simplify the methods of [taking such] appeals...." Id. A.R.S. § 42-151(D) provides:

A copy of the notice of appeal shall be served on the defendant or defendants and the state board of tax appeals within ten days of the filing, in the manner provided for service of process in the rules of civil procedure or by certified or registered mail. An affidavit showing such service shall be filed with the clerk of the court. In an appeal taken pursuant to § 42-123, subsection B, paragraph 7, service shall be on the person in whose name the property is listed at the address shown on the then existing tax role.

The Department argues that service by registered mail is complete upon mailing, however, it cites no direct authority for this argument, beyond certain "analogous authority" in Rule 5(c), Arizona Rules of Civil Procedure, and Rule 4(b), Superior Court Rules of Civil Appellate Procedure. Both rules provide that service by mail is complete upon mailing. Appellee argues that because A.R.S. § 42-151(D) involves the invocation of the original jurisdiction of the superior court, Rule 5(c) cannot apply since appellee made no "appearance" in the de novo appeal before that court. Additionally, it argues that holding that service of process is effective upon mailing would lead to dangerous and absurd results, especially where a summons accompanies the notice of appeal. The fears expressed by appellee are more imagined than real.

From the outset we note that the primary reason this case is before us on appeal is due to the lack of clarity and completeness in the statute itself. The statute requires that "notice ... shall be served on the defendant ... within ten days of the filing, in the manner provided for service of process in the rules of civil procedure or by certified or registered mail." The appellee interprets this language as both mandatory and jurisdictional, thereby requiring service upon the person within the 10 day period. Considering the legislative objective of providing a method whereby such decisions can be reviewed by the superior court, with the legislature's announced intention "to simplify the methods of [taking such] appeals," we cannot conclude that the legislature contemplated such a result as that advanced by appellee. In construing A.R.S. § 42-152(A), which requires the superior court to hear an appeal from the State Board of Tax Appeals within 90 days after it is docketed, 4 our supreme court stated:

The basic rule of statutory construction is for the court to ascertain the legislative intent. Mardian Constr. Co. v. Superior Court, 113 Ariz. 489, 557 P.2d 526 (1976). In arriving at the Legislature's intent, the effect and consequences of alternative constructions may be considered. See State v. Stockton, 85 Ariz. 153, 333 P.2d 735 (1958). A mandatory construction will require that litigation involving substantial rights of both the State and appellees must be dismissed without a determination on the merits. A contrary construction, however, permits the judicial resolution of the questions at issue. When the statute is examined in this light, we are not convinced the Legislature intended that the proceedings should be dismissed if not tried within ninety days, for had the Legislature intended such a consequence, it could have plainly spelled it out in appropriate language. Language, mandatory in form, may be deemed directory when the legislative purpose can best be carried out by such construction. Valley Bank v. Malcolm, 23 Ariz. 395, 204 P. 207 (1922). We hold that A.R.S. § 42-152 A, while couched in obligatory language, does not require a dismissal of the action for its violation. The trial court erroneously entered its order of dismissal.

Department of Revenue v. Southern Union Gas Co., 119 Ariz. 512, 582 P.2d 158 (1978).

Applying the foregoing rationale, we conclude that dismissal below was not proper since A.R.S. § 42-151(D) is a "notice statute" and the proceeding before the superior court is in the nature of an "appeal" rather than a new "original proceeding." When the notice of appeal is filed in the superior court, a "tax appeal" (TA) number is assigned. In addition, the same pa...

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