Bielski v. Zorn, No. 49T10-9309-TA-00070

• Docket Nº: No. 49T10-9309-TA-00070
• Citation: 627 N.E.2d 880
• Case Date: January 20, 1994
• Court: Tax Court of Indiana

Page 880

627 N.E.2d 880 David BIELSKI, Kenneth Gembala, and Douglas Patterson,
individually and as Town Councilmen of the Town of St. John,
Lake County, Indiana, A Municipal Corporation, for and on
behalf of the Taxpayers and Owners of Real Estate Within the
Corporate Limits of the Town of St. John, and the Town of
St. John, Lake County, Indiana, a Municipal Corporation, Petitioners,
v.
Kurt ZORN, Gordon McIntyre, and Wanda Watts, in their
official capacities as Commissioners of the
Indiana State Board of Tax
Commissioners, Respondents. No. 49T10-9309-TA-00070. Tax Court of Indiana. Jan. 20, 1994.

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Richard A. Waples, Indiana Civ. Liberties Union, Indianapolis, Michael L. Muenich, Hand Muenich Wilk & Reid, Highland, Thomas M. Atherton, Dutton Overman Goldstein & Pinkus, and Peter H. Donahoe, Locke Reynolds Boyd & Weisell, Indianapolis, for petitioners.

Pamela F. Carter, Atty. Gen. of Indiana, Marilyn S. Meighen, Ted J. Holaday, Joel

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Schiff, and Kathryn Symmes Hall, Deputy Attys. Gen., Indianapolis, for respondents.

FISHER, Judge.

This appeal alleges Indiana's system of real property taxation violates the provisions of Article 10, Sec. 1 and Article 1, Sec. 23 of the Indiana Constitution and the Fourteenth Amendment to the United States Constitution. The individual petitioners are David Bielski, Kenneth Gembala, and Douglas Patterson, each of whom owns property in the Town of St. John, St. John Township, Lake County, Indiana. These three petitioners are the members of the Town Council of St. John and bring the appeal in their official capacities, as well. The Town of St. John is also a petitioner. The Petitioners seek class certification as representatives of all other real estate owners/taxpayers in the Town of St. John. ¹

The petitioners have brought the action against the members of the Indiana State Board of Tax Commissioners in their official capacities (collectively, the State Board). The matter is before the court on the State Board's motion to dismiss under Ind. Trial Rule 12(B)(1) and 12(B)(6).

ISSUES

The State Board's motion presents the following restated issues:

I. Whether the Landowners have invoked the jurisdiction of the court.

II. Whether the Landowners have exhausted their administrative remedies.

III. Whether the court has subject matter jurisdiction over the Landowners' claims under 42 U.S.C. Sec. 1983.

IV. Whether the Government Petitioners have standing to pursue the appeal.

FACTS AND PROCEDURAL POSTURE

On April 9, 1991, the Town of St. John, a municipal corporation within St. John Township, Lake County, requested the Lake County Board of Review to review and equalize the real property assessments in Lake County and St. John and Hanover Townships within Lake County for the 1989 general reassessment. On July 10, 1991, all the present Petitioners filed a petition with the State Board reiterating the same request. ²

DISCUSSION AND DECISION I

The State Board first claims that the Landowners' attempts to obtain review and equalization from the Lake County Board of Review and the State Board count for naught, that the court therefore lacks subject matter jurisdiction over the appeal, and that the case should be dismissed pursuant to T.R. 12(B)(1). "Jurisdiction of the subject matter involves the POWER of the court to hear and determine a general class of cases to which the proceedings belong." Harlan Sprague Dawley, Inc. v. Indiana Dep't of State Revenue (1991), Ind.Tax, 583 N.E.2d 214, 216 (quoting In Re Adoption of H.S. (1985), Ind.App., 483 N.E.2d 777, 780) (emphasis in original) (footnote omitted). The State Board also asserts the Landowners have failed to state a claim upon which relief can be granted within the meaning of T.R. 12(B)(6). ³ Neither claim, however, succeeds.

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The right to tax is the highest attribute of sovereignty. M'Cullough v. Maryland (1819), 17 U.S. (4 Wheat) 316, 339, 4 L.Ed. 579, 585. The power resides exclusively with the legislature and is limited only by constitutional requirements. See Miles v. Dep't of Treasury (1935), 209 Ind. 172, 176-77, 199 N.E. 372, 374, appeal dismissed (1936), 298 U.S. 640, 56 S.Ct. 750, 80 L.Ed. 1372; State Bd. of Tax Comm'rs v. Holliday (1898), 150 Ind. 216, 49 N.E. 14); Board of Comm'rs v. Harrell (1897), 147 Ind. 500, 504, 46 N.E. 124, 125. In Indiana, the legislature's sovereign right to tax is limited by Article 10, Sec. 1, of the Indiana Constitution, which provides in pertinent part: "The General Assembly shall provide, by law, for a uniform and equal rate of property assessment and taxation and shall prescribe regulations to secure a just valuation for taxation of all property, both real and personal." IND. CONST., art. 10, Sec. 1(a) (emphasis added).

From th[is] constitutional provision[ ] ... three basic propositions stand out in bold relief: (1) Uniformity and equality in assessment; (2) uniformity and equality as to rate of taxation; and (3) a just valuation for taxation. Each of these propositions are interlocking and mandatory. They are the constitutional basis of a valid tax law.

Fesler v. Bosson (1920), 189 Ind. 484, 492, 128 N.E. 145, 147 (emphasis added). See also Indiana State Board of Tax Comm'rs v. Lyon and Greenleaf Co. (1977), 172 Ind.App. 272, 276, 359 N.E.2d 931, 933, trans. denied (and cases cited therein). The quoted portion of Article 10, Sec. 1 has remained steadfast since the adoption of the present Constitution in 1851, and the teaching of our supreme court in Fesler remains as instructive today as it was nearly three quarters of a century ago: the legislature is under an affirmative duty to create a system of property taxation in compliance with the constitutional command. As Justice DeBruler noted several years ago, Article 10, Sec. 1 "mandate[s] Indiana to maintain ... rigid requirements of equality in taxing property." Indiana Aeronautics Comm'n v. Ambassadair, Inc. (1977), 267 Ind. 137, 142, 368 N.E.2d 1340, 1343, cert. denied sub nom. Four Winds, Inc. v. Indiana Aeronautics Comm'n (1978), 436 U.S. 905, 98 S.Ct. 2235, 56 L.Ed.2d 403.

To carry out its mandate, the legislature has passed numerous property tax statutes ⁴ and has for many decades delegated the responsibility to enforce those statutes to the State Board. See IND.CODE 6-1.1-30. See also, e.g., Acts 1975, P.L. 47; Burns Ind.Stat. Secs. 64-1302 through 64-1344 (1951 Repl.); Burns Ind.Stat. Secs. 14209 through 14244 (1926); Burns Ind.Stat. Sec. 10296 (1918 Supp.); Burns Ind.Stat. Secs. 8535 through 8559 (1901); Myers Ind.Stat. Secs. 8637 through 8644 (1892). Today, the legislature requires that the State Board "shall (1) interpret the property tax laws of this state; (2) instruct property tax officials about their taxation and assessment duties; and (3) see that all property assessments are made in the manner provided by law." IND.CODE 6-1.1-35-1 (emphases added). The State Board, "[l]ike all administrative agencies ... 'has such implicit power and authority as is inherent in its broad grant of power from the legislature to ... effectuate the regulatory scheme outlined by the statute.' " Miller v. Gibson County Solid Waste Management Dist. (1993), Ind.Tax, 622 N.E.2d 248, 259 (quoting Northern Ind. Pub. Serv. Co. v. Citizens Action Coalition (1989), Ind., 548 N.E.2d 153, 158). Nonetheless, the State Board is a creature of the legislature, and broad though its powers may be, they are no broader than those of the legislature itself. See Board of Trustees v. State ex rel. Russell (1966), 247 Ind. 570, 576, 219 N.E.2d 886, 890 (administrative tribunals are governed by the express and implied powers granted by the legislature); Vehslage v. Rose Acre Farms, Inc. (1985), Ind.App., 474 N.E.2d 1029, 1033 (administrative agencies have no common law or inherent powers; only those granted by the legislature).

Therefore, because the legislature is duty-bound to follow the requirements of

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Article 10, Sec. 1, the State Board is bound, as well. Indeed, as the legislature's delegate, the State Board is bound not only by Article 10, Sec. 1, but also by the legislature's express command that the State Board "shall see that all property assessments are made in the manner provided by law." IC 6-1.1-35-1. This means the State Board must adhere to IND.CODE 6-1.1-2-2, the legislature's codification of Article 10, Sec. 1, which provides: "[a]ll tangible property which is subject to assessment shall be assessed on a just valuation basis and in a uniform and equal manner...." (Emphasis added). Article 10, Sec. 1, IC 6-1.1-2-2, and IC 6-1.1-35-1 all use the word "shall." In a statutory clause, "shall" "has a mandatory rather than a directory meaning unless it appears clear from the context or purpose of the statute that the legislature intended a different meaning." Fort Wayne Nat'l Corp. v. Indiana Dep't of State Revenue (1993), Ind.Tax., 621 N.E.2d 668, 671 (citing United Rural Elec. Membership Corp. v. Indiana & Michigan Elec. Co. (1990), Ind., 549 N.E.2d 1019, 1022). See also State v. Nixon (1974), 270 Ind. 192, 198-99, 384 N.E.2d 152, 156 (constitutions are to be construed liberally to serve their intended purpose; many rules of statutory construction apply). In the present case, then, the net effect of Article 10, Sec. 1 and the statutes adopted under it is simple and inescapable: the State Board is under a duty to take affirmative steps to ensure "(1) Uniformity and equality in assessment; (2) uniformity and equality as to rate of taxation; and (3) a just valuation for taxation." Fesler, 189 Ind. at 492, 128 N.E. at 147.

This duty is not an abstract goal. It is a concrete obligation. In addition to the provisions for periodic reassessment, ⁵ township reassessments, ⁶ individual reassessments, ⁷ destroyed property reassessments, ⁸ subdivision and rezoning reassessments, ⁹ individual assessment appeals, ¹⁰ and tax refund petitions, ¹¹ there are three statutes particularly relevant to the case at bar.

The...