Boehm v. Town of St. John

Decision Date23 December 1996
Docket NumberNo. 49S10-9608-TA-544,49S10-9608-TA-544
Citation675 N.E.2d 318
PartiesPeggy BOEHM, Gordon McIntyre, and Wanda Watts, in their official capacity as Commissioners of the Indiana State Board of Tax Commissioners, Appellants (Respondents below), v. TOWN OF ST. JOHN, et al., James K. Gilday, Dimple Clarine Shelton and William E. Wise, Appellees (Petitioners below).
CourtIndiana Supreme Court

DICKSON, Justice.

This is an appeal from the decision of the Indiana Tax Court holding that the Indiana Constitution requires a system of property assessment and taxation based on market value and that, because Indiana's current statutory system of taxation values real property on a basis other than market value, the system is unconstitutional. Town of St. John v. State Bd. of Tax Comm'rs, 665 N.E.2d 965 (Ind.Tax 1996). We reverse that conclusion. Because the Tax Court did not address the taxpayers' other claims, we return this case to the Tax Court to resume its consideration and determination of those claims.

This case arises from the consolidation of several original tax appeals by the petitioners-appellants 1 1 ["taxpayers"] in the Indiana Tax Court challenging the past and future methods by which Indiana assesses the value of real property for taxation purposes. Asserting multiple issues, the taxpayers contended that the current system results in a non-uniform, unequal, unjust and discriminatory valuation and assessment of real property in violation of Article 1, Section 23 and Article 10, Section 1 of the Indiana Constitution, as well as the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution. The taxpayers requested the following relief from the Tax Court: (1) declare Indiana Code Section 6-1.1-31-6(c) 2 unconstitutional if interpreted to prevent the State Board from adopting fair market value or a uniform percentage thereof as the standard of value of real property; (2) require the State Board to adopt a system of assessment that treats equally and uniformly persons who are similarly situated in terms of the fair market value of the real property they own; and (3) review and equalize the assessments and valuations within St. John and the other townships in Indiana.

The Indiana Tax Court addressed only the following issue, finding it to be dispositive: "Whether Article 10, § 1 of the Indiana Constitution requires that all real property assessments be based on [fair 3] market value." Town of St. John, 665 N.E.2d at 966. Article 10, Section 1 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, § 1(a). The Tax Court held that "uniform and equal" mandates "each taxpayer's property wealth bear its proportion of the overall property tax burden," Id. at 970, "that 'just value' means market value," Id. at 973, and that the legislature and the State Board must implement fair market value and "bring the state's system of real property taxation into compliance with Article 10, § 1 of the Indiana Constitution" by March 1, 1998. Id. at 975.

The State Board now appeals the judgment of the Tax Court. Decisions of the Indiana Tax Court are appealed to this Court by filing a petition for review pursuant to Appellate Rule 18, which is significantly different from the process by which this Court reviews decisions of the Court of Appeals upon a petition for transfer, as prescribed by Appellate Rule 11. Our grant of transfer from the Court of Appeals generally operates to vacate the decision of the Court of Appeals and we thereafter consider "all issues therein as if originally filed" in this Court, Ind.App.R. 11(B)(3). However, when we grant review of a decision of the Tax Court, we construe our rule to provide that we address only the issues presented in the petition for review, and that the Tax Court decision is not automatically vacated but rather modified only to the extent determined in our subsequent opinion resolving the issues presented. To the extent that the State Board's petition for review alleges Tax Court error, it presents the following claims: 4

1. The Tax Court should have deferred to the legislature's policy judgments because Article 10, Section 1, delegates the property tax system to the discretion of the General Assembly.

2. The Tax Court erroneously decided that Article 10, Section 1, requires that real property to be assessed solely according to fair market value.

3. The Tax Court improperly set an arbitrary date for the State to implement a new system of assessment based on fair market value.

When a statute is challenged as an alleged violation of the Indiana Constitution, our standard of review is well-established. Every statute stands before us clothed with the presumption of constitutionality until clearly overcome by a contrary showing. Adoptive Parents of M.L.V. v. Wilkens, 598 N.E.2d 1054, 1058 (Ind.1992); State v. Rendleman, 603 N.E.2d 1333, 1334 (Ind.1992); Eddy v. McGinnis, 523 N.E.2d 737, 738 (Ind.1988); Miller v. State, 517 N.E.2d 64, 71 (Ind.1987). The party challenging the constitutionality of the statute bears the burden of proof, and all doubts are resolved against that party. Id. If there are two reasonable interpretations of a statute, one of which is constitutional and the other not, we will choose that path which permits upholding the statute because we will not presume that the legislature violated the constitution unless such is required by the unambiguous language of the statute. Price v. State, 622 N.E.2d 954, 963 (Ind.1993); Smith v. Indianapolis St. Ry. Co., 158 Ind. 425, 427-28, 63 N.E. 849, 850 (1902).

Questions arising under the Indiana Constitution are to be resolved by "examining the language of the text in the context of the history surrounding its drafting and ratification, the purpose and structure of our constitution, and case law interpreting the specific provisions." Ind. Gaming Comm'n v. Moseley, 643 N.E.2d 296, 298 (Ind.1994). See also Price, 622 N.E.2d at 957; Collins v. Day, 644 N.E.2d 72, 76 (Ind.1994); Bayh v. Sonnenburg, 573 N.E.2d 398, 412 (Ind.1991), cert. denied, 502 U.S. 1094, 112 S.Ct. 1170, 117 L.Ed.2d 415 (1992); State Election Bd. v. Bayh, 521 N.E.2d 1313 (Ind.1988). In construing the constitution "a court should look to the history of the times, and examine the state of things existing when the constitution or any part thereof was framed and adopted, to ascertain the old law, the mischief, and the remedy." Sonnenburg, 573 N.E.2d at 412 (citing State v. Gibson, 36 Ind. 389, 391 (1871)). Because the "intent of the framers of the Constitution is paramount in determining the meaning of a provision," Eakin v. State ex rel. Capital, 474 N.E.2d 62, 64 (Ind.1985), this Court will consider "the purpose which induced the adoption," id. at 65, "in order that we may ascertain what the particular constitutional provision was designed to prevent." Northern Ind. Bank and Trust Co. v. State Bd. of Fin. of Ind., 457 N.E.2d 527, 529 (Ind.1983).

1. Extent of Legislative Discretion Authorized

The State Board argues that Article 10, Section 1, commits the design of a property taxation system to the legislative branch and imposes no judicially-manageable standards permitting adequate review of the legislative choices involved. It contends that courts must defer to legislative judgment in matters of competing policy goals properly within the legislative purview.

This Court reviews the constitutionality of statutes with the understanding that "[t]he legislature has wide latitude in determining public policy, and we do not substitute our belief as to the wisdom of a particular statute for those of the legislature." Rendleman, 603 N.E.2d at 1334. As such, "[a] statute is not unconstitutional simply because the court might consider it born of unwise, undesirable, or ineffectual policies." Id. Nevertheless, we are also mindful of "our role as guardian of the constitution," Bunker v. Nat'l Gypsum, 441 N.E.2d 8, 11 (Ind.1982), and the requirement that "[j]udges must enforce the Constitution as written and intended." Bd. of Trustees of Pub. Employees' Retirement Fund of Ind. v. Pearson, 459 N.E.2d 715, 717 (Ind.1984). Consequently, "[w]here a law or the application of a law is challenged on constitutional grounds, the judiciary has the authority, as well as the duty, to explore the constitutional ramifications of the law." City of Anderson v. Assoc. Furniture and Appliances, Inc., 423 N.E.2d 293, 295 (Ind.1981).

Cautious of this balance between the court as "guardian of the constitution" and the General Assembly as policy-makers, we have stated:

In approaching a consideration of the constitutionality of a statute, we must at all times exercise self restraint. Otherwise, under the guise of limiting the Legislature to its constitutional bounds, we are likely to exceed our own. That we have the last word only renders such restraint the more compelling. We, therefore, remind ourselves that in our role as guardian of the constitution, we are nevertheless a court and not a 'supreme legislature.'

Bunker, 441 N.E.2d at 11. However, it is equally important that we observe Justice DeBruler's admonition that, "[w]hile this Court respects the separation of powers, we do not permit excessive formalism to prevent necessary judicial involvement. Where an actual controversy exists we will not shirk our duty to resolve it." Ind. Dep't of Environmental Management v. Chemical Waste...

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