Butte County v. Vallery, No. 20896.

• Court: Supreme Court of South Dakota
• Writing for the Court: GILBERTSON, Justice.
• Citation: 1999 SD 142,602 N.W.2d 284
• Parties: BUTTE COUNTY, a Political Subdivision, Appellee, and Butte County Board of County Commissioners, acting in their capacities as the Butte County Board of Equalization, Appellant, v. R. Thornton VALLERY, Appellee.
• Decision Date: 03 November 1999
• Docket Number: No. 20896.

602 N.W.2d 284
1999 SD 142

BUTTE COUNTY, a Political Subdivision, Appellee, and
Butte County Board of County Commissioners, acting in their capacities as the Butte County Board of Equalization, Appellant,
v.
R. Thornton VALLERY, Appellee

No. 20896.

Supreme Court of South Dakota.

Considered on Briefs September 13, 1999.

Decided November 3, 1999.

602 N.W.2d 285

Terri Lee Williams, Butte County State's Attorney, Belle Fourche, South Dakota, Attorney for appellant

James P. Hurley of Bangs, McCullen, Butler, Foye & Simmons, Rapid City, South Dakota, Attorneys for appellee Vallery.

GILBERTSON, Justice.

[¶ 1.] Landowner brought an action against county board of equalization challenging board's assessment of his property, which was based on a method that classified certain real property as irrigable, as compared to dryland, and valued it as such. The circuit court reversed the assessment finding that irrigated or irrigable land cannot be separately classified for purposes of taxation under the South Dakota Constitution. The circuit court ordered the county assess in a similar manner to that of all other agricultural lands. The county appeals. We affirm.

FACTS AND PROCEDURE

[¶ 2.] Thornton Vallery (Vallery) owns approximately 2,661 acres of agricultural land located in the Belle Fourche River Valley. Approximately 300 acres of the property is hay land and farm ground. The Vallery land is not located in the government-established Belle Fourche Irrigation Project. In 1996 Vallery's land

602 N.W.2d 286

had an assessed value of $231.50 per acre as irrigable property

[¶ 3.] In 1997 Butte County (County) assessed Vallery's land at $845.90 per acre. This increase was based upon a finding the land was irrigable. Of the 661.07 acres appealed, County assessed 315 acres as irrigable land, and assessed it at a substantially higher value than the nonirrigable land, irrespective of soil type. Vallery appealed to the county board of equalization, arguing the assessment was in excess of full and true value. The board made no change to the assessment. On July 24, 1997, Vallery appealed to the South Dakota Office of Hearing Examiners (hearing examiner). The hearing examiner found County's assessed value of Vallery's 315 acres of land was determined by soil type, compared to sales of properties with similar soil types. The hearing examiner found County's means of assessment unconstitutional because it established a separate classification for "irrigable land" and considered land management when determining the assessed value of agricultural property. Furthermore, the county director of equalization valued real estate as dry land, not as irrigable land if the property was not "set up" for irrigation. The hearing examiner ordered County to reevaluate the property consistent with nonirrigable agricultural property and assess it accordingly.

[¶ 4.] On September 9, 1997, County appealed the hearing examiner's order to the circuit court. It claimed Vallery's land was properly assessed as irrigable due to its location, soil, terrain, topography and water rights. In determining the 1997 assessment, County considered land management by irrigation, implemented by water rights.¹ It compared the types of soil, as rated by the State according to productivity, location of the property and irrigability. County claimed values for dry land soils and irrigable soils were determined by analyzing sales of comparable property. It was County's policy that if water rights were available and if the soils were irrigable and being irrigated, they were treated as irrigable soils.²

[¶ 5.] The circuit court concluded County was still considering whether land was actually irrigated in making tax assessments on agricultural land, and thus, taking into consideration farm management decisions. The court further concluded this method of classification resulted in two separate classes of property for agricultural land and was therefore unconstitutional.

[¶ 6.] The circuit court also concluded County reevaluated irrigable soil if there was irrigation or if there were some type of water rights. Thus, County was in essence double taxing agricultural land by separately reevaluating whether the soil was irrigable. The circuit court affirmed the decision of the hearing examiner and ordered Vallery's property be classified and valued consistent with the method for valuing other agricultural land in accordance with South Dakota law.

[¶ 7.] County appeals raising the following issues for our consideration:

1. Whether County created a separate agricultural classification for assessment purposes in increasing the value of land deemed irrigable.

2. Whether the assessment of the director of equalization resulted in double taxation.

3. Whether the decision of the hearing examiner was clearly erroneous.

STANDARD OF REVIEW

[¶ 8.] This is an appeal of a tax assessment pursuant to SDCL 10-11-43 and thus it is procedurally governed by

602 N.W.2d 287

SDCL ch 1-26. Under SDCL 10-11-42.1, the hearing examiner tries the issues de novo. On appeal both the circuit court and this Court review that decision as set forth in SDCL 1-26-36. This standard of review requires us to accord great weight to the findings and inferences made by the hearing examiner on factual questions. Clarkson and Company v. Harding County, 1998 SD 74, ¶ 5, 581 N.W.2d 499, 501 (citing Sopko v. C & R Transfer Co., Inc., 1998 SD 8, ¶ 6, 575 N.W.2d 225, 228). "When the issue is a question of fact, we ascertain whether the administrative agency was clearly erroneous." Moose Lodge v. Pennington County, 1997 SD 80, ¶ 5, 566 N.W.2d 132, 133 (quoting Permann v. Dep't. of Labor, Unemployment Ins. Div., 411 N.W.2d 113, 116 (S.D.1987)); West Two Rivers Ranch v. Pennington Co., 1996 SD 70, ¶ 6, 549 N.W.2d 683 (SD 1996) ("value is a question of fact and the trial court's determination will only be overturned if it is clearly erroneous"). When the issue is a question of law, the decisions of the administrative agency and the circuit court are fully reviewable

[¶ 9.] In the present case, the circuit court concluded this irrigated or irrigable land cannot be separately classified for purposes of taxation but should be considered as dryland and assessed according to SDCL 10-6-33.1 and SDCL 10-6-33.2. We will only reverse "if after a careful review of the entire record[,] we are definitely and firmly convinced a mistake has been committed...." Clarkson, 1998 SD 74, ¶ 5, 581 N.W.2d at 501 (quoting Spitzack v. Berg Corp., 532 N.W.2d 72, 75 (S.D.1995)); Richter Enterprises v. Sully County, 1997 SD 61, ¶ 7, 563 N.W.2d 841, 843 (citing Hutchinson County v. Fischer, 393 N.W.2d 778, 781 (S.D.1986)).

ANALYSIS AND DECISION

[¶ 10.] Whether County created a separate agricultural classification for assessment purposes in increasing the value of land deemed irrigable.

[¶ 11.] All real property in South Dakota is to be assessed for tax purposes at its true and full value. SDCL 10-6-33. There is a presumption that tax officials act in accordance with the law and not arbitrarily or unfairly when assessing property, and the taxpayer bears the burden to overcome this presumption. Amert v. Lake County Bd. of Equal., 1998 SD 66, ¶ 14, 580 N.W.2d 616, 618-19 (citing Richter Enterprises, 1997 SD 61, ¶ 7, 563 N.W.2d at 843; see also West Two Rivers, 1996 SD 70, ¶ 7, 549 N.W.2d at 686 (citing Roseland v. Faulk County Bd. of Equalization, 474 N.W.2d 273, 275 (S.D.1991)). "Specifically, [the][t]axpayer must produce sufficient evidence to show the assessed valuation was in excess of true and full value, lacked uniformity in the same class[,] or was discriminatory." Clarkson, 1998 SD 74, ¶ 6, 581 N.W.2d at 502 (quoting Richter Enterprises, 1997 SD 61, ¶ 7, 563 N.W.2d at 843 (internal quotations omitted)).

[¶ 12.] Apart from the statutes governing assessment of property for taxation purposes, the underlying constitutional provisions must also be complied with:

(1) the burden of taxation of all property is to be equitable, S.D. Const. art. XI, § 2,

(2) agricultural and nonagricultural property may be separated into distinct classes for tax purposes, S.D. Const. art. VIII, § 15,

(3) valuation of property is not to exceed its actual value, S.D. Const. art. XI, § 2, and

(4)...