Carpenter v. State Bd. of Equalization and Assessment

• Decision Date: 12 April 1965
• Docket Number: No. 35910,35910
• Citation: 134 N.W.2d 272,178 Neb. 611
• Parties: Terry CARPENTER and Terry Carpenter, Inc., a Corporation, Appellants, v. STATE BOARD OF EQUALIZATION AND ASSESSMENT, Appellee.
• Court: Nebraska Supreme Court

Page 272

134 N.W.2d 272

178 Neb. 611

Terry CARPENTER and Terry Carpenter, Inc., a Corporation, Appellants, v. STATE BOARD OF EQUALIZATION AND ASSESSMENT, Appellee.

No. 35910.

Supreme Court of Nebraska.

April 12, 1965.

Syllabus by the Court

1. The Constitution of this state provides that the necessary revenue for the maintenance of state government shall be raised by taxation in such a manner as the Legislature may direct.

2. The Constitution provides that taxes shall be levied uniformly and proportionately upon all tangible property and that the Legislature may prescribe standards and methods for the determination of the value of tangible property uniformly and proportionately.

3. It is the function of the county board of equalization to determine the actual value of property for taxation purposes.

4. The primary duty of the State Board of Equalization and Assessment is to establish uniformity in taxation between the various counties.

5. Both the county board of equalization and the State Board of Equalization and Assessment must give effect to the constitutional requirement that taxes must be levied uniformly and proportionately upon all tangible property.

6. The determination of each individual county as to actual value is clothed with a presumption of validity and, in the absence of evidence to the contrary, may be accepted by the State Board of Equalization and Assessment as conforming to the law.

7. The State Board of Equalization and Assessment has no power to readjust individual valuations within any particular county.

8. On review of the determination of the State Board of Equalization and Assessment, the proper rule is that this court may not substitute its judgment for that of the State Board of Equalization and Assessment. We review the record only to determine if the State Board of Equalization and Assessment has complied with the requirements of the statute in exercising the powers granted to it by the Legislature.

9. It is only in situations where the record is conclusive that the State Board of Equalization and Assessment's action was illegal, contrary to law, arbitrary, and capricious that this court has any power to interfere with its findings and orders.

10. A wide latitude of judgment and discretion is vested in the State Board of Equalization and Assessment.

11. The State Board of Equalization and Assessment is not bound by the actual record of the evidence taken before it and no particular method or procedure must be followed. No particular kind or standard of evidence is required and it may act upon the knowledge of its own members as to value and on any other information satisfactory to it.

12. The State Board of Equalization and Assessment is entitled to act upon the presumption that the abstracts of assessment returned by the various counties have conformed to law.

13. Actual value is an intangible concept, is largely a matter of opinion, and there are no yardsticks by which it can be determined with accuracy.

14. Substantial compliance with the requirements of equality and uniformity in taxation is all that is required and such provisions are satisfied when designed and manifest departures from the rule are avoided.

15. The object of the law of uniformity in taxation is accomplished if all of the property within the taxing district is assessed at a uniform standard of value.

16. A sales assessment ratio study, without any investigation or evaluation of the raw information according to some uniform standard of evaluation of the sales, is entitled to little, if any, probative force as evidence on the issue of equalization and valuation.

Wilson, Barlow & Neff, Lincoln, for appellants.

Clarence A. H. Meyer, Atty. Gen., H. G. Hamilton, William E. Peters, Asst. Attys. Gen., Lincoln, for appellee.

Heard before WHITE, C. J., and CARTER, SPENCER, BOSLAUGH, BROWER, SMITH and McCOWN, JJ.

WHITE, Chief Justice.

This is an appeal by Terry Carpenter, a taxpayer and owner of urban real property in Scotts Bluff County, and by Terry Carpenter, Inc., a Nebraska corporation, owning both rural and urban real property in Scotts Bluff County, from the decision of the State Board of Equalization and Assessment of the State of Nebraska, made on July 28, 1964.

The record shows that after two preliminary meetings, the State Board of Equalization and Assessment, which will hereafter be referred to as the Board, decided that it would be necessary to call in all of the counties of the state for the hearing before the Board in order to perform its official statutory function. The Board approved a statutory notice of hearing to be sent to each county and informed each county that its representatives would be given an opportunity at a scheduled time to show why the assessed valuations of urban and rural real estate in their county, as shown by the 1964 abstract of assessment rolls previously submitted to the Board, should not be increased or decreased. These notices also stated that particular attention would be focused on the sales assessment ratio for sales prepared by the state Tax Commissioner's office for each county in the years 1960, 1961, 1962, and 1963. Pursuant to these notices, the Board conducted public hearings on July 21, July 22, July 23, July 24, and July 25, 1964. On these dates representatives of all 93 counties appeared before the Board and the testimony of these representatives was incorporated into the minutes of the Board and is a part of the record before this court on appeal.

Subsequently on July 28, 1964, the Board again met. The Board acted upon a motion, which was unanimously carried, and recited that, upon consideration of the testimony of the 93 counties, the statistical data available to the Board, the personal knowledge of the members of the Board, and the requirements of section 77-112, R.R.S.1943, and other applicable law, the Board found: '(1) That the sales assessment ratio, as computed, is not an entirely reliable guide, even if it were possible to use a single factor in making determinations: (2) that there is insufficient evidence to show that the various individual counties are not valuing property for taxation purposes at actual value, such actual value being defined by statute; and (3) that the abstracts of assessment as submitted by the various counties conform to law. * * * The State Board of Equalization and Assessment, therefore, accepts as conforming to law the abstracts of assessment of real and personal property submitted by the various counties to the office of the State Tax Commissioner and approve each of the same.' (Emphasis supplied.)

The appellant, Terry Carpenter, on behalf of himself and Terry Carpenter, Inc., appeared before the Board and requested the Board to equalize the assessment of property in Nebraska to make it conform to law, that is, 35 percent of actual value. From the action of the Board, heretofore recited, the appellants have taken this appeal.

The appellants' assignments of error, summarized, contend that the Board acted arbitrarily and capriciously and not within the law in failing to equalize the valuations of real property among the various counties and that its order did not conform to law in that it did not equalize the values of real property to bring them to the required statutory assessed rate of 35 percent of actual value. At this point, we examine the applicable principles of law involved so that we may proceed to an examination of the pertinent evidence in the case with the proper yardsticks in mind. The Constitution of this state provides that necessary revenue shall be raised by taxation in such a manner as the Legislature may direct. It provides also that taxes shall be levied uniformly and proportionately upon all tangible property. It further provides that the Legislature may prescribe standards and methods for the determination of the value of real and other tangible property at uniform and proportionate values. Art. VIII, § 1, Constitution. Pursuant to these provisions, the Legislature has provided the method of determining the value of tangible property for tax purposes. Section 77-112, R.R.S.1943, provides as follows: 'Actual value of property for taxation shall mean and include the value of property for taxation that is ascertained by using the following formula where applicable: (1) Earning capacity of the property; (2) relative location; (3) desirability and functional use; (4) reproduction cost less depreciation; (5) comparison with other properties of known or recognized value; and (6) market value in the ordinary course of trade.' In our scheme of taxation, the Board acts upon the abstracts of tax assessments furnished by each of the counties. The original determination as to actual value under the statutory standard is the function of a county board of equalization. The determination of each individual county as to actual value within its county is clothed with a presumption of validity and, in the absence of evidence to the contrary, may be accepted by the Board as conforming to the law. It is fundamental that the Board has no power to readjust individual valuations within the county. It can only act to equalize the assessments between different counties in order to achieve the constitutional objective of uniform and proportionate valuations over the whole state. As we see it, the primary duty of the Board is to establish uniformity between the various counties. The basic powers and duties of the Board are set out in the applicable statute, section 77-506, R.R.S.1943, which states in part as follows: 'The State Board of Equalization and Assessment shall proceed to examine the abstracts of real and personal property assessed for taxation in the several counties of the state, including the railroads and pipe lines entirely within such county, and all other property, and shall equalize such assessment so as to make the same conform to law. For that purpose, it shall have the power...