Colorado & Utah Coal Co. v. Rorex

• Decision Date: 19 March 1962
• Docket Number: No. 19666,19666
• Parties: The COLORADO and UTAH COAL COMPANY, a Colorado corporation, Plaintiff in Error, v. Cecil ROREX, Clerk of the Board of County Commissioners of the County of Routt, James Clifton, County Assessor of the County of Routt, T. W. Poulson, County Treasurer of the County of Routt, the Board of County Commissioners of the County of Routt, the Board of Equalization of the County of Routt, and the County of Routt, Defendants in Error.
• Court: Colorado Supreme Court

Page 796

369 P.2d 796

149 Colo. 502

The COLORADO and UTAH COAL COMPANY, a Colorado corporation Plaintiff in Error, v. Cecil ROREX, Clerk of the Board of County Commissioners of the County of Routt, James Clifton, County Assessor of the County of Routt, T. W. Poulson, County Treasurer of the County of Routt, the Board of County Commissioners of the County of Routt, the Board of Equalization of the County of Routt, and the County of Routt, Defendants in Error.

No. 19666.

Supreme Court of Colorado, En Banc.

March 19, 1962.

Holme, Roberts, More & Owen, Denver, for plaintiff in error.

Robert H. Gleason, Steamboat Springs, for defendants in error.

FRANTZ, Justice.

The Colorado & Utah Coal Company was plaintiff in suit concerning the 1958 assessment for tax purposes of certain personal property and improvements on the real estate of the Company. The Company contends that the valuation of all this property for tax purposes should have been $45,000.00, whereas the County Assessor valued the property at $335,030.00. The tax levied was based upon the latter figure.

Having pursued its administrative remedies to an unsuccessful conclusion, the Company thereafter sought relief in the district court by review proceedings under C.R.S. '53, 137-3-38. Trial there resulted in a judgment affirmative of administrative action, and hence adverse to the Company. Persisting in its contention that the tax on the property involved was manifestly erroneous, oppressive, and confiscatory, the Company is before us seeking reversal by writ of error.

As grounds for reversal, the Company contends that the trial court committed prejudicial error----

(1) In holding that the integrity of the presumption of regularity of the Assessor's action in evaluating the property remained intact in the face of admissions and evidence depriving the presumption of any force;

(2) In not findings and determining the assessments to have been manifestly erroneous and oppressive;

(3) In construing the pleadings as limiting the issue to alternative values: either that asserted by the Company or that fixed by the Assessor; and

(4) In failing to exercise its statutory authority to ascertain the value of the property and thereupon modify the erroneous assessment to conform to such value.

The Company was incorporated in 1914, and afterwards commenced its coal operations at Mt. Harris, Colorado. It continued to mine coal until January 31, 1958, after which operations were confined solely to the proper liquidation of the business and the due dissolution of the corporation. During its existence the Company owned an underground mine and tipple north of the Yampa River, and the Company town and store south of the river. A Company-owned bridge connected the mine with the town.

After 1948 a palpable decline in profits from the Mr. Harris operation appears from the records of the Company, and this condition was indicative of the fact that the Company was in the throes of death. In 1948 the Company had realized a net profit of $490,754.92. A marked decrease in profits followed until 1954, when it sustained a loss of $14,675.92. The next year the Company realized a small net profit of $13,249.45, but in 1956 it suffered a loss of $6,285.91, and in 1957 a loss of $40,841.76

At the annual meeting of stockholders, held in April 1955, it was proposed that serious consideration be given to the 'cessation of operations' and 'the prompt liquidation of' the Company. The critical condition of the Company was again discussed at the annual meeting for 1957. A special meeting of directors was held November 18, 1957, at which it was resolved to submit to the stockholders a plan of liquidation. On January 20, 1958, at a special meeting of stockholders, a plan of liquidation was proposed and approved.

The Company made a return of its tax schedule for the year 1958, and placed a value of $55,800.00 on its properties. This value was rejected by the County Assessor, who fixed a valuation of $346,550.00 on these properties, a substantial reduction from the 1957 valuation of $380,560.00. The date of the assessment in question was February 1, 1958, at which time the mine properties were intact. Taxes based on this assessment were paid under written protest.

In determining appraisals for taxation, the 1941 replacement cost of machinery and equipment was the factor considered. A depreciation formula was then applied. In March or April 1958, Winkleman, the industrial appraisal engineer for the Colorado Tax Commission, visited the Mt. Harris property of the Company for the purpose of appraising it, and his valuations were adopted by the County Assessor.

According to Winkleman, management of the Company, obsolescence, or the fact that the Company was part of a very sick industry were not factors which he took into account in making his appraisals. He testified that 'in order for relief to be given there must be several years of notification to the Assessor that the property is in distress.' And then, obsolescence would only be recognized when supported by ample evidence showing that it existed.

Both the Assessor and Winkleman admitted that an official manual existed containing directions for evaluating property for tax purposes, and that obsolescence was treated extensively therein. (Concerning the manual's significance--whether issued pursuant to, or containing directions in accordance with, law--we are not here deciding.) On cross-examination of these witnesses, they admitted that obsolescence was not considered in their decisions as to value. Further, on cross-examination, excerpts of the manual were used in framing questions to Winkleman, and his answers negated resort to the criteria therein given, relating to obsolescence, in his appraisals.

Other factors were not given any weight by the assessing authorities. That the property was located in a coal camp in the process of being abandoned was deemed insignificant. Comparable sales were disregarded. Either impliedly or expressly, these factors were proposed for consideration in the manual in placing value on property.

Pursuant to the plan of liquidation, the Company negotiated for the sale of its assets. Several dealers bargained for them. Eventually the assets, except the land and except some equipment sold to another coal company for $11,839.35, were transferred to J. B. Wise, Inc. for $107,235.00. The latter company removed machinery and equipment from the mine, and these, together with buildings, machinery, and equipment on the surface, were sold by it mostly at auction and some at private sale for a total of $228,347.00.

Whatever other evidence need be mentioned will be recited under the particular point being discussed and to which it has significance. We consider the several points in the order enumerated above.

1. In its 'Memorandum of Decision,' the trial court invoked the rule that the 'Assessor's valuation is attended by the usual presumption that the act of a public official or public body is regular and lawful.' Noting the substantial decrease in the 1958 valuation from the prior year, the trial court observed that it 'was in conformity with the 1952 directive. Winkleman so testified and there is no refutation. Presumptively the reduction included and encompassed all factors properly to be taken into consideration. This presumption has not been overcome.' (Emphasis supplied.)

It is true that an assessor's ascertainment of the value of property for taxation is presumed to be right. Standard Chemical Co. v. Curtis, 77 Colo. 10, 233 P. 1112; Colorado Tax Commission v. Midland Terminal Railway Co., 93 Colo. 108, 24 P.2d 745. The efficacy of this presumption is such that clear and convincing evidence must be adduced to enervate it. Tax Commission v. Midland Terminal Railway Co., supra; Stalder v. Board of County Com'rs, 147 Colo. ----, 364 P.2d 389.

Should the presumption prevail, however, where those assessing officials who would avail themselves of it admittedly had not taken obsolescence and other sales into consideration in fixing values?

'In determining the true value of taxable property * * * market value shall be the guide.' (Emphasis supplied.) C.R.S. '53, 137-3-17. The value thus designated is simply and in essence the value which property has in exchange for money in a free market. Kistler v. Northern Colorado Water District, 126 Colo. 11, 246 P.2d 616. It has been said many times that such value involves voluntary dealing between buyer and seller at a price the former is willing to pay and the latter is willing to take. See Wassenich v. Denver, 67 Colo. 456, 186 P. 533; Board of County Commissioners of Jefferson County v. Noble, 117 Colo. 77, 184 P.2d 142.

Opinion evidence regarding market value should be based upon the same elements as would induce willing and intelligent buyers and sellers to agree, including such sources of information as the contracting parties would use. Obsolescence would be an important factor in the make-up of such market value. Assessors of Quincy v. Boston Consol. Gas Co., 309 Mass. 60, 34 N.E.2d 623. Indeed, one who in anxious to buy but who would disregard obsolescence, when at hand, would be deemed foolhardy, and his purchase would likely prove to be a pig in a poke.

The force of the presumption of regularity of the Assessor's official act must be regarded as spent when he and his witness Winkleman admittedly did not take into consideration obsolescence as it was made to appear in this case. With or without a manual containing directions to take obsolescence into account, it is, when present, a constituent of valuation for taxation. In this state, in order to achieve as nearly an ideal or perfect uniformity and equality in taxation as human fallibility permits, assessors were supplied with manuals which furnished them with guides for determining valuations for tax purposes.

'No party can claim the right of a presumption against his own admission under oath.'...