County Treasurer and Ex Officio County Collector of Cook County, Application of

Decision Date27 September 1989
Docket NumberNo. 66709,66709
Citation131 Ill.2d 541,546 N.E.2d 506,137 Ill.Dec. 561
Parties, 137 Ill.Dec. 561 In re Application of the COUNTY TREASURER AND EX OFFICIO COUNTY COLLECTOR OF COOK COUNTY (County Collector of Cook County, Appellee, v. Ford Motor Company, Appellant).
CourtIllinois Supreme Court

Rock, Fusco & Reynolds and Tully & Weinstein, Chicago (Philip J. Rock, Thomas M. Tully, Donald A. McCarthy and Patrick T. Driscoll, Jr., of counsel), for appellant.

Richard M. Daley, State's Atty., Chicago (Joan S. Cherry, Mark R. Davis and Donald M. Devlin, of counsel), for appellee.

Justice MILLER delivered the opinion of the court:

Ford Motor Company (Ford) filed in the circuit court of Cook County an objection to an application of the Cook County collector (Collector) for judgment for delinquent 1981 real estate taxes. Following a bench trial, the circuit court found in favor of Ford, concluding that the Collector's assessed valuation of Ford's property was so excessive as to be constructively fraudulent and therefore invalid. The trial court then ordered the Collector to refund excess taxes that Ford had paid under protest. The Collector appealed to the appellate court. The appellate court found that the trial court's finding that Ford's property had been overvalued by the assessor was against the manifest weight of the evidence and reversed. (166 Ill.App.3d 373, 116 Ill.Dec. 795, 519 N.E.2d 1010.) We allowed Ford's petition for leave to appeal from the appellate court's judgment pursuant to Supreme Court Rule 315 (107 Ill.2d R. 315).

The record discloses that in 1981, Ford owned and operated an automotive manufacturing facility in Cook County, Illinois, that stamped metal into auto body parts. The facility was situated on a 133-acre tract of land located in an unincorporated area of Cook County at the intersection of Cottage Grove Avenue and Lincoln Highway in Bloom Township. The stamping plant totaled approximately 2.5 million square feet and consisted of one main building, which housed the manufacturing facilities and administrative offices, and 11 support buildings, such as a powerhouse, an oil shed and storage facilities.

Under the Cook County Real Property Assessment Classification Ordinance, Ford's stamping plant is a Class V property, and, as such, is assessed at 40% of its fair market value. (Cook County Real Property Assessment Classification Ordinance §§ 13-14, 13-15 (1980).) For the tax year 1981, the assessed value of Ford's property was $13,626,634, which corresponded to a market value of $34,066,585. The assessed value resulted in property taxes of $1,783,381.49 for that year. Ford, believing that the assessed valuation was excessive, paid the taxes under protest, and then appealed to the board of appeals of Cook County to challenge the 1981 assessment. The board made no change in the assessment.

The Cook County collector made an application for judgment and order of sale of all real estate on which the taxes for the year 1981 had not been paid in full, and also made application to the court for a determination of the correct amount of property taxes paid in full under protest. Pursuant to section 235 of the Revenue Act of 1939 (Ill.Rev.Stat.1981, ch. 120, par. 716), Ford timely filed with the circuit court of Cook County its objection to the Collector's application, alleging, among other things, that the assessment was constructively fraudulent and that Ford was entitled to a tax refund of $762,558.92.

In December 1985, a bench trial was held at which Ford sought to prove constructive fraud on the part of the assessor by establishing that the assessor's valuation of its property was grossly excessive. At trial, Ford offered the expert testimony of John Shanahan, a certified real estate appraiser. Shanahan testified that he had been hired by Ford to render an appraisal of the stamping plant's value in the fall of 1980 and that he believed the property had a fair market value of $19.5 million, an amount more than $14 million less than that calculated by the assessor, as of January 1, 1981. Shanahan explained that in appraising Ford's property he had utilized the three commonly accepted approaches in appraising property values, the cost, income and market data approaches. An explanation of the three approaches used by Shanahan is provided in the appellate court's opinion and need not be repeated here. 166 Ill.App.3d at 375-76, 116 Ill.Dec. 795, 519 N.E.2d 1010.

Shanahan stated that, in his opinion, under the market data approach, the Ford property had an appraised value of $19.5 million; under the cost approach, a value of $20,435,000; and, under the income approach, a value of $17,870,000. Shanahan explained that, although he considered all three approaches in arriving at his final estimate of fair market value, he relied most heavily on the market data approach because he considered that approach to yield the most accurate estimate of value. Shanahan stated that he considered the cost approach to be a sound approach to use in determining property values and that, after the market data approach, he placed the most reliance on that method of valuing property. Of the three approaches used, Shanahan testified, he gave the least weight to the income approach.

In response, the Collector called Bruce H. Brenner, also a certified real estate appraiser, as an expert witness. Brenner testified that he had been hired by the affected school district to appraise Ford's property in 1984, over three years after the assessment. Brenner used the same approaches to appraise the property as Shanahan had and concurred with Shanahan on the relative weight that each of these approaches should be given. Using the market data approach, Brenner estimated that the stamping plant's value was $28 million as of January 1, 1981, using the cost approach $30 million, and the income approach $25 million. Brenner's final estimate of value was $28 million.

The Collector then called as a witness Arthur R. Goepp, who had worked for Ford as a property assessment evaluator for 23 years. In that capacity, Goepp reviewed property tax assessments and then prepared appraisals of Ford's property that, on occasion, were submitted to local assessing authorities. Goepp was then asked to identify a document that he had prepared in the summer of 1979. This document was entitled a Memorandum of Value and purported to give an estimate of the stamping plant's market value based on the cost approach. The memorandum listed the appraised value of the stamping plant as $34,150,000 as of January 1980. Goepp explained that he had prepared the memorandum in question as an advisory, in-house suggestion of value to assist Ford's local tax attorneys. The court took judicial notice of the fact that Ford had submitted the document prepared by Goepp to the Cook County assessor's office.

On June 19, 1986, the trial judge issued an order in favor of Ford. The judge stated that Ford had overcome the presumption that the assessment of its property based upon a market value of $34,065,582 was correct. In making this determination, the judge stated that he had considered the testimony of the expert witnesses, as well as other matters. The judge then said that, once the presumption of the validity of the assessment had been overcome, it was incumbent on the assessor to produce evidence to justify the assessment, but, because no such evidence had been produced, the presumption of correctness had disappeared.

The judge then proceeded to make his own determination of the stamping plant's value as of January 1981 and found that under both the market data and cost approaches to valuation the Ford property was worth $22.8 million. The trial judge then stated that the market value as indicated by the assessment was so excessive when compared to his finding of the market value that the assessment constituted a constructive fraud, and that Ford had proved by clear and convincing evidence that the assessment of its property was constructively fraudulent. On July 1, 1986, the judge ordered the Collector to refund $589,804.34 of the 1981 taxes paid under protest by Ford.

On appeal to the appellate court, the Collector raised two issues for review, arguing first that Ford's evidence had fallen short of the clear and convincing standard necessary to prove that the assessment was constructively fraudulent and, second, that in reaching his decision, the trial judge had erred by considering matters outside the record. An undivided panel of the appellate court reversed the trial court's judgment. The appellate court stated that the weight of the evidence supported the assessor's finding that the property had a fair market value of $34,066,585 rather than the trial judge's finding that the plant was worth $22.8 million. The appellate court then concluded that, because Ford had failed to prove an overvaluation of the stamping plant by the assessor, the trial court had erred in its determination that the assessment was constructively fraudulent.

Here, Ford argues that the trial judge's finding that the stamping plant had a value of $22.8 million is fully supported by the record and contends that, in light of this finding, the trial judge was justified in concluding that the assessment was constructively fraudulent. Ford argues further that, because the trial court's decision was not against the manifest weight of the evidence, the appellate court exceeded the proper scope of appellate review by reweighing the evidence and substituting its judgment for that of the trier of fact. Thus, in addressing this argument, we must first consider whether the trial judge's finding regarding the value of Ford's property was against the manifest weight of the evidence. If the finding of overvaluation is supported by the record, we must further determine whether, given the overvaluation, the trial court was justified in concluding that the assessment was...

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