Drey v. State Tax Commission

• Decision Date: 10 April 1961
• Docket Number: No. 1,Nos. 48118-48120,s. 48118-48120,1
• Citation: 345 S.W.2d 228
• Parties: Leo A. DREY, Plaintiff-Appellant, v. STATE TAX COMMISSION of Missouri, James M. Robertson, Chairman, and John A. Williams, J. Ralph Hutchison, Commissioners of the State Tax Commission of Missouri, Jink Smith, Assessor, Shannon County, Missouri, and Donald D. Searcy, Collector of Shannon County, Missouri, Defendants-Respondents
• Court: Missouri Supreme Court

Page 228

345 S.W.2d 228

Leo A. DREY, Plaintiff-Appellant, v. STATE TAX COMMISSION of Missouri, James M. Robertson Chairman, and John A. Williams, J. Ralph Hutchison Commissioners of the State Tax Commission of Missouri, Jink Smith, Assessor, Shannon County, Missouri, and Donald D Searcy, Collector of Shannon County, Missouri, Defendants-Respondents.

Nos. 48118-48120.

Supreme Court of Missouri, Division No. 1.

April 10, 1961.

Henry C. Lowenhaupt, St. Louis, Robert S. Allen, St. Louis, for plaintiff-appellant.

Friend B. Greene, Eminence, Dorman L. Steelman, David C. Harrison, Salem, for respondents.

HOUSER, Commissioner.

Here for review is the action of the Circuit Court of Shannon County dismissing an aggrieved taxpayer's appeals and affirming the orders of the State Tax Commission upholding real property tax assessments for the years 1957, 1958 and 1959 upon 88,725 acres of wild timberland located in Shannon County. In each of those three years taxpayer Leo A. Drey appealed the assessment to the Shannon County Board of Equalization. In each year the board denied a reduction and the taxpayer petitioned the commission for a review of the assessment. The commission refused to hear and dismissed the 1957 appeal, whereupon taxpayer petitioned the circuit court for judicial review of the decision of the commission. Failing to get relief in the circuit court taxpayer appealed to this Court, which reversed the judgment affirming the commission's order dismissing the petition for review, and remanded the case with directions to remand the case to the commission for the purpose of exercising jurisdiction over taxpayer's appeal of the 1957 assessment. Drey v. State Tax Commission, Mo.Sup., 323 S.W.2d 719. Meantime the commission conducted a hearing on the 1958 appeal, and denied a reduction in the 1958 assessment. Taxpayer sought a judicial review of that order by filing a petition in the circuit court. Drey v. State Tax Commission, supra, was handed down before the circuit court acted. Thereupon the county officials (who had prevailed before the commission) filed a motion in the circuit court to remand to the commission to permit them to adduce additional evidence with respect to the 1958 assessment. The circuit court sustained the motion and remanded the case to the commission. Accordingly, there were three appeals pending after the 1959 appeal reached the commission. All three appeals were set for hearing on the same day and they were heard together on November 9, 1959. By letter dated December 18, 1959 the commission notified taxpayer that it had denied relief in all three appeals. Taxpayer appealed to the circuit court, which affirmed the commission's orders and dismissed all three appeals. From the three judgments of the circuit court taxpayer has appealed to this Court. By agreement of the parties approved by this Court the record in the 1959 appeal is considered as filed in all three cases; the parties filed one set of briefs, and the three appeals were heard together as one for the purpose of decision.

This Court has jurisdiction of these appeals for the reason, among others, that the construction of the revenue laws of this state are involved. Koplar v. State Tax Commission, Mo.Sup., 321 S.W.2d 686.

Taxpayer's petitions for review alleged that the assessments were excessive, erroneous, unlawful, unfair, unequal, improper, arbitrary, capricious, fraudulent, void and unconstitutional because they were excessive, and disproportionate. Taxpayer claimed they were excessive because they: (1) were grossly in excess of true value; (2) failed to take into account the depletion resulting from the cutting of timber from the land, and severe losses from drought and fire, in 1954, 1955 and 1956, as a result of which the value of the land was diminished by considerably more than one million dollars; (3) exceeded the amount of the assessment for 1955 as reduced by the judgment of the Circuit Court of St. Louis County; and (4) were entered without notice to taxpayer. Taxpayer claimed they were disproportionate because unequal and discriminatory as compared with assessments on other and comparable property, in violation of Sec. 3 of Article X and Secs. 2 and 10 of Article I of the Constitution of Missouri, V.A.M.S., and of the 14th amendment to the federal Constitution.

On this appeal taxpayer contends that under the overwhelming evidence the assessments were unlawful, unfair, arbitrary and capricious; that the commission erred in excluding and giving no weight to certain evidence, failing to correct the assessments, denying and violating taxpayer's constitutional rights, failing to accord taxpayer a fair trial and in making decisions which were arbitrary and capricious; that the orders of the commission were not supported by competent and substantial evidence upon the whole record, and that the circuit court therefore erred in affirming the commission's orders.

Taxpayer's case consisted of his own testimony; that of his chief forester; certain admissions made by the assessor at the 1958 hearing, and numerous documents, all of which tended to show the following:

Taxpayer, a resident of St. Louis County, began purchasing wild timberland in central Missouri in 1951. By 1957 he had purchased 131,376 acres in the Counties of Shannon, Texas, Carter and Reynolds, in 99 separate transactions. His holdings in Shannon County were purchased in 14 separate transactions. Taxpayer purchased 87,415 acres from National Distillers Products Corporation on June 1, 1954. That land, assessed on January, 1, 1954 at $376,655, or an average of $4.31 per acre, was sold to taxpayer for $361,393, National reserving all white oak timber 15 inches and over in diameter at breast height, and the right to enter, cut and remove same (300,000 board feet were excluded from the reservation). The subject matter of the reservation was old growth timber, probably the finest timber in the state. After June, 1954 taxpayer, in 12 separate transactions, bought an additional 1,330 acres in Shannon County, for $5,285 (an average cost of $3.97 per acre). By January 1, 1955 taxpayer had purchased a total of 88,725 acres in Shannon County, at an average cost of $4.12 per acre. Sales prices of timberlands in Shannon County of state forestry service over the last few years, by and large, have averaged between $3 and $4 per acre. In 1954 National cut and removed 9,270,340 board feet of white oak timber under its reservation. Taxpayer sold 782,493 board feet, which was removed before January 1, 1955. Taxpayer's whole forest (in all four counties) suffered an extremely heavy drought loss in the summer of 1954, calculated by taxpayer at an excess of 12 1/2 million board feet, worth $12 a thousand. Notwithstanding the standing timber was thus reduced by cutting and drought and the interest of National in the timber under its reservation had been severed from taxpayer's interest, all interests in the land were assessed to taxpayer on January 1, 1955 (the assessor not separately assessing National's interest), and the assessment was not reduced but was made in the same amount as the previous year, $376,655. Taxpayer unsuccessfully appealed the 1955 assessment to the Board of Equalization of Shannon County and the State Tax Commission. He then appealed to the Circuit Court of St. Louis County, which found that the standing timber reserved by National constituted an interest in land taxable only to National and not to Leo A. Drey, the purchaser of the land, and that the assessment had been made on the improper legal assumption that the purchaser was liable to be taxed on the gross value of the land including the standing timber, and modified the order of the commission fixing the assessed value of taxpayer's lands for 1955 at $376,655 by excluding the assessment of the interest of National, and ordered that Leo A. Drey's interest in the land be assessed at $108,207. The assessor was directed to correct his records accordingly. This judgment became final on January 17, 1958. In 1955 taxpayer sold 2,704,105 board feet from the land and National cut 9,012,470 board feet. On January 1, 1956 the land was again assessed to Leo A. Drey in the amount of $376,655. In 1956 taxpayer sold 2,343,817 board feet from the land, while National in 1956, completing its 'harvest' or 'liquidation' cut under its reservation, cut 990,860 board feet. In the three years National cut a total of 19,273,670 board feet. In that period mature oak timber standing on the stump was worth between $50 and $100 per thousand board feet. The gross value of the land was decreased roughly by one million dollars by National's liquidation. When it completed its harvest cut, National on Movember 29, 1956 released the timber reservation in writing. On January 1, 1957 (six weeks after the circuit court ordered the 1955 assessment reduced to $108,207) the land was assessed to Leo A. Drey for $440,775 (15% in excess of previous assessments), an average of $4.96 per acre. In 1957 taxpayer sold 1,334,672 board feet from the land and in 1958, 1,469,578 board feet. On January 1, 1958 and January 1, 1959 the land was assessed to Leo A. Drey at $4.96 per acre. For all of the timber, of all species, cut and sold by taxpayer since 1954 (a total of 8,600,000 odd feet), an average of about $12 per thousand board feet was received, for a total amount of $104,000, according to taxpayer's estimate. As of November, 1959 in the entire forest of 131,376 acres taxpayer, 'speaking in generalities,' guessed that there remained 100,000,000 board feet of timber, of all species, including the nonmerchantable 20% of species that are not salable and that which is scattered and not operable. Notwithstanding losses by fire, storm, theft, and reductions by cutting, a substantial part of the more than 9,000,000 feet of pine estimated in a cruise in 1952, and approximately 12,000,000 feet of hickory (for which there is no market), plus...