Ed Guth Realty, Inc. v. Gingold

• Decision Date: 26 June 1974
• Citation: 315 N.E.2d 441,358 N.Y.S.2d 367,34 N.Y.2d 440
• Parties: , 315 N.E.2d 441, 71 A.L.R.3d 224 ED GUTH REALTY, INC., Appellant-Respondent, v. Benjamin M. GINGOLD, as Commissioner of Assessment of the City of Syracuse, Respondent-Appellant. (And Six Other Proceedings.) ED GUTH REALTY, INC., Respondent, v. Benjamin M. GINGOLD, as Commissioner of Assessment of the City of Syracuse, Appellant. (And Six Other Proceedings.)
• Court: New York Court of Appeals Court of Appeals

Page 367

358 N.Y.S.2d 367

34 N.Y.2d 440, 315 N.E.2d 441, 71

A.L.R.3d 224

ED GUTH REALTY, INC., Appellant-Respondent, v. Benjamin M. GINGOLD, as Commissioner of Assessment of the

City of Syracuse, Respondent-Appellant. (And Six

Other Proceedings.)

ED GUTH REALTY, INC., Respondent, v. Benjamin M. GINGOLD, as Commissioner of Assessment of the

City of Syracuse, Appellant. (And Six Other Proceedings.)

Court of Appeals of New York.

June 26, 1974.

Edward P. Kearse, Corp. Counsel, Syracuse (Thomas J. Lowery, Jr., Syracuse, of counsel), for respondent-appellant in the first above-entitled proceedings and for appellant in the second above-entitled proceedings.

Franklin J. Schwarzer, Syracuse, for appellant-respondent in the first above-entitled proceedings.

Franklin J. Schwarzer, Syracuse, for respondent in the second above-entitled proceedings.

Louis J. Lefkowitz, Atty. Gen. (Ruth Kessler Toch, Carl Rosenbloom and Joseph P. McCale, Albany, of counsel), amicus curiae.

Joseph Jaspan, County Atty. (Leon Friedman, Mineola, of counsel), for County of Nassau, amicus curiae.

Adolph Koeppel, William D. Siegel and Bernard Sommer, Mineola, for 860 Executive Towers, Inc. and others, amici curiae.

GABRIELLI, Judge.

The primary question raised by these cross appeals in these so-called inequality proceedings brought under article 7 of the Real Property Tax Law concerns the kind of proof which can properly form the basis for determination of the ratio of assessed value to fair market value as provided under subdivision 3 of section 720 of the Real Property Tax Law. The years in question are 1964 through 1970. ¹

There is a two-step process in proving an inequality case. The petitioner must prove a proper ratio of assessed value to fair market value, and then he must establish the fair market value of his property. Proof on these two points then leads to the application of a simple arithmetic process whereby ratio times market value equals proper assessed valuation.

Subdivision 3 of section 720 of the Real Property Tax Law limits the methods by which ratio may be proved. '3. Evidence on the issue of whether an assessment is unequal shall be limited as hereinafter provided. The parties shall mutually agree on the parcels to be appraised and the number of witnesses to be heard with respect to such issue. In the event the parties fail to agree on such parcels or on the number of witnesses, upon application of either party the court or referee shall select the parcels to be appraised without reference to their assessed values, or shall determine the number of witnesses, or both, as the case may be. Before any testimony is given by either party as to the value of such parcels, each party shall simultaneously file with the court or referee, on a date fixed by the court or referee, a written statement or tabulation of the appraised values placed upon such parcels by the witnesses of the respective parties, and each party shall serve on the other at the same time a copy of such statement or tabulation of values stated by his witness. The parties shall be limited in their proof on the trial of such issues to such parcels and witnesses, except that in any event, whether or not parcels are selected as hereinabove provided, evidence may be given by either party as to (1) actual sales of real property within the assessing unit that occurred during the year in which the assessment under review was made and (2) the state equalization rate established for the roll containing the assessment under review.'

Here petitioner submitted the three kinds of proof permitted by the statute, (1) selected parcels, (2) actual sales, and (3) the equalization rate. Ten selected parcels were utilized by the court and the appraisal evidence bearing on those properties varies markedly, each side, of course, having submitted properties displaying ratios in its favor. The sales for each side were likewise selected so as to result in the ratios most favorable to each side. Respecting the third item of proof, the equalization rate, petitioner put on witnesses who explained in detail the statistical method by which the rates were arrived at, and, in support of this, computer printouts were introduced showing the data collected and how it bore on the ultimate selection of a particular equalization rate.

The trial court, impressed with the statistical backing given the equalization rate, and the fact that it was the only really objective ratio evidence in the case, based his findings solely on those rates for all the years in question. The Appellate Division modified, holding that the equalization rate could provide the sole basis only for 1970; and that it could only be used as some evidence for the preceding years. The case was not remanded, however, the Appellate Division proceeding to make its own findings from all the evidence as to those previous years. The result was that the findings of overassessment were cut somewhat. ² It was held that because of certain statutory amendments and case law over the course of the preceding 20 years, it was not until 1970 that the equalization rate could be used as the sole basis; that prior to that it could be considered as some evidence, but was not entitled to much weight.

That history, briefly, is this: In People ex rel. Yaras v. Kinnaw, 303 N.Y. 224, 101 N.E.2d 474, involving a claimed inequality for the year 1948, this court per then Judge Fuld held that the State equalization rate was completely inadmissible. This was chiefly because the purpose sought to be achieved through such a device was to ascertain whether the valuations in one tax district bear a just relation to the valuations in all tax districts, and the equalization rate would tend toward such a just relation. There was never any claim that the rates had anything to do with individual properties. Judge Fuld noted that a bill introduced in the Legislature in 1950 which would have made a county equalization rate 'presumptive evidence' of the ratio of inequality was vetoed, the Governor pointing out that the county equalization rate bears no accurate relationship to the true full value of the property in the county (303 N.Y., at p. 231, 101 N.E.2d, at pp. 476--477).

Meanwhile, in 1949 the Legislature created a temporary commission known as the State Board of Equalization and Assessment to review and revise equalization rates and to hear appeals from the fixing of rates by the various county boards of supervisors and other local authorities (L.1949, ch. 346). The board was reconstituted as a permanent agency in 1960 (L.1960, ch. 335; Real Property Tax Law, §§ 200--216; Matter of Town of Smithtown v. Moore, 11 N.Y.2d 238, 241, 228 N.Y.S.2d 657, 659, 183 N.E.2d 66, 67). The first set of rates appear to have been established by the board in 1954 and have continued annually ever since, now into the computer age. Prior to this, rates were promulgated locally, their primary use being for apportionment of taxes in joint districts. 'Since the state had no significant interest in equalization rates, little effort was expended on their establishment. It was well known during this period that the state rates were not based on scientific studies and that they were substantially out of date' (Koeppel, Inequality In Real Property Tax Review, 19 Buffalo L.Rev. 565, 568--569 (1969--1970)). It is easily seen, then, why this court refused to allow in the rate in the Yaras case.

In 1961 the Legislature amended subdivision 3 of section 720 of the Real Property Tax Law so that the selected parcels' yardstick was still the chief item of proof, but provided that, additionally, proof of actual sales and the State equalization rate could come in (L.1961, ch. 942). In 1969 this court held in Matter of O'Brien v. Assessor, 20 N.Y.2d 587, 285 N.Y.S.2d 843, 232 N.E.2d 844 that although the 1961 amendment rendered the equalization rate admissible, it did not purport to authorize such proof independently of the other requirements in subdivision 3 of section 720; that the rate should not be applied automatically and would be entitled to little weight. Noting the statement in Bucho Holding Co. v. Temporary State Housing Rent Comm., 11 N.Y.2d 469, 472, n. 2, 230 N.Y.S.2d 977, 979, 184 N.E.2d 569, 571 that the State rate 'does not purport to measure the ratio of assessed valuation to full value of any individual property', Judge Bergan wrote, 20 N.Y.2d, at p. 596, 285 N.Y.S.2d, at p. 850, 232 N.E.2d at p. 850:

'One difficulty with an uncritical judicial acceptance of an equalization rate is that it is arrived at as an administration decision by the State Board of Equalization and Assessment * * * which is not judicially reviewable at all by the taxpayer and which is reviewable by the tax district under the limitations of article 78 of the CPLR, i.e., whether sustained by substantial evidence before the board * * *

'One party could thus find himself bound by an administrative determination in which he had not participated and which he could not review; and the other by a determination where the review was markedly narrower in scope than the plenary factual inquiry available in the trial of the tax review proceeding itself.'

On the heels of that decision subdivision 3 was again amended and now reads as set forth at the beginning of this opinion (L.1969, ch. 302). The significance of the amendment, of course, is that the phrase 'whether or not parcels are selected as hereinabove provided' was inserted, thus, according to the analysis by the court below (41 A.D.2d, at p. 482, 344 N.Y.S.2d at p. 274), making it 'too obvious for dispute that the statute permits par...