Greene County v. Hermel, Inc.

• Decision Date: 22 July 1974
• Docket Number: No. 58141,No. 2,58141,2
• Parties: GREENE COUNTY, Missouri, Respondent, v. HERMEL, INC., a corporation, Appellant
• Court: Missouri Supreme Court

Page 762

511 S.W.2d 762

GREENE COUNTY, Missouri, Respondent, v. HERMEL, INC., a corporation, Appellant.

No. 58141.

Supreme Court of Missouri, Division No. 2.

July 22, 1974.

Dee Wampler, Springfield, for plaintiff-respondent Greene County, missouri.

White, Dickey & Allemann, Turner White, Springfield, for defendant-appellant.

C. Wallace Walter, Kenneth T. Walter, Mann, Walter, Burkart & Weathers, Springfield, for The School District of Springfield R--12.

HENRY I. EAGER, Special Commissioner.

This case involves the valuation for 1971 state and county taxes of the 'Battlefield Mall' in Springfield, Missouri, owned by Hermel, Inc. It consists of about 60 acres of land and a building approximately 1400 feet long containing 40--50 stores, and an enclosed mall. The case is here on appeal from an order of the Circuit Court reversing a decision of the State Tax Commission. The mall was opened for business in July 1970. The assessor placed a valuation of $1,441,612 on the land as of January 1, 1971, which resulted in an assessment value of $432,480. Appellant raises no objection to that valuation. The improvements as a whole were valued by the assessor at $11,744.909, leaving an assessed value for taxation of $3,557,660. On these valuations the total taxes would be $254,368.22 a year. We shall refer to the appellant as Hermel. At the hearing before the Tax Commission Hermel's Vice-President testified that the construction cost was $8,362,884, including certain allowances to tenants for completion of their store interiors. On the improvements, Hermel's expert witness testified to valuations of: (1) the construction cost, as above, less the cost of land preparation, leaving $8,012,108.25; (2) the capitalization of income,--$8,472.691; and (3) the 'market data' approach based on comparable sales,--$8,590,000. The representatives of the county testified to their original assessed valuations as stated above. The Tax Commission adopted the unopposed land valuation, and fixed the value of the improvements at $9,000,000, with a tax valuation of $2,700,000. We shall review the testimony and its findings later. The county filed a petition for review (and later a first and second amended petition) in which it alleged: that the decision was not supported by competent and substantial evidence, that it was arbitrary, capricious and unreasonable, and that it was in violation of § 536.140, RSMo 1969, V.A.M.S. ¹ The petition sought an order assessing the taxable value of the improvements at $3,523,480. (Some of these figures vary slightly as they appear in different places but this is immaterial to our ultimate consideration.) The Circuit Court found and concluded that the decision of the Tax Commission was arbitrary and not supported by competent and substantial evidence, and set it aside; furthermore, it remanded the matter to the Commission with directions to enter an order reinstating the assessment of the Greene County assessor. From that order and judgment Hermel has appealed. We have jurisdiction of the appeal because our cases have held that similar appeals involved the construction of our revenue laws. Drey v. State Tax Commission, 345 S.W.2d 228 (Mo.1961); State ex rel. Kahler v. State Tax Commission, 393 S.W.2d 460 (Mo.1965); Koplar v. State Tax Commission, 321 S.W.2d 686 (Mo.1959). The School District of Springfield, R--12, has appeared here by counsel as amicus curiae, both by brief and in oral argument.

Before we reach the merits we must note Hermel's motion to dismiss the petition for review. The Circuit Court overruled the motion without comment, but the point is briefed here on appeal. The decision of the Tax Commission was rendered on December 3, 1971; it seems to be conceded that the County filed a petition for review within 30 days thereafter, although the record does not show the precise date. The transcript of the proceedings before the Commission was not filed with the Circuit Clerk until May 23, 1972. There was no formal extension of time. Hermel insists that the failure to file the transcript within 30 days after the filing of the petition for review, as required by § 536.130 and Rule 100.06, V.A.M.R., deprived the Circuit Court of jurisdiction; both the statute and rule require the filing within 30 days, 'or within such further time as the court may allow * * *.' On December 28, 1971, the attorney for the County wrote the reporter, confirming earlier conversations, and asked that the transcript be prepared with 'all deliberate speed.' On February 23, 1972, the transcript was sent to the Tax Commission for its approval, with notice to Hermel's counsel. Section 536.130, subd. 2. It was not finally approved and filed by the Commission until on or about May 23, 1972. During this period the Commission prepared and added its findings of fact and conclusions of law. In the meantime the original Greene County Circuit Judge had been disqualified, the other two had disqualified themselves, and Judge H. A. Kelso had been designated as Special Judge to hear the matter. The parties had been in communication with him by correspondence regarding a date for the hearing on review, and counsel for Hermel expressly asked for a setting. Most of the delay here resulted from the time required by the reporter to complete the transcript and the delay of about three months by the Commission in approving and completing it. Both the Greene County Circuit Judge and Judge Kelso considered the pendency of the matter after the expiration of the thirty-day period and the judges and both parties knew that the transcript was in the process of preparation. This point was not raised until after the transcript had been filed.

Cases are cited pro and con on the necessity of enforcing procedural rules and the jurisdictional nature of such requirements and, on the contrary, to the effect that the courts should determine cases on the merits, if possible, expecially where the party in default has attempted in good faith to comply. Both this court and the bar generally are reasonably familiar with these applicable principles and we do not intend to consume time and space in discussing the dozens of cases cited. The situation has some analogy to that covered in our Rule 81.04 fixing the ordinary time for appeal at ten days, but providing further that failure of the appellant to take the further steps required to secure review within the periods allowed 'does not affect the validity of the appeal, but shall be ground for such action as the appellate court deems appropriate.' It would have been comparatively simple here for respondent to procure an order of extension and it should have done so. It did, however, order the transcript promptly, the Circuit Court more or less considered the matter as though an extension had been granted, and counsel for Hermel was kept advised of the steps being taken to procure and file the transcript. In view of the nature of the case, including the public interest, we feel that the parties should have a determination on the merits. The motion to dismiss is overruled.

As already indicated, we are considering here only the valuation to be placed upon the improvements. Mr. Elliott Freed, Hermel's Vice-President in charge of the construction, produced the final request of the general contractor for payment, with credits for previous payments, and testified that Hermel had paid those amounts. The total listed was $7,036,935.25, but to this Mr. Freed added the amount paid to another contractor and the sum of the amounts allowed and paid to tenants for the completion of their respective stores 'in a normal manner,' arriving at a grand total of $8,362,884. This figure, Mr. Freed said, represented the cost of the building. He also presented an exhibit which showed the cost as apportioned by the contractor to separate stores and sections of the building; this exhibit also showed, by way of comparison, the assessment figures (as received from the assessor) on the same stores and sections. The exhibit shows very substantial increases in the assessment of most of the units over their respective costs, but we are dealing here with the improvements as a whole. It is worthy of note, however, that the assessor arrived at his supposed replacement cost by computing it upon each separate unit, with no apparent relation to actual cost. Mr. Freed could not recall that he was ever asked by the assessor for figures on income or expenses; he testified that the annual net income from rents was approximately $1,390,000, with a provision in the leases for an additional percentage rental based on gross income as a 'hedge' against inflation; no figure could be given on this latter item, since the stores had not been in operation for a full year as of January 1, 1971. The amounts allowed and paid to the tenants for completion of their respective store interiors were negotiated with the tenants; Hermel did not claim any interest in any property produced by expenditures in excess of these allowances and did not even know what totals were spent. It takes depreciation only upon the amounts allowed and paid. Mr. Freed Testified that, 'to his knowledge' he was not asked by the assessor for the construction costs; he furnished all of the figures to Mr. Duck of B. W. Duck and Associates who was selected to make an appraisal of the property. This firm had never been used by Hermel previously; after inquiry, Mr. Freed determined that none of the Springfield appraisers had time to do the job for Hermel. The deed of trust on this property contained a provision that the loan should not be more than 75% of the value of the property; the actual loan was $10,125,000. Mr. Freed assumed that an appraisal had been made at the time of the loan, but testified that any then valuation was not his.

B. W. Duck of B. W. Duck and Associates of Indianapolis, Indiana, had been engaged in the business of real estate appraisals and management, and allied fields...