Hardin v. State Tax Commission

• Decision Date: 23 October 1967
• Docket Number: No. 8384,8384
• Citation: 78 N.M. 477,1967 NMSC 239,432 P.2d 833
• Parties: M. M. HARDIN, d/b/a Park Plaza Apartments, Plaintiff-Appellee, v. STATE TAX COMMISSION of the State of New Mexico, Defendant-Appellant.
• Court: New Mexico Supreme Court

Page 833

432 P.2d 833

78 N.M. 477

M. M. HARDIN, d/b/a Park Plaza Apartments Plaintiff-Appellee, v. STATE TAX COMMISSION of the State of New Mexico Defendant-Appellant.

No. 8384.

Supreme Court of New Mexico.

Oct. 23, 1967.

Boston E. Witt, Atty. Gen., John B. Speer, Sp. Asst. Atty. Gen., Santa Fe, for appellant

W. A. Keleher, T. B. Keleher, William J. Bingham, Albuquerque, for appellee.

OPINION

NOBLE, Justice.

The owner of the Park Plaza, a highrise, luxury apartment building in Albuquerque, appealed the county assessor's valuation of $2,657,000.00 to the county board of equalization. The refusal of the county board to lower the valuation was then appealed to the state tax commission pursuant to Sec. 72--6--13.1, N.M.S.A.1953. The tax commission's order affirming the valuation fixed by the county assessor was then appealed to the district court where findings of fact and conclusions of law were made reversing the tax commission and concluding that the actual market value of the property for the year 1966 was $1,850,000.00. The tax commission now appeals to this court pursuant to Sec. 72--6--13.8, N.M.S.A.1953.

It is well established that a district court may not, on appeal, substitute its judgment for that of the administrative body, but is restricted to whether, as a matter of law, the administrative body acted fraudulently, arbitrarily or capriciously; whether the administrative order is substantially supported by evidence; and, generally, whether the action of the administrative body was within the scope of its authority. Llano, Inc. v. Southern Union Gas Co., 75 N.M. 7, 399 P.2d 646, and authorities there collected. This court, in reviewing the district court's judgment, must, in the first instance, make the same review of the administrative agency's action as did the district court. Reynolds v. Wiggins, 74 N.M. 670, 397 P.2d 469. Our review of the record before the state tax commission leads us to agree with the commission's disposition of the valuation.

Section 1, article VIII of the State Constitution, requires taxes levied upon tangible property to be in proportion to the value thereof. See, also, Sec. 72--6--12.1, N.M.S.A.1953. The term 'value' has been variously defined. See 3 Cooley, Taxation, Sec. 1146 (4th Ed.); Mayor, etc., of City of Chattanooga v. Railroad Co., 75 Tenn. (7 Lea) 561 (1881) and Port Arthur Independent School Dist. v. Baumer, 64 S.W.2d 412 (Tex.Civ.App.1933). Generally the 'reasonable cash market value' reflected by sales of comparable property is to be used if there have been such sales. See Harlingen Independent School Dist. v. Dunlap, 146 S.W.2d 235, 237 (Tex.Civ.App.1940) and Rowland v. City of Tyler, 5 S.W.2d 756 (Comm.App.Tex.1928). However, the record makes it clear that 'value' of this apartment building could not be arrived at on the basis of comparable sales. In situations where, for one reason or another, property has no such 'market value,' earning capacity, cost of reproduction and original cost less depreciation furnish proper criteria for consideration in determining value. See 3 Cooley, Taxation, Sec. 1145 (4th Ed.); People ex rel. Powers v. Kalbfleisch, 25 App.Div. 432, 49 N.Y.S. 546; Somers v. City of Meriden, 119 Conn. 5, 174 A. 184, 95 A.L.R. 434; Alfred J. Sweet, Inc. v. City of Auburn, 134 Me. 28, 180 A. 803, 104 A.L.R. 784; Annots., 104 A.L.R. 790 and 96 A.L.R.2d 666.

It is agreed that the commission's method of computing value on the basis of the anticipated earnings of the apartments was a correct approach to the problem. Counsel for the property owner argues, however, that in applying that method, the tax commission should have used a shorter useful life of the building and should not have reduced certain costs of operation in arriving at net projected income. It is first argued that an economic life of 33 years, as estimated by an appraiser who testified as an expert before the commission, and the 1966 costs of operation substantially support the trial court's valuation of $1,850,000.00. The tax commission was not, however, forced to accept an expert's testimony in its totality. Opinion evidence is admissible on the theory that it may aid the fact finder to understand the problem and lead to a correct result, but opinions...