Helin v. Grosse Pointe Tp.

• Citation: 329 Mich. 396,45 N.W.2d 338
• Decision Date: 08 January 1951
• Docket Number: No. 13,13
• Parties: HELIN et al. v. GROSSE POINTE TP. et al.
• Court: Michigan Supreme Court

Page 338

45 N.W.2d 338

329 Mich. 396

HELIN et al. v. GROSSE POINTE TP. et al.

No. 13.

Supreme Court of Michigan.

Jan. 8, 1951.

Shapero & Shapero, Detroit, for plaintiffs, appellees and cross-appellants. George H. Heideman, Sidney L. Cohn, Detroit, of counsel.

Julius Berns, Detroit, for Grosse Pointe Tp. and Adolph L. Damman, treasurer, defendants and appellants.

Gerald K. O'Brien, Atty. for Wayne County, Arthur L. Robbins and Philip A. McHugh, Asst. Prosecuting Attys., Frank G. Schemanske, Corp. Counsel for City of Detroit, by Stephen J. Carey, Asst. Corp. Counsel, all of Detroit, for Joint Brief amicus curiae for defendants, appellants, and Cross-Appellees, amici curiae.

Before the Entire Bench.

BUSHNELL, Justice.

Plaintiffs Charles Helin and Lempi Helin, his wife, reside in the village of Grosse Pointe Park and are the owners of lots 23 and 24, Windmill Pointe subdivision of private claim 696, and part of private claims 126 and 127, 379 and 570. The Helins purchased this property on land contract from the State land office board in 1945 for $40,000. It is adjacent to that involved in Moran v. Grosse Pointe Township, 317 Mich. 248, 26 N.W.2d 763, and has a 200-foot frontage on Lake St. Clair and a depth of 400 feet. A 55x105 foot mansion-type stone dwelling and a four-car garage with five rooms on its second floor are located on the property. The house has seven rooms and two lavatories on the first floor; eight bedrooms and six bathrooms on second floor; and five rooms and two bathrooms on third floor. It was built in 1924 at a cost of $250,000. The orginal owner paid about $50,000 for the land.

In 1943 when it was assessed at about $135,000 the then owner permitted his title to revert to the State for the nonpayment of approximately $15,000 accumulated taxes. There were no bids at the public auction, held under § 7 of the State land office board act, Act No. 155, P.A.1937, as amended, 1948 C.L. § 211.351 et seq., Stat.Ann. § 7.951 et seq.

The property was appraised at $60,000 on November 6, 1944, under the authority of § 8 of the act, C.L.1948, § 211.359, Stat.Ann. § 7.958. No offers were received, although it was advertised and listed with brokers. On April 23, 1945, Helin made an offer of $35,000, which was not accepted The property was thereafter reappraised at $40,000, and again offered for sale. On May 16th the State accepted Helin's offer in this amount.

The proceeds, less commissions, were distributed, 23.58 per cent of which went to the treasurer of defendant township. Thereafter, defendant township placed the property on the tax rolls at an assessed valuation of $133,270. Helin made timely protest, was accorded a hearing before the board of review and, upon receiving no relief, appealed to the State tax commission. On November 4, 1947, the commission reduced the assessed valuation to $123,770. The adjusted tax of $2,894.98 was paid under protest and suit was brought to recover claimed excess taxes.

Trial by jury was waived. The trial judge held that the fair cash value of the property, as of the date of assessment, was not more than $50,000, and that plaintiff was entitled to recover payments on the assessed value in excess of $50,000.

Defendant township appealed from a judgment in the sum of $1,879.34. Plaintiffs took a cross-appeal on the ground that the court erred in failing to render judgment for the entire amount of the 1947 taxes paid under protest.

Appellants' statement of questions involved is directed to the trial court's denial of their motion to dismiss, claimed improper admission of certain testimony, denial of a motion to strike such testimony, and the establishment by the trial court of its own valuation of the property in question and the rendering of a judgment based thereon

Plaintiffs and cross-appellants claim discrimination because other property in the taxing district was assessed at less than 50 per cent of its cash value. They argued that a valuation of their property, based entirely upon cost of reproduction less depreciation and obsolescence, resulted in this instance in an assessment so excessive and constructively fraudulent as to make it illegal. They also urge that they are entitled to judicial remedy after exhausting all administrative remedies, that there was no error in the admission of testimony, and that the judgment, if not proper, should be increased to include the full amount of the taxes paid. The county of Wayne and city of Detroit were granted leave to file a brief amici curiae.

The testimony indicates that the area in which the properly is located is the most highly restricted in the community, and that homes of this type, although at one time quite desirable, are no longer being built and are generally considered to be presently unsalable. Helin testified that, because of the expense of upkeep, he is only able to use eight or ten rooms, and that these cost $250 per month to heat.

The former owner, Herbert V. Book, testified that he was unable to obtain any tax relief and made every effort to sell his property. He let it go to tax sale in 1943 because he could not obtain anything for his equity, although the property was free and clear of encumbrances, except the unpaid taxes.

The record contains exhibits in tabulated and chart form, prepared by a broker who sold 184 parcels in the area between July 1944 and May 1946. They show the relationship between sale prices and assessed valuations of these parcels. These exhihits indicate that in the four municipalities in Grosse Pointe township, i.e., Grosse Pointe Park, Grosse Pointe Farms, Grosse Pointe Shores, and Grosse Pointe Woods, the assessed valuations of improved property averaged only 50 per cent of their sales prices. The testimony of another broker, who sold 26 parcels in 1947, indicates that the assessed valuations of those parcels averaged 38.6 per cent of sales prices.

An appraiser for the State land office board testified that on November 6, 1944, when he appraised the property at $60,000, he had in mind the statute relating to tax scavenger sales, which required such appraisal to be at the highest price obtainable. When he learned that neither the board nor its agents were able to sell the property at this price, he subsequently appraised it at $40,000, believing that to be the highest price then obtainable.

In support of its assessed valuation, defendant township produced the testimony of Albert E. Champney, director of the Wayne county bureau of taxation. Champney testified that all of the townships in the county of Wayne employ the basic method of assessment that the bureau had established and recommended, with some variations in its application in various areas. These are adjusted through an equalization process by the county board of supervisors.

The system employed is based upon a land value map for each district. The assessing officer arrives at his judgment of the unit values of land for each area, with allowances for depth and variations in size. Champney stated that the assessment level in Grosse Point township is at present 20 per cent below the equalization level applied in the county of Wayne.

The system provides for division of structures into various classes, with a separate class for mansion-type houses. Various factors are used for differences in area, number of stories, and type of construction. The schedule developed in the years 1936 to 1939, as applied to mansion-type homes, includes a substantial allowance for obsolescence. It reflects about 50 per cent of the reproduction cost from 1936 to 1939. In addition, an obsolescence formula, devised by the Michigan state tax commission, is applied to residential luxury-type homes. This, he explained, is a formula which contemplates an increased rate of obsolescence, depending upon total value, and ranges from 10 to 50 per cent. Based upon the original construction cost of $250,000 in 1924 and 1925, this formula produced a total reproduction cost of $113,814 for the buildings before depreciation. Champney added that the assessment made by the township supervisor was exactly the amount that the bureau recommended in 1947.

James McMahon, an examiner for the State tax commission, testified that, in reassessing this property, he recommended a land value of $51,330 and a building value of $72,440, which totaled $9,500 less than the township valuation. This reduction in building value was the result of an increase in the obsolescence factor. He stated that the formula used for mansion type buildings is uniformly applied by the commission to all appeals of this type from Wayne county. He admitted that the problem is difficult because 'sales of so-called mansion-type property do not always reflect the true cash value of those properties.' McMahon estimated that construction costs in 1949 were double those of 1924 to 1925, and, if applied to the Helin property, this would result in a reproduction cost of $600,000 to $650,000.

As stated in Moran v. Grosse Pointe Township, 317 Mich. 248, 254, 26 N.W.2d 763, the words 'cash value' as defined by 1 C.L.1929, § 3415, Stat.Ann. § 7.27, C.L. 1948, § 211.27, is the usual selling price that could be obtained at the time of assessment, but not the price that could be obtained at a forced or auction sale. See, also, Tweny-Two Charlotte, Inc., v. City of Detroit, 294 Mich. 275, 283, 293 N.W. 647.

The Moran case contains a discussion of some of the phases of the problem presented by the instant appeal. Decision there would control here were it not for the fact that Moran case was not one where the protesting taxpayer purchased property from the State land office board after it had been appraised by that State agency. We also note the following, 317 Mich. at page 253, 26 N.W.2d at page 765, in the Moran case: 'At the trial of the case, attorney for plaintiff in his opening address...