Helvey v. Dawson County Bd. of Equalization

• Decision Date: 12 February 1993
• Docket Number: No. S-89-1411,S-89-1411
• Citation: Helvey v. Dawson County Bd. of Equalization, 495 N.W.2d 261, 242 Neb. 379 (Neb. 1993)
• Parties: Richard D. HELVEY, doing business as Rent All Rentals, Lexington, Nebraska, Appellee and Cross-Appellant, v. DAWSON COUNTY BOARD OF EQUALIZATION et al., Appellants and Cross-Appellees.
• Court: Nebraska Supreme Court

Page 261

495 N.W.2d 261

242 Neb. 379

Richard D. HELVEY, doing business as Rent All Rentals, Lexington, Nebraska, Appellee and Cross-Appellant, v. DAWSON COUNTY BOARD OF EQUALIZATION et al., Appellants and Cross-Appellees.

No. S-89-1411.

Supreme Court of Nebraska.

Feb. 12, 1993.

Syllabus by the Court

1. Taxation: Valuation: Equity: Appeal and Error. An appeal from action by a county board of equalization is an equity action tried de novo in the district court. On appeal from the district court to an appellate court, an equity case is tried as to factual issues de novo on the record, requiring the appellate court to reach a conclusion independent of the findings of the trial court. However, when credible evidence conflicts, the appellate court may give weight to the fact that the trial court observed the witnesses and accepted one version of the facts over another.

2. Statutes: Constitutional Law. A court may not properly grant relief based upon a statute which is nonexistent or one which has become nonexistent by reason of judicial declaration of unconstitutionality by the Nebraska Supreme Court whether the question has been raised by the parties or not.

3. Taxation: Valuation: Presumptions: Proof: Appeal and Error. On appeal, a court presumes the county board of equalization faithfully performed its duties in making an assessment of value and acted upon sufficient competent evidence to justify its action. The presumption remains until there is competent evidence to the contrary. From that point on, the question of unreasonableness of valuation fixed by the board of equalization becomes one of fact based upon the evidence, unaided by the presumption. The burden of showing such valuation to be unreasonable rests upon the taxpayer on appeal from the action of the board.

4. Taxation: Valuation: Presumptions. Ordinarily the valuation by the assessor is presumed to be correct.

5. Taxation: Valuation. Showing a mere difference of opinion regarding valuation of property for tax purposes is not sufficient to meet a taxpayer's burden of persuasion.

6. Taxation: Valuation: Evidence: Appeal and Error. In an appeal to a county board of equalization or to a district court, and from the district court to the Nebraska Supreme Court, the burden of persuasion imposed on the complaining taxpayer is not met by showing a mere difference of opinion unless it is established by clear and convincing evidence that the valuation placed upon his property when compared with valuations placed on other similar property is grossly excessive and is the result of a systematic exercise of intentional will or failure of plain duty, and not mere errors of judgment.

7. Taxation: Valuation: Appeal and Error. As a general rule, the valuation of property for tax purposes by the proper assessing officers should not be overthrown by the testimony of one or more interested witnesses that the values fixed by such officers were excessive or discriminatory when compared with values placed thereon by such witnesses. Otherwise no assessment could ever be sustained.

John H. Marsh, Dawson County Atty., and Michael F. Maloney, for appellants.

John DeCamp, of DeCamp Legal Services, Lincoln, for appellee.

HASTINGS, C.J., and BOSLAUGH, WHITE, CAPORALE, SHANAHAN, GRANT, and FAHRNBRUCH, JJ.

PER CURIAM.

In this case, the issue before the district court for Dawson County was whether certain personal property held for rental purposes was "business equipment" subject to personal property tax rather than being exempt as "business inventory."

The Dawson County Board of Equalization (Board), after a hearing, determined that personal property held for rental purposes by Richard D. Helvey, doing business as Rent All Rentals, was business equipment and thus taxable. The district court reversed the Board's decision and found the property to be business inventory and thus exempt. The Board appealed to this court.

Because this court in MAPCO Ammonia Pipeline v. State Bd. of Equal., 238 Neb. 565, 471 N.W.2d 734 (1991), determined that the statute, Neb.Rev.Stat. § 77-202(7) (Reissue 1990), exempting business inventory from personal property tax was unconstitutional, and because the assessment of Helvey's property was not arbitrary or unreasonable, the decision of the district court is reversed and the cause remanded to the district court with direction to enter judgment consistent with this opinion.

An appeal from action by a county board of equalization is an equity action tried de novo in the district court.... On appeal from the district court to an appellate court, an equity case is tried as to factual issues de novo on the record, requiring the appellate court to reach a conclusion independent of the findings of the trial court.... However, when credible evidence conflicts, the appellate court may give weight to the fact that the trial court observed the witnesses and accepted one version of the facts over another.

(Citations omitted.) Dowd v. Board of Equal., 240 Neb. 437, 439, 482 N.W.2d 583, 585 (1992).

The record reflects that in January 1980, Helvey opened a store in Dawson County from which he rented to customers various items, including garden tools, home appliances, and light contractor tools. Helvey collected sales tax on the rental payments from his customers.

Helvey testified that his first property tax schedule was filed in March 1981, at which time he met with the Dawson County assessor for assistance in filling out the return. Helvey testified that they discussed the nature and type of business in which he was engaged. According to Helvey, the assessor never expressed an opinion on the taxability of rental equipment, but "we just both assumed that she knew and I knew that [rental] inventory was exempt." At the hearing before the county board of equalization, he claimed that because sales tax was charged on the property rented, the property was resale property and that he need list only his office furniture and fixtures on the personal property tax return. Each year thereafter, Helvey filed a similar return.

When Helvey sold his store in May 1984, the assessor accelerated the tax due on the business. See Neb.Rev.Stat. § 77-1214 (Reissue 1990). The assessor testified that upon learning of the sale, she became aware that Helvey had not been taxed on his personal rental property. The assessor testified that she made several attempts between May and December 1984 to persuade Helvey to file schedules of his personal rental property for the years 1981 through 1984. When those attempts proved unsuccessful, the assessor sent Helvey schedules in which she had placed a value of $75,000 on the personal rental equipment which had been omitted for each of the 4 years in question. The valuations and assessments were made by the assessor under Neb.Rev.Stat. § 77-412 (Reissue 1981 & Cum.Supp.1984), recodified as § 77-1233.04 (Reissue 1990). Their assessment was based on the selling price of the business, less "blue sky." Helvey filed a protest with the Board.

In May 1985, to make a more accurate assessment, the assessor subpoenaed Helvey's records. The process of assessment was accomplished primarily through the use of Helvey's state and federal income tax returns and bank records and the contract of sale of the business. The assessment process was complicated by the fact that the tax returns did not differentiate between Helvey's property at his Dawson County store and property at a store he owned in Red Willow County. Using bank records of Helvey's deposits, the assessor allocated 63 percent of the personal rental property to the Dawson County store and 37 percent to the store located in Red Willow County. Although Dawson County retained possession of his financial records, Helvey was allowed access to them.

On June 6, 1985, the assessor met with Helvey's lawyer and informed him that a revised assessment was forthcoming which was based on the materials obtained through subpoena. Helvey did not furnish any additional information to the assessor. On July 15, 1985, Helvey was notified that the revised assessment of his personal rental property in Dawson County was $49,480, $67,200, $72,640, and $99,909 for the years 1981 through 1984, respectively. Because the property had not been voluntarily reported, a 50-percent penalty was also assessed pursuant to § 77-412.

The Board heard Helvey's protest on July 30 and August 1, 1985. Before the Board, Helvey argued that the property was business inventory, which was exempt from personal property tax pursuant to § 77-202(7) (Reissue 1981 & Cum.Supp.1984). He argued that other businesses located in Dawson County were not taxed on their personal rental property and that other counties did not tax such property. Helvey also claimed that the assessment was inaccurate, in that items which were intended only for resale were included in the list of taxable rental property. According to Helvey, these resale-only items were listed as business inventory on his federal income tax returns. However, Helvey also stated that there were a few items included in the business inventory amounts that were rental items. He was unable to document an allocation of personal rental property versus property intended only for resale, but his "guess" was that resale-only property averaged $30,000 per year. Helvey also complained that the apportionment of the property between Dawson County and Red Willow County was erroneous because the gross receipts contained in the amounts allocated to Dawson County contained loan amounts being repaid to him and personal checks which Helvey occasionally put into the business. However, Helvey was unable to say what the proper allocation between the two stores should have been.

The assessor testified that it had always been her policy to tax personal rental property in Dawson County. She offered and the Board received into evidence a list of lessors of taxable rental equipment reported in Dawson...