Hillman Land & Iron Co. v. Commonwealth

• Decision Date: 14 May 1912
• Citation: 148 Ky. 331,146 S.W. 776
• Parties: HILLMAN LAND & IRON CO. v. COMMONWEALTH.
• Court: Kentucky Court of Appeals

146 S.W. 776

148 Ky. 331

HILLMAN LAND & IRON CO. v. COMMONWEALTH.

Court of Appeals of Kentucky.

May 14, 1912

Appeal from Circuit Court, Lyon County.

Proceeding by the Commonwealth for the assessment of omitted property of the Hillman Land & Iron Company. From a judgment for plaintiff, defendant appeals. Reversed, with directions.

C. C Grassham, of Paducah, N.W. Utley, of Eddyville, and Berry &amp Grassham, of Paducah, for appellant.

Mat J Holt, of Louisville, for the Commonwealth.

CARROLL J.

This was a proceeding instituted by a revenue agent for the purpose of having assessed for the years 1905-1909 as omitted property 6,292 acres of land owned by the appellant, company, a foreign corporation, and situated in Lyon county, and for the purpose of having assessed for the same years as omitted property money on deposit to the credit of the appellant company in banks located in Lyon county. Upon hearing the case, the circuit court ordered to be assessed for the years mentioned as omitted property the land, as well as the deposits in banks. From the judgment of the circuit court, this appeal is prosecuted.

Taking up first the question of the assessment of the land, it appears from the record that the appellant company in 1901 purchased a large body of land situated in Lyon and adjoining counties. The deed to the appellant company for this land does not describe the number of acres in the tract, but refers to other deeds for a description of the property conveyed. It is not, however, denied that during each of the years mentioned the company owned in Lyon county 13,292 acres of this land, and it is admitted that it only assessed during these years 7,000 acres of land in that county. Conceding these facts, it resists the effort of the commonwealth to have assessed as omitted property the 6,292 acres of land, upon the ground that its agent in Lyon county did not know the number of acres of land it owned in Lyon county, and that the value at which it assessed the land--believing that it contained 7,000 acres--was a fair value, although there may have been in the tract assessed 13,292 acres in place of 7,000 acres; the argument being that, if the amount at which it assessed the land was the fair assessable value of all the land it owned in Lyon county, it is not a matter of material importance whether it described accurately or not the number of acres in the tract assessed. On the other hand, it is the contention of the commonwealth that the company knew that it owned the number of acres it now admits it did own, and that it purposely omitted from assessment the excess over 7,000 acres now sought to be assessed.

The resident agent of the appellant, who gave in the land for assessment, testifies that he did not know how many acres of land was contained in the body, and that he assessed it at 7,000 acres, believing that this was a fair estimate of the number of acres, and that there was no intention upon his part, or on the part of the company, to purposely omit from assessment any land owned by it. Of course, the resident agent in assessing the land acted on behalf of his principal, the company, and, although be may not have known how many acres the tract contained, it is hardly probable that the company did not know approximately at least the number of acres it owned in Lyon county. The discrepancy in the number of acres assessed and the number of acres actually owned is too large to be entirely accounted for upon the theory of inadvertence or mistake. So far, however, as this proceeding is concerned, it is not important why this large acreage of land was omitted from assessment. If it was liable to assessment, the fact that it was omitted by mistake or inadvertence would not excuse the company from now paying taxes upon it; and if it was intentionally omitted, the situation would be the same. If the taxpayer, believing in good faith that he is the owner of only 500 acres of land, assesses that number of acres, when in fact he owns 550 acres, of course 50 acres has been omitted from taxation; and so if he knows he has 550 acres, and intentionally assesses only 500 acres, 50 acres has been omitted. In either event, it is an omission, and the good faith or bad faith of the taxpayer does not affect the question of the assessability of the omitted acreage.

Section 4056 of the Kentucky Statutes provides in part that: "Persons listing their estates with the assessor shall state separately the tracts of land, the number of acres in each tract, the price per acre, and the improvements thereon, the name of the nearest resident thereto, and where situated, giving election precinct in which it is situated. ***" In the schedule the taxpayer must sign and verify, in giving in a list of his taxable property. Items 12, 13, 14, and 15 require that he shall state in separate items the number of acres of land owned by him, the value per acre, the nearest resident thereto, the election precinct in which it is situated, and the valuation of each tract with improvements.

It is obvious that the purpose of requiring the taxpayer to give the number of acres of land is to enable the assessor and the board of supervisors, whose duty it is to revise and correct assessments, to know how many acres of land the taxpayer owns, so that they may have the aid of this information in fixing the value at which it should be assessed. Under the statute, as well as under the prevailing custom, farming land is valued, not by the tract or body, but by the acre, and, although the number of acres is assessed at a lump sum, it is of course easy when the acreage is given to ascertain the price per acre at which it is assessed. The taxpayer is presumed to know the number of acres that he owns, and this information the assessor and the assessing authorities generally obtain from his sworn statement. If true they could, in nearly every instance, by an examination of the records learn the number of acres of land owned by each taxpayer; but the almost universal rule is to accept the statement of the taxpayer as to the number of acres of land owned by him. The assessing officers seldom know the number of acres that a taxpayer owns, but as a rule they do know the value of land per acre in the neighborhood in which be lives; and it is practically altogether on this knowledge of the value per acre that they decide whether or not the value fixed by the taxpayer is correct. So, if the taxpayer owns 500 acres, and assesses it at say $10 an acre, the assessor and board of supervisors can easily determine whether it is a fair valuation; but if he owns 525, or 550 or 600 acres, and reports 500 acres, the assessor and the board of supervisors will, as a rule, value the land according to the number of acres that he has listed, and the land he has not listed will escape taxation, as these authorities would not take into account in placing a valuation upon the land listed the land that had been omitted. In view of these facts, it is apparent that the taxpayer should be required to state with reasonable certainly the number of acres of land he owns, as if he gives in a less number of acres than he owns, the effect as a rule is to mislead or deceive the assessing authorities as to the value at which his land should be assessed.

Nor will the valuation fixed on the number of acres listed be treated as a fair valuation of a larger number of acres, unless there is strong proof to support it, for the simple reason that the presumption is that the acreage not listed was not taken into account in the assessment of the property. It is not to be presumed that a taxpayer who assesses 500 acres of land at $10 an acre has included in the valuation 600 acres of land. The fair and reasonable presumption is that he has only valued the number of acres that he has assessed. Consequently, when the taxpayer seeks to avoid taxation on omitted acreage as shown by the record or by admission, it is incumbent upon him to establish by convincing evidence that the omitted acreage was taken into consideration by him in fixing a valuation on the acreage that he listed, and that the value fixed was a fair value for the entire body, although it contained a greater number of acres than was specified in the assessment. And this rule should be applied, whether the discrepancy in the number of acres returned by the taxpayer and the number owned is great or small. There are few landowners who do not know with reasonable accuracy the number of acres they own. At any rate, when they return for assessment less than they own as shown by the record or by admission, the burden should be on them to show that the discrepancy did not affect the value at which the land owned should have been listed. No injustice or hardship is imposed on the landowner in requiring him to return the number of acres he owns, while, on the other hand, great injustice would be done the state and county and taxing districts if he should be exempted from taxation on omitted acreage on the mere unsupported statement that he did not know how much he owned or that the value given was a fair value for the listed as well as the omitted acreage.

It is suggested that we should lay down some rule permitting a certain per cent. of the land owned to be omitted with out burdening the taxpayer with the necessity of responding to a proceeding to have the acreage omitted assessed as omitted property. But this cannot in justice, or without ignoring the Constitution, be done. There is much land in the state worth $100 and $200 an acre, and manifestly it would be unjust to hold that, unless the discrepancy was say 10 per cent., it should be treated as of no moment. Under such a rule, the owner of valuable land would escape taxation on a material part of his property. But...