Hutchinson County v. Fischer, 14976

• Citation: 393 N.W.2d 778
• Decision Date: 12 February 1986
• Docket Number: No. 14976,14976
• Parties: HUTCHINSON COUNTY, State of South Dakota, A Political Subdivision, Plaintiff and Appellee, v. Bernard FISCHER and Lorraine Fischer, Defendants and Appellants. . Considered on Briefs
• Court: Supreme Court of South Dakota

Page 778

393 N.W.2d 778

HUTCHINSON COUNTY, State of South Dakota, A Political Subdivision, Plaintiff and Appellee, v. Bernard FISCHER and Lorraine Fischer, Defendants and Appellants.

No. 14976.

Supreme Court of South Dakota.

Considered on Briefs Feb. 12, 1986.

Decided Sept. 24, 1986.

Michael V. Braley of Horstman and Braley, Parkston, for defendants and appellants.

Glenn L. Roth, Hutchinson County State's Atty., Olivet, for plaintiff and appellee.

BRADSHAW, Circuit Judge.

PROCEDURAL HISTORY

The Hutchinson County Director of Equalization (Assessor) assessed the Bernard and Lorraine Fischer (Fischers) residence for the tax year beginning January 1, 1983. The Fischers appealed this assessment to both the local and county Boards of Equalization; these boards upheld the assessment. The Fischers then appealed to the State Board of Equalization, which significantly reduced the assessment. Hutchinson County appealed this decision to the trial court. A trial de novo was held and the trial court reversed the decision of the State Board of Equalization. From this judgment, the Fischers appeal.

STATEMENT OF FACTS

Fischers constructed a new home in Parkston, South Dakota, which was completed in 1981. For the tax year beginning January 1, 1983, the Assessor, Donna Zeeb, assessed the Fischer residence at the sum of $57,135. This assessment was appealed to the local Board of Equalization.

Upon recommendation of the local board, Assessor reassessed the Fischer residence along with three other homes in the same area. The Assessor was accompanied by Elmer Maas, fieldman for the South Dakota Department of Revenue. The four houses reassessed were the Fischer house, the Mogck house, the Uttecht house, and the Tiede house. After making a typical inspection of both the exterior and interior of all four houses, the Assessor and the state fieldman made no change in the assessment or classification of the houses.

The Assessor classified the homes using the South Dakota Appraiser's Manual, which was at the time the officially adopted manual for the Department of Revenue. The manual classifies homes in a range from Class 3 to Class 9. A Class 3 home is the lowest quality and a Class 9 home is the highest quality. In Hutchinson County, a Class 5 home is considered an average home while a Class 6 home is considered to be above average.

The Assessor testified that the classification of a house is based on the quality of workmanship and the quality of materials; all other features that add value to a home are treated as "add-ons." According to the South Dakota Appraiser's Manual, these add-ons include the foundation, exterior walls, brick or stone, roof, porches, basement, attic or half-story, floors, interior finish, heating and cooling, plumbing, electrical, and certain miscellaneous items. These add-ons then determine whether the house is given a "+ 5" or a "+ 10" above the basic classification. Therefore, a house in one class may have one of three classifications: i.e., 6, 6 + 5, or 6 + 10. These plus designations are a tool which allow assessors to bring the value of these homes closer together even though they are in a different class. The Fischer house and the Mogck house were classified as 6 + 5 houses while the Tiede house and the Uttecht house received a 5 + 10 classification.

The general contractor of the Fischer house and the other three homes referred to in Parkston was Ivan Haag, a local builder, who has been in the business for twenty-six years. All four homes were built in the same neighborhood at approximately the same time. Haag testified that he used the same work crew on all four jobs, that similar materials were used on all four jobs, and that all of the lumber used was of number one grade. The insulation, foundation, door units, and finish lumber were also similar. The taping and texturing was done by the same contractor in all four jobs. It was his opinion that the quality of workmanship and the materials used were the same in all four houses.

The Assessor agrees that the materials and workmanship are basically the same in all four houses. However, the Assessor placed the Fischer house in the Class 6 category because of its construction, good quality wood shingles, 2 X 12 floor joists, a nice basement, and ornamental stone trim. The Mogck house was placed in the same category because it had very good asphalt shingles and had good quality brick trim to the roofline on three sides. Other factors the Assessor took into account when she placed these homes into the Class 6 category were their desirability and architectural design.

The Uttecht and Tiede homes were classified as average Class 5 houses. Both of these homes had less brick trim of average quality on only one side of the house, average quality asphalt shingles with a straightline roof, and 2 x 10 floor joists. The Assessor also took into consideration the desirability, construction, and architectural design of these homes.

It is also worthy to note that the Fischer house contains certain features that the other comparable properties do not have, including hot water heat as opposed to forced air, air conditioning duct work, a fireplace, and an angled architectural design. While the Fischer home has a finished basement, the Tiede and Uttecht homes have finished basements complete with kitchen facilities and the Mogck and Uttecht homes have sliding patio doors.

Ken Doran, who is also an appraiser for the South Dakota Department of Revenue, testified on behalf of the Fischers that the Fischer residence had not been properly classified. However, instead of using the South Dakota Appraiser's Manual, Doran used the Marshall Swift Manual. This manual was not adopted by the Department of Revenue until July 19, 1984, a year and a half after the assessment in question. Furthermore, Doran did not inspect any of the comparable property; he only inspected the Fischer residence.

On appeal to the State Board of Equalization, the board determined that the county Board of Equalization had failed to properly and accurately equalize the property and reduced the valuation to $50,000. No calculation was shown as to how the valuation was reduced. Hutchinson County appealed this decision to the trial court, and the decision of the State Board of Equalization was reversed. The trial court upheld the Assessor's assessment of $57,135, thereby approving the classification of Fischer's house as a Class 6 + 5. Specifically, the trial court found:

"That Ivan Haag, the contractor that constructed all four of the homes, testified that all four homes were constructed with similar materials and the quality of workmanship was all the same[,]"

and

That (the County Assessor) felt that the Fischer home was a Class 6 home and superior to Class 5 homes, since the Fischer home had hot water heat rather than forced air and also had airconditioning, the same as the others, that the Fischer home had more expensive shake shingles rather than asphalt shingles, that the Fischer home has 12 X 2 floor joists rather than 2 X 10 floor joists, that the Fischer home had a wood burning fireplace whereas others had no fireplace, that the Fischer home had a stone front rather than a brick front and that the home was a better looking and more desirable home than the others because of its architectural design, that (the County Assessor) felt that these factors affected the quality of the home and raised the home to a Class 6, because of the difference between materials and workmanship.

SCOPE OF REVIEW

This court's proper scope of review of a trial court's decision in a trial de novo of an assessment matter is whether the decision of the trial court was "clearly erroneous." Knodel v. Board of County Commissioners, 269 N.W.2d 386 (S.D.1978); Yadco, Inc. v. Yankton Co., 89 S.D. 651, 237 N.W.2d 665 (1975). When applying the clearly erroneous standard, the question is not whether this court would have made the same findings that the trial court did, but whether on the entire evidence this court is left with a definite and firm conviction that a mistake has been committed. In re Estate of Hobelsberger, 85 S.D. 282, 181 N.W.2d 455 (1970).

DISCUSSION

ISSUE I: Did the trial court err by concluding that the Fischer's house was properly classified as a Class 6 + 5 residence by the Assessor? We hold that it did.

The Constitution of South Dakota, art. XI, Sec. 2, states that "[t]axes shall be uniform on all property of the same class, ... and the valuation of property for taxation purposes shall never exceed the actual value thereof." SDCL 10-6-33 provides that "[a]ll property shall be assessed at its true and full value in money[.]" "True and full value" is defined by SDCL 10-6-1(5) as "the usual cash selling price at the place where the property to which the term is applied shall be at the time of the assessment[.]"

In giving effect to these constitutional and statutory provisions, the trial court is given broad authority. The trial court does not merely have power to determine whether an assessment is excessive or arbitrary; rather, it exercises independent judicial judgment to determine valuation. Knodel, supra.

In addition to the broad authority of the trial court, the Fischers have two presumptions to overcome. First, there is a presumption that tax officials will do their duty in accordance with the law and not act unfairly and arbitrarily regarding the assessment of property. Skinner v. New Mexico State Tax Comm'n, 66 N.M. 221, 345 P.2d 750 (1959). Second, there is a presumption that the county director of equalization's valuations are correct. Mortenson v. Stanley County, 303 N.W.2d 107 (S.D.1981).

The South Dakota Appraiser's Manual and the testimony of both the Assessor and the fieldman establish that the proper classification assigned to a structure depends on the quantity and quality of materials and the quality of workmanship used in the construction of the building. These factors are...