In re Assessment of Metropolitan Bldg. Co.

• Decision Date: 28 July 1927
• Docket Number: 20591.
• Citation: 144 Wash. 469,258 P. 473
• Parties: In re ASSESSMENT OF METROPOLITAN BLDG. CO. v. METROPOLITAN BLDG. CO. TAX COMMISSION OF WASHINGTON et al.
• Court: Washington Supreme Court

258 P. 473

144 Wash. 469

In re ASSESSMENT OF METROPOLITAN BLDG. CO.

TAX COMMISSION OF WASHINGTON et al. v. METROPOLITAN BLDG. CO.

No. 20591.

Supreme Court of Washington, En Banc.

July 28, 1927

Appeal from Superior Court, Thurston County; John M. Wilson, Judge.

In the matter of the assessment of the Metropolitan Building Company for the year 1926. The City of Seattle appealed to the Tax Commission of the State of Washington from the value fixed by the county assessor. From the order of the Tax Commission the Metropolitan Building Company and the City of Seattle appealed to the superior court. From a judgment reducing the assessed value, the Tax Commission, the City of Seattle, and others appeal. The appellants also make an application for writ of review. Application for writ of review dismissed. Judgment affirmed.

Thomas J. L. Kennedy and Arthur Schramm, Jr., both of Seattle, for appellants.

Donworth Todd & Holman and Donald G. Graham, all of Seattle, and Frank C. Owings, of Olympia, for respondent.

TOLMAN J.

The state tax commission fixed the assessed value for taxation purposes for the year 1926 of the leasehold interest on the Metropolitan tract, or, as it is commonly known, the 'old University grounds,' in the city of Seattle, held and owned by the Metropolitan Building Company at $1,375,000. The building company appealed from the order of the tax commission to the superior court for Thurston county, and subsequently the city of Seattle likewise appealed. After a hearing in the superior court on both appeals, that court found that the action of the tax commission was so capricious and arbitrary as to amount to constructive fraud, set aside the order of the commission, and restored the value fixed by the county assessor of $700,000, from which the city had originally appealed to the tax commission. The state tax commission and the city have appealed from the judgment of the superior court, and likewise, as a matter of safety, have made application here for a writ of review to review the judgment of the superior court. Both the appeal and the application for the writ have been submitted to us on the same record, and all parties unite in asking us to determine which course is the proper practice.

Without entering into a prolonged discussion, we may say briefly that we see no reason why an appeal will not lie, and, if so and if the remedy by appeal be adequate, a writ of review will not issue.

The statute on this subject (chapter 18, Laws of 1925) provides, in section 7, for an appeal from any order of the tax commission to the superior court, but is silent as to any appeal from the judgment of the superior court. The general appeal statute (section 1716, Rem. Comp. Stat.) provides for an appeal from a final judgment of the superior court to this court, and we think the case of State ex rel. Great Northern Ry. Co. v. Railroad Commission, 60 Wash. 218, 110 P. 1075, is a sufficient and complete answer to any reason which might be advanced here against the right of appeal. We therefore hold that the appeal was properly taken, and the writ of review will be denied and the application therefor dismissed.

The city, in the superior court, moved to dismiss the building company's appeal from the order of the tax commission because the notice of appeal had not been served upon the city, and because, it is claimed, the court had no jurisdiction. The denial of this motion is assigned as error. The statute (section 7, c. 18, Laws of 1925) provides for an informal and summary appeal and directs only that the notice of appeal shall be served on some member of the tax commission or its secretary within 20 days from the entry of the order appealed from, and be filed with the clerk of the superior court to which the appeal is taken. The statute was fully complied with, and certainly where no harm or prejudice has resulted we are not justified in fixing conditions which the statute does not in terms require.

As to the second ground of the motion to dismiss, it seems to be contended that the assessment and levy of taxes are legislative functions which may not be delegated to the courts without contravening the Constitution. However, the courts of this state have always been open to those who have sought to show that a taxing power has been exercised capriciously, arbitrarily or on a fundamentally wrong basis, and so we conclude that the court had jurisdiction to the extent we have just indicated. We do not enlarge, because the matter will be further discussed under the next assignment of error.

It is next urged that the superior court erred in trying the case de novo. When the matter came on for hearing, the proceeding being a new one, the question arose as to whether the jurisdiction of the court was limited to a review of the record as certified to the court, or whether evidence might be received and a trial be had de novo. Both court and counsel realized that the statute was silent on the question of procedure, that the course to be followed was largely an unchartered one, that the case might set a precedent to be followed in the future, and that it was important that a correct procedure be determined and followed. In his first ruling on the question the court did direct that a trial de novo be had, but that is a somewhat elastic term, and, as the trial proceeded and evidence was received, the rulings of the court consistently and properly limited that term in language so apt and so clear that we can do no better than to quote and adopt that ruling as our own. The court said:

'I think we must consider this case as it is being waged here, as an appeal from the ruling of the tax commission, an appeal by the Metropolitan Building Company from the ruling of the tax commission, increasing the valuation of the company's property, and the case must be viewed from that standpoint. I think counsel for the company rather has taken a broader view of the court's meaning on the order granting a trial de novo. The court could not go beyond the limitations that the Supreme Court of this state has made, and in granting a trial de novo this court, of necessity, could only mean the trying of the case anew so far as the introduction of testimony is concerned and the determination of facts is concerned, for the purpose of enabling this court to determine whether the valuation placed upon this property by the tax commission was erroneous to the extent that it was actually or constructively fraudulent. If the court should thus find, I think the court would have power to fix valuation; but if the court should find the findings of the commission were correct from the testimony taken by the court, that would be the extent of the court's power in the matter.

'Now, this rule as to the limitations of the court in this state is well established and is to about this effect that the courts will interfere in behalf of a taxpayer and prevent the imposition of an excessive tax when it is shown to be the result of capricious or arbitrary action amounting to an actual or constructive fraud upon the rights of the taxpayer. The courts have not the power to fix the valuation of property as against that fixed by the taxing officers, in the absence of such a showing. This principle is clearly set forth in the case of Templeton v. Pierce County, 25 Wash. 377 , and is sustained by many other authorities in this state and elsewhere.

'In the case of First National Bank v. Council 112 N.W. [829], an Iowa case, it was held that upon an appeal from the determination of a board of equalization, under a statute providing that the court shall hear and determine anew questions arising before the board, it was held the court was not clothed with jurisdiction to sit as an assessing tribunal, and that the court has authority only to deal with the correctness of the conclusions reached by the board. So when this court announced this was a trial de novo, it could only hold that the court would hear evidence anew for the purpose of determining, under all the facts and circumstances touching the valuation, whether or not the state tax commission had fixed valuations which would amount to actual or constructive fraud upon the taxpayer.'

Since this has always been the rule in this state when the taxpayer has brought suit in equity for relief from unjust assessment and taxation, we are convinced that the Legislature, in providing for an appeal from an order of the tax commission, since it fixed no practice in the act, intended that the well-established equity practice should be followed; especially so, since that practice affords the proper ground for relief in the simplest and most direct way.

Other errors are assigned upon the admission and rejection of evidence and matters incident thereto, but since we shall disregard all improper...