In re Taxes of Potlach Timber Co.

• Decision Date: 18 July 1924
• Docket Number: No. 24,068.,24,068.
• Citation: 160 Minn. 209
• Parties: IN RE DELINQUENT REAL ESTATE TAXES FOR 1920. POTLACH TIMBER COMPANY, OBJECTOR AND APPELLANT.<SMALL><SUP>1</SUP></SMALL>
• Court: Minnesota Supreme Court

160 Minn. 209

IN RE DELINQUENT REAL ESTATE TAXES FOR 1920 POTLACH TIMBER COMPANY, OBJECTOR AND APPELLANT.¹

No. 24,068.

Supreme Court of Minnesota.

July 18, 1924.

In the matter of proceedings in the district court for Ramsey county to enforce the payment of delinquent real estate taxes for the year 1920, the Potlach Timber Company filed objections. The matter was tried before Haupt, J., and after his death submitted, on the transcript of evidence, to Michael, J., who made findings and ordered judgment as stated in the first paragraph of the opinion.

From an order denying its motion for a new trial, the objector appealed. Reversed.

Thomas C. Fitzpatrick, William F. Hunt and B. H. Schriber, for appellant.

Harry H. Peterson and Roy A. MacDonald, for respondent.

LEES, C.

This is a proceeding to enforce the payment of delinquent real estate taxes, in which the property owner interposed the defense that the assessment was in excess of the true and full value of the property. The assessor had valued it at $99,000 and the tax commission had added 7 per cent to the valuation. The answer alleged that the maximum valuation should not have exceeded $60,000. The trial court found that the true value of the property on May 1, 1920, was $99,000, denied a motion for a new trial, and the owner appealed.

The property is located opposite the Union Depot in the city of St. Paul. It consists of two lots with a frontage of 100 feet on East Third street and a depth of 132 feet. A five-story building of practically the same frontage and depth was erected on the lots in the year 1899. For many years the district was occupied by wholesalers and jobbers, but when the construction of the Union Depot was begun in the year 1918 many of the buildings in the district were demolished and the character of the neighborhood was changed. A portion of the depot spans East Third street, which has been lowered through the block west of appellant's property, and elevated railroad tracks occupy all the ground on the side of the street opposite the property. There is no longer any considerable amount of travel over the street east of the depot. It is not likely that there will be any change in these conditions in the future.

Until March 1, 1918, the annual rental of the building had been $6,000. From March 1, 1918, to October 1, 1918, the rental was $125 a month; for the 5 months following, $25 a month; and for the next 7 months the building was vacant. From March 1, 1920, to the time of the trial, the annual rental has been $900. Ever since the year 1918 the income has been less than the taxes, cost of insurance and other carrying charges. Some witnesses expressed the opinion that by an expenditure of $15,000 or $20,000 in alterations of the building the rentals might be increased.

The original cost of the building and ground was $111,000. The replacement cost of the building is not in evidence, but it was shown that insurance was carried amounting to $78,300.

Section 1987, G. S. 1913, reads in part as follows:

"All property shall be assessed at its true and full value in money. In determining such value, the assessor shall not adopt a lower or different standard of value because the same is to serve as a basis of taxation, nor shall he adopt as a criterion of value the price for which the said property would sell at auction or at a forced sale, or in the aggregate with all the property in the town or district; but he shall value each article or description of property by itself, and at such sum or price as he believes the same to be fairly worth in money."

Section 1975, G. S. 1913, defines "true and full value" as follows:

"`True and full value' shall mean the usual selling price at the place where the property to which the term is applied shall be at the time of assessment; being the price which could be obtained therefor at private sale, and not at forced or auction sale."

The state called three witnesses to testify to values. All were experienced real estate brokers, appointed by the St. Paul Real Estate Board, at the request of the county attorney, to make an appraisal. They valued the land at $40,825 and the building at $60,000. On cross-examination, each was asked what he thought the property could have been sold for on May 1, 1920. One answered: "Why, I think about $100,000"; another, "$75,000"; and the third, "$70,000."

The value of improved real estate is affected by a variety of circumstances. Among them are the location and surroundings of the property; the probability or improbability of improvement in the district where it is located; the income the property will produce in its present condition; the income it would probably produce if changes were made in the construction or arrangement of the building; and, most important of all, the price at which it can be sold. In arriving at a conclusion as to the price he will pay for a piece of property, a purchaser is not greatly interested in the original cost of the building or in the cost of replacing it, or in its insurable value. The present selling price of similar buildings in the same locality is the criterion of value in the eyes of a purchaser, and not the intrinsic worth of the building to the owner or occupant. In short the test is: What will the property bring if offered for sale to a buyer desirous of purchasing property of the same general character in the same locality?

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