ITT Community Development Corp. v. Seay, 49028

Decision Date30 June 1977
Docket NumberNo. 49028,49028
Citation347 So.2d 1024
PartiesITT COMMUNITY DEVELOPMENT CORPORATION, a Delaware Corporation, Appellant, v. John SEAY, Property Appraiser of Flagler County, Florida, Appellee.
CourtFlorida Supreme Court

Talbot D'Alemberte of Steel, Hector & Davis, Miami, for appellant.

Kate L. Walton of Walton & Townsend, Palatka, for appellee.

SUNDBERG, Justice.

This cause arrives at our Court following an order of the trial court holding, inter alia, Section 194.042, Florida Statutes (1975), unconstitutional. Pursuant to Article V, Section 3(b)(1), Florida Constitution, we execute our constitutional duties by entertaining this appeal.

Appellant, with its affiliated corporations, owns more than one hundred square miles of real estate in Flagler County. Following the notice of tax assessments for 1975, appellant instituted several attacks on the 1975 tax roll, contending that tax assessment notices, totaling many millions of dollars, reflected a "vast increase" over the previous year's assessment. In addition to the asserted increase, appellant protested the aggregation of its taxable property into massive parcels. One such parcel was assessed at $37,000,000. At a hearing before the Board of Tax Adjustment (now called Property Appraisal Adjustment Board) of Flagler County, appellant's counsel allegedly gained assurances from appellee, the Flagler County Property Appraiser, that the latter's office would assist appellant in breaking the property up into parcels with an assessed value of no more than $200,000 each so that ITT could employ "Pope's Law" to reduce the tax assessments. 1 Section 194.042, Florida Statutes (1975), commonly referred to as Pope's law, purports to provide an alternative means for challenge of a contested assessment. Conceptually, Pope's law attempts to determine "just valuation," or "fair market value," the objective of assessment, by providing a procedure for offering the taxpayer's property for sale at a public auction. The property owner who contests the assessment through Pope's law is required to make a commitment to his difference of opinion by testing that opinion at the marketplace.

After the hearings before the Board had concluded, appellant filed notice of intention to use Pope's law and again requested that the property be broken down into smaller parcels, which request was denied. Appellant did not follow the second step in the procedure for using Pope's law, i. e., filing the certificate required by Section 194.042(1)(b), Florida Statutes (1975), but instead brought a mandamus action in circuit court within the statutory time period allotted for filing the certificate. The purpose of this action was to vindicate appellant's "right to more manageable notices" by requiring appellee to break ITT's holdings into parcels having a value of $200,000 or less; this accomplished, appellant could then utilize Pope's law to prove its claim that its assessments were excessive. Appellee's response to the petition for writ of mandamus took the position that "the responsibility for including land in certificates containing property, the assessed value of which is not in excess of $200,000, rests squarely upon the owner's shoulders." Appellee also raised affirmative defenses, including the defense that the certificates need not be limited to $200,000 unless they included more than one parcel of land. In response to appellee's position, appellant amended its pleadings to seek additional relief by way of declaratory judgment on the statute's construction.

In its final order, the trial court held that: (1) Section 194.042, Florida Statutes (1975), was unconstitutional; (2) appellant was "time-barred" from using Pope's law; and (3) the $200,000 limitation applied only where two or more parcels of property were included in a single certificate. Appellant now raises these three points in its appeal before this Court. Because we affirm the trial court's order declaring Section 194.042 unconstitutional, we are unobliged to ponder the merit of appellant's remaining contentions.

The trial court found Section 194.042, Florida Statutes (1975), unconstitutional on its face as providing a method of determining valuation for ad valorem taxation purposes which violates the "just valuation" criterion of Article VII, Section 4 of the Florida Constitution. That constitutional provision states:

By general law regulations shall be prescribed which shall secure a just valuation of all property for ad valorem taxation . . . .

While we admire the conceptual simplicity with which Pope's law attempts to determine value, we must affirm the conclusion reached by the court below that the statute is incapable of arriving at "just valuation" as mandated by our organic document.

This Court has stated that "just valuation" is legally synonymous with fair market value. District School Board of Lee County v. Askew, 278 So.2d 272 (Fla.1973); Southern Bell Telephone & Telegraph Co. v. Dade County, Fla., 275 So.2d 4, conformed to 275 So.2d 566 (Fla. 3d DCA 1973); Walter v. Schuler, 176 So.2d 81 (Fla.1965). See also McArthur Jersey Farm Dairy, Inc. v. Dade County, 240 So.2d 844 (Fla.3d DCA 1970). It follows that if fair market value cannot be accurately measured, "just valuation" cannot be determined. The formula for establishing fair market value has been stated repeatedly as the amount a purchaser willing but not obliged to buy will pay to one willing but not obliged to sell. Burns v. Butscher, 187 So.2d 594 (Fla.1966); Walter v. Schuler, supra; Root v. Wood, 155 Fla. 613, 21 So.2d 133 (1945). We must determine then whether the "quasi-forced" sale mandated by Pope's law produces both a veritable "willing buyer" and "willing seller," as those terms have been traditionally employed, who negotiate the fair market value of property. We find that it does not.

Section 194.042(1)(k) provides the "property owner" with an alternative to selling his property if he does not fancy the price bid at the auction:

In the event the property owner fails to deliver to the (property appraiser) a good and sufficient warranty deed as provided in paragraph (i), within the time prescribed, the property owner shall forfeit the cash deposit or surety bond given to the (property appraiser) with the written authorization as provided herein and the (property appraiser) shall pay over one-half this amount to the buyer, together with a return of the amount paid in pursuant to the buyer's bid. This shall be full and complete compensation to the bidder and he shall have no other recourse against the property owner and the (property appraiser) arising out of any of the measures taken as provided in this section. The (property appraiser) shall retain the remainder of the forfeited cash deposit or surety bond; provided however, the property owner shall not forfeit the cash deposit or surety bond except for costs not otherwise paid where he is unable to deliver merchantable title acceptable to the buyer. In such event the just value shall be determined as otherwise provided by law. 2

The efficacy of the property owner in reneging on the purchase influences both the prospective buyer and the prospective seller. Were the taxpayer compelled to relinquish his property, once the auctioneer lowered his hammer, he would be more disposed to value the property at a higher price than if, as here, he could renounce this sale and merely forfeit his deposit. 3 Concomitantly, a prospective buyer at a Pope's law auction perceiving the owner's power to terminate the agreement surely must react more phlegmatically in the bidding process than he would in negotiations with an ordinary seller. In essence, then, the public auction does not establish the fair market value of property. Rather, it ascertains how substantial a cash offer will be made for it when the buyer realizes that the sale remains contingent upon the owner's willingness to sell which may continue undeclared for at least 30 days after the auction. Sections 194.042(1)(e) and (i), Florida Statutes (1975).

Appellant relies on Walter v. Schuler, supra, for the proposition that "just valuation" is best determined by establishing fair market value. With this proposition we agree. However, we reject appellant's rationale that Section 194.042, Florida Statutes (1975), outlines suitable procedures for determining fair market value. The Schuler case itself states that fair market value cannot be gauged without a willing buyer and a willing seller . . . "fair market value" and "just valuation" should be declared "legally synonymous" and that such is the best way to arrive at the definition of "X" (the correct assessment). The former term is a familiar one and it, in turn, may be established by the classic formula that it is the amount a "purchaser willing but not obliged to buy, would pay to one willing but not obliged to sell." Root v. Wood, 155 Fla. 613, 21 So.2d 133. Id. at 85, 86.

Under Pope's law, there will never be a "willing buyer" or "willing seller" as those terms have been historically utilized in case law.

A second deficiency of the statute impeding the establishment of "just valuation" manifests itself any time a bid on the property is received at auction. In that event, the statute does not provide for use on the tax roll of any cash offer between the certificate amount and the value fixed by the appraiser on the tax roll. Even if a sale is consummated, there is no provision in the statute that the purchase price be put on the tax rolls thereafter as the fair market value of the property. We can only interpret this peculiar silence in the statute to mean that the value fixed by the appraiser remains on the tax roll even after completion of the sale. Only when the auction results in no cash offer is value established for tax purposes which is different from that assigned by the property appraiser. In that instance, Section 194.042(1)(l ), Florida Statutes (1975), provides:

In the event...

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11 cases
  • Martinez v. Scanlan
    • United States
    • Florida Supreme Court
    • June 6, 1991
    ...of the trial judge and his resort to equitable considerations in deciding this case." Id. at 327. Likewise, ITT Community Development Corp. v. Seay, 347 So.2d 1024 (Fla.1977), held section 194.042, Florida Statutes (1975), which provided a method for determining just valuation for tax purpo......
  • Florida Elks Children's Hosp. v. Stanley
    • United States
    • Florida District Court of Appeals
    • December 4, 1992
    ...matters in determining whether to apply prospectively a decision holding a statute unconstitutional. See ITT Community Development Corp. v. Seay, 347 So.2d 1024 (Fla.1977) (statute determining just valuation for ad valorem taxation violates just valuation provision of the constitution); Int......
  • Fuchs v. Robbins, No. 98-275
    • United States
    • Florida District Court of Appeals
    • November 18, 1998
    ...set out in article VII, section 4) which results in property taxation at less than fair market value. In ITT Community Dev. Corp. v. Seay, 347 So.2d 1024 (Fla.1977), the Florida Supreme Court dealt with section 194.042, Florida Statutes,15 which made available to taxpayers an alternate meth......
  • Fuchs v. Robbins
    • United States
    • Florida District Court of Appeals
    • June 30, 1999
    ...set out in article VII, section 4) which results in property taxation at less than fair market value. In ITT Community Dev. Corp. v. Seay, 347 So.2d 1024 (Fla.1977), the Florida Supreme Court dealt with section 194.042, Florida Statutes, 11 which made available to taxpayers an alternate met......
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1 books & journal articles
  • Property Appraisers and tax breaks.
    • United States
    • Florida Bar Journal Vol. 77 No. 7, July - July 2003
    • July 1, 2003
    ...of tax statute defensively, and court declared F.S. [section]193.023(6) unconstitutional); ITT Community Dev. Corp. v. Seay, 347 So. 2d 1024,1029 (1977) (property appraiser raised constitutionality of tax statute defensively, and court declared F.S. [section]194.042 unconstitutional); Inter......

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