Kennecott Corp. v. Salt Lake County

• Decision Date: 27 June 1985
• Docket Number: No. 18972,18972
• Parties: KENNECOTT CORPORATION, a New York corporation, Plaintiff, v. SALT LAKE COUNTY, et al., Defendants and Appellants. SALT LAKE COUNTY, et al., Cross-claimants and Appellants, v. The STATE TAX COMMISSION OF UTAH, et al., Cross-defendants.
• Court: Utah Supreme Court

Page 451

702 P.2d 451

KENNECOTT CORPORATION, a New York corporation, Plaintiff, v. SALT LAKE COUNTY, et al., Defendants and Appellants.

SALT LAKE COUNTY, et al., Cross-claimants and Appellants, v. The STATE TAX COMMISSION OF UTAH, et al., Cross-defendants.

No. 18972.

Supreme Court of Utah.

June 27, 1985.

Theodore L. Cannon, Co. Atty., Bill Thomas Peters, John G. Avery, Sp. Deputy, Salt Lake City, for defendants and appellants.

Keith E. Taylor, John F. Waldo, Salt Lake City, for Kennecott.

Rex E. Madsen, Reed L. Martineau, Salt Lake City, for State Tax Com'n.

STEWART, Justice:

This appeal arises from a challenge by Salt Lake County to the Utah State Tax Commission's methods of valuing mining properties owned by Kennecott Corporation. On May 19, 1982, Kennecott sued the Tax Commission, the County, and others for a partial refund of its 1981 property taxes previously paid under protest. Jurisdiction was alleged pursuant to U.C.A., 1953, section 59-11-11. Kennecott complained that U.C.A., 1953, section 59-5-4.5 (repealed 1982 Utah Laws ch. 66, section 6), which reduced the valuation of residential property by 20%, was unconstitutional and that consequently Kennecott's tax burden was unlawfully increased. In Rio Algom Corp. v. San Juan County, Utah, 681 P.2d 184 (1984), we upheld the constitutionality of section 59-5-4.5, and by stipulation of the parties that issue is no longer part of this suit.

The County filed two cross-claims against the Tax Commission and one counterclaim against Kennecott. The first cross-claim against the Tax Commission alleged that U.C.A., 1953, section 59-5-57, which governs the assessment of mines, mining claims, and mining machinery, prescribes a method of assessment that does not reflect the full cash value of mining property , which therefore violates Article XIII, Section 3 of the Utah Constitution. The cross-claim further alleged that the Tax Commission had failed to assess certain personal property of Kennecott at its full cash value and had erroneously assessed the value of improvements to real property by classifying them as personal property. The cross-claim prayed for (1) a declaration that section 59-5-57 was unconstitutional; and (2) an order directing the Tax Commission to correct the inequities in its assessment procedures and assess state-assessed mining properties at their full cash value, as required by Article XIII, Section 3.

The second cross-claim against the Tax Commission alleged that the Tax Commission possessed information about Kennecott's assessments that Salt Lake County was entitled to review and prayed for an order directing the Tax Commission to make the information available to the County.

The County's counterclaim against Kennecott alleged that Kennecott's mining properties and equipment were undervalued for various reasons ¹ and that therefore the County was entitled to recover lost taxes from Kennecott for previous years. It prayed for an order fixing the full cash value of Kennecott's properties as of 1981 and for a judgment for taxes that have escaped assessment over the past five years.

The district court ruled that the County lacked standing to maintain its cross-claims against the Tax Commission and its counterclaim against Kennecott and therefore dismissed the cross-claims and counterclaim with prejudice. The County appeals the dismissal. We reverse and remand.

I.

The major issue in this case is whether the County has standing to sue the Tax Commission and Kennecott. At the outset, we note that standing issues often turn on the facts of a case and that "[g]eneralizations about standing to sue are largely worthless as such." Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 151, 90 S.Ct. 827, 829, 25 L.Ed.2d 184 (1970). Nevertheless, in Jenkins v. Swan, Utah, 675 P.2d 1145 (1983), we formulated an alternative test for determining standing.

1. We first apply traditional standing criteria, which require that (a) the interests of the parties be adverse, and (b) the parties seeking relief have a legally protectible interest in the controversy. Id. at 1148, 1150. "Plaintiff must be able to show that he has suffered some distinct and palpable injury that gives him a personal stake in the outcome of the legal dispute." Id. at 1148.

2. If the plaintiff has no standing under the first step, then he may have standing if no one has a greater interest than he and if the issue is unlikely to be raised at all if the plaintiff is denied standing. Id. at 1150.

3. In unique cases, standing may be established by a showing that the issues raised by the plaintiff are of great public importance and ought to be judicially resolved. Id. at 1150-51.

In this case, the County satisfies the first step of the standing test. Under the current statutory scheme, which was in effect when Kennecott filed its complaint, the Tax Commission assesses metalliferous mines and mining claims, section 59-5-57 (Supp.1983), and apportions these assessments to the counties and the other taxing districts in which the mines and mining claims are situated, section 59-6-1(5) (Supp.1983). By May 25th of each year, the Tax Commission transmits to each county auditor a statement showing the assessed value of the state-assessed properties within the county and the amount apportioned to the county. Section 59-6-2 (Supp.1983). By June 1st, each county must in turn apportion the value of the state-assessed properties among the various taxing districts within the county and transmit statements of those apportionments to the taxing districts. Section 59-6-3 (Supp.1983). By June 15th, each county must set the mill levy on the taxable property of the county. Section 59-9-6.3 (Supp.1983). The mill levies are limited to 16 mills per assessed dollar valuation in counties with a total assessed valuation of over $20 million and 18 mills per assessed dollar valuation for counties with a total assessed valuation under $20 million. Section 59-9-6.2 (1974). Counties may not incur debt in excess of the taxes for the current year except by a majority vote of qualified electors, Utah Const. Article XIV, Section 3, and in such case the debt is limited to 2% of the taxable property within the county, Utah Const. Article XIV, Section 4.

If, as alleged, Kennecott's state-assessed mining properties are underassessed, then the County "suffer[s] some distinct and palpable injury that gives [it] a personal stake" in the assessed value of state-assessed properties. The assessment determines in part the tax base of both the County and the taxing districts within the County, to whom the county treasurer owes a fiduciary duty. See Board of Education of Granite School District v. Salt Lake County, Utah, 659 P.2d 1030 (1983). If the value of state-assessed properties is underassessed, the mill levy and debt limitations on the County could well prevent the County from raising adequate revenues to perform its statutorily established responsibilities.

This Court has heard and disposed of numerous cases where counties have challenged Tax Commission assessments, apportionments, and other actions by the Tax Commission. See Washington County v. State Tax Commission, 103 Utah 73, 133 P.2d 564 (1943); Kane County Board of Equalization v. State Tax Commission, 88 Utah 219, 50 P.2d 418 (1935); Rich County v. Bailey, 47 Utah 378, 154 P. 773 (1916); Juab County v. Bailey, 44 Utah 377, 140 P. 764 (1914); Salt Lake County v. State Board of Equalization, 18 Utah 172, 55 P. 378 (1898). Although the standing issue was not explicitly raised in these cases, they implicitly recognize that counties have standing to challenge determinations by the Tax Commission that directly affect the counties' budgeting and taxing functions.

Furthermore, the second step of the standing test would also give the county standing in this case. If counties do not have standing to challenge underassessments of state-assessed properties, then underassessments could be effectively insulated from challenges, which would not likely be made by either a state-assessed property owner, by the Tax Commission (which made the underassessment), or by any county-assessed taxpayer. ²

II.

The Tax Commission and Kennecott argue that the County lacks standing because no statute explicitly authorizes the County to challenge assessments by the Tax Commission. They advance a rule followed by other courts that the right of judicial review in tax assessment cases is by statute limited to a specified class, and it cannot be extended to entities, such as counties, not fairly within the statutory provisions. E.g., State ex rel. St. Francois County School District R-III v. Lalumondier, Mo., 518 S.W.2d 638 (1975); In re Proposed Assessment of County Treasurer, 219 Iowa 1099, 260 N.W. 538 (1935); Grigsby v. Minnehaha County, 6 S.D. 492, 62 N.W. 105, 107 (1895). See also Annot., "Who May Complain of Underassessment or Nonassessment of Property for Taxation," 5 A.L.R.2d 576 (1949). The rule advanced by the Tax Commission is consistent with this Court's decisions. See Pacific Intermountain Express Co. v. State Tax Commission, 7 Utah 2d 15, 316 P.2d 549 (1957); Home Fire Insurance Co. v. Lynch. 19 Utah 189, 56 P. 681 (1899).

Nevertheless, the rule relied upon by the Tax Commission and Kennecott does not control this case, because it does not apply to cases where a county challenges not just the validity of a particular assessment, but the constitutionality of the mining assessment statutes and assessment methods generally. Clearly, the decision of assessing authorities is subject to judicial review when they value property pursuant to a statute or method claimed to be unconstitutional, or have otherwise acted outside their statutory authority. "When the overvaluation of property has arisen from the adoption of a rule of appraisement which conflicts with a constitutional or statutory direction, and operates unequally not merely on a single...