KETCHIKAN PACKING COMPANY v. City of Ketchikan
| Decision Date | 08 December 1958 |
| Docket Number | 3802-KA.,No. 3801-KA,3801-KA |
| Citation | 167 F. Supp. 846 |
| Parties | KETCHIKAN PACKING COMPANY, Plaintiff, v. CITY OF KETCHIKAN, Defendant. WARDS COVE PACKING COMPANY, Plaintiff, v. KETCHIKAN INDEPENDENT SCHOOL DISTRICT, FIRST DIVISION, TERRITORY OF ALASKA, Defendant. |
| Court | U.S. District Court — District of Alaska |
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P. J. Gilmore, Jr., Ketchikan, Alaska, Edward A. Rauscher, of Weter, Roberts & Shefelman, Seattle, Wash., for Ketchikan Packing Co. & Wards Cove Packing Co.
Victor P. Guns, Ketchikan, Alaska, for city of Ketchikan.
C. L. Cloudy, of Ziegler, Ziegler & Cloudy, Ketchikan, Alaska, for Ketchikan Independent School Dist.
This suit involves two separate claims for relief from tax assessments levied by the City of Ketchikan and by the Ketchikan Independent School District against the plaintiffs' property, which claims have been consolidated on appeal. The plaintiffs are owners of fish canneries located in the Ketchikan area. Apparently the assessments were made on plaintiffs' property in the spring of 1956, and notices of taxes owed by them were filed and served in May of 1956.
It appears that the foundation of the assessments made against the plaintiffs' canneries rests principally upon replacement cost less depreciation and various other allowances. In fixing the reproduction cost of the property taxed, the appraiser relied upon a government manual, obtaining a multiplying factor based on costs in Washington for the year 1950. By use of the factor, adjustments could be made for replacement costs in Ketchikan for the year 1956. Through observation and survey, the appraiser was required to ascertain whether the buildings and equipment of these canneries could be categorized as "good" or "fair." Upon making his determination as to the quality, the particular item was multiplied by the factor, thereby obtaining the assessed value. The factor decided upon was 1.9, placing Ketchikan reproduction costs at approximately twice the amount that it would be necessary to expend in the State of Washington for the reproduction of similar items.
The plaintiffs both urge that the predominant consideration in fixing value of their buildings and equipment should have been the sales price of other canneries. It is also contended that the appraiser incorrectly assumed an available fish supply in making his assessments. Numerous other errors have also been assigned to the appraiser. As a result of these alleged errors, the plaintiffs claim relief from the assessments on the grounds set forth and discussed in this opinion. There is no claim for relief from the assessments fixed on the land of the Wards Cove Packing Company. However, relief is requested from the assessed valuation placed on the land of the Ketchikan Packing Company.
The Court, in opinion filed May 14, 1957, 150 F.Supp. 735, allowed the plaintiffs to proceed in this action for refund of tax payments, paid under protest. The Court found that the protested tax payments were made under duress due to penalties that would attach to the taxpayers in the event they failed to pay the contested taxes. It has been previously indicated by this Court that where a statutory remedy does not cover the particular situation, as where taxes are paid under duress or coercion, and under protest, an action at common law may be brought for a tax refund. Pacific American Fisheries v. Mullaney, D. C.1952, 108 F.Supp. 133, 14 Alaska 75.
The plaintiffs first allege that any overassessment, however slight, made in pursuance of the taxing statute, is illegal and will entitle the taxpayers to a refund in the amount that the assessment exceeds the true value of the property taxed. It has been recognized and well settled that in cases such as this, where the value of taxed property is in dispute, there is a presumption of validity of the appraised value, and the Court will not substitute its judgment as to valuation for that of the appraiser. The determination of value is but a product of sound judgment and discretion, and slight error in the exercise of that function by the appraiser is not sufficient to entitle the plaintiffs to relief. Mathematical exactness is not required under any system of taxation, and for this reason the Court should not be disposed to grant relief and disturb the judgment of the appraiser where the question is simply one of overvaluation. Auditor General v. Sage Land & Improvement Co., 1901, 129 Mich. 182, 88 N.W. 468, 56 L.R.A. 105; Helin v. Grosse Pointe Tp., 1951, 329 Mich. 396, 45 N.W. 2d 338; Board of County Com'rs of Ada County v. Sears, Roebuck & Co., 1953, 74 Idaho 39, 256 P.2d 526; People ex rel. Callahan v. Gulf, Mobile & Ohio R. Co., 1956, 8 Ill.2d 66, 132 N.E.2d 544, certiorari denied 1956, 352 U.S. 832, 77 S.Ct. 46, 1 L.Ed.2d 52. Consistent with the principle of these decisions, it is also recognized that mere error in judgment by the appraiser as to valuation affords the taxpayer no constitutional remedy. Southern Ry. Co. v. Watts, 1923, 260 U.S. 519, 43 S.Ct. 192, 67 L.Ed. 375; Hudson Motor Car Co. v. City of Detroit, 6 Cir., 1943, 136 F.2d 574. Testimony presented during the course of the trial indicates that most of the property within the Ketchikan area is overvalued. Under these circumstances, it would be just to grant the plaintiffs relief on the grounds of overvaluation alone only if the Court were to arbitrarily establish the true value of all property in Ketchikan. Sloman-Polk Co. v. City of Detroit, 1933, 261 Mich. 689, 247 N.W. 95, 87 A.L.R. 1294. Clearly, this Herculean task would be outside the province of the Court.
The plaintiffs next contend that the assessments made on their fish canneries were discriminatory and nonuniform. For their argument the plaintiffs rely on the sole allegation that the appraiser incorrectly assumed the availability of a fish supply in making the assessments. The Court is unable to agree that relief may be granted here on these grounds. In the absence of any showing that taxpayers of a class similar to that of the plaintiffs were assessed at lower rates through deliberate design of the tax authorities, or that there was some significant inequality among these taxpayers similarly situated, the Court is not prepared to find that the assessments were nonuniform or discriminatory. Sunday Lake Iron Company v. Township of Wakefield, 1918, 247 U.S. 350, 38 S.Ct. 495, 62 L.Ed. 1154; Sioux City Bridge Co. v. Dakota County, 1923, 260 U.S. 441, 43 S.Ct. 190, 67 L.Ed. 340. Sufficient evidence has not been introduced to uphold a finding upon which it could be predicated that other canneries were deliberately taxed at lower rates or at significantly lower values attributable to a failure of the tax authorities to take the same factors of value into consideration.
It is further alleged by the plaintiffs as grounds for relief that unreasonable methods were used by the appraiser in fixing valuation, and that the assessments, as such, were arbitrary. Essentially, these grounds for relief are the same. The Court believes it to be the better rule that where no statutory method of valuation is prescribed, the method of assessment is immaterial and of itself affords no grounds for relief so long as the assessed value is not grossly excessive of the true and full value of the property taxed. Stanolind Crude Oil Purchasing Co. v. State Board of Equalization, 1935, 174 Okl. 320, 49 P.2d 1089; Bailey v. Megan, 8 Cir., 1939, 102 F.2d 651; Grand Trunk Western R. Co. v. Brown, D.C.1940, 32 F.Supp. 784; People ex rel. Ruchty v. Saad, 1952, 411 Ill. 390, 104 N.E.2d 273.
Even in those cases where assessments have been stricken down on the grounds that unreasonable or arbitrary methods were employed by the appraiser, it does not appear that they would have been without a finding also of excessive valuation. Indicating this view, it was expressed in Adams County v. Northern Pac. Ry. Co., 9 Cir., 1940, 115 F.2d 768, at page 778, that:
A discussion of the issues of this case has reduced the plaintiffs' demands for relief to the single determination of whether or not the assessed valuations were so grossly excessive as to afford them relief. Generally, where the assessed value is grossly excessive of the actual value of the property, the court may grant relief to the taxpayer. Even though the action for tax refunds may be one at law, relief is predicated on equitable considerations. The real basis of relief is one of constructive fraud, that is, the assessed value lies outside the area where it could be said to be the reasonable product of an honest difference in judgment by the appraiser. Poland v. City of Pahokee, 1946, 157 Fla. 179, 25 So.2d 271; Appeal of Dubuque-Wisconsin Bridge Co., 1946, 237 Iowa 1314, 25 N.W.2d 327; Knappton Towboat Company v. Chambers, 1954, 202 Or. 618, 276 P.2d 425, 277 P.2d 763; People ex rel. Callahan v. Gulf, Mobile & Ohio Railroad Co., supra. Although there may be no actual intent to defraud the taxpayer through excessive valuation, there are sufficient grounds for judicial intervention so as not to subject the taxpayer to more than his fair share of the tax burden. There is also authority for the plaintiffs' contention that the tax authorities are...
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