Kindsfater v. Butte County

• Citation: 458 N.W.2d 347
• Decision Date: 21 March 1990
• Docket Number: No. 16797,16797
• Parties: In the Matter of the Tax Appeals of Marvin KINDSFATER and Sharee Kindsfater, Lyle H. Ruby, and Manuel Kindsfater, Taxpayers and Appellants, v. BUTTE COUNTY, South Dakota, Appellee. . Considered on Briefs
• Court: Supreme Court of South Dakota

Page 347

458 N.W.2d 347

In the Matter of the Tax Appeals of Marvin KINDSFATER and

Sharee Kindsfater, Lyle H. Ruby, and Manuel

Kindsfater, Taxpayers and Appellants, v. BUTTE COUNTY, South Dakota, Appellee.

No. 16797.

Supreme Court of South Dakota.

Considered on Briefs March 21, 1990.

Decided June 27, 1990.

Joseph M. Butler and George A. Bangs of Bangs, McCullen, Butler, Foye & Simmons, Rapid City, for taxpayers and appellants.

Richard A. Pluimer of Carr & Pluimer, Belle Fourche, for appellee.

MILLER, Justice.

In this appeal, we affirm the trial court's decision in a trial de novo in a real estate tax assessment proceeding.

PROCEDURAL HISTORY AND FACTS

In 1987, Don McGinnis, Director of Equalization for Butte County (assessor), assessed farm land belonging to the appellant taxpayers. Those 1987 valuations were as follows:

                Manuel Kindsfater           $89,929.00
                Lyle Ruby                    41,941.00
                Marvin & Sheree Kindsfater   46,069.00
                

Taxpayers appealed the 1987 value determinations to the board of county commissioners acting as a board of equalization. Taxpayers claimed that the assessment of their land improperly included their shares of stock in the Redwater Irrigation Association. The board denied taxpayers' appeal. Taxpayers then appealed to the circuit court which ultimately issued its memorandum opinion, findings of fact, conclusions of law, and order holding that the assessment was void because the assessor failed to follow the criteria required by SDCL 10-6-33.1 ¹ and our holding in Matter of Butte County, 385 N.W.2d 108 (S.D.1986). However, the order was later vacated by stipulation of the parties and an interim order was entered requiring a reassessment of taxpayers' land in accordance with statutory and constitutional criteria. The interim order also specifically adjudged the 1987 assessment as void.

The reassessment determined the land values to be twice that of the original 1987 assessment and were as follows:

                Manuel Kindsfater           $197,305.00
                Lyle Ruby                     94,013.00
                Marvin & Sheree Kindsfater    88,603.00
                

In proceedings which everyone called a "rehearing," the trial court heard the assessment appeal de novo and entered extensive findings of fact and conclusions of law. Its findings detailed the procedures utilized by the assessor in the reassessment process and specifically found that the reassessment values (unlike the original assessment) did not assign an additional value "based upon the nature of the water right, whether lands were actually irrigated or other management practices and decision."

The trial court concluded, among other things, that although the 1987 assessment procedures were void, the procedures utilized by the assessor in the reassessment substantially complied with SDCL 10-6-33.1 and constitutional directives and is entitled to the presumption that the valuations were correct. It held that although the "full and true value" of taxpayers' land was as indicated by the reassessment, such values "would result in a lack of uniformity and inequitable treatment as to these taxpayers." Recognizing that equalization of assessments is contemplated in such proceedings, it reduced the values of the property to the values previously assigned by the assessor in the original 1987 assessment.

DECISION

ISSUE

I WAS THE TRIAL COURT'S DECISION CLEARLY ERRONEOUS?

Scope of Review

Taxpayers have stated its first issue as follows:

When a real estate tax assessment has been adjudged to be void by reason of discrimination (i.e., higher than the assessment of other similar and comparable properties), the appropriate remedy is to reduce such assessment to such amount as may be necessary to remove the discrimination.

It is apparent that taxpayers have overlooked the appropriate standard of review in tax assessment appeals. Settled law in this state provides that our scope of review of a trial court's decision in a trial de novo of a tax assessment is to determine whether the findings are clearly erroneous. Butte County, supra at 110; Mortenson v. Stanley County, 303 N.W.2d 107 (S.D.1981)- ; Knodel v. Bd. of County Com'rs, 269 N.W.2d 386 (S.D.1978); Willow, Inc. v. Yankton County, 89 S.D. 643, 237 N.W.2d 660 (1975); Yadco, Inc. v. Yankton County, 89 S.D. 651, 237 N.W.2d 665 (1975).

Nowhere in its argument on this issue have taxpayers asserted that the trial court's decision was clearly erroneous. ² Rather, they rely on older authorities standing for the proposition that if there was a discriminatory value assessed, the appropriate remedy is a reduction in value. They cite Appeals of Chicago and N.W. Ry. Co., 85 S.D. 613, 188 N.W.2d 276 (1971); Baken Park, Inc. v. County of Pennington, 79 S.D. 156, 109 N.W.2d 898 (1961); In re Jepsen's Appeal, 76 S.D. 421, 80 N.W.2d 76 (1957); Chicago, R.I. & P. Ry. Co. v. Young, 60 S.D. 291, 244 N.W. 370 (1932).

We see no reason to specifically reverse the authorities cited by taxpayers because in certain respects there are salient distinguishing factors. However, we reiterate that in cases such as this, we review on the clearly erroneous standard.

Merits

Taxpayers' stated issue would suggest that the trial court, in voiding the 1987 assessment, found that the assessment values were discriminatory. That is not correct! The trial court specifically held that the assessment procedures lacked uniformity and were discriminatory. Additionally, the trial court in requiring the reassessment specifically ordered that the assessor reassess the land according to: (1) the capacity of the land to produce agricultural products; (2) soil type, terrain, and topographical condition of the property; (3) the present market value of the property in question; (4) the character of the area or place in which said property is located; (5) such other agricultural factors as may from time to time become applicable; and (6) the irrigability of the land. As a caveat to factor (6), the circuit court stated, "[w]ith respect to irrigability, the County Assessor shall determine the irrigability based on the land's location, soil, terrain, topography, and appurtenant and non-transferable water rights...." These requirements complied with SDCL 10-6-33.1 and Butte County, supra at 112, wherein we stated that "tax assessment valuation of agricultural land is to be based" on those factors.

The assessor complied with the trial court's order. The trial court's findings set forth the detailed procedures followed by the assessor in the reassessment. ³ It concluded that these procedures substantially complied with statutory and constitutional directives and was entitled to the presumption that the valuation was correct (noting too, that taxpayers had failed to offer any evidence to overcome the presumption). ⁴ We see nothing in the record to convince us that the trial court was clearly erroneous in its decision approving the reassessment values.

As stated earlier, the court entered its final judgment decreeing the reassessment values to be the full and true valuation of taxpayers' land but for equalization purposes it adopted the lower values of the original assessment concluding the same to be equitable and uniform. See Knodel, supra, and Williams v. Stanley County, 69 S.D. 118, 7 N.W.2d 148 (1942).

We have consistently held that in an appeal to the circuit court on a tax assessment, the court may grant the taxpayers relief if the assessment lacks uniformity and is grossly inequitable without regard to the full and true value of the property. ⁵ Butte County, supra; Knodel, supra. "[E]xact uniformity and mathematical accuracy in valuations are absolutely impossible, (citations omitted) there must be substantial compliance with the legislative directives on valuation of agricultural property." Codington County Bd. of Com'rs v. Bd. of Equalization, 433 N.W.2d 555, 558-59 (S.D.1988) see also Baken Park, Inc. v. County of Pennington, 79 S.D. 156, 109 N.W.2d 898 (1961). Uniformity and equality of taxation is preferred over the standard of full and true value when both cannot be secured. Codington County, supra; Baken Park, supra. "In an appeal to the circuit court, the court does not merely have power to determine whether an assessment is excessive or arbitrary, but exercises independent judicial judgment to determine valuation." Knodel, supra at 389.

We have also consistently adhered to the uniformity within class rule. Codington Cty. Bd. of Com'rs, supra. In writing for the court in Codington Cty. Bd. of Com'rs, Justice Henderson summarized the constitutional provisions, noting that

(1) the burden of taxation of all property is to be equitable, S.D. Const. art. XI, Sec. 2, (2) agricultural and nonagricultural property may be separated into distinct classes for tax purposes, S.D. Const. art. VIII, Sec. 15, (3) valuation of property is not to exceed its actual value, S.D. Const. art. XI, Sec. 2, and (4) taxation is to be uniform on all property in the same class. S.D. Const. art. VIII, Sec. 15; S.D. Const. art. XI, Sec. 2.

433 N.W.2d at 557.

Here, the trial court recognized the principle of uniformity within class and appropriately set the property values at what it believed to be uniform, fair and equitable. Under the facts presented, we cannot hold that this was clearly erroneous.

ISSUE II

WHETHER THE POSSIBILITY OF AN UNAVAILABLE SUPPLY OF WATER AFFECTS LAND VALUES WHEN SAID LAND IS THEORETICALLY "IRRIGABLE." ⁶

In this issue, taxpayers assert that: "... 'irrigability' can have no effect upon the value of land until and unless there is irrigation water available[,]" and "[t]he water available for irrigation of the land of [taxpayers] comes from the Redwater Irrigation Canal and their right to draw such water stems, not from ownership of their land, but from ownership of stock in the Redwater Irrigation Corporation which constitutes personal property and which can be transferred separate and apart from the land."

These statements may be true, but they...