King County v. Washington State Bd. of Tax Appeals

• Decision Date: 19 January 1981
• Docket Number: No. 8465-8-I,8465-8-I
• Court: Washington Court of Appeals
• Parties: KING COUNTY and Harley H. Hoppe, King County Assessor, Appellants, v. WASHINGTON STATE BOARD OF TAX APPEALS and Whitney-Fidalgo Seafoods, Inc., Respondents. KING COUNTY and Harley H. Hoppe, King County Assessor, Appellants, v. BOARD OF TAX APPEALS of the State of Washington, Joan Thomas, Glenn Correa, and Robert Ford, as Members, J. P. Stevens & Co., Inc., Respondents.

Page 230

28 Wn.App. 230

622 P.2d 898

KING COUNTY and Harley H. Hoppe, King County Assessor, Appellants, v. WASHINGTON STATE BOARD OF TAX APPEALS and Whitney-Fidalgo

Seafoods, Inc., Respondents.

KING COUNTY and Harley H. Hoppe, King County Assessor, Appellants, v. BOARD OF TAX APPEALS of the State of Washington, Joan

Thomas, Glenn Correa, and Robert Ford, as Members,

J. P. Stevens & Co., Inc., Respondents.

No. 8465-8-I.

Court of Appeals of Washington, Division 1.

Jan. 19, 1981.

Norman K. Maleng, King County Pros. Atty William Severson, Deputy Pros. Atty., Seattle, for appellants.

Slade Gorton, Atty. Gen., Edward Mackie, Asst. Atty. Gen., Olympia, Bogle & Gates, D. Michael Young and John T. Piper, Houghton, Cluch, Coughlin & Riley, William Mathias, Seattle, for respondents.

CALLOW, Chief Judge.

In a consolidated appeal, King County and the King County Assessor appeal from orders of the King County and Thurston County Superior Courts denying review of two decisions of the Board of Tax Appeals. The issue on appeal is whether the Superior Courts should have granted review of these decisions under either RCW 7.16.040 or the court's constitutional power of review.

In 1974, the King County Assessor audited the personal property tax listings of Whitney-Fidalgo Seafoods, Inc., for the assessment years 1971-1973 under authority of RCW 84.40.340. The assessor determined Whitney-Fidalgo had under-reported the value of personal property accounts for the audited years and made "omitted value assessments" under RCW 84.40.080 to correct this under-reported assessment value.

Whitney-Fidalgo appealed these assessments to the King County Board of Equalization, which sustained the assessments. Whitney-Fidalgo then appealed to the Board of Tax Appeals (BTA), electing an informal hearing under RCW 82.03.140.

BTA reversed the Board of Equalization and disallowed the omitted value assessments. BTA based its ruling on its interpretation of RCW 84.40.085, which provides that "(n)o omitted property or omitted value assessment shall be made for any period more than three years preceding the year in which the omission is discovered." BTA held that this statute, passed in 1973, applied prospectively only and that the assessor, therefore, had no authority to make an omitted value assessment for years prior to 1974.

The assessor and King County, in response to this ruling, filed in King County Superior Court an application for writ of certiorari "or in the alternative any other appropriate writ or relief by declaratory judgment." The court denied this application on the grounds that the legislature did not provide that public agencies or officials could seek judicial review of informal BTA decisions, and that the petitioners had not met the requirements for statutory or constitutional certiorari or any other form of extraordinary relief. The assessor and King County appeal from this denial.

In 1976, the assessor audited J. P. Stevens & Co., Inc., and determined that the value of the company's finished goods inventory had been under-reported for the assessment years 1973-1976. The assessor made omitted value assessments for these years. J. P. Stevens appealed these assessments to the Board of Equalization, which sustained the assessor. J. P. Stevens then appealed to the Board of Tax Appeals, electing an informal hearing.

The BTA reversed the Board of Equalization. The BTA ruled, as it had in the Whitney-Fidalgo case, that the assessor did not possess the authority to assess omitted value for years prior to 1974. The BTA also ruled that the Board of Equalization had no authority to hear the appeals for 1974 and 1975, but that those appeals must be heard by reconvened sessions for those years.

The assessor and King County then filed in Thurston County Superior Court an application for writ of certiorari or other appropriate relief. The court denied the application and dismissed the action on the ground that the plaintiffs had not met the requirements for statutory or constitutional certiorari or any other form of extraordinary relief. The assessor and King County appeal from this denial and dismissal.

RCW 82.03.180 provides in part:

Judicial review of a decision of the board of tax appeals shall be de novo in accordance with the provisions of RCW 82.32.180 or 84.68.020 as applicable except when the decision has been rendered pursuant to a formal hearing elected under RCW 82.03.140 or 82.03.190, in which event judicial review may be obtained only pursuant to RCW 34.04.130 and 34.04.140 ...

The Supreme Court has construed this statute to preclude judicial review from an informal hearing of the Board of Tax Appeals except through the two specified statutes, RCW 82.32.180 and RCW 84.68.020, which set out taxpayers' rights to seek tax refunds and are inapplicable in the present case. Pettit v. Board of Tax Appeals, 85 Wash.2d 646, 538 P.2d 501 (1975).

The assessor and King County, therefore, sought review in the superior courts by alternative means, principally under statutory certiorari pursuant to RCW 7.16.040 and the court's constitutional power of review.

RCW 7.16.040 provides:

A writ of review (certiorari) shall be granted by any court, except a police or justice court, when an inferior tribunal, board or officer, exercising judicial functions, has exceeded the jurisdiction of such tribunal, board or officer, or one acting illegally, or to correct any erroneous or void proceeding, or a proceeding not according to the course of the common law, and there is no appeal, nor in the judgment of the court, any plain, speedy and adequate remedy at law.

RCW 7.16.050 provides that "application (for a writ of certiorari) must be made on affidavit by the party beneficially interested ..."

Appellants contend that they have met the criteria for statutory certiorari under these statutes. Respondents disagree. Respondents do not dispute that the Board of Tax Appeals exercised "judicial functions" within the meaning of this statute, nor that appellants have no appeal or other remedy at law. They contend principally that appellants lacked standing to seek a writ of certiorari because they were not a party "beneficially interested" under RCW 7.16.050. In their King County affidavits, the King County Executive and Assessor alleged BTA's actions resulted in the substantial loss of tax revenues to King County, and that both were "beneficially interested" in the outcome of this action. In their Thurston County affidavits, they stated the assessor and King County were beneficially interested in the outcome of this action, in part because of their concerns over a substantial loss of tax revenues and the integrity and fairness of the property tax system.

In denying standing to seek statutory certiorari, the King County Superior Court found

no showing that the decision by the Board of Tax Appeals interferes with the official functions of the King County Assessor or King County Executive. The affidavits of these officials do not reflect a monetary interest in the proceeding sufficient to make them interested parties.

The Thurston County Superior Court made no specific findings on this issue, but also concluded that the plaintiffs lacked standing to qualify for statutory certiorari.

The requirement that application for certiorari be made by the "party beneficially interested" has not been interpreted in a case involving the standing of a governmental entity or official to apply for a statutory writ of certiorari. Appellants ask us, therefore, to apply by analogy the ruling on standing in Seattle School Dist. 1 v. State, 90 Wash.2d 476, 585 P.2d 71 (1978). There it was held that the school district had standing to seek a declaratory judgment on the constitutionality of the State's system for funding public education. The court noted that in past decisions it had liberalized standing requirements for municipal corporations challenging the constitutionality of legislative acts. The court found the school district had standing because it "demonstrated sufficient factual injury" and showed that the interest it sought to protect was within the zone of interest protected by applicable provisions of the state constitution. Seattle School Dist. 1 v. State, supra at 494, 585 P.2d 71.

The similarity between Seattle School District and the instant case, however, is slight. In both cases, local governmental entities claimed financial loss as a result of State action. In Seattle School Dist. 1 v. State, supra at 494, 585 P.2d 71, the district sought review "of a system of public school financing that undermines its means of existence." The appellants here are unable to demonstrate anything more than the loss of a relatively small amount of tax revenue. Unlike the constitutional questions at issue in Seattle School District, the issues for which review was sought here were ones of statutory interpretation.

The appellants argue that the BTA's rulings infringe on the county's constitutionally recognized power to collect taxes. The appellants concede that this taxing power is derived only from legislative grant. See Const. art. 11, § 12; Carkonen v. Williams, 76 Wash.2d 617, 627, 458 P.2d 280 (1969); State ex rel. Hansen v. Salter, 190 Wash. 703, 706, 70 P.2d 1056 (1937). They contend, however, that, once this grant has been made, the county has a sufficient interest in defending its taxing power to allow it to seek review of BTA decisions that limit it. Appellants do not mention that a grant of taxing power does not confer an absolute right to collect property taxes free from state interference. The actions of the assessor are subject to state supervision. Carkonen v. Williams, supra at 625, 458 P.2d 280. Furthermore, the State "can take away not only the power to tax but the subjects of taxation as well. No person or municipality can acquire, as against the state, a vested right to taxes ..." Gasaway v. Seattle, 52 Wash. 444, 451, 100 P. 991 (1909)....