Knappton Towboat Co. v. Chambers

• Decision Date: 08 December 1954
• Citation: 202 Or. 618,276 P.2d 425
• Parties: KNAPPTON TOWBOAT COMPANY, a corporation, Respondent. v. Carl CHAMBERS, Robert MacLean and Ray Smith, Commissioners of the State Tax Commission of the State of Oregon, Appellants.
• Court: Oregon Supreme Court

Page 425

276 P.2d 425

202 Or. 618

KNAPPTON TOWBOAT COMPANY, a corporation, Respondent. v. Carl CHAMBERS, Robert MacLean and Ray Smith, Commissioners of the State Tax Commission of the State of Oregon, Appellants.

Supreme Court of Oregon.

Argued and Submitted on Sept. 9, 1954.

Decided Nov. 10, 1954.

Opinion Corrected Dec. 8, 1954.

See 277 P.2d 763.

Theodore W. de Looze, Asst. Atty. Gen., argued the cause for appellants, with him on the briefs were Robert Y. Thornton, Atty. Gen., and Alfred B. Thomas, Asst. Atty. Gen.

Alex L. Parks, Portland, argued the cause for respondent, with him on the brief were White, Sutherland & Parks, Portland.

Before ROSSMAN, Presiding Justice, and LUSK, BRAND, TOOZE, and PERRY, JJ.

PERRY, Justice.

For the purpose of convenience, we will in this opinion speak of the defendants as the commission.

In the year 1949 by enactment of Chapter 414, Oregon Laws 1949, the legislature provided that all water transport companies, such as the plaintiff, be assessed for taxation purposes by the State Tax Commission. Pursuant to the provisions of this Act, the commission for the year 1950 assessed as a unit the operating properties of the plaintiff (the taxpayer owning and operating watercraft engaged in interstate commerce upon the Columbia and Willamette rivers) in accordance with § 110-513, O.C.L.A., now ORS 308.555, which provided as follows:

'The said commission, for the purpose of arriving at the actual cash value of the property assessable by it, as herein provided, may value the entire property, both within and without the state of Oregon, as a unit. In case it shall value the entire property as a unit, either within or without the state of Oregon, or both, the commission shall make deductions of the property of said company situated outside of the state, and not connected directly with the business thereof, as may be just, to the end that the fair proportion of the property of the said company in this state may be ascertained. If the said commission value the entire property within the state of Oregon as a unit, it shall make deductions of the property of said company situated in Oregon, and assessed by the county assessors, to an amount that shall be just; and for that purpose the county assessors shall be and they are hereby required, if the said commission request the same, to certify to the said commission the assessable value of the property of said companies assessable by them, but such certification of assessed or assessable value is intended to be advisory only, and not conclusive upon the said commission.' (Italics ours.)

The total amount of the true cash value of plaintiff's operating properties before apportionment was determined at $248,173, and there was originally allocated to the state of Oregon 98% of the unit true cash value. Subsequently the commission discovered an error in computation that corrected to 95.17% the plaintiff's operating properties in the state of Oregon, or a true cash value in this state of $236,186.

The plaintiff being aggrieved with the assessment of the commission appealed to the commission, and failing to receive the relief it believed itself entitled to, appealed to the circuit court of Multnomah county.

The circuit court of Multnomah county reduced the over-all true cash value from $248,173 to $230,000, and by adopting a different allocation formula than that used by the commission, reduced that part apportioned to the state of Oregon to $199,594. From this adverse decision the commission has appealed.

The contentions of the commission are (1) that the variation in the unit appraisement of the true cash value of $248,173, as found by the commission, and the $230,000, as found by the circuit court, was well within the reasonable exercise of the discretion and judgment of the commission, and did not justify the circuit court in reducing the unit or over-all assessed value by $18,000; (2) that the plaintiff has failed to sustain the burden of proof necessary to overthrow the valuation found by the commission; and (3) that the circuit court erred in changing the allocation formula used by the commission in the tax year 1950.

The plaintiff in seeking relief from the ruling of the commission appealed to the circuit court in accordance with § 110-524, O.C.L.A., as amended by Oregon Laws 1941, ch. 9, § 2, which provided in part as follows:

'The appeal shall be heard and determined by the circuit court in a summary manner and shall be determined as a suit in equity, except as herein otherwise provided. Either the appellant or any county to which any portion of the assessment complained of is or may be apportioned, as appellee, shall be entitled to the compulsory attendance of witnesses, and to the production of books and papers. If, upon the hearing, the court finds the amount at which the property was finally assessed by the said commission is its actual cash value, and the assessment was made fairly and in good faith, it shall approve such assessment; but if it finds that the assessment was made at a greater or less sum than the actual full cash value of the property, or if the same was not fairly or in good faith made, it shall set aside such assessment and determine such value, and a certified copy of the order or judgment of the circuit court shall be sufficient warrant for the apportionment, levying and collecting of taxes against such property and upon such valuation so determined. * * *'

The words of the above statute, 'If, upon the hearing, the court finds the amount at which the property was finally assessed by the said commission is its actual cash value, and the assessment was made fairly and in good faith, it shall approve such assessment; but if it finds that the assessment was made at a greater or less sum than the actual full cash value of the property, or if the same was not fairly or in good faith made, it shall set aside such assessment and determine such value, * * *' are the exact words used in § 8, ch. 184, Oregon Laws 1913, which section provided for appeals to the circuit court from a county board of equalization.

In interpreting the wording of § 8, ch. 184, Oregon Laws 1913, supra, in Weyerhaeuser Land Co. v. Board of Equalization, 85 Or. 434, 443, 165 P. 1164, 1166, we said:

'To a large extent an assessment depends upon one's judgment. If the method by which the assessor arrived at the value of the property was correct and the assessment was in good faith fairly made, we are not permitted, under the statute as we read it, to pit our judgment as to the value against that of the assessor, although other men of equal ability and fairness might differ in estimating the value of the property. * * * The assessor acts judicially yet his finding as to the valuation is much the same as the verdict of the jury upon a question of fact.'

Thus it is clear that a court, in order to set aside the figure of an assessment, must be able to say that an assessor or assessing body has arrived at a valuation which lies outside of and beyond an area where reasonable minds might differ as to the true cash value of the assessed property, or that the assessment was not fairly and in good faith made; that is, that there is not uniformity within the class being assessed.

'True cash value' is defined in the statute, § 110-335, O.C.L.A., as amended by § 4, ch. 440, Oregon Laws 1941, as follows:

'True cash value of all property, whether real or personal, shall be held and taken to mean the amount such property would sell for at a voluntary sale made in the ordinary course of business, taking into consideration its earning power and usefulness under normal conditions. * * *'

And § 110-512, O.C.L.A., as amended by § 14, ch. 440, Oregon Laws 1941, provides matters to be considered by the assessing body in arriving at the true cash value of the property to be assessed:

'* * * For the purpose of arriving at the amount and character and true cash value of the property belonging to any such company, the said commission personally may inspect such property, and may take into consideration the statements filed under this act, the reports, statements or returns of said company filed in the office of any board, office or commission of this state, or any county thereof, the earning power of said company, the franchises and special franchises owned or used by said company, and such other evidence of any kind as may be obtainable bearing thereon; provided, that in no event shall any report, statement or return be conclusive upon said commission in arriving at the amount and character and true cash value of the property belonging to any such company.'

True cash value includes both the tangible and intangible assets of the unit assessed. Therefore, in any assessment relative to true cash value there must be a basic study of the matter assessed, which information, combined with judgment as to the weight to be given to each element or factor affecting value, results in a finding of the true cash value. Men of equal learning and sound judgment may give greater weight to one factor than to another, thus causing variations in the end-result, so that in all assessments latitudes of judgment must be granted an assessing agency.

The taxpayer on an appeal to the courts for relief is faced with the burden of overcoming the presumption that the assessing body has faithfully performed its duty, and this must be done by clear and convincing evidence. Appeal of Kliks, 158 Or. 669, 76 P.2d 974.

The rule thus applied to this case requires that the plaintiff show by clear and convincing evidence that the commission failed to consider elements or factors that it should, or considered elements or factors that it should not, or that it gave greater weight to certain factors than men of equal ability would have given in exercising judgment, which has resulted in a readily apparent, or, as some courts have expressed it, a grossly excessive appraisal of its property....