NeBoShone Ass'n v. State Tax Commission

• Decision Date: 10 February 1975
• Docket Number: No. 3,Docket Nos. 17717,17728,3
• Parties: NeBoSHONE ASSOCIATION, INC., et al., Plaintiffs-Appellants, v. STATE TAX COMMISSION, Defendant-Appellee
• Court: Court of Appeal of Michigan — District of US

Page 358

227 N.W.2d 358

58 Mich.App. 324

NeBoSHONE ASSOCIATION, INC., et al., Plaintiffs-Appellants, v. STATE TAX COMMISSION, Defendant-Appellee.

Docket Nos. 17717, 17728.

Court of Appeals of Michigan, Division No. 3.

Feb. 10, 1975.

Released for Publication April 4, 1975.

Harold S. Sawyer, Warner, Norcross & Judd, Grand Rapids, for plaintiffs-appellants.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., Richard R. Roesch, Asst. Atty. Gen., for Tax Commission.

Robert A. Burns, Korn & Burns, Cadillac, for Dover Twp.

Before HOLBROOK, P.J., and T. M. BURNS and SMITH, ^* JJ.

HOLBROOK, Presiding Judge.

This is an appeal from the State Tax Commission and its determination of plaintiffs' real and personal property assessments in Dover Township, Lake County, Michigan, for the years 1971 and 1972.

The real property of the plaintiff NeBoShone Association, Inc., an Ohio non-profit corporation, (hereinafter called 'the Association') consists of approximately 1,775 acres in Dover Township, Lake County. Between four and five miles (25,500 feet) of the Pine River runs through the property. The area is cut-over and partially regrown with second-growth timber, contains no roads, only sand trails suited for 'jeep' travel, and is used under the restrictions of the Association's articles of incorporation and by-laws exclusively as a wildlife preserve and for hunting and fishing. The Pine River coursing through the property is a navigable waterway and is heavily canoed and fished by the general public.

The corporation has outstanding seven shares or certificates of membership. These memberships are transferable with the approval of a majority of the non-transferring members. Over the years transfers have occurred and presently five out of the seven members are Michigan residents.

Each membership in addition to carrying the indirect, undivided ownership of 1/7 of the land includes the right to build a cottage on the property of the Association at any site not objectionable to the other members. Six members have availed themselves of this right. When a membership is transferred by its owner, the transferee buys the transferor's cottage as well as the membership. The Association exercises no control over the price of either the membership or cottage, but reserves the right to approve the transferee personally.

Other than the six cottages owned by members, the only other structures on the land are the caretaker's house and several minor outbuildings.

The land was acquired piecemeal in some nine contiguous parcels over the years since 1912, and it is still assessed for tax purposes under the nine individual descriptions and the tax is billed to the Association. The members' cottages are assessed separately as 'personalty' because of the difference of the ownership of the cottages and the underlying land, and the tax on each cottage is billed to the owning member.

Three of the seven memberships have been sold in the last ten years. All of these sales were to the three individual plaintiffs herein.

One of these sales occurred in 1964 to plaintiff Harold S. Sawyer. This sale was of the seventh and last membership which had been carried in the treasury of the Association because of a forfeiture many years ago and did not include a cottage since one had never been built by its former owner. In this instance the price of the membership was fixed by the existing six members and the price was $7,500.

In 1968 plaintiff Guy A. VanderJagt purchased a membership including a fully-furnished cottage and garage and including a 1948 Jeepster for the sum of $22,300. He subsequently remodeled and improved the cottage at a cost of approximately $13,000.

In 1970 plaintiff Thomas R. Winquist purchased a membership for a price of $50,000. This membership included a well-furnished cottage with an adjacent swimming pool and a 1968 Jeep in substantially new condition. This purchase also included an extensive array of hunting and fishing equipment, a canoe and other items; the value of which items plaintiff Winquist estimated at $20,000. The family from which he purchased the membership had the titles to the membership and the cottage and personal property in different persons, and there was an allocation made in the purchase agreement itself allocating $10,000 of the purchase price as the price of the membership.

In the year 1970 the real estate of the Association was assessed at approximately $62,000. The personal property of the individual plaintiffs was assessed in 1970 as follows: Mr. Sawyer $8,050; Mr. Vander-Jagt $14,400, and Mr. Winquist $14,400.

At the request of the township prompted by an unidentified Baldwin land developer, Russell Mackie, an appraiser for the State Tax Commission, made an appraisal of the land and cottages situated on the NeBoShone property, as a result of which he made valuations of the nine parcels of land which totaled $174,475. His total true cash value of the land was $348,950.

In addition, Mr. Mackie at that time determined the true cash value of the Guy A. VanderJagt cottage at $35,000 and stated the assessment to be $17,900. He determined the value of the Harold S. Sawyer cottage at $21,400 and stated the assessment to be $10,625. He appraised the cottage of the plaintiff Thomas R. Winquist at $30,000 and stated the assessment to be $16,275. These cottage values, of course, did not include any land or site value. The Supervisor of the township adopted the true cash values and assessments as determined by Mr. Mackie.

Plaintiffs appealed to the Board of Review and its members refused to do anything about the claimed disputes in values and assessments for the property in the township, saying they understood the Tax Commission had made the valuations and that they could not be changed. (These were the only ones made by the State Tax Commission staff). Appeals were then prosecuted to the State Tax Commission. A hearing was held at the Village of Baldwin, presided over by Commissioner Lee Clark. A transcript of the full stenographic record of the proceedings was arranged for and provided by the plaintiffs.

By agreement the hearing conducted by the State Tax Commission, because of its late date, included both the 1971 and 1972 assessments.

Prior to the hearing Mr. Mackie was requested to make another appraisal of the NeBoShone property in preparation for the appeal. This appraisal indicated a true cash value for the 1,775 acres of $534,570. This appraisal included a value of $75 per acre for the land, plus $15 a front foot for the river frontage or $382,500 (25,500 feet). This appraisal was made on the entire tract of land of the Association, whereas the previous valuation by Mr. Mackie was made on each of the nine descriptions separately as listed on the assessment rolls.

Also, the Commission had by way of preparation caused appraisals to be made by its staff of some 22 parcels of residential property in Dover, Township and some six parcels of agricultural property in the same township.

From these appraisals it was determined by the Commission's staff, as the record establishes, that exclusive of the NeBoShone land and cottages which were assessed at 50% Of the value as earlier determined by Mr. Mackie in his appraisal, the remainder of the privately owned property in the township was assessed at an average of 22.85% Of value.

The Commission substantially accepted the values established by its staff appraiser Mr. Mackie in his original appraisal, which had been accepted by the township. The Commission also accepted Mr. Mackie's assessment of the cottage of plaintiff Sawyer. It also accepted without change the assessment of the cottage of plaintiff VanderJagt. It reduced the assessment on plaintiff Winquist's cottage from $16,275 to $15,000. As to the land of the plaintiff NeBoShone Association, it increased the true cash value as determined by Mr. Mackie on his original appraisal from $348,950 to $350,770 and the resultant assessment from $174,475 to $175,450.

In light of the uncontradicted evidence as to the ratio of the assessment of other Dover Township properties to their values in 1971, the Commission reduced the ratio of assessment to true cash value of the NeBoShone land to 22.85% Of value set for the year 1971. The Commission found that for the year 1972 all assessments in Dover Township were at a ratio of 50% Of assessment to value, and for that year re-established plaintiff's assessment in 1971 with an increase of approximately $1,000 from which this appeal has been taken.

The plaintiff raises questions on this appeal as to the legality of the State Tax Commission's determinations of true cash values and assessments of plaintiff's real estate and personalty for the year 1971 and also the year 1972. In our discussions we will first consider the real estate assessments for 1971, next the personalty for 1971, and last the assessments for the year 1972.

Real Property 1971

Plaintiff sets forth in its grounds for appeal, Viz.:

(1) The assessments are in excess of 50% Of true cash value and thus are in violation of the applicable statutory and constitutional limitations, and (2) the assessments are discriminatory and nonuniform in that the ratio of assessed value to actual value of this property exceeds the ratio of assessed value to actual value of similar property of other taxpayers, both within the taxing unit, and elsewhere in the county.

The pertinent foundation law controlling the taxation of plaintiff's property in this case is found in Const.1963, art. IX, § 3, which reads as follows:

'The legislature shall provide for the uniform general ad valorem taxation of real and tangible personal property not exempt by law. The legislature shall provide for the determination of true cash value of such property; the proportion of true cash value at which such property shall be uniformly assessed, which shall not, after January 1, 1966, exceed 50 percent; and for a system of...