Nepom v. Department of Revenue

• Jurisdiction: Oregon
• Court: Oregon Supreme Court
• Writing for the Court: HOWELL
• Citation: Nepom v. Department of Revenue, 536 P.2d 496, 272 Or. 249 (Or. 1975)
• Decision Date: 12 June 1975
• Parties: Ruth G. NEPOM, Appellant, v. DEPARTMENT OF REVENUE, State of Oregon, Respondent.

Page 496

536 P.2d 496

272 Or. 249

Ruth G. NEPOM, Appellant, v. DEPARTMENT OF REVENUE, State of Oregon, Respondent.

Supreme Court of Oregon, In Banc.

Argued and Submitted May 7, 1975.

Decided June 12, 1975.

Morris G. Galen of Tonkon, Torp & Galen, Portland, argued the cause and filed a brief for appellant.

Glen V. Sorensen, Asst. Atty. Gen., Salem, argued the cause for respondent. With him on the brief were Lee Johnson, Atty. Gen. and James Manary, Asst. Atty. Gen., Salem.

HOWELL, Justice.

Plaintiff appeals from an adverse decree of the Oregon Tax Court in a suit involving the valuation of the improvements on plaintiff's real property for the tax years 1971 and 1972.

Plaintiff owns two parcels of real property in Multnomah County. The Assessment and Taxation Division of the county Department of Finance assessed the property as follows:

              January 1, 1971  January 1, 1972
                              ---------------  ---------------
                Land                 $208,000         $214,240
                Improvements           73,320           75,510
                              ---------------  ---------------
                  Total              $281,320         $289,750
                

Plaintiff was denied relief by the Board of Equalization and the Department of Revenue. She appealed to the Tax Court, challenging only the valuation placed on the improvements. She contended that the value did not exceed $5,000 for each tax year.

The parties submitted the issue to the Tax Court on a stipulation of facts. The stipulation, after reciting the above valuation of the land and improvements for 1971 and 1972, stated that the highest and best use of plaintiff's land was for commercial or light industrial purposes. The stipulation also stated that defendant's witnesses had testified (apparently before the defendant's hearings officer) that 'the true cash value of plaintiff's real property, including both land and improvements' was $281,320 on January 1, 1971 and $289,750 on January 1, 1972. It was further stipulated that plaintiff's witnesses had testified only on the value of the improvements and that the residential apartments on the land had a residual value not exceeding $5,000.

Based on the stipulation, the Tax Court entered a decree reducing the value of the improvements for 1971 from $73,320 to $5,000, and for 1972 from $75,510 to $5,000. However, the Tax Court added the reduction in the value of the improvements for both years to the valuation of the land, resulting in an increase of the land value to $276,320 for 1971 and to $284,750 for 1972.

Plaintiff appeals to this court. She contends that she is contesting only the value of the improvements on her land; therefore the Tax Court had no authority, after reducing the value of the improvements, to increase the value of the land. According to plaintiff, the Tax Court should have retained the land values of $208,000 for 1971 and $214,240 for 1972, and ordered the county to reduce the improvement values to the $5,000 for each year as found by the Tax Court. ¹

ORS 308.215, relating to the assessment rolls, states, in pertinent part: ²

'The assessor shall prepare the assessment roll in the following form:

'(1) * * * For each parcel of real property, the assessor shall set down in the assessment roll according to the best information he can obtain:

'* * *.

'(e) The assessed value of the land, excluding all buildings, structures, improvements and timber thereon.

'* * *.

'(g) The assessed value of all buildings, structures and improvements thereon.

'* * *.

'(j) The total assessed valuation of each parcel of real property assessed.

'* * *.'

The defendant has referred us to several decisions from other states holding that although the assessing statutes require separate valuations for land and improvements for valuation purposes, they are a single entity and must be considered together on appeal.

In Transamerica Develop. Co. v. County of Maricopa, 107 Ariz. 396, 489 P.2d 33 (1971), the plaintiff taxpayer and the taxing authorities agreed on the value of plaintiff's land, and plaintiff appealed only the value of the improvements. Plaintiff contended on appeal that the sole issue before the court was the value of the improvements. The Arizona Supreme Court held that the statute requiring separate assessment was not controlling and stated:

'* * * In other words, if the total valuation represents the full cash value of the property, it is immaterial for purposes of appeal that one part is overvalued and the other is undervalued. It is the total value that is the concern of the board and the court.' 489 P.2d at 36.

In concluding that the land plus improvements should be considered as a single entity, the Arizona court relied on several decisions of the Supreme Court of Pennsylvania on the same subject, all of which were entered on the same day.

In Appeal of Rieck Ice Cream Co., 417 Pa. 249, 209 A.2d 383 (1965), the taxpayer appealed the value of the improvements. The court held that, despite a statutory requirement of a breakdown between land and improvements, 'the only basis for an appeal and for a decision thereon is the total assessment.' 209 A.2d at 387. The court stated that the statute requiring separate valuations for land and improvements does not control, and the court must decide the value as a whole.

In Pittsburgh Miracle Mile v. Board of Prop. A., A. & R., 417 Pa. 243, 209 A.2d 394 (1965), the court repeated the above rule and further held that a stipulation by the parties that only the land assessment was involved was improper and should not have been permitted. A similar stipulation restricting the issues only to the value of the land was also stricken as improper in Deitch Company v. Board of Property Ass., App. & Rev., 417 Pa. 213, 209 A.2d 397 (1965).

We are not persuaded by the majority opinions of the court in the Pennsylvania cases. Two members of the Supreme Court dissented. In Deitch the chief justice criticized the rule that the parties could not stipulate to one issue. He pointed out that separate assessments for land and improvements had been 'statutorily mandated' in Pittsburgh and Philadelphia, and that in some cities the tax rate is different for the land and the improvements. He stated:

'* * * The majority Opinion in each of these cases completely nullifies the statute and the ordinance--the statute which, we repeat, specifically applies and mandates a separate assessment and (the Ordinance specifically applies and mandates) a different millage for land and for buildings--by (1) ignoring and voiding the Ordinance and (2) by holding that that statute is applicable Only to assessors and not to a Court of Common Pleas which reviews an assessment De novo on appeal. In other words, the majority Opinion in Rieck and Heinz and McKnight expressly, and the majority Opinion in several of these companion cases impliedly, hold that there is one rule before the Board of Assessment For determining the value and assessment of a property and An entirely different rule when exactly the Same question is presented on appeal de novo to the Court of Common Pleas. Such a construction was never the intention of the Legislature; and it flies in the teeth of the statute and is unsupportable.' (Emphasis in original.) 209 A.2d at 406.

He also stated:

'* * * It therefore seems to me erroneous to say that real estate is One indivisible class and cannot be divided into one or more kinds of real estate, i.e., land and buildings. Moreover, this theory would require the Court to hold that the Acts supra which require a separate assessment and separate tax for land and for buildings, are Unconstitutional.' 209 A.2d at 407. (Emphasis...