People ex rel. Nordlund v. Lans

• Decision Date: 24 November 1964
• Docket Number: No. 38233,38233
• Citation: People ex rel. Nordlund v. Lans, 202 N.E.2d 543, 31 Ill.2d 477 (Ill. 1964)
• Parties: The PEOPLE ex rel. Leland J. NORDLUND, County Collector, Appellee, v. Samuel LANS et al., Appellants.
• Court: Illinois Supreme Court

Page 543

202 N.E.2d 543

31 Ill.2d 477

The PEOPLE ex rel. Leland J. NORDLUND, CountyCollector, Appellee, v.Samuel LANS et al., Appellants.

No. 38233.

Supreme Court of Illinois.

Nov. 24, 1964.

Berry & Simmons, Rockford, for appellants.

William R. Nash, State's Atty., Rockford (William H. Gates, Asst. State's Atty., of counsel), for appellee.

KLINGBIEL, Chief Justice

The county collector of Winnebago County made application in the county court for judgment for delinquent taxes for years 1959 and 1960.Samuel Lans and his two sons Bertram and William filed objections, alleging their property was so excessively overvalued as to amount to fraud.They requested a refund of a portion of their taxes, which they had paid under protest.The court granted only a part of the relief prayed, and the objectors appeal directly to this court.The collector has taken a cross appeal, claiming that only a difference of opinion on value is involved and that an assessment may not be held constructively fraudulent merely because it is excessive.

The subject property consists of a group of six old industrial buildings, all in fair condition, situated in the city of South Beloit.It was purchased in 1938 by Ida Lans, the now deceased wife of objectorSamuel Lans, and descended to the present objectors as her heirs upon her death in 1960.It was assessed for inheritance tax purposes at a value of $127,500.

For the purpose of the property tax the county treasurer's office assessed it at a full, fair, cash market valuation of $385,000.During the years in question in Winnebago County this figure was then equalized for tax purposes by taking 60% thereof and arriving at an equalized value of $231,000.The tax rates applied to this basis produced a tax of $8,865.82 for 1959 and $8,618.30 for 1960.

The assessor testified that in making the assessment he followed the manual of rules and regulations put out by the Department of Finance, using a replacement cost less depreciation formula rather than a fair cash market value basis.A real-estate expert called by the objectors gave an appraisal of $127,500, or approximately $1 per square foot of building area, as the fair cash market value.Evidence was also introduced on objectors' behalf showing sales of eight other pieces of industrial property in the general area within a few years before and after the assessment in question.The prices per square foot ranged between 60cents and $1,80.

The sole question presented is whether an assessment on a basis of $385,000 as the fair market value is so excessive as to amount to constructive fraud.Under section 1 of article IX of the Illinois constitution, S.H.A., the courts, in the absence of fraud, have no power to review or determine the value of property fixed for purposes of taxation by the administrative officers to whom such function has been delegated.It is only when the valuation has been fraudulently made that it is subject to judicial review, and mere overvaluation is not sufficient to establish fraud.(People ex rel. Callahan v. Gulf, Mobile and Ohio Railroad Co., 8 Ill.2d 66, 132 N.E.2d 544.)The rule has become firmly established, however, that where the evidence shows property to have been grossly overvalued and the assessed valuation is reached under circumstances showing either lack of knowledge of known values or a deliberate fixing of values contrary to the known value, fraud in law will be inferred and relief will be given to the taxpayer.(People ex rel. Rhodes v. Turk, 391 Ill. 424, 63 N.E.2d 513;People ex rel. McGaughey v. Wilson, 367 Ill. 494, 12 N.E.2d 5.)Constructive fraud is shown where the overvaluation is grossly excessive, and it is proved that the assessment was made either in ignorance of the value of the property or that it was not based upon readily obtainable facts.SeePeople ex rel. Harding v. Atwater, 362 Ill. 546, 553, 1 N.E.2d 46.

In support of his cross appeal the collector asserts that the court substituted its judgment of valuation for that of the assessor, and that the evidence was not sufficient to show constructive fraud.We think the judgment must be reversed, but for other reasons.The question of excessiveness and constructive fraud may not be raised in the first instance in the county court proceedings.Section 108 of the Revenue Act gave objectors ample remedy to have the assessment, if excessive, corrected before the board of review,...