Poindexter v. Hand County Bd. of Equalization

• Decision Date: 01 May 1997
• Docket Number: No. 19862,19862
• Citation: 565 N.W.2d 86,1997 SD 71
• Parties: H.A. POINDEXTER, Jerry Poindexter and Jackie Poindexter, Appellants, v. HAND COUNTY BOARD OF EQUALIZATION, Appellee. . Considered on Briefs
• Court: South Dakota Supreme Court

Page 86

565 N.W.2d 86

1997 SD 71

H.A. POINDEXTER, Jerry Poindexter and Jackie Poindexter, Appellants, v. HAND COUNTY BOARD OF EQUALIZATION, Appellee.

No. 19862.

Supreme Court of South Dakota.

Considered on Briefs May 1, 1997.

Decided June 18, 1997.

William H. Golden of Heidepriem, Widmayer, Zell & Jones, Miller, for appellants.

Patricia A. Leary Carlson, Hand County Ltd. Deputy State's Attorney, Miller, for appellee.

SABERS, Justice.

¶1 Taxpayer appeals assessment of agricultural land. We affirm.

FACTS

¶2 In 1994, the Hand County Director of Equalization assessed Poindexter's agricultural land, primarily using a "crop rating." The land is located in Miller and Midland Townships in Hand County. Poindexter appealed to the Hand County Board of Equalization (Board), which reversed the Director's decision and changed the assessment to reflect its use as grass/pasture land. This decision was appealed to the Hand County Commissioners, which reversed the Board's decision and held the original valuation was correct. Poindexter appealed to the circuit court, which conducted a hearing May 12, 1995. ¹

¶3 Poindexter's evidence and testimony at the hearing established that Poindexter used the land in question as grass or pasture for the last 40 years. The soil of the property varied between Class II and Class VI. ² The property is affected by the extreme topography of the Ree Hills, with drastic drops in elevation. In letters dated March 23, 1993 and June 14, 1994, the Soil Conservation Service (SCS) informed Poindexter that the Class II soil, although some of the better cropable soil in Hand County, was not situated for use as cropland:

[T]he position of these soils on the landscape make them very susceptible to water erosion. The overhead run-off water comes from the steep hills to the southwest, flowing northeast across these flatter soils. If tilled annually, intense management practices would need to be installed to prevent severe water erosion problems. Strip cropping, residue management, grassed waterways, terraces and diversions would be needed. Twenty five to thirty percent of this land would have to remain in grassed waterways to control gully erosion; and terraces and diversions would have to be installed to slow the velocity of the run-off water. The best management practice to prevent erosion problems is to leave these areas in grassland.

Included in this unit are ... Class III and VI soils. They have a claypan subsoil that inhibits plant growth. Without residue cover these areas are very susceptible to wind and water erosion. The best management practice is to leave these areas in grassland.

The surface area of this area is inundated with rocks of various sizes which is uncharacteristic of these soils.

SCS letter, March 23, 1993. However, it is not clear from this letter which area of which township is being described as inundated with rocks.

¶4 The June 14, 1994 letter is virtually identical, with the following commentary:

Expensive to install Grassed Waterways, Terraces, and Diversions would slow the velocity of run-off water. Strip cropping and residue management would also be crucial in controlling water erosion problems. These practices would need yearly maintenance and upkeep, also. A third of the cropable acres would be in grassed waterways, terraces, and diversions.

....

An uncharacteristic feature of these soils in this area are the rocks of various sizes, on and near the surface, covering most of the area.

The 1994 letter also concludes that "the best management practice for these soils would be to leave them in grass." This letter is also vague regarding which area is designated as uncharacteristically rocky.

¶5 At the close of the May 12, 1995 hearing, the circuit court ruled from the bench that the property should be appraised as grassland, and remanded to the Board to reassess the land accordingly. The Findings of Fact, Conclusions of Law, and Order reflecting the court's decision were signed June 26, 1995 and filed February 7, 1996. The Board did not appeal this decision.

¶6 In April of 1995 (prior to the May 12 hearing), the Director had already assessed most of the property as cropland again. Poindexter requested a reclassification of the property. The Board affirmed Director's assessment. Poindexter again appealed to the circuit court. Another hearing was held November 13, 1995. The same property (eleven parcels) was the subject of the appeal, but three more parcels were included. ³ One of those three parcels is owned by Don Poindexter, not a party to the proceedings. The court took judicial notice of the May 12, 1995 hearing, but only the transcript of the testimony presented on that date became part of this record.

¶7 The first issue presented to the circuit court was whether the court's May 12, 1995 decision operated as res judicata to the relitigation of the proper classification and assessment of Poindexter's property. ⁴ The circuit court rejected this argument, stating:

This case isn't about the method of assessment. This case is not about the assessment itself, but rather it goes to the rating that was found and in this case whether it was a crop/farm rating or a grass/pasture rating.

That appears to me, this classification rating, whatever you want to call it appears to me to be akin to [a valuation] for assessment purposes. Therefore it's the ruling of this Court that res judicata does not apply.

¶8 At the close of Poindexter's case, Board moved for a directed verdict, claiming Poindexter did not overcome the presumption of correctness. See West Two Rivers Ranch v. Pennington Cty., 1996 SD 70, p 7, 549 N.W.2d 683, 686 ("The assessor's valuation is presumed to be correct, and the taxpayer bears the burden to overcome this presumption."). The circuit court denied the motion, holding "[the evidence is] enough to overcome the presumption unless there's evidence to the contrary."

¶9 The Director testified that she primarily relies upon soil maps produced by SCS and comparable sales in her assessment of agricultural property. If a piece of property can be used as cropland based upon its soil, it is assessed as cropland. If an owner chooses not to grow crops, she considers that a management decision which plays no part in the assessment, even if it is not economically feasible to grow crops because of the potential for erosion. Despite her position, and as an accommodation, she allowed for downward adjustments in some instances because of rocks, but stated that the land in Miller Township was not adjusted for rocks. She also made downward adjustments for various other characteristics not evident from the soil maps, such as hills, channels, and escarpments.

¶10 Board's expert, Arvid Meland (Meland), mapped soils for the SCS for 30 years. He agreed with the Director that the potential productivity of the soil is key to tax assessment. However, he noted that using the soil maps for tax assessment purposes could be flawed because certain features were often omitted, such as stoniness, pot holes, drainage systems with channels, and slopes. In response to complaints that the assessments ignored characteristics of the land not evident from the maps, Hand County hired Meland to conduct a rock study. He admitted he did not look at every piece of property in Hand County, but testified that he looked at every piece of land which Poindexter pointed out to him. In response to a hypothetical on cross-examination, he agreed that Class II land, if sloped, could not be farmed but testified that the "trouble spots" on Poindexter's property were rated as Class IV grassland.

¶11 The circuit court issued its opinion on January 26, 1996, upholding the Board's decision. Findings of fact and conclusions of law were not filed until September 18, 1996. Poindexter appeals.

STANDARD OF REVIEW

¶12 The taxpayer bears a heavy burden in contesting a tax assessment:

The appealing [Taxpayers] bear the burden of overcoming the presumption that the director of equalization's valuation was correct. They must produce sufficient evidence to show the assessed valuation was in excess of true and full value, lacked uniformity in the same class or was discriminatory. Yadco, Inc. v. Yankton County, 89 S.D. 651, 237 N.W.2d 665 (1975). Even if the director of equalization fails to fully comply with statutory mandates, rendering the assessment void, a taxpayer cannot avail himself of such invalidity without also showing that the tax levied was unjust and inequitable. Brink v. Dann, 33 S.D. 81, 144 N.W. 734 (1913). Substantial compliance with legislative directives is sufficient in determining assessed valuation. Hot Springs v. Fall River Landowners, 262 N.W.2d 33 (S.D.1978).

This court's proper scope of review of a trial court's decision in a trial de novo of an assessment matter is whether the decision of the trial court was "clearly erroneous." Yadco, Inc. v. Yankton County, supra.

Knodel v. Board of County Comm'rs, 269 N.W.2d 386, 389 (S.D.1978) (footnote omitted); see also SDCL 19-11-1 ("When substantial, credible evidence has been introduced to rebut the presumption, it shall disappear from the action or proceeding, and the jury shall not be instructed thereon."); Bell v. East River Elec. Power Coop., Inc., 535 N.W.2d 750, 755 (S.D.1995):

The term "substantial, credible evidence" remains undefined, but certainly it "was intended to give a presumption greater strength by requiring much more to defeat it than a mere 'tapping on the window.' "

(Quoting John W. Larson, South Dakota Evidence § 301.1 (1991)).

¶13 1. WHETHER THE CIRCUIT COURT'S RULING ON THE 1994 ASSESSMENT MADE THE CLASSIFICATION ISSUE RES JUDICATA ON THE 1995 ASSESSMENT.

¶14 We have applied the doctrine of res judicata in a tax case.

In Schell [v. Walker, 305 N.W.2d 920 (S.D.1981) ], we determined that the method of real estate tax assessment challenged was the same cause of action previously litigated in Knodel. Schell, 305 N.W.2d at...