Savage v. State Tax Com'n of Missouri

Decision Date16 December 1986
Docket NumberNo. 67981,67981
Citation722 S.W.2d 72
PartiesLarue SAVAGE, Assessor, Greene County, Missouri, Appellant, v. STATE TAX COMMISSION of MISSOURI, et al., Respondents.
CourtMissouri Supreme Court

Theodore L. Johnson, III, County Counselor, John W. Housley, Asst. County Counselor, Springfield, for appellant.

David J. Newburger, Susan Spiegel, Jerome Wallach, St. Louis, for respondents.

ROBERTSON, Judge.

Respondent taxpayers challenged the assessment of their real property in Greene County for tax years 1980 and 1981. The State Tax Commission (the "Commission") found that respondents suffered discriminatory assessment of their real property and ordered the assessor, appellant herein, to lower the assessment of respondent's properties to the average level of assessment within the county. Appellant sought judicial review in the circuit court; the circuit court affirmed the Commission.

On appeal to the Court of Appeals, Southern District, the judges of that court recommended that this Court transfer the case prior to opinion because of its general interest and importance. Rule 83.06. We granted transfer and have jurisdiction. Mo. Const. art. V, § 10.

At issue in this appeal are questions regarding the sufficiency of the evidence upon which the Commission based its decision and the appropriate legal standard upon which the Commission can order the assessor to lower an assessment of a taxpayer's property. We affirm the judgment of the circuit court.

I.

The relevant facts are not in dispute. Pursuant to § 163.011(4), RSMo 1978, Commission employees conducted ratio studies for tax years 1980 and 1981 for the purpose of determining the equalized assessed valuation of real property in order to distribute funds to school districts in Greene County. The ratio studies appraised 231 parcels (1980) and 204 parcels (1981) of Greene County real estate selected at random by a computer program. The study found that the average assessment rate for the randomly selected parcels was 20.9 percent of fair market value in 1980 and 20.5 percent of fair market value in 1981.

Respondent taxpayers, apparently aware of the results of the ratio studies, claimed that their property was assessed at 33 1/3 percent of fair market value and protested their assessments to the State Tax Commission. The Commission consolidated the cases and conducted an evidentiary hearing in April, 1982. The parties (taxpayers and assessor) stipulated to the true value in money of respondents' properties. Respondents contended that the ratio studies establish a disparity between the average level of assessment in Greene County and the assessment of their properties and that such a disparity violates § 137.115(1), RSMo 1978, the uniformity provision of Mo. Const. art. X, § 3, and the equal protection clause of U.S. Const. amend. XIV.

The Commission rendered separate decisions and orders in which it made identical findings that the ratio studies established the average level of assessment of real property in Greene County for 1980 and 1981 at 20.9 and 20.5 percent of true value in money respectively. The Commission further found that appellant had assessed the respective respondent taxpayers' property at the rate of 33 1/3 percent of its true value in money. The Commission ordered the assessor to lower the assessment on respondents' Greene County properties to the average level of assessment for real property in Greene County as determined by the ratio studies. The Commission also ordered appellant to refund the taxes paid in excess of that amount.

Appellant sought review in the Circuit Court of Greene County. The Circuit Court consolidated the separate appeals for review. After considering the arguments of the parties, the Circuit Court affirmed the decision of the Commission.

II.

Our review of the Commission's decision is ordinarily limited to whether that decision is "supported by competent and substantial evidence upon the whole record or whether it was arbitrary, capricious, unreasonable unlawful or in excess of its jurisdiction." Evangelical Retirement Homes of Greater St. Louis, Inc. v. State Tax Commission, 669 S.W.2d 548, 552 (Mo. banc 1984); § 536.140.2, RSMo 1978. In matters of property tax assessment, this Court has acknowledged "the wisdom of the General Assembly in providing an administrative agency to deal with this specialized field." State ex rel. Cassilly v. Riney, 576 S.W.2d 325, 328 (Mo. banc 1979). Thus, we recognize that the courts may not assess property for tax purposes, Drey v. State Tax Commission, 345 S.W.2d 228, 238-9 (Mo.1961), that proper methods of valuation and assessment of property are delegated to the Commission, C & D Investment Co. v. Bestor, 624 S.W.2d 835, 838 (Mo. banc 1981) and that on review, "[t]he evidence must be considered in the light most favorable to the administrative body, together with all reasonable inferences which support it, and if the evidence would support either of two opposed findings, the reviewing court is bound by the administrative determination." Hermel, Inc. v. State Tax Commission, 564 S.W.2d 888, 894 (Mo. banc 1978) (citation omitted). When read together, our cases demonstrate that this Court is loathe to substitute its judgment for the expertise of the Commission in matters of property tax assessment. Absent clear abuse, we will "stay our hand[s]." Pierre Chouteau Condominiums v. State Tax Commission, 662 S.W.2d 513, 517 (Mo. banc 1984) (Blackmar, J. concurring).

A.

Several of appellant's points on appeal appear to constitute an attack on the use of ratio studies generally and the use of these ratio studies particularly as a basis for the Commission's order. Appellant cites May Department Stores Co. v. State Tax Commission, 308 S.W.2d 748 (Mo.1958), as authority for "rejecting Commission ratio studies ... as evidence of the general level of assessment within a county."

It would serve little purpose to burden this opinion with a lengthy explanation of our understanding of the holding in May Department Stores. It is sufficient to say that that case does not announce a per se rejection of the use of properly conducted ratio studies to prove either the average level of assessment or discrimination in an individual case. 1 Even if May Department Stores announced such a rule, as appellant argues, we now hold that properly conducted ratio studies are admissible for purposes of proving both the average level of assessment and discrimination in individual cases.

In State ex rel. Independence School Dist. v. Jones, 653 S.W.2d 178, 183 (Mo. banc 1983), this Court described the evolution of ratio studies in this state.

In 1975, State Auditor George Lehr conducted a tax ratio study as part of an audit of the State Tax Commission and determined that the ratio of assessed value to true value for real property varied widely throughout the state. His report caused a stir and in 1977 a special subcommittee was established in the State House of Representatives to study the situation. The subcommittee held hearings during which commission procedures for conducting ratio studies of real property were described in detail. Thereafter, the tax commission acting with the subcommittee and House and Senate Appropriations Committees developed the procedures used in today's ratio studies of real property assessments.

Given the careful attention which the Commission and the legislative branch have given ratio studies as a means of discovering "average true value ratios to be used ... in determining the equalized assessed valuation ..." § 163.033, RSMo 1978, we cannot agree with appellant that ratio studies are per se inadmissible for purposes of challenges to individual assessment.

B.

We turn now to appellant's attack on the validity of the ratio studies employed in this case. Appellant claims that ratio studies prepared pursuant to § 163.011(4) are not substantial evidence of the general level of assessment in Greene County. Appellant further argues that these ratio studies are not statistically representative of the general mass of real property in the county and are, therefore, not substantial evidence.

1.

Section 163.011(4) directs the Commission to provide the Department of Elementary and Secondary Education with the percent of true value actually assessed in a given county. The Commission determines this percentage by conducting a ratio study within that county. See, Independence School District, supra. Appellant argues that because the purpose of a § 163.011(4) ratio study is not "to determine values of property within a particular county in individual appeals before the State Tax Commission ... [the use of such ratio studies] exceeds § 163.011(4)'s statutory purpose and intent."

Appellant attacks not the accuracy of ratio studies prepared pursuant to § 163.011(4), but their use before the Commission in matters of individual assessment. The germane inquiry is whether the ratio studies accurately find the average level of assessment within Greene County. The mere fact that a ratio study is prepared for purposes of equalizing property assessment within school districts does not as a matter of law render such a study incompetent or insubstantial for purposes of determining the average level of assessment within a county. Section 163.011(4) does not preclude the use of the ratio studies for the purposes employed here. The Commission admitted the studies into evidence in a manner consistent with § 536.070(11), RSMo 1978. The point is denied.

2.

The evidence concerning the ratio studies consisted of the testimony of Johnny Jones, who conducted the assessment survey in Greene County; Jim Follina, his supervisor who reviewed Mr. Jones' findings and who was in charge of developing the computer program which chose the properties to be assessed in the survey; and Fred Wagner, the expert called by the assessor to challenge the validity of the ratio study. The transcript indicates that the...

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