Schleiff v. County of Freeborn

• Court: Minnesota Supreme Court
• Writing for the Court: THOMAS GALLAGHER; THEODORE CHRISTIANSON
• Citation: Schleiff v. County of Freeborn, 231 Minn. 389, 43 N.W.2d 265 (Minn. 1950)
• Decision Date: 23 June 1950
• Docket Number: Nos. 35030 and 35103,s. 35030 and 35103
• Parties: SCHLEIFF v. COUNTY OF FREEBORN.

Page 265

43 N.W.2d 265

231 Minn. 389

SCHLEIFF v. COUNTY OF FREEBORN.

Nos. 35030 and 35103.

Supreme Court of Minnesota.

June 23, 1950.

Syllabus by the Court.

1. In assessing real estate for purposes of taxation, the assessor is required, by virtue of M.S.A. § 273.11, to assess such property at its true and full value in money, which, under § 272.03, subd. 9, means its true and full value at the usual selling price at private sale and not at forced or auction sale. In arriving at sale value by virtue of § 273.12, assessor is required to consider and give due weight to elements and factors affecting same.

2. Factors which should be considered by the assessor include 'Location, cost of construction, cost of reproduction, purpose for which building was used, the intrinsic value or worth of the building, the price at which the owner is willing to sell, the price at which buyers who may use the property for some purpose are willing to buy, the price at which similar property, if any, has sold, and many other things * * *.' In re Delinquent Real Estate Taxes, Waseca County, 182 Minn. 543, 544, 235 N.W. 22.

3. In determining sale value, assessor should take into consideration evidence of the amount for which the property was sold if such sale took place within a reasonable time prior to the assessment. Such sale price, however, is not Conclusive as to the market or sale value of the property, although an Important element for consideration.

4. An assessor's valuation is prima facie valid, the burden resting upon the taxpayer to prove it excessive. If assessor's valuation be arrived at in violation of statutory mandates with reference thereto, court's findings upholding same will be sustained here nevertheless, provided there is other competent and proper evidence sufficient to sustain them.

5. Where assessor testified that his valuations were not based upon sale or market value of property as prescribed by § 272.03, subd. 9, and his testimony further disclosed his failure to take into consideration any except one or two of the elements and factors affecting such valuation, as required by § 273.11, a finding based upon his testimony alone cannot be sustained.

6-7. Where witness testified as to fair market value of property as of date of assessment; correctly defined market value as contemplated by § 272.03, subd. 9; gave consideration to all factors which might affect such valuation; and took into consideration the price which taxpayer had paid for property two years prior to assessment, Held that such evidence was sufficient to sustain trial court's finding of valuation.

8. While income tax returns of taxpayer might properly have been admitted in evidence, nevertheless where witness offering them did not prepare them and testified that all information thereon came from original books and records of taxpayer kept by witness, which records were not submitted or offered in evidence; and where accountant preparing such income tax returns was not present to testify or be examined with reference to deductions for various expenses therein, Held that trial court did not abuse its discretion in refusing to receive such returns in evidence.

9. Examination of the record fails to disclose that taxpayer's property was unfairly and unequally assessed in comparison with other assessments in the locality, and indicates taxpayer's failure to substantiate her claim on this issue.

Meighen, Knudson, Sturtz & Peterson, Albert Lea, for appellant.

Rudolph Hanson, Albert Lea, for respondent.

THOMAS GALLAGHER, Justice.

Petitioner, Rose Schleiff, hereinafter referred to as the taxpayer, filed her petition in the district court of Freeborn county under M.S.A. § 278.01 claiming that certain structures on real property owned by her in the city of Albert Lea, Freeborn county, had been partially, unfairly, and unequally assessed, at a valuation greater than its real or actual value, for the 1947 taxes. Previous thereto, pursuant to an order of the district court under § 278.03, she had paid one-third of the challenged taxes.

On September 16, 1948, the district court ordered judgment for the full amount of the taxes for the year in question, less the amount previously paid thereon as provided in § 278.07. Subsequently it denied taxpayer's motion for amended findings or a new trial. Taxpayer appealed from the findings and order for judgment and from a subsequent order denying her motion for a new trial.

On appeal, the questions presented are (1) whether the proper 'yardstick' for determining full and true value for assessment purposes was applied in assessing the structure on the real estate here involved; (2) whether the assessor acted properly in raising the valuation thereof approximately $30,000 for 1946 and 1947 when the valuations of similar buildings in the vicinity were left unchanged or decreased; and (3) whether the income tax return of taxpayer for the year 1945 was properly excluded from evidence.

The structure consists of a building in Albert Lea with a frontage of 62 feet on East Clark street therein and extending northward about 240 feet, originally constructed about 40 years ago, and an additional wing constructed a few years later extending west 126 feet from the northerly end of the original structure making an L-shaped building.

The floors, ceilings, posts, and other parts of the building are of wood. The walls are of brick and the basement of cement. Inside the building a line of wooden posts supports the ceiling and roof. They are 12 feet apart, making use of the interior impractical for all but a few purposes.

It was built for a specific type of manufacturing, for which it is no longer adaptable. It can be used for storage or light manufacturing, but it was essentially a one-purpose building, and that purpose no longer exists. It is in need of continuous repair, and expenses therefor are estimated to range between 70 and 75 percent of the gross income therefrom. It would cost $12,000 to put its windows and window casings in proper condition, $8,000 to repair the floor, and.$19,000 for two new freight elevators.

The structure is located about two blocks east of the main retail street in Albert Lea and two blocks north of the principal east-west thoroughfare. It is not in a manufacturing section and has no trackage. To bring trackage to it would cost approximately $155,000, plus the required land for right of way purposes.

It was built by the American Gas Machine Company, which, after many years of operation in the manufacturing business, became insolvent. On December 1, 1939, the company filed a petition for arrangement under the Bankruptcy Act, 11 U.S.C.A. Thereunder a reorganization was effected in 1941.

Thereafter tax delinquencies reached the sum of approximately.$19,000. The corporation listed the property for sale with a real estate broker, who made repeated and continuous efforts to sell it. The best offer received prior to the sale to taxpayer here was $30,000. It was referred to by local businessmen as a 'white elephant.'

On October 1, 1944, this taxpayer purchased the property for $35,000. Delinquent taxes in the sum of approximately.$19,000 were deducted from the purchase price, so that the owner received only about $16,000. The transaction was between strangers dealing at arm's length. Taxpayer was interested in Lee Motors, an automobile sales agency, which then was in need of space. The new American Gas Machine Company was not in financial difficulties nor faced with the necessity of selling.

From 1941 until the sale to taxpayer, income from the structure was less than accruing taxes. Subsequently taxpayer's net income therefrom in 1947 was $5,978.98; in 1946 it was $3,152. Her federal income tax return for 1945 was offered in evidence but excluded. It would have established a net income for that year of $3,702.75 from a gross income of $17,495.48.

At the time of trial, portions of the structure were leased to Lee Motors, a Ford agency, in which taxpayer has an interest; Munsingwear Company of Minneapolis; Universal Milking Machine Company; Albert Lea Plating Company; the telephone company; and Grain Belt Beer. The principal use to which such lessees adapted their respective portions of the structure was for storage of their products. Lee Motors was required to expend approximately $24,000, of which one-half went for fixtures and equipment, to make its space practical for its purposes.

The tax history of the structure is one of constant delinquency. On April 15, 1940, the commissioner of taxation, upon the unanimous approval of the members of the city council of Albert Lea, granted an application to reduce the taxes against the property as follows: 1938 taxes from $6,456.10 to $3,476.56; 1939 taxes from $6,470.39 to $3,836.48. In 1940, 1941, 1942, and 1943, as previously indicated, the taxes thereon became delinquent and remained unpaid until the sale. Taxes for 1944 and 1945 were paid by the present taxpayer.

In 1940 and 1941, the assessed value of the structure was reduced by the assessor from $119,850 to $83,900. In 1942 and 1943, he further reduced it to $41,950. In 1944 and 1945, taxes were paid on an assessed valuation of $37,775.

In 1946 and 1947, the assessed valuation of the structure was increased to $97,600, but subsequently reduced by the board of equalization of Freeborn county to $67,200. It is the latter assessment and valuation which taxpayer contends is arbitrary and unjust. Taxes based thereon for the years 1946, 1947, and 1948 have not been paid, except for the one-third thereof paid prior to these proceedings, as previously stated.

1. M.S.A. § 273.11 provides that 'All property shall be assessed at its true and full value in money.' Section 272.03 subd. 9, defines 'full and true value' as 'the usual selling price at the place where the property * * * shall be at the time of assessment; * * * the price which could be obtained therefor at private sale and not...