Second Stone Ridge Co-op. Corp. v. City of Bridgeport

• Decision Date: 19 September 1991
• Docket Number: No. 14148,14148
• Citation: 597 A.2d 326,220 Conn. 335
• Court: Connecticut Supreme Court
• Parties: SECOND STONE RIDGE COOPERATIVE CORPORATION v. CITY OF BRIDGEPORT.

Page 326

597 A.2d 326

220 Conn. 335

SECOND STONE RIDGE COOPERATIVE CORPORATION v. CITY OF BRIDGEPORT.

No. 14148.

Supreme Court of Connecticut.

Argued May 1, 1991.

Decided Sept. 19, 1991.

Richard S. Scalo, Bridgeport, for appellant-appellee (defendant).

Robert S. Peeters, Stamford, for appellee-appellant (plaintiff).

Before PETERS, C.J., and SHEA, CALLAHAN, GLASS, COVELLO, BORDEN and SANTANIELLO, JJ. COVELLO, Associate Justice.

This is an application for relief from the allegedly wrongful assessment of real property brought pursuant to General Statutes § 12-119. ¹ The issues presented are: (1) Can routine disputes as to the value of real property serve as the basis for an application for relief pursuant to § 12-119; (2) Does the adoption of the "cost of reproduction" method of evaluation of real property when unsupported by underlying data result in an illegal assessment so as to warrant relief under § 12-119; and (3) Can the provisions of a regulatory agreement of the federal housing commissioner, contained in a mortgage assumption agreement, create a real property interest in the federal housing commissioner so as to warrant a proration of the real property assessment between the owner and the federal housing commissioner.

On July 6, 1988, the plaintiff, Second Stone Ridge Cooperative Corporation (Stone Ridge), filed an application in the Superior Court for relief from a wrongful assessment of real property pursuant to § 12-119. The application alleged that Stone Ridge was the owner of land and buildings in the defendant city of Bridgeport subject to taxation on the grand list of October 1, 1987. The application further alleged that the Bridgeport assessors had valued the land for assessment purposes at $587,440 and the buildings at $1,929,424, for a total assessment of $2,516,864. See footnote 2, infra. Finally, the application alleged that the valuation "[did] not properly allocate the assessment to various parties owning interests in the property" and that the resulting tax was manifestly excessive, and disregarded both the statutes for determining real property values and "the interests of the owner as affected by the interest of the Federal Housing Commissioner in the subject premises."

The state trial referee found that Stone Ridge was "a nonpublic, subsidized cooperative housing project consisting of 189 duplex, two story units in 26 buildings, constructed in 1964." The shareholders occupying the units pay a monthly pro rata carrying charge in an amount equal to the funds necessary to pay the cooperative's operating expenses, debt service and reserve for maintenance and repairs. Any excess in income generated by the cooperative must go into a reserve fund solely for maintenance and repair of the facility. Membership in the cooperative is limited to families whose income does not exceed standards set by the United States Housing and Urban Development agency (HUD).

Stone Ridge raised two claims to the trial referee. First, it claimed that the method used by the Bridgeport assessors in making the October, 1987 assessment was contrary to the appraisal methods permitted under the statute for determining the fair market value of real property subject to assessment. Second, it claimed that the tax levied should be prorated between Stone Ridge and HUD "because many of the bundle of rights associated with ownership belong to HUD [and] not to [Stone Ridge] under the regulatory agreement and mortgage covenants between the cooperative and HUD."

As to the first claim, that Bridgeport's assessors used the wrong method in assessing Stone Ridge's property, the trial referee found that Bridgeport's valuation of the property was based on the cost of building replacement. The trial referee further found that "there was no data on which to make that evaluation, and none was provided by the person who testified for the city." The trial referee found it significant that the two experts who testified agreed "that the only feasible method of evaluating the plaintiff's property is through income capitalization." The trial referee concluded "that the assessment in question was wrongful in that it was derived from an inappropriate method of evaluation contrary to the statutes and that it was manifestly excessive."

As to Stone Ridge's second claim, that the tax levied should be prorated between Stone Ridge and HUD, the trial referee concluded that General Statutes § 12-64 required that "the title holder be the person or entity subject to the tax." Because the Bridgeport land records "clearly identif[ied] [Stone Ridge] as the title holder of the property in question," the trial referee concluded that Stone Ridge "is the appropriate entity subject to the tax."

The trial referee rendered judgment reducing the fair market value of the property as of October 1, 1987, from $3,595,520 to $1,700,000. ² Bridgeport appealed to the Appellate Court and Stone Ridge cross appealed. We transferred the matter to this court pursuant to Practice Book § 4023.

Although Bridgeport asks us to address other issues, the disposition of this matter requires us to focus first on whether an appeal under General Statutes § 12-119 is authorized under the factual circumstances presented in this case. We conclude that § 12-119 does not authorize an appeal under these circumstances.

We have, upon a number of occasions, distinguished General Statutes §§ 12-115 and 12-118 ³ from their companion statute, § 12-119. See footnote 1, supra. "Our statutes [§§ 12-115 and 12-118] provide a method by which an owner of property may directly call in question the valuation placed by assessors upon his property by an appeal to the board of relief, and from it to the courts.... These statutes limit to a short period the time within which the property owner can seek relief under them, and the purpose of this is undoubtedly to prevent delays in the ultimate determination of the amounts a municipality can collect as taxes." Cohn v. Hartford, 130 Conn. 699, 702, 37 A.2d 237 (1944).

On the other hand, § 12-119 allows a taxpayer one year to bring a claim that the tax was imposed by a town that had no authority to tax the subject property, or that the assessment was "manifestly excessive and could not have been arrived at except by disregarding the provisions of the statutes for determining the valuation of [the real] property...." (Emphasis added.) Our case law makes clear that a claim that an assessment is "excessive" is not enough to support an action under this statute. Instead, § 12-119 requires an allegation that something more than mere valuation is at issue. It is this element that distinguishes § 12-119 from its more frequently invoked companion, § 12-118. In Connecticut Light & Power Co. v. Oxford, 101 Conn. 383, 392, 126 A. 1 (1924), we addressed the predecessor statute of § 12-119 and concluded that there were two possible grounds for recovery under the statute: "the absolute nontaxability of the property in the municipality where situated, and a manifest and flagrant disregard of statutory provisions." Claims under § 12-119 must fall into one of these two categories.

"The first category in the statute embraces situations where a tax has been laid on property not taxable in the municipality where it is situated...." E. Ingraham Co. v. Bristol, 146 Conn. 403, 408, 151 A.2d 700, cert. denied, 361 U.S. 929, 80 S.Ct. 367, 4 L.Ed.2d 352 (1959). This category includes claims alleging that the municipality has exceeded the scope of its taxing power. Cases that fit in this category include Fenwick v. Old Saybrook, 133 Conn. 22, 24, 47 A.2d 849 (1946) (municipality cannot tax a public park established by a borough of the municipality), and First National Bank & Trust Co. v. West Haven, 135 Conn. 191, 194, 62 A.2d 671 (1948) (municipality has no authority to tax the property of a national bank.) See also Hartford Electric Light Co. v. Wethersfield, 165 Conn. 211, 332 A.2d 83 (1973) (utility right-of-way generally not taxable separate from freehold to which attached); Security Mills, Inc. v. Norwich, 145 Conn. 375, 143 A.2d 451 (1958) (assessment cannot be levied on personal property not located in municipality). ⁴

The second category consists of claims that assessments are "(a) manifestly excessive and (b) ... could not have been arrived at except by disregarding the provisions of the statutes for determining the valuation of the property." (Emphasis added.) E. Ingraham Co. v. Bristol, 146 Conn. 403, 409, 151 A.2d 700, cert. denied, 361 U.S. 929, 80 S.Ct. 367, 4 L.Ed.2d 352 (1959). Cases in this category must contain allegations beyond the mere claim that the assessor overvalued the property. "[T]he plaintiff ... must satisfy the trier that [a] far more exacting test" has been met: either "there was misfeasance or nonfeasance by the taxing authorities, or the assessment was arbitrary or so excessive or discriminatory as in itself to show a disregard of duty on their part." Mead v. Greenwich, 131 Conn. 273, 275, 38 A.2d 795 (1944). Only if the plaintiff is able to meet this exacting test by establishing that the action of the assessors would result in illegality can the plaintiff prevail in an action under § 12-119. The focus of § 12-119 is whether the assessment is "illegal." Cohn v. Hartford, 130 Conn. 699, 703, 37 A.2d 237 (1944); see E. Ingraham Co. v. Bristol, supra, 146 Conn. at 408, 151 A.2d 700 (municipality disregarded the statutes when it taxed real property at 50 percent of its value, personal property at 90 percent and motor vehicles at 100 percent at a time when municipalities were prohibited from assessing property as a percentage of its value); Stratford Arms Co. v. Stratford, 7 Conn.App. 496, 500, 508 A.2d 842 (1986) (property could not be taxed as condominiums when still legally an apartment building at date of assessment). The statute applies only to an assessment that establishes "a disregard of duty by the assessors." L.G. DeFelice...