Sheraton-Midcontinent Corp. v. Pennington County

• Decision Date: 16 April 1959
• Docket Number: No. 9755,SHERATON-MIDCONTINENT,9755
• Citation: 77 S.D. 554,95 N.W.2d 892
• Parties: CORPORATION, Plaintiff and Respondent, v. COUNTY OF PENNINGTON and Rapid City, Defendants and Appellants.
• Court: South Dakota Supreme Court

Page 892

95 N.W.2d 892

77 S.D. 554

SHERATON-MIDCONTINENT CORPORATION, Plaintiff and Respondent, v. COUNTY OF PENNINGTON and Rapid City, Defendants and Appellants.

No. 9755.

Supreme Court of South Dakota.

April 16, 1959.

James H. Wilson, Leonard E. Morrison, Rapid City, for defendants and appellants.

Bottum & Beal, Rapid City, Woods, Fuller, Shultz & Smith, Sioux Falls, for plaintiff and respondent.

ROBERTS, Judge.

Respondent is the owner of the Sheraton-Johnson Hotel in Rapid City, Pennington County. The 1956 assessment fixed the value of the land at $59,985, the structure at $813,485, and the personal property at $77,470. The city and county boards of equalization denied petitions for reductions and the owner appealed to the circuit court. Following a trial de novo the circuit court reduced the assessed value of the structure to $566,383, and confirmed the assessed value of the personal property as made by the assessor. There appears to have been no controversy concerning the assessment of the land. The city and county have appealed from the judgment of the circuit court.

Appellants contend that the evidence is insufficient to justify the finding of the court that the assessed value of the hotel structure for 1956 was in excess of its true and full value in money and that the court erred in granting the reduction. Their contentions more specifically are (1) that the complaining taxpayer did not overcome the presumption that the assessor's valuation was correct and not excessive; (2) that the sale price of the property nine years prior to the assessment did not furnish a substantial basis for evaluation; and (3) that the assessor ascertains the valuation of property for taxation purposes in Pennington County by analyzing replacement costs, comparative sales, and capitalization of income which is a generally accepted method of evaluating property and that from the evidence the court should have found that such a formula was fairly and impartially applied in 1956 to the hotel structure.

The standard of valuation prescribed by statute at the time of the assessment here in question was that 'All property shall be assessed at its true and full value in money. In determining the true and full value of real and personal property the assessor shall not adopt a lower or different standard of value because the same is to serve as a basis of taxation, nor shall he adopt as a criterion of value the price for which the property would sell at an auction or at a forced sale, or in the aggregate with all the property in the town or district; but he shall value each article or description of property by itself and at such a sum or price as he believes the same to be fairly worth in money.' SDC 57.0334. 'True and full value', as defined in SDC 57.0301, means 'the usual cash selling price at the place where the property to which the term is applied shall be at the time of the assessment.' The statute in other words provides for an assessment at the price that property would bring to its owner if it were offered for sale on an open market under conditions in which neither buyer nor seller could take advantage of the exigencies of the other. See Tidball v. Miller, 72 S.D. 243, 32 N.W.2d 683. The Constitution (Art. XI, Sec. 2) requires not only that 'taxes shall be uniform on all property of the same class', but that the 'valuation of property for taxation purposes shall never exceed the actual value thereof.'

As we have stated there is no claim of discrimination in valuation between the hotel property and similar property in the same taxing district and that reduction was necessary to effect uniformity. However, if the hotel property was assessed in excess of its actual value, respondent taxpayer was entitled to a reduction notwithstanding there was no discrimination in valuation and assessment. In re Jepsen's Appeal, 76 S.D. 421, 80 N.W.2d 76 and cases cited.

An appeal to the circuit court from the action of the county board of equalization in refusing to reduce the assessed valuation of property is tried de novo and the circuit court does not merely have power to determine whether the action of the board of equalization was without jurisdiction or arbitrary, but to determine anew what is the actual value of the property and to reduce the assessment if the same is in excess of actual value. Williams v. Stanley County Board of Equalization, 69 S.D. 118, 7 N.W.2d 148; In re Robinson, 73 S.D. 580, 46 N.W.2d 908; Appeal of Margulies, 75 S.D. 36, 58 N.W.2d 620.

Appellants place much stress on the presumption that the assessor's valuation is correct. This is an application of the general rule that in the absence of proof to the contrary courts will presume that public officers have properly discharged the duties of their offices. Adamson v. Minnehaha County, 67 S.D. 423, 293 N.W. 542; State ex rel. Gosch v. Lemler, S.D., 84 N.W.2d 418. We have held that the presumption had no application where the assessing authorities made no investigation of their own, but accepted valuations made by professional appraisers. In re Jepsen's Appeal, supra. The presumption, however, like other presumptions does not take the place of evidence. It disappears when evidence is introduced from which facts may be found. Peters v. Lohr, 24 S.D. 605, 124 N.W. 853; McKiver v. Theo. Hamm Brewing Co., 67 S.D. 613, 297 N.W. 445. The burden of proof in other words is on the complaining taxpayer to prove that an assessment is excessive. Appellants relying principally upon Bennett v. Board of Review, 234 Iowa 800, 13 N.W.2d 351 and LeDioyt v. County of Keith, 161 Neb. 615, 74 N.W.2d 455, contend that the assessing authority's valuation is reviewable only for arbitrariness or failure to follow standards prescribed by law and not for mere errors of judgment. The Constitution as above stated prohibits an assessment of property for purposes of taxation in excess of its actual value. The purport of the decisions of this court cited above with respect to an appeal from a board of equalization to the circuit court is that the court exercises an independent judicial judgment where valuation in excess of actual value is claimed.

The city assessor based the value of the hotel structure upon replacement costs less depreciation. The assessor prepared a tabulation which was received in evidence as Exhibit 4. It shows that the structure was classified as a fireproof building having a cubical content of 1,173,264 feet; that the basic replacement cost of $962,076 was arrived at by multiplying the cubical content by the replacement figure of 82cents per cubic foot; that various increments were added to the basic cost such as terrazzo tile floors, revolving entrance doors, elevators, cut stone facing and ceramic tile in the lobby; and that the total of these amounts, less a deduction of $970 for each room having a connecting bath, represents a replacement cost of $1,078,938. The hotel was erected in 1927, but because of remodeling in 1938, 1947 and 1955 the effective age in the opinion of the assessor was reduced to 19 years. Allowing for 17 1/2% depreciation, the exhibit indicates a value in 1956 of $890,125. This amount as returned by the assessor was reduced to $813,485 by reason of a percentage reduction by the State Board of Equalization on a class of structures in Rapid City which included hotels. The assessor testified 'Our manual * * * was set up in 1952 * * *. There has not been a great deal of...