State Bd. of Tax Com'rs v. Smith

• Decision Date: 15 May 1984
• Docket Number: No. 4-1182A348,4-1182A348
• Citation: 463 N.E.2d 493
• Parties: STATE BOARD OF TAX COMMISSIONERS, Appellant (Defendant Below), v. Harry SMITH, et al., Appellees (Plaintiffs Below).
• Court: Indiana Appellate Court

Page 493

463 N.E.2d 493

STATE BOARD OF TAX COMMISSIONERS, Appellant (Defendant Below), v. Harry SMITH, et al., Appellees (Plaintiffs Below).

No. 4-1182A348.

Court of Appeals of Indiana Fourth District.

May 15, 1984.

Linley E. Pearson, Atty. Gen. of Indiana, James R. Green, Deputy Atty. Gen., Indianapolis, for appellant.

Michael L. Rogers, Rogers & Dove, North Vernon, for appellees.

YOUNG, Judge.

Plaintiffs-appellees, Harry Smith, et al. (Taxpayers) challenged the validity of an equalization order issued by defendants-appellants, State Board of Tax Commissioners (Board). This equalization order, if effective, would restore assessed real estate values to the amounts as originally assessed by the township trustees of Jennings County. Thus, the Board's order would nullify the trustees' unanimous decision to reduce said assessments by 30%, allowing a 15% reduction factor for location and a 15% reduction factor for local economic conditions. The trustees' decision was apparently arrived at after conversation among the various trustees and with the County Assessor, the County Commissioners, the soil conservation service and also real estate brokers and loan company agents.

In determining whether the values of the property, as assessed by the trustees, should be modified, the Board held an equalization hearing in Jennings County on November 10, 1981 for the purpose of gathering information. Upon review of the county abstract of assessments submitted on June 21, 1981 and acting upon the recommendation of the hearing officer present at the November 10th hearing, the Board issued an equalization order on December 2, 1981 directing that the assessments be increased by a 42% multiplier. This multiplier would in effect restore the assessed values to the same level as before the trustees' application of the 30% reduction factor.

On December 14, 1981 the Taxpayers filed a petition to review the Board's equalization order, and a hearing upon that issue was held on January 26, 1982. The Board entered its finding on February 12, 1982 reaffirming its order of December 2, 1981.

The Taxpayers filed their complaint for judicial review in the Jennings Circuit Court on February 24, 1982 alleging that the Board's decision to use the 42% multiplier was arbitrary, capricious and unlawful. On motion by the Board, the matter was thereafter venued to Jackson Circuit Court. The Jackson Circuit Court reviewed the equalization order, stated its findings, and entered judgment for the Taxpayers. This appeal followed.

The several issues posed by the Board have been rephrased as follows for the sake of clarity: ¹

1) whether the trial court applied the incorrect standard of review in finding that the Board's equalization order of December 2, 1981 was arbitrary, capricious, and unlawful;

2) whether the trial court erred by relying on the judgment rendered in a prior lawsuit; and

3) whether the trial court erred in finding that the Board's equalization order violated the statutory notice requirements of Ind.Code 6-1.1-14-1, et seq.

I.

The Board assigns as error various findings of fact and conclusions of law rendered by the trial court. In essence, the Board argues that the trial court arrived at these findings by examining the Board's decision on the merits and thus failed to accord any weight to the Board's own previous findings. We agree. The proper standard to be applied by a trial court in reviewing an administrative agency's decision is "... whether the agency possessed jurisdiction over the subject matter, and whether the agency's decision was made pursuant to proper procedures, was based upon substantial evidence, was not arbitrary or capricious, and was not in violation of any constitutional, statutory or legal principle." ² State Board of Tax Comm'rs v. South Shore Marina, (1981) Ind.App., 422 N.E.2d 723, 727. See State Board of Tax Comm'rs v. Gatling Gun Club, Inc., (1981) Ind.App., 420 N.E.2d 1324; Stokely Van Camp, Inc. v. State Board of Tax Comm'rs, (1979) Ind.App., 394 N.E.2d 209; State Board of Tax Comm'rs v. Holthouse Realty Corp., (1976) 170 Ind.App. 232, 352 N.E.2d 535; State Board of Tax Comm'rs v. Pappas, (1973) 158 Ind.App. 327, 302 N.E.2d 858.

In ensuring its equalization order, the Board was acting pursuant to Ind.Code 6-1.1-15-1 to -4, and thus its decision was entirely within its jurisdictional limits. It was incumbent upon the trial court to review the evidence before the Board and determine whether there was substantial evidence to support the equalization order. The Board's equalization order could be set aside only when a review of the entire record "clearly indicates that the agency's decision lacks a reasonably sound basis of evidentiary support." City of Evansville v. Southern Indiana Gas & Electric Co., (1975) 167 Ind.App. 472, 485, 339 N.E.2d 562, 572.

The record discloses that at the meeting of December 2, 1981, the Board had before it all the evidence relevant to the assessment for the tax year 1981 payable in 1982 including the transcript of the hearing held on November 10, 1981 and the results of the Board's own survey. Based on this evidence, the Board found that the trustees' reduction produced unequal assessments of property within Jennings County and as compared to assessments of similar property in adjoining counties and that equalization was therefore proper under Ind.Code 6-1.1-14-5(a)(2).

The trial court found, however, that the Board's decision to equalize these assessments was not supported by any substantial evidence and was in fact arbitrary, capricious and unlawful. In doing so, the court apparently presumed that the trustees' decision to lower assessments by 30% was accurate until and unless the Board proved otherwise. ³ The Taxpayers argue that, as plaintiffs, they had no duty to question the validity of the Board's survey and that their failure to do so does not constitute reversible error. In fact, the burden in this instance rested squarely with the Taxpayers who, in seeking to upset the equalization order, were required to prove that the order was unsupported by substantial evidence.

The Taxpayers by their own admission did not attempt to discredit the Board's evidence, witnesses or findings and thus failed to affirmatively prove that the Board's decision was not founded on substantial evidence and therefore arbitrary and capricious. State Board of Tax Comm'rs v. Traylor, (1967) 141 Ind.App. 324, 228 N.E.2d 46. A review of the record indicates that the Board conducted a hearing on November 10, 1981 at which time it solicited evidence which would support the reduction of assessments by the trustees. Counsel for the Taxpayers was present at that hearing and testified on behalf of several Jennings County taxpayers. While the testimony mentioned the adverse economic conditions in Jennings County as compared to surrounding counties, no evidence was introduced to support the trustees' decision to reduce the real estate assessments alone. Under these circumstances, the Board was entitled to give greater weight to its own survey than to the Taxpayers' testimony, and we cannot say that the Board acted arbitrarily and capriciously in disregard of uncontradicted evidence. The legislature has vested the Board with discretionary fact-finding powers, and its findings are entitled to particular weight at the trial court unless clearly shown to be erroneous. Department of Financial Institutions v. State Bank of Lizton, (1969) 253 Ind. 172, 252 N.E.2d 248; Metropolitan School District of Martinsville v. Mason, (1983) Ind.App., 451 N.E.2d 349; State Board of Tax Comm'rs v. South Shore Marina, supra; State Board of Tax Comm'rs v. Philco-Ford Corp., (1976) Ind.App., 356 N.E.2d 1379.

II.

Both the Board and the Taxpayers have argued extensively on the application to the facts of this case of the judgment of the Jennings Circuit Court in Johnson v. State Board of Tax Comm'rs, Cause Number 80-C-116. In its findings of fact and conclusions of law, the Jackson Circuit Court cited repeatedly to the issues decided in that prior lawsuit. Initially, we note that unappealed decisions of a trial court are not stare decisis and thus can bind only those who are parties to the decision itself. Skrundz v. Review Board of the Ind. Empl. Security Division, (1983) Ind.App., 444 N.E.2d 1217, 1222; Hagood v. State, (1979) Ind.App., 395 N.E.2d 315. This is particularly true when the parties to an action enter into a consent decree subsequent to judgment. The consent decree does not nullify the court's judgment, but it does become the law of the case and as such fixes the rights and duties of the respective parties in a particular case. State v. Huebner, (1952) 230 Ind. 461, 104 N.E.2d 385; cf. General Discount Corp. v. Weiss Machinery Corp., (1982) Ind.App., 437 N.E.2d 145.

Taxpayers argue, however, that the Johnson decision was binding on the court here under the doctrine of res judicata. For the doctrine to be applicable, it is essential that there have been a final adjudication upon substantially the same issues and involving the same parties.

Taxpayers here advance a novel argument in support of their contention that certain issues decided in the Johnson litigation are binding in the present dispute. We find no merit in Taxpayers' assertion that admittedly different plaintiffs in separate litigation can nevertheless be "the same" for purposes of the doctrine of res judicata. We fail to perceive the distinction between "same" and "identical". In re Terry, (1979) 271 Ind. 499, 394 N.E.2d 94, cert. denied, (1980) 444 U.S. 1077, 100 S.Ct. 1025, 62 L.Ed.2d 759. It is submitted that both Johnson and the present action were initiated as class actions by and on behalf of all property owners and taxpayers of Jennings County and against the Board. We found nothing in the record to indicate that either of these cases was ever ordered to proceed as a class action pursuant to Ind.Rules of Procedure, Trial Rule 23....