Stehly v. Davison Cnty., #25742-a-GAS
| Decision Date | 24 August 2011 |
| Docket Number | #25742-a-GAS |
| Parties | DONALD STEHLY and GENE STEHLY, Plaintiffs and Appellants, v. DAVISON COUNTY, a governmental subdivision of the State of South Dakota, KATHY GOETSCH, Davison County Assessor, DAVID WEITALA, RICHARD ZIEGLER, JERRY FISCHER, GERALD WEISS and JOHN CLAGGETT, Davison County Commissioners, Defendants and Appellees. |
| Court | South Dakota Supreme Court |
APPEAL FROM THE CIRCUIT COURT OF
THE FIRST JUDICIAL CIRCUIT
DAVISON COUNTY, SOUTH DAKOTA
HONORABLE SEAN M. O'BRIEN
Judge
CARL J. KOCH
Mitchell, South Dakota
Attorney for plaintiffs
and appellants.
JAMES D. TAYLOR
Davison County Deputy
State's Attorney
Mitchell, South Dakota
Attorneys for defendants
and appellees.
CONSIDERED ON BRIEFS
OPINION FILED 08/24/11
[¶1.] In 2007, Davison County adopted a county-wide plan to reassess agricultural structures. The County reassessed agricultural structures in four of its twelve townships that year. The new valuations in the four reassessed townships were generally higher than the existing valuations in the County's eight other townships. Donald and Gene Stehly, who own agricultural structures in the four reassessed townships, initiated this declaratory judgment action, alleging that the plan to reassess four townships each year created an unconstitutional lack of uniform taxation within the County. The trial court concluded that the Stehlys' claim failed because they did not establish lack of uniformity within a single taxing district. We affirm.
[¶2.] In 2007, Kathy Goetz, the Davison County Director of Equalization, discovered discrepancies in the County's assessments of agricultural structures. While some individuals were paying taxes on agricultural structures that no longer existed, others were not paying taxes on newly-constructed structures. On Goetz's recommendation, the County developed a plan to reassess all agricultural structures in the County over a three-year period.1 Beginning in 2007, agriculturalstructures in four of the County's twelve townships were to be reassessed each year for the next three years to complete reassessment of the entire county. The reassessments were to be placed on the assessment rolls as they were ascertained.
[¶3.] The County began the reassessment process in the four townships with the greatest number of agricultural structures: the Blendon, Badger, Baker, and Tobin townships. Agricultural structures in the County's other eight townships were not reassessed in 2007; they were to be reassessed in either 2008 or 2009. Unless new agricultural structures were constructed or existing structures changed in use or condition, the assessments in those eight townships remained unchanged. The reassessed valuations were placed on the 2008 assessment roll for taxes payable in 2009.
[¶4.] The new valuations in the four reassessed townships were generally higher than the existing valuations in the County's other eight townships. For example, a grain bin with ventilated floors in one of the four reassessed townships was valued at $1.90 per bushel of storage after reassessment, but the valuation for a similar facility in one of the County's other eight townships remained at $1.05 per bushel. The reassessment created a 80.9% increase in valuation. Similarly, a grain bin without ventilated floors in one of the four reassessed townships was valued at $1.35 per bushel of storage after reassessment, but the valuation for a similar facility in one of the County's other eight townships remained at $0.85 per bushel. This change caused a 58.8% increase. Finally, the new valuation for pole buildings in the four reassessed townships was approximately 25% higher after reassessment than for similar facilities in the County's other eight townships. Evidencepresented at trial established that the new valuations were the full and true value of agricultural structures in the four reassessed townships.
[¶5.] The Stehlys own agricultural structures in the Badger Township, which was reassessed in 2007. While Donald Stehly's taxes on his agricultural structures before the reassessment totaled $1,320.00, his taxes after the reassessment totaled $2,139.38. Thus, the reassessment of Donald Stehly's agricultural structures resulted in an $819.38 tax increase for the 2009 tax year. No evidence was presented at trial concerning the tax increase Gene Stehly or other individuals who owned agricultural structures in the four reassessed townships incurred due to the reassessment.
[¶6.] In August 2008, the Stehlys initiated this declaratory judgment action against the County, alleging that the plan to reassess four townships each year created an unconstitutional lack of uniform taxation within the County. The Stehlys asked the trial court to issue a writ of mandamus ordering the Davison County Assessor to "implement, prepare, and present to the Davison County Commissioners for their approval an assessment roll" that was constitutional. After a court trial, the trial court concluded that the Stehlys' claim failed because they did not establish lack of uniformity within a single taxing district. The Stehlys appeal.
[¶7.] An appeal asserting a violation of a constitutional provision is a question of law reviewed under the de novo standard of review. W Two Rivers Ranch v. Pennington Cnty., 2002 S.D. 107, ¶ 8, 650 N.W.2d 825, 827 (per curiam) (citing Jackson v. Weber, 2001 S.D. 136, ¶ 9, 637 N.W.2d 19, 22). "Under the denovo standard of review, we give no deference to the [trial] court's conclusions of law." In re Guardianship of S.M.N., T.D.N, and T.L.N., 2010 S.D. 31, ¶ 10, 781 N.W.2d 213, 218 (citing Sherburn v. Patterson Farms, Inc., 1999 S.D. 47, ¶ 4, 593 N.W.2d 414, 416). But the trial court's findings of fact "are reviewed under the clearly erroneous standard." Id. ¶ 11 ().
[¶8.] The Stehlys challenge the County's reassessment plan under article XI, section 2, of the South Dakota Constitution:
To the end that the burden of taxation may be equitable upon all property, and in order that no property which is made subject to taxation shall escape, the Legislature is empowered to divide all property including moneys and credits as well as physical property into classes and to determine what class or classes of property shall be subject to taxation and what property, if any, shall not be subject to taxation. Taxes shall be uniform on all property of the same class, and shall be levied and collected for public purposes only.
The constitutional mandate for uniform taxation requires uniform tax assessments within a particular taxing district. W. Two Rivers Ranch, 2002 S.D. 107, ¶ 9, 650 N.W.2d at 827 (quoting 71 Am. Jur. 2d State and Local Taxation § 124 (2001)).
[¶9.] The Stehlys bear the burden of presenting sufficient evidence to overcome the presumption that the County's reassessment plan is "in accordance with the law."2 In re Brookings Assoc., 482 N.W.2d 873, 876 (S.D. 1992) (citingSkinner v. N.M. State Tax Comm'n, 345 P.2d 750, 753 (N.M. 1959)). A tax assessment is unconstitutional if it "lacks uniformity and is grossly inequitable without regard to the full and true value of the property." Kindsfater v. Butte Cnty., 458 N.W.2d 347, 350 (S.D. 1990) (citing In re Butte Cnty., 385 N.W.2d 108, 113 (S.D. 1986); Knodel v. Bd. of Cnty. Comm'rs of Pennington Cnty., 269 N.W.2d 386, 389 (S.D. 1978)). While "exact uniformity and mathematical accuracy in [assessments is] absolutely impossible, there must be substantial compliance with the legislative directives[.]" Codington Cnty. v. S.D. Bd. of Equalization, 433 N.W.2d 555, 558-59 (S.D. 1988) (citations omitted).
[¶10.] The crux of the dispute in this case is what constitutes a taxing district under South Dakota law. The Stehlys argue that the plan to reassess four townships each year created an unconstitutional lack of uniform taxation within the County. But the County contends that counties are assessment districts and that townships are taxing districts. Because the Stehlys presented no evidence at trial demonstrating a lack of uniformity within the four reassessed townships, the County maintains that their claims must fail.
[¶11.] South Dakota law does not define the term "taxing district," and we have never before considered whether townships are taxing districts. We begin our analysis with an overview of the process for the annual assessment of property taxes. A county's director of equalization annually assesses all taxable property within the county. SDCL 10-3-16. The director of equalization then prepares assessment rolls for each township, municipality, or other district in the county and delivers those rolls to the local boards of equalization. SDCL 10-3-28. If a township is organized, it is vested with the powers of a local board of equalization. SDCL 1011-13. Otherwise, the county board of equalization serves as the local board of equalization. SDCL 10-11-26. The local boards of equalization for the various overlapping townships, municipalities, and school districts in the county meet to equalize the assessment of all taxable property within their districts. SDCL 10-1113. When equalization is complete, the local boards of equalization deliver the assessment rolls to the director of equalization. SDCL 10-11-21. The county treasurer sends a bill and collects all taxes whether levied for state, county, township, municipality, school, or other purposes. SDCL 10-21-1. The county treasurer pays those funds to the districts to which they belong. SDCL 10-21-27.
[¶12.] Our statutes do not define the term "taxing district," but SDCL 10-11-27 provides guidance in determining whether townships are taxing districts:
No complaint concerning property assessed in any district having a local board of equalization shall be considered unless it has first been made to...
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