Titus v. State Tax Commission

• Decision Date: 02 February 1965
• Docket Number: No. 7,7
• Citation: 132 N.W.2d 647,374 Mich. 476
• Parties: Leon O. TITUS et al., Plaintiffs and Appellants, v. STATE TAX COMMISSION, Defendant and Appellee.
• Court: Michigan Supreme Court

Page 647

132 N.W.2d 647

374 Mich. 476

Leon O. TITUS et al., Plaintiffs and Appellants, v. STATE TAX COMMISSION, Defendant and Appellee.

No. 7.

Supreme Court of Michigan.

Feb. 2, 1965.

Joseph W. Planck, Lansing, for plaintiffs and appellants.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., T. Carl Holbrook, William D. Dexter, Asst. Attys. Gen., Lansing, for defendant and appellee.

Before the Entire Bench.

SOURIS, Justice.

On plaintiffs' application, we granted them leave to appeal in the nature of certiorari from an order of the State tax commission confirming the 1963 city real property tax assessment of their Lansing home. It is their claim that in 1963 the Lansing assessor assessed about 20% of the real property in Lansing, including their own, by a method of assessment different from that used in the assessment of the remainder of the real property in the city, thereby depriving them of the guaranties of equality and uniformity granted by art. X, § 3, Constitution of 1908 and by C.L.S.1961, § 211.24 (Stat.Ann.1960, Rev. § 7.24).

Although the record made before the commission is not as complete and detailed as might be desired, we may conclude therefrom that beginning in 1963 the assessor undertook to reappraise all of the real property in the city. Because of the enormity of the task, it was contemplated it would require several years to complete. In the first year of the project, the tax year here involved, 20% of the properties were physically examined and reappraised. Land appraisal was based on current sales prices for comparable land. Improvements were appraised on the basis of their current cost of reproduction less depreciation. These properties then were assessed by a method not theretofore utilized in Lansing. Their assessed value was determined by increasing the appraised value of improvements by 15%, 20% or 25%, depending upon the subdivision in which located, ¹ and by adding 40% of the resultant to 40% of the appraised value of the land. The remaining real property in Lansing was not physically examined. Instead, the assessor used the same appraised value determined in prior tax years for those properties and, after 'reviewing' the preceding tax year's assessed value in a manner not described by the assessor, the assessed value was 'reposted' for 1963. While the assessor did not describe the methods by which the appraised and assessed values of these properties theretofore had been determined, there was admitted in evidence, without objection, a report of a citizens' committee on tax assessments, dated January 29, 1962, which describes the methods of assessment then used in Lansing. That description has not been challenged as inaccurate. From it we determine that prior to 1963 the Lansing assessor assessed land at a 'certain' percentage of its 1936 value while improvements were assessed on the basis of cost of reproduction less depreciation adjusted to 1947 construction costs.

The record discloses that the city council of Lansing, recognizing the manifest unfairness of the assessment of a part only of the city's real property by the new method of assessment, by unanimous resolution ² requested the board of review to postpone a change in the method of assessment until the new method could be applied uniformly to all property in the city. The council's request was not granted.

From the record made before the defendant commission the conclusion is inescapable that plaintiffs' real property, as well as about 20% of the property in Lansing, was assessed by a method different from that applied to the assessment of the remainder of the real property in Lansing. Whether either of the methods used conformed to the then applicable legislative mandate that real property be assessed at its 'true cash value' (C.L.S.1961, § 211.24 [Stat.Ann.1960 Rev. § 7.24]), is unnecessary to be determined; it is sufficient for purpose of decision that the variant methods used deprived plaintiffs of the guarantee of uniformity of taxation provided by art X, § 3 of the Constitution of 1908. See Huron-Clinton Metropolitan Authority v. Bds. of Suprs. of Five Counties, 304 Mich. 328, 335-336, 8 N.W.2d 84, where this Court adopted the following from Exchange Bank of Columbus v. Hines, 3 Ohio St. 1:

"What is meant by the words 'taxing by a uniform rule?' And to what is the rule applied by the Constitution? No language in the Constitution, perhaps, is more important than this; and to accomplish the beneficial purposes intended, it is essential that they should be truly interpreted, and correctly applied. 'Taxing' is required to be 'by a uniform rule;' that is, by one and the same unvarying standard. Taxing by a uniform rule requires uniformity not only in the rate of taxation, but also uniformity in the mode of the assessment upon the taxable valuation. Uniformity in taxing implies equality in the burden of taxation; and this equality of burden cannot exist without uniformity in the mode of the assessment, as well as in the rate of taxation. But this is not all. The uniformity must be coextensive with the territory to which it applies. If a State tax, it must be uniform over all the State; if a county, town, or city tax, it must be uniform throughout the extent of the territory to which it is applicable."

The order of defendant State tax commission of October 8, 1963 is vacated and the commission is directed to determine the true and lawful assessment of plaintiffs' property, as provided in C.L.S.1961, § 211.152 (Stat.Ann.1960 Rev. § 7.210), and in accordance with this opinion. ³ No costs may be taxed.

DETHMERS, KELLY, BLACK, SMITH and O'HARA, JJ., concurred with SOURIS, J.

ADAMS, Justice.

The problem in this case is one of the proofs. Admittedly, no taxation principle is of greater importance than uniformity. In 1963, there were approximately 31,000 residential properties in Lansing. The assessor selected about 6,000 to be reappraised as part of such a program for all residential properties.

Appellants' claim is stated in their brief:

'Appellants claim that there has been a systematic, intentional and arbitrary assessment of their realty (and that of about 6,000 other owners of residential property) at both (1) a higher percentage of true cash value, and (2) by a different mode or manner of appraisal than was employed in the great majority of residential properties in Lansing for the year 1963.'

Of the 6,000 owners of residential property reappraised, it does not appeal whether any steps were taken by them to protest their assessments to the city assessor. It is apparent, however, that some taxpayers protested the assessment of their property to the Lansing Board of Review, since we are told in appellants' brief:

'Of the taxpayers who protested to the Lansing Board of Review, the owners of some 54 properties appealed to the State Tax Commission. The Tax Commission heard jointly the 54 appeals, presenting common issues as to uniformity of taxation and equal protection of the laws * * *.'

Of the 54 appellants who pursued their remedies past the Board of Review to the Michigan Tax Commission, only appellants Leon O. Titus and wife now stand before this Court. They claim their appeal is in the nature of a representative case. However, of the 54 appeals taken to the Tax Commission, 14 were given relief and 40 were upheld. Since there was no uniform disposition by the commission, it is evident that each case was handled on its own facts. The result is that appellants stand before this Court not in a representative capacity, as they claim, but on the merits of their own case.

Ernst, the Lansing City Assessor, was the only witness to testify before the Tax Commission. He was cross-examined by appellants' counsel. Ernst was careful to differentiate between appraisal procedures and assessment procedures, as the following questions and answers serve to indicate:

'Q. Now, then, these thirty one thousand residential properties in Lansing. About how many were reappraised within the past year, and the reappraisals reflected in the 1963 taxes?

'A. Are you speaking of those appraised, not assessed?

'Q. Yes.

'A. About six thousand properties actually physically inspected. * * *

'Q. Did you earlier this year announce to the City Counsel [Council] that you are undertaking the appraisal of the property in the City?

'A. Set up a program of reappraisement, not reassessment. * * *

'Q. And all of their [the appellants'] properties were reappraised under this program?

'A. Reappraised, yes. * * *

'Q. Leaving forty per cent in the future?

'A. To be physically inspected, yes. * * *

'Q. Now, with regard to Reuben Shipman, you have on here [work sheet], two different methods for appraising his property, did you not?

'A. We use a number of different methods of appraising property. We are interested in getting a cash value regardless of the method.' (Emphasis supplied.)

Once the properties had been appraised, various factors, particularly evidence of sales in an area, were taken into account in making the assessment:

'Q. Now, what was that factor?

'A. That factor reflects a market demand for that particular area as reflected in the sales. This is a mechanic at arriving at assessment. * * * We use an approach, not a method * * *. This is the reason * * * each assessment is reviewed, regardless of the mechanic * * *. This is a tool to arrive at value. * * *

'Q. Do you find this method of appraisal of residential property recommended in the assessors tax manual approved by the tax commission, the State Tax Commission?

'A. Yes.' (Emphasis supplied.)

The appraisal values were increased by various percentages from 10% to 25% before reduction to the 40% assessment figure which was applied across the board to all 6,000 properties.

After physical inspection of appellants' property, the assessed valuation was increased from $5,100 to $7,800. According to appellants' appraisal, the market value of their...