Tregor v. Board of Assessors of City of Boston

• Decision Date: 23 March 1979
• Citation: 387 N.E.2d 538,377 Mass. 602
• Parties: Norman TREGOR, Trustee, v. BOARD OF ASSESSORS OF the CITY OF BOSTON (and seven companion cases).
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 538

387 N.E.2d 538

377 Mass. 602

Norman TREGOR, Trustee, v. BOARD OF ASSESSORS OF the CITY OF BOSTON (and seven companion cases).

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Jan. 3, 1979.

Decided March 23, 1979.

Walter H. McLaughlin, Jr., Boston (Walter H. McLaughlin, Sr., Boston, with him), for Bd. of Assessors of Boston.

Arthur D. Altman, Boston, for taxpayer.

Before HENNESSEY, C. J., and QUIRICO, BRAUCHER, KAPLAN, WILKINS, LIACOS and ABRAMS, JJ.

BRAUCHER, Justice.

We are asked to reconsider the remedy available to a taxpayer who is a victim of disproportionate assessment. Under our decisions "a taxpayer has a right to have his assessment reduced so that it is 'proportional to the assessments of the class of property valued at the lowest percentage of fair cash value.' " Assessors of Weymouth v. Curtis, --- Mass. ---, --- ^A, 378 N.E.2d 655 (1978), quoting Shoppers' World, Inc. v. Assessors of Framingham, 348 Mass. 366, 377-378 n.10, 203 N.E.2d 811 (1965). The Appellate Tax Board (board) applied that rule to the present cases, but expressed a preference for reduction of the assessment only to a level proportional to the average percentage of fair cash value computed for the assessments of all taxable property in the taxing district. We affirm the decisions of the board.

In the principal case the assessors of Boston valued land and an office building owned by the taxpayer at $320,000 and assessed a real estate tax for the 1977 fiscal year of $80,928. The taxpayer made timely application for abatement and appealed to the board from the assessors' denial of his application. The board granted an abatement based on $87,904 as the "ultimate value" of the taxpayer's property, and the assessors appealed.

The parties stipulated that the appropriate method of determining the fair cash value of the property was the capitalization of income method, that the net income of the property before taxes was $55,000, and that the proper capitalization rate was 10% To account for return on investment and for depreciation. They left to the board the determination of the appropriate "tax factor."

The parties further stipulated that the class of property assessed at the lowest percentage of fair cash value in Boston was single-family residential property, which was assessed at an average rate of 26.8% Of fair cash value as determined from figures reported by the Commissioner of Corporations and Taxation. The average for all taxable real and personal property in the city was 50.2%. The parties stipulated that these 1976 percentages "may apply" to the 1977 fiscal year for the purposes of the proceedings before the board.

The board computed the "tax factor" by multiplying the current tax rate ($252.90 per $1,000 assessed valuation) by the assessment percentage of the most favored class (26.8%), yielding a tax factor of .0678. The stipulated net income ($55,000) was divided by the combined factor for return, depreciation and taxes (.10 k .0678 = .1678), yielding a fair cash value of $327,771, rounded to $328,000. Application of the single-family residence percentage then produced an assessed value proportional to that of the most favored class ($328,000 X 26.8% = $87,904). The tax on that value ($87,904 X .25290 = $22,230.92), subtracted from the income ($55,000 - $22,230.92 = $32,769.08), yields approximately 10% Of the fair cash value ($32,777.10) to cover return and depreciation. See Assessors of Lynn v. Shop-Lease Co., 364 Mass. 569, 571-572, 307 N.E.2d 310 (1974).

1. The requirement of full valuation. Our Constitution empowers the Legislature to impose "proportional and reasonable assessments, rates, and taxes, upon all the inhabitants of, and persons resident, and estates lying, within the said commonwealth." Part II, c. 1, § 1, art. 4, of the Massachusetts Constitution. Cf. art. 10 of the Declaration of Rights: "Each individual of the society has a right to be protected by it in the enjoyment of his life, liberty and property, according to standing laws. He is obliged, consequently, to contribute His share to the expense of this protection" (emphasis supplied). The former provision forbids the imposition of taxes "upon one class of persons or property at a different rate from that which is applied to other classes, whether that discrimination is effected directly in the assessment or indirectly through arbitrary and unequal methods of valuation." Cheshire v. County Comm'rs of Berkshire, 118 Mass. 386, 389 (1875), quoted in Bettigole v. Assessors of Springfield, 343 Mass. 223, 230-231, 178 N.E.2d 10, 15 (1961).

Pursuant to the Constitution, our statutes require assessors to assess property at its "fair cash valuation." G.L. c. 59, § 38. Cf. G.L. c. 41, § 29 (assessors' oath). But "illegal assessments have long been the rule rather than the exception throughout much of the Commonwealth." Sudbury v. Commissioner of Corps. & Taxation, 366 Mass. 558, 563, 321 N.E.2d 641, 645 (1974), and cases cited.

The present cases are not affected by art. 112 of the amendments to the Constitution, ratified in November, 1978. The amendment authorizes the Legislature to classify property according to its use for the purposes of taxation, and G.L. c. 59A, inserted by St.1978, c. 580, § 38, provides for such a classification. But the statute is to be applicable to property taxes assessed for the fiscal year beginning 1980. St.1978, c. 580, § 40. We decide no question with respect to the amendment or the statute.

2. Boston assessments. The stipulation of the parties incorporates a report of the Commissioner of Corporations and Taxation for the year 1976. That report describes a pattern of assessment in the city of Boston in flagrant disregard of constitutional and statutory mandates. Assessments of various classes of real and personal property are shown at average percentages of full value ranging from 26.8% To 100%. The board listed separate percentages for single-family residential property in various wards, showing a range from 17% And below for Wards 1 and 2 to 79.2% And above for Ward 12. Compare Sudbury v. Commissioner of Corps. & Taxation, 366 Mass. 558, 567, 321 N.E.2d 641 (1974), where, on the basis of a narrower range for Boston districts, we said, "The process has lost contact with reality."

The city does not now dispute the fact that the taxpayer is aggrieved by a disproportionate assessment. It contends only that the appropriate remedy is reduction of the taxpayer's assessment to a level proportional to the average of assessments of all classes of property throughout the city.

3. Remedies. On application of a taxpayer the assessors are to make a "reasonable abatement" of his taxes "if they find him taxed at more than his just proportion, or upon an assessment of any of his property in excess of its fair cash value." G.L. c. 59, § 59, as amended through St.1977, c. 198. For many years, however, this court denied abatements in cases like the present one: "Whatever may be the remedy, if there be any, when it is shown that the assessors have intentionally assessed the property of a part or all of the inhabitants at less than its fair cash value, we are of opinion that, in a petition for the abatement of taxes on the ground of the overvaluation of the property of the petitioner, and of (the) disproportionate taxation arising from such overvaluation, the question is, whether the property has been valued at more than its fair cash value, and not whether it has been valued relatively more or less than similar property of other persons." Lowell v. County Comm'rs of Middlesex, 152 Mass. 372, 375, 25 N.E. 469, 470 (1890). See Stone v. Springfield, 341 Mass. 246, 250-251, 168 N.E.2d 76 (1960), and cases cited.

Bettigole v. Assessors of Springfield, 343 Mass. 223, 178 N.E.2d 10 (1961), established that a court of equity might "prevent the enforcement of the whole of an illegal city or town tax assessment for a given year," but such extraordinary and drastic relief is narrowly confined. Leto v. Assessors of Wilmington, 348 Mass. 144, 148-149, 202 N.E.2d 922, 925 (1964). Other remedies provided some measure of relief from disproportionate assessments, but were "not wholly satisfactory." Id. at 147, 202 N.E.2d 922. To afford taxpayers their constitutional rights, we reconsidered and abandoned the rule of the Lowell case in Shoppers' World, Inc. v. Assessors of Framingham, 348 Mass. 366, 373-376, 203 N.E.2d 811 (1965). Since that decision we have continued to confine alternative remedies within narrow limits. Nearis v. Gloucester, 357 Mass. 203, 257 N.E.2d 467, cert. denied, 400 U.S. 918, 91 S.Ct. 180, 27 L.Ed.2d 158 (1970) (injunction). Sears, Roebuck & Co. v. Somerville, 363 Mass. 756, 298 N.E.2d 693 (1973) (action of contract under G.L. c. 60, § 98). But within those limits we have ordered comprehensive declaratory and injunctive relief, directing the filing of plans for orderly revaluation. Coan v. Assessors of Beverly, 349 Mass. 575, 211 N.E.2d 50 (1965) (taxpayer suit under G.L. c. 40, § 53). Bennett v. Assessors of Whitman, 354 Mass. 239, 237 N.E.2d 7 (1968) (same).

In Sudbury v. Commissioner of Corps. & Taxation, 366 Mass. 558, 565-568, 321 N.E.2d 641 (1974), we dealt with the problem of discrimination against those cities and towns whose assessors act lawfully, in favor of those whose assessors engage in the illegal practice of fractional valuation. The State Tax Commission was required to establish an "equalized valuation" for each city and town. G.L. c. 58, §§ 9-10C. Those valuations play an important part in the distribution of State funds and in the apportionment of county and other taxes. It appeared that fractional valuation made the equalization task difficult, if not impossible. We noted that such complex problems are usually solved by executive action or pursuant to express legislative directions, and ordered the entry of a decree declaring the powers and duties of the Commissioner of...