Union Pacific R. Co. v. Board of Tax Appeals

• Decision Date: 22 November 1982
• Docket Number: No. 14194,14195,14194
• Citation: Union Pacific R. Co. v. Board of Tax Appeals, 654 P.2d 901, 103 Idaho 808 (Idaho 1982)
• Parties: UNION PACIFIC RAILROAD COMPANY, et al., Petitioners-Respondents, v. The BOARD OF TAX APPEALS of the State of Idaho, Respondents, and The State Tax Commission of the State of Idaho, Respondent-Appellant. BURLINGTON NORTHERN, INC., a Delaware corporation, Petitioner-Respondent, v. The BOARD OF TAX APPEALS of the State of Idaho, Respondent, and The State Tax Commission of the State of Idaho, Respondent-Appellant.
• Court: Idaho Supreme Court

Page 901

654 P.2d 901

103 Idaho 808

UNION PACIFIC RAILROAD COMPANY, et al., Petitioners-Respondents, v. The BOARD OF TAX APPEALS of the State of Idaho, Respondents and The State Tax Commission of the State of Idaho, Respondent-Appellant BURLINGTON NORTHERN, INC., a Delaware corporation, Petitioner-Respondent, v. The BOARD OF TAX APPEALS of the State of Idaho, Respondent and The State Tax Commission of the State of Idaho, Respondent-Appellant.

No. 14194, 14195.

Supreme Court of Idaho.

Nov. 22, 1982.

David G. High, Deputy Atty. Gen., Boise, for respondent-appellant.

Thomas C. Frost, Deputy Atty. Gen., Boise, for respondents.

Robert L. Bilow and Eugene A. Ritti, of Hawley, Troxell, Ennis & Hawley, Boise, for petitioners-respondents.

SHEPARD, Justice.

These are appeals in consolidated cases from a declaratory judgment adverse to the State Tax Commission, holding that the Union Pacific Railroad Company and Burlington Northern, Inc., petitioners-respondents, have a right to appeal the Tax Commission's valuations of the railroads' operating properties to the Board of Tax Appeals. The Tax Commission asserts that the only avenue of appeal available to the railroads in this instance is through the district court, pursuant to the state administrative procedure act, that our statutes do not contemplate such an appeal to the Board of Tax Appeals and that our constitution and public policy considerations should preclude a review of Tax Commission decisions by the Board of Tax Appeals.

The Union Pacific and Burlington Northern railroads own and operate interstate railroads, a part of which are located within Idaho. The Tax Commission valued the statewide operating properties of the railroads for the calendar year 1980 and notified Burlington Northern that the value of its property was $24,595,916, and notified Union Pacific that its property was valued at $231,347,080. The railroads sought and obtained informal conferences with the Commission's staff, seeking adjustments of those values, with no success. Thereafter formal hearings were held pursuant to I.C. § 63-710, and the Commission issued final decisions granting some but not all of the railroads' requested adjustments. Subsequently, the counties in which the operating properties of the railroads are located imposed their respective tax levies on the basis of the valuations set by the Tax Commission. The railroads paid those taxes under protest.

At that point the railroads perceived a dilemma. If they appealed to the Board of Tax Appeals, the Tax Commission could argue, as it does here, that the only avenue of appeal is through the district court pursuant to the administrative procedure act, while if they filed for appellate review in the district court, it might be argued that they failed to exhaust their administrative remedies in not appealing to the Board of Tax Appeals. Consequently, the railroads filed simultaneous appeals, one to the Board of Tax Appeals, pursuant to I.C. § 63-3811, and another to the district court of Ada County, pursuant to I.C. § 67-5215 of the state administrative procedure act.

In the district court the railroads also sought a declaratory judgment to clarify the appropriate appeal procedure from the decision of the Tax Commission. Further relief was sought in the event the district court should determine that the Board of Tax Appeals did not have jurisdiction to proceed. Under the declaratory judgment cause of action, an expedited trial was held and thereafter the district court ruled that an appeal de novo lies to the Board of Tax Appeals from an order of the Tax Commission valuing railroad properties, and further determining that the Board of Tax Appeals may properly "substitute its judgment" for that of the Tax Commission regarding the proper value to be placed upon the operating property of the railroads. The district court determined that while the Tax Commission is charged by law, I.C. § 63-701, with determining the value of the railroads' operating property and allocating such value to the various counties, nevertheless, the legislature delegated to the Board of Tax Appeals the quasi-judicial function of reviewing that administrative determination by the Tax Commission, I.C. § 63-3811, and hence the railroads were permitted to appeal the Commission's determination to the Board of Tax Appeals.

The essence of the case presented here is determination of the proper avenue of appeal which may be pursued by a utility taxpayer who is dissatisfied with the Commission's valuation of the taxpayer's statewide operating property. The trial court held and the railroads argue here that such an appeal must be taken pursuant to I.C. § 63-3811. That statute provides:

"63-3811. Appeal from determination of tax liability.--Appeal from statewide valuations.--Taxpayers may, within the period herein provided and by following the procedures herein required, appeal to the board of tax appeals from a final determination of any tax liability, including those pursuant to sections 63-401, 63-2210, 63-3049, and 63-3632. County assessors may appeal to the board from valuations of property made on a statewide basis by the state tax commission, or allocation of such value."

The Tax Commission on the contrary asserts that I.C. § 63-3811 is not applicable to a review or appeal of its valuations of statewide operating property and that the sole avenue of review lies through the district court, pursuant to I.C. § 67-5215. That statute provides the general mechanism for review of final decisions of various administrative agencies of the State of Idaho unless other means of review are provided by law and states:

"(a) A person who has exhausted all administrative remedies available within the agency and who is aggrieved by a final decision in a contested case of an agency other than the industrial commission or the public utilities commission is entitled to judicial review under this act [administrative procedure act]. This section does not limit utilization of or the scope of judicial review available under other means of review, redress or relief provided by law...."

Both parties address a possible third avenue of review as provided by I.C. § 63-2213 which provides:

"63-2213. Taxes paid under protest--Limitation on action for recovery.--An action against a county, an officer, or officer de facto, for taxes or money paid to such county, officer, or officer de facto under protest, or seized by such officer, in his official capacity as a collector of taxes, and which it is claimed ought to be refunded, shall be commenced within sixty (60) days after such payment or seizure."

Since the respondent railroads had paid their taxes under protest to each of the counties in which operating properties were located, the railroads filed protective actions in Ada County against all the counties to which they had paid 1980 operating property taxes. I.C. § 63-2213. Operating property taxes paid under protest in 1981 were the subject of supplemental complaints filed in those protective actions. Those protective actions are presently pending and the parties, with near unanimity, essentially agree not to actively prosecute or defend until this Court has rendered a decision in the instant appeal. Here, the parties agree that I.C. § 63-2213 does not apply to centrally assessed taxpayers and urge this Court to hold that § 63-2213 does not apply to respondents; that I.C. § 63-2213 has been implicitly repealed and that the appropriate avenue of appeal is either I.C. § 63-3811 or I.C. § 67-5215.

We agree with the assertions of the parties regarding I.C. § 63-2213. I.C. § 63-701 provides:

"63-701. Operating property assessable by state tax commission.--The operating property of all public utilities and railroads and the franchises of all persons owning, or operating as lessees, or constructing any public utility or railroad wholly or partly within this state shall be assessed for taxation for state, county, city, town, village, school district and other purposes, exclusively by the state tax commission; except land or buildings rented by a company or corporation as lessee which is used as or in connection with its business such as business offices, warehouses, service centers, moorage grounds or docks, shall be assessed to the owner by the county assessor."

That statute vests in the Tax Commission the responsibility for the assessment and valuation of railroad operating properties. Following assessment by the Commission, that amount is apportioned among the several counties, I.C. § 63-605; the amounts so apportioned are certified to the county auditors of the counties, I.C. § 63-711; and those amounts are then utilized by the county board of commissioners in making their annual tax levies, I.C. § 63-901.

Chapter 7, Title 63 of the Idaho Code relates solely to the assessment of the properties of public utilities and railroads, and one of its principal objectives was the attainment of uniformity in valuation and assessment of public transportation and utility properties which extend through more than one county and which by nature constitute unitary systems. See Northern Natural Gas Co. v. Bender, 208 Kan. 135, 490 P.2d 399 (1971), cert. denied, 406 U.S. 967, 92 S.Ct. 2408, 32 L.Ed.2d 665 (1972). That statutory procedure is clearly designed to eliminate inequalities in the assessed values of utility and railroad properties which might occur if local assessors were free to exercise individual judgment and discretion as to assessed values of utility operating property. It would make little or no practical sense to require centrally assessed taxpayers to challenge those assessments in local actions filed pursuant to I.C. § 63-2213. Further, such would tend to defeat the sought-after uniformity in the valuation and assessment of public transportation and utility properties which is statutorily mandated. I.C. § 63-2213 contemplates protest actions directed against the acts...