Walker v. Trump, 88-1309

• Decision Date: 27 September 1989
• Docket Number: No. 88-1309,88-1309
• Citation: 14 Fla. L. Weekly 2249,549 So.2d 1098
• Parties: 14 Fla. L. Weekly 2249 Rebecca WALKER, as Palm Beach County Property Appraiser, and Allen C. Clark, as Tax Collector of Palm Beach County, Florida, Appellants, v. Donald J. TRUMP, Appellee.
• Court: Florida District Court of Appeals

Page 1098

549 So.2d 1098

14 Fla. L. Weekly 2249

Rebecca WALKER, as Palm Beach County Property Appraiser, and Allen C. Clark, as Tax Collector of Palm Beach County, Florida, Appellants, v. Donald J. TRUMP, Appellee.

No. 88-1309.

District Court of Appeal of Florida Fourth District.

Sept. 27, 1989.

Richard A. Kupfer of Wagner, Nugent, Johnson, Roth, Romano, Eriksen & Kupfer, P.A., West Palm Beach, for appellant Allen C. Clark.

Willa A. Fearrington, West Palm Beach, and Gaylord A. Wood, Jr., Fort Lauderdale, for appellant Rebecca E. Walker.

Elizabeth T. Maass and Robb R. Maass of Alley, Maass, Rogers, Lindsay & Chauncey, Palm Beach, for appellee.

WARNER, Judge.

From a final judgment in favor of Donald Trump which reduced the assessment on Mar-A-Lago, Trump's Palm Beach mansion, by $4,500,000, Rebecca Walker, Property Appraiser for Palm Beach County, appeals claiming error. We agree and reverse.

Mar-A-Lago, perhaps Palm Beach County's most famous piece of real estate for fifty or more years, was originally built by Marjorie Merriweather Post in 1927 and has served as a stopping point for heads of state, diplomats, and other famous leaders and celebrities. It is the largest single family residential property in the Town of Palm Beach. The main house consists of 34,764 square feet of living area which includes over 100 rooms with 17 bedrooms and 13 baths. Together with servants quarters and a six car garage, the total building area amounts to over 54,000 square feet. The mansion occupies grounds lying between the Atlantic Ocean on the east and the Intracoastal Waterway on the West. The grounds also include a pool, tennis court, citrus grove, and a pitch and putt golf course located along the intracoastal waterway.

The mansion was deeded in trust to the United States Government in 1972 but was given back to the Post Foundation by the government in 1981. The Foundation then determined to sell Mar-A-Lago and appointed a committee to effect a sale. An appraisal was obtained and showed the value of the Estate to be $12,000,000 for the real estate and $1,600,000 for the personal property. The asking price for the estate was $20,000,000. Several brokers were given listings, and it was advertised both nationally and internationally. During the next five years over 20 prospective purchasers viewed the Estate. While there were a number of offers, only three or four went to contract but did not close. All contract purchase amounts exceeded $12,000,000.

In August of 1985, Donald Trump offered to purchase the Estate for $8,000,000. With no better offers at that time, the Foundation contracted with Trump to purchase Mar-A-Lago for $8,000,000. The Foundation also assigned to Trump its $2,000,000 contract for the repurchase of the oceanfront tract between Mar-A-Lago and the ocean which the Foundation had sold in 1974. The closing for the two properties took place on December 27, 1985, and the closing statement showed Trump allocated $7,000,000 for the real property ($5,000,000 for Mar-A-Lago and $2,000,000 for the oceanfront tract) and $3,000,000 for the personal property. ¹ There was no explanation for the $3,000,000 valuation of the personal property.

As of January 1, 1986, the Property Appraiser of Palm Beach County assessed the combined oceanfront tract and Mar-A-Lago for $11,500,000 based upon an appraisal prepared for Mrs. Walker by Michael Slade of Calloway & Price, Inc. Being dissatisfied with this valuation, Mr. Trump first protested the assessment to the Palm Beach County Property Appraisal Adjustment Board where he was denied relief. He thereupon filed suit in circuit court contesting the assessment and claiming that just valuation was no greater than the $7,000,000 price he paid for the property in December of 1985. He requested that the court determine that the appraisal was illegally excessive and for the court to determine that the proper assessment for the real property was $7,000,000. The property appraiser's answer denied these allegations and raised affirmative defenses.

At trial Mr. John Underwood, Mr. Trump's appraisal expert, testified that in his opinion, using the comparable sales approach appraisal method, the real estate was worth $8,100,000. Using five comparable sales, he computed a market value of $10,600,000 but then used a downward adjustment for "functional obsolescence due to superadequacy" of the mansion. In simple terms, the house was just too big and too expensive to maintain which reduced its value in his opinion.

Mr. Michael Slade, the appraiser hired by Mrs. Walker, testified that he had also used the comparable sales approach in reaching his valuation of $11,500,000. Using six comparables, five of which were the same comparable sales as Mr. Underwood used, Mr. Slade first calculated the price per square foot of enclosed area, main living area, and adjusted building area and then developed a range of values from which he made his ultimate opinion of value. ² By using the lower end of the range of prices in each category and multiplying it by Mar-A-Lago's respective square footage in each category, Slade calculated that the value of Mar-A-Lago, less the oceanfront parcel, was $9,500,000. On cross-examination, it was revealed that instead of using the low end price per square foot in one of the categories to figure Mar-A-Lago's value, the third lowest per square figure was used. Had the lowest figure been used, the value according to that category would have been $7,300,000. However, Mr. Slade responded that even with that correction of the mathematical error, his opinion on value would not change given his analysis of other market data, the prior contracts on Mar-A-Lago, and his knowledge of the Palm Beach real estate market.

Mr. Slade testified that he also considered functional obsolescence in arriving at his opinion on value. But, he testified that he had never seen another appraiser use the methodology which Mr. Underwood used to determine superadequacy and noted that a reduction for superadequacy was used under the cost approach to valuation, not in the comparable sales approach.

Both appraisers agreed that Mar-A-Lago was unique and difficult to appraise. However, its uniqueness did not prevent them from using conventional comparable sales appraisal techniques, allowing for appropriate adjustments. Furthermore, each appraiser regarded the $7,000,000 sale to Mr. Trump as lacking in credibility because of the assignment of a $3,000,000 value to the furnishings which was not documented. Both further stated that the sale price of $7,000,000 for the real estate was below the fair market value.

Despite this uncontradicted evidence, the trial court found that Mar-A-Lago was so unique that "one sale does make a market." The trial court then analyzed the sale to Mr. Trump based upon the criteria of market value as set forth in a recognized appraisal text and determined that the sale met all the tests of market value. Therefore, the court determined that the fair market value of the estate and oceanfront property was the sale price, of $7,000,000. In doing so the court specifically rejected the appraisal prepared for the property appraiser because (1) Mr. Slade was not properly deputized according to section 193.024, Florida Statutes (1987) and (2) because of the mathematical error in the appraisal.

In challenging this final judgment the appellant raises two issues which merit discussion: (1) was Mr. Slade's appraisal unlawful because he was not deputized under section 193.024, Florida Statutes (1979)?; (2) did the court err in rejecting the property appraiser's valuation and then by itself reassessing the value of Mar-A-Lago to the amount of Mr. Trump's purchase price?

A. Legality of Appraisal.

The trial court held that Slade's appraisal was unlawful because Slade was not a deputized appraiser pursuant to section 193.024, Florida Statutes (1987). As appellee points out in his brief, the supreme court has held that there is no prohibition on the use of outside appraisers to assist the property appraiser in fulfilling her function, since such appraisals produced by outside firms are not binding upon the property appraiser but may serve as a guide. Freeze v. County of Pinellas, 146 So.2d 97 (Fla.1962); State ex rel Glynn v. McNayr, 133 So.2d 312 (Fla.1961). In this case the testimony shows that the report was submitted and then adopted by the property appraiser. Furthermore, a contract with an appraisal firm to reappraise property in the county does not constitute an unlawful delegation of authority by the assessor. Peters v. Hansen, 157 So.2d 103 (Fla. 2d DCA 1963). That being so, even if section 193.024, Florida Statutes (1987) required that the property appraiser administer an oath to Mr. Slade prior to his undertaking, which we do not decide, he is by his engagement, at the least, a de facto officer whose acts are valid and cannot be collaterally attacked by third persons. See, State ex rel Booth v. Byington, 168 So.2d 164 (Fla. 1st DCA 1964).

In fact Mr. Trump never challenged Mr. Slade's status in his complaint, the pre-trial statement, or at trial. The court on its own could not make Mr. Slade's status an issue. Lotspeich Co. v. Neogard Corp., 416 So.2d 1163 (Fla. 3d DCA 1982); Bobenhausen v. Boucher, 377 So.2d 31 (Fla. 1st DCA 1979). Therefore, the trial court erred in injecting this issue in the case and declaring Mr. Slade's appraisal "unlawful" because of his failure to be deputized under section 193.024, Florida Statutes (1987).

B. Rejection of Property Appraiser's Valuation and Reassessment of Mar-A-Lago.

The Florida Constitution, Article VII, Section 4 (1968) provides that "by general law regulations shall be prescribed which shall secure a just valuation of all property for ad valorem taxation...." To effectuate this constitutional provision, the Legislature passed section 193.011, Florida Statutes (1979) which provides eight factors to be considered in...