Ward v. Department of Revenue
| Citation | 293 Or. 506,650 P.2d 923 |
| Parties | Douglas G. WARD and Helen P. Ward, husband and wife, Appellants, v. DEPARTMENT OF REVENUE, State of Oregon, Respondent. SC 28228. * |
| Decision Date | 21 September 1982 |
| Court | Supreme Court of Oregon |
Gary D. Allen, Salem, argued the cause and filed the brief for appellants.
G. F. Bartz, Asst. Atty. Gen., Tax Section, Salem, argued the cause for respondent. With him on the brief was David B. Frohnmayer, Atty. Gen., Salem.
Plaintiffs-taxpayers challenge a county assessor's valuation of their real property for ad valorem tax purposes. The subject property is a 26-acre parcel of real property which includes 20 condominium units and a number of undeveloped tax lots. This appeal concerns only the assessor's valuation of a 14-acre (10 tax lots) undeveloped portion of the parcel. The Tax Court found that plaintiffs had not established that the fair market value of the tract in question was different than the assessed value and upheld the valuation by the Department of Revenue. Plaintiffs appeal contending that on de novo review (see ORS 305.425(1) and 305.445) we should compute the fair market value of the 14-acre tract by the price which they had recently paid for the entire 26-acre parcel subtracting the undisputed assessed value of the remainder of the parcel.
In 1976, First Federal Savings & Loan Association acquired title to the 26-acre parcel through foreclosure of a mortgage loan. It had the property appraised and set a selling price of about $500,000 for the entire 26-acre parcel. The property was never listed for sale, but real estate brokers, developers and investors in the area knew it was available. Just prior to plaintiffs' purchase of the parcel, First Federal agreed to sell it to another buyer for $525,000, but the buyer could not raise the down payment.
Plaintiffs agreed to purchase the parcel in January, 1978, and consummated the sale in June, 1978, for $500,000. Financing arrangements were ordinary, and there is no indication that First Federal was under any compulsion or pressure at the time to sell the property. Plaintiffs' purchase of the property appears to have been a voluntary bona fide arm's-length transaction between a knowledgeable and willing buyer and a willing seller.
In April, 1978, the county assessor assessed the taxable units comprising the parcel at a total of $600,000, $100,000 more than the purchase price. First Federal and plaintiffs petitioned the local board of equalization for review of the assessment. When the board sustained the assessment, plaintiffs petitioned the Department of Revenue for review as to only the undeveloped 14-acre tract. Plaintiffs did not challenge the value assigned to the other 12 acres. After considering some recently imposed development restrictions, the department reduced the total assessed valuation of the 14-acre tract from $167,080 to $154,860.
Plaintiffs then appealed to the Tax Court contending that, subtracting the undisputed assessed value of the 12-acre parcel from the purchase price of the total, the value of the remaining 14-acre tract should be only $58,350. Plaintiffs' only witness as to the tract's value before the Tax Court was Mr. Ward, one of the plaintiffs. He claimed no expertise in the valuation of real property and testified principally as to the nature of the property and the circumstances of the sale as described above. The department called the only appraisal expert to testify, the county assessor. He had appraised only the 14-acre tract. Based on an examination of the physical, legal, and economic characteristics of the property and an analysis of recent sales of comparable properties within the area, he concluded that the tract's true cash value was approximately the assessed value. The Tax Court reasoned that one sale was not persuasive evidence of market value and that plaintiffs' arithmetic approach therefore failed to persuade the court by a preponderance that the defendant's order was incorrect.
We must make that determination anew. The issue is the property's "true cash value," that is, its "market value * * * as of the assessment date." ORS 308.205. 1 As the parties challenging the validity and correctness of the assessment, plaintiffs have the burden of proving a valuation different from that found by the department or of proving that the challenged assessment is incorrect. See ORS 305.427; J. R. Widmer, Inc. v. Dept. of Rev., 261 Or. 371, 494 P.2d 854 (1972); see also, Borden, Inc. v. Dept. of Rev., 286 Or. 567, 576, 595 P.2d 1372 (1979). As noted, plaintiffs' sole evidence of the subject property's value is the price paid for the entire 26-acre parcel, less the value of the 12-acre tract. They contend that this is sufficient evidence to satisfy their burden of proof. In addition, plaintiffs, without offering their own comparable sales market analysis, seek to discredit the department's by arguing that the sales and properties upon which its valuation was based are not sufficiently comparable.
The agreed price in a voluntary arm's-length sale of the assessed property, contemporaneous with the assessment, between a knowledgeable and willing buyer and seller is persuasive evidence of the property's market value. Sabin v. Dept. of Rev., 270 Or. 422, 426-427, 528 P.2d 69 (1974); Equity Land Res., Inc. v. Dept. of Rev., 268 Or. 410, 415, 521 P.2d 324 (1974); Kem v. Dept. of Rev., 267 Or. 111, 114, 514 P.2d 1335 (1973). As this court emphasized in Kem, however, such a sale "is not necessarily determinative of market value and does not foreclose other methods of valuation." 267 Or. at 115, 514 P.2d 1335. See Annot., 89 A.L.R.3d 1126 (1979). Accordingly, we hold that proof of a recent arms-length sale of the whole, minus the agreed value of an excluded part, is legally sufficient to prove fair market value in the sense that plaintiffs would survive a motion equivalent to a motion for nonsuit. The next question, however, is...
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