Washington County v. First National Bank of Weiser

• Decision Date: 29 April 1922
• Citation: 206 P. 1054,35 Idaho 438
• Parties: WASHINGTON COUNTY, Appellant, v. FIRST NATIONAL BANK OF WEISER, Respondent
• Court: Idaho Supreme Court

206 P. 1054

35 Idaho 438

WASHINGTON COUNTY, Appellant, v. FIRST NATIONAL BANK OF WEISER, Respondent

Supreme Court of Idaho

April 29, 1922

TAXATION-UNIFORMITY-DISCRIMINATION-RELIEF BY COURTS-EVIDENCE OF VALUE-HEARSAY-RECITALS IN PRIVATE DEEDS-FEDERAL FARM LOANS-SUFFICIENCY OF EVIDENCE-VALUE OF BANK STOCK-DEDUCTION ON ACCOUNT OF OTHER PROPERTY ASSESSED TO BANK-INTENTIONAL AND SYSTEMATIC UNDERVALUATION OF OTHER PROPERTY-PROOF OF.

1. Where certain property is assessed at a higher valuation than all other property, the court will enforce the requirement of uniformity by a reduction of the taxes on the property assessed at the higher valuation, if it be shown that the difference is the result not of mere error in judgment, but of fraud or of intentional and systematic discrimination.

2. In an action to obtain a reduction of taxes, recitals of consideration in private deeds are not competent evidence of the value of the property.

3. In such a case federal farm loans on lands in certain amounts are competent evidence of the value of the lands, the law requiring that no loan shall be in an amount greater than 33 1/3 per cent of the value.

4. In such a case it is not necessary for the plaintiff to prove directly that all the other property was undervalued for purpose of assessment. It is sufficient if he proves a reasonable number of representative cases from which that deduction may be drawn.

5. The deduction provided by C. S., sec. 3297, is that part of the capital stock invested in other property which is assessed in the name of the bank.

6. Whether the undervaluation of property for purposes of assessment by the tax officials was intentional and systematic must be inferred from their acts.

APPEAL from the District Court of the Seventh Judicial District, for Washington County. Hon. Ed. L. Bryan, Judge.

Action to obtain reduction of taxes. Judgment for petitioner. Affirmed.

Judgment affirmed, with costs to respondent.

Roy L Black, Attorney General, Dean Driscoll, First Assistant, and Harrison McAdams, Prosecuting Attorney, for Appellant.

The requirement that all property be assessed at its actual cash value is secondary to the constitutional mandate of equality of taxation, so that where even though one individual's property be assessed at less than the full cash value, if other property generally be assessed at still less proportionately, the courts will enforce the requirement of uniformity by corresponding reduction of the property assessed at the higher valuation, provided always that mere undervaluation in itself is not sufficient ground for disturbing any assessment, but it must be shown that the discrepancy arises not by mere error in honest judgment of the assessing officer, but that it is the result of fraud or of intentional and systematic discrimination. (Northern P. Ry. Co. v. Clearwater County, 26 Idaho 455, 144 P. 1; Humbird Lumber Co. v. Thompson, 11 Idaho 614, 83 P 941; Washington Water Power Co. v. Kootenai County, 270 F. 369; Coulter v. Louisville & Nashville Ry Co., 196 U.S. 599, 25 S.Ct. 342, 49 L.Ed. 615; Chicago, B. & Q. Ry. Co. v. Babcock, 204 U.S. 585, 27 S.Ct. 326, 51 L.Ed. 636; Greene v. Louisville & Interurban R. Co., 244 U.S. 499, Ann. Cas. 1917E, 88, 37 S.Ct. 673, 61 L.Ed. 1280; Louisville & Nashville Ry. Co. v. Greene, 244 U.S. 522; Ann. Cas. 1917E, 97, 37 S.Ct. 683, 61 L.Ed. 1291; Illinois Cent. Ry. Co. v. Greene, 244 U.S. 555, 37 S.Ct. 697, 61 L.Ed. 1309.)

Evidence showing that two-thirds of the county's property was undervalued does not show that the remaining third, a large part of which was not assessed by the county assessor but was assessed by the state board of equalization, was undervalued and no relief could be granted as to the remaining third, but, on the contrary, it would have to be considered as having been assessed at its full cash value and proper allowance made in making reductions. (Washington Water Power Co. v. Shoshone County, 270 F. 377.)

Bank stock is to be assessed at its actual market value and not at its book value. (C. S., secs. 3104, 3110, 3297.)

In making the deduction of real estate separately assessed in arriving at the valuation of bank stock for assessment, the valuation to be used is the valuation at which the real estate was separately assessed, and not the book value. (C. S., sec. 3297.)

Richard H. Johnson, Carey H. Nixon, Pasco B. Carter and A. C. Cherry, for Respondent.

The compilations of Mr. Crane and Mr. Smith, showing value of property in Washington county, were properly admitted. (Burton v. Driggs, 20 Wall. (U.S.) 125, 22 L.Ed. 299; San Pedro Lumber Co. v. Reynolds, 121 Cal. 74, 53 P. 410.)

It is no defense that respondent's testimony as to value at which property was assessed did not include 100 per cent of the property in Washington county. (Washington Water Power Co. v. Kootenai County, 270 F. 369, 374; Greene v. Louisville & I. R. Co., 244 U.S. 499, 501, Ann. Cas. 1917E, 88, 37 S.Ct. 673, 61 L.Ed. 1280; Cummings v. Merchants' Nat. Bank, 101 U.S. 153, 25 L.Ed. 903.)

Courts will grant relief to a person or corporation whose property has been assessed at its full value, upon proof that other property in the county has been systematically assessed at a percentage of its full value. (Taylor v. Louisville & N. R. Co., 88 F. 350, 31 C. C. A. 537; Northern P. Ry. Co. v. Clearwater County, 26 Idaho 455, 144 P. 1; Ex parte Ft. Smith & Van Buren Bridge Co., 62 Ark. 461, 36 S.W. 1060; Chicago & N.W. Ry. Co. v. Board of Suprs. of Boone County, 44 Ill. 240; Amoskeag Mfg. Co. v. City of Manchester, 70 N.H. 200, 46 A. 470; People v. Woodbury, 74 Misc. 130, 145, 133 N.Y.S. 135; People v. State Board of Tax Commissioners, 134 N.Y.S. 987; Railroad & Telephone Cos. v. Board of Equalizers, 85 F. 302; Nashville etc. Ry. v. Taylor, 86 F. 168; Southern R. Co. v. North Carolina Corp. Commission, 104 F. 700; Louisville & N. R. Co. v. Bosworth, 230 F. 191; Greene v. Louisville & I. R. Co., 244 U.S. 499, Ann. Cas. 1917E, 88, 37 S.Ct. 673, 61 L.Ed. 1280.)

Such method of taxation is in violation of the 14th amendment to the U.S. Constitution. (Sunday Lake Iron Co. v. Wakefield Township, 247 U.S. 350, 38 S.Ct. 495, 62 L.Ed. 1154; People's Gas Light etc. Co. v. Stuckart, 286 Ill. 164, 121 N.E. 629; Druesdow v. Baker (Tex. Com. App.), 229 S.W. 493; Atchison T. & S. F. Ry. Co. v. Sullivan, 173 F. 456, 97 C. C. A. 1.)

MCCARTHY, J. Lee, J., concurs, DUNN, J., concurring in part.

OPINION

MCCARTHY, J.

Respondent filed a petition with the board of county commissioners of Washington county sitting as a board of equalization stating that the full cash value of its capital stock in 1919 including surplus and undivided profits was $ 90,415.48; that 45,100 of its capital stock was invested in other property which had been separately assessed for said year; that the full cash value of the capital stock after deducting the part thereof invested in said other property was $ 45,315.48; that the assessor of said county assessed said capital stock for said year at the said amount of $ 45,315.48, or at its full cash value after deducting the amount so invested in other property; that all other property in said county was, by a systematic, intentional and illegal undervaluation, assessed at 40 per cent of its full cash value. Respondent prayed that the assessment of its capital stock be modified and equalized by placing it on the same basis of valuation as that adopted in the assessment of the other property of the county. This application was denied by the board after a hearing. From this order respondent bank appealed to the district court for Washington county in accordance with the procedure outlined by C. S., secs. 3510, 3511 and 3512. After a hearing, said court found that the actual cash value of the capital stock, after deducting the amount invested in other assessable property, was $ 45,315.48, and that it was assessed at that amount; that all other property in said county was assessed, by a systematic and intentional undervaluation, at 50 per cent of its full cash value; that respondent in order to prevent the seizure and sale of its property had paid, under protest, the full amount of the tax levied against it, to wit, $ 2,284.60. The court concluded that the assessment of respondent's capital stock should be reduced by 50 per cent, that it should recover 50 per cent of the total tax paid under protest, and duly entered judgment to that effect. From this judgment Washington county appeals to this court. The following are the principal assignments of error and the only ones which need be considered: First, that the court erred in overruling appellant's objections to the introduction of certain evidence offered by respondent to prove that other property in the county was assessed at only 50 per cent of its cash value, to wit, plaintiff's exhibits "A" and "B," and the testimony of witnesses Crane and Smith, based thereon. Second, that the court erred in finding that the capital stock of said bank was assessed at its full cash value. Third, that the court erred in finding that all other property in said county was assessed by a systematic and intentional undervaluation thereof at 50 per cent of its cash value.

C. S sec. 3297, provides: "Sec. 3297. The shares of capital stock of any bank, existing by authority of the United States or of this state and located within this state, or of any building and loan association, trust company or surety and fidelity company organized under the laws of this state and doing business within this state, shall be assessed for taxation where such bank, company, association or other corporation is located and not elsewhere, as in the same manner and upon the same basis of actual value, and uniformly with all other property...