West Penn Power Co.. v. Bd. Of Review

• Decision Date: 07 June 1932
• Docket Number: (No. 7300)
• Citation: 112 W.Va. 442
• Court: West Virginia Supreme Court
• Parties: West Penn Power Company et al. v. Board of Reviewand Equalization of Brooke County

112 W.Va. 442

West Penn Power Company et al.

v. Board of Reviewand Equalization of Brooke County

(No. 7300)

Supreme Court of Appeals of West Virginia.

Submitted May 25, 1932.

Decided June 7, 1932.

1. Taxation

An assessment made by a board of review and equalization and approved by the circuit court will not be reversed when supported by substantial evidence unless plainly wrong.

2. Constitutional Law

Under the Fourteenth Amendment of the Constitution of the United States it is the right of a taxpayer whose property is taxed at one hundred per centum of its true and actual value to have his assessment reduced to the percentage of that value at which other properties of the same class in the same governmental unit of taxation are taxed, even though the statute requires that all property be taxed at its true and actual value.

Appeal from Circuit Court, Brooke County. Proceedings in the matter of the assessment for taxation of an electric power plant owned by the West Penn Power Com- pany and another. From an order of the circuit court affirming an assessment made by the Board of Review and Equalization of Brooke County, the taxpayers appeal.

Reversed and remanded. Litz and Woods, Judges, dissenting.

Steptoe & Johnson, Handlan, Garden & Matthews, M. F. Millikan and W. D. McKinney for appellants. John T. Simms, for appellee.

Maxwell, Judge:

This is an appeal from the circuit court of Brooke County affirming an assessment for taxation made by the board of review and equalization of that county.

West Penn Power Company and Ohio Power Company, appelants, own jointly a large electric plant known as the Windsor plant. For the year 1931, the owners made a return of said property for taxation purposes on substantially the same basis as had been used for 1930. The 1931 return for "Windsor power house tract, machinery and equipment, structures and personal property located thereon" was $7,121, 274.00. This included $497,000.00 personal property not involved in this controversy; also $26,300.00 valuation of the land upon which the plant is located. The assessor of Brooke County entered the property for taxation at values thus returned by the owners.

The board of review and equalization becoming dissatisfied with this assessment, notified the owners that a hearing would be had as provided by statute. Code 1931, 11-3-24. Following the hearing, the board assessed the properties of the appellants at $10,000, 000.00, exclusive of the said item of $497,000.00 personal property. The assessment of $10,000, 000.00 is composed of two items: plant proper, $9,790, 400.00; other land and improvements, $209,600.00. The appellants say that the item of $9,790, 400.00 is far in excess of the true and actual value of the plant.

Our assessment law provides: "All property shall be assessed annually as of the first day of January at its true and actual value; that is to say, at the price for which such property would sell if voluntarily offered for sale by the owner thereof, upon such terms as such property, the value of which is sought to be ascertained, is usually sold, and not the price which might be realized if such property was sold at a forced sale." Code 1.931, 11-3-1.

At the hearing, the appellant introduced evidence tending to show that the true and actual value of the "Windsor plant as of the first of January, 1931, was (in round numbers) from $5,000, 000.00 to $6,000, 000.00. This testimony was given by four expert witnesses, trained and experienced in the construction and operation of electric power plants. Their estimates vary somewhat.

This plant, of 180, 000 kilowatts capacity, cost about $18,000, 000.00. The first unit was put in operation in 1917, the second in 1918, the third and fourth in 1919, and the fifth and sixth in 1923. It was designed in 1915. Thus, on January 1, 1931, it was sixteen years old in design, and its several units had been in operation for the average period of ten and eight-tenths years. Appelants' witnesses say that actual deterioration of a plant of this sort is not serious, that a depletion charge of about two per centum per annum would probably take care of that item. But, from their view, the great shrinkage in value lies in obsolescence.

It is testified that although the plant was of the most approved possible design at the time its construction was begun in 1917, the developments and improvements in power plant construction in the last fifteen years have rendered this plant inadequate in comparison with a plant of present design; that a new and modern plant of the same capacity would cost about $14,400, 000.00, as of January 1, 1931, and that its operating cost would be about $871,000.00 less per year than the operating cost of the existing plant. From all of which it is deduced by appellants that the true and actual value of the plant as of January 1, 1931, was not in excess of $5,609, 200.00. Their reasoning is forceful and the methods of calculation and deduction are clear and precise. But have appellants and their witnesses taken all proper elements of value into consideration?

The appellants, in operation of their jointly owned plant, do not occupy the status of regulated utilities. They are manufacturers selling the output of this plant to other companies. The plant is a link in each of two larger power systems. It is in evidence, however, that inasmuch as the appellants have each built more modern plants than the Windsor plant, it no longer ranks as a base-load plant. A witness testified: "It is not the plant which we keep loaded to the maximum. Windsor has come to the place where it is just used as a peak carrying capacity plant." He says that it costs more to make power at Windsor than at other more recently built plants. But however this may be, the going concern value of this plant cannot be ignored in a proper assessment for taxation.

The record is not satisfactory as to either the gross or the net earnings of this plant. From a minute of the board it appears that a representative of the Tax Commissioner, in attendance at the hearing, requested that the appellants furnish a statement showing, among other things, the gross and net incomes derived from the plant. The request was not complied with. But it does appear from the record that the appellants pay annually to the State of West Virginia between eight and nine thousand dollars gross sales tax on the electric energy produced at this plant. The basis upon which this tax was paid was 21/100 of one per centum of the gross proceeds of sales. Code 1931, 11-13-2 (b). If the application of this rate produced the tax amounting to between eight and nine thousand dollars, say eighty-five hundred dollars, the gross sales amounted to a little over $4,000, 000.00. Deducting therefrom the annual operation cost of a little more than $2,000, 000.00 as testified on behalf of appellants, there remains about $2,000, 000.00 net. These figures are not recited here as precise and accurate but the record warrants the belief that they are approximately correct. Now if this plant is experiencing a net annual income of anyways near $2,000, 000.00, it is earning a very splendid return on the investment. Its earning capacity is great; its going concern value is necessarily high. The board of review and equalization properly took into consideration these very valuable elements.

These are intangible elements, and the estimation of the value of such is always involved in more or less uncertainty. We perceive, however, no basis on which we could properly say that the board erred to the prejudice of the appellants when it added to the material values testified to by appellants' witnesses a sufficient sum representing intangible values to raise the total to $10,000, 000.00.

Matters of this sort are primarily administrative. By virtue of statute they are appealable here where the assessment is $50,000.00 or more. Code 1931, 11-3-25. Though doubting the right of the legislature thus to clothe this court with authority and duty of reviewing assessments we have submitted to it because of long practice. Hodges v. Public Service Commission, 110 W. Va. 649, 654, 159 S. E. 834. But in no event should we assume to disturb such finding "when supported by substantial evidence unless plainly wrong." Coal Co. v. Bassett, 108 W. Va. 293, 150 S. E. 745. We think the assessment made by the board is not plainly wrong, and to the contention of counsel that the said finding is not supported by substantial evidence, we reply that the earning capacity of this plant as deduced from the showing in the record as to its annual gross sales tax paid to the State of West Virginia, is sufficient basis for a very positive going concern value.

There remains for consideration a problem to be determined in the light of the "equal protection of the laws" clause of the Fourteenth Amendment...