Western Pocahontas Properties, Ltd. v. County Com'n of Wetzel County, s. 21148

Citation431 S.E.2d 661,189 W.Va. 322
Decision Date25 March 1993
Docket NumberNos. 21148,21149,s. 21148
CourtSupreme Court of West Virginia
PartiesWESTERN POCAHONTAS PROPERTIES, LTD., and Littleton Fuel Company, Plaintiffs Below, Appellants, v. The COUNTY COMMISSION OF WETZEL COUNTY, West Virginia, Sitting as the Board of Review and Equalization, Defendant Below, Appellee. PUCKETT INVESTMENT CO., Plaintiff Below, Appellant, v. The COUNTY COMMISSION OF WETZEL COUNTY, West Virginia, Sitting as the Board of Review and Equalization, Defendant Below, Appellee.

Syllabus by the Court

1. "It is a general rule that valuations for taxation purposes fixed by an assessing officer are presumed to be correct. The burden of showing an assessment to be erroneous is, of course, upon the taxpayer, and proof of such fact must be clear." Syl. pt. 7, In re Tax Assessments Against Pocahontas Land Co., 172 W.Va. 53, 303 S.E.2d 691 (1983).

2. As a general rule, there is a presumption that valuations for taxation purposes fixed by an assessor are correct. Thus, a tax assessment of coal property will be presumed to be correct when the assessor, in assessing the coal property: (1) relies upon the legislative rules prescribing the methods by which property is to be assessed; and (2) uses, as a guide, information furnished by the tax department, such as a list of comparable sales of similar property. The burden is on the taxpayer challenging the assessment to demonstrate by clear and convincing evidence that the tax assessment is erroneous.

3. "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." Syl. pt. 1, West Penn Power Co. v. Board of Review and Equalization, 112 W.Va. 442, 164 S.E. 862 (1932).

Logan Hassig, Snyder & Hassig, New Martinsville, for the appellants.

Robert J. Hannen, Schrader, Byrd, Byrum & Companion, Wheeling, for the appellee.

James J. Alex, Sp. Asst. Atty. Gen., Charleston, amicus curiae for Tax Com'r of State of West Virginia.

Thomas N. McJunkin, John A. Mairs, Jackson & Kelly, Charleston, amicus curiae for West Virginia Coal Ass'n.

McHUGH, Justice:

In these consolidated cases, Western Pocahontas Properties, Ltd. (hereinafter "Western Pocahontas"), Littleton Fuel Company (hereinafter "Littleton") and Puckett Investment Company (hereinafter "Puckett") seek review of orders of the Circuit Court of Wetzel County which denied their appeals of the county tax assessor's valuation of their coal properties located in Wetzel County, West Virginia. We conclude upon review of this case that the orders of the circuit court should be affirmed.

I.
A. Western Pocahontas and Littleton

In January of 1991, the Wetzel County Assessor (hereinafter "assessor") appraised the coal properties owned by Western Pocahontas and Littleton for tax purposes at $100.00 per acre for Green and Magnolia Districts, and $150.00 per acre for the remaining five districts in Wetzel County. 1 Western Pocahontas and Littleton sought review of this assessment before the appellee, the Wetzel County Commission (hereinafter "Commission"), sitting as the board of equalization and review, 2 on the grounds that the assessor had improperly valued the coal properties.

Following a hearing on the matter, the Commission found that the assessor had properly valued Western Pocahontas' and Littleton's coal properties, and denied their applications for review. The circuit court subsequently entered an order denying their appeal, and affirming the Commission's decision. 3 Western Pocahontas and Littleton now seek review of that order before this Court.

B. Puckett

In June of 1987, Puckett purchased certain coal properties from Atlantic Richfield Company (hereinafter "ARCO"), a Delaware corporation, for $5,000.00 plus a royalty of two and one-half percent of all coal produced from those properties from July 1, 1987 through June 30, 1992. No coal, however, was produced from these properties prior to June 30, 1992.

For the 1988 real estate tax year, the county tax assessor valued Puckett's Mapletown coal at $20.00 per acre and its Pittsburgh coal at $150.00 per acre. Following an application for review of the assessment in February of 1989, the Commission, sitting as the board of equalization and review, ruled that Puckett's Mapletown coal should be valued at $1.70 per acre, and that its Pittsburgh coal should be valued at $6.14 per acre.

The assessor subsequently advised the Commission, in December of 1989, of his intent to increase the assessed value of Puckett's coal properties. Then, in February of 1990, Puckett applied to the Commission, sitting as the board of equalization and review, to review the assessment and to allow Puckett to present evidence as to the fair market value of its coal properties. The Commission denied the application for review, and Puckett appealed the decision to the circuit court. On November 26, 1990, the circuit court reversed the Commission's decision and found that the true and actual value of Puckett's coal in aggregate was $5,000.00.

In January of 1991, the assessor advised Puckett that its coal properties would have an appraised value of $100.00 per acre for Green and Magnolia Districts and that its remaining districts would have an appraised value of $150.00 per acre. Puckett sought review of this assessment before the Commission, sitting as the board of equalization and review. When the Commission denied the application for review on the grounds that the assessor properly valued the coal properties in accordance with state regulations, Puckett appealed to the circuit court. The circuit court affirmed the Commission's decision, and the appellants appealed. This matter is now before this Court on appeal of those decisions.

II.

In support of their appeal before this Court, the appellants in these consolidated cases first assert that the circuit court erred in ruling that the assessor properly applied 110 West Virginia Code State Regulations § 1-11.4(b)(8) (1988) to the valuation of their coal properties. The appellants maintain that their coal properties should have been categorized as "unmineable" for valuation purposes rather than as "reserves" because they cannot be mined profitably and therefore are not commercially saleable. 4

A. Burden of Proof

As an initial matter, we point out that this case essentially turns on whether the appellants, in challenging the tax assessment of their coal properties, have met their burden of proof. In In re Tax Assessments Against Pocahontas Land Co., 172 W.Va. 53, 303 S.E.2d 691 (1983), we reaffirmed that the burden of showing that a tax assessment is erroneous is upon the taxpayer, and proof that the assessment is erroneous must be clear. We explained:

[i]t is obvious that where a taxpayer protests his assessment before a board, he bears the burden of demonstrating by clear and convincing evidence that his assessment is erroneous. Once this is done, it is incumbent upon the taxing authority to place some evidence in the record to show why its assessment is correct. This, of course, can be done by entering the official appraisal of the State Tax Commissioner as we suggested in Tug Valley [Recovery Center, Inc. v. Mingo County Commission, 164 W.Va. 94, 261 S.E.2d 165 (1979) ].

172 W.Va. at 61, 303 S.E.2d at 699. We summarized this holding in syllabus point 7 of In re Tax Assessments Against Pocahontas Land Co.: "It is a general rule that valuations for taxation purposes fixed by an assessing officer are presumed to be correct. The burden of showing an assessment to be erroneous is, of course, upon the taxpayer, and proof of such fact must be clear." Therefore, the burden in this case was on the appellants to demonstrate by clear and convincing evidence that the tax assessments were erroneous.

B. Procedure for Tax Assessment

The tax assessor in this case was required to follow the legislative rules set forth in 110 W.Va.C.S.R. § 1-11 (1988) in valuing the coal properties for tax purposes. Under 110 W.Va.C.S.R. § 1-11.4(a) (1988), coal property ownership, for valuation purposes, is classified into four categories: (1) active; 5 (2) reserves; (3) unmineable; and (4) mined-out/barren. 6 There is no dispute among the parties that the coal properties at issue cannot be categorized as either active or barren. Therefore, we shall focus our discussion on whether the appellants have shown by clear and convincing evidence that the assessor should have characterized the coal properties as unmineable rather than as reserves.

The term "reserves" is defined under 110 W.Va.C.S.R. § 1-11.4(b)(13) (1988) as "those seams of coal, or portions thereof, which are mineable and contain recoverable coals, but are not active mining property." Furthermore, under these rules, the term "mineable coal" is defined under 110 W.Va.C.S.R. § 1-11.4(b)(8) (1988) as

"[c]oal which is so situate that it may be mined using generally accepted mining practices and suitable equipment and which is of such quality so as to be commercially saleable (as either mined coal or as a recoverable reserve). Furthermore, unless there is evidence to the contrary, coal seams which are of a thickness less than thirty inches (30"') will not be considered or classified as mineable."

The term "unmineable" is defined at 110 W.Va.C.S.R. § 1-11.4(b)(17) (1988) as "[c]oal which is not mineable as defined above."

The assessor was also required under the legislative rules to consider comparable sales in valuing reserves. Specifically, 110 W.Va.C.S.R. § 1-11.4(c)(1)(I)(3) (1988) provides:

(A) General.--Reserves shall be valued considering a review of sales reflecting arms-length, willing buyer-willing seller transactions of such properties, and the market conditions in the region within which the property is located. The coal reserve value shall be the product of the reserve acres multiplied by the regional reserve...

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