Winegardner v. Greater Anchorage Area Borough Bd. of Equalization

Decision Date26 March 1975
Docket NumberNo. 2086,2086
Citation534 P.2d 541
PartiesRoy E. WINEGARDNER, dba Anchorage Motel Company, Petitioner, v. GREATER ANCHORAGE AREA BOROUGH and its BOARD OF EQUALIZATION, Respondent.
CourtAlaska Supreme Court

Karl L. Walter, Jr., of Groh, Benkut, and Walter, Anchorage, for petitioner.

Gary Thurlow, Brough Atty., Lee S. Glass, Asst. Borough Atty., Anchorage, for respondent.

Fred J. Baxter, Juneau, for amicus curiae.

Before RABINOWITZ, C. J., and CONNOR, ERWIN, BOOCHEVER and FITZGERALD, JJ.

OPINION

ERWIN, Justice.

This involves a petition by a taxpayer for review of an order of the superior court regarding an assessment by the Greater Anchorage Area Borough. Roy E. Winegardner, who owns and operates the Holiday Inn in Anchorage, appealed his 1973 real property tax assessment to the Greater Anchorage Area Borough Assembly, sitting as the Board of Equalization. 1 After hearings at which he was represented by counsel, the Board granted Winegardner a slight adjustment to his assessment, but denied him the greater reduction he sought.

Winegardner then appealed the Board's action to the superior court and invoked AS 29.53.140(f), 2 demanding trial de novo and trial by jury to determine the correct valuation of his property. The superior court declined to undertake de novo review or allow trial by jury, stating:

Since this case involves issues contemplated by Appellate Rule 45, as an Administrative Appeal, trial de novo is not permitted. 3

Winegardner's petition to this court for review of the superior court's ruling was granted on April 16, 1974.

In this petition Winegardner bases his demand for de novo jury review on several grounds. He argues that trial by jury is guaranteed in a tax assessment appeal by sections 1 and 16 of article I of the Alaska Constitution and by the fourteenth amendment to the United States Constitution. Section 16 of article I of the Alaska Constitution preserves a right to jury trial '(i)n civil cases where the amount in controversy exceeds two hundred fifty dollars . . . to the same extent as it existed at common law.' Proceedings to levy and collect taxes are not suits at common law. 4 The similar language of the seventh amendment to the United States Constitution 5 has been held not to apply to tax matters, 6 and numerous cases hold that there is no constitutional right to a trial by jury to determine proper assessments. 7 We share these views.

Winegardner also argues that Appellate Rule 45, which limits appeals from administrative decisions to review on the record, does not apply because the Board of Equalization is not an administrative agency.

Once a complaint has been filed in the Superior Court, the action of the Board no longer has any effect, hearings before the Board become irrelevant, and the decision of the jury supersedes any such action. Since the Board is no longer carrying out a delegated function of the State of Alaska in the assessment process, how can it be an administrative agency when its function ceases to exist upon the appeal?

The contention seems to be that the Board cannot be an administrative agency because its decisions are subject to judicial review under AS 29.53.140(f). This ignores not only the requirements of judicial review of administrative decisions 8 but also Keiner v. City of Anchorage, 378 P.2d 406, 410 (Alaska 1963), where we held that the term 'administrative agency' in AS 22.10.020(a), which sets out the jurisdiction of the superior court, encompassed acts of a city council sitting as a board of adjustment on appeal from an order requiring removal of a building as a health and fire hazard:

There is nothing in the wording of the statute, or in its legislative history, which persuades us to adopt (an interpretation that the term 'administrative agency' as used in AS 22.10.020(a) refers only to agencies created by the state legislature). We conclude that the term 'administrative agency' should be construed broadly so as to include a municipal council, acting as a board of adjustment, since it is in fact performing administrative functions.

Although the statute involved in this appeal is not AS 22.10.020(a), the Board of Equalization performs a function perfectly analogous to the board of adjustment in Keiner. Instead of passing on general policy or the rights of individuals in the abstract, as legislative bodies, both Boards apply policy in the form of ordinances to particular persons in their individual capacities. 9 Even the statute prescribing the procedure to be used by the Board of Equalization recognizes its administrative character:

The board is governed in its proceedings by such procedures consistent with general rules of administrative law and the laws governing equalization proceedings as may be adopted by ordinance . . .. 10

There is simply no argument of substance that the Board of Equalization is not an administrative agency within the meaning of Appellate Rule 45.

Winegardner also argues that Rule 45 does not regulate his action in the superior court because judicial review of the Board of Equalization is an original proceeding not an appeal. Appellate Rule 45, he contends, applies to appeals from administrative decisions but not original proceedings which seek to set such decisions aside.

AS 29.53.140(f) speaks of an 'appeal to the superior court' and gives no indication that this proceeding, even though authorized as de novo and by jury, constitutes a new proceeding. Winegardner's argument seems to be that because a jury on appeal may act independently of the record created by the Board of Equalization, the proceeding must be regarded as a new civil action and Appellate Rule 45 cannot apply. We see no reason to make such a distinction. De novo jury trial does expand judicial review beyond the limited scope associated with a classic appeal; and because, as we explain later in this opinion, 11 under AS 29.53.140(f) the jury may disregard some of the findings of a board of equalization without regard to the prior proceedings, the review resembles an original proceeding. Nevertheless, the resemblance does not render Appellate Rule 45 inapplicable. The Rule serves a function beyond requiring that appeals from administrative agencies be heard on the record. It also prescribes the running of time for appeal, the contents of the notice of appeal, as well as requirements for bond and for dismissal if costs are not paid. Whether Appellate Rule 45 applies is not determined by labeling a case an appeal or a new proceeding. The essential question is a functional one: does the claim before the superior court challenge a prior administrative decision? 12 If the answer is affirmative, Appellate Rule 45 applies.

This conclusion creates a conflict between the requirement of Appellate Rule 45 that judicial review of administrative decisions be on the record and the statute's grant of de novo jury review both at the request of the borough as well as at the election of the taxpayer. The Rule provides that it shall 'supersede all other procedural methods specified in Alaska statutes for appeals from administrative agencies to the courts of Alaska.' 13 As we view this case, the central issue is whether the rights conferred by AS 29.53.140(f) are procedural within the meaning of Appellate Rule 45.

The declaration of Appellate Rule supremacy over procedural statutes is an expression of the judicial power distributed to the courts by article IV, sections 1 and 15, of the Alaska Constitution. 14 We have attempted to mark one limit of this power by distinguishing, as in Appellate Rule 45, between substantive and procedural rights. For example, in Ware v. City of Anchorage, 439 P.2d 793, 794 (Alaska 1968), we held a statute requiring a non-resident plaintiff to provide security for the costs of litigation to be substantive and thus not an infringement upon our rulemaking power, stating:

The authorities generally agree that substantive law creates, defines and regulates rights, while procedural law prescribes the method of enforcing the rights. (footnote omitted).

In Channel Flying, Inc. v. Bernhardt, 451 P.2d 570, 576 (Alaska 1969), we restated the test in deciding that a statute allowing disqualification of a judge also was substantive:

This statute does not merely regulate procedure. With or without it the particular action in court takes the same course. The statute rather creates and defines a right-the right to have a fair trial before an unbiased and impartial judge. This is something more than merely presecribing a method of enforcing a right. (footnotes omitted) 15

In the absence of the rights guaranteed by AS 29.53.140(f), a taxpayer has no assurance that he will receive an impartial determination that his assessment is a fair one. The borough assesses and then, sitting as the board of equalization decides whether the assessment is accurate. When the borough is delegated the authority to assess and levy taxes, judicial review is limited. A court will not substitute its judgment and correct the dollar amount of the assessment unless the borough's error is egregious. In this setting, a judge 'is concerned with nothing less than fraud or the clear adoption of a fundamentally wrong principle of valuation.' 16

AS 29.53.140(f) is intended to alter this scheme. The borough retains the power to assess taxes and review their accuracy in the first instance. But on appeal the taxpayer may demand a fresh determination by a jury that the assessment is correct. The jury makes its decision as if it were sitting in the place of the assembly, unrestrained by the limited scope of review which a judge would ordinarily exercise. Thus, AS 29.53.140(f) creates a taxpayer's right to have the judgment of a jury substituted for that of the borough assembly sitting as its own board of equalization. The right, however, is not to a fresh assessment of taxes of the property. AS 29.53.135 quoted in full at ...

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