Yadco, Inc. v. Yankton County, No. 11628

CourtSupreme Court of South Dakota
Writing for the CourtDOYLE
Citation237 N.W.2d 665,89 S.D. 651
PartiesIn the Matter of the Appeals of Yadco, Inc. from its Assessments for the Years 1971, 1972 and 1973. YADCO, INC., Appellant, v. YANKTON COUNTY, South Dakota, Respondent.
Docket NumberNo. 11628
Decision Date19 December 1975

Page 665

237 N.W.2d 665
89 S.D. 651
In the Matter of the Appeals of Yadco, Inc. from its
Assessments for the Years 1971, 1972 and 1973.
YADCO, INC., Appellant,
v.
YANKTON COUNTY, South Dakota, Respondent.
No. 11628.
Supreme Court of South Dakota.
Dec. 19, 1975.

Page 666

[89 S.D. 653] M. T. Woods, of Woods, Fuller, Shultz & Smith, Sioux Falls, for appellant.

Richard D. Hagerty, Larry F. Hosmer, Yankton, for respondent.

DOYLE, Justice.

This is an appeal by Yadco, Inc. (Yadco) of Yankton County, South Dakota, from assessments of real property for the years 1971, 1972 and 1973. The principal contention of Yadco is that the 'full and true' value of its property should be based, at least in part, on the amount of income which will be received under a long-term, uneconomical lease consummated by it.

The Yankton County Board of Equalization failed to adopt Yadco's argument and denied relief; Yadco thereupon appealed the Board's decision to the circuit court. The circuit court, after a trial de novo, also rejected Yadco's argument and denied its petition for a reduction in its assessed valuation for each of the years involved. Yadco now appeals to this court. We affirm the trial court on all issues.

[89 S.D. 654] I. The Facts.

Yadco, originally known as Community Development Corporation, was organized in Yankton, South Dakota, in 1969. One 'objective' of the firm, as stated in its Articles of Incorporation, was to 'benefit the community as measured by increased employment, payroll, business volume and corresponding factors.' Another purpose was to 'engage in any commercial, industrial and

Page 667

agricultural enterprise calculated or designed to be profitable to this corporation * * *.'

The record shows that Yadco has engaged in one business enterprise during its existence. The enterprise involved it with Wiltco Manufacturing, Inc., a builder of truck trailers. Wiltco agreed with Yadco that Wiltco would become Yadco's tenant under a 20-year lease in consideration of Yadco's construction of a manufacturing plant to be designed by Wiltco. Wiltco agreed to pay rent of $1,166,154 for the first ten years and $1,064,940 for the second ten years. Wiltco also agreed that it would pay proeprty taxes assessed on Yadco for the leased property; Yadco, however, agreed that it would rebate to Wiltco any property taxes in excess of an aggregate amount of $160,000 paid by Wiltco over the 20-year period. The cost of construction, including the land, was approximately $950,000. According to testimony presented at the trial, the lease was a very poor investment for Yadco, which, because of the low revenue from the lease and because of the obligation to rebate taxes to Wiltco, would lose over $600,000 during the term of the lease.

Yadco's property was assessed at $915,000 full and true value in 1971, 1972 and 1973. Its taxable value was computed at 60% Of the true and full value or $539,480 for each of the years.

II. True and Full Value.

The State of South Dakota has by statute determined that 'All property shall be assessed at its true and full value in money * * *.' SDCL 10--6--33. The phrase 'true and full value' has, in turn, been defined by statute to mean 'the usual cash selling price at the place' in which the property rests at the time of the assessment. SDCL 10--6--1. It has been said by our decisions to be [89 S.D. 655] 'the amount a willing purchaser will pay a willing seller in an open market.' Sheraton-Midcontinent Corp. v. County of Pennington, 1959, 77 S.D. 554, 95 N.W.2d 892.

Often, however, there is no market for the property to be assessed. When this is the case, the assessor must still determine the 'full and true' market value and, in so doing, he is to consider 'every other element which can reasonably affect its value.' Rau v. Fritz, 1965, 81 S.D. 311, 134 N.W.2d 773. Stated another way, it is the duty of the assessor to use all of those techniques and facts which accurately reflect 'full and true' value and to reject those which do not. Cf., Tidball v. Miller, 1948, 72 S.D. 243, 32 N.W.2d 683; Aetna Life Ins. Co. v. City of Newark, 1952, 10 N.J. 99, 89 A.2d 385. Factors which ordinarily are to be considered include: 'replacement cost less proper deductions * * * income from the property,' Sheraton-Midcontinent Corp. v. County of Pennington, supra; "evidence of actual sales of other lands," when such sales are made by willing buyers to willing sellers, Tidball v. Miller, supra; and previous sales of the particular property in question. Plaza Hotel Assoc. v. Wellington Assoc., Inc., 1973, 73 Misc.2d 6, 340 N.Y.S.2d 796.

The assessor relied on the cost approach in determining that the true and full value of the property in question was $915,000. To verify this conclusion, he compared the reproduction cost per square foot to the reproduction cost per square foot of the Cimpl Building. He stated that the portion of the Cimpl Building, which is apparently roughly comparable to the property at issue, was assessed at a higher cost per square foot. The assessor testified inflation had caused the property to appreciate in recent years to such an extent that the appreciation was greater than depreciation and obsolescence. Therefore, he did not adjust the value downward to reflect these factors.

The assessor testified that he refused to use the income approach because 'it does not bear out the true market value of the building.' He stated further that he had ignored the lease which Yadco had made with Wiltco because it was irrelevant to the cost approach.

Page 668

[89 S.D. 656] To reinforce the assessor's opinion at the trial, the County of Yankton called an outside expert witness who stated that the valuation of the assessor was 'substantially correct.' Unlike the county assessor, the outside expert witness testified that he did consider the lease in determining 'true and full' market value. It is unclear whether the expert witness relied primarily on the cost approach, comparable sales approach or income approach in making his valuation.

The taxpayer, who bore the burden of overcoming the presumption that the assessor's valuation was correct, Sheraton-Midcontinent Corp. v. County of Pennington, supra, called a single expert witness. This expert witness testified that the value of the property employing the cost approach was $777,535; that the value of the property employing the standard income approach was $738,000 in 1971, $728,000 in 1972 and $717,000 in 1973; and that the value of the property based on the expert witness' version of the income approach was $160,000. Both the standard income approach and the...

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32 practice notes
  • Supervisor of Assessments of Allegany County v. Ort Children Trust Four, No. 150
    • United States
    • Court of Appeals of Maryland
    • 11 Agosto 1982
    ...Dept. of Revenue, 257 Or. 622, 480 P.2d 713 (1971); Kargman v. Jacobs, 113 R.I. 696, 325 A.2d 543 (1974); Yadco, Inc. v. Yankton County, 89 S.D. 651, 237 N.W.2d 665 (1975); Richmond, Fredericksburg and Potomac R. R. v. Commonwealth, 203 Va. 294, 124 S.E.2d 206 4 There is language in Somers ......
  • City and County of Denver v. Board of Assessment Appeals of State of Colo., No. 91SC775
    • United States
    • Colorado Supreme Court of Colorado
    • 8 Marzo 1993
    ...property. Valencia Center, Inc. v. Bystrom, 543 So.2d 214, 217 (Fla.1989); Oberstein, 318 N.W.2d at 820-21; Yadco, Inc. v. Yankton County, 89 S.D. 651, 237 N.W.2d 665, 668 (1975); Folsom, 759 P.2d at 1201-02. Page 364 The manner of calculating the value of both the lessor's and lessee's est......
  • C. A. F. Inv. Co. v. Saginaw Tp., Docket Nos. 60744
    • United States
    • Supreme Court of Michigan
    • 24 Febrero 1981
    ...Mass. 69, 141 N.E. 564 (1923); Richmond, F & P R Co. v. Commonwealth, 203 Va. 294, 124 S.E.2d 206 (1962); Yadco, Inc. v. Yankton County, 89 S.D. 651, 237 N.W.2d 665 (1975). Cf. State ex rel. Park Plaza Shopping Center, Inc. v. Board of Review for Madison, 61 Wis.2d 469, 213 N.W.2d 27 The se......
  • Tax Appeal of Brookings Associates v. South Dakota State Bd. of Equalization, No. 17461
    • United States
    • Supreme Court of South Dakota
    • 24 Octubre 1991
    ...property in question is the price which a willing purchaser will pay a willing seller in the open market. Yadco, Inc. v. Yankton County, 89 S.D. 651, 237 N.W.2d 665 (1975). Examples of a fallacious technique, employed by the assessor, were rejections of a sales approach and looking at econo......
  • Request a trial to view additional results
32 cases
  • Supervisor of Assessments of Allegany County v. Ort Children Trust Four, No. 150
    • United States
    • Court of Appeals of Maryland
    • 11 Agosto 1982
    ...Dept. of Revenue, 257 Or. 622, 480 P.2d 713 (1971); Kargman v. Jacobs, 113 R.I. 696, 325 A.2d 543 (1974); Yadco, Inc. v. Yankton County, 89 S.D. 651, 237 N.W.2d 665 (1975); Richmond, Fredericksburg and Potomac R. R. v. Commonwealth, 203 Va. 294, 124 S.E.2d 206 4 There is language in Somers ......
  • City and County of Denver v. Board of Assessment Appeals of State of Colo., No. 91SC775
    • United States
    • Colorado Supreme Court of Colorado
    • 8 Marzo 1993
    ...property. Valencia Center, Inc. v. Bystrom, 543 So.2d 214, 217 (Fla.1989); Oberstein, 318 N.W.2d at 820-21; Yadco, Inc. v. Yankton County, 89 S.D. 651, 237 N.W.2d 665, 668 (1975); Folsom, 759 P.2d at 1201-02. Page 364 The manner of calculating the value of both the lessor's and lessee's est......
  • C. A. F. Inv. Co. v. Saginaw Tp., Docket Nos. 60744
    • United States
    • Supreme Court of Michigan
    • 24 Febrero 1981
    ...Mass. 69, 141 N.E. 564 (1923); Richmond, F & P R Co. v. Commonwealth, 203 Va. 294, 124 S.E.2d 206 (1962); Yadco, Inc. v. Yankton County, 89 S.D. 651, 237 N.W.2d 665 (1975). Cf. State ex rel. Park Plaza Shopping Center, Inc. v. Board of Review for Madison, 61 Wis.2d 469, 213 N.W.2d 27 The se......
  • Tax Appeal of Brookings Associates v. South Dakota State Bd. of Equalization, No. 17461
    • United States
    • Supreme Court of South Dakota
    • 24 Octubre 1991
    ...property in question is the price which a willing purchaser will pay a willing seller in the open market. Yadco, Inc. v. Yankton County, 89 S.D. 651, 237 N.W.2d 665 (1975). Examples of a fallacious technique, employed by the assessor, were rejections of a sales approach and looking at econo......
  • Request a trial to view additional results

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