Williamson County v. State Board of Equalization

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
June 26, 2001Session

WILLIAMSON COUNTY, ET AL. v. TENNESSEE STATE BOARD
OF EQUALIZATION

Appeal from the Chancery Court for Davidson County
Nos. 00-522-III, 00-558-III Ellen Hobbs Lyle, Chancellor

No. M2000-03178-COA-R3-CV - Filed December 10, 2001

In this case, a consortium of counties and cities appeals the decision of the Chancery Court of
Davidson County upholding the action of the Tennessee State Board of Equalization in applying
depreciable life schedules forming a part of Tennessee Code Annotated section 67-5-903(f) to
commercial and industrial tangible personal property and in holding that personal property is not
constitutionally required to be valued at its actual value in the implementation of Tennessee Code
Annotated section 67-5-1509(a). The only issues before this court are the constitutionality of
Tennessee Code Annotated section 67-5-903(f) and Tennessee Code Annotated section 67-5-
1509(a). We hold both statutes to be constitutional and affirm the Chancellor.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed

WILLIAM B. CAIN , J., delivered the opinion of the court, in which BEN H. CANTRELL , P.J., M.S. and
PATRICIA J. COTTRELL, J., joined.

Jeffrey Dean Moseley, Franklin, Tennessee, for the appellant, Williamson County, Tennessee.

James Charles and Jennifer Clinard Surber, Nashville, Tennessee, for the appellant, Metropolitan
Government of Nashville and Davidson County.

Donnie E. Wilson and Robert B. Rolwing, Memphis, Tennessee, for the appellant, Shelby County,
Tennessee.

Jean Dyer Harrison, Nashville, Tennessee, for the appellants, Tennessee City Governments and
Tennessee County Governments.

Paul G. Summers, Attorney General & Reporter; and Jimmy G. Creecy, Chief Special Counsel,
Nashville, Tennessee, for the appellee, Tennessee State Board of Equalization.

T. Arthur Scott, Jr. and Suzanne S. Cook, Kingsport, Tennessee, for the appellees, Appalachian
Power Company and Kingsport Power Company.

Brigid M. Carpenter, Nashville, Tennessee; James W. McBride, Washington, D.C.; and Stephen D.
Goodwin, Memphis, Tennessee, for the Intervenors/Appellees, Coalition of Public Utilities.
Everett B. Gibson, Memphis, Tennessee, for the Intervenors/Appellees, Colonial Pipeline Company,
MCI Metro Access Transmission Services, Inc., MCI Telecommunications Corporation and Norfolk
Southern Railway Company.

Charles A. Trost and Michael G. Stewart, Nashville, Tennessee, for the Intervenor/Appellee,
Tennessee Association of Business.

OPINION

This case follows in the wake of two sister cases already decided by the appellate courts. The
first of these cases, In Re All Assessments 1998, No. M1998-00243-SC-R11-CV, 2000 WL 1710174
(Tenn. Nov. 16, 2000), involved centrally assessed public utility personal property equalization for
1998. In that case, the Supreme Court of Tennessee, reversing the Court of Appeals, held: “The
Tennessee Board of Equalization is authorized to reduce (or increase) the appraised (and therefore
corresponding assessed) value of centrally-assessed public utility tangible personal property as part
of the equalization process, the purpose of which is to equalize the ratio of the appraised value to fair
market value of public utility property in any particular county with the corresponding ratio for
industrial and commercial property in that county.” Id.

The second case was In Re All Assessments 1999 & 2000, No. M2000-00399-COA-R12-CV,
2001 WL 1077948, (Tenn. Ct. App. Sept. 14, 2001). That case, again involving centrally assessed
public utility tangible personal property assessments for the tax years 1999 and 2000, was reduced
in scope by the supreme court decision of November 16, 2000 to a challenge of the constitutionality
of Tennessee Code Annotated section 67-5-903(f) and Tennessee Code Annotated section 67-5-
1302(b)(1). The September 14, 2001 decision of this Court upheld the constitutionality of both
statutes.

The case at bar is limited to a second attack upon the constitutionality of Tennessee Code
Annotated section 67-5-903(f) and an attack upon the constitutionality of Tennessee Code Annotated
section 67-5-1509(a).1 The Chancellor affirmed the Tennessee Board of Equalization upholding the
constitutionality of both Tennessee Code Annotated section 67-5-903(f) and Tennessee Code
Annotated section 67-5-1509(a).

On appeal, where only the constitutionality of these two statutes is put in issue, there is little
to be gained by repetition of the two previous decisions. It suffices to say that, when the Supreme
Court of Tennessee, in In Re All Assessments 1998, specifically held that the Tennessee Board of
Equalization was authorized to reduce the value of centrally assessed public utility tangible personal

1
As the two sister case s previously decided involved centrally assessed utility property, direct review of the final
decision was vested in the Middle Division of the Tennessee Court of Appeals pursuant to Tennessee Code Annotated
section 4-5-322(b)(1). By that same code section, this case, involving locally assessed personal property, was subject
to review in the C hancery Co urt of D avidson C ounty with the decision o f the Chancellor appealable to this Court.

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property as part of the equalization process, it effectively cut the heart out of the appellant’s
argument that Article II, section 28 of the Constitution of Tennessee, subsequent to the 1972
amendments, requires property to be assessed at its actual value. Once this holding, predicated as
it was upon Marion County v. State Bd. of Equalization, 710 S.W.2d 521 (Tenn. Ct. App. 1986)
(permission to appeal denied), and Sherwood Co. v. Clary, 734 S.W.2d 318 (Tenn. 1987), was issued
by the highest court in the state, neither the State Board of Equalization, the Chancery Court of
Davidson County, nor this Court had any basis upon which to constitutionally invalidate the
elaborate statutory scheme promulgated by the General Assembly and implicitly upheld by the
supreme court.

Following the November 16, 2000 decision of the Supreme Court of Tennessee, this Court
upheld the constitutionality of both Tennessee Code Annotated sections 67-5-903(f) and 67-5-
1302(b)(1)(Supp. 2000) for reasons articulated in pages 14 through 20 of In Re All Assessments 1999
and 2000, 2001 WL 1077948, at *10-15. It remains only to address now the constitutionality of
Tennessee Code Annotated section 67-5-1509(a).

It is asserted by the appellants that what the sales appraisal ratio does is undervalue personal
property by a percentage derived from real estate values on top of the undervaluation already
resulting from the application of the depreciation schedules set forth in Tennessee Code Annotated
section 67-5-903(f). The pertinent provision of Tennessee Code Annotated section 67-5-1509(a)
(1998) provides: “The board shall by order or rule direct that commercial and industrial tangible
personal property assessments be equalized using the appraisal ratios adopted by the Board in each
jurisdiction. Such equalization shall be available only to taxpayers who have filed the reporting
schedule required by law.”

In In Re All Assessments 1999 & 2000, we held:

Use of such sales ratios may provide the least unsatisfactory method of appraising
tangible personal property, but such is a legislative decision unshackled by
constitutional prohibition. Section 67-5-1509(a) of the Code mandates that locally
assessed industrial and commercial personal property be adjusted by the sales ratio
in each county. It necessarily follows that, to achieve equalization, public utility
personal property must likewise be adjusted under section 67-5-1302(b)(1). It is not
the prerogative of this Court, or of the State Board of Equalization, to question the
reasonableness of a statute or second guess the policy judgments of the legislature.
Bell South Telecomm., Inc. v. Greer, 972 S.W.2d 663, 673 (Tenn. Ct. App. 1997).

Id. 2000 WL 1077948, at *15.

Once it is established that “one hundred percent of actual value” is no longer constitutionally
mandated by Article II, section 28 of the Tennessee Constitution, the legislative prerogative
evidenced by Title 67, Chapter 5, part 15 of Tennessee Code Annotated is, wisely or unwisely, free

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of constitutional infirmity. The constitutional challenge to Tennessee Code Annotated section 67-5-
1509(a) must fail.

The judgment of the Chancellor is in all respects affirmed with costs assessed against the
appellants.

___________________________________
WILLIAM B. CAIN, JUDGE

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