I do not think the assessed values as fixed by the assessor are in any sense exorbitant. And it is only when assessed values are so exorbitant as to indicate arbitrary or capricious action on the assessor's part that the court is warranted in stepping in and revising valuations. That the assessor may have proceeded on a fundamentally wrong basis is not sufficient ground for intervention, unless it results in an overvaluation which is palpably exorbitant and greatly disproportionate to valuations of property of like character in the same taxing district.Templeton v. Pierce County, 25 Wn. 377, 65 P. 553. In that case, the rule is stated as follows:
"Fraud on the part of the assessing officer may be presumed from a palpably excessive or exorbitant overvaluation. The court will grant relief for an arbitrary, fraudulent, or malicious excessive valuation by the assessing officer. Where the assessing officer has exercised an honest judgment, and no fraud or arbitrary or capricious action in making the assessment is shown or can be presumed, the court will not interfere. Where it appears that the assessing officer endeavored honestly to get at the true value, and there is an honest difference of opinion as to the value, the judgment of the officer is conclusive. If property, even if overvalued, is assessed in the same proportion as other like property within the jurisdiction of the assessing officer, and the system of valuation adopted operates equally on all other property, the constitutional provision as to uniformity of taxation is complied with." *Page 617
Now, in the light of this rule, let us look at some of the undisputed facts in the case at bar. The court found that
". . . the full actual value of the property . . . as found by the assessor . . . for the years 1932 and 1933 was as follows: .. . making a total valuation upon the real property, including improvements, . . . for said years 1932 and 1933 in the amount of $273,225. That the full actual value . . . as found by the assessor . . . for the years 1934 and 1935, was as follows: . . . making a total valuation upon the real property, including improvements, . . . in the amount of $243,350."
The court further found that
". . . the taxing authorities . . . assessed for general taxation purposes for the years 1932 and 1933 the said land . . . and the improvements thereon . . . making a total assessed valuation of said real property, together with the improvements .. ., of $109,290. That . . . the taxing authorities . . . assessed for general taxation purposes for the years 1934 and 1935 the said land . . . and the improvements thereon . . . making a total assessed valuation of said real property, together with the improvements thereon, for said years 1934 and 1935 of $97,340."
The court then found:
"That the true and fair value . . . of the real property . .., together with the improvements thereon for said years 1932 and 1933 [is] of $147,850. That the . . . total true reasonable and fair value of the real property . . ., together with the improvements thereon for the year 1934, [is] of $131,787.50."
Upon these bases of actual value, the court found:
"The assessed valuation of the said property of plaintiff in said years should be as follows: *Page 618
1933, Land .................................... $ 8,990.00
Improvements ............................ 50,150.00
_________
making total assessed valuation of land
and improvements .............................. $59,140.00
1934, Land .................................... $ 8,090.00
Improvements ............................ 44,625.00
__________
making a total assessed valuation of land
and improvements .............................. $52,715.00"
Putting it simply, the court reduced the assessed valuation
for the years 1932 and 1933 from $109,290 to $59,140; and for the years 1934 and 1935, from $97,340 to $52,715.
Now, what facts can be found in the record to warrant the court in so substituting its judgment for that of the assessor? To my mind, there are none. On the contrary, I think the undisputed facts justify the actual and assessed valuations fixed by the assessor.
The hotel building, erected in 1929, is a modern steel and concrete structure, fifteen stories in height, and containing one hundred forty-six guest rooms. The actual cost was in excess of $400,000. In December, 1929, the respondent floated a bond issue, secured by a first mortgage, in the amount of $250,000. (This was after the crash, when conservative investment bankers were floating bond issues on a basis of fifty per cent of market value.) March 1, 1932, respondent carried insurance on the property in excess of $300,000. In 1934, the amount of insurance carried was $228,000. While, of course, these figures are not conclusive as the "actual fair value" of the property, they are indicative of the valuation respondent's officers put upon the property for purposes other than taxation.
The property is operated under a lease containing rather unusual terms with respect to the rent reserved. The lessor covenants to pay taxes, assessments, insurance *Page 619 premiums, interest and principal on outstanding bonds when due, and in addition seven per cent "on the par value of lessor's outstanding preferred and common stock." Prior to January 1, 1935, the lessee, pursuant to this covenant, paid in excess of $80,000; $15,890.90 being paid to the stockholders of the respondent company.
Under these facts, I do not see any ground for the court to intervene on the theory that the conduct of the assessor was so arbitrary and capricious as to amount to constructive fraud. On the contrary, taking all proper elements (cost less depreciation, mortgage loan valuations, insurance valuation and income) into consideration, it seems to me that the assessor came as nearly as any one possibly could to the "actual fair value" of the property for the basis of his assessed valuation.
I dissent.
MAIN, GERAGHTY, and TOLMAN, JJ., concur with BLAKE, J. *Page 620