Deitch Co. v. Board of Property Assessment

Dissenting Opinion by

Ms. Chief Justice Bell:

I would affirm the Order of the lower Court for the reasons hereinafter set forth.

The property owner took an appeal to the Court of Common Pleas from the Board’s assessment. It contended that the assessment exceeded the fair market value of the land, and that it did not comply with the requirements of uniformity.

Stipulations

The parties had agreed upon the valuation of the building and “[b]y stipulation of counsel, the only issue tried before that court was the valuation of the *225land.” The parties had also agreed, expressly or impliedly, that the value of the entire property was the total of the value of the building and the value of the land.

The majority holds that the parties may not, by stipulation or otherwise, even with the approval of the Court, try only the (value and) assessment of the land (or of the building) and that such a practice is improper and illegal and if the case was tried on such a basis, this Court sua sponte will vacate the Order of the Court below. This new and extraordinary rule was approved or reiterated in the companion cases of Pittsburgh Miracle Mile Town & Country Shopping Center, Inc. v. Board of Property Assessment, 417 Pa. 243, 209 A. 2d 394; Casa Loma, Inc. v. Board of Property Assessment, 417 Pa. 257, 209 A. 2d 387; McKnight Shopping Center, Inc. v. Board of Property Assessment, 417 Pa. 234, 209 A. 2d 389; and Rieck Ice Cream, Company Appeal, 417 Pa. 249, 209 A. 2d 383, in all of which, Opinions are being filed simultaneously herewith.

In every field of the law, but especially in the civil fields, Courts for many years have been constantly striving to narrow the issues and expedite a trial by getting the parties to agree, either at trial or at pretrial, on all possible facts and every possible issue, in order to expedite Justice and eliminate or reduce or prevent backlogs. Even in criminal cases, trial Judges favor the practice of having both parties agree on as many facts and the elimination of as many issues as is possible, and even a defendant can waive many of his constitutional rights. Thus, the rule enunciated by the majority Opinion flies in the teeth of modern Judicial practice and reform, and has exactly the opposite effect to what is desired by every litigant and every Judge.*

*226I disagree very strongly with much of the basic reasoning and many of the statements in each of the real estate assessment Opinions filed simultaneously herewith and shall discuss all of them in this Opinion.

A New and Revolutionary Rule

The majority not only outlaws stipulations in this field, but I am convinced revolutionizes, without the slightest justification (and even without any realization), (1) the law and (2) the practices which have existed for decades. The law as to a separate assessment (a) for land, and (b) for buildings, has been statutorily mandated in Pittsburgh and in Philadelphia, and I am informed that the practices in those Cities have been followed (without statutory mandate) in nearly all the other counties of the State. The majority Opinion in the instant case and also in several of the above mentioned cases (1) states, not only that the parties cannot stipulate (a) as to the value of one of the two component parts of a real estate property— i.e., either the land or the building — or (b) that the total value of the property as a unit is the total value of its two component parts; but also (2) requires the property owner to produce before the Board and, on appeal, before the Court of Common Pleas, testimony as to the value of the property as a whole (entity), and (3) the appeal to the appellate Court must be from the assessment of the entire property.

At least two recent decisions of this Court have held that the practice of a separate valuation for (a) the land, and (b) buildings was valid and permissible: Buhl Foundation v. Board of Property Assessment, 407 Pa. 567, 180 A. 2d 900; North Park Village, Inc. v. Board of Property Assessment, 408 Pa. 433, 184 A. 2d 253. See also: Lehigh & Wilkes-Barre Coal Company’s Assessment, 225 Pa. 272, 277, 74 A. 65.

*227In Buhl Foundation v. Board of Property Assessment, 407 Pa., supra, Justice Eagen, speaking for a unanimous Court, said (page 569) : “This appeal is from an order of the court below sustaining a triennial real estate tax assessment. The property involved is a private housing development in the nineteenth ward of the city of Pittsburgh,* known as Chatham Village.

“. . . The assessment appealed, from involves only that levied against the buildings; the land assessment is not in litigation

The requirement of the majority in these half dozen real estate assessment cases that in every case an appeal from the Board to the Court of Common Pleas and to an appellate Court must be taken from the assessment of the entire property as a unit, flies in the teeth of the Act of March 7, 1901, P. L. 20, as amended, 53 PS §25894, and is contrary to prior decisions of this Court and to a half century of practice. They hold this rule to be applicable even though (1) the taxpayer and the Board agree orally or in writing on the assessment upon all except one of the component parts of the property, or (2) the taxpayer and the Board are completely satisfied with the Board’s or the lower Court’s assessment of the property in its entirety. In Pittsburgh, for example — where (1) a separate assessment for land and for buildings has been statutorily mandated, and (2.) councils were statutorily mandated to determine the annual rate of tax and to assess a tax each year upon the buildings equal to five-tenths of the highest rate of tax required to be assessed for such year on the land, “so that upon the said classes of real estate of said city there shall ... be two rates of taxation” — the majority Opinion is obviously unsupportable. Analysis will further demonstrate this: Appellant *228may agree with appellee that the assessment of the entire property at $500,000 (or for any other amount) is proper but contend that the assessment on the land and on the building, instead of being $250,000 on each, should be $400,000 for the land and $100,000 valuation for the building, thereby resulting in almost doubling appellant’s tax. Why, therefore, should the appellant be required to appeal from the total assessment with which he agrees, instead of from that part of the assessment with which he disagrees? The majority do not and cannot explain or justify their decision in this respect. Moreover, doesn’t it violate the majority’s theory of constitutional uniformity, i.e., that real estate is one indivisible class? Furthermore, if uniformity can be established only by considering the entire property as a unit, is it not unconstitutional to permit the imposition of a tax on land at a specified millage and one-half of said tax on a building which everyone knows is an integral part of the entire property?

The majority decision in this and in the companion cases (a) nullifies the applicable law in Pittsburgh and in Philadelphia, and (b) will not only revolutionize the long established practices in real estate assessment cases throughout Pennsylvania, but (c) will make the decision of Common Pleas Judges in real estate assessment cases more burdensome and difficult, and (d) will greatly increase and lengthen litigation, and (e) will increase the burdensome costs of the property owner, and (f) will undoubtedly delay Justice. There is neither reason nor authority for this revolutionary rule or for such a backward step.

Prima Facie Case

The majority in the instant case further says: “ . . . Such presentation makes out a prima facie case for the validity of the assessment in the sense that it *229fixes the time when the burden of coming forward with evidence shifts to the taxpayer. . . . But once the taxpayer produces sufficient proof to overcome its initially allotted status, the prima facie significance of the Board’s assessment figure has served its procedural purpose, and its value as an evidentiary device is ended. Thereafter, such record, of itself, loses the weight previously accorded to it and may not then influence the court’s determination of the assessment’s correctness. . . .”

This is both incorrect and confusing. It is clearly and undoubtedly contrary to many reported cases and to hundreds and hundreds of unreported cases, and is utterly unsupportable. All the eases hold that the record of assessment, when introduced into evidence, makes out a prima facie case which establishes the validity, of the assessment, and the assessment must be affirmed in the absence of any credible evidence which is of such weight as to overcome the prima facie case: Baldwin-Lima-Hamilton Corporation Appeal, 412 Pa. 299, 194 A. 2d 434; North Park Village, Inc. v. Board of Property Assessment, 408 Pa., supra; Buhl Foundation v. Board of Property Assessment, 407 Pa., supra; Brooks Building Tax Assessment Case, 391 Pa. 94, 137 A. 2d 273; Hammermill Paper Co. v. Erie, 372 Pa. 85, 92 A. 2d 422; Chatfield v. Board of Revision of Taxes, 346 Pa. 159, 29 A. 2d 685; Westbury Apartments, Inc., Appeal, 314 Pa. 130, 170 A. 207; Washington County v. Marquis, 233 Pa. 552, 82 A. 756.

Proof of Lack of Uniformity

Uniformity depends upon the ratio or percentage of assessed value to market value, and assessments are constitutionally required to be uniform. However, I disagree with the statements in the majority Opinion in the instant case and in the Pittsburgh Miracle Mile *230and in the Rieck and in the McKnight cases, supra, which hold that the property owner, in order to show lack of uniformity, must prove the market value and the assessed value and the general or common ratio or percentage of assessed value to market value of properties not only in the neighborhood but throughout the enormous taxing district. This ignores and nullifies the Act of June 21, 1939, P. L. 626, §7, 72 PS §5152.7, which permits the Board of Property in Counties of the second class to divide the County into three districts, and provide for triennial assessments each year “but for only one of such three districts during any one year.”

The proof required of a property owner by the majority is not only contrary to the law and to prior decisions of this Court, but is so impractical and so onerous and burdensome on the property owner as to amount to a denial of Justice: Brooks Building Tax Assessment Case, 391 Pa., supra; Harleigh Realty Co.’s Case, 299 Pa. 385, 119 A. 653.

I likewise disagree with the majority’s mandate that in order to attain uniformity, the assessment of every property in every taxing district throughout Pennsylvania must be forthwith increased or reduced by the assessors, even though only a few appeals have been taken in any district: McKnight Shopping Center, Inc. v. Board of Property Assessment, 117 Pa., supra. Cf. also: Rieck Ice Cream Company Appeal, 117 Pa., supra. Except in Counties of the second class this is correct in theory, but to review and forthwith reassess hundreds of thousands of properties in a large taxing district is certainly unrealistic and so burdensome on both the assessors and the taxpayer as to be practically impossible: Cf. Brooks Building Tax Assessment Case, 391 Pa., supra; Harleigh Realty Co.’s Case, 299 Pa., supra.

*231Rieck Ice Cream Company Appeal

In Rieck Ice Cream Company Appeal, 417 Pa., supra, and in Heinz Company v. Board of Property Assessment, the appeal was from the assessment of a building on property situate in Pittsburgh. The majority Opinion in each of these cases completely nullifies the statute and the ordinance — the statute* which, we repeat, specifically applies and mandates a separate assessment and (the Ordinance specifically applies and mandates) a different millage for land and for buildings— by (1) ignoring and voiding the Ordinance and (2) by holding that that statute is applicable only to assessors and not to a Court of Common Pleas which reviews an assessment de novo on appeal. In other words, the majority Opinion in Rieck and Heinz and McKnight expressly, and the majority Opinion in several of these companion cases impliedly, hold that there is one rule before the Board of Assessment for determining the value and assessment of a property and an entirely different rule when exactly the same question is presented on appeal de novo to the Court of Common Pleas. Such a construction was never the intention of the Legislature; and it flies in the teeth of the statute and is unsupportable.

Furthermore, in Rieck, the majority Opinion holds that evidence of the prior assessment was neither res adjudicata nor one of the factors which the Board or the Court could consider. Of course it was not res adjudicata; equally certain, it was admissible in evidence as a factor to be considered in the proper valuation and assessment for the triennial period involved in the Rieck case.

Moreover, in Rieck (and similarly in McKnight and Pittsburgh Miracle Mile) the majority Opinion says:

*232“The thing from which the property owner appeals and therefore the concern before the court, is the total assessment of the property as a unit.” If this is correct, it completely ignores and is necessarily contrary to the majority Opinion in the companion case of Morris v. Board of Property Assessment, 417 Pa. 192, 209 A. 2d 407.

I likewise disagree with the statements in Rieclc and in several of the majority Opinions filed simultaneously herewith, that real estate must be valued and assessed as an indivisible unit or class. Language can be found in several prior cases to refute this principle. It therefore seems to me erroneous to say that real estate is one indivisible class and cannot be divided into one or more kinds or classes of real estate, i.e., land and buildings. Moreover, this theory would require the Court to hold that the Acts supra which require a separate assessment and separate tax for land and for buildings, are Unconstitutional.

Tax Equalization Board

In Pittsburgh Miracle Mile, the majority Opinion states in a footnote that three Judges agree that the figures compiled by the Tax Equalization Board should be admissible in evidence. I disagree, first because the Act, by its language, prohibits it, and secondly, because the figures represent only “sales”, and no one knows whether the sales represent a sheriffs or other forced sale, or a sale between a willing buyer and a willing seller, and no party is given an opportunity to challenge the figures or cross-examine any witness, nor is it an admission against interest. How can a property owner overcome that Board’s figures which cover an entire County without imposing upon the property owner the unfair burden of presenting evidence which covers the entire County?

*233Future Options Too Speculative for Assessment Purposes

In McKnight, the majority, speaking through Justice Cohen, holds that an option (for future purchase of the property) contained in a lease, — which option “was not actually executed until the middle of the triennium” — is a proper factor to be considered in determining the value of the property at the beginning of the triennial period. In my judgment, for assessment purposes, it is too speculative.

In Hendel Appeal, 403 Pa. 635, 170 A. 2d 109, Justice Cohen, speaking for a unanimous Court, said (page 637) : “While a property owner under the Second Class County Code is entitled to have his property carried on the assessment rolls at a valuation which reflects its condition as of December 31 of the preceding year or January 1 of the current year, he cannot require that his future plans for the building, except to the extent that they are executed, be reflected in the assessment. Here, the subsequent completion of the intended demolition, even though partially commenced before January 1, and after January 1 expeditiously pursued, cannot affect the value of the building on January 1 . . . .”

For each and all of these reasons, I dissent from the Court’s Opinion in this case and would affirm the Order of the lower Court.

Mr. Justice Musmanno joins in this Dissenting-Opinion.

Except a majority of this Court.

Italics throughout, ours.

Act of March 7, 1901, P. D. 20, as amended, 53 PS §25894, governing Cities of the Second Class.