State Board of Tax Commissioners v. Oliverius

Staton, J.

Nature of the Appeal: A reassessment of real property in Starke County was begun on March 1, 1969. The county trustees had engaged a professional appraising firm to make the reassessment. Several taxpayers felt that the reassessment made by the professional appraising firm was *48inaccurate and filed a complaint with the County Board of Review. The County Board of Review set aside the professional reassessment and ordered the Trustees of Starke County to make a new reassessment. This reassessment was accomplished by applying a percentage to the value stated on the property record cards. Hearings were held by the State Board of Tax Commissioners at which time they determinéd that the first reassessment made by the professional appraising firm was the better of the two assessments and should be used for tax purposes. The taxpayers sought relief from the State Board of Tax Commissioners’ decision by filing a complaint in the Starke Circuit Court.

The taxpayers filed a motion for summary judgment based upon a denial of due process. The taxpayer’s allegation was that the State Tax Board considered matters in their decision that were not introduced at the hearings and that this evidence was gathered without the knowledge of and without the presentation to the taxpayers. The trial court granted the motion for summary judgment and this appeal ensued.

Two issues are presented for our review:

1. Did the Starke Circuit Court have subject matter jurisdiction?
2. May the State Tax Board base its decision on evidence obtained in the absence of and without the knowledge of the petitioners-taxpayers and without giving the petitioners-taxpayers an opportunity to meet or rebut such evidence?

In our opinion which follows, we hold that the State Tax Board did not rebut the presumption of jurisdiction and that the consideration of evidence in the absence of or without notice to the taxpayers so that it may be rebutted is a denial of due process of law. We affirm the trial court’s judgment.

STATEMENT OF THE FACTS: The county trustees of Starke County, Indiana authorized a professional appraising firm to reassess the property in Starke County. A review of this reassessment before the County Board of Review was sought by affected taxpayers. The County Board of Review *49ordered the township trustees to reassess all real property in the townships of Starke County. New reassessments were made by the trustees as ordered by the County Board of Review. The reassessment was accomplished by applying a percentage to the value stated on the property record cards. Affected taxpayers sought review of this order before the State Board of Tax Commissioners. Hearings were held by the State Tax Board and at the conclusion of said hearings, the State Tax Board ordered the County Board of Review to reinstate the professional appraising firm’s first reassessment. The affected taxpayers filed a class action on behalf of some 900 taxpayers in the Starke Circuit Court. On July 1, 1970, the cause was venued to Porter County.

A motion for summary judgment was filed by the affected taxpayers on October 29, 1971. The motion was granted after hearings on November 16, 1971. The motion to correct errors was filed on January 14, 1972 and overruled on February 25, 1972. The appeal was fully briefed and distributed to this Court on November 14,1972.

STATEMENT OF THE ISSUES: There are two issues which must be decided by this Court. They are:

1. Did the Starke Circuit Court have subject matter jurisdiction ?
2. May the State Tax Board base its decision on evidence obtained in the absence of and without the knowledge of the petitioners-taxpayers and without giving the petitioners-taxpayers an opportunity to meet or rebut such evidence?

STATEMENT ON THE LAW

ISSUE ONE:

Did the Starke Circuit Court have subject matter jurisdiction?

The State Board of Tax Commissioners on September 19, 1972 filed with this Court a motion to vacate the judgment of the Porter Superior Court for lack of subject matter jurisdiction. The underpinning of the State Tax Board’s motion is the *50recent decision by the First Division of the Appellate Court of Indiana in Cooper v. County Board of Review of Grant County (1971), 150 Ind. App. 232, 276 N.E.2d 533. The State Tax Board argues that the Porter Superior Court did not obtain subject matter jurisdiction in that a statutory remedy was available and that the taxpayers had failed to pursue this remedy.1 In Cooper v. County Board of Review of Grant County, supra, 276 N.E.2d at 539, this Court quoted Justice Arterburn’s opinion in Public Service Commission of Indiana v. City of Indianapolis (1956), 235 Ind. 70, 83, 131 N.E.2d 308:

“ ‘. . . [W]here the statute provides for a procedure for such review or for a judicial remedy, it excludes any common law or equitable procedure to the extent such statutory provisions are adequate in protecting and preserving such substantive rights guaranteed by the constitution, the statutes or general principles of law. Such statutory procedure must be followed at least to the extent of the remedy available before resort is made to any common law or equitable remedy”

If the taxpayers are afforded a statutory remedy, it must be followed. If the remedy is not followed, they waive any rights that they may have had to pursue an alternative remedy. If the taxpayers had a statutory remedy and chose not to follow it, the Porter Superior Court would have been divested of subject matter jurisdiction, and an attack on its jurisdiction under Rule TR. 12(B) (1) of the Indiana Rules of Procedure would be proper.

Our first determination must be whether IC 1971, 6-1-31-4; Ind. Ann. Stat. § 64-1004 (Burns 1972 Supp.) provides a statutory right to the taxpayers to appeal the final determination of the State Tax Board in an equalization order.2 In determining whether a statute ap*51plies to a final determination of the State Tax Board, we must not view the statute in isolation but must ascertain its effect and application by reading it in context with the entire act. Walgreen Co. v. Gross Income Tax Division (1947), 225 Ind. 418, 75 N.E.2d 784 and State ex rel. Clemens v. Kern (1939), 215 Ind. 515, 20 N.E.2d 514. In so doing, it becomes readily apparent that IC 1971, 6-1-31-4, supra, applies to any final determination of the State Tax Board which affects the assessment on a taxpayer’s property, regardless of the procedural steps that preceded the State Tax Board’s decision. Thus, a final equalization order which affects a petitioner’s tax assessment can be appealed through IC 1971, 6-1-31-4, supra.

The question now becomes: Are the taxpayers precluded from review because they failed to comply with the requirements of IC 1971, 6-1-31-4, supra? IC 1971, 6-1-31-4, supra, reads as follows:

“Appeals to circuit or superior court. — Any person shall have the right to appeal from the final determination of the state board of tax commissioners regarding the assessment on his property to the circuit or superior court of the county in which said property is being assessed. Appeals may be consolidated, at the request of the appellants, in order to save the expenses thereof, when it can be done in the interest of justice. At any time within thirty [30] days after the board gives notice of its determination, an appeal may be taken by filing a written notice with the board asking for such appeal and designating the court to which such appeal is being taken, together with the filing of a complaint in said court, a copy of which shall be served upon the attorney-general as provided by the Acts of 1945, chapter 3, section 1 [§49-1937], as amended; no such appeal shall be deemed to have been commenced unless the service of such complaint upon the attorney general, as therein provided, is made within thirty [30] days after the board gives notice of its determination as provided herein. Upon such appeal being requested, the secretary of the board shall make out and certify to a complete transcript of the proceedings, not including the evidence, had with respect to the property of the person so appealing, and transmit the same to the clerk of the designated court. Such appeal shall be tried by the court without the intervention of a jury, and the.trial *52shall be governed by the laws governing civil actions. All appeals under this section shall be advanced on the docket of the court and shall be entitled to precedence in the consideration of the court. . .
IC 1971, 6-1-31-4, supra, states that to appeal the State Tax Board’s final order, the taxpayers must have:
(1) filed a written notice with the tax board
(a) asking for an appeal;
(b) designating the court to which the appeal would be taken;
(2) File a complaint in the Starke Circuit Court
(3) Send a copy of the complaint to the attorney general, and
(4) Serve the complaint on the attorney general and the notice of appeal on the State Tax Board within 30 days of the State Tax Board’s notice of its final determination.

The record shows that the final order of the State Tax Board was filed on May 14, 1970. The complaint was filed by the taxpayers in the Starke Circuit Court on June 8, 1970. As to the rest of the requirements listed above, the record is silent. Coupled with this lack of information is a stipulation by the parties that:

“14. It is stipulated that all steps necessary to be taken by the named plaintiffs to perfect an appeal from the order of May 14, 1970, were duly and timely taken by said plaintiffs and the court has jurisdiction of this appeal.”

Parties cannot confer jurisdiction over the subject matter by consent;3 however, where the record does not disclose the lack of jurisdiction, we cannot presume that it was absent. If we indulge in any presumptions, they must be in favor of the trial court’s action. In all cases appealed to this Court, there is a presumption that the trial court correctly decided the questions presented. It is incum*53bent upon the appellant to rebut this presumption. Kuykendall v. County Comm’rs. Of Marion County (1968), 142 Ind. App. 363, 364, 234 N.E.2d 860; see also, Shoemaker v. South Bend Spark Arrester Co. (1893), 135 Ind. 471, 35 N.E. 280; Town of Eaton v. Rickert (1968), 251 Ind. 219, 240 N.E.2d 821; First State Bank of Valparaiso v. Crumpacker (1950), 120 Ind. App. 317, 90 N.E.2d 912.

The State Tax Board has failed to demonstrate that the Porter Superior Court did not have subject matter jurisdiction; therefore, the motion to vacate the judgment of the Porter Superior Court for lack of subject matter jurisdiction should be overruled.

ISSUE TWO:

May the State Tax Board base its decision on evidence obtained in the absence of and without the knowledge of the taxpayers and without giving the taxpayers an opportunity to meet or rebut such evidence?

Normally, when we review the granting of a motion for summary judgment, our endeavors are directed toward ascertaining the existence of a genuine issue of fact. However, in this case due to an “appeal stipulation” the only question presented is a question of law. The State Tax Board and the taxpayers have entered this stipulation:

“The order of State Board of Tax Commissioners entered on May 14,1970, in the proceedings concerning reassessment of real estate in Starke County, Indiana, in which the appellees were objectors and petitioners, was based, in part, upon evidence not presented at the hearing held on April 13, 1970, and such evidence was received by the State Board in the absence of the said objectors and petitioners, without their knowledge and without their having an opportunity to cross examine the party or parties submitting such evidence or meet or rebut such evidence.”

The only justification that the State Tax Board has advanced for considering ex parte evidence is their interpretation of IC 1971, 6-1-38-6; Ind. Ann. Stat. §64-1607 (Burns 1961) which reads as follows:

*54“Hearing officers — Procedure.—When, under the provisions of any statute, the state board of tax commissioners is required to conduct a hearing, a member or members of such board need not be present or preside at such hearing, but the board shall have the power to appoint, by an order in writing, hearing officers to so preside, whose duties shall be prescribed in such order. In the discharge of their duties, such hearing officers shall have all the powers granted to the board to investigate and to require evidence. The board may conduct any number of hearings contemporaneously through different hearing officers. At the conclusion of the hearing, the hearing officer shall make a written report thereof. After receipt of such report the board may take further evidence or hold further hearings. The decisions of the board shall be based upon such report, additional evidence, and records as the board deems pertinent.”

In is the State Tax Board’s contention that the last line of the above statute which allows the Board to base its decision on additional evidence and records is statutory justification for their actions.

Providing a party the opportunity to meet and rebut adverse evidence or the opportunity to cross-examine adverse witnesses has been held by the Supreme Court of the United States to be one of the minimum requirements of due process in an administrative hearing. Goldberg v. Kelly (1970), 397 U.S. 254. It is also the view held in Indiana. Doran v. Board of Education of Western Boone Co. Com. Sch. (1972), 152 Ind. App. 250, 283 N.E.2d 385; Public Service Comm. v. Indiana Bell Telephone Co. (1955), 235 Ind. 1, 130 N.E.2d 467; see also 18 A. L. R. 2d 552. Indiana follows the rule that a final administrative decision is a denial of due process when it considers evidence received outside the presence of a party who is without notice of its consideration and who is not afforded an opportunity to rebut the evidence.4

*55We can only conclude in the light of the stipulation and case authorities cited above that an unconstitutional practice would be adopted if we were to accept the State Tax Board’s construction of IC 1971, 6-1-38-6, supra, We find no error.

The judgment of the trial court should be and the same hereby is affirmed.

Sharp, J., concurs; Hoffman, C.J., dissents with opinion.

. - The statutory remedy alluded to by the State Tax Board is IC 1971, 6-1-31-4; Ind. Ann. Stat. § 64-1004 (Burns 1972 Supp.).

. The statutory provisions relating to equalization orders by the State Tax Board are found in IC 1971, 6-1-29-1, Ind. Ann. Stat. § 64-831- — ■ IC 1971, 6-1-29-7; Ind. Ann. Stat. § 64-836 (Burns 1972 Supp.).

. It is the law in this State that subject matter jurisdiction cannot be conferred upon the court by the consent of the parties. Cooper v. Board of Review of Grant County, supra. See also 1 Ind. Prac. Rules of Civil Procedure, Harvey at 604.

. We are not here deciding that an administrative agency may never consider evidence not made a part of the formal or informal hearing. Examples of instances where such considerations were held proper can be found in 18 A.L.R. 2d 552. We hold only that if the agency does consider ex parte evidence, that it make such evidence known and available to such parties and allow them the opportunity to meet and rebut *55the ex parte evidence. Goldberg v. Kelly, supra; Morrissey v. Brewer (1972), 408 U.S. 471, 92 S. Ct. 2593, 33 L. Ed. 2d 484 and Doran v. Board of Education of Western Boone Co. Com. Sch., supra.