Appeal No. 183, March T., 1952, from order of Court of Common Pleas of Erie County, Feb. T., 1950, No. 354, in case of Hammermill Paper Company v. City of Erie. Order reversed; reargument refused December 5, 1952.
Gerald J. Weber, City Solicitor, with him Maurice J. Coughlin, Assistant City Solicitor, for appellant.
Mortimer E. Graham, with him Gifford, Graham, MacDonald & Illig, for appellee.
Before Stearne, Jones, Bell, Chidsey and Musmanno, JJ.
OPINION BY MR. JUSTICE BELL
There are three major questions involved in this appeal: (1) Did the City Assessor in fact make an assessment; (2) Was the assessment valid and constitutional;
(3) Was the plaintiff upon the facts disclosed by the record entitled to relief.
The Real Estate assessor of the City of Erie, who was duly elected by the City Council, made in 1948 a triennial assessment of each piece or parcel of real estate in the City of Erie, omitting therefrom any valuation of industrial machinery. In United Laundries v. Board of Property Assessment, 359 Pa. 195, 58 A.2d 833, this Court decided that industrial machinery and equipment, indispensable for carrying on that particular industrial business, became a fixture and as such a part of the real estate, and hence should be included in the assessment of real property of which it was a part. As a result of that decision, it was apparent that a new assessment should be made.
The City Council of Erie, spurred by an action of mandamus, directed the City Assessor to assess the industrial machinery of all industries in Erie as part of the real estate. Under The Third Class City Law,*fn1 the only (relevant) qualification necessary for a tax assessor in third class cities is a residency in the city for the five previous years and ownership of real estate therein having a value of at least $500. The City Council, realizing that the City Assessor had little if any knowledge of the value of industrial machinery, entered into a contract with Cole-Layer-Trumble Co., a firm of out-of-state industrial appraisers to assist the City Assessor in appraising the machinery of certain plants for taxation purposes. From the fact that the City paid the appraisal company $58,000 to appraise the industrial machinery in 109 large industrial plants, it is apparent that such an appraisal required considerable knowledge and experience and a specialized ability
in that particular field. This contract also provided, inter alia, that the City Assessor should retain and perform his duties as Assessor.
The City Assessor aided by the appraisal of Cole-Layer-Trumble Co., made an interim assessment in 1950 under the authority of The Third Class City Law which in § 2506(a) gives an assessor in interim years the power to correct any errors of law, fact or judgment which may have been made in making the triennial assessment. The interim assessments were affirmed by the Board of Revision of Taxes. From the Order of the court below striking off this interim assessment and reinstating the triennial assessment of 1948, the City of Erie took this appeal.
The record in this case is both confused and confusing but we believe the following constitutes an accurate summary of the facts. Assessments of real estate, including land and improvements but not industrial machinery, made in 1948, for the triennial period (1949, 1950, 1951) were based upon 1933 actual market values. What the Assessor should have done was to ascertain and fix the market value of each property as of 1950 and not as of 1933; and then if he so desired, reduce that value in every instance by a certain fixed uniform percentage or ratio. This reduction of the market value of each property by a certain and uniform percentage is a method often employed, although a strict compliance with the Statute would be to assess the property at its then existing actual market value, after which the proper authorities could, if they so desired, reduce the tax rate.
In making the interim assessment of those properties which consisted of land and an industrial plant with industrial machinery (therein), taxable under the assembled industrial plant doctrine, the Assessor adopted, so far as large industrial plants were concerned,
the appraisals of industrial machinery made by (Cole-Layer-Trumble Co.) the appraisal company, believing as he had a right to do, that the appraisals by these disinterested specialists were fair, just and uniform. The City Assessor had visited appellee's plant on several occasions and had consulted with Cole-Layer-Trumble Co.'s appraisers frequently during their appraisal of appellee's property, but had little if any personal knowledge of the value of industrial machinery or of the method or system used by the appraisal company to arrive at its final valuation. The appraisal company used replacement cost of machinery less depreciation to determine the actual or market value of the machinery in 1950. In this case, since the 1933 values were used for land, it would seem appropriate to use 1933 value for industrial machinery. However, (almost all of) the industrial machinery of this appellee, and of most plants in Erie, was admittedly not in existence in 1933; consequently the appraisal company selected 1941 which was generally considered a normal year. The Assessor then adopted as his valuation in each industrial plant the value of the industrial machinery found by the appraisal company which, as we have seen, was the replacement cost of such machinery in 1941, less depreciation.
The interim assessment of appellee's property in 1950 included $2,516,280.00 for industrial machinery; this amount was added by the Assessor to the 1933 market value of this property (including land and improvements); the Assessor then found the 1950 market value of the property as a whole to be the sum total of these separate items or appraisals. Appellee, the owner of the property, made no effort to prove the market value of its land or buildings or of its industrial ...