Appeal from order of Court of Common Pleas of Allegheny County, April T., 1960 B, No. 2258, in case of The Deitch Company v. Board of Property Assessment, Appeals and Review of Allegheny County.
David L. Cohen, with him Alexander Cooper, and Cooper, Goodman & Schwartz, for appellant.
James Victor Voss, Assistant County Solicitor, with him Francis A. Barry, First Assistant County Solicitor, and Maurice Louik, County Solicitor, for appellee.
Bell, C. J., Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Roberts. Dissenting Opinion by Mr. Chief Justice Bell. Mr. Justice Musmanno joins in this Dissenting Opinion.
The Deitch Company owned property in the Borough of Sharpsburg, Allegheny County, which was assessed by the Board of Property Assessment, Appeals and Review, at $185,420 for the triennium beginning in the year 1959. This assessment consisted of a land valuation in the amount of $108,680 and a building and machinery valuation in the amount of $76,740. The initial assessment was higher, but an appeal to the Board resulted in reduction of the land valuation.
The appellant-owner sought further relief in an appeal to the Court of Common Pleas of Allegheny County. By stipulation of counsel, the only issue tried before that court was the valuation of the land. Appellant
contended that the assessment exceeded the fair market value of the land and that it did not comply with the requirements of uniformity imposed by law. The Board offered into evidence a certified transcript of the assessment of the property involved. Appellant then called a real estate expert who testified that the fair market value of the land was $20,200, and who further testified concerning the fair market values of several other properties. In arriving at these valuations, the expert witness indicated that he considered, among other things, sale and holding prices in the area, physical factors, location, and access to and from the properties involved. He also testified as to the assessed valuations of each of the properties and constructed ratios based on a comparison of assessed values to market values. The ratios so constructed ranged from 46% to 72% of market value.*fn1
In rebuttal, the Board offered the testimony of one of its assessors, not as an expert witness, but for the sole purpose of showing who made the assessment and what factors were considered. The assessor testified that after considering use, location, topography, a few sales in the vicinity, and comparable assessments, he recommended a land assessment of $124,400 which the Board reduced to $108,680.
The court below dismissed the appeal on two grounds: first, that appellant, with the consent of appellee, did not attack the complete assessment as required by North Park Village, Inc. v. Bd. of Property Assessments, 408 Pa. 433, 184 A.2d 253 (1962), and secondly, that the evidence presented by appellant had fallen short of the evidence required to meet its burden of proof. The court's opinion concerning the latter
point is somewhat unclear but appears to indicate that, in its view, the taxpayer must produce testimony with respect to comparable properties in order to construct a ratio of assessed value to market value. The opinion further appears to define comparable properties as properties which are similar properties of the same nature in the neighborhood of the taxpayer's property.
The trial of this case in conformity with the understanding of counsel for both parties and of the court that only the assessment on land was being attacked was improper. The parties may not, by stipulation or otherwise, circumvent our holding in North Park Village. Although the lower court in its opinion correctly recognized the rule established by that decision, it incorrectly allowed itself to be governed by the stipulation rather than the rule. The limits of such a stipulation in assessment cases is discussed in Pittsburgh Miracle Mile Town & Country Shopping Center, Inc. v. Bd. of Property Assessment, 417 Pa. 243, 209 A.2d 394 (1965).
Furthermore, the apparent misconception of the court below with respect to the relevance of comparability in the determination of an equalization ratio is shared by other courts and boards of assessment. We therefore feel compelled to clarify the guidelines which are applicable in assessment cases.
Under the Act of May 22, 1933, P. L. 853, § 402, as amended, 72 P.S. § 5020-402, real estate in Allegheny County is to be assessed at its actual value. The term actual value means the market value and market value has been defined as a price which a purchaser, willing but not obliged to buy, would pay an owner willing, but not obliged to sell, taking into consideration all uses to which the property is adapted and might in reason be applied. Buhl Foundation v. Bd. of Property Assessment, 407 Pa. 567, 570, 180 A.2d 900, 902
(1962). However, we, too, recognize what the Legislature has recognized -- that, as a practical matter, in Allegheny County, as in many other counties, real estate is frequently assessed at a percentage which is less than market value. Thus, the Act just cited further provides that the assessors should accomplish equalization of the subject property in accordance with other assessments in the taxing district. And more importantly, Article IX, § 1, of the Constitution of Pennsylvania provides that all taxes must be uniform on the same class of subjects within the territorial limits of the authority levying the tax.
In Brooks Bldg. Tax Assessment Case, 391 Pa. 94, 137 A.2d 273 (1958), the taxpayer produced evidence that several properties were assessed at ratios ranging from 40.2% to 57.2% while his property was assessed at 91%. The lower court in that case denied relief on the ground that the taxpayer had not proved that there was a fixed percentage of full value that had been applied to the great majority of the properties in the taxing district. In reversing that ruling, this Court concluded that "if an assessor, without actual fraud, negligently, foolishly, or capriciously assessed some properties at 10% of actual value, other similar properties at 20%, other similar properties at 50%, others at 75% and plaintiff's at 90%, it would be unjust and ridiculous to hold that since there was no fixed ratio of assessed value generally throughout the district, plaintiff failed to prove a lack or violation of uniformity, which the Constitution requires." Id. at 98, 137 A.2d at 275. In arriving at that conclusion, we construed the uniformity provision of the Constitution of Pennsylvania to require that taxes "must be applied with uniformity upon similar kinds of business or property and with substantial equality of the tax burden to all members of the same class . . . ." Id. at 99, 137 A.2d at 275. We therefore held that the taxpayer
had met its burden of proof by producing evidence of the market value of its property and of similar properties of the same nature in the neighborhood and by proving the assessments of each of those properties and the ratio of assessed value to actual or market value. We remanded the case to the lower court for further proceedings without reaching the question of the amount of relief to which the taxpayer was entitled or the method by which any reduction should be computed.*fn2
In Rick Appeal, 402 Pa. 209, 167 A.2d 261 (1961), we made it clear that a taxpayer is not entitled to have his assessment reduced to the lowest ratio of assessed value to market value to which he could point in the taxing district if such lowest ratio does not reflect the common assessment level which prevails in the district as a whole. Although in Rick the taxpayer showed that his property had been assessed at 67.2% of its full value, while 76 newly-constructed houses were assessed at only 35%, we denied relief. The rationale underlying our decision was that a property owner is not entitled to have a property assessed at a rate comparable to what has been done in the instances of a few properties out of a total of more than 30,000 properties, where the evidence shows that the under-assessments are not representative of the district as a whole, and that the taxpayer has, in fact, not been assessed at more than the common level in the district. See Notes, "Inequality in Property Tax Assessments: New Cures For an Old Ill," 75 Harv. L. Rev. 1374, 1384-85 (1962).
From these previous decisions there emerges the principle that a taxpayer should pay no more or no less than his proportionate share of the cost of government. Implementation of this principle would require that an owner's assessment be reduced so as to conform with the common level of assessment in the taxing district. In Siegal v. City of Newark, 38 N.J. 57, 183 A.2d 21 (1962), the Supreme Court of New Jersey reached the same conclusion: "Hence, as to assessments made, the injured taxpayer is remitted to a different remedy, to wit, a reduction of his assessment to the 'common level' of assessments in the taxing district. The thesis is that the taxpayer is injured by so much of the tax bill as exceeds his pro rata share of the burden of local government. True, there may remain some residual harm in that the dollar value of the reduction may be recaptured in another year from all properties including that of the successful appellant. But perfect relief is inherently impossible. If the taxpayer pays no more than his fair share for the year in question, practical justice is achieved. Surely, if the taxpayer who appeals is permitted to pay less than his fair share, the injustice to those who were overassessed but did not complain would be compounded. Hence, we held in Kents that an excessive assessment should be reduced to what it would have been if all taxable real property had been assessed equally." Id. at 61, 183 A.2d at 23.
Of course, the question arises as to the definition of the term "common level". Where the evidence shows that the assessors have applied a fixed ratio of assessed to market value throughout the taxing district, then that ratio would constitute the common level. However, where the evidence indicates that no such fixed ratio has been applied, and that ratios vary widely in the district, the average of such ratios may be considered the "common level". Siegal v. City of Page 221} Newark, supra, at 64, 183 A.2d at 24.*fn3 Furthermore, it may be that the evidence will show some percentage of assessed to ...