Vermejo Club v. French , 43 N.M. 45 ( 1938 )

The question for decision in this case is whether the state is bound the same as the taxpayer by the classification and valuation of real estate duly fixed and determined by the taxing authorities from which no appeal is taken.

The Vermejo Club, appellant, is the owner of 176,984 acres of land in school district No. 20, Colfax County, which it returned in the year 1934 without mentioning the fact that there was growing timber thereon or listing in its tax schedule any part thereof as timber land. The taxing authorities followed appellant's tax schedule in classifying and valuing said land. It was so assessed for the years 1934, 1935 and 1936, but for the year 1937 the assessor added "timber, $75,000." Appeals were duly taken by appellant from the action of the assessor and from the order of the Board of County Commissioners, sitting as a board of equalization, which affirmed the act of the assessor. The State Tax Commission, after considering the appeal of the Vermejo Club, on June 25, 1937 ordered the assessor to reclassify enough acreage of appellant's land in school district No. 20 to make a total increase in value of $75,000; and dismissed the appeal of appellant; whereupon appellant brought this suit praying that the assessor be restrained from carrying out the order of the State Tax Commission.

Paragraphs 9 and 10 of appellant's complaint state:

"9. That the attempted additional assessments against plaintiff's property for the years 1937 are illegal, void and contrary to Chapter 86 of the 1933 Session Laws of the State of New Mexico as it is an attempt to change values, within four years, which values were finally fixed by the assessment of 1934, and unless restrained by the court defendant as Assessor of said Colfax County will imperil plaintiff's lands and property with an illegal assessment and with the extension of taxes thereon.

"10. That plaintiff has no speedy and adequate remedy at law."

The return to the order to show cause and answer to the complaint admits the allegations of the fact set out above and that the assessor intends to carry out the order of the State Tax Commission. Paragraphs 5, 6, 7 and 8 of said return state:

"Denies each and every allegation contained in paragraph 9 of plaintiff's complaint.

"And further answering said complaint and as a further return to the said order to show cause alleges and shows to the Court that as defendant is informed and believes, there is in excess of one hundred million board feet of merchantable timber now growing upon the lands of the plaintiff herein; that said timber, or a portion thereof, has been sold to one W.E. Burke, and that said Burke is now engaged in cutting and removing said timber; that said lands belonging to the plaintiff upon which said timber is growing were not classified as timber lands for the year 1934 through error of the Tax Assessor of Colfax County; that the reclassification ordered by the State Tax Commission and the Additional assessment placed upon plaintiff's property by this defendant represents the actual value of the property of the plaintiff.

"That plaintiff appealed from the additional assessment for the year 1937 to the Board of County Commissioners of Colfax County sitting as a board of equalization, and further appealed from the board of equalization to the State Tax Commission; that said appeal was prosecuted in accordance with the provisions of Chapter 86 of the Session Laws of the State of New Mexico for the year 1933; that the order of said Tax Commission rendered upon said appeal is final and binding upon this plaintiff; that the questions sought to be raised by said complaint are now res judicata.

"And making further return to the order to show cause herein defendant shows to the Court that said Chapter 86 of the 1933 Session Laws of the State of New Mexico, in so far as the same purports to prevent the reclassification ordered by the State Tax Commission contravenes Section 3 Article 8 of the Constitution of the State of New Mexico is unconstitutional and void in that the said Chapter 86 of the 1933 Session Laws would exempt from taxation for the years 1935, 1936 and 1937 the property of the plaintiff not specifically exempted in the Constitution of the State of New Mexico."

The district court heard the matter, discharged the order to show cause and dismissed the complaint. This appeal follows.

The allegation of paragraph 10 of the complaint that the plaintiff has no speedy and adequate remedy at law was not denied and apparently counsel desired and obtained a ruling on the constitutional question raised and the construction of the statutes involving the right of the State Tax Commission to set aside, years later, a classification and valuation of land duly fixed, and order a reassessment on a different valuation.

Section 1 of Article 8 of the New Mexico Constitution was amended under Joint Resolution No. 10 of the Legislature of 1913, see Laws 1913, p. 170, but the provision as to equality and uniformity was not materially changed. It now reads as follows: "Taxes levied upon tangible property shall be in proportion to the value thereof, and taxes shall be equal and uniform upon subjects of taxation of the same class."

The first six sections of Ch. 86, Laws 1933, are as follows:

"Section 1. Hereafter all real property subject to assessment and valuation by the assessors of the different counties, including grazing lands, the value of which is fixed by the State Tax Commission, shall be appraised and valued for purposes of taxation once every four years, the first of such valuations to be in the year 1934, the next in the year 1938, and thereafter each four years.

"Sec. 2. All such property shall be assessed and valued at actual market value in the manner and by the authority as now provided by law, except that the value of all such property as finally fixed in the year 1934, and each succeeding fourth year thereafter shall be final and binding on all taxing authorities and all owners of such property for four successive tax years, except as to right of appeal. Actual market value of property is hereby determined and fixed to be that price or worth represented by the amount of money, or its equivalent, which would be received therefor at a normal sale in or at a normal market.

"Sec. 3. Each of the three years following any years in which its value is fixed, the assessor shall add to the value of all real property the actual value of any or all improvements which may be placed thereon during the preceding year, and shall deduct from such value the value of all improvements which may have been destroyed or removed during the preceding year.

"Sec. 4. Whenever any real property is patented or in any other manner becomes subject to taxation, the same shall be added to the roll for the next year following date of patent and its value fixed and determined in the same manner as other real property, which value when so fixed shall be final and binding on all taxing authorities and all owners of such property until the next year in which general real property values are fixed.

"Sec. 5. Whenever any real property is found to have been omitted from the tax roll of any year in which real property values were fixed, its value shall be fixed and determined and such value, when so fixed, shall be final and binding on all taxing authorities and all owners of such property until the next year in which general real property values are fixed; and such omitted property so valued shall be listed for the number of years omitted and in the manner as provided by law.

"Sec. 6. In fixing the value of real property under the provisions of this Act all taxing authorities shall fix the same as near as may be at the actual market value for the period for which such value is fixed."

The first part of Sec. 1 of Ch. 104, Laws 1933, reads as follows: "The Board of County Commissioners of each County shall constitute a Board of Equalization for the revision, re-valuation, correction and completion of the assessment rolls. It shall, at its meeting on the first Monday in April, have power to supply omissions in the assessment roll, revise and re-value property, and for the purpose of equalizing the same, may increase, diminish or otherwise alter and correct any assessment or valuation, except where such valuation is fixed by Law or by the State Tax Commission. * * *"

An administrative body has such authority and only such authority as is given by law. Courts of equity alone can set aside judgments for fraud in procuring them. The administrative body was given no authority to set aside its own judgment, but on the other hand, was prohibited from doing so.

"A reviewing board or officer is not empowered to increase valuations for assessment unless authorized to do so by statute." 61 C.J., Taxation, sec. 1022.

"In the absence of statutory provisions conferring the power of reassessment on boards or officers, they have no such power, and any attempt at reassessment is unauthorized and void." 61 C.J., Taxation, sec. 1024.

"Changes of periodical general assessment during continuance of period. In a number of jurisdictions there are statutes providing for a periodical general assessment of property and further providing that the valuations then placed on property shall, to a certain extent, be taken as the valuation for assessment purposes until the next periodical assessment, save as certain described changes in the condition of the property shall authorize a change of the valuations; and, where there are such statutes, the existence and extent of power in the reviewing boards to alter valuations between the times when periodical assessments are made depend on the terms of the statutes. Similarly, where by statute a particular assessment is approved and the valuation thereby adopted is declared to be the basis of assessment for a certain number of years, except for subsequent changes according to law, it has been held that a reviewing board cannot alter the valuation of property as fixed by such assessment during the period for which the assessment was approved. * * *

"Effect of invalid alteration. If a board or officer attempts to alter a valuation but the change made is invalid, the valuation placed on the property before the attempted change remains the one at which the property is to be assessed. * * *" 61 C.J., Taxation, sec. 1021.

It is said that Ch. 86 quoted above was taken from the Laws of Illinois. In Crozer v. People, 206 Ill. 464, 69 N.E. 489, where the facts were similar to those in the case at bar, it was held that the taxing officials were without authority to reassess and raise the valuation for the years intervening the quadrennial assessment years. The Illinois Act was later amended. Smith-Hurd Stats.Ill. c. 120, § 280 et seq. See People ex rel. Gill v. Jastromb, 367 Ill. 348, 11 N.E.2d 368. No doubt our legislature will amend Ch. 86, but it is not for the judiciary to legislate. Our Act confers power on assessors to appraise and value for tax purposes once every four years the real property of their respective counties, beginning with 1934, and such assessed valuations "shall be final and binding on all taxing authorities and all owners of such property for four successive tax years, except as to right of appeal." Section 2, Ch. 104, quoted above was enacted at the same session of the legislature and must be construed as a part of Ch. 86, as they are of the same subject-matter and are to be construed in pari materia. "All the enactments of the same legislature on the same general subject matter are to be regarded as parts of one uniform system. Later statutes are construed as supplementary or complimentary to the earlier enactments." Black on Interpretation of Laws (2d Ed.), sec. 104.

Ch. 104 confers power on the county equalization board to revise and revalue property "except where such valuation is fixed by Law or by the State Tax Commission." Sec. 1 of Ch. 86, Laws 1933, fixes the values of real estate subsequent to the year in which the value of all real estate is fixed each fourth year. And it is so fixed that it cannot be changed by any taxing authority. Construing the two acts together, Ch. 104 confers no power or authority on taxing officials to alter for intervening years the valuation of real estate fixed for the four year period. It is thus fixed by law.

The question is important since the language in Sec. 2 of Ch. 86 is as strong in its restraint of taxing authorities and as to the binding effect of a valuation finally fixed as any law enacted since statehood. And if this judgment is sustained, thousands of other tracts of land may be reassessed as omitted property for many past years. See Southern Pac. R. Co. v. State,34 N.M. 479, 284 P. 117; Oden Buick, Inc., v. Roehl et al.,36 N.M. 293, 13 P.2d 1093; 61 C.J., p. 761.

A different legislative policy prevails in some of the older states to that which has been consistently followed in this jurisdiction. It is forcefully stated by the Supreme Court of Minnesota in State v. Weyerhauser, 72 Minn. 519, 75 N.W. 718, that "* * * There is no distinction in principle between a case where land has wholly escaped taxation by reason of its omission from the assessment roll and one where, by reason of a fraudulent or grossly inadequate assessment, it has escaped a part of its just share of the public burdens." [page 719.]

And in Re Taxes for Itasca County, State v. Weyerhauser et al.,68 Minn. 353, 71 N.W. 265, the same court said as follows [page 268]: "It is true that most of the decisions upon this question of reassessing property omitted from assessment and taxation relate to cases where the omission has been entire, and not partial, as in the case at bar; but such property which was grossly undervalued comes within the same reason for reassessing the same as though they had been entirely omitted. The constitution requires that taxes to be raised in this state shall be as nearly equal as may be, shall have a cash valuation, and be equalized and uniform throughout the state. The true intent of the law is that each dollar's worth of property shall bear its just proportion of the public burdens, and when such property has escaped assessment to such an extent as to be deemed gross undervaluation, it has been omitted from the just requirements of the law. It is the value of the property, as well as the description of the property which has been omitted from assessment and taxation. * * *"

Different views were expressed in Delta Land Timber Co. v. Police Jury et al., 169 La. 537, 125 So. 585 and Miller v. Copeland's Estate, 139 Miss. 788, 104 So. 176.

In State v. Jemez Land Co., 30 N.M. 24, 226 P. 890, after holding that growing timber was part of the realty, we said: "Following the action of the county assessor and board of equalization, appellee found its property, consisting of 110,308 acres of land, on the tax rolls for 1919 classified as 90,308 acres of grazing land, valued at $1.25 an acre, and 20,000 acres of timber land, valued at $12.50 an acre. Thereupon appellee appealed to the state tax commission from the valuation of said timber lands as excessive, but did not appeal from the classification or valuation of the grazing lands. Notwithstanding there was no appeal except as to the valuation of the timber land, the state tax commission ordered the whole 110,308 acres to be valued and assessed at $1.50 per acre, and added thereto the valuation of 400,000,000 feet of stumpage at 40 cents a thousand feet. Appellee refused to pay the taxes so assessed, and, upon suit being brought for the recovery thereof under the provisions of chapter 133, Session Laws of 1921, defended on the ground that the tax commission was without jurisdiction to increase the valuation of the 90,308 acres of grazing land, as to which no appeal had been taken, and was without jurisdiction to levy an assessment on said 400,000,000 feet of stumpage, apart from the land, and that, if it should be mistaken as to the jurisdictional defenses, the action of the state tax commission resulted in an excessive valuation of its property and constituted a discrimination against the appellee. By its answer appellee alleged its readiness and willingness to pay taxes on said real estate at such reasonable value as the court might fix, and contended for a valuation of $1.25 an acre on the grazing land and $4 an acre on the timber land. The state demurred on the ground that the allegations of the answer were insufficient in law to authorize the granting of the relief asked for. The demurrer was overruled, and thereupon the state replied, denying generally the new matter in the answer. The court heard evidence and concluded, as a matter of law, that the state tax commission had no power to ignore the appeal as to such 20,000 acres of timber land, and had no power, without appeal as to the 90,308 acres, to make a different classification or assessment, or pass on questions not brought up by appeal, and was without jurisdiction to assess the whole of the land separately at $1.50 an acre, and to assess separately the timber growing thereon. * * *" and that "Had the state desired a review of such other valuations, the statute gave the same right of appeal to the taxing officers as was given to the taxpayer. It follows that the order of the state tax commission increasing the valuation of 90,308 acres of grazing land from $1.25 an acre to $1.50 an acre was void as having been made without jurisdiction, and could not be enforced. The valuation of $1.25, as previously fixed, should stand, and the court was correct in so holding. * * *"

The court also held "that the standing timber was a part of the realty for the purpose of taxation, and its value an element to be considered in ascertaining the true value of the land." and on rehearing the court said: "On motion for rehearing the appellee challenges the correctness of that construction and, after hearing argument, and, further considering the facts as disclosed by the record, we are agreed that we were in error in our first conclusion, and that what the tax commission attempted to do was to revalue the entire acreage, including the 90,308, as well as the 20,000 acres, and to make a separate valuation of 400,000,000 feet of growing timber without definitely locating that timber on the 20,000 acres. While the 20,000 acres constituted a part of the 110,308 acres which the commission undertook to value, we have no means of knowing what part of that value should be assigned to the former. But that was the only subject-matter before the commission for valuation. The order of the commission, then, by direction of which the tax roll was amended, and by which the commission undertook to dispose of the appeal, deals wholly with a subject-matter not involved in the appeal, and the commission was without jurisdiction to make it. Since such order was made without jurisdiction, it is void, and did not and does not dispose of the appeal which was pending before the tax commission, and the appeal, being undisposed of, is still there pending. The result is that the valuation of $1.25 an acre on the 90,308 acres of grazing land stands for the reasons stated in our original opinion."

The court held that although a part of the 400,000,000 feet of timber might be on the 90,308 acres, that tract which had been listed as grazing land could not be reclassified and revalued, because the State Tax Commission was without jurisdiction — the state having failed to exercise its right to appeal. We find the same situation in this case. The "item" of land was appraised and valued and no appeal taken therefrom.

Appellee alleges that it was due to "error of assessor of Colfax County". It seems clear that throughout the history of the state the responsibility for the proper classification and valuation of real estate has been upon the taxing officials, although all our taxation statutes have provided penalties against property owners for failure to make returns of property for taxation, including the statutory penalty for perjury in the verification of tax schedules. The statutes quoted above are in conformity with Sec. 1 of Article 8 of our Constitution which has been considered by us many times, including the following cases: Scholle v. State Tax Commission, 42 N.M. 371, 78 P.2d 1116; In re Blatt, 41 N.M. 269, 67 P.2d 293, 110 A.L.R. 656; State ex rel. Atty. Gen. v. State Tax Commission, 40 N.M. 299, 58 P.2d 1204; First State Bank of Mountainair v. State Tax Commission, 40 N.M. 319, 59 P.2d 667; State ex rel. Taylor v. Mirabal, 33 N.M. 553,273 P. 928; First National Bank of Raton v. McBride, 20 N.M. 381,149 P. 353; South Spring Ranch Co. v. Board of Equalization,18 N.M. 531, 139 P. 159. In State ex rel. Taylor v. Mirabal, supra, 273 P. 932, after commenting upon "glaring inequalities" we quoted from Northwest Auto Co. v. Hurlburt, 104 Or. 398,207 P. 161, the following: "``There never was, and perhaps never will be, any system of taxation devised that will work even and exact justice in every instance. The best result that the law maker may hope to attain is such an approximation to uniformity as will work out justice in the great majority of cases.'"

Some of the cases listed above show "glaring inequalities" and flagrant violations of the constitutional provision, but we have not found that under any of our tax statutes they did not work out justice in the majority of the cases. In First State Bank of Mountainair v. State Tax Commission, supra, 59 P.2d 669, we said: "Taxation is a legislative function without any limitation except such as is imposed by constitutional provisions. The state tax commission is the administrative body which has been designated by the Legislature to secure uniformity throughout the state on property of certain classes, to act for the state in making certain assessments. The Legislature has taken from the local assessors the right to determine the valuation of certain property. For example, railroad, telegraph, telephone, and transmission or pipe line company property are assessed by the tax commission. Also shares of the capital stock of all banks, trust, and mortgage loan companies. Also mineral property; the shares of mutual building and loan associations and savings and loan associations. Comp.St. 1929 § 141-502. The Legislature also vested in the tax commission the power to determine and fix the actual valuations of the different classes of grazing lands and live stock. Comp.St. 1929 § 141-510."

In Re Blatt, supra, we held that while the court could vacate an illegal assessment it had no authority to revalue the property or assess taxes, that being the duty of the taxing authorities. It is apparent that the policy long followed by this court of interfering as little as possible with the taxing authorities is the proper one, and while inequalities have been brought to the court's attention it has not appeared that the State Tax Commission was not endeavoring to properly solve the extremely difficult problem of equalizing taxes. In the early case of First National Bank of Raton v. McBride, supra, the court was confronted with the realities. In the opinion rendered May 24, 1915, Mr. Justice Parker, speaking for the court, said: "The plaintiffs allege that, in pursuance of a notice by the county assessor that all property must be returned at 35 per cent. of its actual value, they returned their property at 35 per cent. of its actual value, while many other taxpayers of the county returned their property at a much less rate. * * * The proposition involved is one of much difficulty. When a taxpayer is required to return his property at its full cash value for taxation purposes, and where he has returned it or has been taxed upon it only 50 cents on the dollar, it is difficult to understand how he can appeal to a court of equity for relief simply because some other taxpayers have been more fortunate and have escaped in a greater degree the just taxation to which their property was subject. * * *" 149 P. 354.

It is matter of common knowledge that at that time the poorer counties were compelled to list property at a higher percentage of its value in order to raise sufficient revenue for the county government — there being a limitation on the county tax levy.

These were and still are problems for the legislative and executive branches of the government, and the intent of the legislature in enacting the statute quoted above relative to the reassessment of property for past years must be considered. If we should abandon the doctrine that the state is bound by the values as finally fixed where there is no appeal from an assessment, and adopt the doctrine of the Weyerhauser Cases quoted above, thousands of homesteads on which trees are growing which were assessed as grazing land would be subject to reclassification and reassessment for many past years. So would irrigated lands under government projects where the acreage listed on tax rolls for the past years was less than the water right claimed under the irrigation project. In fact all real estate "grossly undervalued" in past years would be subject to reassessment as omitted property, although taxes assessed had been paid. Government funds available as loans for building homes and other purposes on first liens would not be loaned in this state in many instances because our lands might be reassessed for past years and the state tax lien would be the first lien. The abstract of title showing taxes paid would no longer satisfy the lender or prospective purchaser. Whether the lands had been "grossly undervalued" during past years could not be ascertained from the records in most cases.

The assessor would have power under that interpretation of the statute in connection with the statute authorizing the assessment of omitted property which might be used for political purposes, as the power of taxing officials was used in some instances in territorial days resulting in what was familiarly known as the "assessment cinch".

A late work on economics, after commenting upon the various kinds of exchanges, including the enormous volume of business which centers around lands and buildings, says: "It almost becomes a truism, then, to say that the welfare of the whole society varies with and is determined by the volume of exchanges — that is, of business — that goes on within it. * *" Harry Scherman's The Promises Men Live By, p. 403.

We cannot credit the legislature with intending to bring such a calamity upon the people of the state as would follow from such a construction of the law.

The question of the right to injunctive relief presents a more difficult question. In Lougee v. Bureau of Revenue, 42 N.M. 115,76 P.2d 6, we held that we were reluctant to interfere with the collection of taxes by injunction and would not do so even though the tax was void except in special circumstances. In this case the taxes legally assessed have been paid. We are not restraining the collection of a tax, but the making of a void assessment — an act prohibited by statute.

"Where the statute prescribes specifically how an act shall be performed by a board, or prohibits its performance under certain conditions, an act in direct violation thereof is absolutely void." 46 C.J., Officers, p. 1034, § 296.

In Oden Buick, Inc., v. Roehl, supra, we referred to Cooley on Taxation (4th Ed.), § 1659, which follows: "Restraining assessment. An injunction against the assessment of a tax is to be distinguished from an injunction against the collection of a tax. Ordinarily an injunction will not be granted to restrain an assessment, especially in case of mere irregularities, or where there is a plain and adequate remedy at law by appeal, certiorari, or other proceedings; but the writ may be granted in some cases where the assessment is under an unconstitutional statute, or on unconstitutional principles, or the property to be assessed is exempt, or the assessment would for other reasons be clearly unwarranted. Likewise the writ will be granted where necessary to prevent a multiplicity of suits, or to prevent irreparable injury to complainant, or to prevent a cloud on the title, where there is no adequate remedy at law."

A method is not provided by statute whereby a taxpayer who is aggrieved by the action of the State Tax Commission can appeal to the court. In re Blatt, supra.

This in a sense is not an assessment or a mere irregularity, but an attempt at a reassessment or the increase of the valuation duly fixed in the face of the prohibitory statute. The result would be to cloud the title of appellant and if all other offenders of the same class were treated in the same way the result would be a multiplicity of suits.

It has been suggested in argument that the assessor of Colfax County with equal authority might announce that he proposed to list on the tax rolls the landowners referred to in the case of First National Bank of Raton v. McBride, supra, who escaped with the payment of 35 per cent. of the taxes justly due the state, for the additional or 65 per cent. still due for that year. Other assessors throughout the state might with equal authority list as omitted property all lands "grossly undervalued" in past years.

We are constrained to hold that under these circumstances the trial court should have granted the relief prayed for.

For the reasons stated the judgment will be reversed and the cause remanded for further proceedings in conformity herewith. It is so ordered.

BRICE and ZINN, JJ., concur.