In Guth Realty v Gingold (
The first above-captioned proceeding (860) actually encompassed 20 separate certiorari proceedings, covering the years
Although inequality can be shown, theoretically, only by establishing that the subject property has a higher rate of assessment than all other properties in the taxing district, the Legislature has, over the years, prescribed various procedures to shorten trials in inequality cases. Until 1969, the use of the selected parcel method was mandatory under subdivision 3 of section 720 of the Real Property Tax Law, with taxpayers having the additional option of introducing evidence of the State equalization rate and actual sales of real property. The sеlected-parcel method requires the parties to mutually agree upon a selection of "sample” parcels. Failing such agreement, the court is to select the parcels. Each side must then employ expert appraisers to determine the market value of such sample parcels, with the court being the final arbiter of such value. The rate of assessment or ratio would be found by dividing the aggregate sums of the assessed value of all sample parcels by the aggregate sums of their market value.
The State equalization rate has a varied history. Prior to 1949 the rate was of very limited use, since only small amounts of State aid were apportioned on the basis thereof, and local taxing and borrowing powers were based upon the assessed valuation of taxable real property. Moreover, since the State had no significant interest in equalization rates, little effort was expended upon their establishment. They were not scientifically developed; they were substantially out of date; and they did not even purport to reflect the ratio of assessed value tо market value within the tax district. Rather, aiming only for a just apportionment of taxes in joint taxing districts, the State equalization rate was intended to measure merely the value of taxable property within each district (People ex rel. Yaras v Kinnaw,
In 1949 the State Constitution was amended so as to relate local taxing and borrowing powers to the average full valuation of taxable real estate, which was defined as constituting the ratio of the assessed valuations of taxable real estate to the full valuations thereof for the last completed assessment roll and the four preceding rolls (art VIII, § 10). At the same time, the Legislature created a temporary commission, known as the State Board of Equalization and Assessment, with the power, inter alia, to review and revise State equalization rates. It was during that period that the practice of periodic statistical surveys was begun. In 1960 the SBEA was reconstituted as a permanant agency and, pursuant to article 12 of the Real Property Tax Law, it was required to sample the ratio of assessments to market values for eaсh major type of taxable real property at least once in every five years, and to ascertain, as nearly as it could, the percentage of full value at which taxable real property was assessed.
In 1961 the Legislature amended subdivision 3 of section 720 of the Real Property Tax Law to allow the parties in an inequality proceeding to introduce in evidence the State equalization rate established for the roll containing the assessment under review. In 1967 the Court of Appeals held that the amended statute did not eliminаte, but rather continued, the requirement that the parties employ the selected-parcel method of proving inequality; and that the State rate was entitled to "little weight” and could not, standing alone, sustain a claim of inequality (Matter of O’Brien v Assessor of Town of Mamaroneck,
In 1969 the Legislature again amended subdivision 3 of section 720 to overcome the holding in O’Brien. This time, it
As it refers specifically to the appellant’s amicus brief, we quote at length from the opinion in Guth, written by Judge Gabrielli for a unanimous cоurt, as follows (pp 449-451):
"Our chief concern is whether that analysis of the 1969 amendment is correct. We find that it is and that it provides a solution to a situation fraught with problems over the years. As we see in this case the selected parcel and actual sales methods not only create discouraging and enormous expense for the taxpayer, but promote the search by both sides for samples which are at the extreme ends of the spectrum—the same egregious problem we seem always to find in expert valuation testimony in condemnаtion cases. Utilization of the equalization rate which is objectively arrived at, and which today is expertly arrived at, would tend to greatly simplify and narrow the scope of these proceedings.
"Application of the equalization rate as the sole basis for ratio for the year 1970 is easily justified in this case. First, the intent of the 1969 amendment rather clearly was to overrule the holding in O’Brien. The memorandum in support of the measure submitted by the State Board of Equalization and Assessment (N.Y. Legis. Annual, 1969, p. 439) emphasizes that the equalization rates today refleсt more accurately the ratio of assessed value to full value than the ratio produced by either the actual sales of selected parcels methods. ' "This is so because the state rates are based upon larger appraisal samples than those presented to the court under present law. Also state rates are based upon samples of representative classes while the parcels in a parcels proceeding are not intended to be representative.” ’ (Ibid.)
"Second, the argument advanced in the Nassau County amicus brief that such a constructiоn would be unconstitutional because, as Judge Bergan pointed out in O’Brien, the*469 rate would be used against parties (among which could be Nassau County) who have no standing to challenge it when it is promulgated by the administrative agency, assumes too much. It assumes that the equalization rate would be automatically applied in all cases. Unless stipulated to, such would not be the case at all. The party who seeks to use the rate will be put to his proof that such use is justified in that case. So, in the instant case, petitioner produced Samuel J. Stein, Director of Research and Statistics for the State Board of Equalization and Assessment as a witness. He interpreted the computer printouts showing data making up the rate formulation, explained how it was collected and showed that it contained specifically to the taxing unit in issue. Nowhere does the city or Nassau County argue that this evidence, which was fully open to impeachment attempts, was not relevant or probative. And although they argue that the equalization rate is not established for this purpose, overlooked is the fact that the Legislature specifically made it applicable in 1961 and reinforced this applicability in 1969, and the additional fact that while the primary purpose of the State equalization rate may be to facilitate uniform State aid to localities, there is no discernible reason why it also may not be used in individual inequality cases. Of course, the taxing authority will always be entitled to show that the equalization ratio is inappropriate to the taxing unit, to the category of property involved and to the particular property or any othеr valid reason which would affect its relevancy or weight. The same questions then arise as would respecting any sort of proof; its weight and application are subject to judicial decision which can be reviewed on appeal.”
We come, accordingly, to the essential question in the 860 ratio appeal—the fair meaning and scope of the Guth decision. The ratio trial here consumed many months, cost the petitioners over $400,000 in expenses, fees and disbursements, and resulted in a 14-volume record on appeal, plus numerous cartons of exhibits. The trial was not merely a replay of the Guth trial but, in point of fact, an intensive and exacting examination of the SBEA’s methodology applied to Nassau County, despite the fact that the Guth decision predated this ratio trial by several months.
At the Special Term, the petitioners took the position that the County was in effect foreclosed by Guth from challenging the SBEA’s methodology, and that the attack on the adequacy
Guth proclaims that the State equalization rate is "objectively arrived at” and, today, "expertly arrived at” (p 450), and that its appliсation as the sole basis for ratio was easily justified in that case, relying, in part, upon the SBEA’s assertions that its methods more accurately produce the ratio of assessed value to full value than either the actual sales or selected-parcel method since, thereby, the rates are based upon larger and more representative appraisal samples. Those views, accordingly, preclude the County from attempting to establish, at bar, that the State rates are really subjectively and inexpertly arrived at and thаt, compared with other methods, the State rates constitute a less accurate reflection of the ratios obtaining in the County. We do not overlook the statement in Guth (p 451) that the taxing authority may always show that "the equalization ratio is inappropriate to the taxing unit, to the category of property involved and to the particular property or any other valid reason which would affect its relevancy or weight.” It is our view, however, after examining the record and briefs submitted to the Court of Appeals, that future retrials of the SBEA’s methodology were not envisioned, and that the invitation to the taxing unit to show inappropriateness is more limited than the language might, on its face, suggest.
The Guth record reveals that the Court of Appeals was aware of virtually every step in the SBEA’s methodology when it upheld the use of the State rates. The only argument in the briefs directed to inappropriateness was marshalled by Nassau County, appearing amicus curiae. Its argument was to the effect that Nassau would suffer far more damage than any other taxing district if the State ratio were applied to it, because this would result in unequal assessments between properties of equal full value. The premise of this argument— that it would result in an equalization rate for a political
It should also be borne in mind that the issue of appropriateness to the category of property involved is, in law, largely illusory. Although apparently honored only in the breach, the settled rule is that assessments must be made at a uniform rate or percentage of all market value for every type of property in the assessing unit (C.H.O.B. Assoc. v Board of Assessors of County of Nassau,
Although we deem virtually all of the proof on the SBEA’s methodology intrоduced by the County upon the 860 ratio trial to have been inadmissible under Guth, we have nevertheless reviewed the record in this respect. We have considered, inter alia, the SBEA’s 80%-class sampling rule, its appraisal and value interval stratification procedures, the two-thirds rule as respects review parcels, and the use of actual sales data and sales confirmation cards. We have also reviewed the
There are, concededly, elements of judgmental interference with a purely random selection process and, at least as respects Nassau County, a separate county-wide survey would be preferable to the combined unit surveys presently in use. The manner in which the SBEA adjusts for partially exempt property is not entirely satisfactory. Still, we can in no way agree with the County’s claim that the SBEA’s methodology is a wholly judgmental procedure which exerts a large downward bias on the equalization rate. In this respect, the County particularly ignores the fact that the so-called aggregate class ratios advanced by its expert to demonstrate that the State rate is inaccurate were not weighted in aсcordance with their percentage of assessed value of the roll. Even more importantly, any downward bias which does exist is greatly offset by the upward bias inherent in the SBEA’s use of aged surveys. In other words, in a time of increasing market values, as is true of the years here under review, the use of surveys made two to six years earlier than the date of the current roll will always give an equalization rate which is higher than that found by comparing current assessed and market values. In short, the County has not satisfied its burden of showing that the State rate’s statistical methodolоgy is not truly "sound, fair, representative and, in general, designed to produce an accurate result” (cf. Matter of Tenants’ Union of West Side v Beame,
We also note that the petitioners in 860 satisfied their limited burden under Guth by producing a witness, with a mathematical and statistical background, who testified to the general methodology employed in making up the County’s equalization rate after interviews with SBEA officials and
The last aspect of the County’s challenge to the use of the State equalization rates, and perhaps the only aspect truly related to "inappropriateness” rather than to methodology, relates to the peculiar standing of Nassau County in the eyes of the SBEA. In our view, a fair reading of the Real Property Tax Law indicates that the Legislature intended to render State rates admissible for counties аs well as for cities, towns and villages. Indeed, it is a provision in Nassau County’s own governing law, and not in the Real Property Tax Law, which has caused a problem. That problem is that the SBEA has refused to grant the County formal standing with respect to the statutorily mandated notice and hearing on tentative equalization rates. Clearly, under section 609 of the County Government Law of Nassau County, the powers and duties of the old town assessors have been transferred to the County Board of Assessors (L 1936, ch 879, as amd). Hence, the latter must have standing to represent the towns in hеarings before the SBEA on tentative equalization rates for those towns. Nevertheless, the SBEA’s erroneous denial of standing did not prevent the County from exercising its right to challenge the final State rates by way of an article 78 proceeding pursuant
We are further of the opinion that, in the unlikely event an individual assessing unit suffers unique prejudice because of some peculiarity of the SBEA’s methodology, future challenges should be made in the statutorily provided hearings before the SBEA and not in the courts upon a certiorari proceeding. Although the administrative challenge (and certainly the pursuance of an article 78 proceeding) should properly collaterally estop the assessing unit from challenging the SBEA’s methodology again in а certiorari proceeding, as the SBEA determination is quasi-judicial in character (see Village of Elmira Heights v Town of Horseheads,
As concerns the selected-parcel phase of the 860 ratio trial, suffice it to say that the deficiencies of this method are nowhere better exemplified than in the case at bar. The County’s selected parcels represented tint only the extreme high end of the ratio spectrum, but some of the most difficult appraisal problems as well, a LILCO generating plant, the Mid-Island Shopping Plaza, the Sperry Gyroscope plant and a large department store, A & S Hempstead. Neither side chose parcels representing a fair cross section of the assessment roll. Residential property comprises approximately 70% of the County’s total assessed valuation, but selected residential parcels comprised less than 1% of the parcels’ assessed valuation. Public utility and railroad properties comprise about 5% of the County’s total assessed valuation. Yet, the selected LILCO generating plant, by itself, had an assessed value which was equal to the assessed value of all the other 32
Accordingly, the interlocutory judgment in the first above-captioned proceeding which, in determining the applicable ratios for the tax years under review, rejected the County’s challenge to the use of the State equalization rates, should be affirmed.
The County’s appeal in the second above-captioned proceeding from a judgment awarding the petitioning taxpayers their reasonable costs and expenses in making proof of ratio upon the joint trial, pursuant to subdivision 2 of section 716 of the Real Property Tax Law, is without merit. Having proved the correct ratios to be not in excess of the ones for which stipulation was sought and rejected, the petitioners may be awarded reasonable expenses incurred in making their proof (Real Property Tax Law, § 716, subd 2; Guth Realty v Gingold,
Finally, in the third, fourth and fifth above-сaptioned actions under review are three orders which granted the petitioning taxpayers partial summary judgment on the issue of inequality for the tax years in issue on the basis of the interlocutory judgment in the 860 ratio trial. The affected certiorari proceedings were some of those which had been blocked on the calendar by the 860 proceeding. The County had proposed to litigate the inequality issue de novo in these proceedings, challenging the SBEA methodology all over again. Special Term invoked the doctrine of collatеral estoppel against the County, precluding it from relitigating the issue as to the applicability of the State equalization rates. Its determinations should be affirmed.
Collateral estoppel may be asserted by a stranger to a prior suit or proceeding, provided that the party against whom the estoppel is directed had a full and fair opportunity to litigate the identical issue or issues (Schwartz v Public Administrator of County of Bronx,
Martuscello, Rabin, Shapiro and Titone, JJ., concur.
Judgment and interlocutory judgment of the Supreme Court, Nassau County, entered December 8, 1975 and July 30, 1975, respectively, affirmed, with separate bills of costs.
Orders of the Supreme Court, Nassau County, entered November 13, 1975, affirmed and order of the same court, entered November 14, 1975, affirmed insofar as appealed from, with separate bills of $50 costs and disbursements.
Notes
The County failed to institute any proceeding to contest the denial of standing (cf. Matter of Smith Co. v Ingraham,