*1 380 340 332. ques- psychiatrists. examining That
mony on trial. not raised It was ns. not before tion Appeals is affirmed. judgment of the Court Souris, J., Black, Kelly, and Dethmees, C. J. JJ., O’Hara, with concurred BeeNNAN, and
Adams, result. concurred J., M. KavaNAgh, T. COMPANY v. CENTER
FISHER-NEW COMMISSION. STATE TAX op Opinion the Court. -Assessment—Review—Hearing. 1. Taxation — hearing provided 1899 for a property tax act since has General agency for of assess- procedure before a board or review rolls, provided further that action the board ment has 1918, agency (CL final in accordance with the act shall be 1964, 275). 211.152, as amended PA No § Assessment—Review—Finality Rule. 2. Same — prevailed adop- Finality as decisional law before the rule whieh 1963 Constitution of was that review of tion ageney reviewing by the board or tax assessments in action general property tax bo with the act could not accordance
References for Points in Heabnotes [1, 3, [2, [8] [7] [5, [9] [10-13,16-24] [25] [27, 28] 6, 39, 51 Am 1 51 29-38] 4,14,15, 5 Am Jur Am Am 51 Am 40] Jur Jur, Jur, Taxation 2 Am 2 Am 26] 2d, Jur, 2d, Appeal Taxation Administrative Law Jur Am 51 Jur Taxation Am 2d, Jur, 2d, § § Administrative Law Jur, Administrative Law 565 et Taxation 773. § Taxation Error 771. § § § 1009 et 148 et § 770 et et seq. § seq. seq. § 393 et seq. seq. seq. Center Co. Tax Comm. except action challenged liad where the taken was on the fraud, grounds law, adoption errors of of wrong prin- (Const 6, ciples 28; 1948, 211.152, CL art § § amended by PA 275). No *2 Assessment—Review—Finality 3. Same — Rule. Finality rule as to tax assessment review evolved of because repetition, year year, decision-making process after determining assessment, a tax and because of the need government reasonably units to be assured of their tax revenues.
4. Same —Annual Assessment. Decision-making process setting basically tax is assessments process subject annual change year year, and to from to quite procedure where, unlike the usual matters tried, once a ease has been appellate and decided accorded review, adjudication. it becomes a final 5. Law. Same —-Assessment—Review—Constitutional requirements Minimum review of decisions of administrative agencies provided held, for in the Constitution of 1963 apply to to any ageney review of provided decisions of final property laws, for the administration of tax as to which there (Const 6, 28). is a 1963, more limited review art § 6. Same —Assessment—Review—Constitutional Limitation. right appeal Constitutional ageney from decisions of final held, provided for property the administration tax laws to showing fraud, law, adop- be restricted to a error of or the wrong (Const 6, principles 1963, 28). tion of art § 7. Same —Assessments—Review. Taxpayer’s upsetting claims for the valuation assessments of property, by commission, its fixed the State tax will be con- purpose determining for sidered the restricted whether the adopted wrong commission committed errors of law or prin- ciples proceedings assessment, in its in the determine the (Const absence of a claim taxpayer of fraud art §28).
8. Same —Assessment—Tax Commission Review —Due Process. taxpayer
A being whose assessment reviewed the State tax commission is entitled to be advised as studies or re- ports might the staff tax commission on which it determination, base its opportunity must be afforded an 340. studies, validity reports, findings, challenge of such preparing them. persons cross-examine the
and to Report Evidentiary Stamp — Value. 9. Commission — Same —Tax recommending an report tax commission to State assessment Staff entirely capitalization of ineome method based almost investigator property, staff who made admitted on real expert capitaliza- he was not an on the cross-examination held, method, any evidentiary not without tion of ineome value part whatsoever, appraisal record, is a where the itself familiarity investigator and the staff exhibited with the procedures appraisal appraisal and the use manuals. Making.
10. Same —True Cash Value —Methods—Decision property eash value of real All methods used to determine true judgment purposes the exercise of of taxatiоn involve making. decision Same —True Cash Value —Sale. necessarily A sale which has occurred does not determine true by definitely fixing price, value of the market eash particularly unique if if there have been *3 few sales.
12. Same —True Cash Value —Sales Price. price, particularly single price, only 1
Sales a sales is index determining of true value to be eash used the assessment purposes, by property real for tax is of and not itself con- trolling.
13. Cash Same —True Value. —Methods—Decision Assessor. purposes True cash value for tax of assessment should based upon recognized one or more of the methods for its determina- tion, and the method or methods to be used is a matter for de- assessing which, supported by cision at the level if rec- the ord, subject will not be review- 14. Same —True Cash Value —Method—Administrative Decision
—Review. (1) by assessor, (2) by
Three levels of determination — review, of board and the State tax commission—must (3) suffice the assessment decision for the determination of purposes, true cash value of for tax assessment fraud, law, wrong adoption of of the absence error of or the (Const 1963, principles 28). art § Co. Tax Comm. CeNter Fisheb-New 343 Application op cot Law — 15. Same —Assessment—Review—Error Principles. Wrong wrong application principles of law or the deter- Errors of held, taxpayer’s property mining cash value of not dem- true by taxpayer, where State tax commission determina- onstrated substantially showing similar cash derived tion, true values recognized appraisal, supported by methods of several 6, 28). (Const art the reeord § Tax Cash Value —State Commission —Record. Same —True by State tax commission that the true cash value Determination held, $19,558,348 taxpayer’s supported record, reproduction method, in a case where the cost after adjustment deprecia- for ornate construction and allowance obsolescence, gave value; capitalization tion and such a method, using capitalization applied income faetor 8.1% gave year, to the actual net income before taxes for value approximately $18,850,000; method, using the same capitalization applied taxpayer’s expert’s same faetor es- taxes, gave timated stabilized net income before a value of $20,043,210; multiplication gross of aetual income for years by multiplier 5.6, each of successive within the range multipliers of 4 buildings for old office found appraisal manual, gave in an $20,160,000 true cash values of year $19,600,000 year. for 1 for the other op 17. Same —State Tax Commission —Error Law —Evidence.
A average decision the State tax commission that the assess- ment level value, Detroit is at of true cash based studies of the commission whieh were not con- in taxpayer-appellant’s tained appendix nor in the records court, certified to the identified on the reeord at hearing commission, printed before the nor a separate appendix by purpose exhibiting the commission for court, unsupported by the studies to the would be evi- dence and oblige hence would the court to hold that law, commission committed an error of if there were no other support evidence before the average eourt to the 50% *4 assessment level. Tax
18. Same —State Commission —Studies—Record. practice upon appeal Supreme Better to the Court from a decision of the State tax commission based on studies made by the commission would be to of studies include the the 380 by for consideration the part the record as a of commission bulky, certifi- extraction and are too if studies Court, such or studies, stipulation portions of the pertinent of cation
by parties their contents. as to Studies —Record. 19. Same —State Tax Commission —Commission tax commission of the State Taxpayer appеaling from a decision of commission has by made the staff based on studies the com- to include the studies of responsibility the initial by the part a record consideration as mission so, the court, to do commission taxpayer if fails and resxionsibility providing the same. has the Studies —Record. 20. Same —State Tax Commission —Commission level tax commission that assessment of State Decision value, of true cash based faet of Detroit 50% the commission staff but made studies made held, appeal, supported other part evi- of the record record, that several of in the where the record shows dence by taxpayer’s attorney explicitly cross-examined the witnesses being level used their assessment mentioned 50% taxpayer to offer com- computations, elected and where level rather than at- peting lower assessment impeach in the tempting to level assumed com- report and indicated the witnesses. mission staff 21. Same —Valuation—Ultimate Goal. single goal performed valuation ultimate tax assessors eash is to uniform true values. attain 22. Same —Uniform Assessment. always approach to valuation does not result A uniform uniform assessment. Reproduction
23. Same — Cost Method —Uniform Assessment. reproduction replacement depredation less eost Use valuation, and obsolescence method because the percentage depreciation to be used of obsolescence judgment, achieving is not an assured method of matter assessment. uniform Cash Value —Valuation Methods. 24. Same —True likely purposes are more Valuations of for assessment approaches to valuation to reflect true eash values when all comparison results, use in and the use are available for reproduction depreciation less eost method *5 CeNtee, Co. Tax Comm. obsolescence, permissible, should not while foreclose other approaches, depending upon methods and nature of the particular property, to achieve uniform assessment.
25. Costs —Taxation—Assessment—Record. appeal are allowed on from No costs order of State tax com- Supreme mission to Court affirmance of commission’s property, to party order relative assessment on where neither provided adequate support has the Court with an record to the determination under review.
Dissenting Opinion. J., C.
Dethmers, JJ. O’Hara, and Souris and 26. Administrative Law and Procedure —Taxation—Assessment
—Review. Proceedings subject scope State tax commission are to same of provided procedures review as the administrative of agencies (GLS act 1961, §24.101). other administrative for 27. Same —Decision—Evidence. Agency findings, inferences, conclusions, or decisions must be supported competent, material, and substantial evidence (GLS 1961, 24.101[8][e]). § 28. Taxation —Assessment—Review—Constitutional Law. may appeal any No any taken to agency court from final provided administration tax laws of from relating decisions allocation, to valuation or in the absence fraud, law, adoption error wrong or the principles of of (Const 1963, 6, 28). art § 29. Same —Evidence—Review. Sufficiency hearing evidence in State tax commission before question is a appropriate reviewing law court’s con- sideration even when review is certiorari and limited questions law. Appeal
30. and Error —Evidence. Pieviewing court considers determine, evidence to as a matter law, whether supports, by by law, standard set by being tribunal whose action facts found reviewed. Statutes—Appeal prom Agency 31. Same — Administrative —Evi- dence. appeals Statute which limits agency’s administrative de- from cision to questions circuit court to preclude law does not 340. law to deter- on review errors evidence consideration any competent contained record whether
mine agency. by the support the found facts Process —Evidence. Law Procedure —Due Administrative agency record administrative process requires least that Due competent disclose laws must *6 errors reviewed decisions of for findings the de- support on which the of fact were based. cisions Scope of Procedures Act — 33. Same —Statutes—Administrative Review. by proce- provided
Scope review the administrative of or modi- limits reversal act administrative decisions dures for rights where substantial decisions to situations of fication of may prejudiced petitioner because the ad- have been the (1) findings, inferences, conclusions or decisions ministrative (2) provisions, are excess in violation constitutional are of statutory authority jurisdiction agency, (S) the the or of of upon procedure, (4) are other are made unlawful affected law, (5) unsupported by competent, material, and error are of submitted, in view the substantial evidence entire record of contrary overwhelming weight evidence, or to the the or of (6) arbitrary capricious (CDS 1961, §24.108). are Opinion—Admissibility. 34. Evidence — normally
Opinions competent or conclusions are not considered they beyond evidence unless relate to matters the Teen of they finder, unless are in the fact offered form of opinion expert, an and unless the basis of factual for expert’s opinion supported respects by in all essential some evidence. Report Evidentiary Sup-
35. Taxation —Tax Commission —Staff — port. report recommending to State tax commission an assess-
Staff entirely capitalisation ment based almost income method of investigator property, real made who admitted for staff expert capitalisation he was not an on the income method of report upon and that was based assumed essential facts сonclusion, evidentiary support to its which there is no record, opinion judgment i/n the is an which should competent be considered evidence. Co. Tax Comm. Cekter op Stapp Report Adoption —Evi- 3G. Same —Tax Commission — dence. Adoption invests State tax commission assessment staff of capital- gator base rate rate return as used a who 5.5% of earnings ad- izing value when he to determine of average represent rate return the rate did not mitted of expected, no investment real estate that he knew sale of return, repre- and that the basis rate made on 5.5% of pri/me average expected in a return where sented situation involved, only improper, little there is rislc where the evi- prudent in- dence in the record rate return a real estate expect expert compared who vestor would came invest- from put ments in the area and the rate between 8.8% 10.7%. Hearing
37. Same —Administrative —Record. finding affecting Administrative valuation a tax- payer upon part be based must studies that are the record hearing. tax commission’s Report—Evidence—Burden. 38. Same —Tax Commission — Burden is report State tax commission to introduce its supporting report evidence when the with conflict tax principal contentions either contestants.
Separate Opinion.
Black, J. 39. Taxation —Assessment—Review—Constitutional Law. requirements Minimum decisions, findings, review of of final rulings, any agency and orders administrative or of officer apply any does not agency pro- review decisions final property vided (Const administration 1968, tax laws for 6, 28). art § 40. Same —Assessment—Review—Constitutional Limitation. provides Constitution fraud, law, absence error adoption wrong principles appeal may no be talcen to any any agency provided court the administra- from final for property tion tax laivs relating decision to valua- from (Const tion 1963, 6, allocation §28). art from
Appeal
State Tax Commission. Submitted
7,
June
1967.
(Calendar No. 4, Docket No. 51,603.)
April 1,
Decided
1968.
granted
Rehearing
6, 1968. See
Fisber-New Center appealed taxpayer, tax its assess- tion, City years by of Detroit for tbe ments defendant and to tbe State Tax Commission. 1963, 1964, Order by fixing entered Tax tbe Commission Company prop- of Fisber-New Center assessment erty. Taxpayer appealed Appeals, to tbe Court of cross-appealed, City of Detroit and the both leave granted. Taxpayer appeals, City and of Detroit Supreme cross-appeals granted tbe leave Court Appeals, pursuant before decision Court 852. Decision of State Tax 1963, Commission GCB. affirmed as appeal cross-appeal.
to both and Honigman, Miller, Cohn, & Schwarts David counsel), (John for SJdar, M. Miro Fisber-New Company. Center Kelley, Attorney
Frank J. General, Robert A.
Derengoski, T. General, Solicitor and Carl Holbrook Attorneys R. Roesch,
and Richard Assistant Gen- eral, State Tax Commission. Corporation Reese,
Robert H. Counsel, John Witherspoon Pliskow, and Julius C. Assistant Cor- poration City Counsel, of Detroit. January appellant’s prop
Adams, J. On erty in Detroit, known Fisber-New Center Complex, was valued $9,779,170 at the State tax commission. Detroit bad assessed the appeal by
$13,241,460 for 1963. While pending, we remanded to the commission for fur bearing. Company ther In re Fisher-New Center (1965), stipulation By parties, *8 bearing the new also covered 1964 and 1965 assessments. e Th commission its order of reaffirmed Jan- 349 Tax Co. Comm. CeNter Opinion op the Court. prop- uary the true cash value found 6, 1964, general erty level $19,558,348, to he to be true cash in Detroit assessments proper $9,779,170. to he and the assessment
value, by- petition grant of is now here case pass Appeals. the Court Scope oe Review.
I. in this is determination to decision case Basic judicial final review of and nature the extent board or agency relating al- decisions valuation or spreading of taxes. location for general property sеction 1521of 1899,
Since seq. § [Stat (CL Ann Rev 211.1 et 1960 tax act 1948, hearing procedure provided seg.]) § for a has 7.1 et agency,2 there or a member before a hoard or State to determine rolls of, for review assessment subject any property to taxation has been whether have not been or individual assessments omitted Throughout compliance in its exist with law. made by provided action 152 ence, section has agency, accordance with member, or board has held that the act This shall be final. Court except from review where was foreclosed challenged grounds fraud, action taken on the was wrong principles. adoption This errors of law, “finality rule.” doctrine has been described (1915), Newport Mining City 185 Co. v. Ironwood Township Pointe 685; Moran v. Grosse 668, 1 appears 1899, in CL by PA No 154. It 152 added Section subsequently amended as to tlie been 1948 language pertinent 211.152 and lias as § 1964, No 1955, 223 and PA here PA No Supp 7.210). 1965 (Stat Stat Ann Cum 275 Ann 1960 Rev and § 154, commissioners 1899, the board of State tax PA ereated No department State tax estab- which was succeeded lished and, turn, 1925, 155, abolished 1927 with PA No present tax commis- 209.103, powers to the transferred duties sion, respectively (CL 209.152 and ereated PA No § § 7.633]). Ann 1960 Rev § §7.621 [Stat *9 Mich 380
350 Opinion op the Coukt. Kingsford Company (1947), Chemical 248; 317 Kingsford (1956), City Mich 91; Pavilion v. Apartments, of (1964), Inc., v. Tax Commission Mich 601. appellant, however, It is the contention of provisions § of Const art 6, 28, because of scope judicial of the tax commission has been broadened. review an order the State Michigan Article of the 1963 Constitution relates judicial to the branch. Its section 28 reads: findings, rulings “All decisions, final administrative officer or and orders any agency existing un- judicial by der the constitution or law, which are private quasi-judicial rights and affect licenses, subject by pro- shall be to direct review courts as by vided law. This shall include, review as a mini- mum, the determination such whether final decisions, findings, rulings and orders are authorized law; required, hearing in cases in and, whiсh a whether supported by competent, the same are material and Findings substantial evidence on the whole record. compensation proceedings
of fact workmen’s shall be conclusive the absence of fraud other- unless provided by wise law. “In adop- fraud, the absence error law or the wrong principles, appeal tion may no taken any any provided agency court from final administration tax laws deci- from relating sion allocation(Emphasis to valuation or
supplied.) Appellant incorporates § contends article 6, 28, requirement a constitutional the law as had been developed by prior decisions of Court; that, Constitution, courts are authorized to review agencies, actions of all including the State tax com- grants mission; that section 28 direct review to determine aas minimum whether administrative findings supported competent, are material and ¿5Í Tas Co. Comm. Fishee-New CeNter op Opinion the Court. record; that, on the whole substantial expressly- scope review of such cases, valuation agency whether to a determination limited adop- law, on error of or the fraud, decision is based principles; wrong that a valuation deci- tion unsup- commission which is tax the State sion by competent, ported material and substantial evi- record is an error of law and an the whole dence adoption *10 argument wrong principles. By provisions limiting appellant seeks to avoid the § paragraph of article 28. 6, the second purposes property for tax are first
Valuations by acting aor board of assessors an assessor set governmental local units. Such are for assessments by any a local reviewed board of review where then protest appear may taxpayer to the assessor’s valu- taxpayer with If the is dissatisfied the deci- ation. may appeal review, of the bоard of he to
sion tax commission. State the local assessor or the board
Decisions year question. finality only review have for the by the tax commission Even a determination finality period to exceed three of not has years. § PA amended 211.152,
CL as last 1948, (Stat Supp 7.210). § No Ann 1965 Cum 275 decision-making process, basically an annual The subject change year year, from to one and to procedure quite the usual matters unlike decided, and ac- tried, once a has been where, case adjudica- appellate a final review, corded becomes repetition, year year, tion, after Because of the decision-making process, of the need and because reasonably government assured to of units of finality rule evolved. revenues, their tax delegates convention to the constitutional Michigan of this Constitution were 1963 aware [Api*. 380
'CO o op Opinion the Court. situation as is revealed their debates.3 Conse- quently, spell when it was to out in the new desired rights of review of administrative de- Constitution provide an the convention was careful to ex- cisions, ception rights appeals to in connection with such any provided agency from final for the administra- relating tax from tion of to valuation or allocation. laws decision Appellant attempts to impose requirements in first the minimum review permis- paragraph appeals §6, 28, of article paragraph. do not so con- sible under the last strue We clearly paragraph The last was section. 3 1963, originated Constitution of Section of article Record, proposal convention as 95. Official constitutional Constitutional committee 1961, p Convention 1440. What is now the last appear original paragraph in the of this section did not text. proposed complete as an amendment at the time that It being proposed revision of the the convention the new Constitution was considered Becord, reading. p on third Official 3136. At convention, Delegate Brake, time the amendment was offered in gave following eo-authors, explanation: “If one of its we are permit any taxpayer who is not satisfied with the decision of go tax commission the State as to the value of his court, going always into been the fixed ment on the value of we are to need more It has courts. policy judg never that a court will substitute its properly judgment for the of the assessor. get In or bad faith or that simply into order court we have had to be able to show fraud *11 * * * illegal. to just the assessment was It court, appeal work allow won’t to an when no fraud involved, is from a decision on the basis of what is the value of property.” Beeord, p 2 time, certain Official 3136. At that the proposed was Becord, never the Becord, p was 2 amendment defeated. Official 3138. It again proposed days in three later a form. 2 revised Official occasion, Delegate p “Never, 3240. On this Brake said: judge in opinion the world can we have substitute his opinion machinery you the assessors and have tax that Now, when faith, can live with. there is a matter of there is a matter of bad when fraud, illegal tax, remedy an the in the court ready any always get You is Speaking time. can in things.” court on those amendment, Delegate Allen, to co-author, the same also a trying say in said: commission matters we “All we’re to do this is to that on State tax preserve rights already all the exist but going go we are not to further and allow the court to substitute judgment its an 2 Record, p and become assessor.” Official adopted. Record, p The amendment was Official 3242. The style amendment was reworded the committee drafting on and Record, of the constitutional p convention. Official 3292. The language of the amendment as recommended to the convention style drafting adopted. Record, on and committеe 2 Official p 3293. Tax Comm. Co. v. Ceetteb Fisheb-New op Opinion the Court. prop- provide in a more limited review to
intended provided first erty is than tax matters paragraph Appeals are paragraph. last under or the showing error of law, fraud, to restricted principles. adoption wrong the nature granted order that here in review
"VVe might considered be extent of review and Michigan light provisions Con- of the 1963 taxpayer’s claims that and stitution because and of law errors commission committed tax State adopted arriving wrong principles at its decision. taxpayer’s holding, light much of above
In the our predicated argument because loses effectiveness § interpretation which this article Court an Taxpayer’s upsetting accept. claims for does the property, fixed of its assessments valuation will considered for commission, be tax the State determining purpose whether the the restricted adopted of law or errors committed commission taxpayer. wrong principles. is claimed No fraud HeabiNg. II. The Apartments, Inc., State Tax Com
In Pavilion taxpayer supra, mission, it was determined reports by advised as studies entitled upon which that tax commission the staff of commission might The tax its determination. base opportunity challenge payer afforded must be findings, validity reports studies, such preparing persons the same. to cross-examine the commission for fur this case to remanded We light hearing hearing in the of Pavilion. Such ther commission, decision, states The its was held. every shred of data and evi
that it “made available taxpayer to both contained in its records dence authority.” adequacy hearing taxing undisputed. it is claimed as a However, that, now *12 op Opinion the Coukt. produced hearing,
result the evidence (1) decision of the commission was erroneous: be- support there is decision, cause or no evidence its (2) against great because decision weight disregard only of the evidence competent evidence. opened hearing taxpayer. by the Wit Berry, president
ness Louis of Fisher-New Center Company, properties testified the assessed were purchased on December for 7, 1962, $10,000,000. The purchase price factor used to determine the was re turn investment. specialist appraisals it. Luedders,
William a properties, nonresidential testified that certain with adjustments price finally in the sales amounted to opinion, In $9,238,585. his there are three stand- approaches ard to value:
“Replacement depreci- value after allowances for upper ation and obsolescence which furnishes an Comparable capitalization capitalization limit value. sales, and may of income which be based on the capitalization
method disclosed—or disclosed levels comparable sales.” capitalization Based method, income he arrived at a fair cash market value for 1963 of $9,800,000and for 1965 of $10,000,000.
Elof Nordbeck, member of the staff of the tax commission, was called for cross-examination taxpayer. charge Nordbeck was in of the staff that investigated Wayne assessments in Detroit county year purpose making for the equalizing recommendations for valuations. He tes- tified that the studies such determination are process a continual and that data from which the part were studies made were of his files. He stated Wayne normal level assessments *13 Tax Comm. Center Co. v. op Cotjet. Opinion the cash, year county of for that was true value. 50% in further that assessments He testified Detroit percentage in and relation to true cash varied value range from 38 with the bullí of residen- in a to 52% average at an of tial real estate 43%. taxpayer also to the commission The submitted documentary sup- exhibits and certain port general its claim that the level assessments that two of the tax Due to the fact com- was 42.7%. present for the
missioners would not be balance taxpayer hearing, attorney for the then made the the closing in which it that the statement was claimed city reproduction by method of de- the of a cost use improper termining was and should not have value city determining by fair used the assessors been market proper assessment level in value; that the consequently, the as- that, Detroit was 42.7% property determined to should be sessed value $4,400,000. $4,300,000 be between same the time,
In a statement made at the attor- capitalization ney city the of income for the stated by approach the board of assessors to is not used all industrial arrive at because assessments 95% property property all residential and 85% judge owner-occupied. what is no income There capitaliza- proper based would be a assessment approach primary used tion income. The depreciation, reproduction
city considera- cost less being given income as a test to tion measure the to sales and
grant of where warranted. obsolescence following day. hearing Robert resumed Heights city for who had Case, assessor Dearborn appraiser previously property for the tax been attorney for was cross-examined commission, investigator an He testified he had been Detroit. appraisals development doing field work appraiser with another he, and that corqmission, connec- had done the work field 380 ’356 Opinion op the Court. with, properties. The the Fisher-New Center
tion appraisal at the insistence Tax Commis- sheets, conducting hearing’, were sioner Barr who great part of the record. Case 'testified made procedures were followed as to the which detail buildings real and the the value of the determine estate. attorneys
He was cross-examined tаxpayer. had been calcu- Values and the projecting income of the lated both reproduction Using the latter and on a cost basis. given for obsoles-
method, allowance was down to the value that *14 appraisal bring cence “to our projecting of the the income at from we arrived property.” cross-examination: under Case testified entirely approach you your on relied “Q. In fact — approach, you not? did the income entirely.” say “A. I almost would taxpayer’s that, It is the contention because Case capitalization expert an on the of stated he was not probative the of the method, income entire value appraisal the was de- the staff of commission appraisal part stroyed. is a of the record. itself though unwilling an denominate himself as Case, to expert phase appraisal particular ex- work, in a of familiarity appraisal procedures and a with hibited appraisal Consequently, use we the of manuals. report the to the commis-
do conclude that staff’s evidentiary whatsoever. sion without value a Libcke, member of the board of asses- John W. city proce-
sors of testified as Detroit, to by 420,000 There are dures followed board.
parcels of real estate in Detroit to be assessed and personal property as- 65,000 more than individual property appraisals are sessments to be made. Real presented appraisers to the made a of 60 staff pursuant policy determina- assessors, board Thq procedures board, outlined tions Fisheb-Njsw Tax Comm. CeNtek Co. v. op Opinion the Court. building cost sched- established of assessors board they to reflect the cash considered true ules which applied property other factors when with value of process. Building cost assessment involved by sales to determine the valid- are tested schedules ity stated it would be of the schedules. Libeke determining apprоach proper the income to utilize basically, but, the true cash value reproduction city testified cost method. He uses the particular building would cost the known reproduction relevancy cost under the have no such but that used of assessment method average building be assessed the basis a costs for would type building aver- involved, such building age being from cost determined costs schedules. employee
George the land Turner, attached to re- with assessors, testified division the board city’s procedures gard valuation for the assessing the value stated that real estate. He of land he was than the value concerned with more piece as- He said involved. of the one always keep how valua- in mind their must sessors parcel next and the next relates block tion of city. This to the whole and so thereafter, block primary function. When asked the assessor’s *15 average as- opinion as level of his personal, in cash value real and sessments, replied: 1964 or he say area in downtown the newer “I would buildings the older 50%, assessed close would be you
buildings if is so much obsolescence and —there properties assess- of these our went sales price many ments could be 100 of the sale cases % more.” Henry appraiser major Thomas, K. head building for assessors, Detroit board division Mich op Opinion the Coukt. with,regard to the
testified assessment of the Fisher- properties. procedure The normal New Center appraising for used board would comparative replacement to take the be preciate and de- rate age conformity for the of the structure procedures. comparative with its rules and A re- placement reproduction is rate used instead aof rate to remove excess cost over-decoration and over- design. operation analysis next The for ob- approach solescenсe. basic utilized in determin- building ing comparative assessment replacement depreciation, cost, less allowances city study less obsolescence. The also makes comparative sales to determine obsolescence consid- erations. Thomas stated that the does not base solely approach assessments on an income approach ap- aon sales but, rather, does them on an praisal depreciation. Upon of cost less cross-exami- nation, he was asked: you your “Q. Are now satisfied to state that you opinion competent capitaliza- are not to make a approach property?
tion income this * * * “A. Yes. you “Q. You have testified did not seek to property, arrive at true cash value of this Complex, right? Fisher-New Center isn’t that You already
have testified to that?
“A. Yes.” testimony It city’s is clear from the wit- policies, procedures, nesses and exhibits that the method assessment established the Detroit sought objective primary board to assessors as its uniformity properties attain within and between rather than true cash values. hearing,
At the conclusion of the Commissioner question Barr raised the as to what would constitute file case. said: He Opinion Center op the Court. *16 Co. Tax Comm. CO taxpayer complaint there, must remain “The appraisal data and re- and onr sheets work all our part of the considered ports file.” must he staff of our attorney city, exchange for the with an In said: Barr Commissioner going saying not to he we are you that are “If determining these
permitted this material use to material we that make use to assessments, through then will staff, our we have accumulated have to you again lay I it out because meet agree are going this record that we am going we can’t make use so restricted be knowledge in our we have accumulated work.”
Finally, Barr stated: Commissioner record, new we hаve the hut rate
“Well, at is not limited.” commis- and order of the tax
The decision State part as fol- filed reads sion December : lows ap- every other assessment this, “In and as (a) peal, de- faced tax commission is with (b) termining the true cash value of proportion which its assess- of true cash value at placed.
ment should be taxpayer that its recent “The contends essence purchase properties $10,000,000 estab its and that it conse value; lishes true cash should quently since the work data of approximately $4,270,000 assessed at county equalization and State of true cash indicates assessment level 42.7% # * city value for the of Detroit. justify has not chosen to “The Detroit urged the $13,241,4604 assessment of but has instead Building made The total assessment for the Fisher recommended by was increased $6,772,660. This in 1963 was the Detroit hoard of assessors $7,466,110 by the Detroit hoard review *17 380 Mich
O ca- os. Opinion op the Court. being proper figure the as assessment $12,548,010 descrip- properties figure which consist of 29 Building, comprising Fisher the New tions parking surrounding Building, locations. Center and consistently city that it has assessed maintains The properties deprecia- by its cost less consideration of properties obsolescence, tion in such manner and that therefore the Fisher-New that it assesses all and necessarily properties their Center must be assessed rejects proper tax such burden. The commission experience long contention its well based judicial pronouncements as the of Mich- constant igan Supreme experience Court. Such approach decisions establish that uniform to valua- always not tion does result in uniform assessment. “Although pur- the commission is aware price properties
chase of the in the amount of $10,000,000it cannot conclude therefrom that purchase price representative properties is property true cash An value. isolated sale of is especially evidence of its true cash value where the * * * property singular quality. is in character and impressed ap- “The commission is not with the praisal presented by taxpayer support a mar- ket value of $10,000,000. The actual income and ex- pense figures years for the 1961 and 1962 were sub- thoroughly analyzed to the mitted commission capitalization its ap- staff. A reasonable factor plied assigns aggregate thereto value $19,558,- property. 348 to the 29 items of Such valuation approach by repro- an income substantiated approach duction property. cost to the taxpayer’s “The contention that of true cash 42.7% value constitutes the prop- assessment level of all city erties in the exclusively upon Detroit is based Wayne county equalization work of upon which superimposed equalization. Acceptance State $693,450 the addition of resulting rejection from the of a 15% obsolescence allowance on portion the office recommended cube,” equate assessor “to better the net rentable area with the (Footnote supplied; part not a quoted text.) Tax Comm. CeNter Co. op Opinion tee Coukt. perfect presuppose percentage intra- would such connty equalization fact is unattainable. which real studies of indi- tax commission city property in the of Detroit was real cate assessed cash of personalty its true property, for range significant of its true ain 38-52% question. days in Studies the tax as of value personal indicate assessment levels approximately assessed 56% of all assessment level cash value. personal, in the of Detroit real and question years has been determined the tax approximate its one-half or true cash all tax commission has determined Thus, the value. during years question appeals assessment *18 prop- application to cash value of the the true 50% erty. taxpayer’s sole re- stressed that the “It should be ‘equalization factor’ a so-called of 42.7
liance is ization. % perfect intracounty equal- presumes misplaced. It county is the fact within This * * * State. finds commission that the 29 items “The tax appeal property contained Company had a true cash value of Decem- Center proportion $19,558,348; 1962 of ber property, per- real value at which all and true cash assessed, in the of Detroit is is one-half sonal value; of true cash and that therefore the or imposed upon proper property assessment to $9,779,170.” amounts
III.
True
Cash Value.
All methods used
determine true cash value in-
judgment
decision-making.
exercise of
or
volve
may
that a sale which has occurred
seem
While
indisputa-
price
definitely
so as almost
fixes market
bly
this is not neces-
value,
true cash
determine
unique
sarily
particularly
if
is
case,
testimony
if
been few sales.
there have
and
great many
considerations
shows that
in this case
380 op
Opinion
the Court.
price-
into the
enter
determination of sales
—need
ability
property,
or
to utilize the
the calculation of
potential
age
physical
income, actual income,
and
possible tax
condition,
of
benefits or detriments, cost
money,
price, particularly
on.
so
Sales
single
price,
only
sales
one index of true cash
Twenty-Two
City
Inc.,
Charlotte,
value.
Detroit
v.
(1940),
Mich 275, 283;
Moran v. Grosse
Township, supra; Kingsford
Pointe
pany
Chemical Com-
City
supra,
Kingsford,
at 102, 103. In
City
Lansing (1959),
Davidson v.
Finally, method will income depending upon such deci- produce results different projected actual income use as whether to sions capitaliza- make-up of the and amount income, et rate, cetera. tion taxpayer’s expert, Mr. Luedders,
In this case capitalization of 9 after taxes rate used hut % depreciation: before of conservatism one the interest “Two reasons: pride amount of is a certain other, there complex ownership owning such a beautiful prominent piece property.” and such way produce A shift either would consider- value, variation in as will seen hereafter. able be True cash value should be based one or recognized for its determina- more of methods methods be used a mat- tion. The method or ter for decision at the ported to sup-
assessing level if and, subject will not record, be error of “fraud, review. Review will limited adoption principles.” wrong In these law or the determination— decisions, assessment three levels of (1) (2) by assessor, review, the board ordinarily (3) by tax commission—must suffice. report
The staff indicates that the commission’s reproduction cost Center current depreciation buildings or obsolescence before Excluding ornate construc- to $63,160,864. amounts replacement $51,- cost amounts to tion, the current deprecia- that after The staff estimated 062,475. tion and obsolescence improvements buildings and of the the value parking lots, $13,870,342. land, brings estimated value the total cetera, et properties $19,558,348. Fisher-New Center *20 340. 380 364 Opinion the Codkt. average the Fisher-New net income of Cen
Tlie depreciation properties and before ter taxes years was 1962, $1,176,- 1960, 1961, for the appraiser estimated that the commission’s 314. The approximate $1,576,314. should net income future appellant presented appraisal on behalf The figures 1964 to have for 1963 and the actual shows being respectively, $1,482,284, $1,526,806 been taxes. The commission estate incomebefore real net cap capitalization factor of Such utilized italization 8.1%. against applied in the 1963 net factor, approxi in an amount a value would indicate come, mating $18,850,000. appellant appraisal also offered on behalf of
The net income5 before an estimated stabilized shows capitalize by If one were to $1,623,500. taxes of the commission’s net stabilized factor of 8.1% capitalized cash true value taxes, the income before properties be $20,- would Fisher-New Center of the 043,210. properties, according gross of the income
appellant’s appraisal was $3,531,- 1963 and respectively. tax com- The State $3,635,379, 989 and report that: recites mission’s staff buildings gross from fоr office “A income check gross income multi- indicates
Boeckh’s Manual6 plier 4 to 6.” by cross-appellant, recites: “M”, Exhibit offered comparable analysis “An of sales prices average sales at an showed such were gross proper- of 5.6 times income of these ratio ties.” ap- Multiplication gross income shown pellant approximating a mul- $3,600,000, appeal's appraisal in the Stabilized net income as it identi projection depreciation. fied as the of normal future income before Appraisals (1903, Boeckh’s H. Boeckh Manual E. Associ ates, Inc., Washington, C.), p D. Tax Comm. Co. Center op Opinion the Court.
tiplier a cash value indicate true would of 5.6 Projecting gross $3,500,000 income of $20,160,000. for 1963 produce multiplier true of 5.6 would $19,600,000. cash value of tax commission of tbe State
Tbe determination taxpayer’s regard cash value tbe true with Appellant supported has property record. tbe application of or tbe of law errors not demonstrated principles. wrong Property oe Assessments. Level GENERAL
IY.
Appellant states: in its brief applied a commission tax decision, State “In its general level value as the fair market ratio of 50% city bearing, the Detroit. At the in of assessments of any bore that its assessments Detroit denied testimony only in market values. to fair ratio tiis lant Appel by appellant. regard that furnished was produced in the 1963 State board evidence general’s report; equalization auditor Detroit’s 1963 report; Wayne County supervisor’s report; study department commerce United States testimony commission’s of State tax member having reports, status, official All of these staff. disclosed general in level of assessments that the personal property was for both real and Detroit city of from the Without 42.7%. opposition tax thereto, State commission Detroit in general level of as a fact that the nevertheless found appellant in Detroit was Thus assessments 50%. contrary finding, to and total contends, too, only ly unsupported by lawful evidence before beyond question tax commission which established general t he level of Detroit assess ments was 42.7%.”
Tbe State tax commission found as follows: “State tax commission studies of real city property in indicate real of Detroit was 380 Opinion op the Court. significant range in the of its assessed 38-52% question. days true cash value as of the tax personal property Studies assessment levels indi- personalty approximately cate that was assessed of its cash true value. The assessment level 56% property, personal, of all real and in the years question for the tax Detroit mined to has been deter- approximate one-half or true of its 50% cash value. the tax has Thus, commission deter- appeals years during all mined assessment question by application of to the true cash property.” value of the The studies of the commission which it based appellant’s appen- its decision are not contained in dix Appel- nor Michigan the record certified to this Court.
lee to *22 State tax commission took no action
identify these studies on the record at the hear- ing print sepa- before it, nor did the commission a appendix purpose rate exhibiting the of the studies to this Court.
If we were convinced as to the nonexistence of the commission studies if and there were no evi- support average dence before tous the assess- 50% obliged ment level, we would be to hold com- that the mission committed an error of law since its decision unsupported by any would then be evidence.
The commission stated that it had “made available every shred of data and evidence contained in its taxpayer taxing authority.” records Apparently, both and appellant it is the contention of that, specifically because the commission did not see fit part order its to be studies made a of the record hearing place, when the took there is no evidence to support Appellant its decision. has misconstrued hearing the nature of the afforded it order of this purpose hearing, Court. The of that as decided in give taxpayer opportunity Pavilion, was to the challenge validity reports, the studies, Cektter Co. v. Tax Comm. op Opinion" the Court. findings of commission’s the and to staff, cross-ex- persons preparing amine the the same. Barr
Commissioner discussed the nature of the hearing record at the and close insisted that part files and the commission a all records be record in this matter. It is from an evident ex- place hearing took at amination what that the the taxpayer not misled as to nature of was and as matter of that, studies level fact, 50% assumed to shown such studies. report prepared by
The staff Robert Case was a copies part of the record in the were hands of during hearing. report, The staff counsel commenting projected average total
on the net in- properties capitaliza- come income said rate, tion “this assumes assessment level.” 50% Additionally, concluding paragraph, in the under the heading Supervisors “District Comments”, appears: appraisal statement “Our also assumes a assessment level.” 50%
Taxpayer’s counsel cross-examined Robert Case extensively concerning report the contents prepared. In which he had the course that ex- following occurred: amination, figure your “Q. You use for taxes 2.6%
report for real estate taxes. How that 2.6 ar- rived at? by relating the “A. I As recall the is arrived 2.6%7 it to the assessment level here *23 supervisor, might Detroit. The Mr. Nordbeck, qualified go
more into to detail than I about that am. you prevailing “Q. In other words, took the tax rate of about a thousand it in half $53 and cut be- 'prevailing city cause in assessment rate real estate сash composed of a value. commission taxes (Footnote return on investment of utilized supplied; city of Detroit capitalization not a part amounting 5.5% quoted text.) factor of to allowance for 2.6% 8.1%, of true being Mioh 340. op Opinion the Court. is that value, about market at Detroit right? 50% of fair supplied.) (Emphasis I is true. As recall, “A. Honigman: all.” That is “Mr. George give when Turner, asked to his
Witness opinion average as to the level of assess- in the downtown Detroit, ments answered that buildings at close area the newer were assessed to 50%. understanding
Henry confirmed his Thomas level of when he assessments Detroit ex- 50% city plained percentage his of allowance for taxes: comparative analysis situation in a 2.6 was “The average may in the the assessment 50% roughly— $52 rate was Detroit—the (Interposing): of assessed Per thousand “Q.
value. way (Continuing): a combined —and that in “A. a rate under under basis $52 be the taxes
would assessment. 50% evaluating you recognize in words, In other “Q. liability tax that the will be tax on the per thousand based on $52 $53 assessed approximately value which is true assessed 50% of right? (Emphasis supplied.) value, is that cash “A. That’s correct. Honigman: That’s all.” “Mr. from the record before us that the tax
It is clear surprise payer was not taken as to the assessment might to be which the commission find level tax impeach attempting effect in Detroit. Instead report in the commission staff level assumed the taxpayer these witnesses, and as indicated competing of a lower to offer as elected accept the commission elected to level. If sessment competing might However, so. evidence, do such support being the determina- some evidence there *24 Tax Comm. Center Co. Opinion op the Court. the and the valuation of tax commission, of the tion having payer’s property been to reduced taxpayer determination, such with accordance complain. position to not in a appeal practice upon this would have The better of the as a the studies commission to include been part this consideration Court. record for feasible, this was not bulk, of their If, because pertinent portions could be extracted and certified Initially, stipulation. their covered contents appellant. appel responsibility was lant portion having a to make studies failed excused for the commission cannot be the record, having neglected to do so.
Y. ITNIform Mode of AssessmeNt. determined the contention of There remains be cross-appeal upon a the use of uni its Detroit form mode properties all for assessment of within the commission correct and that erred the failing city’s determination valuation
to affirm agree We with the tax method. commission such approach always a to valuation does not that uniform Appeal In re result in uniform assessment. See Corporation (1965), Mich Motors General may approach 1. 378, footnote While uniform goal not ultimate it is valuation. desirable, goal They true is uniform cash values. the ultimate necessarily by single ap not achieved uniform are pointed reproduction proach. out, we have As re depreciation placement less cost obsolescence is many slight subject Even a variation variables. depreciation percentage or of obsolescence
in the produce may difference valuation. considerable judgment. percentage to be used is matter Consequently, no assurance that the use of a there is single assess- uniform mode will achieve a uniform 380 Opinion op the Court. not forbidden but such use should use is Its
ment. depend- methods approaches, foreclose other the particular property, the nature of ing *25 all approaches assessment. With achieve uniform valua- comparison results, for use and of available are more for assessment purposes tions of property cash than will be the to reflect true values likely a is used. single case if mode only many judicial
AddeNdum : There are varieties of Generally review. review has been tailored to what courts, and constitutional conventions legislatures, to be to due and the requisite process considered situations. For particular instance, realities of in compensation review workmen’s matters in the findings fact, is so limited absence 6, are article fraud, conclusive. See Const § 1963; 413.12 Ann 1960 (Stat 17.186). CL Rev § § In to review matters is this, chancery contrast novo, in this de even Court.
I forth the reasons I have set construe the consti- language admittedly tutional mean limited ju- tax dicial review of assessments —a special kind administrative proceeding goes year year that, statewide, after and involves hundreds of thousands 420,000 parcels real valuations — 65,000 estate and assessments personal property Detroit alone. The this law was well established in field before the 1961 Constitutional Convention.
From the constitutional clear the 1963 debates, Constitution no departure intends from the previous law.
Justice mine opinion and serve to illustrate Soueis’ practical difficulties involved if courts were consider the of the evidence in these tax mat- weight In ters. these there a opinions, has been review of If such were single case. review finality which allowed matter right, Tax Comm. Co. v. CeNtee Fisleb-New OF COURT. OPINION THE Michigan reposed largely tax now pass the im- to the courts. Since would commission operation portance for the revenue of assured government I understood, the 1963 Con- was well and local State do not believe people, adopting would defer of review that kind stitution, intended through litigation progressed finality years as the courts. disagree that where with Justice Soubis
I do hearing the commission or the demanded has been responsibility procedural commission’s staff has the scrutiny presenting its case on the record pre- taxpayer. adequate testing by This issue of properly resolved at the hear- was never sentation reports, ing and other data studies, in this case—the fully never were identified level of assessments as to commission’s files—either ferretted out of the *26 taxpayer The commission or the commission. part they vague a that were in a fashion insisted taxpayer nor the Neither of the record. upon specification as same, of the insisted
Detroit they techniques suggested right "While had to do. problem coping in this have been stated with techniques necessary may
opinion, he whatever developed tax cases. in future should he provided party having neither
Affirmed. No costs, satisfactory record. with Court M. Black:, T. BreNNAN, KavaNagh, Kelly, concurred with J. JJ., Adams, (dissenting). agree Mr. I with do not
Soubis, J. any opinion if there he Justice Adams’ findings support
found the record to judicial review of commission, State tax that ends proceedings for errors law. the commission’s opinion, proceedings, my are sub- commission’s 380 Míos by Soukis, J. Dissenting Opinion provided by scope judicial
ject review to the same procedures act1 for other admin- administrative agencies. establishes, That act subsec- istrative tion quantum (e) 8(6) of evidence neces- thereof, sary agency decision. The standard sustain agency findings, con- inferences, is that established by compe- supported decisions must be clusions, It is not material substantial evidence. tent, enough evidence, there in the record some agency’s determination to sustain the scintilla, against claim, an “errors of law” Justice Adams holds.
Applying requirements the act’s to the record of proceedings tax I con- commission, before the State sup- findings clude that the are not commission’s ported by competent, material, and substantial they contrary evidence and that whelming weight are to the over- Indeed, of the evidence. I conclude competent support there is no evidence to com- decision. I conclude that Therefore, mission’s unsupported commission’s decision based such findings constituted an error of law.
I. paragraph § of article 28 of The second our Con- scope limits the review stitution proceedings: of such adop- “In law fraud, the absence of error of or the principles, appeal may wrong tion of no be taken to any any agency provided tax laws from court from final for the ad-
ministration of decisions *27 relating to valuation allocation.” opinion, As I understand he Justice does Adams’ dispute proposition sufficiency not that the of 1961, seq. (Stat 1 CLS et Ann 1961 3.560 Rev [21.1] §24.101 § seq.). et Fishjgjr-New 373 Cestteb Co. Tax Comm. v. Dissenting Opinion by J. Souris, support finding.is a tribunal’s fact evidence question event, In in this law. suf of question ficiency appropriate is a of evidence law of reviewing court’s consideration even re when and, therefore, limited to errors view is certiorari reviewing mean that does not court of This law. purpose making for the of the evidence
considers findings only hut of that the fact, own its of determine, as matter law,
is examined whether (by by law) supports the standard set facts being tribunal whose action is found reviewed. Michigan (1939), Eastern Motorbuses
In Jones v. writing Justice 619, 643, 287 Mich Mr. North, Court, six examined the members issue length scope in the context of this Court’s review nonjury law under former Court Rule No cases (1933) (pp 648) : appeal
“Even when
in law cases was
the com
long-established practice
mon-law writ
error,
jurisdiction permitted
testimony
in this
review
as to essential
if
facts,
under such
of error there
writ
assignment
judgment
finding
was an
that the
contrary
overwhelming
the court was
to the clear or
weight
(Stat
§
§
of evidence.
CL
Ann
27.995);
Kotzke
Estate,
184;
Kotzke’s
Hamburger v. Bank Detroit,
that the against preponderance the evi judgment dence’ is the of is question of of law rather than one fact. a judg generally speaking, a because, true This is of a law case which is entered favor the ment in party having proof, notwithstanding the burden contrary, preponderance to of the evidence is the the judgment entered violation law.” Highland Jerry McCarthy Company, In Chevrolet Department (1958), Revenue Mich Inc., v. 558, judicial the considered nature this Court review agency’s light of of an administrative statute which limited decision in
appeals to circuit court to questions statutory authority test law. Absent to great agency findings administrative of fact on weight similar the Court concluded standard, that the evidence could be considered nonetheless on to determine whether review errors law any competent sup contained record evidence agency. port facts found of our
Article section 28 does Constitution quantum necessary specify to sus- finding agencies tain a of fact such as the State against a claim of error Ab- tax commission of law. specification in our stat- sent such Constitution agree with I would Justice ute, have Adams, McCarthy, strength supra, commis- for errors of law would sion’s decisions reviewed any if were com- evidence, to be sustained there have petent findings support is, the record to evidence, fact the decisions based. which were process requires. very least that due That is (1946), 314 v. Ford Motor Co. Mich Dation the administra- I concluded that However, have applicable procedures com- to State tax act tive notwithstanding proceedings, Dossin’s Food mission (1960), 360 Tax Inc. Commission Products, v. State 1968] Co. v. Tax Comm. CeNter Dissenting Opinion by J. Soueis, requires and that statute more than findings evidence to sustain of fact made adminis- agencies subjected trative when review. majority
It is true that a of this Court held in supra, procedures Dossin’s, act is not that the administrative
applicable pro- tax State commission ceedings. majority by The reached its conclusion finding general property conflict between the tax procedures act,2 and the administrative act, and reasoning general property spe- that the tax act ais subsequently cific statute; that the enacted adminis- procedures general trative the act is a statute; and that repeal specific by general aof statute statute implied will not be the or assumed. At our invitation, parties supplementary hereto have submitted briefs addressed to the issue whether Dossin’s hold- ing subject that the State tax commission is not procedures the administrative act should be over- ruled. opinion dissenting
The in Dossin’s continues to be persuasive majority more fact to me than the view. The that this Court has overruled Dossin’s sub Appeal Corpo silentio, In in re General Motors (1965), ration 376 Mich in 382, which the 373, Court, speaking through unanimously Justice Adams, ruled that the State tax commission was bound provided proof
standards of the administrative procedures act and that on remand of that case only such additional evidence should be considered competent authority as would be under the of sec suggests tion 5 of that act. No one that the commis subject may provisions sion be to some, all, but not of that act. scope judicial review administrative
agency provided by decisions section 8 the admin- 2 seq. (CL 1948, PA No 206 et Ann 211.1 1960 Rev § [Stat seq.]). 7.1 et § 380 Mich J. Dissenting Opinion by Souris, than the er- procedures act is not broader
istrative permitted of our article section 28 law rors of reviewing tax considered Constitution commission does not seem to be dis- It decisions. to “errors of
puted reference the constitutional appropriate of law the errors with is identical law” to consideration by certiorari. Mr. Jus- on review Township Imlay Primary dissent, tice Black, Board Education No. v. State District School ably (1960), 478, 489,3 demonstrated questions only 8(6) allows review subsection margin4 in the He listed certiorari. as on law, 8(6) specific opinion subsection limitations his imposed his conclu- and stated review presented review item of authorized that each sion question bar is the the case at law. Pertinent to opinion reasoning following from Justice Black’s 491-493): (pp support of his stated conclusion by peti- provided appeal 8 is under section “The *30 petition, and and it is filed served The once tion. due up brings the administrative return is made, by authority of sec- on certiorari issued record as (1945) (likewise author- Rule No 43 tion 2 of Court Imlay majority appeals from the State held that The Court’s subject procedures the administrative board of education were not very majority reasons Dossin’s later held act for much the same subject proceedings were not to the act. the State tax commission’s hand, disagreed and, thus, Black, Justice consideration of the nature on the other turned provided by of review the act. 4 “'(6) may agency court affirm the decision of the [circuit] may proceedings; remand the case for further or it reverse or or modify have rights petitioners may if the substantial of the decision prejudiced findings, inferences, been because the administrative conclusions or decisions arc: (a) provisions; In violation of constitutional or (b) statutory authority jurisdiction In excess of the or of the agency; or (c) (d) (e) upon procedure; Made unlawful or law; Affected other error of or Unsupported by competent, material, and substantial evi- submitted, contrary dence view of the entire record as or to the overwhelming weight evidence; or ” (f) Arbitrary capricious.’ or 1968] CeNtee Co. v. Tax Comm. Dissenting Opinion by Scrams, J. 1908)
ity allegedly § to review 7, art Const tire ‘corporate body grievous action of some or board or on certiorari thereof.’ As issued under officers said petition 2 the and returned section administrative bring question to circuit no of fact au- record determination, thorize no de novo or otherwise, margin specific ‘factual issues.’ Listed in the are the imposes 8(6) upon judicial limitations section view. re- presents Each item of authorized review a question of law.
“Possibly my Brothers have assumed that subsec (e) authorizing tion determination whether — questioned administrative decision is ‘contrary to the weight overwhelming of the evidence’—authorizes judicial determination of an issue or issues of fact..
If that were so I would share the concern voiced in opinion. Mr. Justice It is not so, however, Carr’s (e) brings alarm thus the is false. Subsection up questions only, having prop of law been held— erly lengthily and with considered care—that question whether there is record supporting finding finding of fact, or whether such contrary preponderance (as ‘oyer- here) whelming weight’ presents of the evidence of record, question (Jones of law and not of fact v. Eastern Michigan Motorbuses, 287 619; followed point 290). v. Beck, Barnes 348 Mich possibly If such was not the law, new and unconsti might upon tutional judiciary task have been cast every (section case where, similar statute employment security example) act is another the circuit court is called to determine whether an administrative variоusly decision satisfies legal preponderant overwhelming- worded test of weight.” ! 8(6) (e) subsection
Thus, of the act establishes a quantum *31 of evidence standard to be considered
judicial review for errors of law broader than the applicable “any otherwise evidence” rule of the Mc- Carthy supra. Case, The result is an error of law Mich 340. [Api. Dissenting Opinion by SouRlá, J. findings “unsupported by
if are the commission’s competent, and substantial material, evidence in contrary the entire record as submitted, view of to tbe overwhelming weight of the evidence.” Lest anyone judges be alarmed to determine hereafter will assert right pro- facts de a ceedings, novo in section 8 adopt special
we could here that “Thou proposed5 not” shalt commandment Justice Black Imlay, supra. opinion in in his II.
Applying procedures the administrative act’s quantum necessary support of evidence standard agency I conclude that the decisions, State tax com- predicated upon findings mission’s decision was fact not supported by competent, material, and sub- findings contrary stantial evidence and its were overwhelming weight pre- to the of the evidence as I read Furthermore, record, sented. the com- satisfy “any mission’s decision does even the applied by standard Justice evidence” In Adams. competent support I find no evidence to short, commission’s decision valuation and assessment. taxpayer’s property
The commission valued on a capitalization clearly of income basis. This is dem- by the cross-examination of onstrated Robert Case, appraiser, part quoted of which a commission Justice supra, opinion, p While it is Adams’ repro- that calculations were made of the true crystal property, of the' it is clear duction cost from testimony and, well, Mr. from the Case’s written quoted also commission, Justice .of decision uneasy course', my yet queasy if are “Of Brothers about intentions, below, they special judiciаl commandment eould insert a not’ 'Thou shalt concern; general opinion in their order that no judge engaged reviewing an administrative reeord under circuit said section 8 or anything may point decide or determine aside from a presented points under said section subd (6).” of law *32 379 Tax Comm. Fisher-New Center Co. by Souris, Dissenting Opinion J. upon its opinion, relied that the commission Adams’ In the writ- capitalization calculations. of income reproduction is made to reference decision, ten cap- appraisal merely of the as substantiation cost appraisal. the commis- But of income italization testimony dispute and its witness’ records sion’s own report dis- Its staff claimed substantiation. appraised taxpayer’s at land that closes $5,688,- reproduction buildings, cost a current and its 006 depreciation obsolescence, before $51,- basis on cross-examination testified, Mr. Case 742,222. reproduction taxpayer’s cost was that the counsel, depreciation re- that the for reduced sulting 50% for ob- further reduced amount was 50% se- factor was obsolescence solescence. 50% example, in than lected, rather 60%, 40% figure reproduction bring down cost order to capitalization previously aon determined the value jus- testimony concerning the His of income basis. destroys factor obsolescence for the
tification 50% that any claim for the commission’s basis whatever deprecia- reproduction computation cost less its its valuation “substantiated” and obsolescence tion por- pertinent by capitalization of income. The margin.6 testimony are forth in the set of that tions you have Now, the amount that Sonigman] where is “Q. [Mr. obsoleseenee, you got of that? breakdown have off taken report refers to factor The obsoleseenee “A. [Mr. Case] year depreciation. per rate of to a in addition obsolescence 2% 50% you obsoleseenee factor? arrive at the How did “Q. projections we made to the value that ineome “A. From the bring to the indicated current it down market * * * projections we made. ineome on the basis value you explain done, to me? What Now, will how is that “Q. replacement cost? of what? Of you mean do 50%? 50% replacement correct, depreciated cost. “A. That’s eost, you you figure replacement then took first So “Q. * * * you percentage, recall? do factor of what depreciation judgment personal you decided a matter of So therefore “Q. depreciation be a sound would factor? that 50% yes. this building, For “A. Mich
Dissenting Opinion by Soukis, J. That that the commission’s if decision, means computations from its own is to be sustained support capital evidentiary from its value, must find appraisal repro and not from ization of income its prepared appraisal. the com duction cost Mr. Case by capitalization appraisal of mission’s value of in only come. As as the record before us discloses, far employee, *33 commission David worked Riser, one other capitalization earnings ap Mr. on the with praisal, Case and be was not as witness. The called you obsolescence, And then hoiv did arrive “Q. 50% explain it. by taking “A. We at the obsolescence the reduction arrived 50% necessary bring approach in value of the down ineome value to it to the on the propety. words, using you approach “Q. So other the income basis reproduction arrived at a value that was less than the cost less right? depreciation, is that Considerably “A. so. reproduction How much was that valuation less than “Q. * * * depreciation ? cost less $51,000,000. “A. $51,000,000 depreciation you you “Q. and then say after took judgment, got you off as matter of $26,000,000, down to 50% right is that ? Well, “A. figures I quoting you am to relate —include both depreciation apрlied rate applied and the obsolescence factor replacement figure to $51,000,000 reduce eost down to figure $13,870,000. used of I “Q. understand I trying that but am to trying arrive —I am you it, to demonstrate how you just arrived at so if will listen questions get to the we will to First, you the same answer. di- $51,742,000 half, vided the right? get deprecia- is that To tion? depreciation “A. That deduction, was the correct. gets you “Q. And that close $26,000,000, right? is that Approximately. “A. right. you All “Q. Then cut that again down half as an get obsolescence factor $13,870,000? “A. That’s correct. Now, you “Q. what caused figure to take the for obsoles- 50% cence? Well, “A. in order for bring us to appraisal our down to the value that we arrived at projecting from the ineome of the necessary, it was apply that amount of bring obsolescence to range. down to that “Q,. Well, why necessary was it to use instead of 40 or 60? Well, “-4. if we used 40 or 60 then we would _ not be _ correla- tion with our projections income as to property,” the value of the Co. Tax Comm. Center Dissenting Opinion by Souris, J. or fall on the must stand tes therefore, appraisal, support. in its His timony Mr. Case offered report was based testimony discloses for which conclusion, to its facts, essential assumed evidentiary support in record and, no there adoption its valu commission’s that the therefore, an decision was error own as its conclusion ation requiring reversal. of law for determin- methods that all *34 any purpose.
ion evidence any pretense ex- to Here, Mr. Case disavowed pertise capitalization in of valuation the field earnings. than a reluc- His disavowal was more upon modesty expertise; to assert tance based false expert.7 affirmatively he was an Whatever he denied your report you purported Case, preparation Mr. in the “Q. method, expert capitalization to an on valuation of income on the you did not? object that, cityj “Mr. Plisbow : I I don’t will to [counsel for field, expert any think Mr. Case ever was an said he he employee an was of the State tax commission. Honigman: expert “Mr. I he is an want know whether not, going right we are to find out now. expert “Mr. Plisbow: You “Mr. tried to make of him. Honigman: going He him- to have to make the elaim self, way or one the other. I care which is. don’t “A, -I are There all kinds I expert of definitions of but tMnk 380 Mich
Dissenting by Souris, Opinion J. procedures appraisal familiarity and man- with bis testimony supports bis disclaimer of uals, bis own report, expertise. commission’s staff Therefore, the authorship, is in because it its be claimed of which opinion, expression judg- essential form an admitted not have been should ment, adopted by commission its own decision. as qualifications if we Mr. Case’s
Even assume opinion testimony, underlying assumptions offer opinion supported by is based are not which his example For Mr. testified facts in this record. Case that he a of return as the base rate used rate 5.5% earnings capitalizing the value of for taxpayer’s property. to determine
He admitted rate represent average rate of re selected does expected by prudent in real estate; turn investor any that he did not know of sales investment real rate of return;8 made on the basis of estate 5.5% years go appraisal field I before will have a number of qualify expert. as an your you expert capitalization opinion, on a So in are not “Q. of income method? expert, “A. Not an no. your testimony qualified And would not —eould not be “Q. testimony purpose? expert for that say “A. I no.” would point devastatingly Mr. Case’s eross-examination on this reveals any prime money the absence of rate for reveals that taxpayer’s foundation for his use of the 5.5% capitalizing earnings on real estate investment. It also very appraisal purported supports manual he to use capitalization evidence that rate used hаve should been between 10%: you any “Q. Do know sales of investment real estate made on the basis of a return? 5.5% “A. property. I haven’t been involved in the sales of you any? question. “Q. Do know of Just answer the “A. No. right. you prevailing All Do “Q. know what rate of re- type turn from real estate investments this during you making appraisal? you the time that were Will yes know, or no. answer You either do or don’t Mr. Case. say yes. “A. I would You prevailing “Q. do know what was the return rate of real investment estate at that time? *35 ‘ n ‘d- talking You overall rate? are about Tax Comm. Co. Center "by J. Sotjbis, Dissenting Opinion expected average then rate instead, was, that very- there is prime where situation return “in a money. in the investment risk involved little typical rate of return Well, prevailing means the word “Q. time, at the expected investors at this property type of for this making appraisal. you time were upon considerably depending Well, varies “A. this rate property itself. range variance? What was “Q. depending say structure an office I “A. would between — 6 and is with the the situation 8%. what —between you change 5.5%, want is not right, then it All “Q. 5.5%? right? that 6 to now to range change me for a going You asked it. No, I am not “A. depend- just have said as well gave it. I could I 8% 5.5% risk involved. ing upon the bought any property that was at you know of Do “Q. 5.5% talking you are of? during period that “A. No. “Q. any bought at you was know that Do 6%? “A. No. “Q. any bought you was at Do know of that Or 8%? 7%? “A. No. “Q. any bought you at Do know 9%? “A. No. bought ? you any Do that was “Q. know “A. No. you any bought at Do that was “Q. “A. No. know 15%? any you sales of investment don’t know of “Q. So they general period? in that investment return showed what Well, “A. “Q. as— we used (Interposing): that, you you? do or don’t Yes Just answer you don’t. You either do or or not. buildings comparable “A. took other into consideration and "We report. buildings in this sale those into consideration Now, any you buildings you do know of “Q. Dine. took into consideration? my my report. “A. I “Q. to refer to list in would have you your report Will you take a look at the list and tоll buildings if took into consideration? us buildings “A. listed 4 other here had a look We that we taken selling building, price: at the One was the Penobscot the other one building, building was the United Artists Maccabees and the Pirst building. National right. you All “Q. Do know what rate of return was shown buildings? each of these appraisal “A. At the time of their sale and at I did this the time return, report, I my the rate of recall it. no it included wouldn’t you prevailing in- no “Q. So that at time did know what expectancy you making ap- your
vestment praisal? was at the time were *36 Mich 380 384 Dissenting Opinion J. Souris. * * # all over invest consideration into It takes chip stocks types like bine of investments ments, where municipal cetera, et cetera, et and bonds and investment of its money basis can returned gaining return.” very in involved risk little with of re- only of the rate record in this The Detroit in the prudent investor real estate turn a Lued- expected it. normally came from William area ders, qualifications expert taxpayer’s whose witness, through introduced Evidence conceded. were contemporaneous real es- comparable him actual of re- at rates Detroit near in and tate investments is, that net, free and clear 10.7%, from turn 8.8% depreciation.9 Mr. property but before taxes after computing his valuation in that testified Luedders earnings, by capitalizing he taxpayer’s stating that in his rate, net and clear free used 9% return. rate opinion was a conservative are avail- appraisal manuals tliat say only from our “A. I would in- on each ferreting rate of return out tbe I recall and don’t able dividual report. in here building we have included cheeking pre- you in you manuals used know what Do “Q. capitalization of income method? vailing rates for Appraisal Stevens. Well, Manual and Marshall Boeckh’s we used "A. figure you Boeckh’s uses? know what What do “Q. “A. For? building type. of this For offiee “Q. ranges I between 6 and “A. As “Mr. recall it 8%. Bonigman: Manual. Get Booekh’s girl. Barr: We will take a 5-minute break for the “Chairman a.m.) “(Bearing at 11 :S0 o’clоck recessed Becess “After (By Bonigman): you, Case, Mr. Let me show Boeckh’s Mr. “Q. Manual, page percentage for this what return does show property? type of “(extending witness) manual to high buildings centrally located, “A. offiee well located For modern range class, they buildings show a of office to 10%. says buildings’? And then it 'older offiee “Q. “A. buildings offiee well located —7 to 10 Older %.” Whitney building, The sales considered included the David Gris- Lafayette building, building, building, wold First National Book building, building, building, Dnited Artists and the Francis Palms Detroit; Village Arbor; in Ann all Pittsfield and Federal de- partment and store ranged Ferndale. The sales occurred between 1957 price $715,000 $11,750,000. in sales 1965 and from Co. Comm. Tax Fisheb-New Center Opinion Dissenting by Souris, J. for capitalization rate of return pur- proper issue between only disputed taxpayer poses are They practically agree- commission. and the in the capitalization other element only ment on be- earnings estimated formula —the the commission’s estimate taxes, be- estate real fore But less than $50,000 taxpayer’s. almost ing represents between difference 5.5% $19,460,667 $13,588,- between difference value of earnings before Case’s estimate Mr. 913, using *37 he to allowance of added and an taxes property 2.6% for taxes.10 compensate property rate to the prime use of Mr. Case’s support evidence to Absent real estate earnings capitalizing factor for 5.5% com- that commission I conclude the investments,11 10 carry property burden of in real estate investments Because investments, an has to be made payable allowance not on other taxes for Accordingly, expense item. Mr. additional determinable such money prime rate an allow factor to his Case added 2.6% 5.5% taxes, bringing up to to the factor for thus ance 8.1% earnings property taxes. The al applied estimated be lowance was tax were he/ore prevailing correctly light that madе of evidence per $53 and assessments of assessed value rate was thousand Luedders, Mr. on the averaging of true cash value. 50% earnings actually hand, from his the taxes deducted estimate other city resulting earnings ter imposed taxes, net and to af free and net rate determine applied ho his clear value. 9% actually imposed city’s However, inflated were taxes based litigation. precipitated simplify To assessment which may comparison purposes, we use Mr. Case’s estimate matters earnings property taxes and his allowance for such before 2.6% capitalization computa added to Mr. Luedder’s rate. The taxes tions 9% may expressed thus: ($1,576,314 .026) Cash Value X 100 —True --!-g-g-$19,460,667 ($1,576,314 .026) Cash X Value —True ----g-$13,588,913
- — ap- report prepared staff Mr. Case has The commission’s supervisors’ They quotation in pended its merit district comments. light they east, commission, upon the full for the even within the money prime appraisal property: use of this rate 5.5% Supervisors appraisal primarily “District Comments: The [’] approach. Cap. an income rate rather low and 5-1/2% building is doubtful if this eould this even con- be sold 380 Mían 340. Dissenting by Soukis, J. Oiúnion using compe- only of law
mitted error it. The put tent evidence free and clear net. the rate between 8.8% 10.7% I would, therefore, reverse the purpose commission’s decision and remand for the recomputing the valuation assessment of tax- payer’s property capitalization aat rate within that range procedures in accordaance with the described herein.
III. disgree I do not with Justice Adams’ conclusion support there was sufficient evidence to commission’s determination that assessments 1964 and 1965 were about of true cash value. during evidence, indeed, Some elicited by taxpayer’s
cross-examination counsel. strong taxpayer That offered evidence the ratio point, was much lower does merit reversal on this support not because there was some finding commission’s but, rather, because we cannot say contrary overwhelming weight that it was to the of the evidence. agree suggestion,
I do not with Justice Adams’ however, that we can consider the commission’s *38 part claim support that a studies not of this record finding. part If its not made a of the record of the hearing, they may by commission’s commission or not be used the
by us. Nor do I believe toit be the taxpayer’s'burden to ferret out of the commission’s reports, all files of the studies, and other data that conceivably might upon the rely commission in sidering depreciation. the benefits possibility is There a the that can $400,000 income be projected. In this increased over the that we Our appraisal also assumes a assessment level. a case 50% $3,500,000 come could extremely speculative reduction. is It in- the net $700,000 necessary be yield increased to the to allow a on this of give which equity would plus return the 7% depreciation.” benefits-of Tax Comm. Co. v. Centeb Fisheb-New Dissenting Opinion by Soubis, J. proceedings reaching the In a its before decision. taxpayer has a difficult commission, tax
State enough rebutting putting case, in own it is his time as municipality’s taxing well, attack and, case as report of the ing in an adverse the weaknesses Apart Pavilion staff. See tax commission’s (1964), 373 Tax Commission ments, Inc., v. State just foot, is the other shoe Mich 601. The as ing municipality taxing binding, defend is when objections taxpayer’s against its assessment report ad staff tax commission’s and a of the State in some arises, as it does it. This situation verse to proceedings, agency because other administrative tripartite one between contest sometimes is municipality taxing taxpayer, and the com by the fact own staff. It is exacerbated mission’s dispute position staff in that the commission’s formally hearing by presented it at the not normally by rather, counsel but, its behalf elicited position supports. taxpayer it whose report supports neither the commission’s staff When principal Fisher, contestants, this case adversary presentation the staff itself absent quite un to me counsel, or on its behalf seems place upon either of them to realistic the burden sup underlying all of the data introduce porting report. In such circum the adverse staff protected if the interests are to stances, State’s process adequately concepts not dis and our of due represented must be torted, the commission’s staff party proceedings actively as a to the counsel. very if the commission’s least, however,
At the represented hearing, at the the burden staff is report supporting introducing evidence, its principal contest- when conflict with both placed squarely commission. ants, should be supra, thought Pavilion, I hadwe decided in *39 380 Opinion by Dissenting Somas, J. agencies, specifically very administrative this com “stray were not entitled to mission, record in will from the reaching [their] decision”. Mazza v. Ca (1954), (105 554), vicchia quoted NJ A2d supra. Pavilion,
in Unless Pavilion means agency that the administrative must introduce for mally documentary in all evidence and testimonial rely upon making facts it intends to in its decision, nothing taxpayers it means of value to or to tax ing If authorities. not that, does mean the tax payer taxing municipality must then ferret out agency’s they every scrap of the if files, can, paper agency conceivably and other evidence the might use, even evidence adverse to their claims, own they “challenge validity so that can reports findings studies, staff, commission’s persons preparing * * * cross-examine supra— same,” in the words of Justice Adams, they way knowing if even have no then how the might commission in the future use make of the data reaching found its decision! If that is what our Pyrrhic victory decision in Pavilion means, it was a taxpayer. for the
I would hold commission, case that having failed to introduce evidence its staff studies of levels, assessment was entitled reaching consider them in its decision.
IV. agree opinion regarding with Justice Adams’ I cross-appeal. of Detroit’s
For the reasons set forth I above, would reverse purpose recomputing and remand for the the valu- taxpayer’s property ation and capitalization assessment at a range rate within the established competent this record discussed *40 v. Tax Center Co. Comm. Dissenting Opinion by Souris, J. opinion. I wonld also II assess costs in Part , taxpayer. in favor of the j J., C. concurred with O’Hara, J., Dethmers, Souris, J. (concurring). I reservation Without J. Black, reasoning
agree the comment and Justice with through paragraphs 9 of his has written Souris opinion a ma- is that But the trouble for reversal. agree
jority in the not with us did Court (360 312) and Case Food Products Bossin’s agree that the State view with our still does 1(1) “agency” within section is an tax commission (CLS § procedures act of the administrative 24.101 et 3.560(21.1)]). § seq. [Stat Ann 1961 Rev attempts per- In two unsuccessful this'Court enough. in wait as more Better to lie are suasion Resignedly, pours I have therefore, in. ammunition opinion a correct Adams Justice indorsed (art provision application the constitutional 1963) re- § rule which our current and of 28, Const decisions of of orders and review stricts tax commission. Adams notes Justice including capitalization of earn- ing- value, true cash judgment. require Decisions ings, the exercise unsup- factually conjecture, upon hunches, based ported fairly assumptions, hardly can be described Opinions judgment. or conclu- the exercise competent normally evi- are not considered sions beyond they the ken relate to matters dence unless they are offered in the form unless finder, of the fact opinion expert, unless the factual of the supported expert’s opinion is in all for the basis respects by is not evidence. This some essential competence credibility; it a matter of a matter of opin- goes admissibility to the and, therefore,