PIER 67, INC., Appellant, v. KING COUNTY, ET AL, Respondents.
No. 44366
En Banc
December 22, 1977
89 Wn.2d 379
WRIGHT, C.J., and ROSELLINI, HAMILTON, STAFFORD, BRACHTENBACH, HOROWITZ, DOLLIVER, and HICKS, JJ., concur.
Christopher T. Bayley, Prosecuting Attorney, and Dennis E. Kenny, Deputy, for respondents.
UTTER, J.—This is an appeal from property valuations for purposes of the ad valorem property tax. The primary issues are whether these valuations violate various provisions of the state and federal constitutiоns.
The present appeal is essentially a continuation of the original action commenced in 1964. We considered this case on two previous occasions. See Pier 67, Inc. v. King County, 71 Wn.2d 92, 426 P.2d 610 (1967) (Pier 67 I); and Pier 67, Inc. v. King County, 78 Wn.2d 48, 469 P.2d 902 (1970), cert. denied, 401 U.S. 911, 27 L. Ed. 2d 810, 91 S. Ct. 876 (1971) (Pier 67 II). The issues raised on this appeal stem primarily from Pier 67 II. In that case, this court overruled prior statutory interpretations of
Since Pier 67 II, a host of legislation has been passed amending
After our decision in Pier 67 II, the King County assessor changed the valuations on appellant‘s (Pier 67, Inc.) leasehold and improvements (the Edgewater Inn, Seattle), and appellant now challenges their validity. The valuations in dispute concern assessment years 1963-67 and 1970-72 (for taxes payable in yeаrs 1964-68 and 1971-73). No taxes have been paid for those years.
The trial court made the following findings and conclusions: (1) The leaseholds of Pier 67, Inc., the Olympic Hotel, and the University Properties, Inc., have similar characteristics making the comparison of valuations valid
I
Appellant makes several assignments of error pertaining to the trial court‘s refusal to find it had been unconstitutionally discriminated against, not only during the years 1968 and 1969, but also 1963 through 1967, and 1970 through 1972. Appellant reasons that the interpretation of
Our constitution provides: “All taxes shall be uniform upon the same class of property within the territorial limits of the authority levying the tax . . .”
It seems too plain for argument that to pick out the property of a particular owner and raise the assessed valuation of his property substantially above the assessed valuation of property of a like character similarly situated, violates the uniformity and equality provision of
article VII, § 2, of the state constitution .. . . If the assessment is higher than that of property of like character and similar in situation, the assessment cannot be sustained, even though it be based on the true market value of the property.
(Italics ours.) Pacific Tel. & Tel. Co. v. Wooster, 178 Wash. 180, 183-84, 34 P.2d 451 (1934). The United States Supreme Court has expressly held, in a case arising in this jurisdiction and on facts closely analogous to those now before us, that the use of different valuation techniques for
Property tax assessments and the underlying valuations are presumed valid. Alaska Land Co. v. King County, 77 Wn.2d 247, 461 P.2d 339 (1969); Dexter Horton Bldg. Co. v. King County, 10 Wn.2d 186, 116 P.2d 507 (1941); Bellingham Community Hotel Co. v. Whatcom County, 190 Wash. 609, 70 P.2d 301 (1937). In addition, the assessor‘s valuations will only be overturned if the taxpayer can prove that the valuations were fraudulently, arbitrarily, or capriciously made (Mason County Overtaxed, Inc. v. Mason County, 62 Wn.2d 677, 384 P.2d 352 (1963); Dexter Horton Bldg. Co. v. King County, supra) or if the valuations violate some constitutional provision. Pacific Tel. & Tel. Co. v. Wooster, supra. The taxpayer has the burden of establishing by clear and convincing evidence that the valuations and assessments are illegal. Alaska Land Co. v. King County, supra; Ozette Ry. v. Grays Harbor County, 16 Wn.2d 459, 133 P.2d 983 (1943).
The trial court concluded the presumption of corrеct assessment must prevail for the years now at issue because the records which contained the valuation techniques utilized for the Olympic Hotel and University Properties, Inc., during these periods had not been preserved by the county, with the result that the appellant was unable to prove with absolute certainty that the Olympic Hotel and University Properties, Inc., had been allowed deductions which had
The trial court found the leaseholds of Pier 67, the Olympic Hotel and University Properties, Inc., have similar characteristics, making comparison of assessments valid for purposes of determining compliance with the constitutional mandate of uniformity. It also found those properties were assessed in “a substantially different manner” for assessment years 1963 through 1969. Despite these findings, the court held, in essence, that absent sрecific evidence of discrimination as to each of the tax years in question (such as was found to exist for the years 1968 and 1969), the presumption of correctness prevails.
The cases in which the presumption of correctness was developed did not involve a factual setting such as this. Those cases concerned attacks on excessive or disparate evaluation, generally in a single year, rather than disparate valuation allegedly arising from the systematic use of varying valuation techniques as to similar property over a period of years. See, e.g., Northwestern Improvement Co. v. Pierce County, 97 Wash. 528, 167 P. 33 (1917); Norpia Realty Corp. v. Thurston County, 131 Wash. 675, 231 P. 13 (1924); Swanson v. Snohomish County, 191 Wash. 389, 71 P.2d 170 (1937); Mason County Overtaxed, Inc. v. Mason County, supra; Alaska Land Co. v. King County, supra.
This case was begun in 1964. The county has been on notice since that time that appellant was seeking to determine the assessment method applied to the Olympic Hotel and University Properties, Inc., leaseholds for all tax years for which the relevant data is now unavailable. We have previously held on several occasions that where relevant evidence which would properly bе a part of a case is within the control of a party whose interests it would naturally be to produce it and he fails to do so, without satisfactory explanation, the only inference which the finder of fact may draw is that such evidence would be unfavorable
The trial court found the appellant sustained his burden to prove discrimination as to the 2 years for which records were mаintained by the county. As to the years 1964-67, for which no specific evidence (other than the fact that such deductions were then lawful and appellant‘s property was assessed at an enormously greater value than similar properties) is available, the only inference which may be drawn is unfavorable to the contention of the respondents that such discriminatory techniques were not in fact employed. British Columbia Breweries (1918) Ltd. v. King County, supra. There being no evidence to the contrary, the appellant has сlearly met his burden as to these years. The record does, however, suggest that the Olympic Hotel and University Properties, Inc., were not allowed the mortgage amortization deductions which form the basis for appellant‘s claim of discrimination in the year 1970. While no evidence is available as to what technique was utilized in subsequent years, it is logical to assume, given our decision in Pier 67 II, that such deductions were not allowed as to any taxpayers thereafter. This being so, we cannot concludе the appellant has adequately demonstrated discrimination in valuation techniques for the years subsequent to 1969.
We hold that the assessments for the years 1963-67 are also discriminatory and therefore void. Appellant is entitled to have its leasehold assessed for each of these years in a manner consistent with the techniques the evidence indicates were utilized with regard to other equivalent properties.4
II
Appellant next asserts the trial court erroneously interpreted thе leasehold moratorium act (
III
Finally, appellant assigns error to the trial court‘s award of interest at the statutory rate from May 23, 1968, to the date of payment. The general rule in this state is that, in the absence of a statute, delinquent taxes bear no interest. State v. Pacific Tel. & Tel. Co., 195 Wash. 244, 80 P.2d 780 (1938).
The judgment is reversed and remanded for further proceedings consistent with this opinion.
WRIGHT, C.J., and ROSELLINI, HAMILTON, BRACHTENBACH, HOROWITZ, and DOLLIVER, JJ., concur.
STAFFORD, J. (dissenting in part)—I disаgree with the majority insofar as it reverses the trial court‘s determination for assessment years 1963-1967 (i.e., tax years 1964-1968). I concur with the balance of the opinion. Thus, I would affirm the trial court in toto.
I dissent even though I accept the following factual recitation made by the majority: (1) The leaseholds of appellant, the Olympic Hotel and University Properties, Inc., have similar characteristics making valuation comparisons valid on the constitutional issues of discrimination and
I also agree property tax assessments and underlying valuations are presumed valid. Thus, the appellant has the burden to establish, by clear and convincing evidence, that the assessor‘s valuations either were fraudulently, arbitrarily, or capriciously made or violate some constitutional provision. Here, appellant simply has not satisfied its burden for assessment years 1963-67.
Appellant points to no substantive evidence that establishes either that the assessor‘s valuations were fraudulently, arbitrarily, or capriciously made, or that they violate some constitutional provision. Indeed, even the majority opinion points to no such evidence. In the absence of such proof, appellant has neither sustained its heavy burden of proof nor met the rebuttable presumption of validity which attaches to property tax assessments and valuations. Baker v. Lake City Sewer Dist., 30 Wn.2d 510, 191 P.2d 844 (1948); School Dist. 88 v. Morgan, 147 Wash. 321, 266 P. 150 (1928). Thus, I cannot agree that “the trial court placed too great an emphasis upon the presumption of proper assessment” thereby committing error.
The majority seeks to excuse appellant‘s failure of proof by pointing to the county‘s failure to preserve and produce records which might explain valuation techniques utilized
Yet, the majority and appellant take the position that:
where relevant evidence which would properly be a part of a case is within the control of a party whose interests it would naturally be to produce it and he fails to do so, without satisfactory explanation, the only inference which the finder of fact may draw is that such evidence would be unfavorable to him [the county] . . .
. . . the only inference which may be drawn is unfavorable to the contention of the respondents [the county] that . . . discriminatory techniques were not in fact employed.
(Brackets and italics mine.) Here the majority treats failure to preserve and produce documents as creating a mandatory inference that the contents of the missing documents, if produced, would be unfavorable to the county and would also establish the fact of discriminatory techniques. In this circuitous fashion, the majority seeks tо create the missing substantive evidence and thus finds appellant to have satisfied its burden of proof. Support for such an unusual “triple-play” is sought in British Columbia Breweries (1918) Ltd. v. King County, 17 Wn.2d 437, 135 P.2d 870 (1943), and its progeny.
I agree with the majority that unexplained failure to preserve and thus produce relevant records in one‘s possession may create an unfavorable inference rather than an unfavorable presumption. The majority has correctly characterized the evidentiary function served by failure to preserve and produce records thus clarifying some of the confusion generated by British Columbia Breweries. In fact, most authorities agree presumptions and inferences are entirely different. 1 S. Gard, Jones on Evidence § 3:2, at 129 (6th ed. 1972); 9 J. Wigmore, Evidence § 2491 (3d ed. 1940); 31A C.J.S. Evidence § 115, at 198 (1964). A presumption arises from the high degree of probative value stemming from an
While I agree respondent‘s unexplained failure to preserve or producе documents may permit an unfavorable inference, appellant has not produced sufficient evidence to make the inference relevant. The unfavorable inference which may arise from the destruction of, or failure to preserve, evidence is only available if the destruction has been wilful, deliberate, or done with some evil intent. Walker v. Herke, 20 Wn.2d 239, 147 P.2d 255 (1944); 1 S. Gard, Jones on Evidence § 3:90, at 319; 29 Am. Jur. 2d Evidence § 177, at 220-21 (1967); 31A C.J.S. Evidence § 153, at 389-90. Even the unfavorable inference which may arise from the possessor‘s failure to produce evidence is not available if
The majority next treats the inference as mаndatory. I disagree with this evidentiary maneuver for two reasons. First, British Columbia Breweries at page 455 twice uses the expression ”the only inference which may be drawn” (italics mine). But, careful review of the entire text plus review of the cited authorities and their later editions makes clear that the inference is not mandatory. Rather, it is permissive only. The trier of fact may draw the inference but is not required to do so. 1 S. Gard, Jones on Evidence § 3:91, at 324, § 3:93, at 327; 31A C.J.S. § 156(1), at 398; Annot., 70 A.L.R. 1326 (1931). Thus, even if the trier of fact here was permitted to draw an unfavorable inference, it chose not to do so. Consequently, the rebuttable presumption that assessments are valid was not negated.
I also disagree with the majority‘s assumption that the inference would spеcifically have been “unfavorable to the contention of the respondents [county] that such discriminatory techniques were not in fact employed.” (Brackets and italics mine.) British Columbia Breweries does not support this position. In fact, we said at page 455:
The rule is that the only inference which may be drawn by the trier of the fact is that
. . . Evidence of such conduct is persuasive rather than probative and cannot be invoked as substantive proof of any facts essential to the case of the opponent.
The rule has been stated that the presumption [more properly denominated a permissive inference] will not supply a missing link in an adversary‘s case and cannot be treated as independent evidence of a fact otherwise unproved. It has been stated that the presumption [more properly denominated a permissive inference] arising from the nonproduction of evidence does not relieve the other party from the burden of proving his case.”
(Italics mine.)
Neither can the inference relied on here be substituted for substantive prоof of discriminatory techniques, nor can it relieve the appellant of the obligation of proving its case. Walker v. Herke, supra.
The inference merely discounts the credibility of the withholding party‘s claim. Walker v. Herke, supra at 249-51; 2 J. Wigmore, Evidence § 278(2), at 120; 1 S. Gard, Jones on Evidence § 3:90, at 321, § 3:91, at 325, § 3:93, at 329; 31A C.J.S. 156(1), at 399; Annot., 70 A.L.R. 1326. It does not substitute for substantive proof of any fact much less take the place of proof of a fact essential to the case of the party invoking it. Walker v. Herke, supra; 1 S. Gard, Jones on Evidence § 3:93, at 329; 31A C.J.S. § 152, at 388, § 156(1), at 398. Further, it does not supply a missing link in the proponent‘s case because it is not independent evidence of any fact otherwise unproved. 29 Am. Jur. 2d § 178, at 223; 31A C.J.S. § 152, at 388, § 156(1), at 398.
The inference permits the trier of fact to infer that the missing documents would be unfavorable to the claim of the county. But it does not permit the further inference that, if produced, the evidence would establish any specific underlying unfavorable facts. 1 S. Gard, Jones on Evidence § 3:90, at 320-21, § 3:91, at 325, § 3:93, at 329; 29 Am. Jur. 2d § 179, at 224. Nor does it constitute proof of the contents or nature of the documents which it is claimed would have been shown on production. 31A C.J.S. § 156(1), at 398-99. The inference merely diminishes the force of the spoliator‘s existing evidence or enhances the probative value of that actually produced by his opponent. Olsson v. Hansen, 50 Wn.2d 199, 310 P.2d 251 (1957); 31A C.J.S. §
In any event appellant must still establish a prima facie case. Walker v. Herke, supra; 1 S. Gard, Jones on Evidence § 3:93, at 329; 29 Am. Jur. 2d § 177, at 221; 31A C.J.S. § 152, at 388; 70 A.L.R. 1326. Here, appellant has produced no substantive evidence and has established no prima facie case for assessment years 1963-67. Thus, there is nothing to which the inference could attach. Since the inference does not supply the crucial missing link in appellant‘s case, and since it is not independent evidence of any fact and is neither affirmative nor substantive proof of the content or nature of the missing paper, appellant has failed to sustain its burden of proving by clear and convincing evidence that the challenged valuations and assessments for assessment years 1963-67 are illegal.
For this reason, the trial court having been affirmed on all other points, it should be affirmed in full.