|ICE CREAM SPECIALTIES,||)|
|)||Appeal Number 11-10973 and 12-10535|
|JAKE ZIMMERMAN, ASSESSOR,||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
DECISION AND ORDER
Decision of the County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE. Complainant presented substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization.
The Assessed Value for the subject property for tax years 2011 is set at $355,737. The Assessed Value for the subject property for tax year 2012 is set at $568,369.
Complainant appeared by counsel Thomas Campbell.
Respondent appeared by counsel Paula Lemerman
Case heard and decided by Hearing Officer Maureen Monaghan.
Complainant appeals, on the ground of overvaluation, the decision of the St. Louis County Board of Equalization, which sustained the valuation of the subject property. The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2011 and January 1, 2012.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
- Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the St. Louis County Board of Equalization.
- Evidentiary Hearing. The Evidentiary Hearing was held on August 12, 2014 at St. Louis County Administration Building, Clayton, Missouri.
- Identification of Subject Property. The subject property is identified by account number M0040154A
- Description of Subject Property. The subject property consists of business personal property.
- Assessment. In 2011, the Assessor assessed the personal property at $953,140. The Board of Equalization sustained the assessment. In 2012, the Assessor assessed the personal property at $1,277,780. The Board of Equalization sustained the assessment.
- Complainant’s Evidence. The following exhibits were offered and admitted into evidence:
A1- List of Personal Property, Original Cost, Date of Acquisition, Depreciated Value for 2011.
A2- List of Personal Property, Original Cost, Date of Acquisition, Depreciated Value for 2012.
B – Written Direct Testimony of Ed Ripka
C – Amendment to A1
D – Amendment to A2
E – Invoice.
Respondent objected to Exhibit E as it was submitted after the expiration of the exchange schedule. Complainant stated that the exhibit was rebuttal evidence unanticipated as the Respondent did not submit exhibits other than the Board of Equalization Decisions.
- Respondent’s Evidence. The following exhibits were offered and admitted into evidence:
1. Board of Equalization Decisions for 2011 and 2012
2. “Amended List”
The Board of Equalization Decisions were received; any additional documents contained in Exhibit 1 were not admitted into evidence. Exhibit 2 was a file listing report of unknown author. The Respondent offered it in relation to the inter cooler – when it was placed in service and the value. The exhibit was admitted over the objection of the Complainant. The only information received into evidence from the document was the line regarding the cooler. The Hearing Officer determined the appropriate weight to be given to the evidence.
- Presumption of Correct Assessment Rebutted – Value Established. The Complainant presented an amended declaration. Complainant also presented, at hearing, the valuation of office furniture and the ammonia condenser which had been omitted from the amended declaration for 2011 and 2012. Complainant also presented at hearing the valuation of a roller conveyer which had been omitted from the amended declaration for 2012. The evidence presented by Complainant was substantial and persuasive to both rebut the presumption of correct assessment by the Board and to establish the assessed personal property value to be $355,737 for 2011 and $568,369 for 2012 using the methodology set out in Section 137.122 RSMo. As follows:
CONCLUSIONS OF LAW
The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious. The hearing officer shall issue a decision and order affirming, modifying or reversing the determination of the board of equalization, and correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious. Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo.
Presumption In Appeal
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization. Hermel, Inc. v. STC, 564 S.W.2d 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Co. v. STC, 436 S.W.2d 650, 656 (Mo. 1968); May Department Stores Co. v. STC, 308 S.W.2d 748, 759 (Mo. 1958).
This presumption is a rebuttable rather than a conclusive presumption. It places the burden of going forward with some substantial evidence on the taxpayer – Complainant. When some substantial evidence is produced by the Complainant, “however slight”, the presumption disappears and the Hearing Officer, as trier of facts, receives the issue free of the presumption. United Missouri Bank of Kansas City v. March, 650 S.W.2d 678, 680-81 (Mo. App. 1983), citing to State ex rel. Christian v. Lawry, 405 S.W.2d 729, 730 (Mo. App. 1966) and cases therein cited. The presumption is not evidence of value.
In the valuation of personal property, an estimate of value determined under the mandates set by statute (Section 137.122 RSMo) is presumed to be correct for the purpose of determining the assessed value of depreciable tangible personal property. The statutory method of estimation of value may be disproved by substantial and persuasive evidence under any method determined by the State Tax Commission to be correct, including, but not limited to, an appraisal of the tangible personal property specifically utilizing generally accepted appraisal techniques, and contained in a narrative appraisal report in accordance with the Uniform Standards of Professional Appraisal Practice.
Rebutting of Presumption of Correct Assessment
The presumption of correct assessment is rebutted when the taxpayer presents substantial and persuasive evidence to establish that the Board’s valuation is erroneous and what the value should have been placed on the property.
Section 137.122, RSMo
Under Section 137.122, RSMo, the depreciable tangible personal property is valued by applying the class life and recovery period to the original cost of the property according to the depreciation schedule set forth in the statute. “Original cost” is the price the current owner, the taxpayer, paid for the item without freight, installation, or sales or use tax.
The Complainant filed personal property lists with the Assessor in tax years 2011 and 2012. The Complainant certified that the list was true and correct. The Assessor relied upon the sworn, certified list to set value for the personal property. However, the business personal property list filed by Complainant, even though certified by the Complainant as being true and correct, was not accurate. Due to the Complainant not acting with due diligence and providing a list to which the Complainant swore was accurate, the county was unable to correctly value the personal property. The Complainant’s business personal property list filed as an Exhibit in the appeal was an accurate listing of the property as of January 1, 2011 and January 1, 2012. An accurate listing as the one provided as an Exhibit should have been filed by the Complainants originally. Since the basis of the assessment was an inaccurate listing of personal property, the presumption of correct assessment is rebutted.
Complainant’s witness was familiar with all property present at the property. He testified that he worked for the company at that facility since 1986. He is the plant manager and therefore oversees all operations at the plant. He is familiar with all the equipment, its maintenance, installation, costs, bids, and so on. The original personal property declarations were submitted by the tax department of the larger company whose offices are located in Illinois. As part of the appeal, Mr. Ripka reviewed the personal property declarations to determine if all property had been declared and if property was on the list that was not at the subject location on January 1, 2011 and 2012. He determined whether the inventory list included non-taxable items such as real estate, labor, freight and installation. He was aware of any equipment removed from the property. He was knowledgeable as to when items, such as the intercooler, were placed into service. Mr. Ripka testified as to the labor costs to install many of the items on the inaccurate declaration form. Mr. Ripka was able to locate invoices for the labor costs in order to remove those expenses for an accurate reporting of “original costs”. Using his knowledge and familiarity of the plant, a detailed and accurate inventory of the property was developed.
The Complainant then amended their personal property declaration to include the corrected information. Equipment not located at the plant on January 1 of the tax year was removed, equipment at the plant that was omitted was added, placed in service dates were corrected, original cost information was verified, and all property on the declaration was analyzed to confirm it was not a fixture. The amended declarations comply with Section 137.122 RSMo methodology for valuing personal property
There was some cross examination of the witness in regards to the air conditioning unit, security devices, and parts for machinery. Mr. Ripka described each of those items. The air conditioning unit is on the roof and would require a crane to remove – the unit would be sold with the building. The security system is devised for their plant, wiring is behind drywall, and the company has no intention of removing it as it would damage the building. The parts in question are parts for rebuild and maintenance of the plant equipment. There was no evidence to rebut his testimony.
“It would serve no good purpose to review the decisions of this court and the supreme court on the subject of fixtures. Nothing would be gained by this, as the question of what is, and what is not, a fixture, must depend largely upon the facts of each particular case.” Buchanan v. Cole, 57 Mo. App. 11, 16 (1894). With this one statement, Judge Biggs set forth the cardinal rule of the law of fixtures, that is, that there are no hard and fast rules to determine what is or is not a fixture.
Black’s Law Dictionary defines a fixture as follows:
An article in the nature of personal property which has been so annexed to the realty that it is regarded as a part of the land. (5th ed., p. 574)
A fixture, by definition then, is real property. In Missouri, three things are required for an object to become a fixture: annexation, adaptation, and intent. Sears, Roebuck and Company v.Seven Palms Motor Inn, Inc., 530 S.w.21 695, 696 (Mo. banc l975). Although all three elements are required to be present, the courts weigh each element differently in different circumstances.
Black’s Law Dictionary defines annexed as:
A thing is deemed to be affixed “annexed” to land when it is attached to it by roots, embedded in it, permanently resting upon it, or permanently attached to what is thus permanent, by means of cement, plaster, nails, bolts, or screws. (5th ed., p. 574)
This is the traditional view of the type of annexation required to make an item a fixture. Some type of more or less permanent annexation has traditionally been required, for example, cabinets nailed to walls and floors (Marsh v. Spradling, 537 S.W.2d 402 (Mo. 1976)), hydraulic lifts embedded in cement (Leawood National Bank of Kansas City v. City National Bank & Trust Comnany of Kansas City, 474 S.W.2d 641 (Mo. App. 1971)), or insulated doors installed in made-to-measure openings (Stockton v. Tester, 273 S.W.2d 783 (Mo. App. 1954) Other evidence of annexation is the facility with which an object can be removed. If an object could be removed without harming itself or the real estate it was presumed to be personal property.
Adaption refers to whether the property has been adapted for the property. Even if an item is only tenuously attached to the realty, if it is particularly adapted to the purpose for which the building was constructed, it may very well be considered a fixture.
The last element is intent – whether the annexor intended that the item be permanently affixed to the land. Intent is demonstrated generally by the annexor’s acts and conduct. Other evidence of intent is the nature of the annexation to the property. If the object is affixed in such a way as to allow removal without damaging itself or the real property, the indicated intent of the annexor is that it remain personal property. Handlan v. Stifel, 232 S.W. 245 (App. 1921).
The Respondent questioned whether items such as replacement parts, surveillance system and air conditioning unit were fixtures or items of personal property. In State ex rel. Otis Elevator Co. v. Smith, 357 Mo. 1055, 212 S.W.2d 580 (banc 1948); rehearing denied (1948), the court determined that the parts supplied to repair elevators were not personal property. In Sears, Roebuck and Company v. Seven Palms Motor Inn, Inc., 530 S.W.2d 695 (Mo. banc 1975) the court held that curtain rods and drapery were fixtures. Given the nature of items such as the security system and air conditioning unit in this case meet the guidelines set forth by Missouri cases, the items are determined to be fixtures.
The trier of fact has the duty to evaluate the evidence presented to determine its sufficiency and persuasiveness in establishing market value. The Complainant presented evidence sufficient to rebut the presumption in favor of the assessment affirmed by the Board. The Complainant’s witness reviewed the personal property list of the Complainant, removed items that were not tangible personal property, i.e., labor, freight, installation, real estate, and corrected the inventory to include all items, and only those personal property items, that were located on the subject property as of the tax date. A value under the methodology presumed to be correct under Section 137.122, RSMo was developed to arrive at a true value as presented by Complainant.
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for St. Louis County for the subject tax day is SET ASIDE.
The assessed value for the subject property for tax year 2011 is set at $355,737 and for 2012 is set at $568,369.
Application for Review
A party may file with the Commission an application for review of this decision within thirty days of the mailing date set forth in the Certificate of Service for this Decision. The application shall contain specific facts or law as grounds upon which it is claimed the decision is erroneous. Said application must be in writing addressed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO 65102-0146, and a copy of said application must be sent to each person at the address listed below in the certificate of service.
Failure to state specific facts or law upon which the application for review is based will result in summary denial. Section 138.432, RSMo
The Collector of St. Louis County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending the possible filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of Section 139.031.8, RSMo.
Any Finding of Fact which is a Conclusion of Law or Decision shall be so deemed. Any Decision which is a Finding of Fact or Conclusion of Law shall be so deemed.
SO ORDERED this 26th day of August, 2014.
STATE TAX COMMISSION OF MISSOURI
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 26th day of August, 2014 to: Robert Droney, 101 S. Hanley Rd., #1700, St Louis, MO 63105, Attorney for Complainant; Paula Lemerman, 41 S. Central Ave., Clayton, MO 63105, Attorney for Respondent; Jake Zimmerman St. Louis County Assessor, 41 S. Central Ave., Clayton, MO 63105; Mark Devore, St. Louis County Collector, 41 S. Central Ave. Clayton, MO 63105.