Stephen & Louis Ruprecht v. Chuck Pennel, Assessor Taney County

October 16th, 2014

State Tax Commission of Missouri

STEPHEN & LOUIS RUPRECHT	)
	)
Complainant(s),	)
	)
v.	)	Appeal Number 14-89503
	)
CHUCK PENNEL, ASSESSOR,	)
TANEY COUNTY, MISSOURI,	)
	)
Respondent.	)

ORDER NUNC PRO TUNC

Order and Decision dated October 16, 2104, is amended nunc pro tunc as follows:

The language in the second paragraph of such Order and Decision is to read as:

“True value in money for the subject property for tax year 2014 is set at $53,500, residential assessed value of $10,165.”

The language under paragraph 8 of “FINDINGS OF FACT” is stricken.

The language under “ORDER” is to read as:

“The assessed valuation for the subject property as lowered by the Board of Equalization for Taney County for the subject tax day is SET ASIDE. The assessed value for the subject property for tax year 2014 is set at $10,165.”

In all other respects said Order is affirmed as issued.

SO ORDERED this 19th day of November, 2014.

STATE TAX COMMISSION OF MISSOURI

John Treu

Senior Hearing Officer

Delivery or Notice was made via mail, email, fax, or personally on November 19th, 2014 to the following Individuals of this Decision/Order/Holding

Stephen & Louis Ruprecht, 128 Mulligan Ct. #16, Branson, MO 65616, Complainants

Chuck Pennel, Assessor, PO Box 612 Forsyth, MO 65653, Respondent;

Sheila Wyatt, Collector, PO Box 278 Forsyth, MO 65653

Donna Neeley, Clerk, PO Box 156, Forsyth, MO 65653

Jacklyn Wood

Legal Coordinator

State Tax Commission of Missouri

STEPHEN & LOUIS RUPRECHT	)
	)
Complainant(s),	)
	)
v.	)	Appeal Number 14-89503
	)
CHUCK PENNEL, ASSESSOR,	)
TANEY COUNTY, MISSOURI,	)
	)
Respondent.	)

DECISION AND ORDER

HOLDING

This appeal is submitted on the record by agreement of the parties. Decision of the County Board of Equalization reducing the assessment made by the Taney County Assessor is SET ASIDE. Although Complainants bore the burden of proof in this appeal as to the subject property, which previously were bought as two lots, Mr. Pennel’s Written Direct Testimony submitted via email on October 10, 2014, must, to serve the ends of justice and equity, be considered, ultimately, to the benefit of Complainants. Complainants did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization to show the value of the subject property as of January 1, 2013. However, the Written Direct Testimony of Chuck Pennel states that two lots “which are comparable to Mr. Ruprecht’s lots” (now one piece of property), were sold for $25,000 and $28,500 respectively. Combining the sales prices of these two lots equals $53,500.

True value in money for the subject property for tax years 2013 and 2014 is set at $53,500, residential assessed value of $10,165.

Case decided on the record by Senior Hearing Officer John Treu.

ISSUE

Complainants appeal, on the ground of overvaluation, the decision of the Taney County Board of Equalization, which lowered 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, 2013. The value as of January 1 of the odd numbered year remains the value as of January 1 of the following even numbered year unless there is new construction and improvement to the property. Section 137.115.1 RSMo

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. Complainants timely appealed to the State Tax Commission from the decision of the Taney County Board of Equalization.
Evidentiary Hearing. The case was submitted on the record by agreement of the parties.
Identification of Subject Property. The subject property is identified by map parcel number or locator number 08-4.0-18-000-000-011.079. Such is a vacant lot in Branson, Missouri, Taney County, Missouri. (Ex. E).
Description of Subject Property. The subject property consists of a vacant lot. It is a combination of two lots purchased by Complainants. Complainants submitted no evidence relating to the size of the lot. (Ex. A through E).
Sale of Subject. The two lots now making up the subject property had settlement dates of December 23, 2013 and February 28, 2014, with purchase prices of $12,000 and $11,000 respectively. (Exhibit E). See, Methods of Valuation, infra.
Assessment. The Assessor appraised the property at $138,000, an assessed residential value of $26,220. The Board of Equalization reduced the appraisal of the property to $80,000, an assessed value of $15,200. (Ex. E)
Complainant’s Evidence. Multiple documents were submitted by Complainants. Each exhibit is being considered part of the evidentiary record, but only given such weight as appropriate. Exhibit A consists of a settlement statement regarding a property not the subject of this appeal, purchased by Jason and Gina Love. Exhibit B consists of a settlement statement regarding a property not the subject of this appeal, purchased by Joseph and Susan Ruprecht. Exhibit C consists of a settlement statement regarding a property not the subject of this appeal, purchased by Andrew and Jennifer Ruprecht. Exhibit D consists of a hand drawn map showing the location of the subject property in relations to the properties of Joseph Ruprecht and Jason Love, and a statement about such properties. The statement also explains where the property of Andrew Ruprecht is. Exhibit E consists of Complainants Complaint for Review of Assessment, The Board of Equalization Decision of Taney County Missouri regarding the subject property, a Settlement Statement regarding one lot of two lots now making up the subject property, with a Settlement date of February 28, 2014, and a Buyer’s Statement regarding the other lot of two lots now making up the subject property, with a settlement date of December 23, 2013. All of the exhibits are made part of the evidentiary record, but only given such weight as appropriate
No Evidence of New Construction & Improvement. There was no evidence of new construction and improvement from January 1, 2013, to January 1, 2014, therefore the assessed value for 2013 remains the assessed value for 2014. Section 137.115.1, RSMo.
Respondent’s Evidence. Respondent submitted Written Direct Testimony on October 10, 2014, which the ends of justice and equity will be considered, ultimately to the benefit of Complainants. which states in pertinent part that two lots “which are comparable to Mr. Ruprecht’s lots” (now one piece of property), were sold for $25,000 and $28,500 respectively. (Exhibit 1).
Presumption of Correct Assessment Not Rebutted. Complainants’ evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the true value in money as of January 1, 2013. See, Presumption In Appeal, infra.

CONCLUSIONS OF LAW AND DECISION

Jurisdiction

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.

Basis of Assessment

The Constitution mandates that real property and tangible personal property be assessed at its value or such percentage of its value as may be fixed by law for each class and for each subclass. Article X, Sections 4(a) and 4(b), Mo. Const. of 1945. The constitutional mandate is to find the true value in money for the property under appeal. By statute real and tangible personal property are assessed at set percentages of true value in money. Section 137.115.5, RSMo – residential property at 19% of true value in money; commercial property at 32% of true value in money and agricultural property at 12% of true value in money.

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 – Complainants. When some substantial evidence is produced by the Complainants, “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. 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 fair market value should have been placed on the property. Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).

Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See, Cupples-Hesse, supra. Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact. The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief. Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).

Complainants’ evidence (Ex. A through E) was not sufficient to make the presumption in this appeal disappear. The case is decided free of the presumption.

Complainants’ Burden of Proof

In order to prevail, Complainants must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on January 1, 2013. Hermel, supra. There is no presumption that the taxpayer’s opinion is correct. The taxpayer in a Commission appeal still bears the burden of proof. The taxpayer is the moving party seeking affirmative relief. Therefore, the Complainant bears the burden of proving the vital elements of the case, i.e., the assessment was “unlawful, unfair, improper, arbitrary or capricious.” See, Westwood Partnership v. Gogarty, 103 S.W.3d 152 (Mo. App. E.D. 2003); Daly v. P. D. George Co., 77 S.W.3d 645 (Mo. App. E.D. 2002); Reeves v. Snider, 115 S.W.3d 375 (Mo. App. S.D. 2003); Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. 1991). A valuation which does not reflect the fair market value (true value in money) of the property under appeal is an unlawful, unfair and improper assessment. Exhibits A through E do not reflect the acreage of the subject property in relation to the other properties. Exhibits A through E do not show that the sales of the two lots, now making up the subject property, were true market sales and do not show the sales of the two lots with closing dates in December of 2013 and February of 2014 reflect of value of the two lots as of January 1, 2013. Exhibits A through E do not show that the sales of the properties not the subject of this appeal were true market sales and do not make appropriate adjustments for differences in topography, size of lot, view, etc.

Owner’s Opinion of Value

The owner of property is generally held competent to testify to its reasonable market value. Rigali v. Kensington Place Homeowners’ Ass’n, 103 S.W.3d 839, 846 (Mo. App. E.D. 2003); Boten v. Brecklein, 452 S.W.2d 86, 95 (Sup. 1970). The owner’s opinion is without probative value; however, where it is shown to have been based upon improper elements or an improper foundation. Cohen v. Bushmeyer, 251 S.W.3d 345, (Mo. App. E.D., March 25, 2008); Carmel Energy, Inc. v. Fritter, 827 S.W.2d 780, 783 (Mo. App. W.D. 1992); State, ex rel. Missouri Hwy & Transp. Com’n v. Pracht, 801 S.W.2d 90, 94 (Mo. App. E.D. 1990); Shelby County R-4 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965).

“Where the basis for a test as to the reliability of the testimony is not supported by a statement of facts on which it is based, or the basis of fact does not appear to be sufficient, the testimony should be rejected.” Carmel Energy at 783. A taxpayer does not meet his burden if evidence on any essential element of his case leaves the Commission “in the nebulous twilight of speculation, conjecture and surmise.” See, Rossman v. G.G.C. Corp. of Missouri, 596 S.W.2d 469, 471 (Mo. App. 1980).

In this appeal, absent the Written Direct Testimony of Respondent Chuck Pennel, Complainants’ the Commission would have been left “in the nebulous twilight of speculation, conjecture and surmise.” Id. Complainants’ evidence regarding other properties and what they sold for are irrelevant in the manner in which they were presented. Such were not submitted as part of an appraisal report, with appropriate adjustments being made for various differences in the properties. Furthermore, no written direct testimony of any appropriate witness was submitted regarding such properties. The sales prices or appraised values of other properties are not relevant without such being supported in the proper fashion. There was no evidence presented by Complainants that the purchase of any of the lots referenced by Complainants’, including, but not limited to, the two lots now constituting the subject property were true market sales. Complainants quite simply did not meet their burden. Nevertheless, the Written Direct Testimony of Chuck Pennel essentially constitutes an admission that two comparable lots (of which the subject property is made up of) sold for $25,000 and $28,500 respectively.

Standard for Valuation

Section 137.115, RSMo, requires that property be assessed based upon its true value in money which is defined as the price a property would bring when offered for sale by one willing or desirous to sell and bought by one who is willing or desirous to purchase but who is not compelled to do so. St. Joe Minerals Corp. v. State Tax Commission, 854 S.W.2d 526, 529 (Mo. App. E.D. 1993); Missouri Baptist Children’s Home v. State Tax Commission, 867 S.W.2d 510, 512 (Mo. banc 1993). True value in money is defined in terms of value in exchange and not value in use. Daly v. P. D. George Company, et al, 77 S.W.3d 645, 649 (Mo. App E.D. 2002), citing, Equitable Life Assurance Society v. STC, 852 S.W.2d 376, 380 (Mo. App. 1993); citing, Stephen & Stephen Properties, Inc. v. STC, 499 S.W.2d 798, 801-803 (Mo. 1973).

It is the fair market value of the subject property on the valuation date. Hermel, supra.

Market value is the most probable price in terms of money which a property should bring in competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeable and assuming the price is not affected by undue stimulus.

Implicit in this definition are the consummation of a sale as of a specific date and the passing of title from seller to buyer under conditions whereby:

Buyer and seller are typically motivated.

Both parties are well informed and well advised, and both acting in what they consider their own best interests.

A reasonable time is allowed for exposure in the open market.

Payment is made in cash or its equivalent.

Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.

The price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the transaction. Real Estate Appraisal Terminology, Society of Real Estate Appraisers, Revised Edition, 1984; See also, Real Estate Valuation in Litigation, J. D. Eaton, M.A.I., American Institute of Real Estate Appraisers, 1982, pp. 4-5; Property Appraisal and Assessment Administration, International Association of Assessing Officers, 1990, pp. 79-80; Uniform Standards of Professional Appraisal Practice, Glossary.

Hearsay and Relevance

In evidentiary law there are two important and fundamental concepts relating to the admissibility of evidence, whether in testimonial or documentary form. Those two principles are hearsay and relevance. Either can be sufficient in various circumstances to exclude testimony or documents from coming into the evidentiary record.

Hearsay

Black’s Law Dictionary, Seventh Edition (1999), p. 726, defines hearsay as follows: “Traditionally, testimony that is given by a witness who relates not what he or she knows personally, but what others have said, and that is therefore dependent upon the credibility of someone other than the witness. Such testimony is generally inadmissible under the rules of evidence.” McCormick on Evidence, Third Edition, (1984), p. 729, defines the term as; “a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.” The Courtroom Handbook on Missouri Evidence Missouri Practice, William A. Schroeder – 2012, Principle 800.c, p. 504,

follows the definition given by the Federal Rules and cited by McCormick. The out of court statement can take the form of either oral or written assertions. Therefore, documents which make assertions of facts are hearsay, just as well, as the speech of another person.

The hearsay rule provides that “no assertion offered as testimony can be received unless it is or has been open to test by cross-examination or an opportunity for cross-examination, except as otherwise provide by the rules of evidence, by court rules or by statute.” Black’s, supra – hearsay rule, p. 726. The rationale behind the rule is quite simply that out of court hearsay statements are not made under oath and cannot be subject to cross-examination. Accordingly, when various documents, such as but not limited to, Internet, newspaper and magazine articles are offered as exhibits in a hearing before the Commission, unless the document falls within one of the exceptions to the hearsay rule, upon objection such must be excluded.

Relevance

The principle of relevance is the second critical evidentiary factor that must be considered when testimony and documents are tendered for admission into an evidentiary record. For facts, information or opinions to be relevant they must be connected in a logical manner and tend to prove or disprove a matter that is at issue in the proceeding. Black’s, supra – relevant, p. 1293. McCormick explains that “There are two components to relevant evidence: materiality and probative value. Materiality looks to the relation between the propositions for which the evidence is offered and the issues of the case. If the evidence is offered to help prove a proposition which is not a matter in issue, the evidence is immaterial. . . . The second aspect of relevance is probative value, the tendency of evidence to establish the proposition that it is offered to prove.” McCormick, supra – p. 541. Evidence, that tends to prove or disprove a fact that is at issue or of consequence, is relevant. Missouri Practice, supra – p. 95.

In appeals on the value of property, the issue is what a willing buyer and seller would have agreed to as the purchase price on the applicable valuation date. The issue is not what real estate price trends in general may have been or any given period of time. The issue is specific to the property that is under appeal. Therefore, general statements, claims, conclusions and opinions as to what the “market for homes” has or hasn’t done do not meet the factors of materiality and probative value and are accordingly irrelevant. The fact that some report provides general information on home values is addressing a matter that is not at issue in an appeal. Such information is not material. Furthermore, such general data does not tend to prove what the property under appeal was worth on the given valuation date. For example, a report that home prices in the nation, region or certain metropolitan area over a four or five year period decreased by a certain average percentage provides no factual information as to the price or value of any given home. In other words, such information is not probative on the issue of value. It does nothing to prove that a given property is worth one amount or another.

Regarding the present appeal, in addition to the other insufficiencies mentioned above, Complainants presented no evidence to show a retrospective value of the subject property as of January 1, 2013. Without such, Complainants’ did not meet their burden of proof.

Investigation by Hearing Officer

In order to investigate appeals filed with the Commission, the Hearing Officer may inquire of the owner of the property or of any other party to the appeal regarding any matter or issue relevant to the valuation, subclassification or assessment of the property. The Hearing Officer’s decision regarding the assessment or valuation of the property may be based solely upon his inquiry and any evidence presented by the parties, or based solely upon evidence presented by the parties. Section 138.430.2, RSMo.

Weight to be Given Evidence

The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but is free to consider all pertinent facts and estimates and give them such weight as reasonably they may be deemed entitled. The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide. St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968).

Methods of Valuation

Proper methods of valuation and assessment of property are delegated to the Commission. It is within the purview of the Hearing Officer to determine the method of valuation to be adopted in a given case. See, Nance v. STC, 18 S.W.3d 611, at 615 (Mo. App. W.D. 2000); Hermel, supra; Xerox Corp. v. STC, 529 S.W.2d 413 (Mo. banc 1975). Missouri courts have approved the comparable sales or market approach, the cost approach and the income approach as recognized methods of arriving at fair market value. St. Joe Minerals Corp. v. STC, 854 S.W.2d 526, 529 (App. E.D. 1993); Aspenhof Corp. v. STC, 789 S.W.2d 867, 869 (App. E.D. 1990); Quincy Soybean Company, Inc., v. Lowe, 773 S.W.2d 503, 504 (App. E.D. 1989), citing Del-Mar Redevelopment Corp v. Associated Garages, Inc., 726 S.W.2d 866, 869 (App. E.D. 1987); and State ex rel. State Highway Comm’n v. Southern Dev. Co., 509 S.W.2d 18, 27 (Mo. Div. 2 1974).

The Supreme Court of Missouri has also held that evidence of the actual sales price of property is admissible to establish value at the time of an assessment, provided that such evidence involves a voluntary purchase not too remote in time. The actual sale price is a method that may be considered for estimating true value. St. Joe Minerals Corp., supra.

ORDER

The assessed valuation for the subject property as lowered by the Board of Equalization for Taney County for the subject tax day is SET ASIDE.

The assessed value for the subject property for tax years 2013 and 2014 is set at $10,165.

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

Disputed Taxes

The Collector of Taney 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 16th day of October, 2014.