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 constitutions.
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 RCW 84.40.030
Since Pier 67 II, a host of legislation has been passed amending RCW 84.40.030.
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 years 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
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 RCW 84.40.030 by this court prior to Pier 67 II allowed deductions for mortgage amortization and it is logical to assume the assessor followed the law in the years prior to that decision. In addition, appellant argues that the assessor's failure to produce records which would evidence a contrary conclusion should create a presumption that the assessor did grant such deductions to other taxpayers, with the result that the failure to allow these deductions to the appellant constituted an act of unlawful discrimination.
Our constitution provides: "All taxes shall be uniform upon the same class of property within the territorial limits of the authority levying the tax ..." Const. art. 7, § 1 (amendment 14). In interpreting the provisions of our constitution concerning uniformity of taxation this court has held:
(Italics ours.) Pacific Tel. & Tel. Co. v. Wooster, 178 Wn. 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 Wn. 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 correct 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 specific 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 Wn. 528, 167 P. 33 (1917); Norpia Realty Corp. v. Thurston County, 131 Wn. 675, 231 P. 13 (1924); Swanson v. Snohomish County, 191 Wn. 389, 71 P.2d 170 (1937); Mason County Overtaxed, Inc. v. Mason County, supra; Alaska Land Co. v. King County, supra.
The trial court found the appellant sustained his burden to prove discrimination as to the 2 years for which records were maintained 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 clearly 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 conclude 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.
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 Wn. 244, 80 P.2d 780 (1938). RCW 84.56.020 allows the imposition of interest upon delinquent taxes which are authorized under any provision of RCW Title 84. Appellant has not tendered the amount of taxes it felt to be justly due pending the outcome of this suit. Those taxes found to be justly due are therefore delinquent and subject to the payment of statutory interest. Norpia Realty Corp. v. Thurston County, supra. Appellant is liable for interest on the amount of taxes ultimately found to be delinquent by the trial court after allowance of the adjustments required by this decision as to the years 1963 through 1967. The decision of the trial court with regard to the assessment years 1968-69 and 1970-72 is affirmed.
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 disagree 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 Wn. 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:
(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 to 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 produce 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 mandatory. 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 specifically 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:
Neither can the inference relied on here be substituted for substantive proof 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; 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.
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.