PAD Court Case Summaries History

Cargill Meat Sols. Corp. v. Colfax County Board of Equalization
290 Neb. 726, 861 N.W.2d 718

Synopsis: Cargill timely filed its 2010 personal property tax return, and properly listed the taxable property, but the county assessor mistakenly did not place the personal property on the tax rolls. The primary issue in this appeal was whether in 2013, the Colfax County Board of Equalization (Board) had statutory authority to add the personal property to the 2010 tax rolls. The Tax Equalization and Review Commission (TERC) considered and rejected two statutory sources of authority Neb. Rev. Stat. §§ 77-1507(1) and 77-1233.04, but the Board assigned error only as to one statute.

The Court noted, “As this court explained over 100 years ago, the assessment, levy, and collection of taxes are not equitable proceedings; they necessarily have to be governed by rules, and the taxing power and the taxpayers must comply with these rules.” The Court analyzed the history of Neb. Rev. Stat. § 77-1507 and noted how it used to pertain to both real and personal property, but now only applied to real property. The Board did not argue or ask for the Court’s review of the applicability of Neb. Rev. Stat. § 77-1233.04 which relates to personal property. The Court decided that because Neb. Rev. Stat. § 77–1507(1) applies only to real estate and not to personal property, it did not authorize the Board’s action and therefore its action was void, affirming TERC’s decision and reversing and vacating the Board's decision.

The Court noted that its “conclusion is driven by the very narrow way in which the issue was presented to us. We confront both a limited record and the Board’s reliance on § 77–1507(1) to the exclusion of any other potential avenue of addressing the problem. We were not asked to review whether § 77–1233.04 would allow the county assessor to make this change, and we therefore express no opinion on that question. We are also constrained by the language used by the Legislature in its 1999 amendment to § 77–1507(1), which did not make the statute applicable to personal property.”

Archer Daniels Midland Co. v. State
290 Neb. 780, 861 N.W.2d 733

Synopsis: The Nebraska Supreme Court held that Archer Daniels Midland Co. (“ADM”) was not entitled to a personal property tax exemption because it failed to timely file its claim for exemption.

ADM filed for a personal property tax exemption four days after the required filing deadline set by statute. The parties filed an “Amended and Restated Stipulation of Facts and Issue” listing as the only issue whether ADM was eligible for a 2010 personal property tax exemption. The Nebraska Department of Revenue (Department) denied the personal property tax exemption for tax year 2010 as being late. The Tax Commissioner denied the petition for reconsideration, after which ADM appealed to the Tax Equalization Review Commission (TERC), which affirmed the decision of the Tax Commissioner. In its appeal, ADM argued that it “substantially complied” with the statute’s filing deadline, and also requested a new hearing on the theory that the Department’s hearing officer should have recused herself. The Court noted that the plain terms of the statute applied absent language to the contrary. The Court further noted that in TERC cases, it had required strict compliance with statutory time requirements. Finding no conflicting statutory language, the Court found that ADM was not entitled to the exemption because it failed to adhere to the express filing requirements set forth in the statute. The Court further found that because ADM, as a party to the joint stipulation limiting the issue to whether or not ADM was entitled to the exemption, had waived the issue of its request for recusal of the hearing officer and did not address the issue.

TJ 2010 Corp. v. Dawson County Board of Equalization,
22 Neb. App. 989

Synopsis: TJ 2010 Corporation (TJ) appealed to the Court of Appeals “the order of the Tax Equalization and Review Commission (TERC) affirming the decision of the Dawson County Board of Equalization (Board) regarding the 2013 taxable value of a hotel owned by TJ.” Because the Court of Appeals found that TJ failed to establish by clear and convincing evidence that the county’s valuation was arbitrary or unreasonable, it affirmed the TERC’s decision.

The Court of Appeals criticized the county’s appraisal, but ultimately found for the County Board of Equalization. The Court agreed with TERC that there was competent evidence to rebut the statutory presumption in favor of the Board. Thus, “TJ presented competent evidence to overcome the presumption that the Board faithfully performed its official duties in making an assessment and acted upon sufficient competent evidence to justify its action. From that point forward, the reasonableness of the county’s valuation became a question of fact based upon all the evidence presented, and the burden of showing such valuation to be unreasonable rested upon TJ.” The Court found “based on the evidence presented and the factual findings set forth in TERC’s order that TJ failed to meet its burden of establishing by clear and convincing evidence that the valuation adopted by the Board was arbitrary and unreasonable.”

In this context the Court stated that they “acknowledge the deficiencies in both parties’ valuations; however, TJ failed to produce competent evidence of the property’s actual value as of January 1, 2013. While Stanard’s income approach had deficiencies, particularly in the development of the market factors, TJ did not present any market data supporting a different opinion of any of the income approach factors.” For these reasons, the Court of Appeals affirmed TERC’s decision “that TJ failed to present clear and convincing evidence that the county’s valuation was arbitrary and unreasonable.”

Cain v. Custer County Board of Equalization
291 Neb. 730, 868 N.W.2d 334

Synopsis: Per the Supreme Court, in 2012, the Custer County Assessor (Assessor) increased the assessed value of property owned by Donald V. Cain, Jr., from $734,968 to $1,834,925. Cain challenged this valuation increase by filing petitions with the Tax Equalization and Review Commission (TERC) pursuant to Neb. Rev. Stat. § 77–1507.01, because he had not received adequate notice for the increased value. A divided panel of two TERC commissioners affirmed the increased valuations for 2012, by not having a majority and therefore denying Cain’s appeal, and Cain further appealed to the Supreme Court. The Court found plain error in the standard of review applied by TERC to Cain’s petitions, and reversed the order of TERC and remanded the cause for reconsideration on the record. The Court asked TERC to use the preponderance, or greater weight, of the evidence standard, which it said was applicable to protests before a county board of equalization, rather than the clear and convincing standard that TERC applied.

The Court determined that TERC did not lack jurisdiction over the taxpayer’s petition to determine actual value of real property due to the Assessor’s failure to provide the taxpayer with a timely notice of increased valuation. This was because the Legislature’s adoption of Neb. Rev. Stat. § 77-1507.01 rendered portions of previous decisions inapplicable, which found that failure to give notice rendered an increased assessment void, since § 77-1507.01 provided an avenue for relief before TERC in situations where there has been no adequate notice. The Court also found that since one commissioner did not constitute a majority, pursuant to Neb. Rev. Stat. § 77‑5016(13), TERC was required to deny Cain’s petitions. In effect, the tie between the two commissioners was broken by § 77-5016(13), which required TERC to enter an order denying Cain’s petitions. It concluded that the order entered by a divided panel of two commissioners was a valid order.

Cain also raised a constitutional challenge to the statute governing petition to the TERC for due process. However, the Court noted that Cain’s failure to strictly comply with the court rule governing appellate review of a constitutional challenge, precluded the Supreme Court’s review of the due process challenge. For these reasons, the Court reversed the decision of TERC and remanded the cause for reconsideration on the record.

Remand at TERC: Cain Jr. v. Custer County Case Nos. 12A 112-121. The Supreme Court instructed that when exercising jurisdiction over the petitions filed by the Taxpayer, the role of TERC was “not that of an appellate body” since these were not appeals from determinations by a county board of equalization, where TERC acts as an “intermediate appellate tribunal.” Therefore, TERC was in “a position to perform an initial review of [the Taxpayer’s] challenges to the increased assessments.” TERC respectfully pointed out that the “generally applicable” standard of review applied by the court did not refer to an initial review by any governmental body of an assessment by a county assessor, and the Court had consistently stated that the burden of persuasion was clear and convincing evidence before the county board of equalization. Since none of the previous precedent was overruled, TERC concluded that the holding in Cain is limited specifically to the fact pattern presented in that case and the standard of review of preponderance of the evidence is only to be used by TERC for petitions filed under § 77-1507.01.                 

Lozier Corporation v. Douglas County Board of Equalization
285 Neb. 705, 829 N.W.2d 652

Synopsis: The taxpayer appealed a dismissal of its appeals by the Tax Equalization and Review Commission (TERC) because of not being timely filed. The Supreme Court determined that the taxpayer timely mailed the appeals under the mailbox rule, and determined that a postage meter stamp was a postmark under the applicable statute, as a matter of first impression.

As part of its analysis, the Supreme Court considered TERC’s jurisdictional statute, Neb. Rev. Stat. § 77-5013, since the definition of the term “postmark” was at issue. The Court noted that the term “postmark” was “not defined anywhere in the Nebraska statutes. Nor is it defined in our case law. TERC has, however, defined ‘postmark’ in the Nebraska administrative code. There, TERC has defined ‘Postmark’ as ‘[t]he cancellation mark of the [USPS]. The mark of any private delivery or courier service (such as FedEx, Airborne, UPS, etc.) is not a postmark.’”

The Court went on to find “that the meaning of the term ‘postmark’ is ambiguous. It could mean only a mark made by the USPS or it could also mean marks made by postage meters, which the USPS licenses and regulates.” In other words, the Court confines the usage of the term “postmark” to only those marks made under the auspices of the US Postal Service.

JQH La Vista Conference Center Development LLC v. Sarpy County Board of Equalization
285 Neb. 120, 825 N.W.2d 447

Synopsis: JQH La Vista Conference Center Development LLC (JQH) protested the convention center located off Interstate 80 in La Vista, Nebraska, known as the La Vista Conference Center for both 2009 and 2010. The Sarpy County Board of Equalization denied the protests and appeals were filed with the Tax Equalization and Review Commission (TERC). TERC denied JQH’s appeal and valued the conference center at $23,400,000 for both tax years (the county assessor’s value). JQH appealed TERC’s decision as to both the 2009 and 2010 tax years.

The Supreme Court affirmed the TERC’s decision and held that the presumption of correctness accorded to the County Board of Equalization’s value was overcome by competent evidence. The Court held “that when an independent appraiser using professionally approved methods of mass appraisal certifies that an appraisal was performed according to professional standards, the appraisal is considered competent evidence under Nebraska law.”

However, the Court held that the fact that the JQH’s appraiser used all three statutorily described methods (income, sales comparison, and cost) in determining actual value did not render the county assessor’s higher valuation unreasonable or arbitrary on the basis that the county assessor only used the cost approach. Moreover, the county assessor had an explanation for his failure to utilize other methods, indicating that at the time of the 2009 assessment, he lacked market data with which to perform an income approach, and that there were few, if any, sales of stand-alone conference centers to use as a basis for the sales comparison approach.

Steven Banks v. Heineman
286 Neb. 390, 837 N.W.2d 70

Synopsis: Effective July 15, 2010, the Nebraska Legislature changed the manner in which wind energy generation facilities in Nebraska are taxed, exempting personal property used by such facilities from the personal property tax and imposing a new tax based on the facility’s nameplate capacity. The legislation allowed taxpayers who had paid personal property tax prior to 2010 to claim a credit against nameplate capacity taxes assessed for 2010 and subsequent years. Knox County, taxpayers, and members of the County Board of Supervisors brought action against the Governor, State Treasurer, and Tax Commissioner, seeking injunctive and declatory relief, challenging the constitutionality of the credit. The District Court of Lancaster County held the credit was an unconstitutional commutation of taxes. The Supreme Court reversed and held the credit is not unconstitutional.

The Supreme Court held that the nameplate capacity tax was an excise tax and not a property tax, since it was based on the capacity of a wind turbine to generate electricity as measured in megawatts and fractions of megawatts. The Court held that the constitutional prohibition against commutation of taxes set forth in Neb. Const. Art. VIII, § 4, does not apply to an excise tax, and thus the nameplate capacity tax credit was not an unconstitutional commutation of tax, disproving Kiplinger v. Nebraska Dept. of Nat. Resources, 282 Neb. 237, 803 N.W.2d 28 to the extent that it may suggest otherwise.

Finally, the Court held that the nameplate capacity tax credit did not violate the constitutional prohibition against special laws in Neb. Const. Art. III, § 18, when viewed in the context of the whole scheme and purpose of the broader legislation. The Court determined that it does not read Nebraska’s constitutional prohibition against special legislation to proscribe the Legislature from enacting a reasonable provision to prevent an unjust result from a change in the law.

Harold Warp Pioneer Village Foundation v. Ewald
287 Neb. 19, 844 N.W.2d 245

Synopsis: The Harold Warp Pioneer Village Foundation (Foundation) owns and operates the Pioneer Village Museum in Minden, Nebraska. The Foundation also owns and operates a nearby motel and campground, both used primarily by museum visitors. For many years, the museum, the motel, and the campground were all granted property tax exemptions. When the Kearney County Board of Equalization granted the exemptions for 2011, the Department of Revenue (Department) appealed to the Nebraska Tax Equalization and Review Commission (TERC), contending the motel and campground were not entitled to exemptions. TERC agreed, and the Foundation appealed from those determinations. The Court concluded that the motel and campground are beneficial to the museum and reasonably necessary to further its educational mission and are therefore entitled to property tax exemptions.

The Court looked at the very specific facts surrounding Pioneer Village, and characterized Pioneer Village’s arguments as “viewing the entire global structure of its operation as one integrated body that exclusively promotes educational purposes,” while the Department focused “more narrowly on the use of the motel and the campground.” The Court analyzed the Doane College case, and declared that “the issue in this case is not whether the Foundation uses its property for an educational purpose, but, rather, how much of its property is used for that purpose,” leading them to a discussion of Lariat Boys Ranch and Immanuel, Inc. In each of those cases, a determination as to whether or not property was “reasonably necessary” for the exempt purpose had to be made on a case-by-case basis. Here, the Court found that the museum is “unusual if not unique” because firstly the museum houses an extensive collection, which cannot be viewed in a single day, and secondly that the museum is in a small community with no public lodging facilities. “The issue is not whether ‘lodging’ is an educational use in an abstract sense, but, rather, whether these specific lodging facilities were reasonably necessary to accomplish the educational purpose of the Foundation in the operation of the museum.”

The Court noted that the properties were being used predominantly for that purpose; and although the motel and campground are open to the public, primarily visitors to the museum utilize them. In each of the years from 1990 through 2010, at least 95.5 percent of the persons who stayed at the motel and campground were museum visitors, with a significant majority of them from outside Nebraska and almost all from outside Kearney County. “It was estimated that 30 percent of these museum visitors viewed exhibits for more than 1 day; those who did and wished to stay overnight in Minden had to utilize the Foundation's motel or campground.” Thus, the Court held that the operation of the motel and campground was reasonably necessary to the accomplishment of Pioneer Village’s educational mission.

Cargill Meat Solutions v. Colfax County Board of Equalization
281 Neb. 93

Synopsis: Cargill prevailed, but the Court’s frustration with their technical win was evident.  Using terms like “jurisdictional trap,” “procedural maze,” “procedural minefield,” and “procedural trap,” the Court in this case gave as strong an indication as they could to the Legislature that they need to fix the statute governing appeals from the Tax Equalization and Review Commission.

Cargill owned a facility that it used to slaughter cattle and pack meat.  The County appraised the property as of 1/1/2000 at $21,300,700 using the cost approach.  Every year thereafter, the County would update the appraisal by calculating the value of any improvements made to the property and adding that to the value from the previous year, without accounting for depreciation.  The value for TY 2008 was $26,191,375.  Cargill protested, the Board recommended no change, and Cargill appealed to the Commission.  The Commission rejected the Board’s valuation, finding that failing to account for functional or physical depreciation met the threshold for deeming the Board’s action as “unreasonable or arbitrary.”  While the Commission apparently found Cargill’s appraisal to be less detailed than the Board’s, they found it still met professional standards, concluded that the value of the land and improvements together was $14,809,190, and vacated and reversed the Board’s valuation.

The Board appealed, filing a “Petition for Judicial Review and Notice of Appeal” with the Court of Appeals.  The Court of Appeals issued a summons to be served upon Cargill, and instructed the Board to serve the summons on Cargill and file a return of service with the Court of Appeals.  However, instead of serving Cargill, the Board served Cargill’s attorney.  The Supreme Court moved the case onto their docket.  Cargill moved to dismiss, arguing that the Board had failed to comply with Neb. Rev. Stat. § 77-5019(2)(a).  That statute provides:

Proceedings for review shall be instituted by filing a petition and the appropriate docket fees in the Court of Appeals within thirty days after the date on which a final appealable order is entered by the commission. All parties of record shall be made parties to the proceedings for review. The commission shall only be made a party of record if the action complained of is an order issued by the commission pursuant to section 77-1504.01 or 77-5020 or sections 77-5023 to 77-5028. Summons shall be served on all parties within thirty days after the filing of the petition in the manner provided for service of a summons in section 25-510.02. The court, in its discretion, may permit other interested persons to intervene. No bond or undertaking is required for an appeal to the Court of Appeals.

The Court considered whether it had jurisdiction.  Noting that Neb. Rev. Stat. § 25-510.02 provides the manner for serving the state or a political subdivision, the Court found that Cargill, a private corporation, could not possibly be served in accordance with § 25-510.02, and so § 77-5019(2)(a) could not apply.

The Board argued that the applicable rule would be the Nebraska Court Rules of Appellate Procedure § 2-101(D), which provides: “In an appeal from an order of [a] tribunal from which an appeal can be taken directly to this court, the procedure shall be that provided for in appeals from the district court, except as otherwise provided by statute.”  The procedure for appeals from district court is found at Neb. Rev. Stat. § 25-1912, which requires two steps: (1) the appellant must file notice of appeal with the district court clerk of the court where the judgment was rendered; and (2) the party must deposit a docket fee with the district court clerk.

The Court found that the Board did not comply with the rule.  The Board filed its notice of appeal with the Court of Appeals, rather than the Commission (finding the Commission to be analogous to district court).  The Board’s appeal was not properly perfected under § 2-101(D), and the Court concluded it did not, therefore, have jurisdiction.

In criticizing the words used in § 77-5019(2)(a), the Court says that statute “does not make sense … not all parties to a TERC hearing or a subsequent appeal are political subdivisions.  It defies the language of § 25-510.02 to require a county board of equalization to serve a private party, such as Cargill, as if it were a political subdivision … We can think of no sensible reason for doing this … Stating the obvious, the Legislature needs to correct this procedural trap.”

In all cases, any court will first look to see if they have jurisdiction.  This is consistent with the “gatekeeper” role courts are supposed to play.  Courts are notoriously overburdened by the volume of litigation that appears before them, and one of the ways they reduce their caseload is by distinguishing those cases that have been properly filed from those that have not.  This is not to suggest that courts shirk their duties; far from it.  However, while “access to the courts” is something that the law favors in principle, one of the first tests of a potential litigant’s seriousness is whether they file their appeal properly. The Court seems to acknowledge, however, that this statute makes appeals from the Commission a tricky business.

Vandenberg v. Butler County
281 Neb. 437

Synopsis: One of the items that was not even addressed by the Supreme Court was the jurisdictional issue raised in Cargill Meat Solutions v. Colfax County, supra. Apparently, serving process directly to Mrs. Vandenberg, whether or not it was served through the Tax Equalization and Review Commission (which does not have authority to serve summonses) or the Court of Appeals (which is what the County had done), was adequate.

First, the Supreme Court reiterates the very high standard for overturning decisions from lower courts: for errors appearing on the record, the inquiry is whether the decision conforms to law and is neither arbitrary, capricious, or unreasonable. Review of TERC decisions, however, are merely de novo on the record. This standard has been around for a long time, but the crucial distinction between the deference accorded the legal opinion of a lower court and the Commission is worth noting.

The Court starts its analysis with Neb. Rev. Stat. § 77-105, particularly the trade fixture provision. They also reviewed the Property Assessment Division’s regulation defining the same.

The Court focuses on how the machinery is used, and not who uses it. The Court states “The statutory language clearly focuses on the activity being conducted on the land, not who is conducting that activity.”  They find that raising crops for profit is “commercial activity” for the purposes of § 77-105.

The Court concludes by discussing Northern Natural Gas. They say:

“The three-part test was appropriately applied in Cook [Northern Natural Gas’ predecessor] and remains appropriate for determinations of whether fixtures should be encompassed by land sale contracts. However, § 77-105 clearly controls the issue of classifications of fixtures for taxation purposes. Accordingly, the three-part test does not apply to taxation determinations of this nature. To the extent that Northern Natural Gas Co. holds to the contrary, it is expressly overruled.” (emphasis supplied)

As a result of this case, the analysis of whether or not property is a fixture falls explicitly under the trade fixture statute.  If a piece of property is machinery or equipment used directly in commercial, manufacturing, or processing activities conducted on real property, it is a trade fixture, and therefore personal property. If it is not, additional analysis under the three-part test from Northern Natural Gas could be appropriate.

Fort Calhoun Bapt. Ch. v. Washington County Bd. of Equalization
277 Neb. 25, 759 N.W.2d 475

Synopsis: The Fort Calhoun Baptist Church (Church) leased part of its facilities to the Fort Calhoun Community School District (School). As a result of the lease, the Washington County Board of Equalization (Board) reduced the tax exemption on the Church's property from 100 percent to 80 percent. The Tax Equalization and Review Commission (the Commission) affirmed the Board's action, and the Church appealed. The Nebraska Supreme Court held that although ownership and use of the property may be by different entities, exclusive use of the property for exempt purposes is required for property to be exempt from taxation, and the church's property was used exclusively for religious and/or educational purposes, and thus, regardless of whether the lease was below the market rate, the property was exempt from taxation.

The Church was a religious organization that meets the requirements to hold property exempt from property taxes. The Church owned real property in Fort Calhoun, Nebraska. In February 2006, the School, also a tax-exempt organization, began looking for a space to use for a new special education program. At that time, the School's special education students were receiving services in Omaha, Nebraska, and the School sought to provide these services in Fort Calhoun. The School and the Church ultimately entered into a lease, which would allow the School to use the Church for its special education program. After physically upgrading the building to accommodate the School, the Church applied for a 100-percent tax exemption on its real property on November 20, 2006. The Washington County assessor subsequently recommended an 80-percent exemption. The Board concurred with the assessor's recommendation and notified the Church of the valuation change designating 20 percent of the property as taxable. The Church timely protested the valuation, and the Commission scheduled a hearing.

The Commission found that the evidence did not support a finding that the Church had leased the property to the School at a below-market rate. As such, it determined that the Church had not met its burden of proving its eligibility for an exemption, because it “failed to demonstrate that the lease of the subject property to the School was for less than market value or that its lease of the subject property to the School represents a contribution of any manner in aid of a charitable, religious or educational use by the School.” It concluded the Church had not proved by clear and convincing evidence that the Board's decision was unreasonable or arbitrary, and it affirmed the Board's recommendation of an 80-percent exemption. The Church then appealed.

The Nebraska Supreme court focused on the issue of whether the property leased by the Church to the School was used exclusively for educational, religious, or charitable purposes and, therefore, was exempt from taxation pursuant to Neb.Rev.Stat. § 77-202 (Cum. Supp. 2006). The Commission relied upon United Way in affirming the Board's decision. The Commission examined whether the lease to the School was a qualified charitable use by the Church. It found that the leased property was used by the Church for religious purposes on weekends, Wednesday evenings, and other times when necessary. The Commission found there was no evidence that the School used the property for religious purposes or that the Church made any educational use of the leased premises except in conjunction with its religious use. Because this property was used a significant amount of time by the School for educational purposes, the Commission concluded that the Church did not use the property exclusively for a religious use. The Commission also examined the comparable leases submitted by the School and concluded that the lease to the School was not at a below-market rate, and because the lease was not below the market rate, the Commission found that the lease did not represent a contribution in aid of a charitable, religious, or educational use by the School. Therefore, it concluded that the leased portion of the property was not exempt. The Commission affirmed the Board's reduction of the Church's exemption to 80 percent.

The court determined that in United Way, the inquiry should have ended with whether the use of the leased space was charitable. In this case, the court found that it is the exclusive use of the property that governs the exemption, and not the market value of the lease. It was not disputed that the Church and the School were organizations qualified to own property exempt from taxation. The issue of financial gain or profit to the owner or user of the subject property was not an issue to be considered by the Commission. Here, the property was being used exclusively for religious or educational purposes. The court concluded that the property owned by the Church was used exclusively for religious and/or educational purposes. The School used the fellowship hall, restrooms, and areas for ingress and egress Monday through Friday during school hours, unless the use would interfere with a wedding, funeral, or election. This use was educational and was an exempt use. The remainder of the time, the Church used the property for religious purposes, which was also an exempt use. The lease of the property by the Church to the School did not create a taxable use. Both of the uses were exempt. The property was used for a combination of exempt uses. The Commission was misled by the court’s reasoning in United Way. Therefore, the lease by the Church to the School did not create a non-exempt use of the property. The property continued to be used exclusively for religious and education purposes. Thus, the Commission’s order was reversed and the cause remanded with directions to instruct the Board to grant a 100-percent exemption on the Church’s property.

Garey v. Nebraska Dept. of Nat. Resources
277 Neb. 149, 759 N.W.2d 919

Synopsis: Residents and taxpayers of natural resources districts filed an action for declaratory and injunctive relief alleging that a property tax levy authorized by statute was unconstitutional. The District Court, Lancaster County concluded that the challenged provision was unconstitutional and entered an order granting declaratory judgment, severed the offending provision, and enjoined various governmental agencies from enforcing the provision. Various governmental agencies appealed, and plaintiffs cross-appealed. The Nebraska Supreme Court, held that the statute authorizing natural resources districts to levy a property tax that could be used to repay bonds issued for the purpose of acquiring water rights violated the State Constitution's prohibition against the State levying a property tax for a state purpose.

Appellees in this case were residents and taxpayers of the NRD's (Natural Resource Districts). Defendant-appellant Department of Natural Resources is an administrative department of the State and has jurisdiction over matters pertaining to water rights for irrigation, power, or other useful purposes. The NRD's are districts within the State; one of their purposes is the regulation of ground water within their respective districts. The remaining appellants in this case are individuals and entities with the authority to impose and collect property taxes in the counties that make up the NRD's.

Appellees in this case are residents and taxpayers of the NRD's. Defendant-appellant Department of Natural Resources is an administrative department of the State and has jurisdiction over matters pertaining to water rights for irrigation, power, or other useful purposes. The states of Colorado, Kansas, and Nebraska and the United States are party signatories to the Republican River Compact of 1943. Under the terms of the Compact, each signatory state is allotted an annual number of acre-feet of water for “beneficial consumptive use. By entering into the Compact, Nebraska agreed to limit its consumption of water from the Republican River Basin to ensure that downstream Kansas would receive its allotted share of the water.

In 2004, Nebraska's Governor and Attorney General informed the NRD's' water users that to comply with an earlier settlement agreement, water consumption would need to be reduced in dry years, and that to ensure compliance with the Compact, the State could step in if the NRD's failed to control usage. In 2006 and 2007, the department leased or purchased surface water rights from the Bostwick Irrigation District to assist the State in meeting its obligations under the Compact. On May 1, 2007, the Governor signed L.B. 701 into law. Section 11 of L.B. 701, at issue in this case, amended § 2-3225(1)(d) and (2), and essentially put into place a property tax levy. The office of the Nebraska Governor issued a press release stating that the passage of L.B. 701 created a cash fund which, among other things, could be used to help the state continue to comply with interstate compacts and agreements. In September of 2007, letters were sent on behalf of appellees to each of the NRD's, formally requesting that the NRD's “vote not to levy any property taxes ... sanctioned by the Nebraska Legislature in L.B. 701. Nevertheless, in September 2007, the NRD's each adopted property tax levies authorized by L.B. 701. In response to the levies, appellees filed an action seeking a declaratory judgment and alleging that the property tax levy found in L.B. 701 is unconstitutional and unenforceable. Appellees claim that the property tax levy in represented a property tax levy for state purposes, in violation of Neb. Const. art. VIII, § 1A; results in a commutation of taxes, in violation of Neb. Const. art. VIII, § 4; and constitutes special legislation, in violation of Neb. Const. art. III, § 18. After a trial on stipulated facts, the district court entered an order granting declaratory judgment and injunctive relief to appellees, concluding that although § 11(1)(d) of L.B. 701 does not violate Neb. Const. art. VIII, § 1A or § 4, it is special legislation, in violation of Neb. Const. art. III, § 18, and, therefore, unconstitutional. Both sides appealed.

The Nebraska Supreme Court concluded § 11(1)(d) of L.B. 701 violated the prohibition against a property tax levy for state purposes contained in Neb. Const. art. VIII, § 1A, and therefore, was unconstitutional on this basis. Neb. Const. art. VIII, § 1A, states that “[t]he state shall be prohibited from levying a property tax for state purposes.” This constitutional provision contains two aspects: First, the property tax at issue must be levied by the State, and second, the property tax at issue must be levied for a state purpose. In assessing § 11(1)(d) of L.B. 701 for constitutional analysis, the court looked to the legislative history, and found that it was clear from the legislative history that L.B. 701 had the purpose of ensuring the State's compliance with the Compact and additionally addressing the water problems of the Republican River Basin. Therefore the court concluded that the purposes of the property tax provisions found at § 11(1)(d) of L.B. 701 were intermingled state and local purposes.

Given the stipulated facts and applicable law, the court concluded that the property tax levy in L.B. was effectively a state levy and that its primary purpose was for a state purpose, and thus the property tax levy violated Neb. Const. art. VIII, § 1A. In determining that the property tax at issue is primarily for state purposes, the court specifically noted that the legislative history, some of which is quoted by the district court in its order, was full of testimony that the predominant purpose of the property tax provision of L.B. 701 was for the purpose of maintaining the State's compliance with the Compact. The court determined this to be a state purpose. Therefore, the court held that L.B. 701(1)(d) violated the prohibition against levying a property tax for state purposes found in Neb. Const. art. VIII, § 1A, and that such provision was therefore unconstitutional. Under § 34 of L.B. 701, the court severed the offending provision and the ruling has no bearing on the remaining provisions of L.B. 701. The court noted that although its reasoning was different from that of the district court, which also concluded that § 11(1)(d) of L.B. 701 was unconstitutional, albeit on another basis, it was nevertheless affirming the order of the district court, which declared § 11(1)(d) of L.B. 701 unconstitutional and enjoined its enforcement.

Johnson v. City of Kearney
277 Neb. 481, 763 N.W.2d 103

Synopsis: Landowners brought action to challenge creation of paving and improvement district and the validity of a special assessment levied against their property. The District Court of Buffalo County, entered judgment for city, and landowners appealed. The Nebraska Supreme Court held that the court lacked jurisdiction over challenge to district's creation, and that the evidence was sufficient to support the finding that the assessment benefited the landowners' property.

Appellants, Marlo Johnson and Jennifer Johnson, were the owners of real estate abutting the east side of south Central Avenue in Kearney, Nebraska. The Johnson’s were challenging the passage of the ordinance creating paving and improvement district No. 2000-822 along Central Avenue and the special assessment levied on their property. In February of 2000, the Kearney City Council adopted ordinance No. 6621, which created paving and improvement district No. 2000-822. District No. 2000-822 called for the widening of a section of Central Avenue from a 24-foot-wide street to a 36-foot-wide street and also called for curbs, gutters, and new storm sewers. The Johnson’s prepared a written petition objecting to the proposed district and circulated the petition among the landowners abutting the affected portion of Central Avenue. They originally received more than the 50 percent of landowners subject to special assessments signatures, but after some withdrew their signatures, only 47.01 percent of the landowners were still objecting. Based on this, the city found that there were insufficient objections to the ordinance, and the improvements were made.

Two and a half years later and after construction of improvements, in November 2002, the city council, sitting as a board of equalization, heard objections to a proposed special assessment to pay for the construction. The Johnson’s appeared at the hearing and objected to the amount and validity of the proposed special assessment levied against their property. The council voted in favor of the special assessment and levied an assessment in the amount of $30,686.04 against the Johnsons' property. The Johnson’s filed a notice of appeal in the district court for Buffalo County and alleged that the ordinance creating the district should be repealed based on the objections filed under § 16-620 and that the special assessment levied against their property was excessive. The district court entered judgment in favor of the city. With respect to the propriety of the ordinance creating the district, the court concluded that objectors may properly withdraw their objections until such time as the city repeals the newly created ordinance. The court thereby approved of the ordinance and the creation of the district. The court next found that the paving project did in fact enhance the Johnsons' property. Specifically, the district court noted that the road was widened; temporary asphalt was replaced with permanent concrete; roadside ditches were replaced with curbing, gutters, and additional drainage; soil and gravel were removed; and modern lighting was installed. The assessment was affirmed, and the Johnson’s appealed.

The Johnsons claimed that the ordinance creating the paving and improvement district should have been repealed based on the number of objections initially filed pursuant to § 16-620. The city questioned the authority of the district court to determine the validity of the ordinance creating the district in this case, which was filed under § 19-2422. The Nebraska Supreme Court agreed with the city that the district court did not have authority to rule on the propriety of the ordinance in this case brought under § 19-2422. The court had previously held that a city council's determination whether or not there are a sufficient number of objections to challenge an ordinance, and prevent a city from going forward with a paving district, is an exercise of the city council's judicial function, not the district court’s. In this case, the Johnsons should have challenged the city council's determination as to the sufficiency of the objections through the petition in error statute and should have done so within 30 days. However, their petition filed in December 2002 challenging the city council's March 2000 decision regarding the propriety of the newly enacted ordinance was out of time. Because the aspect of the Johnsons' case challenging the validity of the ordinance was not timely, the Nebraska Supreme Court found that the district court was without authority to rule on the propriety of the city council's decision regarding the sufficiency of the objections under § 16-620, and thus the challenge to this portion of the district court's decision was without merit.

The Johnsons also argued that the special assessment created by the ordinance levied against their property by the district was excessive. The court noted that special assessments were charges imposed by law on land to defray the expense of a local municipal improvement on the theory that the property has received special benefits from the improvements in excess of the benefits accruing to property or people in general. The amount of a special assessment cannot exceed the amount of benefit conferred on the property assessed. Additionally, it is the property owner who challenges the special assessment who has the burden of establishing its invalidity. After a de novo review of the record, the court could not say that the board's decision to approve the special assessment was arbitrary, capricious, or unreasonable. The city then set forth evidence that the paving and improvement district made improvements to the property by widening the street, updating the sewage system, modernizing the lighting, and replacing dirt and soil with curbing. The officials testified that these improvements addressed many of the problems complained of by the residents and business owners. The city engineer also testified as to the method used in determining the amount of the assessment and the steps taken to ensure that the assessment was fair and uniform among all landowners assessed. It was the Johnsons' burden to rebut the presumption in favor of the assessment, and based on the record, the court found they did not set forth sufficient evidence refuting the benefits of the improvement, as described by the city officials, or show that the assessment was arbitrary, capricious, or unreasonable. Therefore, the court concluded that the Johnson’s did not rebut the presumption that the assessment levied pursuant to the creation of paving and improvement district No. 2000-822 benefited appellants' property, and thus they affirmed the decision of the district court.

Ottaco Acceptance, Inc. v. Larkin
273 Neb. 765, 733 N.W.2d 539

Synopsis: Sigma Investments, Inc. (Sigma), appealed from a judgment entered against it by the Douglas County District Court. Ottaco Acceptance, Inc. (Ottaco), sought to quiet title to real property located in Omaha, Nebraska, claiming that it was the owner of the property by virtue of a treasurer's tax deed. Sigma, which was issued a trustee's deed on the property, claimed title adverse to Ottaco's title. Sigma argued that its lien on the property was not extinguished by the issuance of Ottaco's tax deed and that Ottaco's tax deed was void or voidable. The district court found that Ottaco's tax deed was not void and that Sigma failed to prove it had redeemed the property.

On March 3, 1997, Equifunding, Inc., was issued the tax certificate for the property in question by the Douglas County treasurer. Although the assignment of the tax certificate is not contained in the record, it is undisputed in the present appeal that Equifunding assigned the tax certificate to Ottaco. Pursuant to Neb.Rev.Stat. § 77-1831 (Reissue 2003), in April and May 2000, notice was personally served upon Martin Sylvester and Connie Sylvester, the tenants of the property. Notice was sent via certified mail on December 7, 1999, to Teresa Larkin, record title owner of the property; on January 3, 2000, to Industry Mortgage Company, L.P. (Industry Mortgage), and a beneficiary under a trust deed issued on the property; and on January 3 to Steffi Swanson, trustee under the trust deed. In a letter dated August 25, 2000, Ottaco requested a tax deed for the property from the Douglas County treasurer. On September 5, the treasurer issued a tax deed to Ottaco. The deed states in pertinent part that the property in question was sold for nonpayment of taxes to Ottaco on March 3, 1997. The tax deed was recorded on September 7, 2000.

On August 29, 2000, Swanson, as trustee, sold the property to Sigma at a trustee's sale for $29,000 pursuant to the trust deed for breach and default under the terms of the deed. Sigma, as purchaser, was issued a trustee's deed on August 29, and the same was recorded on September 6. The record reflects that Kiely Sindelar, a shareholder of Sigma, had researched the property on the computerized Douglas County information system prior to Sigma's purchase of the property at the trustee's sale and knew the property was subject to a tax sale certificate for delinquent taxes. On August 31, 2000, Ottaco filed a petition with the district court requesting (1) an accounting of the amount due under the tax certificate; (2) that its lien be adjudged a first lien; (3) that the property be sold for satisfaction of the lien; (4) that the rights of various defendants, including Larkin, the Sylvesters, Industry Mortgage, Swanson, and Sigma, be determined and found to be subsequent to Ottaco's; (5) that the defendants be foreclosed from redemption; and (6) that Ottaco recover its costs. Pursuant to a request by Sigma, the court, in July 2001, entered an order authorizing Sigma to make repairs to the property and authorizing the sale of the property. Sigma claims to have spent approximately $36,818.25 to repair the property which was then sold to a third party for $66,295.73. The proceeds of the sale were paid to the clerk of the district court to be held in a trust account. After the issuance and filing of its tax deed, Ottaco filed the operative petition, wherein Ottaco requested that title to the property be quieted in its name and that all proceeds from the sale of the property be distributed to it.

In its answer, Sigma (the only remaining defendant) alleged that Ottaco's tax deed was void because Ottaco failed to provide Sigma with notice pursuant to § 77-1831 and because Ottaco failed to produce to the treasurer its tax certificate pursuant to § 77-1837. Sigma claimed that it was entitled to reimbursement for the $29,000 it purchased the property for at the trustee's sale and the $36,818.25 it ex-pended for repairs, because: (1) Ottaco did not notify it of Ottaco's intent to seek a tax deed; (2) Ottaco's interest in the tax deed is a lien interest in the property; (3) Sigma's interest, in the property is derivative of Industry Mortgage's interest, and Sigma's interest should be considered superior; and (4) it would be unjust and unfair for Ottaco to benefit at Sigma's expense. Sigma also counterclaimed, alleging unjust enrichment on the part of Ottaco for the amount expended by Sigma. The district court entered an order in favor of Ottaco, as they found that Sigma had failed to meet its burden of proof to raise its challenges to Ottaco's tax deed. The court found that under Neb.Rev.Stat. § 77-1843 (Reissue 2003), Sigma was required to prove that it had properly redeemed the property. The court found that Sigma failed to meet its burden under § 77-1843 and, therefore, could not defeat Ottaco's tax deed. Sigma appealed.

Sigma first argued that the Ottaco’s tax deed merely represented a lien on the property. The court concluded that the tax deed conveyed title to Ottaco, and was not merely a lien interest in the property. Sigma then argued that it was not required to comply with §§ 77-1843 and 77-1844 because Ottaco's tax deed was void or voidable. The court disagreed and found that Section 77-1843 sets forth those conditions a party seeking to defeat title conveyed under a treasurer's deed must prove. Section 77-1844 sets forth those conditions a party seeking to question title conveyed under a treasurer's deed must prove. Statutory language is to be given its plain and ordinary meaning, and an appellate court will not resort to interpretation to ascertain the meaning of statutory words which are plain, direct, and unambiguous. The court noted that it was clear from the language of §§ 77-1843 and 77-1844 that even if title under a tax deed is void or voidable, the conditions precedent set forth in those statutes must be met in order to first question and then defeat title, and here, those precedents were not met.

First, Sigma argued that Ottaco failed to personally serve notice to the record titleholder. However, Sigma cannot assert a claim based on improper service to another party. Next, Sigma claimed that Ottaco failed to submit the original tax certificate to the treasurer as required. In this case, Ottaco did not return the original tax certificate to the treasurer because the original tax certificate was already in the treasurer's possession. Instead, Ottaco presented the treasurer with a copy of the tax certificate. The court found that where the original tax certificate is in the possession of the treasurer, the holder of the certificate is not obligated to undertake the formalistic procedure of requesting the return of the original tax certificate only to “present” the tax certificate back to the treasurer. Sigma then asserted that Ottaco's deed incorrectly identified Ottaco as the purchaser of the property in question on March 3, 1997. In fact, Equifunding was the purchaser of the property on that date and later assigned its interest in the property to Ottaco. The court found that while Ottaco's tax deed misidentified Ottaco as the purchaser of the property at the March 3, 1997, sale, there was no indication in the record that either Ottaco or the treasurer was unaware that Equifunding was the original purchaser at the tax sale or that the tax deed would not have been executed had Equifunding been properly identified. At most, the misidentification of Ottaco as the purchaser at the tax sale necessitated reformation of the tax deed. The court found that notwithstanding the tax deed's misidentification of Ottaco as the purchaser of the property at the tax sale, the tax deed is made in compliance with § 77-1839. Finally, Sigma argued that Ottaco's tax deed lacked a legible treasurer's seal as required by Neb.Rev.Stat. § 77-1857 (Reissue 2003). Section 77-1857 provided that the county treasurer shall affix an impression or representation of its official seal to every tax sale certificate and tax deed made by him or her. The court read sections 77-1839 and 77-1857 as merely requiring that the treasurer's seal be affixed. They do not require that the treasurer's seal be entirely legible. Because it is not within the province of this court to read a meaning into the statute which is not there, the court concluded that Ottaco's tax deed was substantially in compliance with § 77-1839. Therefore, Sigma's contentions that Ottaco's tax deed is void or voidable are without merit.

The court then found that Sigma could not defeat Ottaco’s title because Sigma did not argue, nor present any evidence that the four conditions of §77-1843 had been satisfied, and thus not satisfied the requirements of §77-1843. Therefore, the court affirmed the decision of the district court.

Destiny 98 TD v. Miodowski
269 Neb. 427, 693 N.W.2d 278

Synopsis: On March 1, 1999, Destiny 98 TD (Destiny 98) purchased Douglas County treasurer's certificate of tax sale No. 99-01220, representing a tax lien on Burlington Place Addition, in Douglas County, Nebraska. On September 11, 2002, Destiny 98 filed an amended petition to foreclose liens represented by various tax sale certificates. John J. Miodowski and “____ Miodowski” were alleged to be the owners of the property and were named as defendants in the third cause of action, which pertained to the real property and tax sale certificate described above. On February 21, 2003, Destiny 98 filed a motion for judgment by default with respect to the third cause of action, alleging that the Miodowskis had been properly served with summons but had failed to respond with a timely responsive pleading. On March 7, the district court entered a default judgment and decree ordering a sheriff's sale of the property. Notice of the sale was published in The Daily Record, a legal newspaper in Douglas County, on June 27 and July 4, 11, and 18, 2003. At the sheriff's sale held on July 29, Bel Fury Investments Group, L.L.C. (Bel Fury), purchased the property for $6,360. On August 21, the district court confirmed the sale of the property and ordered that a sheriff's deed be delivered to Bel Fury. Subsequent to execution and delivery of a sheriff's deed dated September 3, 2003, Bel Fury filed a praecipe for writ of assistance.

Several days thereafter, Empire Title of Nebraska, Inc. (Empire Title), filed an ex parte application seeking to intervene in the proceeding and for other relief. In its application, Empire Title represented that it had served as trustee and closing agent in a refinancing of the Miodowski property in August 2003 and that it believed it had distributed funds to satisfy the tax liens represented by the tax sale certificates in foreclosure, but that through “error, omission or misunderstanding,” this may not have occurred. The district court quashed the writ of assistance as it related to the property in question and scheduled an evidentiary hearing for October 1, 2003. On September 23, the Miodowskis filed an application to set aside the confirmation of the sale and the sheriff's deed based on Destiny 98's failure to provide them with a notice of homestead exemption pursuant to § 25-1531. Upon being granted leave to intervene during the hearing on October 1, Empire Title filed a motion to vacate confirmation of the sale on grounds that “the property was not sold in conformity to the provisions of Chapter 25 [of the Nebraska Revised Statutes] for fair value under the circumstances and conditions of the sale, and subsequent sale would realize a greater amount.”

In an order entered on October 8, 2003, the district court ruled that § 25-1531 did not apply to proceedings to foreclose tax sale certificates pursuant to Neb.Rev.Stat. § 77-1902 (Reissue 2003) and denied the relief sought by the Miodowskis and Empire Title. However, after conducting a hearing on October 10, the court changed its ruling and concluded in an order entered on November 10 that § 25-1531 was applicable. The district court therefore vacated its prior order confirming the sale because the Miodowskis had not been given notice of the homestead exemption procedures in accordance with § 25-1531. In a separate order entered on November 26, the court denied Bel Fury's oral motion for attorney fees, stating that there was no statutory authority or recognized custom whereupon attorney fees would be allowable. Bel Fury then appealed, and the Nebraska Supreme Court moved the case to its docket pursuant to its authority to regulate the caseloads of the appellate courts of Nebraska.

The court looked at the narrow question of whether notice of the homestead exemption procedures was required. Bel Fury argued that because the tax foreclosure statutes codified at chapter 77 of the Nebraska Revised Statutes did not require notice of a homestead exemption, there was no such requirement in a proceeding to foreclose a tax sale certificate. On the other hand, the Miodowskis and Empire Title argue that because § 77-1902 directs that a tax sale certificate foreclosure is to be conducted “in the same manner and with like effect as in the foreclosure of a real estate mortgage,” except where §§ 77-1903 to 77-1917 specifically provide otherwise, the homestead exemption notice requirement set forth in § 25-1531 is applicable.

The court found that a notice of homestead exemption rights is required prior to confirmation of sale only in those mortgage foreclosure proceedings where such rights exist. However, neither the Miodowskis nor Empire Title provided the court with any argument or authority supporting the existence of any homestead exemption right which would affect the confirmation of a sheriff's sale in a proceeding to foreclose the lien for taxes represented by a tax sale certificate. Thus the court concluded that the tax lien was superior to any homestead interest which could be claimed by the Miodowskis, and therefore held that the provisions of § 25-1531 requiring notice of homestead exemption rights did not apply to foreclosure of a tax lien represented by a tax sale certificate. Therefore, the district court erred in vacating and setting aside its order confirming the sale entered on August 21, 2003.

Bel Fury also argued that the district court erred in determining that it was not entitled to recover its attorney fees incurred in this action. As a general rule, attorney fees and expenses may be recovered in a civil action only where provided for by statute or when a recognized and accepted uniform course of procedure has been to allow recovery of attorney fees. Here, the district court found no statutory authority or uniform course of procedure which would permit an award of attorney fees. The court agreed, and concluded that this assignment of error was without merit. Therefore, the Nebraska Supreme Court affirmed only that part of the judgment of the district court denying Bel Fury's application for attorney fees. The Court reversed that part of the judgment which vacated the August 21, 2003, order confirming the sale based upon our determination that the district court erred in concluding that the Miodowskis had a legal right to notice of homestead exemption rights prior to confirmation. Accordingly, the cause was remanded to the district court with directions to reinstate the order confirming the sale and for such further proceedings consistent with this opinion as may be necessary to conclude the foreclosure.

Brown County Agricultural Soc., Inc. v. Brown County Board of Equalization
11 Neb. App. 642, 660 N.W.2d 518

Synopsis: The taxpayer, the Brown County Agricultural Society, appealed the decision of the Brown county board of equalization (the Board) which denied tax-exempt status for a portion of a community hall on the ground that the portion was not being used for public purpose, and thus, was subject to real property taxation. The Tax Equalization and Review Commission (the Commission) affirmed the decision the Board. Taxpayer appealed. The Nebraska Court of Appeals held that the taxpayer was entitled to a property tax exemption with regard to use of the portion of the community hall.

The Agricultural Society is a county agricultural society, whose primary function was to provide Brown County with a fair. Located on the fairgrounds was the Community Hall, which was at issue in this case. When the fair was not being conducted, the Agricultural Society allowed the Community Hall to be used occasionally for certain other activities. In February 2000, the Agricultural Society applied for a class M liquor license, which was issued on May 1. The Agricultural Society had decided to apply for a liquor license so that it would have greater control over the consumption of alcoholic liquors during the annual county fair and to provide additional revenue to support the fair. The license covered the entirety of the Community Hall.

On February 28, 2001, a notice of taxable status was sent to the Agricultural Society by Charlene Fox, the Brown County assessor, advising the Agricultural Society that her office had determined that the Community Hall was not being used or developed for use for a public purpose and was therefore subject to property taxation for the tax year 2001. On March 26, the Agricultural Society filed a timely protest with Brown County. Brown County denied the Agricultural Society tax-exempt status, finding that the sale of alcohol in the Community Hall is not a proprietary function of an agricultural society and that the use of the area in which alcohol was sold was more than incidental. Brown County further found that “the balance of the Community Hall and portions of the real estate outside the Community Hall were used for the consumption of ... alcohol.” Brown County determined that an area measuring 24 by 60 feet within the Community Hall, comprising the storage area and kitchen area, would be taxable. The Agricultural Society filed an appeal with the Commission. The Commission issued findings and an order on April 15, 2002, affirming the decision of Brown County to deny tax exemption of the contested space. It concluded that the contested space was not used to carry out the duties or responsibilities imposed by law on the Agricultural Society and was not used for a qualifying public purpose. The Commission also determined that the contested space was utilized for nonpublic purposes for 78 out of the 850 days considered. The Commission concluded that the use of the contested space for nongovernmental purposes was not an “ ‘incidental’ ” use, but was, instead, the predominant use of the contested space. With regard to the class M liquor license obtained by the Agricultural Society, the Commission disregarded the emphasis placed by Brown County on the sale or consumption of alcohol, finding that if the liquor license defeated the tax exemption, then the entire Community Hall should be subject to taxation, instead of just a portion of it, since the license applied to the entire structure.

The first issue presented was whether the use of the contested space within the Community Hall constituted a public use of the premises entitling the Agricultural Society to a property tax exemption for the contested space. In its order, the Commission found that the walk-in cooler, kitchen, and food preparation and service area in the contested space were used for cold food and liquor storage and for the cooking and other preparation and service of food. The Commission found that while this was consistent with the Agricultural Society's stated goal of providing barbecues to those attending the annual fair, there was ... nothing in the statutes which compelled the Agricultural Society to provide a free meal to those attending the fair. The Commission concluded that there was no evidence to support the contention that the use of the contested space was necessary to perform the duties imposed on the Agricultural Society by law. The court found that it was not necessary that an entity be statutorily mandated to perform an activity in order for the property to be considered necessary to carry out duties imposed by law. There was nothing in the statutes that specifically set forth the activities an agricultural society was required to offer at a county fair, and the court found that the consumption of food and beverages was a common activity at a county fair. Thus the provision of facilities to accomplish this activity was consistent with an agricultural society's conducting a county fair. The court therefore concluded that it was arbitrary and unreasonable to carve out a portion of the Community Hall and determine that it is not necessary for the holding of a county fair. If the balance of the Community Hall served the purpose of a county fair, then the contested space did as well, as the Community Hall would be of little benefit during the fair without the kitchen, food service, and storage areas.

The court found that making the contested space available to the public for reasonable private recreational uses fit within the duties conferred by law upon the Agricultural Society and was a use designed to promote recreation and community development within Johnstown. Given the broad language of the mandate given to the Agricultural Society in § 2-251, the court found that the Commission’s decision that the use of the contested space did not constitute a public use did not conform to the law, was not supported by competent evidence, and was therefore arbitrary, capricious, and unreasonable.

With regards to the incidental use of contested space, Section 77-202(1)(c) provided that property owned by and used exclusively for agricultural and horticultural societies should be exempt from property taxes. The concept of exclusive use had been defined in the Nebraska Administrative Code as the predominant use of the property, to such an extent that an occasional or incidental use of the property for other purposes would not disqualify the property for an exemption. However, even if the use of the contested space for events such as wedding and graduation receptions was not considered a public use of the space, the contested space could still be treated as tax-exempt property if use of the space for those purposes was incidental to the primary use of the contested space for the annual county fair. The court found that during the days of “non-use,” the property was still being held by the Agricultural Society for its primary purpose of conducting an annual county fair. Based upon foregoing authority which stated that so long as the property was actually used exclusively for educational, religious, or charitable purposes, the exemption was not lost because the use was for less than full time (on a continuous or daily basis), the court concluded that it was arbitrary for the Commission to disregard the days when the Community Hall property was not actually used in determining its primary purpose. The record indicated that the primary use of the contested space was for the annual county fair, and the Community Hall property had never been unavailable for use during the county fair because of the other uses, and thus the other uses had not detracted from the property's primary use. The court therefore concluded that the use of the contested space for wedding and graduation receptions and similar events, if not considered use for a public purpose, was use that was incidental to use of the property for its main purpose in conjunction with conducting the annual county fair. Thus the decision of the Commission was contrary to the law, was not supported by the evidence, and was arbitrary, capricious, and unreasonable.

The Commission also found that the record demonstrated that the use of the Community Hall was leasing for non-public purposes, a use specifically prohibited by § 77-202. That statute specifically provided in subsection (1)(a)(ii) that “public purpose does not include leasing of property to a private party unless the lease of the property is at fair market value for a public purpose.” The Agricultural Society argued that the premises in question were not “leased” to private parties as the term “lease” is used in the above-quoted statutory provision. The court agreed, and found that the agreements entered into with the community to use the Community Hall for private occasions were more in the nature of licenses than leases. Thus the court concluded that the Commission’s finding that the contested space was being leased for nonpublic purposes in violation of the prohibition found in § 77-202(1)(a)(ii) was contrary to the law, was not supported by the evidence, and was arbitrary, capricious, and unreasonable.

Finally, in its findings and orders, the Commission concluded that the Agricultural Society had failed to demonstrate by clear and convincing evidence that the decision of Brown County was unreasonable or arbitrary. However, the court concluded that the Agricultural Society satisfied its burden of showing entitlement to a tax exemption for the contested space. The Commission again erred in finding that the Agricultural Society had not demonstrated that the decision of Brown County was unreasonable or arbitrary and in finding that the Agricultural Society was not entitled to a tax exemption for the contested space. Therefore the court concluded that the contested space was owned by the Agricultural Society and used exclusively for agricultural society purposes within the meaning of § 77-202 in that the primary or dominant use of the property was for agricultural society purposes, and thus the Commission’s order was reversed, and the cause was remanded to the Commission with directions to instruct Brown County to grant the exemption to the Agricultural Society for the contested space.

City of Alliance v. Box Butte County Board of Equalization
265 Neb. 262, 656 N.W.2d 439

Synopsis: The County Board of Equalization determined that several city-owned properties were not being used for public purpose, and denied tax-exempt status for the properties. The city appealed. The Tax Equalization and Review Commission (the Commission) affirmed the Board's decisions. The city appealed. The Nebraska Supreme Court held that as a matter of first impression, the properties were acquired and held by the city for resale in conjunction with the city's municipal duties and responsibilities, and were therefore exempt from taxation as property used by governmental subdivision for public purposes.

Alliance had created several improvement districts in connection with the anticipated development of five residential subdivisions within the city. The city, by ordinance, levied special assessments against various residential lots which were specially benefited by the improvements, including the lots which were the subject of this action. Because property owners did not pay the special assessments, the city made expenditures from its general fund to service the bonded indebtedness. As a result of the special assessment defaults, the city acquired title to various properties by foreclosure or conveyance in lieu of foreclosure. The city offered these properties for sale to the public at prices which did not exceed the amount of delinquent special assessments and interest for each property. The city had not leased or rented any of the properties at issue and did not realize any revenue from them. In 2001, the Board determined that the subject properties were taxable because they were not being used for a public purpose or being developed for a public use. Thereafter, the city filed protests on each of the subject properties, which the Board denied. The city filed appeals with the Commission. The city and the Board stipulated that the only issue before the Commission was whether the properties were being utilized for a public purpose. The Commission entered an order in which it affirmed the Board's decisions. The city filed appealed.

The court determined the sole issue as being, when real property is acquired by a city through enforcement of special assessment liens and is offered for sale to the public at a price which does not exceed the delinquent special assessments and accrued interest, is the real property being used “for a public purpose” and therefore exempt from real estate taxation? The court determined that based on the Nebraska State Constitution, Neb.Rev.Stat. § 77-202(1)(a), and the Department of Property Assessment and Taxation, that in order to qualify for the public purpose exemption, the properties at issue must either be used to carry out the city's “duties or responsibilities conferred by law,” or to provide “public services” in order to be tax-exempt.

The court found that the record reflected that the city had acquired and offered the subject properties for sale for the sole purpose of realizing the value of the city's special assessment liens so as to reimburse its general fund for payments on its bonded indebtedness. As such, the city was prudently exercising its legal authority to defray the cost of public improvements from a revenue source legally designated for that purpose. Based on those facts, the court concluded that the city acquired and was holding the subject properties for resale in conjunction with its municipal duties and responsibilities. The plain language of § 77-202(1)(a)(ii) provides that property which is used “to carry out the duties and responsibilities conferred by law” is held for a public purpose and is not subject to taxation. The court thus reversed the Commission’s order and remanded the case to the Commission with directions to instruct the Board to grant the requested exemptions on each of the subject properties.

City of York v. York County Board of Equalization
266 Neb. 297, 664 N.W.2d 445

Synopsis: City appealed decision of the county board of equalization that city property leased to a private party for agricultural use was not exempt from taxation. The Tax Equalization and Review Commission (The Commission) affirmed board's decision, and city appealed. The Nebraska Supreme Court held that city's leasing of land for agricultural use was incidental to its purpose as a buffer zone for airport and, thus, the leased property was exempt from taxation.

The City was the owner of property located in York County, Nebraska, that was adjacent to the York Municipal Airport. The tracts comprise approximately 423.2 acres. The airport property was improved with a paved runway, as well as a number of hangars and other buildings, taxiways, and roads. These improvements are surrounded by the unimproved tracts at issue in this case. Pursuant to FAA regulations regarding erosion control, the City had two options concerning these unimproved tracts: It could seed and otherwise maintain the unimproved land at its own expense, or it could lease the property for restricted agricultural use. The City elected to lease approximately 245 acres to a private party for agricultural use. Only these 245 acres were determined to be taxable by the Board, and only that property was at issue in this appeal.

The York County assessor notified the City of her determination that the leased property was not being used or developed for a public purpose. The county assessor testified that she reviewed the lease and then sent a notice to the City stating that the property was income producing and therefore taxable because it was not being used for a public purpose. After the county assessor made her determination, she received a directive from the state Property Tax Administrator indicating that the areas within the buffer zone would not be subject to taxation.
However, after the county assessor notified the City that the land at issue was taxable, the City filed a protest to the Board. The Board denied the protest, and the City appealed the denial to the Commission.

The City argued before the Commission that the primary purpose of the lease of the land surrounding the airport was to control erosion and wildlife, as recommended by the FAA. The City asserted that the agricultural use was incidental. The Commission found that the land at issue was leased to a private party for agricultural use and was in direct competition with all other land available for lease for agricultural use. The Commission stated that the City had failed to demonstrate that the agricultural use of the property by a private party was a qualifying “public purpose” under Neb.Rev.Stat. § 77-202(1)(a) (Cum.Supp.2000). The Commission therefore affirmed the decision of the Board denying the City's protest, and the City appealed.

The Nebraska Supreme Court dealt with the issue of whether the lease served a public purpose. § 77-202(1)(a), provides: that the following property shall be exempt from property taxes:

(a) Property of the state and its governmental subdivisions to the extent used or being developed for use by the state or governmental subdivision for a public purpose. For purposes of this subdivision, public purpose means use of the property (i) to provide public services with or without cost to the recipient, including the general operation of government, public education, public safety, transportation, public works, civil and criminal justice, public health and welfare.... Public purpose does not include leasing of property to a private party unless the lease of the property is at fair market value for a public purpose.

The leasing of property by a municipality to a private party is not exempt unless the lease is at fair market value for a public purpose. The primary or dominant use, and not an incidental use, is controlling in determining whether property is exempt from taxation. It was not disputed before the Commission that the lease was for fair market value. The property was leased for the purpose of maintaining the area surrounding the runways as a buffer zone as required by the FAA assurances, federal legislation, and state law. The lease ensured that the grounds would be properly maintained and that weeds would be controlled without the use of city labor or at the City's expense. The revenue generated from the rent was used to support the airport's operating expenses as required by the FAA and as provided by federal legislation. Therefore the Court concluded that the primary use of the land was as an airport buffer zone and that the agricultural use was incidental. The land was being leased for agricultural use, which was incidental to its purpose as a buffer zone for the airport. Thus the court concluded as a matter of law that the leased property was being used for a public purpose and was exempt from taxation. Therefore the court concluded that the Commission’s decision did not conform to the law, and therefore, reversed the decision and remanded the case with directions that the Commission reverse the decision of the Board finding the property to be taxable.

City of York v. York County Board of Equalization
266 Neb. 305, 664 N.W.2d 452

Synopsis: The City appealed decision of county of board of equalization that land leased to a private party for agricultural use was not exempt from taxation. The Tax Equalization and Review Commission (the Commission) affirmed the board's decision, and city appealed. The Nebraska Supreme Court held that city's renting property for agricultural use was incidental to primary use as industrial park land and, as such, leased property was exempt from taxation as a community development project.

The property at issue is in the York Industrial Park, York County, Nebraska. The property, referred to as “the industrial park,” included approximately 85.04 acres, of which 83.5 acres had been leased to a private party for agricultural use. The 83.5 acres which have been leased were determined to be taxable and were the subject of the appeal. The industrial park had been developed by the City as part of its economic development plan. The primary purpose of creating the industrial park was to allow the City to offer improved industrial land for sale, which would attract industry to the community. The property at issue was leased for $100 per acre, which the city administrator stated represented the fair market value. The lease was subject to the sale of the property for industrial use. The York County assessor reviewed the lease and determined that because the property was income producing and not used for a public purpose, it was not exempt from taxation. She notified the City, which filed a protest with the Board. The Board denied the exemption, and the City appealed to the Commission. The Commission found that the primary or predominant use of the industrial park land was for agricultural purposes and that the property was not being used or developed for use as a development project. It concluded that the City had failed to establish that leasing of the industrial park land was a qualifying use under the community development definition found in state regulations. The Commission also found that the City had failed to establish the imminent sale of any of the lots or to demonstrate that the use of the leased land qualified as a public purpose. For these reasons, the Commission affirmed the decision of the Board denying the exemption. The City appealed.

The issue before the Nebraska Supreme Court was whether the 83.5 acres of leased property in the City's industrial park was being used for a public purpose. One of the uses which qualifies as a public purpose under § 77-202(1)(a) is “community development.” The term is defined in state regulations as “public property for use in a development project.” See 350 Neb. Admin. Code, ch. 15, § 002.13 (2001). The land at issue was authorized for development as an industrial park when the city council adopted a comprehensive plan in 1996. Six lots were sold between 1994 and 2001. Prior to the hearing before the Commission, the City had transferred ownership of an additional four lots. The zoning of some of the lots had been changed to commercial. Contrary to the findings of the Commission, a number of the lots in the industrial park have been sold. The industrial park was created by the city council acting as a community redevelopment authority for the purpose of community development. The court concluded that the primary use the industrial park land serves was for a public purpose and that the agricultural use was incidental. The leased property was exempt as a community development project under § 77-202(1)(a). The unsold lots had been leased for a 3-year term for agricultural use. This use of the property was incidental to the primary purpose of being an industrial park for community development. The primary use of the property was for a public purpose. The court found that tenting the property for $100 per acre cannot be considered anything but an incidental use when one compares the rental income to the $13,500 per acre spent by the City to develop the area. Therefore, the court found that the Commission’s decision did not conform to the law, and thus, reversed the decision remanded the case with directions that the Commission reverse the decision of the Board finding the property to be taxable.

City of York v. York County Board of Equalization
266 Neb. 311, 664 N.W.2d 456

Synopsis: The City of York owned land which was adjacent to the York Municipal Airport and was used as a solid waste landfill. The York County Board of Equalization (Board) upheld the county assessor's determination that a 44-acre parcel of the land was not being used for a public purpose and was taxable because the parcel was leased to a private party for agricultural use. The Tax Equalization and Review Commission (the Commission) affirmed the Board's decision, and the City appealed.

The landfill was owned and operated by the York Area Solid Waste Agency (Agency). The landfill received solid waste, disposed of it in accordance with state and federal regulations, conducted recycling activities, and did ground water monitoring. The parcel at issue was acquired via eminent domain after it was discovered that the landfill's monitoring wells needed to be extended. During the eminent domain proceedings, the Agency was required to establish that the land was being taken for a public purpose. At the time of the hearing before the Commission, the leased property was being maintained for future expansion of the recycling facility and for use as cover for solid waste cells. Three of the landfill's monitoring wells were located on this property, and were approximately 6 feet by 6 feet each. Each of these wells was located along the property line and minimally disturbed use of the leased property. The remainder of the property was used for agricultural production and other investigative activities, such as geo-probing and soil borings for ground water monitoring. The parcel of land held to be taxable was leased to a private party, and it included 44 acres of tillable irrigated cropland. The land rented for $135 per acre, for a total annual rent of $5,940. The rental income was placed in the landfill fund and used to fund capital and operating expenses.

After the York County assessor reviewed the lease, she determined that the 44-acre parcel was income producing and was therefore not used for a public purpose. She notified the City that the property was taxable. The City filed a protest with the Board, which also found the property to be taxable. The City appealed to the Commission, alleging that the primary use of the land was for ground water monitoring required by DEQ and that the agricultural use was an incidental use. The Commission found that the City failed to demonstrate that the lease was for a public purpose, and thus affirmed the decision of the Board denying the protest.

The Agency, which operated the landfill, was created in 1993 by the City and York County. In March 2000, the City leased 44 acres of the landfill to a private party for agricultural use at $135 per acre. The parties agreed that the lease represented the fair market value of the property. The issue was whether the parcel was used for a public purpose. The district court ultimately concluded that the Agency had authority pursuant to the Act to acquire the land by eminent domain for the purpose of conducting the investigation of ground water contamination. Therefore, it was clear that the property at issue was acquired for a public purpose. However, the court then focused on whether the subsequent leasing of the property for agricultural purposes subjects the property to taxation.

The Act authorizes a county, municipality, or agency to purchase, develop, maintain, and improve solid waste facilities. Landfills operated by local government entities must have long-range plans to ensure sufficient capacity to meet future waste disposal requirements because state law requires landfills to have adequate capacity for solid waste disposal until 2014. The court concluded that renting the property for $135 per acre for agricultural purposes was incidental to the land's primary purpose as a landfill, the purpose for which the land was condemned. The 44 acres of land at issue was acquired for use as a landfill at a total cost of $216,191. The fact that the Agency derives income from the leased property does not change its primary purpose. Therefore, the Commission erred in finding that the leased property was not being used for a public purpose and in determining that it is taxable, as the primary purpose of the property was for the use as a solid waste landfill, and the lease for the agricultural use was incidental to that purpose. Thus the court reversed the Commission’s decision, and remanded the case with directions that the Commission reverse the decision of the board finding the property to be taxable.

River City Life Center Ltd. Partnership v. Douglas County Board of Equalization
265 Neb. 723, 658 N.W.2d 717

Synopsis: The appellants, River City Life Center Limited Partnership and Prairie Life Center of Q Street, Ltd., sought further review of the summary dismissal by the Nebraska Court of Appeals. The sole issue on appeal was whether the district court and Court of Appeals erred in dismissing the appeal for lack of jurisdiction for the reason that the appellants' praecipe was not filed with the clerk of the district court, as required by Neb.Rev.Stat. § 25-1905 (Reissue 1995), within the time period prescribed by Neb.Rev.Stat. § 25-1931 (Cum.Supp.2002). The Nebraska Supreme Court affirmed this decision.

In 2002, the Douglas County Board of Equalization (Board) granted continued approval of a partial property tax exemption to Community Health Vision, Inc., (now known as Alegent Health), doing business as Lakeside Wellness Center (Lakeside). On April 23, River City Life filed a petition in error in the district court. River City Life alleged that the exemption from property tax granted by the Board to Lakeside was contrary to applicable statutes when the property considered as a whole is not used exclusively for exempt purposes. On the same date, River City Life filed a praecipe with the Douglas County clerk, the custodian of the Board's records. On May 28, River City Life filed a certificate of transcript with the district court, which was beyond the requirement of § 25-1931 that the certificate be filed 30 days after the rendition of judgment. In their respective answers, the Board and Lakeside, alleged that the district court lacked jurisdiction over the proceeding in error because River City failed to file a transcript of the proceedings or praecipe with the district court, as required by § 25-1905, within the time period prescribed by § 25-1931. Both the Board and Lakeside also filed separate motions for summary judgment.

In an order dated August 13, 2002, the district court sustained the Board and Lakesides' motions for summary judgment. The court held that there were no issues of material fact and that the Board and Lakeside were entitled to judgment as a matter of law. The court construed § 25-1905 to require that for jurisdiction to attach, a praecipe must be filed with the district court requested to review such judgment, and not with the tribunal, board, or officer charged with preparing the transcript. Therefore, the district court dismissed River City Life’s petition in error for lack of jurisdiction because the praecipe was not timely filed with the clerk of the district court. The River City Life then filed an appeal, which was summarily dismissed on October 15, 2002, by the Court of Appeals on the same grounds as that of the district court. The Nebraska Supreme Court granted River City Lifes’ petition for further review.

The sole issue on appeal was whether § 25-1905 required a praecipe for transcript to be filed specifically with the court requested to review a judgment in order to confer jurisdiction on such court. The requirement that a plaintiff in error shall file with his petition a transcript of the proceedings is mandatory and jurisdictional. In the absence of a transcript as the statute requires, the court in which a petition in error is filed has no jurisdiction to proceed further than to dismiss the petition in error. It is presumed that when a statute has been construed by the Supreme Court and the same statute is substantially reenacted, the Legislature gave to the language the significance previously accorded to it by the Supreme Court. Brown v. Kindred, 259 Neb. 95, 608 N.W.2d 577 (2000). Because the Legislature did not change the jurisdictional requirements, the court concluded the statute's plain language required that for jurisdiction to attach, the transcript of the proceedings or praecipe had to be filed specifically with the petition in error in the court requested to review such judgment. The court’s conclusion was consistent with the language of the statute and prior case law.

In this case, the River City Life timely filed the petition in error with the district court, but filed the praecipe with the county clerk. River City Life subsequently filed an untimely certificate of transcript with the district court. Because River City Life failed to timely file a transcript or praecipe with the petition in error in district court in accordance with § 25-1905, the court concluded the court lacked jurisdiction to hear the case. Therefore, the court affirmed the summary dismissal by the Court of Appeals.

Krusemark v. Thurston County Board of Equalization
10 Neb.App. 35, 624 N.W.2d 328

Synopsis: Property owner Dale Krusemark brought challenge to the assessed value of his property as determined by the county board of equalization. The Tax Equalization and Review Commission (the Commission) affirmed determination. Krusemark appealed. The Nebraska Court of Appeals, held that: (1) procedural due process issue was properly preserved; (2) property owner was entitled to procedural due process; (3) hearing officer that conducted hearing on property owner's challenge to valuation of property acted in judicial capacity; (4) hearing officer's comments regarding potential disciplinary action against real estate appraiser, who was expert witness for property owner, had chilling effect and amounted to improper testimony; and (5) property owner was entitled to opportunity to supplement record of proceedings to determine whether issue of equalization was properly presented to county board.

In 1997, Krusemark bought a lot for $20,000 in Pender, Thurston County, Nebraska, in an older part of town. He demolished an old house on the lot and began building a new house, which was completed in 1999. The value of the improvements were at issue in this case. Krusemark protested to the Board the valuations assigned to the property for the tax years 1998 and 1999. Krusemark appealed both the 1998 and 1999 valuation of his property to the Commission, although the Commission did not consolidate the appeals. In addition to numerous exhibits introduced as evidence by both the Board and Krusemark, testimony was received from Krusemark; Leon Blomendahl, who was a real estate appraiser; and the Thurston County assessor. Krusemark argued before the Commission that the valuation was excessive and incorrect because his house was only 75 percent complete on the assessment date, that the area of the basement classified as “finished” was incorrect, and that the determination that the “quality” of the house construction was “very good” was incorrect and not in accordance with standard appraisal techniques. In the Commission’s findings and order of March 14, 2000, deciding the case, it stated that the testimony of Blomendahl “was withdrawn and therefore the Commission gave no weight to it,” and thus found that Krusemark had not adduced clear and convincing evidence to establish that the valuation of the Board was unreasonable or arbitrary, and affirmed the decision of the Board valuing the house for both years. Krusemark appealed.

First, Krusemark argued that the actions of the Commission intimidated his expert witness. The court found that the record reflected that while Blomendahl did testify at some length without interruption or objection, the record also reflects that the hearing officer made several comments directed toward Blomendahl, implying that the witness was going to end up in front of the Real Estate Appraisal Board because of his testimony. After this occurred a few times, Krusemark’s attorney removed Blomendahl from the stand, and he was not recalled. The Board argued that Blomendahl was not prevented from testifying, but that Krusemark voluntarily withdrew the testimony of his expert opinion. After determining that the Krusemark was entitled to procedural due process in the presentation of his evidence to the Commission, the court then analyzed the effect of the hearing officer’s comments made during the course of proceedings, and whether Krusemark’s right to due process was violated because of them. From the context of the record, the court found that the hearing officer was acting in a judicial capacity because he swore in the witnesses, controlled the presentation of evidence, ruled on objections, and with the two other hearing officers, assisted in the decision-making process. Because the hearing officer was acting in a judicial capacity, the court found that the hearing officer's comments during the course of the proceedings had a chilling effect upon Blomendahl and amounted to improper testimony by the hearing officer regarding facts not in the record such that Krusemark was effectively denied his right to procedural due process. Therefore, the actions of the Commission in this regard were unreasonable, and the court thus reversed the decision and remanded the matter for further proceedings consistent with the decision.

Krusemark also argued that the Commission’s determination that the issue of equalization was not raised by Krusemark before the Board, and therefore could not be considered by the Commission was in error. During the Commission hearing, the Commission correctly noted that it had subject matter jurisdiction over only those issues presented to the Board. “Property Valuation Protest” (Form 422) is the standard form used in filing a protest to the Board and provides a section whereby the protesting taxpayer states the reasons for the protest. Krusemark handwrote: “Since the house was not completed, $345,845 is only 3/4 of the valuation. I also wish you would consider removing the sales multiplier of 1.35%. I'm also attaching papers giving my reasons for making this protest.” The Commission had no attachments to Form 422 in the record before it and was of the opinion that Krusemark's statement in Form 422 indicated that the house should not be valued at full market value. However, on Form 422 Krusemark filled out the following: Dale Krusemark appeared to give testimony. Presented comparables to County Board of Equalization. My home valued at 144.00 per square foot. These other homes average 66.60 per sq. ft. Showed neighboring counties comparable homes. Waynes valuation and Dakota valuations are not rising. Madison, Dixon and Dakota County value these homes at what they would bring on the market. Krusemark argued before the Commission, and now the court, that the reference to “comparable” in the statement indicated that equalization was an issue before the Board. The Board asserted that although Krusemark offered purported comparables at the protest hearing before the Board, there was no evidence that the comparables were offered for the purpose of raising the issue of equalization. The court found that in reviewing the Form 422 in the 1998 protest, it indicated Krusemark presented “comparables” to the Board, although the form does not specifically reference the issue of equalization. However, in reviewing the Form 422 in the 1999 protest, there was likewise no specific reference to equalization; rather, reference to “comparables” is contained therein, and that was enough for the Commission to address the equalization issue there. The court found that in order to properly resolve the issue of whether equalization was presented to the Board in the 1998 protest, and consequently, the Commission’s jurisdiction over the issue, the Commission, on remand, should allow Krusemark to supplement the record with the proceedings before the Board in the 1998 protest.

Therefore, because Krusemark was denied the right to procedural due process in the hearings before the Commission, the court reversed the Commission's decisions of March 14, 2000, which affirmed the Board's determinations and valuations of Krusemark's property for the tax years 1998 and 1999, and remanded the cause to the Commission for further proceedings consistent with the opinion.

Schmidt v. Thayer County Board of Equalization
10 Neb.App. 10, 624 N.W.2d 63

Synopsis: Taxpayers, the Schmidt’s, sought review of a determination by the Thayer county board of equalization regarding the valuation of a quarter section of their agricultural property. The Tax Equalization and Review Commission (the Commission) affirmed the board's determination, and the taxpayers appealed. The Nebraska Court of Appeals held that: (1) the taxpayer and professional appraiser were competent to offer opinion testimony as to the value of property, and (2) the Commission’s approval of the valuation of taxpayers' property based upon its location in higher-valued market area, without relation to soil classification, was not supported by competent evidence and was arbitrary. The court therefore reversed and remanded for further proceedings.

This appeal from the Commission involved a quarter section of agricultural real property in Thayer County, Nebraska, owned by Dennis G. Schmidt (Schmidt) and Joyce E. Schmidt. For the year 1999, the county assessed the property, approximately 160 acres, at $126,750. The prior valuation had been $88,350. The Schmidts protested to the Board for the reason that the valuation was above market value for the land classes and soil types contained on the parcel and requested a valuation of $99,840. The Board made no change to the valuation. The Schmidts appealed the Board's decision to the Commission. In the Commission’s findings and order affirming the decision of the Board, it determined that Schmidt's testimony as to the soil types in Thayer County and the productivity of that soil was based on the Thayer County soil survey. The Commission found that Schmidt's opinion of value based on soil types had no foundation and therefore accorded it little or no weight. The Commission further determined that five out of eight of Schmidt's comparable sales were not comparable and further found that Schmidt's opinion as to the value of the property was competent but not credible. The Commission ordered that the decision of the Board which denied the Schmidt’s' protest be affirmed and that the property be valued for the tax year 1999 at $126,750. The Schmidts appealed for the reasons that the valuation of the property was above the market value for the land classes and soil types and that the Commission failed to properly consider the evidence.

The property contained soils of class 1D (45 percent of the total property) and class 3D1 (49 percent). On the property, the 1D soil is very good producing soil. The 3D1 soil can be good producing soil, but is generally of moderately low fertility, is difficult to farm because it has a tendency to be sticky and to ball up when wet, is very hard when dry, and can only be farmed when it has dried out. Schmidt asserted that because of the small percentage of 3D1 soil in the county and a relatively large percentage of 3D1 soil on the property, the property was unique for valuation purposes. With regards to the assessment, Schmidt felt the Board did not take into consideration the negative effect that the 3D1 soil had on the other soil on the Schmidt’s' farm. The court also noted that Thayer County had been divided into two market areas for assessment purposes. A map of the county indicated that the market areas were divided by a southwest to northeast stair-step line drawn on township boundaries. Market area 1 consisted of 10 townships, and market area 2 consisted of 6 townships. Market area 1 was generally of higher valuations than market area 2, except for grassland classes.

In its analysis, the court noted that there was a presumption that a county board of equalization has faithfully performed its official duties in making an assessment and has acted upon sufficient competent evidence to justify its action. That presumption remains until there is competent evidence to the contrary presented, and the presumption disappears when there is competent evidence adduced on appeal to the contrary. The burden of showing such valuation to be unreasonable rests upon the taxpayer on appeal from the action of the board. The Commission accorded little or no weight to Schmidt's opinion of the value of the property, even though a resident owner who is familiar with his or her property and knows its worth was permitted to testify as to its value without further foundation; this principle rested upon the owner's familiarity with the property's characteristics, its actual and potential uses, and the owner's experience in dealing with it. The court found that the Commission erred in determining that Schmidt's opinion testimony as to the value of the property should be accorded little or no weight. Schmidt testified to the basis of his opinion, and his testimony was received generally without objection. There was sufficient foundation establishing his familiarity with the property, yet the Commission determined that there was no foundation for Schmidt's opinion because the soil survey for Thayer County was not in evidence. However, a review of the record revealed that Schmidt's testimony regarding the soil types was based primarily upon his personal knowledge and that very little information from the soil survey itself was discussed.

The court also found that the Commission erred in according no weight to the opinion of the appraisal by Bruning. The Board objected to Bruning's appraisal report on the grounds that it was produced in May 1999 and that the assessment date of the property was January 1, 1999, thus, in the Board's opinion, rendering the report irrelevant. The objection was overruled, and the appraisal report was received as part of the record, although the Board's standing objection was noted. Bruning certified in his appraisal report that he had personally inspected the property and that the report had been made in conformity with the “Professional Standards of the Nebraska Real Estate Appraisers.” The court found that precedent dictated that the appraiser’s opinion was entitled to some weight. The court therefore determined that both Schmidt's testimony and the appraiser's report were incorrectly disregarded by the Commission.

The Schmidts also argued that the Commission erred when it equalized real property in the county by arbitrarily creating and utilizing market areas in assessing taxes, in violation of article VIII of the Nebraska Constitution, in accepting the market areas as valid without supporting evidence, and in using the market areas when analyzing the comparable properties presented by Schmidt and in finding that market areas were “subclasses” of property. The Schmidts asserted that the property is only one-half mile from market area 2, which was valued at $200 less per acre than in market area 1. The court found that the evidence in this case indicated that the market areas established by the assessor were not, in fact, based on soil classification, but, instead, were based on assessment-to-sales ratios. Subclasses of agricultural land must be based on soil classification, not upon where the land is located. Thus the market areas did not constitute subclasses of agricultural land as defined by the statutes. There was little evidence presented by the Board to explain its basis for arriving at the market area divisions. The boundaries separating market areas 1 and 2 appeared to have been arbitrarily drawn, and there was no evidence to the contrary. It was clear to the court that the market areas were not based on soil types, but, rather, on location of property within the county. The court therefore concluded that the Commission’s approval of the valuation of the Schmidt’s' property based upon its location in market area 1, without relation to soil classification, was not supported by competent evidence and was arbitrary. Thus the court reversed the Commission’s decision affirming the Board’s denial of the Schmidt’s protest, and remanded the cause to the Commission for further proceedings consistent with the opinion.

County of Douglas v. NE Tax Equalization and Review Commission
262 Neb. 578, 635 N.W.2d 413

Synopsis: Douglas County appealed from an order of the Tax Equalization and Review Commission (the Commission) that increased the value of the commercial property in county by 7%. The Nebraska Supreme Court, held that: (1) the Commission correctly concluded that it was not necessary to order a percentage adjustment to the residential property in county; (2) determination that “sales chasing” had occurred in county during the relevant time period was supported by competent evidence; (3) finding that a time adjustment was not necessary was supported by the record; (4) the Commission was not precluded from using past sales data to determine that statistical analysis by county was not reliable; and (5) the Commission’s use of only one year of sales data to evaluate level of assessment of commercial property did not violate state constitution's uniformity clause.

For the 2000 tax year, the statistical reports for the commercial class of property were to be determined by use of sales during the 3-year period from July 1, 1996, through June 30, 1999. However, for Douglas, Lancaster, and Sarpy Counties, the PTA's reports and opinions included calculations based on sales of commercial property using only 1 year's worth of data (July 1, 1998, through June 30, 1999). For Douglas County, the PTA rounded the median assessment-sales ratio for commercial property and reported it to be 90 percent. This calculation was based on a “trimmed profile” that included 464 sales in Douglas County between July 1, 1998, and June 30, 1999. A trimmed profile is a summary of statistical studies provided in the PTA's reports and opinion that utilizes only sales with an assessment-sales ratio between 25 and 200 percent. In an attempt to “make Douglas County comparable with other counties,” the PTA applied a 4-percent increase to the reported median assessment-sales ratio of 90 percent, “which represented a twelve month adjustment to the midpoint of the time frame established by the Nebraska Tax Equalization and Review Commission. The PTA opined that adjusting the median assessment-sales ratio of 90 percent to 94 percent brought the existing commercial values in Douglas County within the statutorily acceptable range of 92 to 100 percent, but the quality of assessment was not acceptable because the reported 23.17 percent COD was above the acceptable range of 0 to 20 percent.

On April 18, 2000, the Commission commenced its equalization proceedings. The Commission sought the assistance of an expert witness to evaluate the PTA's reports and opinion for Douglas County, and the expert testified that the methodology used by the PTA on the commercial property in Douglas County was not consistent with professionally accepted mass appraisal standards and that the mathematical calculation used by the PTA was not appropriate. Relying upon the expert’s opinion, the Commission concluded that there was no credible evidence to support the PTA's 4 percent time adjustment of the median assessment-sales ratio from 90 percent to 94 percent. The Commission concluded that an order directing the PTA to adjust commercial property values was necessary to ensure compliance with the uniformity and proportionality provisions of article VIII, § 1, of the Nebraska Constitution and § 77-5023. The Commission issued an order directing Douglas County to show cause why the value of the commercial property in Douglas County should not be increased by 7 percent. On May 10, 2000, the Commission filed its “Findings and Orders Adjusting Values,” in which the Commission rejected the PTA's proposed 4-percent time adjustment to the median assessment-sales ratio because none of the standard reference works identified this adjustment as a professionally accepted mass appraisal method. The Commission concluded that the PTA's 4-percent time adjustment to the median assessment-sales ratio was not recognized, reliable, or credible. The Commission concluded that a just and equitable assessment of the commercial property in Douglas County could not be made without increasing the value of property by a percentage and the Commission therefore ordered an increase of 7 percent in the assessed value of the commercial property in Douglas County. This 7-percent adjustment was to be applied to all commercial and industrial real property in Douglas County, including both land and improvements. The Commission found that this increase would bring the median assessment-sales ratio to 96 percent, the midpoint of the acceptable range required by § 77-5023. On May 22, 2000, Douglas County filed an appeal with the Nebraska Court of Appeals, and the Nebraska Supreme Court granted Douglas County's petition to bypass.

Douglas County claimed that the Commission acted in an arbitrary fashion by accepting a time adjustment to the residential property in Douglas County, but not to the commercial property. The Supreme Court did not find the Commission’s actions to be arbitrary. Even without a time adjustment, the median value of real property was still within the acceptable range of 92 to 100 percent, and the Commission correctly concluded that it was not necessary to order a percentage adjustment to the residential property in Douglas County.

Douglas County then argued that the Commission lacked sufficient evidence to issue the order to show cause. Pursuant to § 77-5023, the Commission is given the authority to issue an order to show cause why the value of a class of property should not be adjusted. See § 77-5026. In considering the show cause order, the Commission relied upon the expert’s testimony that the 4-percent time adjustment that the PTA applied to the median assessment-sales ratio for commercial property in Douglas County was not consistent with a professionally accepted mass appraisal standard. The court found that this was sufficient evidence to support the Commission’s actions, and therefore the Commission did not act arbitrarily in issuing the show cause order to Douglas County.

Douglas County also objected to the Commission’s findings in its May 10, 2000, order as arbitrary, unsupported by the evidence, and not in conformity with the law. The county claimed that a number of analyses could have been used by the Commission which showed that the median level of value for commercial property in Douglas County was within the statutorily acceptable range. Instead, the county argued that the Commission based its findings on the unsupported theory that “sales chasing” had occurred prior to January 1999. The county asserted that even though the Commission, the PTA, and the county's own witness all agreed that “sales chasing” could be evidenced, it was not conclusively shown by a comparison between the percent in sales base value to the percent change in assessed base value. The court noted that “sales chasing” occurs when values for properties that have been sold are changed while values for unsold properties remain constant. The practice is unprofessional because it creates inequities between properties and, unless adjusted for, renders sales ratio studies invalid. The Commission argues that evidence of “sales chasing” is shown in the assessment-sales ratio data contained in the profile prepared by the PTA. This data reflected a marked decrease in the assessment-sales ratio for commercial property in Douglas County between the last two quarters of 1998 (94 and 93.18 percent) and the first two quarters of 1999 (84.12 and 80.20 percent), with a net drop in the median of 14 percent in 6 months. The Commission asserted that the practice of “sales chasing” tainted the sales data prior to January 1, 1999. The court noted that the evidence was undisputed that the commercial real estate market in Douglas County was strong and increasing at a rate of 4 percent per year. As the Commission noted, under these circumstances, the quarterly assessment-sales ratios listed in the profile should have decreased. No witness provided any explanation for the dramatic change in the median after the former assessor left office in January 1999, and Douglas County presented no evidence to explain the inconsistency. Therefore the court found that the Commission’s determination that “sales chasing” had occurred in Douglas County during this time period was supported by competent evidence and the Commission’s findings with respect to “sales chasing” were neither arbitrary, capricious, nor unreasonable.

Finally, Douglas County argued that the Commission violated the uniformity clause of the Nebraska Constitution by failing to treat Douglas County in a manner that was uniform with other counties within the state. In particular, the county asserts that it was improper to analyze Douglas County on 2 quarters, or one-half of 1 year, while analyzing the rest of the counties using a 3-year timeframe. Douglas County contended that it was treated differently than Lancaster County, which was permitted to provide 3 years' worth of sales information. However, the record showed that the PTA's reports and opinions for both Douglas and Lancaster Counties used only 1 year's worth of sales data. Pursuant to state law, the court looked to whether there was a substantial difference of situation or circumstance or some public policy reason that would justify why Douglas County was not evaluated using a 3-year timeframe as were the other counties within the state. The court agreed with the Commission’s assertion that the different timeframe was justified by the evidence of “sales chasing.” The record in the case contained substantial evidence that “sales chasing” had occurred in Douglas County and that the “sales chasing” affected the 3-year sales information. The data for Lancaster County did not indicate that the sales information for Lancaster County was contaminated by the type of “sales chasing” that had occurred in Douglas County. Therefore, the court concluded that the evidence of “sales chasing” justified the differential treatment accorded to Douglas County. Thus based upon the factual situation presented, the court found that the Commission did not err in using only 1 year of sales data to evaluate the level of assessment of the commercial property in Douglas County. The court therefore affirmed the Commission’s order.

Falotico v. Grant County Board of Equalization
262 Neb. 292, 631 N.W.2d 492

Synopsis: Taxpayers sought review of decision by the Tax Equalization and Review Commission upholding denial of valuation protests. The Supreme Court moved case to its docket. The Supreme Court, held as a matter of first impression that increase in valuation was void since the county clerk violated the statutory duty to give notice to the taxpayers within seven days of the county equalization board's decision.

The Grant County assessor assessed higher valuations for the subject properties for purposes of taxation as of January 1, 1999. The proposed valuations were based on a sample size of only five sales concerning four properties (one property was sold twice over a 3-year period). The taxpayers filed protests to the proposed valuations. The Board denied the taxpayers' protests, making its decision on July 23, 1999. The county clerk, though required under Neb. Rev. Stat. § 77-1502 (Cum.Supp.2000) to send the taxpayers notice of the Board's decision within 7 days of that decision, did not send the notices until August 19. The taxpayers received the notices on August 21, which fell on a Saturday. The deadline under Neb.Rev.Stat. § 77-1510 (Cum.Supp.2000) for filing an appeal with the Commission was Tuesday, August 24. Thus, the taxpayers had only 2 business days within which to prepare and file their appeals. Moreover, the forms the Commission provided to the taxpayers stated that the deadline was August 25, 1 day later than the statutory deadline. The taxpayers mailed their appeal forms to the Commission on August 25, and the Commission received and filed them on August 26. The Commission held a hearing to determine whether it had jurisdiction to hear the cases and then issued an order declaring that it could properly do so, because dismissing the taxpayers’ appeals on jurisdictional grounds would violate the principle of equity and would further deny the taxpayers due process of law (notification within 7 days of the Board’s decision and 30 days within which to appeal). The Commission granted the Board's motion to dismiss largely because the taxpayers had not produced any evidence regarding the actual values of the properties. Because they offered no evidence, the Commission found that the taxpayers had not shown that the Board's valuations were grossly excessive and had thus not rebutted the presumption favoring the Board's action. The taxpayers sought review in the Nebraska Court of Appeals, and the Nebraska Supreme Court moved the case to its docket pursuant to the power to regulate the caseloads of the Nebraska Supreme Court and the Court of Appeals.

The court noted that the issue was whether the Commission had subject matter jurisdiction over the case. Subject matter jurisdiction is the power of a tribunal to hear and determine a case of the general class or category to which the proceedings in question belong and to deal with the general subject matter involved and to acquire jurisdiction over the subject matter of the action, there must be strict compliance with the time requirements of the statute granting the appeal. The statutes require that any appeal to the Commission shall be filed within thirty days after adjournment of the board. Thirty days past July 25, 1999, is August 24. Here, the taxpayers postmarked their appeals on August 25, and they were actually received and filed by the Commission on August 26. Thus, the taxpayers' appeals were filed after the expiration of the statutory 30-day period. However, the reason for the delay was due both to the failure of the county assessor to mail out the notice for the hearing within the stated time frame, and due to an error on the form.

Procedure prescribed by the Legislature in respect to levying a tax must be strictly observed. In previous cases, the court had found that the statute requiring notice by the county assessor to the taxpayer is mandatory and that the failure to give the required notice is fatal to the tax levied on the increase in valuation of the property. Here, the court concluded that just as notice by the county assessor under § 77-1315 is essential to the validity of the levy, so too is notice by the county clerk under § 77-1502. Because the county clerk violated the statutory duty under § 77-1502, the increase in the valuation is void and the Commission thus lacked jurisdiction over the case. The court therefore reversed the affirmance by the Commission of the Board's decision which denied the protests filed by the taxpayers, vacated the decision of the Board denying the protests of the taxpayers, and declared that the action of the Grant County assessor increasing the valuations of the subject properties for the purposes of taxation as of January 1, 1999, was void.

Firethorn Inv. v. Lancaster County Board of Equalization
261 Neb. 231, 622 N.W.2d 605

Synopsis: Landowners filed tax protests with county board of equalization after assessed value of their golf course was increased. The board denied the protests. Landowners appealed. The Tax Equalization and Review Commission (the Commission) affirmed. Landowners appealed. The Nebraska Supreme Court held that: (1) presumption existed that county board faithfully performed its official duties in making an assessment and acted upon sufficient competent evidence; (2) owners failed to rebut the presumption; (3) a sale to a political subdivision can reflect current market value and serve as a comparable sale for an assessment; and (4) single sale may in some instances provide evidence of market value.

Firethorn owns four tracts of land which compose a private golf course. At issue in this case is the value of the land underlying the golf course. In 1998, Firethorn developed and/or conveyed some of its real property. In 1999, the Lancaster County assessor notified Firethorn of tax increases due to an increase in the assessed valuation of the property. Under the 1999 assessment, the value of the property increased from $3,504,476 to $6,171,000. The increase was based primarily on an assigned land value of $15,000 per acre. Firethorn appeared before a referee appointed by the Board, Wayne Kubert, who recommended no change to the valuation. Firethorn then appeared before the Board, which also accepted the valuation. Firethorn then appealed to the Commission.

In proceedings before the Commission, Allen, a certified real estate appraiser, testified for Firethorn. Allen testified that he appraised the golf course property using 31 comparable sales, with emphasis placed on 9 sales, but only 4 that were primarily relied on. Allen admitted that three of the four sales were to the City. Allen testified that he confirmed that the sales were arm's-length transactions by speaking with the City and that they were based on an appraisal of like-kind properties, with the purchase price negotiated from that price. Robert Stanley, the county appraiser who performed the assessment on the property, testified that when he made his assessment, he was unaware of the conservation and preservation easements on the property but that he was aware that the property was included in a community unit plan. The record shows that the Board was aware of the conservation and preservation easements. In assessing the property, Stanley looked at sales of 14 properties but placed emphasis on 5 sales ranging in price from $10,000 to $24,758 per acre. Stanley testified that he did not consider the sales Allen relied on comparable for several reasons, the main one being that in regards to the sales to the City, Stanley testified that even in the absence of an overt threat of condemnation, the ability of the City to take the property is always present, thus making it a distressed sale. In its findings and order, the Commission found that the community unit plan and the conservation easements did not affect the fair market value of the golf course property and that the highest and best use of the property was as a golf course. The Commission further found that three of the four most comparable sales used by Allen were ones in which the City was the buyer. Based on this, the Commission found that the record did not establish that any of the sales to the City reflected the current market value. In finding that the sales to the City were not comparable, the Commission relied largely on Stanley's testimony that the threat of condemnation is always present, along with the policy of the county assessor's office to always disqualify such sales. The Commission further concluded that one sale did not establish market value. Finally, the Commission concluded that the action of the Board was not unreasonable or arbitrary and affirmed their decision.

Firethorn first argued that the Commission acted unreasonably when it found that the Board gave due regard to the restricted use of the property. In particular, Firethorn argues that Stanley was unaware of the conservation easements on the property and that the Board disregarded the effect of the easements. Although Stanley was unaware of the conservation easements on the property, he was aware of the community unit plan. In upholding the assessed value, the Board was aware of both the community unit plan and the conservation easements. Both parties presented testimony that the highest and best use of the property was as a golf course and neither was able to locate sales of other properties subject to conservation easements when determining value based on comparable sales. The court found that it was reasonable for the Board and the Commission to determine that the limitations placed on the property by the conservation easements did not act to lower the value of the property since the limitations were generally similar to restrictions placed on the property through the community unit plan and to the use that has always been made of the property. Additionally, Firethorn did not present evidence to show how the conservation easements affected the value of the property. Without evidence of sales of property that are restricted in use, it is impossible to conclude that the restricted use of Firethorn's property actually lowered its value. In the absence of evidence through the use of comparable sales or another assessment method showing how the conservation easements affected the value of the property, and to what dollar amount, Firethorn failed to meet its burden to overcome the presumption that the Board acted reasonably.

Firethorn then argued that the Commission erred in failing to consider three sales of property to the city. In its order, the Commission stated that the sales were disregarded because sales to a political subdivision implicitly carry a threat of condemnation and because it was the policy of the county assessor's office to disqualify such sales. Although the Commission stated it found that the sales of property to the City did not reflect current market value, a reading of the order as a whole showed that this conclusion was based solely on the finding that sales to a political subdivision are always under a perceived threat of condemnation. The court determined that such a finding would act to always disqualify sales to a political subdivision, and nowhere do the statutes state that sales to a political subdivision are to be automatically excluded from consideration. Rather, this finding is contrary to the provisions of § 77-1371 which states that consideration shall be given to whether such a sale reflects market value. Thus the court held that a sale may not be disregarded solely because it is a sale to a political subdivision. As a result, the court reversed and remanded for the Commission to consider whether the sales to the City reflected market value.

Firethorn also argued that the Commission erred in disregarding evidence of a fourth sale consisting of land sold in a private sale for the purpose of being developed into a golf course. The Commission’s order showed that consideration was not given to the fourth sale presented by Firethorn solely due to a finding that adjustments had not been made and because of a determination that a single sale cannot show market value. However, the record shows that Allen did make some adjustments to the property. Thus, the court concluded that the Commission’s factual finding to the opposite was not supported by competent evidence. Additionally, the court held further that a single sale may in some instances provide evidence of market value, as a single sale should not be excluded merely because it is a single sale. Rather, the fact that evidence of other sales is not presented goes to the weight of the evidence. Because the Commission’s order indicated that it gave no consideration to the sale due to an erroneous factual finding and because it was only one sale, the court concluded that the Commission erred in disregarding the fourth sale.

Finally, Firethorn argued that the Commission erred in utilizing information regarding Firethorn’s purchase and sale of property to conclude that remaining portions of Firethorn’s property, including the golf course, were worth $16,814 per acre without taking into account substantial changes and differences in zoning among various portions of the property. In its brief, the Board agreed that the Commission erred, but contended that the error was harmless. The court agreed that the Commission erred in making that calculation and therefore the Commission could not rely on that calculation on remand. Thus the court reversed the decision of the Commission and remanded for further proceedings.

Garvey Elevators, Inc. v. Adams County Board of Equalization
261 Neb. 130, 621 N.W.2d 518

Synopsis: Taxpayer protested assessment valuation of two parcels of commercial property. County board of equalization reduced value of one parcel, but not the other. Taxpayer appealed. The Tax Equalization and Review Commission (the Commission) affirmed the board's decision, and taxpayer appealed. On its own motion to remove case from docket of the Court of Appeals, the Supreme Court held that: (1) county board of equalization was entitled to a presumption of validity regarding valuation of taxpayer's property; (2) board was not required to produce evidence to show how it determined actual value of taxpayer's property; and (3) taxpayer failed to establish that valuations were grossly excessive and result of a systematic exercise of intentional will or failure of plain duty.

Garvey is in the grain storage and merchandising business. The property in question consists of two parcels of property located in Adams County, Nebraska. The first parcel, which we refer to as the “improved parcel,” consists of approximately 22.09 acres. The improvements on this parcel have a total capacity of 8 million bushels, including a grain elevator terminal which has a concrete elevator with a total of 258 bins and 4,733,000 bushels of storage capacity. The second parcel of property, which we refer to as the “unimproved parcel,” consists of approximately 83.82 acres of solely agricultural land. Garvey alleged in its protest to the Board that for the tax year 1998, the Adams County assessor proposed valuing the improved parcel in the amount of $1,965,375. This amount included $1,845,395 for the improvements on the property and $119,980 for the land itself. However, the property record card for the improved parcel indicates that the assessor had proposed valuing the improved parcel in the amount of $1,871,785, which included $1,757,520 for the improvements on the property and $114,265 for the land itself. As the Commission noted, nothing in the record explains the difference between the valuations. Garvey filed its protest regarding the improved parcel with the Board and requested that the valuation of the improved parcel be reduced to zero. The Board reduced the 1998 assessment value of the improved parcel to $1 million. This amount included $880,020 for the improvements on the property and $119,980 for the land itself. Garvey appealed the Board's decision to the Commission.

The Commission noted that when a “Phase I Environmental Site Assessment” was conducted on the property in question, it was determined that the soil was contaminated with carbon tetrachloride in an area consisting of approximately 502,655 square feet extending down to the water table, and the total soil affected was estimated to be 55 million cubic feet. The Commission found that from the record before it, the actual or fair market value (including the effect on value of the contamination) as of the assessment date was $1 million for the improved parcel. The Commission found that the property record card for the unimproved parcel demonstrated that the Board's final determination of value for the unimproved parcel was $72,415 and that $72,415 was the actual or fair market value as of the assessment date. The Commission also concluded that there was not sufficient evidence to establish that the decision of the Board was unreasonable or arbitrary and the Commission therefore affirmed the decision of the Board. Garvey appealed to the Nebraska Court of Appeals, and the Nebraska Supreme Court moved the case to their docket.

Garvey first argues that the Board's valuation is not entitled to any presumption because the Board failed to act upon its own information and failed to utilize any of the required statutory methods for determining the actual value of the property. Garvey claims that because the Board did not offer any evidence to support its valuation of the subject property, the Board was not entitled to a presumption of validity regarding the $1 million valuation. § 77-1511 creates a presumption that a county board of equalization has faithfully performed its official duties in making an assessment and has acted upon sufficient competent evidence to justify its action, and that presumption remains until there is competent evidence to the contrary presented, and the presumption disappears when there is competent evidence adduced on appeal to the contrary. The court found that no record was made of the proceedings before the Board, and there was no evidence to establish that a valid assessment of the property had not been made. Thus the court determined that Garvey did not establish that the Board was not entitled to a presumption that the Board faithfully performed its official duties in making the assessment and acted upon sufficient competent evidence to justify its action.

Garvey also argued that the Board was required to produce evidence to show how it determined the actual value of the property in accordance with § 77-112. Garvey claimed that because the Board did not contradict its evidence in support of a zero valuation, such evidence was therefore undisputed and the Commission’s decision must be reversed. This argument also failed, as the court found that Garvey had not presented competent evidence to rebut the presumption that the Board had faithfully performed its duties. It was Garvey’s duty to show by competent evidence that the action by the Board was unreasonable or arbitrary, and he did not do so. Until there has been competent evidence presented by the taxpayer, the Board does not have to present any evidence to support its valuation.

Finally, Garvey argued that even if the Board was entitled to the aforementioned presumption, it had successfully rebutted such presumption and that the Board was therefore required to put on evidence to support its valuation. The unreasonableness of the valuation must be established by clear and convincing evidence that such valuation when compared with valuations placed on other similar property is grossly excessive and is the result of a systematic exercise of intentional will or failure of plain duty and not mere errors of judgment. Unless such unreasonableness is shown, the Commission must affirm the action taken by the Board. Garvey failed to establish by clear and convincing evidence that the valuations placed upon its property when compared to valuations placed on other similar property were grossly excessive and the result of a systematic exercise of intentional will or failure of plain duty, and not mere errors of judgment. Thus the Commission’s determinations that Garvey failed to provide credible evidence that the Board's actions were unreasonable or arbitrary and that Garvey did not rebut the presumption that the Board faithfully performed its duties and acted upon sufficient competent evidence were not clearly wrong. Therefore the court concluded that the Commission did not act arbitrarily, capriciously, or unreasonably in affirming the decision of the Board, and affirmed the decision of the Commission.

Cabela's, Inc. v. Cheyenne County Board of Equalization
8 Neb. App. 582, 597 N.W.2d 623

Synopsis: This case involved a retail store built in 1991 for approximately $5 million with many unusual features that attracts approximately one million visitors a year. Between 1992 and 1996, the property was valued at approximately $5 million. In 1997, the property was valued by the county assessor at approximately $4,775,000 ($204,000 for land, $4,775,000 for improvements). The taxpayer protested to the county board who reduced the value of the improvements to approximately $3,900,000 by subtracting the value of an aquarium and a "mountain", both of which were determined to be personal property. The county in setting the value used Marshall and Swift valuation materials to reach a value of approximately $6 million and subtracted approximately $2 million for depreciation.

The taxpayer appealed to the Nebraska Tax Equalization and Review Commission where its case consisted primarily of the testimony of an appraiser it had hired. He likened the property to a K Mart or Walmart retail store, thought the subject property had been "overbuilt" to project the company's image, and that the taxpayer would take a loss if the property were sold. It was the appraiser's opinion that the property's fair market value was approximately 2.85 million dollars. In reaching that opinion, the appraiser used all three approaches to value. His replacement cost figures differed from those of the county assessor, for sales comparison, he used other retail sales and for income capitalization, he used the operating income of other retail locations in the area. However, the appraiser used properties in his analysis that differed from the subject property and he made adjustments to value that were not contained in his appraisal report.

The county used the cost approach in valuing the property. This was largely because there were no comparable sales due to the quality of the subject property. Further, little or no data was available for a capitalization analysis. The county did use comparable sales to come up with a depreciation rate for the property.
The Commission accepted the approach of the county assessor and county board as professionally accepted mass appraisal techniques which were most appropriate in this case because of the uniqueness of the property. The Commission found the taxpayer's appraiser unpersuasive because he made adjustments to value that were not in his appraisal report and only used one sale in his analysis. The Commission found that the value of the elevator in the property was overstated and reduced the overall value to approximately 3.98 million dollars. The taxpayer appealed to the Nebraska Court of Appeals.

The Court of Appeals noted that Nebraska law requires the use of applicable valuation methods to determine the actual value of property. Actual value is not what an individual buyer may pay for a property but instead is the market value of the property in the ordinary course of trade. In this case, the county assessor was unable to find comparable sales to the subject property and therefore relied on the cost approach, less depreciation. The cost approach is typically best for newer improvements and properties where sales and income data are scarce according to the International Association of Assessing Officers (IAAO). Therefore, the county's use of the cost approach was supported by competent evidence, especially in light of the lack of truly comparable sales offered by the taxpayer.

The taxpayer argued that the amount of depreciation applied to the property for physical depreciation, functional depreciation and economic depreciation was not applied to the property. The Court noted that the assessor considered the application of economic depreciation (external market forces depressing a property's value) but found it inappropriate based on growth in the county's economy. The assessor applied a depreciation rate to the subject property that was applied to all businesses in the county. The taxpayer's appraiser admitted that calculating depreciation was difficult and that he had omitted items from his calculation. In reviewing the record, before the Commission, the Court could not say the county board acted arbitrarily or unreasonably.

The taxpayer also made the argument that since the assessor did not physically inspect the property, the presumption of correctness does not attach to the county's decision and therefore, the question of the value of the property is simply one of the reasonableness of the value placed on the property. However, the taxpayer still had the burden to show the unreasonableness of the valuation and in the Court's view, the Commission had competent evidence to conclude that the taxpayer had not met that burden. In mass appraisal, physical inspection may not necessarily be done for individual properties. Further, the square footage used by the assessor in calculating value was identical to the square footage used by the taxpayer's appraiser. Additionally, although the taxpayer had an expert witness, expert's opinions are only as reliable as the data underlying the opinion. In this instance, the opinion of the appraiser testifying for the taxpayer was unpersuasive due to the flaws in his underlying data.

Finally, the taxpayer made the argument that the property was not equalized for valuation purposes with other similar properties in the county. However, the burden is on the taxpayer to show the lack of equalization and the evidence indicated that the taxpayer had not met that burden. For example, the county showed that the taxpayer's property had no equal in the county. Further, there was a local bank of "excellent" quality, like the subject property, which was assessed at a much higher level than the subject property. The Court found that the taxpayer had not met its burden on this point and that the Commission's order, setting value at $204,240 for the land and $3,785,665 for the improvements was supported by the evidence.

Scribante v. Douglas County Board of Equalization
8 Neb. App. 25, 588 N.W.2d 190

Synopsis: This case was the result of a several year history between the taxpayer, the county assessor and the county board of equalization. In 1991, the taxpayer purchased a residential property for approximately 1.3 million dollars. In 1996, the county valued the property at approximately 1.1 million dollars. The taxpayer protested to the county board alleging that his property was valued in excess of the valuation of other similar properties in the neighborhood. The county board denied the protest and the taxpayer appealed to the Nebraska Tax Equalization and Review Commission. After the hearing, during which the county asserted that the taxpayer's neighborhood was going to be reappraised in its entirety in the next year, the Commission ruled for the taxpayer due to the lack of uniformity and proportionality in valuing the taxpayer's subdivision. The Commission indicated that the lack of uniformity and proportionality in the neighborhood was due to the fact that property was reappraised only when the property was sold, a building permit was issued or the state intervened. As a result, the Commission reduced the value of the property to approximately $875,000.

The next year, the taxpayer's property was assessed at approximately $1.3 million, a 49% increase from the value the Commission placed on the property in its order. The taxpayer protested to the county board, based again on equalization within the subdivision. Once again, the county board denied the protest and the taxpayer appealed to the Commission. At hearing, the taxpayer put on evidence to indicate that for thirty-two properties within the neighborhood, the average increase in value from the previous year, excluding the taxpayer's property and one other recently sold property, was 11%. Further, an appraiser testifying on behalf of the taxpayer indicated that based on five methods of calculating the value of the taxpayer's home, the equalized value of the home was approximately half the value placed on the home by the county.

The county's position at hearing was that the value of the taxpayer's property accurately reflected its actual value. Further, the county's expert witness criticized the taxpayer's analysis of the value of comparable properties for using properties which, in his estimation, were more dissimilar than similar.

The Commission rendered an opinion in favor of the taxpayer and set the total valuation of the property at $741,000. The county appealed to the Nebraska Court of Appeals. The Court affirmed the decision of the Commission.

In evaluating the record made in front of the Commission, the Court noted that the taxpayer's position was not that the property was not valued at market value but that the taxpayer's property was not equalized with other properties in the subdivision, which were significantly undervalued. The year before, the Commission in its order had put the county on notice that the assessment practice of only revaluing property when a sale occurred, a building permit was issued, or the state intervened resulted in the property in that subdivision being significantly undervalued. The issue in the case, therefore, was not whether the value placed on the subject property reflected market value but whether the property was uniformly and proportionately valued when compared to similarly situated residential property. The Court pointed out that Article III, section 1 of the Nebraska Constitution requires that taxes shall be levied by valuation uniformly and proportionately upon all real property. Equalization is the process of ensuring that all taxable property is placed on the assessment rolls at a uniform percentage of its actual value.

The Court went on to analyze the evidence regarding equalization presented by the taxpayer regarding comparable properties and their values. The Court found that the taxpayer had presented sufficient evidence to show that the value place on his property by the county was sufficient for the Commission to conclude that the value placed on the property was unreasonable and arbitrary, especially in light of the lack of evidence presented by the county on the equalization question. Further, the Court held that to set the valuation of similarly situated property at materially different levels is by definition unreasonable and arbitrary under the Nebraska Constitution.

Finally, the Court dealt with the reduction in the value of the property ordered by the Commission. In doing so, it cited the case of Kearney Convention Center v. Board of Equalization., 216 Neb. 292, 344 N.W.2d 620 (1984) where the Nebraska Supreme Court concluded that the appropriate remedy where properties are assessed at vastly different levels was to equalize the value of the property assessed at the higher level of value to the level of the lower valued property. "[W]here it is impossible to secure both the standard of the true value, and the uniformity and equality required by law, the latter requirement is to be preferred as the just and ultimate purpose of the law." Kearney Convention Center,216 Neb. At 304, 344 N.W.2d at 626. Here, the court concluded that there was disproportionate valuation in the taxpayer's subdivision. Whether the taxpayer's property was assessed too high, or the rest of the property was assessed too low, discriminatory treatment of the taxpayer's property was established and he was entitled too relief Therefore, since the appropriate remedy was to reduce the value of the taxpayer to reflect the value of their similarly situated neighbors, the Commission acted correctly in reducing the taxpayer's property to $741,400.

U.S. Ecology v. Boyd County Board of Equalization
256 Neb. 7, 588 N.W.2d 575

Synopsis: This case involved property purchased for a potential radioactive waste facility for $320,000 in 1990. From 1990 through 1995, the property was assessed at no more than $113,875. In 1996, the county board increased the value to $320,000. The taxpayer appealed the county board's determination to the Nebraska Tax Equalization and Review Commission. The Commission upheld the county board's decision. The taxpayer appealed to the Nebraska Court of Appeals which reversed the Commission. The county board sought review by the Nebraska Supreme Court.

The facts seemed to indicate that the taxpayer paid a premium for the property because of its suitability for use as a waste site. The appropriate licenses had been applied for but not yet obtained and so the property was not being used for that purpose. The property was still grassland although the taxpayer had spent significant money to develop it as a waste site and was conducting a variety of tests on the site.

At hearing in front of the Commission, the taxpayer offered the testimony of its manager who testified about the value of the property. Additionally, the taxpayer called on an appraiser to testify. The appraiser had used a comparative value approach in determining the value of the property and reached the conclusion that the total value of the property should be $135,000 for land (80% of actual value for agricultural land) and improvements. At the close of the taxpayer's evidence, the Commission dismissed the case, determining that the taxpayer failed to present credible evidence to support its claim that the property was valued in an unreasonable or arbitrary manner. It found that the manager's testimony opinion of the property's value was not supported by the evidence and the appraisal was not credible because it determined that the highest and best use of the property was for agricultural land and that taxpayer could not use the property for agriculture under the constitutional provision prohibiting corporate farming. Further, the Commission felt that the appraisal was not credible because it considered only the sales comparison approach and not the income approach even though standard appraisal practices dictate that a second approach to value is essential to support the opinion and that the taxpayer had spent over 80 million dollars to make it suitable for use as a waste site.

The Court of Appeals, in reversing the Commission, determined the Commission erred in disregarding the testimony of the manager and the appraiser. Further, the Court held that the Commission improperly considered the prohibition on corporate farming because the issue was not raised before the county board. The Court of Appeals determined that the
subject property was agricultural land not being used for agricultural purposes and was to be valued at one hundred percent of actual value.

The Supreme Court pointed out that the actual value of real property for purposes of taxation is the market value of the property in the ordinary course of trade. The Court agreed with the Court of Appeals that it was error to disregard the manager's testimony regarding value. An owner who knows the worth of his property may testify as to its value. The Court also felt that the Commission erred in disregarding the testimony of the appraiser. Nebraska law, in section 77-112(1) provides that actual value may be determined by sales comparison, income approach and reproduction cost. However, the statute does not require the use of all the factors, only the applicable ones. The appraiser had testified that he used sales comparison but not income because buyers and sellers of farmland do not attach great significance to the net income produced. The Court felt that the appraiser had used one applicable approach and articulated a reason why another did not apply. Therefore, the appraisal was competent evidence. The Court noted that actual value is without a precise yardstick for determination and that in this case, the testimony of the manager and appraiser was the only competent evidence of value in the record.

The county board argued that the appellate court could give the appropriate weight to the hearing tribunal's having heard and observed the witnesses and that it could accept one version of the facts over another. The Court pointed out, however, that the county put on very little evidence which would support the value placed on the property or contradict the taxpayer's evidence. (This may not be entirely fair; the case was dismissed at the close of the taxpayer's case and the county did not have to go forward with any evidence before the Commission.) The Court also agreed with the determination of the Court of Appeals that the question of the constitutional provision dealing with corporate farming was not raised before the county board and therefore could not be considered by the Commission under Section 77-1511. (The Court also questioned whether a county board, as an administrative agency and not a court, could ever adjudicate such a constitutional question.)

The Court also pointed out that the purchase price of property, by itself, is not conclusive of the actual value of property for assessment purposes; it is only one factor to be considered in determining actual value. It felt that there was no evidence contradicting that of the taxpayer and on the record before the Commission, the purchase price of $320,000 was not determinative of market value. The Court therefore affirmed the Court of Appeals in its determination that the appropriate value of the property was $166,000, representing 100 percent of actual value.

1997

McLaughlin v. Jefferson County Board of Equalization
5 Neb. App. 781, 567 N.W.2d 794

Synopsis: This case resulted from the protest of value by an individual taxpayer before the county board of equalization. After the protest was denied, the taxpayer appealed to the Nebraska Tax Equalization and Review Commission. After a hearing, the Commission reduced the value placed on the property by the county board. The taxpayer sought further reduction and filed an appeal with the Nebraska Court of Appeals. However, the taxpayer did not file a praecipe with the Court of Appeals within thirty days of filing the appeal, as required by the Administrative Procedure Act. The Court noted that although appeals from decisions of the Commission are to the Court of Appeals rather than to the District Court, as is the case in appeals from state agencies under the APA, the language of the statute creating the Commission, like the APA, requires that the parties of record shall be made parties to the proceedings and that summons shall be served within thirty days of filing the petition. Therefore, in reviewing cases interpreting the APA, the Court noted that courts acquire jurisdiction to hear appeals from decisions of administrative agencies only if the review is sought in the manner and time provided for by. statute. Since serving summons within thirty days of filing the appeal is a prerequisite for the court to obtain jurisdiction to hear the appeal, failing to file a praecipe for service within thirty days of the appeal and failing to serve summons within the necessary time frame meant that the Court did not have subject matter jurisdiction to hear the appeal and the Court dismissed the appeal.

1980

State Ex. Rel. Svoboda v. Weiler
205 Neb. 799, 290 N.W.2d 456

Synopsis: In this case the Plaintiff filed suit for a peremptory writ of mandamus directing

the Keith County Assessor to add to the real estate tax rolls of the county, as well as place a value on, all severed mineral interests in which plaintiff was the owner of the surface rights be added to the tax rolls of Keith County so that they could be assessed for tax purposes as required by section 77-1301, R.R.S. 1943. The Supreme Court affirmed the decision of the trial court.

The Court stated that under sections 77-201 and 77-103, R.R.S. 1943, mineral interests are real property subject to taxation. Under section 77-1317, R.R.S. 1943, county assessors are under a duty to place upon or have escaped taxation for any former

year.

The Court made no finding with respect to value. The question of value is one to be determined initially by the assessors.

1978

Berkshire and Anderson v. Douglas County Board of Equalization
200 Neb. 113, 262 N.W.2d 499

Synopsis: These actions stemmed from taxpayers' appeals challenging determinations made by the board of equalization as to the situs of personal property. The District Court upheld the decision of the board and the Supreme Court upheld.

Defendants in the case were IBM and Xerox. Xerox reported its leased personal property for property tax purposes at its principal place of business, which is in School District No. 1, instead of at the actual physical situs of each item. It leased personal property at the physical situs of each item, instead of its place of business, located in School District No. 66. Plaintiffs alleged that the approval by the board of the different reporting methods resulted in a lack of consistency which was incorrect as a matter of law.

The Court held that a corporation's tangible personality is assessed in the taxing area of the corporation's principal place of business, unless otherwise provided by statute or unless it has acquired an actual situs elsewhere. Ace Constr. Co. v. Board of Equalization, 169 Neb. 77, 98 N.W.2d 367 (1959). The test of what characteristics such property must have to be removed from inclusion at the principal place of business was stated in the above case as follows:

Permanency of tangible personal property in a taxing area is determined by the ownership and use for which the property is designed and does not embrace the idea of a forever-fixed location or the thought that the owner bringing personal property in the area has no present intention of ever removing it; but it excludes the idea of mobile personal property which happens to be in the taxing area at the moment of the assessment of property which, for some definite purpose of the owner, has come to rest within the area for a limited time.

The rule is broad in scope and its application must take into account the practices of a business, type of equipment it utilizes, and the mobility of that equipment if situated elsewhere than the principal place of business. The leasing of large equipment to other businesses for extended periods of time could conceptually allow such equipment to acquire a new situs for taxing purposes.

The burden of proof is upon a taxpayer to establish his contention that the assessor's valuation, as affirmed by the board of equalization, is discriminatory, unjust, or unfair. See Hastings Building Co. v. Board of Equalization, 190 Neb. 63, 206 N.W.2d 338 (1973). This same rule applies to a determination by the board of the taxing situs. The plaintiffs contend the differences in the types of machinery leased and the leases used by IBM and Xerox are not material enough to justify the different reporting of the sites of personal property. But the plaintiffs' complaint failed to sustain their burden of proof.

Bethesda Foundation v. County of Saunders
200 Neb. 574, 264 N.W.2d 664

Synopsis: The issue in this case was whether the nursing home operated by appellant was entitled to tax exempt status. The District Court overturned the ruling that the nursing home was not entitled to a tax exemption and the Supreme Court reaffirmed.

The Bethesda Foundation is a Nebraska nonprofit corporation organized exclusively for charitable and religious purposes, and its specific purpose is to own and operate nonprofit homes for the physical, psychological and spiritual care of elderly persons. It operates more than 20 nursing homes in 7 state. If revenue at a particular nursing home exceeds expenses, then that gain is used elsewhere in the foundation to offset net losses of homes where expenses exceed revenues. As an entity, its expenses exceeded its revenue in past years.

The home in question here accepted applicants on a "first come, first serve" basis, and ability to pay was not a consideration for admission. Those who were able to pay were charged. No patient was ever removed from the home for refusal or inability to pay, and no lawsuit was ever commenced to collect payment from a patient. The evidence showed that religion played an important role at the home. An interdenominational religious service was held every week, and there were daily Bible study sessions. Pastors from local churches agreed that there was a religious atmosphere at the home.

Under Art. VIII, section 2, Constitution of Nebraska, as well as section 77-202, R.R.S. 1943, property owned and used exclusively for religious, educational, or charitable purposes is exempt from taxation. It is the primary or dominant use, and not an incidental use, of the property which is controlling and determining whether property is exempt from taxation under section 77-202. If the property in question is used for no other purposes than those which are educational, religious, and charitable, the conditions of exemption have been complied with, irrespective of the proportion which any of these distinctive purposes may bear to. the others. Lincoln Women's Club v. City of Lincoln, 178 Neb. 357, 133 N.W.2d 455 (1965); Ancient and Accepted Scottish Rite v. Board of County Commissioners, 122 Neb. 586, 241 N.W.2d 93 (1932).

1977

Reed v. County of Hall
199 Neb. 134, 256 N.W.2d 861

Synopsis: In this action Plaintiffs sought to enjoin Defendants from collecting taxes on certain real estate resulting from increases in assessed valuation for the years 1974 and 1975. Plaintiffs alleged that the taxes were void because the county failed to follow statutory procedures for giving notices of the increases in assessments for the two years. The Supreme Court supported Plaintiffs' contentions with respect to the 1974 tax.

The Court held that section 77-1315, R.R.S. 1943, requires that a notice be given by first-class mail, addressed to the record-owner's last known address, on every piece of real estate which has been assessed at higher figure than at the last previous assessment. Here the notice was sent to one of the Plaintiffs, who was not the record owner, at the last-known address of the corporation's registered agent. Also ,the old assessed value was not included in the notice, but this was held to be a mere technical error. The Court also held that section 77-1315 is the only statute applicable to the taxing of improvements.

Ross v. The Governors of Knights of Ak-Su-Ben
199 Neb. 513, 260 N.W.2d 202

Synopsis: The defendants in this case applied for exemption from property tax. On recommendation of the county assessor, the Board of Equalization of Douglas granted the exemption. Appellant, a citizen and taxpayer of Douglas County, filed a petition in error in District Court alleging that the commercial uses of the property for profit disallowed an exemption. The District Court held appellant had no standing to object and the Supreme Court affirmed.

1976

Bemis v. Board of Equalization of Douglas County
197, Neb 175, 247 N.W.2d 477

Synopsis: The District Court held that a county assessor does not have legal capacity to maintain an appeal to the District Court from a tax exemption determination by the county board of equalization. Under sections 77-202.01 through 77-202.07, a county assessor may make a recommendation on whether or not to grant a tax exemption to the county board of equalization, which decides whether to grant the exemption. The taxpayer has the right to appeal an adverse decision to the District Court. The Tax Commissioner may review and reverse any decision of the county board of equalization which grants the tax exemption.

The Court held that a tax exemption determination can no longer be taken pursuant to the provisions of sections 77-1510 and 77-1511. It must be brought under section 77-202.04. The assessor's course of action is not to prosecute an appeal, but to call the ruling to the attention of the State Tax Commissioner who may exempt it.

Knoefler Honey Farms v. County of Sherman
196 Neb. 435, 243 N.W.2d 760

Synopsis: This action involves the assessment of a personal property tax by Sherman County on colonies of honey bees brought into the state after January 1, but before July 1 of 1972. The progenitors of these colonies of honey bees had been previously taxed for the year 1972 in the state of California. Plaintiff appealed to the District Court from the action of the board of equalization of Sherman County adding these colonies to the plaintiff's assessment. The District court found that the assessment was illegal and directed the county assessor to remove the colonies of honey bees from the tax rolls. The Supreme Court affirmed.

The county relied on section 77-1211, R.R.S. 1943, in making its argument for taxation. That section provides in part:

... when any person shall bring personal property into the state . . . after 12:01 a.m. on January 1 and prior to July 1 in any year, it shall be the duty of the owner to list and return such property for taxation that year, unless he shall show to the county assessor ... under oath and by producing a copy of the assessment duly certified to . . . that the property has been listed for taxation for that year . . . in some other state or territory of the United States, . . .

The county argued that the copy of the California assessment was not duly certified, nor was it under oath. But the Court held that there had been substantial compliance with the statutes. The Court noted that it was the custom and practice in Nebraska that no livestock born within Nebraska after the first day of January is subject to assessment for tax purposes for that year. Also, livestock born after January 1, and brought into the state before July 1 are not assessed. The Court further noted that Plaintiff was the only taxpayer against whom the county was attempting to enforce its interpretation of section 77-1211. The Court held that the equal protection clause of the 14`h Amendment protects the individual from state action which selects him out for discriminatory treatment by subjecting him to taxes not imposed on others of the same class.

State ex rel. Western Technical Com. Col. Area v. Tallon
196 Neb. 603, 244 N.W.2d 183

Synopsis: In this action respondents challenge the constitutionality of the Technical Community College Area Act of 1975 set forth in sections 77-2637 through 79-2662, R.R.S. 1943. The District Court upheld the constitutionality of the act and the Supreme Court affirmed.

See the earlier case of State ex rel. Western Technical Corn. Col. Area v. Tallon, 172 Neb. 201, 219 N.W.2d 454 (1974), wherein the Court held the former act to be unconstitutional on the grounds that it provided for a property tax to support a state purpose and was in violation of Art. VIII, section 1(A), of the Constitution of Nebraska, which prohibits the levy of a property tax for state purposes.

The Court held that the present act did away with the objectionable features noted in the previous decision. The Court further commented that state aid to schools necessarily involves a commingling of state and local purposes. But in every instance where schools are locally controlled and supported, no objection has been found to a provision for state aid. The mere granting of state aid does not render a school operation a state function.

Note: State ex rel. Meyer v. County of Banner, 196 Neb. 565, 244 N.W.2d 179 (1976). Statutory provisions requiring the counties to pay the costs and expenses of maintaining a county court, a District Court, prosecuting criminal law violations, and conducting state and national elections to not contravene Art. VIII, section 1(A), Constitution of Nebraska, prohibiting the state from levying a property tax for state purposes.

Svoboda v. Hahn
196 Neb. 21, 241 N.W.2d 499

Synopsis: This is an action for a declaratory judgment to determine the validity of a resolution of the County Board of Keith County relating to a refund of taxes. Plaintiff contended that the refund was invalid under section 77-1737, R.R.S. 1943. The District Court refused to grant the declaratory relief and the Supreme Court affirmed.

The intervenor in this case had voluntarily paid taxes under a statute that the Attorney General had ruled unconstitutional. It was assured that it could get a refund by the county treasurer. The county board later met and passed a resolution granting the refund.

The Court stated that the authority of public officials to refund taxes is very limited. Section 77-1237 forbids a county board from making any refunds for any reason whatever. The right of a taxpayer to recover taxes that have been paid is also very limited. In the absence of statute, taxes voluntarily paid cannot be recovered. When a tax imposed is illegal and unauthorized for any purpose, an original action may be brought to recover the tax only by virtue of statutory or constitutional authority. Misle v. Miller, 176 Neb. 113, 125 N.W.2d 512 (1963). Generally, a tax is paid voluntarily when it is paid not under compulsion or without threat of seizure or sale of the property of the taxpayer to satisfy the tax in question. Mere protest along with payment is not enough to make the payment involuntary. Here the intervenor paid the tax on the day that it became due, and for any part of the tax that was delinquent, the payment was clearly voluntary as a matter of law and the intervenor had no right to recover the tax independent of the remedies provided by statute.

The two remedies the intervenor could have pursued are granted by section 77-1735. R.R.S. 1943, as well as section 77-1734.01, R.R.S. 1943. Section 77-1735 permits a taxpayer who claims a tax, or any part thereof, to be invalid for any reason to demand the same in writing from the county treasurer within 30 days after payment. If not refunded within 90 days thereafter, the taxpayer may sue the county treasurer for the amount demanded. Section 77-1734.01 permits a taxpayer to file with the county treasurer within 9 months after payment of the tax a written claim for refund of any taxes paid as a result of a clerical error on the part of the taxpayer or the taxing official. Before a taxpayer can recover taxes under a statutory procedure, he must substantially comply with the requirements of the statute. The plaintiff in this case failed to carry his burden of proof and so was denied declaratory relief.

1975

Knoefler Honey Farms v. County of Sherman
193 Neb. 95, 225 N.W.2d 855

Synopsis: Method of appeal to a District Court from a decision of the county board of equalization. In order to perfect an appeal to the District Court from a decision of a county board of equalization, pursuant to 77-1510, R.R.S. 1943, all activities necessary to perfect such appeal, including the filing of notice of appeal, are required to be carried out within 45 days of the adjournment of the board. The 45 day period specified in section 77-1510 overrides the 20 day period provided for in section 23-135, R.R.S. 1943. The District Court acquires jurisdiction by appeal from a decision of a county board of equalization where the taxpayer gives notice of appeal, furnishes an appeal bond, and files in the office of the clerk of the District Court a transcript of the proceedings and order of the county board of equalization within the time allowed by law.

Sealtest Cent. Div. - Omaha, Kraftco Corp. v. Douglas County Board of Equalization
193 Neb. 809, 229 N.W.2d 545

Synopsis: This was an action wherein defendant's alleged that the plaintiff failed to list part of its personal property for 1970, 1971, and 1972. Defendant's increased assessments and assessed penalties for these years. Plaintiff won a summary judgment setting aside the additional assessments and penalties, and the Supreme Court affirmed.

The Court held that in order to sustain an addition of property by tax assessors to a return as omitted property, it must appear that specific items were added which were not assessed in the original assessment. The taxing authorities here failed to point out any specific items of property which were omitted from plaintiffs tax returns.

1974

Nash Finch Co. v. County Board of Equalization
191 Neb. 645, 217 N.W.2d 170

Synopsis: Here property was rezoned and a reappraisal was ordered as a result. The reappraisal resulted in an increase valuation in the property by the county board of equalization. The District Court sustained the valuation and the Supreme Court affirmed.

The Court stated that the burden of proof is upon a taxpayer to establish his contention that the value of his property has not been fairly and proportionately equalized with all other property, resulting in a discriminatory, unjust, and unfair assessment.

Stahmer v. State
192 Neb. 63, 218 N.W.2d 893

Synopsis: Plaintiff sought a declaratory judgment ruling sections 77-202.25 to 77-202.33 to be unconstitutional. These statutes exempted from taxation a portion of the actual value of agricultural income-producing machinery and equipment, business inventories, livestock, fee, etc. The action was dismissed by the District Court and the Supreme Court affirmed Because of the exemptions, the State Treasurer was directed to place sufficient revenue from sales and income taxes each year in a Personal Property Tax Relief Fund to reimburse tax agencies in all counties for tax revenue lost by reason of the exemptions. On certification by the counties of revenue lost, the State Treasurer was directed to transfer the fund sin the Relief Fund to the county treasurers each year. The county treasurers were directed to retain one percent of the money each received and to distribute the rest among the various taxing agencies in each county.

Plaintiff complained that the act provided for a continuing appropriation of state funds and was in violation of Article III, section 22, Constitution of Nebraska, as worded prior to its 1972 amendment, in that the appropriations extended beyond the end of the first fiscal quarter after the adjournment of the next regular legislative session. Also that it violated Article III, section 25, in that it permitted the withdrawal of state funds without specific appropriations.

The Court stated that in construing a statute it is the duty of the Court to give it an interpretation which meets constitutional requirements if it can reasonably be done. The Court also said that legislative construction of a statutory or constitutional provision, although not conclusive on the courts, when deliberately made is entitled to great weight. The Court held that the Legislature did not intend or consider the statutes here to be an appropriation measure. Thus the act was not in violation of the constitutional provisions above mentioned.

The 1970 amendment of Article VIII, section 2, represented a special constitutional provision adopted later than, and with full knowledge of, the constitutional provisions relied on by plaintiffs. The Court held that where general and special provisions of a Constitution are in conflict, the special provisions of a Constitution are in conflict, the special provisions should be given effect to the extend of their scope, leaving the general provisions to control in cases where the special provisions do not apply.

The Court did not find the classifications set forth in the act to be unreasonable. The Legislature may classify for purposes of legislation if the classification rests on some reason of public policy, or some substantial differences of situations or circumstance, that would naturally suggest justice or expendiency of diverse legislation with respect to the objects to be classified.

State ex rel. Meyer v. Peters
191 Neb. 330, 215 N.W.2d 520

Synopsis: This is a continuation of the earlier case of State ex rel. Meyer v. Peters, 188 Neb. 817, 199 N.W.2d 738 (1972). Here the Attorney General brought a declaratory judgment action seeking a judicial determination of the constitutional validity of laws making changes in property tax statutes as regards exemption of household goods, as well as inter-county equalization where a taxation district overlaps two or more counties. The District Court upheld the laws and the Supreme Court reversed.

The Court held that a statute defining those household goods constitutionally subject to exemption from taxation as including major appliance either attached or detached to real property was unconstitutional. The power of the Legislature to define household goods does not authorize the Legislature to define any and all property in the state as household goods and personal effects.

With respect to intercounty equalization where a taxation district overlaps two or more counties, the statutes in question provided for apportionment between the counties wherein the taxation district lies by application of the respective county assessment ratio developed by the Tax Commissioner. The Court held that the statutes were defective in the following respects: first, taxpayers living in the taxing district were entitled to notice of an intention to adjust the mill levies and an opportunity to be heard. Second, the Court also held that the counties themselves were entitled to notice and an opportunity to be heard since the activities mandated by the statutes were equivalent to increasing assessed valuations. Third, the procedures contemplated by the statutes would result in nonuniform taxation in violation of Article VIII, section 1, Constitution of Nebraska.

State ex rel. Western Nebraska Technical Corn. Col. Area v. Tallon
192 Neb. 201, 219 N.W.2d 454

Synopsis: This was an action in mandamus in which respondents challenged the constitutionality of section 79-2626, R.S.Supp., 1973, which provided for the raising of funds by a property tax levy in partial support of the system of technical community colleges. The District Court found the statute to be constitutional and issued the writ of mandamus compelling the treasurer and commissioners of Sheridan County to remit the tax. The Supreme Court reversed.

The Court stated that where state and local purposes are commingled in a statutory enactment creating a new, independent, statewide system of technical community college areas, the crucial issue of the use of property tax levies to support the system turns on a determination of whether the controlling and predominant purposes are sate purposes or local purposes. The application of the constitutional amendment prohibiting the state from levying a property tax for state purposes hinges on that determination. Where the state assumes the control and the primary burden of financial support of a statewide system of technical community college areas, the property tax levy provided for in section 79-2626, is for a state purpose within the meaning of Art. VIII, section IA of the Nebraska Constitution.

Note: R-R Realty Company v. Metropolitan Utilities District, 184 Neb. 237, 166 N.W.2d 746 (1969). A statute authorizing or requiring a city or county to levy a property tax for local fire protection purposes does not contravene the constitutional prohibition against a state levy of a property tax for state purposes. The levy of a property tax by a local governmental unit should not be treated as a state levy for state purposes merely because the Legislature has authorized or required the local government to make the levy. Neither should the fact that the tax is for a governmental purpose make it automatically for state purposes rather than for local.

Note: Craig v. Board of Equalization, 183 Neb. 779, 164 N.W.2d 445 (1969). This case involved a complaint that the statutory revisions requiring the County to pay funds to the state home based on the number of county residents in the home, from local property taxes, was unconstitutional as a use of property taxes for state purposes. The Court held that this purpose was a substantially local one and not a state purpose and therefore the statutes were not unconstitutional.

1973

County of Sioux v. State Board of Equalization and Assessment
190 Neb. 198, 207 N.W.2d 219

Synopsis: This was an appeal from an order of the State Board increasing the assessed value of all real estate in the county for local property tax purposes by restoring values established by a professional appraiser. The Supreme Court affirmed the order of the Board.

The Court held that professional reappraisals conducted in accordance with statutory requirements, as well as the applicable rules and regulations of the State Tax Commissioner, and approved by him, constitute an adequate basis upon which the State Board may rely in the absence of clear evidence that such appraisals or reappraisals are erroneous or that they fail to establish the equality and uniformity required by law. The Court noted that professional appraisals have consistently been approved as a reasonable and proper basis of valuation of real estate for tax purposes. Such appraisals have been the traditional method of valuation in this State.

Other issues considered by the Court were the adequacy of notice given to the county of the State Board meeting, as well as the use of improper evidence before the State Board. Sioux County charged that the notice of the meeting before the State Board was defective and that in the absence of valid notice, the Board has no jurisdiction to order an increase in value. But while the county did object as to sufficiency of notice at the commencement of the hearing, it made no request for a continuance or for a specification of proposed adjustments. The county participated fully in the proceedings before the Board without further objection as to notice, and with no apparent confusion as to the exact purpose of the hearing. The notice met all essential requirements of the statutes and the decisions of this Court. See County of Blaine v. State Board of Equalization and Assessment, 180 Neb. 471, 143 N.W.2d 885 (1966); County of Lancaster v. State Board of Equalization and Assessment, 180 Neb. 497, 143 N.W.2d 885 (1966).

The county also complained that hearsay evidence was received and some documents received in evidence without proper foundation, and other documents received or considered without formal admission and inclusion in the record, but the Court held that proceedings at a hearing before the State Board are not bound by the strict technical rules of evidence demanded in a court of law.

Hastings Building Co. v. Board of Equalization
190 Neb. 63, 206 N.W.2d 338

Synopsis: In an appeal to the county board of equalization or to the district Court, and from the District Court to this Court, the burden of persuasion imposed on the complaining taxpayer is not met by showing a mere difference of opinion unless it is established by clear and convincing evidence that the valuation placed upon his property, when compared with valuations placed on other similar property, is grossly excessive and is the result of a systematic exercise of intentional will or failure of plan duty, and not mere errors of judgment.

Neb. Conf. Assn. of Seventh Day Adventists v. Board of Equalization
190 Neb. 658, 211 N.W.2d 613

Synopsis: If property is partly exempt and partly nonexempt, the value of the nonexempt portion is subject to taxation and the value of the exempt portion is not subject to taxation. The District Court found all the property of Platte Valley Academy, a coeducational boarding high school, to be tax exempt, with the exception of the property occupied and used for profit by 2 privately owned and operated industries, and a residence rented to one of the owners of the industries. The Supreme Court affirmed. The sole issue was whether the location and operation of the 2 factories upon the academy campus destroyed the tax exempt status of all the remaining property of the school which would otherwise be tax exempt. The general facts involving the ownership and operation of the Platte Valley Academy are set out in Nebraska Conference Association of Seventh Day Adventists v. Board of Equalization, 179 Neb. 326, 138 N.W.2d 455 (1965). The Court stated that there was no evidence that the basic operation of the academy had been altered or changed in any way by the addition of the two private factories except to provide additional student work.

Norden Laboratories, Inc. v. County Board of Equalization
189 Neb. 437, 203 N.W.2d 152

Synopsis: The issue in this case was whether goods manufactured and stored by the owner in its licensed, bonded warehouse were exempt from taxation under free port laws (section 77-2116.01, R.R.S. 1943). The District Court found for the taxpayer and the Supreme Court reversed. While plaintiff was granted a public storage warehouse license, it owned all products in its warehouse. At no time did it solicit or accept goods of others for storage. The Court held that because plaintiff did not make available and use its facilities for public storage for compensation, it therefore did not gain an exemption.

Rien v. Board of Equalization
190 Neb. 481, 209 N.W.2d 144

Synopsis: This was a property valuation protest case. Involved were apartment buildings built primarily with the labor of Plaintiffs. In figuring costs of construction Plaintiffs allowed $3.00 per hour for their services. The trial court sustained the increase in valuation of the property and the Supreme Court affirmed.

The property was appraised by a professional appraiser. The firm made studies of construction costs and rental values in the area, as well as of recent sales of various types of property. The evidence tended to support the assessments made. The court held that the burden of proof is upon a taxpayer to establish that the value of his property has been arbitrarily or unlawfully fixed in an amount greater than its actual value. See Lexington Building Co., Inc. v. Board of Equalization, 186 Neb. 821, 187 N.W.2d 94 (1971). The Court must affirm the action taken by the board of equalization unless it is established that its action was arbitrary or unreasonable. See section 77-1511, R.R.S. 1943.

Plaintiff's evidence as to construction costs failed to take into account the high costs of skilled labor and their estimate of value based on cost failed to include the value of the land. Their estimate of expenses of operation was conclusionary in nature without verification by the production books or bank accounts. Their expert witness was impeached when he admitted ignorance of comparative sales in the city and relied largely on figures as to net income and construction costs supplied by Plaintiffs.

1972

Hansen v. County of Lincoln
188 Neb. 462, 197 N.W.2d 651

Synopsis: This was a class action by a taxpayer to have declared null and void a portion of the tax levied against rural lands in Lincoln County, and to have the allegedly illegal portion of the tax refunded to those who paid it. The trial court declared void the portion of the tax as prayed for and retained jurisdiction for the apparent purpose of supervising refunds. The Supreme Court affirmed the part of the decree declaring the portion of the tax increase void and reversed the remainder of the decree.

This case is a sequel to County of Sioux v. State Board of Equalization and Assessment, 185 Neb. 741, 178 N.W.2d 754 (1070). In 1969 the State Board ordered a 50 percent increase in the valuation of rural lands in Lincoln County. One taxpayer appealed and this Court voided the increase in valuations on "rural lands." Plaintiff complained that he was not given proper notice of the increase in valuation as required by section 77-1315, R.R.S. 1943. The Court held that the provisions did not apply to increases ordered by the State Board under section 77-508.01, R.R.S. 1943. Also, the county assessor has the authority to correct valuations which have become erroneous because of a judicial declaration of invalidity of an increase ordered by the State Board.

The Court further held that a taxpayer cannot bring a class action on behalf of himself and others similarly situated to recover back taxes alleged to have been illegally assessed. Each taxpayer must bring an action on his own behalf. State ex rel. Sampson v. Kenny, 185 Neb. 230, 175 N.W.2d 5 (1970). The reason is that generally an action cannot be maintained as a class action by a Plaintiff on behalf of himself and others unless he has the power as a member of the class to satisfy judgment on behalf of all members of the class. This the Plaintiff here could not do insofar as refunds or tax credits were concerned.

School Dist. of Minatare v. County of Scotts Bluff
189 Neb. 395, 202 N.W.2d 325

Synopsis: The plaintiff school district brought this action to recover personal property taxes refunded to a taxpayer. The refund was paid in part from the tax funds held for the credit of the school district. The District Court dismissed the action and the Supreme Court affirmed.

Through a clerical error, the Scotts Bluff County taxpayer paid too much personal property tax. He was granted a refund several months later pursuant to section 77-1734.01, R.R.S. 1943, by the county board. Section 77-1735, R.R.S. 1943, is the other refund statute, but with a much shorter time limit for filing than section 77-1734.01.

Plaintiff contended that the defendants had no authority or jurisdiction to refund taxes under either of the two refund statutes. The Court held that the only requirement of section 77-1734.01 is that some portion of the tax was paid as a result of the "clerical error." The term "clerical error" is not restricted to a clerical error made by a taxpayer on the face of a personal property tax return. The Court also held that the county board is the authority" whose approval is required for payment of a tax refund claim under section 77-1734.01. The failure to transmit a copy of the claim to other taxing entities does not deprive the county board of jurisdiction and authority to determine and approve a proper claim.

Other holdings by the Court were as follows: section 77-1737, R.R.S. 1943, providing that a county board does not have power to remit taxes for any reason, does not prevent the proper authority from refunding taxes as authorized by any specific tax refund statute. Second, the allowance of a tax refund claim where the county board acts quasi judicially and within the scope of its jurisdiction and authority, is not open to collateral attack in the absence of fraud.

State ex rel. Meyer v. Peters
188 Neb. 817, 199 N.W.2d 738

Synopsis: The main issue in this case was the authority of the Attorney General to sue on his own relation and whether there existed a present controversy and justiciable issue within the meaning of the Declaratory Judgments Act. The Court held that the Attorney General may, on his own relation, in the name of the state of Nebraska, bring an action for a declaratory judgment challenging the constitutionality of a statute which the State Tax Commissioner of the state proposes to implement by enforcement and regulation pursuant to the duties imposed upon that officer by statute and the Constitution. The fact that the State Tax Commissioner was charged constitutionally and statutorily with the duty of implementing an act by enforcement and the adoption of regulations, absent a declaration of unconstitutionality, created a sufficient justiciable issue and present controversy within the meaning of the Declaratory Judgments Act. The Court further held that the rule that a person may not attack the constitutionality of a statute where his rights are not affected thereby applies to private persons and not to the Attorney General, who is acting in the public interest.

Note: State ex rel. Sampson v. Kenny, 185 Neb. 230, 175 N.W.2d 5 (1970). A taxpayer cannot maintain a class action to recover back void taxes. Each taxpayer must bring action on his own behalf. Section 77-1736.04 provides for a determination and certification by the county board individually of the legality and validity of a refund. This is an individual determination that could not be effectively maintained as a class action.

Note: County of Lincoln v. Evans, 185 Neb. 19, 173 N.W.2d 365 (1969). Resolution of a county board of commissioners directing foreclosure of tax sales certificates need not identify each tax sales certificate individually. The affixing of a county treasurer's seal to a tax sale certificate is not essential to its validity.

1971

Berean Fundamental Church Council, Inc. v. Board of Equalization
186 Neb. 431, 183 N.W.2d 750

Synopsis: This was an appeal from an order denying the request of the church that the inventory and fixtures of its bookstore be declared tax exempt. The Supreme Court affirmed.

Appellant predicated its claim for exemption on its contention that the bookstore was an essential part of the literature ministry of the church. The Court held that the statutes exempting property from taxation should be strictly construed, and one contending that his property is exempt must clearly show that he is within the exemption provided by statute. Todd v. County of Box Butte, 169 Neb. 311, 99 N.W.2d 455 (1959).

The bookstore was run the same as any other bookstore would be. It sold to all who would buy, put out catalogues and advertised. The mere fact that the bookstore handled materials of an educational or religious character did not entitle it to exemption. If that were so, every religious bookstore would be entitled to exemption. The bookstore was operated at a profit in direct competition with other bookstores handling educational and religious supplies. The Court declared that the bookstore would have to be considered profit-making no matter how the profit was used. It is the use of property as distinguished from the use of income from the property that determines whether it is exempt from taxation. See Nebraska Conf. Assn. Seventh Day Adventists v. Board of Equalization, 179 Neb. 326, 138 N.W.2d 455 (1965). The Court defined the dominant purpose of the bookstore as being to merchandise religious materials for profit. The making available of material embracing its theological doctrine was incidental to that dominant purpose.

Chudomelka v. Board of Equalization
187 Neb. 542, 192 N.W.2d 403

Synopsis: Plaintiff appealed from the District Court valuation of his land and the Supreme Court affirmed.

Upon an appeal from a county board of equalization to a District Court on the ground that property has been valued in excess of its actual value, the sole issue to be detemined is the actual value of the property. For the purposes of taxation, the terms actual value, market value, and fair market value mean exactly the same thing. Richards v. Board of Equalization, 178 Neb. 537, 134 N.W.2d 56 (1965). Actual value is to be determined by using the applicable elements including those specified in section 77-112, R.R.S. 1943.

Either lay or expert witnesses may testify as to the value of property if it is shown that they have an acquaintance with the property and are informed as to the state of the market. Lansman v. State, 177 Neb. 119, 128 N.W.2d 569 (1964). The competency of a witness to testify as to value is a matter within the discretion of the trial court.

Lexington Building Co., Inc. v. Board of Equalization
186 Neb. 821, 187 N.W.2d 94

Synopsis: The Court held that the rezoning of the property and issuance of the conditional use permit were sufficient to justify the reappraisal of the property and, when coupled with other factors (desirability and functional use of, as well as location of the property) could serve to form a reasonable basis for the higher valuation. The property in question was compared with similar property in the area. Appellant attacked the comparison by pointing out the disparity in the purchase price of the property as well as the fact that most of the property to which his was compared was zoned commercial, while his was zoned residential (but a conditional use permit could be issued to allow for parking on the premises). The Court found the argument unconvincing. It stated that once Appellant's property became related to the property with which it was compared as an economic unit, the value of Appellant's property would arguably be greater than it would have been had it retained its purely residential character. To appraise the land based upon the comparison made was not reasonable.

Loskill v. Board of Equalization
186 Neb. 707, 185 N.W.2d 852

Synopsis: The value of Plaintiff's land was ordered increased by the county board. On appeal the District Court upheld the board and the Supreme Court affirmed.

The issue was whether Plaintiff's land should be valued as dry land or irrigated land. Plaintiff irrigated his tract of land, but did so under a revocable license to draw water from a well located on the south half of the quarter section. Plaintiff argued that the basis of the marketability was dry, not irrigated land, and should be valued accordingly.

The Court held that the action of the county board of equalization with respect t actual value of property will be affirmed on appeal top the District Court unless: (1) the action of the board is unreasonable or arbitrary, or (2) the property of the appellant is assessed too low. See section 774511, R.R.S. 1943. The Court also stated that, with respect to the relationship between the parties, that a county board of equalization in a valuation proceeding out to look through form to substance to prevent unconscionable avoidance of taxation of property.

Note: Boss Hotel Co. v. County of Hall, 183 Neb. 19, 157 N.W.2d 868 (1968). There is a presumption that a board of equalization has properly performed its official duties and in making an assessment acted upon sufficient competent evidence to justify its action. The presumption of correctness disappears when there is competent evidence to the contrary and thereafter the reasonableness of the valuation is one of fact to be determined by the evidence.

OEA Senior Citizens, Inc. v. County of Douglas
186 Neb 593, 185 N.W.2d. 464

Synopsis: This was an appeal from the denial of tax exempt status to appellant for a retirement home for the aged. The District Court denied the exemption and the Supreme Court affirmed.

The case was essentially a retrial of the same issues presented in a 1961 case between the same parties. County of Douglas v. OEA Senior Citizens, Inc., 172 Neb. 696, 111 N.W.2d. 719 (1961). Appellant urged that the previous decision was no longer controlling because of the material changes in the use of the property as well as changes in the Court's construction of the applicable law in other cases subsequent to that decision. One new development since the previous case was the establishment by appellant of a health center which provided hospital-type nursing care for residents.

Charges were made by Appellant for all services rendered to its residents. Appellant did not knowingly take anyone who was not fully able to meet the charges. Retired teachers without sufficient funds to pay all changes were aided through the OEA foundation. But the Foundation was not part of Appellant's operation.

The Court held that the nursing home was not used exclusively for educational or charitable purposes. Statutes exempting property from taxation should be strictly construed and one contending that his property is exempt must clearly show that he is within the exemption provided by the statute. Berean Fundamental Church Council, Inc. v. Board of Equalization, 186 Neb. 431, 183 N.W.2d 750 (1971). The law requires a finding that the property be used exclusively for charitable purposes. That some of the residents could not pay all the charges assessed did not make the nursing home a charitable institution. The establishment of a health center by the appellant was held by the Court to provide nursing home service or medical service akin to a hospital, but to provide housing facilities for the aged. The addition of the health center did nothing to change the dominant purpose of the nursing home. With the exception of the health center the same essential facts were presented as were in 1961.

Sioux City and New Orleans Barge Lines, Inc. v. Board of Equalization
186 Neb. 690, 185 N.W.2d 866

Synopsis: This was an appeal from the decision of the District Court declaring that the value of improvements located on the Missouri River port and terminal area owned by the City of Omaha, but leased to Plaintiff, were exempt from taxation. The Supreme Court affirmed. In the agreement, the barge line agreed to provide warehouse space, together with an office building. Title, ownership, and equity in any improvements were vested and remained in the City of Omaha under the agreement.

Article VIII, section 2, of the Constitution of Nebraska, provides in part: "The property of the state and its governmental subdivisions shall be exempt from taxation." The county board of equalization based its claim to tax here upon section 77-1209, R.R.S. 1943, which provides in part: "All improvements put on leased public lands shall be assessed to the owner of such improvements as personal property, together with the value of the lease, and listed and assessed as such in the place where the land is situated." The attempt to apply that statute to taxation of the property here rested upon an interpretation of Offutt Housing Co. v. County of Sarpy; 160 Neb. 320, 70 N.W.2d 382 (1955). The Court distinguished in the case by stating that no constitutional exemption process was involved in Offutt. The United States had waived any immunity or exemption from taxation granted under the Enabling Act and ceding statutes, and had specifically granted to the state the right to tax the interests of the lessee. There was an estimated useful life of the improvements and the interest of the lessee in the real estate was mortgaged.

In this case, the agreement was clear and undisputed that title and ownership of all of the land and improvements was and would remain at all times in the City of Omaha, and there was no showing as to the estimated life of any of the improvements. No distinction was made between improvements constructed and paid for by the dock board and those constructed and paid for the barge line. Nor did the agreement make any distinctions in fixing title and ownership. The land and improvements were not used solely for the private benefit of the barge line. The improvements here-involved were under the control and supervision of the Dock Board of the City of Omaha and were the property of the city. As such property it was exempt from taxation under the provisions of Article VIII, section 2, Constitution of the state of Nebraska.

1970

Christian Retirement Homes, Inc. v. Board of Equalization
186 Neb. 11, 180 N.W.2d 136

Synopsis: This was an appeal from a District Court ruling that only a part of appellant's retirement home (the medi-center and the chapel) was exempt from taxation. The Supreme Court affirmed.

Property owned and used exclusively for religious or charitable purposes and not owned or used for financial gain or profit is exempt from taxation. Art. VIII, section 2, Constitution of Nebraska; section 77-202, R.R.S. 1943; Evangelical Lutheran Good Samaritan Soc. V. County of Gage, 181 Neb. 831, 151 N.W.2d 446 (1967). It is the primary or dominant use, and not an incidental use, which is controlling in determining whether property is exempt from taxation.

While there was some evidence of religious use of the property, the Court held that this use was an incidental rather than a primary or dominant use. The preliminary or dominant use of the property was to provide housing for elderly persons. The Court stated that the home was best described as a retirement home rather than a nursing home furnishing daily care similar to hospital care to the occupants. Property owned and used primarily for the purpose of furnishing low-rent housing is not entitled to exemption from taxation as property that is owned and used exclusively for charitable purposes. County of Douglas v. OEA Senior Citizens, Inc., 172 Neb. 696, 111 N.W.2d 719 (1961).

The plan was to operate the home at cost, with the residents providing the funds necessary to operate the home and retire its debt. Although the operation of the home included many charitable aspects, the ownership and use of the property was not exclusively charitable.

County of Gage v. State Board of Equalization and Assessment
185 Neb. 749, 178 N.W.2d 759

Synopsis: This is an appeal by eight counties from the action of the State Board ordering increases in the assessed valuations of the counties. The Supreme Court affirmed in part the findings of the District Court and in part reversed.

The Board applied assessment sales ratios on the one hand, and recent reappraisals approved by the Tax Commissioner on the other, as precisely equal methods of measuring and applying uniform value. But the record demonstrated that these two methods, as applied here, did not produce an equal uniform level of value. Necessary correlation could have been made, but it would not have supported the percentages of increase ordered.

The Court where the record on appeal from an order of the State Board establishes an arbitrary adjustment, the order must be reversed. See County of Keith v. State Board of Equalization and Assessment, 180 Neb. 494, 143 N.W.2d 902 (1966). The record here could not support the orders entered.

County of Hooker v. State Board of Equalization and Assessment
185 Neb. 772, 178 N.W.2d 785

Synopsis: The State Board ordered 8 counties to increase the value of their agricultural land by 33 percent for 1969. The orders were made following notice and a hearing before the Board. The orders as to 6 of the counties were affirmed, while the orders as to 2 others were reversed. All of the counties were located in the area generally knows as the Sandhills. Between 75 and 90 percent of the land in these counties is grassland and was generally described in the record as Class VI-land. The controversy centered around the valuation of such land.

Two appraisal studies were before the Board for its consideration, the Brandt and Walters studies. Brandt defined Class VI land as requiring 20 acres to support one animal unit per year. J Walters defined Class VI land as requiring 10 acres per animal unit. The record was convincing that the Board based its orders in these cases on the Brandt Study. The Walters Study tended to support the Board's conclusions that the valuation of agricultural land in these counties was low, but did not fully sustain the action of the Board.

When the record is considered as a whole, it appears that the Board raised Thomas, Grant, Cherry, Blaine, Arthur, and Logan Counties to the approximate level of Hooker and McPherson Counties before any increase was applied. The Board then applied the same percentage increase to Hooker and McPherson Counties without making any adjustment for the difference in the indicated ratios. The order on its face showed that the Board disregarded its own finding. The action of the Board as to Hooker and McPherson Counties was clearly arbitrary and had to be reversed. The action of the Board in regard to Thomas, Grant, Cherry, Blaine, Arthur, and Logan Counties did not appear to be prejudicial since after the increase had been applied, these counties remained well below the average or media ratios for the other counties. See County of Loup v. State Board of Equalization and Assessment, 180 Neb. 478, 143 N.W.2d 890 (1966).

County of Lancaster v. State Board of Equalization and Assessment
185 Neb. 757, 178 N.W.2d 772

Synopsis: Lancaster County appealed from an order of the State Board increasing the valuation of agricultural land in the county. The order was based on the sales assessment ratio. The record showed that the Board made no change in the valuation of many counties which had sales assessment ratios equal to or lower than Lancaster County. These counties had been equalized on the basis of reappraisals. The Board made no effort to correlate the reappraisals with the sales-assessment ratios or any other uniform standard of value. Nothing n the record sustained or justified the disparity of treatment.

County of Sarpy v. State Board of Equalization and Assessment
185 Neb. 760, 178 N.W.2d 765

Synopsis: This was an appeal from the action of the State Board ordering increases in the assessed valuations of 8 counties. The Supreme Court reversed the order of the Board.

For all of the counties, except one, the rural increases were predicated upon a 3-year old sales assessment ratio, agricultural statistics, and the testimony of the county officials. In addition, in two counties, appraisal studies were made. In one of these 2 counties, a 2-year sales assessment ratio and agricultural statistics were used.

See County of Sioux v. State Board of Equalization and Assessment, 185 Neb. 741, 178 N.W.2d 754 (1970). Reference is made to the opinion for the holding that the consideration of agricultural statistics is a clear violation of the Nebraska Administrative Procedures Act, section 84-914 R.R.S. 1943. Reference is also made to the opinion for the fact that the sales assessment ratio covered both the land and the improvements thereon. The rural increases made here were for the land only and not the improvements. This created a disparity between agricultural lands with improvements and put an undue she of the tax burden on the latter.

The increase in valuation of Wheeler County was based on the sales-assessment ratio, instead of a reappraisal, made three years previously. There was no showing in the record as to why the reappraisal was used for approximately 30 other counties where made within the last 2 or 3 years, and ignored in Wheeler.

A reappraisal for Sarpy County was accepted in 1966, and was continually updated. To apply an increase to this county, based on a sales assessment ratio for sales where the valuations had already been corrected on the county's records, would double the increase as to these properties. A comparison was made between comparable farm land along the border between Douglas and Sarpy Counties. The highest value for Douglas County was $374 per acre and the lowest was $167 per acre. The comparable land across the road in Sarpy County was assessed at considerably higher figures, so that any increase for Sarpy County would increase the value disparity between Sarpy and Douglas Counties. Because of overlapping school districts between the two counties, this would result in Sarpy County rural taxpayers bearing an undue portion of school taxes compared with the Douglas County taxpayers in those same school districts.

One county had overlapping school districts with two other counties, yet the proposed increase for the county was much greater than the proposed increase for the other two counties. Despite the fact that the State Board order recited consideration of a 3-year sales assessment ratio based upon its conclusion as to the indicated ratio, only the year 1968 was considered. The same was true with respect to two other counties.

For Loup County, only 2 sales were used to compute the sales assessment ratio. The Court stated that two sales were too few for sales assessment ratio purposes. What was said as to agricultural statistics is pertinent here, because with the appraisal study, it was a factor in the assessment of the increase.

The Court held that it was impossible to reconcile the discrepancies in the way counties were dealt with from the record. The Court concluded that the State Board used completely different and uncorrelated methods to support its ultimate conclusions, and that no reasonable approach was made to achieve uniformity among the counties. It is the primary duty of the State Board to equalize or establish uniformity among the various counties, and, while absolute uniformity of approach may not be possible, there must be a reasonable attempt at uniformity. See County of Sioux v. State Board of Equalization and Assessment, 185 Neb. 741, 178 N.W.2d 745 (1970). Where the record of the proceedings before the State Board contains no evidence to justify an order, the action must be held to the unreasonable and arbitrary.

County of Sioux v. State Board of Equalization and Assessment
185 Neb. 741, 178 N.W.2d 754

Synopsis: This is an appeal from the action of the State Board ordering increases in the assessed valuations of three counties. The Supreme Court affirmed in part the orders of the District Court and in part reversed.

Previous to the hearings by the State Board, the Tax Commissioner held regional hearings to gather information for use in the equalization of value among the 93 counties. The Court held that the State Tax Commissioner can hold only an administrative hearing, and not a discretionary or a quasi-judicial one, because the power of the State Board cannot be delegated to the State Tax Commissioner. The order for the increase in valuation of agricultural lands was based largely in consideration of a 3-year sales assessment ratio. The record was void of any explanation as to why the valuations of some counties were increased while others were not. The record also disclosed an absence of any sate-federal agricultural statistics, though these were supposedly considered in determining the increase for agricultural lands. None of the evidence presented could be used to sustain the action of the State Board, because to do so would be a violation of the Nebraska Administrative Procedures Act.

The Court held that the record made before the State Board must sustain the action of the Board, and in the absence of some satisfactory explanation of divergence and discrepancy in the application of the different methods used and relied upon to achieve uniformity, and of a satisfactory explanation of the correlation between those methods, the County could not determine if the constitutionally required equalization or uniformity for taxation was attained between counties. Where the record of the proceedings before the State Board contains no evidence to justify an order, the action must be held to be unreasonable and arbitrary.

State ex rel. Meyer v. McNeil
185 Neb. 586, 177 N.W.2d 596

Synopsis: This was an action to test the constitutionality of a bill which created a separate class for taxation purposes of agricultural income producing machinery and equipment which is required to report taxable income pursuant to the Internal Revenue Code. This method would provide a different value of personal property specified in the act from that applied to all other tangible property in the same class. The Supreme Court held the bill to be unconstitutional.

The Court held that it is the province of the Legislature to make a reasonable classification of persons, corporations, and property for purposes of legislation concerning them, but the classification must rest on real differences of situation and circumstances surrounding the members of the class, relevant to the subject of legislation which render appropriate its enactment. The establishment of two methods of valuation of property in the same class for taxation purposes results in a want of uniformity within the constitutional prohibition of Art. VIII, section 1. There can be no difference in the method of determining valuation or the rate of tax to be imposed unless the separate classification rests on some reason of public policy, some substantial difference of situation or circumstances that would naturally suggest the justice or expediency of diverse legislation with respect to the objects to be classified.

The Internal Revenue Code does not purport to determine the value of agricultural income-producing machinery and equipment. It is wholly unrelated to actual value for taxation purposes required by the law of this state. Thus, it cannot support a classification for tax purposes based thereon.

Note: State ex rel. Meyer v. Story, 173 Neb. 741, 144 N.W.2d 769 (1962). This case found an amendment to section 77-1242, R.R.S. 1943, which relieved motor vehicle dealers from proportionate share of their taxes on automobiles, to be unconstitutional. The rule of uniformity prescribed by M. VIII, section 1, of the Constitution of Nebraska, inhibits the Legislature from discriminating between taxpayers in any matter whatever.

1968

County of Hall v. Engleman
182 Neb. 676, 156 N.W_2d 801

Synopsis: In this case the County of Hall sought to foreclosure of 10 tax sale certificates on 10 separate pieces of real estate owned by 10 separate owners. The trial court held that the tax liens were void and overruled the motion for a new trial. The Supreme Court dismissed the appeals by the county.

A plaintiff who brings suit on multiple tax sale certificates or tax liens in a single action in accordance with section 77-1904, R.R.S., 1943, may appeal from a decree resolving the issues in one or more of his causes of action by filing a single notice of appeal and depositing a single docket fee as required by section 25-1912, R.R.S. 1943. The Supreme Court then acquires jurisdiction of the appeal. Where a parry appealing from the District Court to the Supreme Court fails to file a cost bond in accordance with section 25-1914, R.R.S. 1943, within 1 month after the rendition of the judgment or final order appeal from or within time extended by this Court on a shoring of good cause, the appeal will be dismissed.

County of Kearney v. State Board of Equalization and Assessment
183 Neb. 329, 160 N.W.2d 179

Synopsis: This is an appeal by the County that it is entitled to a reduction of the valuations expressed in its own abstract of assessment furnished the State Board. The Board fixed the values without change. The Supreme Court affirmed the order of the Board.

The County argued that the State Tax Commissioner's sales assessment ratio showed a higher rural ratio for Kearney County than surrounding counties and so it is entitled to a reduction. The Court held that it was not arbitrary for the Board to conclude that the proposed State Tax Commissioner's sales assessment ratio did not properly reflect a disparity sufficient to command a reduction.

The State Tax Commissioner's recommendations were based almost exclusively on the sales assessment ratio. The Board found that the present sales-assessment data were insufficient and inadequate to serve as a basis for valuation adjustments. The data thus could not be used as an adequate basis to change the county's valuation.

The Court also held that equalization between adjoining counties cannot be ordered. The only power of the Board is to equalize on a statewide basis; district or intracounty equalization is not authorized. The Court noted that the county assessor of Kearney County requested that a no change decision be granted Kearney County. This position by the county was considered binding, especially with relation to the reasonableness of the action of the Board. A party may not complain of error which he has invited.

Union College v. Board of Equalization
183 Neb. 549, 162 N.W.2d 772

Synopsis: This case involved an appeal by Union College from a decision holding that real property owned by it was not exempt from taxation under the educational exemption. The Trial court held that the property was not exempt and the Supreme Court affirmed.

Appellant claimed that property used for the operation by it of industries which provided employment for students should be exempt. The industries, however, were not .operated to provide vocational education as such. The students received no scholastic credit for the work which they performed.

Property owned and used exclusively for educational purposes, and not owned or used for financial gain or profit, is exempt from taxes. See section 77-202, R.R.S. 1943. The primary or dominant use, and not an incidental use, is controlling in determining whether property is exempt from taxation. A use which is not direct, but remote, will not qualify for exemption. See Doane College v. County of Saline, 173 Neb. 8, 112 N.W.2d 248 (1961). Property used primarily for the purpose of providing student employment is not exempt as property used exclusively for educational purposes. See Nebraska Con£ Assn. Seventh Day Adventists v. Board of Equalization, 179 Neb. 326, 138 N.W.2d 455 (1965).

1967

Brandeis Inv. Co. v. State Board of Equalization and Assessment
181 Neb. 750, 150 N.W.2d 893

Synopsis: This was an appeal from an order of the State Board increasing the valuation of industrial and commercial property within incorporated municipalities in Douglas County. The Supreme Court reversed the actions of the State Board.

This case is an elaboration of the same proceedings discussed in City of Omaha v. State Board of Equalization and Assessment, 181 Neb. 734, 150 N.W.2d 888 (1967). The Court observed that only sales for the last 5 months of 1965 were reviewed for the sales-assessment ratio study for Douglas County, whereas sales for the entire 12 months were reviewed in all other counties in which the sales-assessment ratio study was used. There was no satisfactory explanation or correlation in the record for this difference nor was there any showing to indicate that the sales used were representative samples for the entire year. The record contained no proof of any nature to justify an increase for Douglas County. See County of Lancaster v. State Board of Equalization and Assessment, 181 Neb. 738, 150 N.W.2d 886 (1967). The State Board is bound by its record, and where the record of the proceedings before the State Board contains no evidence to justify an order, the action must be held unreasonable and arbitrary.

The Court also observed that contrary to the State Board's findings with respect to irregularities in the Douglas County Abstract, the sales-assessment ratio for urban residential property was. used for urban industrial and commercial property. This resulted in a 24 percent increase on all commercial and industrial lands and improvements within the boundaries of all municipalities in Douglas County. The action of the State Board produced inequality rather than equality and must be held to be arbitrary, unreasonable, and capricious.

Note: Northwestern Bell Tel. Co. v. St. Bd. of Equalization and Assessment, 181 Neb. 748, 150 N.W.2d 899 (1967). See Brandeis Investment Co. v. State Board of Equalization and Assessment, 181 Neb. 750, 150 N.W.2d 893 (1967).

Note: County of Perkins v. State Board of Equalization and Assessment, 181 Neb. 747, 150 N.W.2d 883 (1967). See Hanna v. State Board of Equalization and Assessment, 181 Neb. 725, 150 N.W.2d 878 (1967).

City of Omaha v. State Board of Equalization and Assessment
181 Neb. 734, a50 N.W.2d 888

Synopsis: This was an appeal by Douglas County and the City of Omaha from an order of the State Board increasing the valuation of suburban residential lands and improvements. The Supreme Court reversed the order of the Board.

The Court held that a county is entitled to reasonable notice and hearing when a proposed decrease in valuation suddenly becomes a substantial increase, and the entire thrust of the hearing reversed direction after the original hearing has been concluded. Less than one day's notice was given to Douglas County for this substantial change in position by the State Board. The requirements of due process are not lessened by the imminence of a statutory deadline for Board action. The overnight notice that a hearing based on new evidence which the county had no reasonable opportunity to challenge or even to examine, did not meet the requirements of due process.

The Court also stated that the evidence upon which the State Board relied and the method by which it equalized assessments of property must be shown. Upon consideration of the entire record here, the Court held that the order of the State Board was arbitrary and capricious. Compare County of Blaine v. State Board of Equalization and Assessment, 180 Neb. 471, 143 n.W.2d 880 (1966); County of Lancaster v. State Board of Equalization and Assessment, 181 Neb. 738, 150 N.W.2d 886 (1967).

County of Box Butte v. State Board of Equalization and Assessment
181 Neb. 742, 150 N.W.2d 892

Synopsis: Appellant appealed from the equalization order entered by the State Board. The Supreme Court reversed the order of the board.

Administrative findings, express and implied, that failed to disclose a clear basis for an order were inadequate. If findings by the State Board are inadequate, the resulting order is arbitrary. See County of Lancaster v. State Board of Equalization and Assessment, 181 Neb. 738, 150 N.W.2d 886 (1967).

Note: Novak v. State Board of Equalization and Assessment, 181 Neb. 741, 150 N.W.2d 892 (1967). See Brandeis Investment Co. v. State Board of Equalization and Assessment, 181 Neb. 750, 150 N.W.2d 893 (1967).

County of Lancaster v. State Board of Equalization and Assessment, 181 Neb. 738, 150 N.W.2d 886 (1967). The issue here was whether the order of the State Board increasing valuations of certain real estate should be reversed because the findings were inadequate. The Supreme Court reversed the actions of the State Board.

The Court found that in ordering an increase in the valuations of certain subclasses of property that no finding of a mathematical relation among subclasses or of other explanatory facts was made. The ratios and the increases were not correlated. The Court held that there must be a clear basis for the administrative agency's action. See Ostler v. City of Omaha, 179 Neb. 515, 138 N.W.2d 826 (1965); Yellow Cab Co. v. Nebraska State Railway Commission, 176 Neb. 711, 127 N.W.2d 211 (1964). If the findings by the Board are inadequate, the resulting order is arbitrary.

County of Keith v. State Board of Equalization and Assessment
181 Neb. 754, 150 N.W.2d 895

Synopsis: This is an appeal from the order of the State Board increasing the assessed value of rural lands. The Supreme Court reversed the actions of the State Board.

The Court found that there was no direct evidence in the record or any finding of fact supporting the sales-assessment ratio used by the Board. However, the order of the State Board was reversed on more basic grounds. Absolute uniformity of approach in equalizing is impossible. But the record must sustain the action of the State Board and in the absence of an explanation of the divergences and discrepancies in the application of the different methods used and relied upon, and of a satisfactory explanation of the correlation between the different methods, the Court cannot determine if the constitutionally required equalization or uniformity has been attained between counties. See Hanna v. State Board of Equalization and Assessment, 181 Neb. 725, 150 N.W.2d 878 (1967).

County of Lincoln v. State Board of Equalization and Assessment
181 Neb. 744, 150 N.W.2d 884

Synopsis: Lincoln County appealed from the order of the State Board increasing the valuation of agricultural land in the county. The Supreme Court reversed the order of the State Board.

The Court found that the-record did not show that the county was afforded the hearing to which it was entitled. The Court also found that the record failed to disclose a basis upon which the action of the State Board could be supported. An order of the State Board which is not sustained by the record of the proceedings before the Board is arbitrary and will be reversed. The Court also noted the importance of including only representative sales in the computation of a sales-assessment ratio.

County of Lancaster v. State Board of Equalization and Assessment
181 Neb. 738, 150 N.W.2d 886

Synopsis: The issue here was whether the order of the State Board increasing valuations of certain real estate should be reversed because the findings were inadequate. The Supreme Court reversed the actions of the State Board.

The Court found that in ordering an increase in the valuations of certain subclasses of property that no finding of a mathematical relation among subclasses or of other explanatory facts was made. The ratios and the increases were not correlated. The Court held that there must be a clear basis for the administrative agency's action. See Ostler v. City of Omaha, 179 Neb. 515, 138 N.W.2d 826 (1965); Yellow Cab Co. v. Nebraska State Railway Commission, 176 Neb. 711, 127 N.W.2d 211 (1964). If the findings by the Board are inadequate, the resulting order is arbitrary.

Equity Union Grain Co. v. Board of Equalization
182 Neb. 182, 153 N.W.2d 741

Synopsis: This is an action involving the taxation of certificates of indebtedness owned by a Missouri corporation. The District Court ruled that they were not subject to taxation in Nebraska and the Supreme Court affirmed.

The corporation had offices in Kansas City, Missouri, Lincoln, and Denver. Each company operated independently of the other. The certificates of indebtedness in question were issued by the Kansas City company and used as a method of ownership and as collateral for a loan to the elevator company.

Ordinarily, a corporation is domiciled for tax purposes in the state of its incorporation. In the absence of a statute to the contrary, its intangible personal property has its tax sites in that state, unless a business situs elsewhere has been established. . Before a state where a corporation has been domesticated or has established a business situs may tax the corporation's intangible property, it must appear to have a reasonable connection with the business of the company in the state in that it has a localized use, is primarily an asset of the local business, and under local management and control. A state has no authority to tax the property of a foreign corporation which is clearly outside the state and forming no part of its domestic business. When a foreign corporation is domesticated, there is a domestic resident corporation within each state insofar as the corporation has been created by and exists under its laws and a foreign corporation insofar as it exists and exercises franchises under the laws of another state. Domesticating a foreign corporation in Nebraska, for purposes of taxation, has much the same effect as establishing "a business situs" in Nebraska and its intangible property may have a situs, for taxation purposes, apart from the state of its original incorporation.

Evangelical Lutheran Good Samaritan Soc. v. County of Gage
181 Neb. 831, 151 N.W.2d 446

Synopsis: The Nebraska Supreme Court determined that a nursing home was entitled to tax exemption with facts similar to those in the present case. In that case, the Court concluded that nursing homes were charitable institutions, noting that the concept of charity was aboard enough to include practical enterprises for the good of humanity operated at a moderate cost to those who receive benefits. The Court found that nursing homes are analogous to hospitals which are universally classed as charitable institutions.

Appellant attempted to distinguish this case from Good Samaritan on the grounds that Bethesda had been involved in profit-making ventures and had used revenue from its nursing homes for the financial gain or profit to officers of Bethesda. The evidence showed, however, that no money was ever made from the two "profit-making" ventures and that the businesses were not used to siphon off funds from Bethesda. The association with the companies was for the purpose of minimizing Bethesda's cost and did not result in financial gain or profit to either Bethesda or its officers.

Frye v. Haas
182 Neb. 73, 152 N.W.2d 121

Synopsis: Educational service units (See sections 79-2201-2212) were authorized by the Legislature to certify a tax levy of not to exceed one mill directly to the county treasurers for collection, thus bypassing the county boards of equalization. The primary question involved is whether this procedure deprived plaintiffs of due process of law in that they were not given their constitutional right to suitable notice and an opportunity to be heard before the county board.

Involved here was a general, not a special tax. Within the meaning of the Due Process Clause, laws for the levy and collection of general taxes stand upon a different footing than laws for the levy and collection of special taxes and arc to be construed with the utmost liberality. In some cases, no notice whatever is required.

Tax proceedings are necessarily summary in character. They may not be impeded by a due process requirement of notice and opportunity to be heard at any particular stage of the proceedings. Tax proceedings are not judicial in character, personal notice is not necessary, and notice by statute itself is sufficient. The statutes specifically provide that collection shall not be stayed. See section 77-1606-1610. There is no constitutional requirement that notice of the assessment of a tax and an opportunity to contest it, must be given in advance of the assessment. It is enough that all available defenses may be presented to a competent tribunal before exaction of the tax and before the command of the state to pay it becomes final and irrevocable.

If taxes are levied without authority of law, their collection may be enjoined. Section 77-1735 creates a direct cause of action in the tax proceedings by which a taxpayer may tax the validity, for any reason, of the tax or any part thereof Another remedy is section 77-1736. This gives the taxpayer an administrative remedy as the treasurers of the different districts are required to refund the taxes if "it appears to the satisfaction of such authorities that tax, or a part thereof, was clearly invalid." A third remedy would be a suit to enforce and collect the lien of taxes. This would afford the taxpayer notice and process and a judicial hearing as to his tax liability.

An alternative answer to the establishment of a deviation from customary statutory levying procedures is that fixing levies through cities and other political subdivisions, the county board of equalization is restricted to the powers granted under the statutes and has a mandatory ministerial duty conferred by legislative power to fix the number of mills certified to it. The county board of equalization has no standing to question those matters lying within the discretionary legislative power of a city of political subdivision nor to determine as a quasi-judicial body the legality or illegality of a tax levy made by a political subdivision to whom the Legislature has entrusted the legislative power.

Hanna v. State Board of Equalization and Assessment
181 Neb. 725, 150 N.W.2d 878

Synopsis: This case involved an appeal by eight counties relation to the proposition of assessment and equalization of rural or agricultural lands. The question was whether the counties were properly equalized in relation to each other and to the other counties within the state. The Supreme Court reversed the actions of the State Board.

The Court held that for the purpose of determining sales-assessment ratios, sales occurring in recent years adjusted to allow for any fluctuations in actual value occurring subsequent to such sales may be considered. Here, a wide divergence in the sales-assessment ratios as between counties resulted. It is the duty of the State Board to give effect to the requirement that taxes be levied uniformly and proportionately upon all tangible property and to properly equalize between counties to that end. Here no uniform approach was adopted for the purpose of equalization among the various counties of the state. The record must sustain the action taken by the State Board and, in the absence of a uniform approach to equalization, or the rationalizing of the relationship existing between the various factors on which the State Board has acted, it was impossible for the Court to ascertain that the constitutionally required uniformity between counties had been attained. Sales-assessment ratios revealed by the record indicate varying discrepancies in the assessed values adopted for the various counties and in the absence of a reasonable explanation of such discrepancies, the actions of the State Board cannot be sustained.

Note: County of Lancaster v. State Board of Equalization and Assessment, 180 Neb. 497, 143 N.W.2d 885 (1966). The Court held that in the absence of a specific statute the State Board is not required to notify taxpayers of a hearing to be held for the purpose of equalizing assessed valuations of property among counties. On review the question concerning the issues before the State Board is not the adequacy of the original notification but the fairness of the whole procedure.

Note: County of Keith v. State Board of Equalization and Assessment, ISO Neb. 494, 143 N.W.2d 902 (1966). The Court held that on appeal from an order of the State Board for equalization of assessed valuations of property among counties, the Court considers the entire record for the purpose of deciding whether the order was made arbitrarily. In the absence of a statute, the State Board may adopt any reasonable method of equalization including reasonably reliable assessment-sales ratios.

Note: County of Box Butte v. State Baud of Equalization and Assessment, 180 Neb. 492, 143 N.W.2d 900 (1966). If a record on appeal from an order in a proceeding for equalization of assessed property valuations establishes an arbitrary adjustment, arbitrariness is not dispelled by speculation that extra-record information sufficient to support the adjustment may have been used. At a minimum extra-record information in come from ought to have been incorporated into the transcript or bill of exceptions.

Note: County of Garfield v. State Board of Equalization and Assessment, 180 Neb. 491, 143 N.W.2d 899 (1966). The final decision of the State Board ordering Garfield County to increase its assessed valuation of rural land 39 percent was arbitrary. See County of Blaine v. State Board of Equalization and Assessment, 180 Neb. 471, 143 N.W.2d 880 (1966).

Note: County of Brown v. State Board of Equalization and Assessment, 180 Neb. 487, 143 N.W.2d 896 (1966). This case reaffirms the principles set forth in previous State Board cases. See County of Blaine v. State Board of Equalization and Assessment, 180 Neb. 471, 143 N.W.2d 880 (1966); County of Loup v. State Board of Equalization and Assessment, 180 Neb. 478, 143 N.W.2d 890 (1966); County of Kimball v. State Board of Equalization and Assessment, 180 Neb. 482, 143 N.W.2d 893 (1966).

Municipal University of Omaha v. County Board
181 Neb. 881, 151 N.W.2d 924

Synopsis: The issue in this case was whether a county board of equalization could reduce a mill levy certified to it because the levy would produce revenue in excess of University's requirements.

The Court repeated principles expressed in State ex rel. City of Omaha av. Lynch, 181 Neb. 810, 151 N.W.2d 278 (1967). In Ratigan v. Davis, 175 Neb. 416, 122 N.W.2d 12, the Court determined that the authority to levy a tax for university purposes was deemed to flow directly from the Legislature, and that the board of regents of the University was authorized to certify the amount of the levy to the city council of the City of Omaha to be levied upon all tangible property within the district.

The relation of revenue to be produced, and the amount of levy duly certified by the board of regents of University is of no concern to Board if within the statutory limit. By virtue of section 14-1317, R.R.S. 1943, University may levy and collect taxes for purposes other than its day-to-day operation.

Note: Podewiz v. Gering Nat. Bank, 171 Neb. 380, 106 N.W.2d 497 (1960). A tax deed issued under section 77-1839, R.R.S. 1943, is not only required to state that the land has been offered at public sale. The only requirement is a statement therein as to whether the sale, pursuant to which it is being issued, was public or private.

Rodeo Tel. Membership Corp. v. County of Greeley
181 Neb. 492, 149 N.W.2d 357

Synopsis: This case involved a protest by the telephone company as to the valuation of its tangible personal property. The issue was whether the valuation can be determined by a formula, not specified by statute, based upon valuations reported by the taxpayer to the Nebraska State Railway Commission for rate-making purposes. The District Court dismissed Plaintiff's petition and the Supreme Court affirmed.

Plaintiff contended that only the Legislature can prescribe standards and methods for determination of value. But the Court stated that formulas or standards, whether set by the Legislature or used by others, are merely methods for determining the ultimate fact of valuation for purposes of taxation. There are no settled and infallible rules for determining actual value. The use of a formula or standard in determining actual value of the tangible personal property of a telephone of a company is not improper in the absence of evidence that it was arbitrary, capricious, or unreasonable. The taxpayer must establish that the application of the formula resulted in the assessment of its property at more than its actual value, or violated the constitutional requirement that taxes on tangible property be levied uniformly and proportionately.

S. S. Kresge Co. v. Jensen
169 Neb. 833, 83 N.W.2d 569

Synopsis: This case involved a controversy concerning the amount of personal property taxes owned by the Plaintiff on its two stores. The District Court found for the Defendant tax collectors, and the Supreme Court affirmed.

The Court first stated that the state is not a necessary party in an action by a taxpayer for a declaratory judgment attacking the validity of an assessment brought against the county treasurer and the county in which the property is assessed. Second, the cost of the stock inventory is not its actual value. Actual value is the value in the market in the ordinary course of trade.

The remedy of a taxpayer for overvaluation or a failure to receive uniform and proportionate valuation of its property by the county board of equalization is by direct appeal to the District Court, not by collateral attack. A collateral attack may only be made where the assessment is valid, willfully discriminatory, or the result of fraud. A taxpayer who fails to pursue such remedy is precluded from objecting to the valuation of the separate property for taxation purposes. The right of a taxpayer whose property alone is taxed at 100 percent of its actual value is to apply to the county board of equalization to have his assessment reduced to the percentage of that value at which others are assessed, even though this is a departure from the requirements of the statute. Uniform and proportionate taxation is a constitutional requirement and consequently the prime consideration.

State ex rel. City of Omaha v. Lynch
181 Neb. 810, 151 N.W.2d 278

Synopsis: This is an action against the County Board of Equalization of Douglas County seeking a writ of mandamus requiring the county board to levy the number of mills for 1967 taxes certified and directed by the city. The District Court dismissed the action and the Supreme Court reversed.

The county board of equalization can exercise only such powers as are expressly granted to it by statute and statutes conferring power and authority upon the county board of equalization in these circumstances are strictly construed. The levy of a tax is a legislative function to be exercised only by the state or some inferior political division to which the state has delegated the power. The Legislature did not intend to grant to a county board of equalization any legislative power with respect to a city tax levy nor to divide such power, or permit a dual exercise of it. Nor did the Legislature intend that the county board act as a quasi judicial body to review and determine questions of legality or procedural budgetary requirements of a home rule city. The levying body has considerable discretion in fixing the tax amount, and the exercise of this discretion will not be disturbed in the absence of an abuse thereof.

1966

County of Blaine v. State Board of Equalization and Assessment
180 Neb. 471, 143 N.W.2d 880

Synopsis: This is an appeal by Blaine County from the order of the State Board increasing the valuation of rural land and improvements as shown by the abstract of assessment for the county. The county complained about the procedure of the State Board in that it did not comply with the Administrative Procedures Act. The Supreme Court reversed the order of the State Board.

The provisions of the Administrative Procedures Act appear in sections 84-901 --84-919. The Court held that a notice issued by the State Board pursuant to sections 77-508 and 77-509 should specify the percentage adjustment which the Board proposes to make in that county. But since the county appeared and participated in the hearing without objections, it could not complain about the notice which was given. The Court stated that the Board may adopt any reasonable method of procedure in equalizing the assessment of property between the various counties. The next issue was whether the order of the Board was unreasonable and arbitrary. The Court determined that from its examination of the record it was unable to discover any basis upon which the order directing a 90 percent increase in the valuation of rural land and improvements in Blaine County could be sustained. Thus, the order of the Board was arbitrary and capricious.

County of Kimball v. State Board of Equalization and Assessment
180 Neb. 482, 143 N.W.2d 893

Synopsis: This was an appeal by Kimball county from an increase in the valuation of both urban and rural land and improvements as shown by the abstract of assessment for the county. The Supreme Court affirmed the order of the Board. See previous State Board cases: County of Blaine v. State Board of Equalization and Assessment, 180 Neb. 471, 143 N.W.2d 880 (1966); County of Loup v. State Board of Equalization and Assessment, 180 Neb. 478, 143 N.W.2d 890 (1966).

The justification for the increase in valuation was the sales-assessment ratio. The court stated that equalization based upon a comparison of sale-assessment ratios must include both land and improvements since, usually, there is no way to apportion consideration between land and improvements.

County of Loup v. State Board of Equalization and Assessment
180 Neb. 478, 143 N.W.2d 890

Synopsis: This is an appeal by Loup County from the order of the State Board of Equalization and Assessment increasing the valuation of rural land and improvements as shown by the abstract of assessment for the county. The Supreme Court affirmed.

The county claimed that the State Board placed too much emphasis upon sales-assessment ratios and sales prices and did not give proper consideration to section 77-112, R.R.S. 1943, which defines actual value of property for taxation. The Court held that the record of proceedings before the Board did not show that the order of the Board was unreasonable, arbitrary, or prejudicial. The order of the Board therefore had to be affirmed.

Grainger Brothers Co. v. Board of Equalization
180 Neb. 571, 144 N.W.2d 161

Synopsis: The law imposes the duty of valuing and equalizing property for taxation purposes upon the county assessor and the county board of equalization. In reviewing the actions of tribunals created by law for ascertaining the valuation of equalization of property for taxation purposes, courts will not usurp the functions of such tribunals. It is only where such assessed valuations are not in accordance with law, or it is made to appear that they were made arbitrarily or capriciously, that the courts will interfere.

Lariat Boys Ranch v. Board of Equalization
181 Neb. 198, 147 N.W.2d 515

Synopsis: In this case, both appellant and appellee appealed from the decision of the District Court granting a tax exemption for 200 acres of a 1,000 acre ranch because of its use for educational purposes. The Supreme Court modified the decision of the District Court.

See previous tax exemption cases: Nebraska Conf. Assn. Seventh Day Adventists v. Board of Equalization, 179 Neb. 326, 138 N.W.2d 455 (1965); Doane College v. County of Saline, 173 Neb. 8, 112 N.W.2d 248 (1961); Lincoln Woman's Club v. City of Lincoln, 178 Neb. 357, 133 N.W.2d 455 (1965). The board contended that only the five acres upon which the educational and housing facilities were located should be exempt. The Court stated that this premise was too limited because the ranch was not only an educational institution but also a charitable institution. The Court allowed the judgment of the corporate organizers that 1,000 acres were required to constitute a ranch home and thus held all of the land to be exempt from taxation.

Satterfield v. Britton
163 Neb. 161, 78 N.W.2d 817

Synopsis: This was an action by a taxpayer against the board of commissioners and county clerk for an injunction to prevent them from making a contract for the construction of a courthouse and from using any money raised by taxation for that purpose. The Court held that a taxpayer who voluntarily pays an unauthorized and illegal tax and who makes no demand for its return within 30 days of the time of the payment of tax (see section 77-1735, R.R.S. 1943) is forever barred and has no capacity to contest the validity of the tax by any legal proceedings.

Svoboda and Hanna v. Board of Equalization
180 Neb. 215, 142 N.W.2d 328

Synopsis: This was an appeal from the judgment of the district Court sustaining the decision of the county board of equalization assessing the taxpayer's tangible personal property in three different taxing districts in the county rather than in the single taxing district in which the taxpayer had originally listed all of the property. The Supreme Court affirmed the judgment of the District Court.

Section 77-1216, R.R.S. 1943, makes it the duty of the county board to determine where within the county personal property shall be assessed when questions arise, and its decision will not be disturbed unless an abuse of discretion is shown. For taxation purposes a partnership is a distinct entity, and neither the residence of the partners for their abstract intent is material in determining taxation situs. Partnership property is taxable as an entity at the domicile of the firm rather than at the residences of the several owners, and the domicile of a partnership, for the purposes of taxation, is its place of business.

Sections 77-1204 and 77-1205, R.R.S. 1943, establish specific statutory exceptions to the general rule that personal property shall be listed and assessed where the owner resides, as provided in section 77-1202, R.R.S. 1943. The residence of the taxpayers is determinative of the place where livestock and other personal property connected with a farm will be taxed only if such property does not come under sections 77-1204 or 77-1205.

The next issue was whether the partnership was operating one integrated farm, or multiple operations, consisting of a wheat farm and a ranch. The Court concluded that the partnership was conducting a multiple operation. The court also stated that the business of the partnership was transacted by each of the partners at their several places of residence. Thus, the partnership had no principal place of business.

Note: Ramm v. County of Holt, 172 Neb. 88, 108 N.W.2d 808 (1961). This case reaffirms the principles set forth in Goebel v. County of Holt, 172 Neb. 81, 108 N.W.2d 406 (1961). In this case, the county board did not abuse its discretion when it held contiguous tracts of land in two different school districts constituted one farm rather than two where taxpayers had different parts of a cattle operation in each of the districts.

1965

Carpenter v. State Board of Equalization and Assessment
178 Neb. 611, 134 N.W.2d 272

Synopsis: This case is an appeal from the decision of the State Board of Equalization and Assessment accepting the assessment of real and personal property submitted by the counties of Nebraska to the State Tax Commissioner. The appellant claimed that the Board acted arbitrarily and capriciously by rejecting the sales assessment ratios prepared in a study by the Department of Revenue. The Supreme Court affirmed the actions of the Board.

The primary duty of the State Board of Equalization and Assessment is to establish uniformity in taxation between the various counties. The Court may not substitute its judgment for that of the Board. It is only where the record is clear and conclusive that the Board's action was illegal, contrary to law, arbitrary, and capricious that the court has any power to reverse the findings of the Board. When a taxpayer appeals from an action of the Board, the presumption is that the Board faithfully performed its duties and the burden is on the Appellant to prove that the action of the Board was erroneous, arbitrary, capricious, and contrary to the law. Substantial compliance with the requirements of equality and uniformity is all that is required and such provisions are satisfied when designed and manifest departures from the rule are avoided.

The sales assessment ratio as compiled in this case does not reflect the truth and could not be used for the basis of any calculation as to disproportionate valuations between the counties. It was not arbitrary and unreasonable on the part of the Board to reject the sales assessment ratio as a proper standard for performing its duty. See H/K Company v. Board of Equalization, 175 Neb. 268, 121 N.W.2d 382 (1963).

Note: Union P. R. R. Co. v. State Board of Equalization and Assessment, 170 Neb. 139, 101 N.W.2d (1960). The holdings of the Court in this case are identical to the ones expressed in Chicago, B. and Q. R. R. v. State Bd. of Equalization and Assessment, 170 Neb. 77, 101 N.W.2d 856 (1960).

Lincoln Woman's Club v. City of Lincoln
178 Neb. 357, 133 N.W.2d 455

Synopsis: This action was brought by Plaintiffs to enjoin collection of taxes on real estate constituting the headquarters building of the club. The District Court entered judgment finding such taxes void except as to the portion of the basement used as a caretaker's apartment, and enjoin the enforcement of taxes against the real estate except for the portion properly attributable to the apartment. The Supreme Court affirmed.

See previous exemption cases: Doane College v. County of Saline, 173 Neb. 8, 112 N.W.2d 248 (1961); Young Men's Christian Assn. v. Lancaster County, 106 Neb. 105, 182 N.W.593 (1921). The Court held that within the guidelines previously established, the facts of this case established the aims and purposes of the Lincoln Women's Club as religious, educational, and charitable. It is not essential that the use of property be exclusively for one of the three purposes. See Ancient and Accepted Scottish Rite v. Board of County Commissioners, 122 Neb. 586, 241 N.W. 93, 81 A.L.R. 1166 (1932). Here the primary and dominant use of the building was for religious, educational, and charitable purposes. An incidental use of property which produces some funds from members does not make the use any less an incidental use where the funds are devoted to the primary and dominant purposes of the organization. That a portion of the charitable work was done by the members off the premises involved did not affect the primary or dominant use of the premises. So long as the property is actually used exclusively for education, religious, or charitable purposes, the exemption is not lost because the use is for less than full time.

Nebraska Conf. Assn. Seventh Day Adventists v. Board of Equalization
179 Neb. 326, 138 N.W.2d 455

Synopsis: This was an appeal by the board of equalization and county assessor exempting from taxation property owned by appellee. The land was purchased by appellee in 1963 after the decision of the Court in Nebraska Conf Assn. Seventh Day Adventists v. County of Hall, 166 Neb. 588, 90 N.W.2d 50 (1958). The Court held that the use of land to increase the income to a school for the sole purpose of providing compensable work for students is an incidental use of property that does not entitle it for exemption from taxation as property owned and used exclusively for educational, religious, charitable, or cemetery purposes, even though such property is not used for private financial gain or profit. To be exempt it must be shown that the lands were reasonably needed and predominately used for educational purposes. The Court also held that residence buildings located on real estate which is exempt from taxation because of its predominate use for education purposes, and which are occupied by teaching personnel and other employees of the school located thereon, are exempt from taxation when used for the primary purpose of carrying out the educational program of the school.

Richards v. Board of Equalization
178 Neb. 537, 134 N.W.2d 56

Synopsis: In this property valuation protest case the trial court lowered the valuation of the property and the Supreme Court affirmed. The value of the property was determined using the reproduction cost less depreciation formula. The Court stated that the cost of reproduction less depreciation is but one element to be considered in determining actual value. All available evidence of actual value is competent at all hearings on the issue. In commenting on the Plaintiff's evidence the Court stated that the want of any market for any period of time does not necessarily mean an excessive reduction of actual value.

Note: Leech, Inc. v. Board of Equalization, 176 Neb. 841, 127 N.W.2d 917 (1964). This litigation involved a controversy as to actual value for tax purposes of two tracts of land in Imperial, Nebraska. See previous property valuation protest cases: Matzke v. Board of Equalization, 167 Neb. 875, 95 N.W.2d 61; Adams v. Board of Equalization, 168 Neb. 286, 95 N.W.2d 627 (1959).

Note: HIK Company v. Board of Equalization, 175 Neb. 268, 121 N.W.2d 382 (1963). See previous property valuation protest cases: LeDioyt v. County of Keith, 161 Neb. 615, 74 N.W.2d 455 (1956); Newman v. County of Dawson, 167 Neb. 666, 94 N.W.2d 47 (1959); Baum Realty Co. v. Board of Equalization, 169 Neb. 682, 100 N.W.2d 730 (1960).

1964

Young Women's Christian Assn. v. City of Lincoln
177 Neb. 136, 128 N.W.2d 600

Synopsis: This was an action for a declaratory judgment finding that the plaintiff's property was exempt from taxation and enjoining the defendants from taxing the property. The trial court found for the plaintiffs and the Supreme Court affirmed.

The essential question was whether Plaintiffs property had been used and was being used for charitable purposes and not for financial gain. See previous exemption cases: Doane College v. County of Saline, 173 Neb. 8, 112 N.W.2d 248 (1961); County of Douglas v. OEA Senior Citizens, Inc., 172 Neb. 696, 111 N.W.2d 719 (1961). See also Young Men's Christian Assn. v. Lancaster County, 106 Neb. 105, 182 N.W. 593, 34 A.L.R. 1060 (1921). While individuals living at the institution were charged for the privilege, the Court held that this did not defeat the charitable purposes of the organization. Whether or not a use of property is charitable must in each instance be determined by its own facts.

1963

Misle v. Miller
176 Neb. 113, 125 N.W.2d 512

Synopsis: This was an action brought by taxpayers to recover penalties added to taxes paid by them which were alleged to be illegally levied and therefore void. The District Court dismissed the action and the Supreme Court reversed.

See previous tax penalty cases: Johnson Fruit Co. v. Storey, 171 Neb. 310, 106 N.W.2d 182 (1960); Creigh v. Larsen, 171 Neb. 317, 106 N.W.2d 187 (1960). The defendants claimed that the plaintiffs were without remedy, while the plaintiffs claimed that section 77-1735, R.R.S. 1943, applied to their case and allowed the recovering of a penalty. The Court concluded that section 77-1735 provides a remedy for the recovering of penalties as well as taxes which have been illegally imposed on property.

1961

County of Douglas v. OEA Senior Citizens, Inc.
172 Neb. 696, 111 N.W.2d 719

Synopsis: Property owned and used primarily for the purpose of furnishing low-rent housing is not property owned and used exclusively for charitable purposes. This was a declaratory judgment action brought by a board of county commissioners to determine whether the property owned by the defendants was exempt from taxation. The lower court found that the property was not exempt and the Supreme Court affirmed.

Under Art. VIII, section 2, of the Constitution of Nebraska, the Legislature may exempt from taxation property owned and used exclusively for educational, religious, or charitable purposes, when such property is not owned or used for financial gain or profit to the owner or user. The Legislature implemented this grant of power in section 77-202, R.R.S. 1943. The question of taxability of property is a subject of yearly inquiry. An adjudication that property is exempt from taxation in one year is not res judicata of the question of whether it is exempt in any succeeding year. An independent action is proper in which to determine whether property which has been placed upon the assessment rolls is exempt from taxation, and this is true notwithstanding the availability of a statutory remedy.

Doane College v. County of Saline
173 Neb. 8, 112 N.W.2d 248

Synopsis: This case was an appeal by the college from a determination by the county board of equalization that the house of the president of the college, as well as the faculty housing units were not exempt from taxation. The District Court held that the president's house was exempt but that the faculty housing its were not. The Supreme Court affirmed the decision. The evidence in this case established that the president of the college lived in the house provided him, not as a matter of personal convenience and advantage, but because it was necessary in the discharge of his duties. While the faculty housing units were not owned or used for financial gain or profit, that alone did not entitle them to exemption from taxation. Also, the primary or dominant use of the property was not for educational purposes.

Goebel v. County of Holt
172 Neb. 81, 108 N.W.2d 406

Synopsis: This case involved a determination of the proper place of listing livestock and machinery for taxation as between two taxing districts in Holt County. The trial court found for the plaintiffs and the Supreme Court affirmed.

Section 77-1216, R.R.S. 1943, makes it the duty of the county board to determine where within the county personal property shall be assessed when questions arise, and its decision will not be disturbed unless an abuse of discretion is shown. The term "farm" as used in Chapter 77 means a tract of land used for cultivation or production of crops of

any nature, or the raising of any type of animal embraced within the term "livestock." Where the owner of cattle resides in one taxing district and his cattle are kept on a farm in another taxing district, which farm is entirely disconnected from the home of the owner, the cattle are properly taxed in the taxing district where kept.

Peter Kiewit Sons', Inc. v. County of Douglas
172 Neb. 710, 111 N.W.2d 734

Synopsis: This is an appeal from a District Court decision fixing the value of Plaintiff's intangible property for taxation purposes. The District court sustained in part the increase m valuation. The Supreme Court affirmed with modifications.

Plaintiff contended that the board of equalization was without authority to raise Plaintiffs intangible property valuations because the increase in value was not the result of omitted or undervalued property within section 77-1502, R.R.S. 1943. The Court held that the contention was without merit because while Plaintiff disclosed the ownership of the intangibles in question, it did not return them for taxation purposes.

The primary contention made by Plaintiff was that shares of stock in corporations foreign to Nebraska, bank deposits outside of Nebraska, and bills and accounts receivable arising from business transactions outside of Nebraska, are not taxable in this state. The Court stated that under section 77-201.01, R.R.S. 1943, all intangible property in the state not expressly exempt, is subject to taxation and shall be valued and assessed at its actual value.

A presumption exists that the intangible property of a corporation is taxable in the sate of its incorporation. But where it is shown that. the domicile of the corporation is actually in a state other than the incorporating state, this sites of intangible property follows the domicile of the corporation and it is taxable in the domiciliary state. The evidence showed that the company was actually domiciled in Nebraska, although it had a legal domicile in Delaware.

As to the stock, the Court stated that the inference was plain that it was kept in Iowa to avoid taxation in Nebraska. The stock was in the possession and control of the principal officers of the corporation and the corporation itself, all of whom were domiciled in Nebraska. Plaintiff's stock in its subsidiary and affiliated corporations outside of Nebraska was an integral part of Plaintiff's business in Nebraska and has a taxable situs in this state under the rule that the sites of the intangible property follows the owner's domicile for purposes of taxation. The placing of the stock certificates in a safety deposit box, without any expressed reason for doing so, is not sufficient reason for departing from the general rule. The general rule is that the situs of intangible personal property for the purposes of taxation is the domicile of the owner. No exceptions to this general rule apply to this case.

As to the bank account, the Court held that the sites of a bank account is the domicile of the owner for purposes of taxation. As to the bills and accounts receivable, the Court held that they were owned by Plaintiff and their situs for tax purposes was the domicile of the owner in the absence of a showing that they are within any recognized exception.

The situs of intangible property is the domicile of its owner. Thus intangible property may be taxed at the domicile of the owner.

1960

Chicago, B. and Q. R.R. v. State Board of Equalization and Assessment
170 Neb. 77, 101 N.W.2d 856

Synopsis: This was an appeal from the assessment of railroad property. The Supreme Court reversed the assessment made by the Board.

The Court stated that the Legislature has not defined a specific method by which railroad property in the State shall be valued for taxation by the State Board. The Board may, within legal limitations and restrictions, resort to any appropriate method by which a reasonable and just determination of actual value of such property can be ascertained. The presumption that an assessing authority values property fairly and according to law disappeared in this case because no evidence was presented by the State Board. The only evidence as to valuation of the property was that presented by the railroad and this left the issue to be decided a one of fact unaided by the normal presumption and burden of establishing an illegal assessment. It was the duty of the State Board to value the property at its actual value and assess it as 35 percent thereof. Any departure therefrom was in disregard of the legislative mandate and constituted an arbitrary valuation and assessment. It is unlawful discrimination to value property at more than 35 percent of its actual value, when all other tangible property is valued at the 35 percent rate.

Chicago and N.W. Ry. Co. v. State Board of Equalization and Assessment
170 Neb. 106, 101 N.W.2d 873

Synopsis: Decided the same day as the above case, this case expressed the same principles. The Court also noted that it is generally permissible for assessment authorities in fixing the value of the interstate operating property of a railroad for tax purposes to consider its investment in transportation property determined according to the rules of the Interstate Commerce Commission, in conjunction with the average value of its stocks and bonds during a reasonable period antecedent to the time of the valuation of the property and the capitalization at a reasonable rate of the average net operating income of the railroad during a like period. Such a valuation is not arbitrary or unreasonable. The assessing authorities may also determine the proportion of the value of the entire operating property of an interstate railroad allocable to its interstate property in a single state by considering the percentage that the interstate traffic units, gross earnings, car locomotive mileage, and current mileage bear to the total railroad system. A computation of system value based upon average market price of stocks and bonds and a computation based upon a capitalization of net earnings reflect the effect upon actual value, of obsolescence, of the competition of other means of transportation, and of all factors affecting earnings. The capitalization of the average net income of a railroad for a five-year period immediately antecedent to the time of the assessment of the property of the railroad at the rate of 6 percent as one factor in ascertaining the value of the entire property of the railroad for taxation is not arbitrary or unreasonable.

Creigh v. Larsen
171 Neb. 317, 106 N.W.2d 187

Synopsis: This was a class action brought by a taxpayer to have sections 77-413, 77-616, and 77-318, which impose a penalty for failure to report intangible personal property for taxation declared unconstitutional. These sections were found to be unconstitutional by the District Court and the Supreme Court affirmed. The Court held that these statutes were not uniform as to class and were discriminatory among members of the class, thereby violating M. III, section 18, and M. I, section 25, Constitution of Nebraska.

Johnson Fruit Co. v. Storey
171 Neb. 310, 106 N.W.2d 182

Synopsis: This was an action by the Plaintiff requesting an injunction preventing the collection of a penalty for filing a late personal property tax a return. The statute penalizing a taxpayer for failing to make a return, section 77-413, was in Creigh v. Larsen, 171 Neb. 317, 106 N.W.2d 187 (1960), declared unconstitutional. The Court held that the penalty would not apply where the personal property tax return was filed late.

Scudder v. County of Buffalo
170 Neb. 293, 102 N.W.2d 447

Synopsis: This is an action for a declaratory judgment in which the Plaintiff prayed for an adjudication of the rights of the parties growing out of an alleged mistake in the assessment of Plaintiff's property. The trial court found for the Plaintiff and the Supreme Court reversed.

The Court stated that relief from the over assessment of property for tax purposes is by appeal to the District Court from the order of the county board of equalization fixing the assessed value of the property. This remedy is full adequate and exclusive. See section 77-1510-13, R.R.S. 1943. The claim that property is assessed too high for taxation purposes cannot be made, in the first instance, by direct application to any other body or by a collateral attack in law or equity, in the event of failure to bring the matter before the county board of equalization and to appeal therefrom in case of an adverse determination. A collateral attack may be made upon an assessment of property for tax purposes only if the assessment, or some part thereof, is wholly void. An over assessment is an erroneous assessment, but not a void one. The Uniform Declaratory Judgments Act does not create a new cause of action where one did not previously exist. Where an exclusive remedy is provided, the declaratory judgment act does not provide an additional remedy.

Note: Baum Realty Co. v. Board of Equalization, 169 Neb. 682, 100 N.W.2d 730 (1960). Real estate valuation cases: Matzke, Adams, Omaha Paxton Hotel Co.

1959

Ace Constr. Co. v. Board of Equalization
169 Neb. 77, 98 N.W.2d 367

Synopsis: This case involved a general contractor who owned construction equipment which he moved from location to location as he completed a job. The question was whether this equipment, which was located outside the state, was subject to taxation. The District Court found for the defendant and the Supreme Court affirmed.

The Court held that tangible personal property belonging to a corporation is assessed in the taxing area of the principal place of business of the corporation unless otherwise provided by statute unless it has acquired an actual situs elsewhere. The state which is the domicile of the owner of intangibles is the situs of tangible personal property temporarily in another state but not permanently located there. See also Ainsworth v. County of Fillmore, 166 Neb. 779, 90 N.W.2d 360 (1958).

Note: Ainsworth v. County of Fillmore, 166 Neb. 779, 90 N.W.2d 360 (1958). The state which is the domicile of the owner of tangibles is the situs of tangible personal property temporarily in another state but not permanently located there. A fact necessary to entitle the plaintiffs to an injunction against the assessment made on their wheat, which was located outside the state on the date of taxation, was the permanent absence of the wheat from the state.

Adams v. Board of Equalization
168 Neb. 286, 95 N.W.2d 627

Synopsis: This case concerned the value of two lots in the City of Aurora. The District Court affirmed the valuation given to the property and the Supreme Court reversed.

Generally the valuation by the assessor is presumed to be correct. However, if the assessor does not make a personal inspection of the property but accepts a valuation thereof fixed by a professional appraiser, the presumption does not obtain and in such case the burden is upon the protesting party to prove the assessment is excessive. The presumption that a board of equalization in making an assessment acted upon sufficient evidence to justify its action disappears when there is competent evidence on appeal to the contrary and thereafter the reasonableness of the valuation fixed by the board is one of fact to be determined from the evidence, unaided by presumption, and the burden of showing such valuation to be unreasonable is upon the complaining party. See also Ahern v. Board of Equalization, 160 Neb. 709, 71 N.W.2d 307 (1955); Omaha Paxton hotel Co. v. Board of Equalization, 167 Neb 231, 92 N.W.2d 537 (1958); Matzke v. Board of Equalization, 167 Neb. 876, 95 N.W.2d 61 (1959).

Matzke v. Board of Equalization
167, Neb. 875, 95 N.W.2d 61

Synopsis: This case is a continuation of the principles applied in Newman v. County of Dawson, 167 Neb. 666, 94 N.W.2d 47 (1959). The trial court affirmed the valuation placed on the property and the Supreme Court reversed.

The Court recognized that a building which has completed its use expectancy may be of considerable actual value. Reproduction cost less depreciation is but one element of the statutory formula for determining actual value. But the physical depreciation of a building on account of age may not be exclusively asserted in the evidence on the basis of its age as compared with tits use expectancy, and then allowed on an arbitrary basis not shown by the evidence to have any relation to its age or the depreciation resulting therefrom. A formula for determining the value tangible property for taxation purposes must tend to produce the result required by section 77-112, R.R.S. 1943, when applied uniformly and impartially. Where it appears that an arbitrary basis is used which is not uniformly applied to all tangible property, the result is an arbitrary one. It will not sustain a valuation for tax purposes.

Note: Newman v. County of Dawson, 167 Neb. 666, 94 N.W.2d 47 (1959). This case reaffirms the principles of LeDioyt v. County of Keith, 161 Neb. 615, 74 N.W.2d 455 (1956).

Note: Omaha Paxton Hotel Co. v. Board of Equalization, 167 Neb. 231, 92 N.W.2d 537 (1958). Ordinarily the valuation of a county assessor for tax purposes will be presumed to be correct. The burden of proof rests upon the taxpayer to prove that an assessment is excessive. But where the evidence shows that an assessment by a county assessor was arbitrarily made, the assessment cannot be sustained. In such a situation, the valuation becomes one of fact to be determined from the evidence, unaided by presumption.

State ex rel. School Dist. of Scottsbluff v. Ellis
168 Neb. 166, 95 N.W.2d 538

Synopsis: This case involved the issue of the distribution of motor vehicle taxes to the school district. The school district protested the defendant County Treasurer's formulation for distribution of these taxes. The Court found for the School District.

The Court found that section 77-1240.01, R.R.S. 1943, does not violate Art. VIII, section 1 of the Constitution and that under the provisions of this statute, the proceeds from the taxation of motor vehicles shall be allocated to the taxing units levying taxes on tangible property in which the motor vehicle had a tax situs in the same proportion that the mill levy on the tangible personal property of each such taxing unit bears to the total mill levy on tangible personal property of all the taxing units in which the motor vehicle has its tax situs.

Thomas v. Flynn
169 Neb. 458, 100 N.W.2d 37

Synopsis: This case was an adverse possession case in which the Plaintiff brought an action to have a Treasurer's Tax Deed from the county treasurer to the defendant declared null and void because the notice required by sections 77-1831-32, R.R.S. 1943, had not been properly served. The Court stated that the words "in actual possession or occupancy" as contained in section 77-1832 mean such occupancy or possession by a person as would put an ordinarily prudent man on notice of that fact by observation of the premises involved.

United States Cold Storage Corp. v. Stolinski
168 Neb. 513, 96 N.W.2d 408

Synopsis: This case declared that section 77-1226, R.R.S. 1943, was unconstitutional. This section required that all goods stored in warehouses be listed and reported to the county assessor for the purpose of uncovering taxable property stored in warehouses. The Court held that the statute was unconstitutional because it created an arbitrary classification of warehouse owners since those who stored used household goods were exempt from the requirements of the Act.

Note: Peterson v. Hancock, 166 Neb. 637, 90 N.W.2d 298 (1958). This case upholds the constitutionality of the motor vehicle tax, section 77-1240.01, R.R.S. (1976) and states that there is no conflict between it and section 77-1211, R.R.S. (1976) which exempts from taxation property already taxed by some other county, state, or territory.

1958

Nebraska Conf. Assn. of Seventh Day Adventists v. County of Hall
166 Neb. 588, 90 N.W.2d

Synopsis: This case involved an appeal by the plaintiffs from a denial of an exemption from taxation of farm property owned by the plaintiffs which was used in connection with a private school run by the plaintiffs. The denial from exemption was reversed by the District Court and its finding was affirmed by the Supreme Court.

The Court held that property is exempt from taxation if owned and used exclusively by a religious or educational institution in carrying on its educational work, if all the income from the property is used exclusively for the support of its educational endeavors, and if no financial gain or profit inures to the owner of the property. In this case, the farm was used exclusively for purposes of education and thus was exempt from taxation.

1957

Iota Benefit Assn. v. County of Douglas
165 Neb. 330, 85 N.W.2d 726

Synopsis: This was a tax exemption case involving a fraternity house for medical students. The District Court denied exemption and the Supreme Court affirmed.

The Court held that a property being used by members of a university or college fraternity as a home while attending such university or college is not being used exclusively for charitable or educational purposes within the intent and meaning of Art. VIII, section 2, Constitution of Nebraska and section 77-202, R.R.S. 1943. College fraternity houses are generally not exempt from taxation. In determining whether or not property falls within a tax exemption provision, the primary or dominant use, and not an incidental use, will control. The essential question here was whether the property was owned and used exclusively for educational purposes. For a discussion of what is meant by education purposes see Ancient and Accepted Scottish Rite v. Board of County Commissioners, 122 Neb. 586, 241 N.W. 93 (1932).

K-K Appliance Co. v. Board of Tax Equalization
165 Neb. 547, 86 N.W.2d 381

Synopsis: Plaintiff protested the valuation of his inventory property for taxation purposes. The method employed by the county assessor increasing the valuation of the property consisted of counting appliances and fixing an arbitrary valuation as determined by newspaper advertisements. The District Court affirmed this method of valuation. The Supreme Court reversed.

The Court stated that a county assessor may not act arbitrarily in raising an assessment, and the yardstick employed in fixing the valuation of property for tax purposes must be one which reasonably tends to accomplish the purpose of the taxing statutes. A method of assessment having no real relation to the value of property being assessed will no be sustained and is entirely void.

The value of stock or merchandise is some evidence of its actual value for tax purposes. In the absence of other competent evidence of actual value it is sufficient to sustain a finding that cost value is actual value. Where the only competent evidence of the actual value of merchandise are the cost prices established by taxpayer, a court is required to hold the cost price is the only evidence of actual value shown by the record.

By questioning the valuation of Plaintiff's inventory, the question of the correctness of the inventory also arouse. Obsolete property must be listed for taxation purposes unless expressly exempted by statute from taxation.

Lucas v. Board of Equalization
165 Neb. 315 85 N.W.2d 638

Synopsis: This case relates to the valuation placed on real estate for taxation purposes and a claim of partial exemption of the property from liability to local taxation to the extent of $10,000 of the cost of the property which was paid with money received from the U.S. government by and for the use of Appellant, a disabled veteran. The District Court denied Appellant's claims and the Supreme Court affirmed.

When this case was litigated, assessment was based on basic value, which was 70 percent of actual value. Appellant claimed that the basic value set on his house by the county assessor was too high.

The assessor did not inspect the property, but based the assessment upon his years of experience and upon information gathered and reported to him by the tax appraisal board of the previous year. The Court held that if the assessor accepted the valuation of the property as determined and reported by the tax appraisal board, the presumption that he properly assessed the property would not exist, but the burden would nevertheless be on the property owner to establish that the assessment was excessive.

The Court further held that the burden imposed on the complaining taxpayer is not met merely by showing a difference of opinion between his witnesses and the county assessors or county board of equalization with regard to value unless it is established by clear and convincing evidence that the valuation placed upon his property when compared with valuations place on other similar property is grossly excessive and is the result of a systematic exercise of the intentional will or failure of plain legal duty, and not mere errors of judgement. Generally, the valuation of property for tax purposes by the proper assessing officers should not be overthrown by the testimony of one or more interested witnesses that the values fixed by such officers were excessive or discriminatory when compared with values placed thereon by such witnesses. Otherwise, no assessment could ever be sustained.

Lynch v. Howell
165 Neb. 525, 86 N.W.2d 364

Synopsis: This was a suit brought to have taxes levied on the real and personal property of plaintiffs by the City of Omaha, as well as others, declared null and void because the property was not within the territorial limits of the city on the assessment date, nor within the city limits prior to the date the county assessor was required to complete the assessment and make his return to the county clerk. The trial court found the taxes levied to be valid and the Supreme Court affirmed.

The Court commented that the purpose of an assessment is to determine the ownership, quantity and value of property for tax purposes as of the date fixed by statute. It involves no question of the power to tax. The power to tax is determinable as of the date the tax is levied. Where a valid assessment of property has been made and the property is within the limits of the municipal corporation imposing the tax on the date the tax is levied, the power to tax is generally held to exist.

1956

Boettcher v. County of Holt
163 Neb. 231, 79 N.W.2d 183

Synopsis: This was an action in equity to secure an injunction against the collection of taxes based upon the valuation of real estate for 1955 which was in excess of the valuation for 1954. The trial court sustained the demurrer by the Defendant and the Supreme Court affirmed.

The county entered into a contract with a private firm to appraise and revalue the real estate in the county. Appellants made numerous complaints about the contract between the county and the firm, as well as the procedures used by the firm, but at no point in the petition was it alleged that any of the Plaintiffs ever protested or attempted to protest to the board of equalization the value placed upon his property by the county assessor.

The Court made the following holdings: If a county assessor performs the duties in fixing the value of property in the manner required of him by law, the fact that in the performance of the duties he resorted to recommendations and evidence furnished by an appraisal committee does not affect the validity of the assessment. If a county assessor fails to make an inspection of real estate and relies upon and accepts for assessment purposes the valuation of an appraiser, the assessment is not void and thereby no ground is afforded for injunctive relief Where the complaint of a taxpayer is based upon irregularities as distinguished from incidents rendering the tax void, the remedy of the taxpayer is not by injunction but by resort in the first instance to the board of equalization.

LeDioyt v. County of Keith
161 Neb. 615, 74 N.W.2d 455

Synopsis: This case involved five taxpayers who complained to the county board of equalization that: (1) their property had been overvalued; (2) there existed a gross inequality between the value placed upon their properties and the values placed on other classes of real property assessed in the county. The trial court found for Plaintiffs and lowered the valuation. The Supreme Court reversed.

The Court's opinion is extensive, composed of several observations and holdings. First, approximation both as to value and uniformity is all that can be accomplished, because absolute mathematical equality in the valuation of properties. for tax purposes is unattainable. Substantial compliance with the requirements of equalization and uniformity in taxation laid down by the federal and state constitutions is all that is required.

The burden of proof is upon the taxpayer to establish that the value of his property has been arbitrarily or unlawfully fixed by the county board of equalization at an amount greater than its actual value, or that its value has not been fairly or properly equalized when considered in connection with the assessment of all other property, so that this disparity and lack of uniformity result in a discriminatory, unjust, and unfair assessment.

The complaining taxpayer's burden is not met merely by showing a difference of opinion between his witness and the county assessor or county board of equalization with regard to value unless it is established by clear and convincing evidence that the value unless it is established by clear and convincing evidence that the valuation placed upon his property, when compared with valuations placed on similar property, is grossly excessive and is the result of a systematic exercise of intentional will or failure of plain legal duty and not mere errors of judgment. Mere errors of judgment by tax officials will not support a claim of discrimination. There must be something which, in effect, amounts to an intentional violation of the essential principle of practical uniformity. The good faith of such officers and the validity of their actions are ordinarily presumed, and, when assailed, the burden of proof is upon the complaining party.

Finally, the Court stated that courts should not usurp the functions of tribunals created by law for ascertaining the actual value of property for tax purposes or constitute themselves a taxing board or board of equalization.

1955

Ahem v. Board of Equalization
160 Neb. 709, 71 N.W.2d 307

Synopsis: This case involved an appeal by a taxpayer concerning the assessment and valuation of her real property by the county assessor which was affirmed by the board of equalization. The taxpayer appealed to the District Court which found in her favor and reduced the valuation of her property. The Supreme Court affirmed the decision with modifications.

The Court recognized two presumptions: first, that ordinarily the valuation by the assessor presumed to be correct unless he accepts the valuation by professional appraiser, in which case the presumption does not obtain and the burden is upon the protesting parry to prove that the assessment is excessive. Second, the presumption obtains that a board of equalization has faith fully performed its official duties and in making an assessment is acted upon sufficient competent evidence to justify it action. The presumption disappears when there is competent evidence on appeal to the contrary. The reasonableness of the valuation fixed by the board becomes one of fact based upon evidence, unaided by presumption, with the burden of showing such value to be unreasonable resting upon the party complaining.

In this case, neither presumption prevailed. The valuation was not based upon personal inspection of the property by the assessor and so his valuation could not be presumed to be correct. This fact disabled the presumption that the board of equalization in making the assessment acted upon sufficient competent evidence to justify its action. Plaintiff's evidence on the issue of the value of her property was uncontradicted and unimpeached. The Court further lowered the valuation of the property beyond the value set by the District Court.

Babin v. County of Madison
161 Neb. 536, 73 N.W.2d 807

Synopsis: This case involved a complaint by the taxpayer as to the increased valuation placed upon her property. She sought to enjoin the collection of taxes resulting from the increase in valuation. The trial court rendered a judgment for Plaintiff, and the Defendants appealed. The Supreme Court affirmed.

The main issue was whether or not the Plaintiff has a cause of action for injunctive relief against the collection of the taxes when Plaintiff had not be properly notified of the increase in valuation of her property as required by section 77-1315, R.R.S. 1953. The Court held that the provisions of section 77-1315 requiring notice to the land owner of any increase in assessed value of his realty over the last previous assessment is mandatory. A tax levied on such increase, made without notice to the owner, is void, and its collection may be enjoined. Failure to comply with the provisions of section 77-1315 is not a mere irregularity from which a voidable tax results.

The Court also stated that individual discrepancies and inequalities must be corrected and equalized by the County Board of Equalization. The duties of the State Board of Equalization are unrelated thereto and have no direct relationship to a county board of equalization.

Ewert Implement Co. v. Board of Equalization
160 Neb. 445, 70 N.W.2d 397

Synopsis: In this case the taxpayer appealed the increase in valuation of his business inventory by the county board of equalization. Plaintiff contended that the Board did not have the power to increase valuation of his business inventory once the assessor's abstract had been certified to the State Tax Commissioner. The District Court found in favor of the county board of equalization and the Supreme Court affirmed.

The Court stated that, by the 1947 amendment to section 77-1502, R.R.S. 1943, the rule limiting the exercise of the powers of the county board of equalization to the period prescribed for its annual meeting is no longer controlling. By section 77-1502, R.R.S. 1943, a county board of equalization is authorized to meet in special session at any time after the close of the annual meeting for the purpose of equalizing assessments of omitted and undervalued property.

Offutt Housing Co. v. County of Sarpy
160 Neb. 320, 70 N.W.2d 382

Synopsis: This case involved an action by the Offutt Housing Co. which leased U.S. government land on an air force base for the purpose of establishing a housing project thereon to provide housing for base personnel. Plaintiff filed an injunction against the county to enjoin the levy and assessment of taxes on his personal property located on the leased land. The Supreme Court reversed, sustaining the appeal. The Court held that Congress, through its legislative acts, had consented to the taxation of the lessee's interest in the project erected on Government land. This consent waived any immunity or exemption thereof from taxation appearing in the Enabling Act and ceding statutes of this state. Plaintiffs interest in the lease, as well as the housing units and fixtures as owner thereof, were taxable as personal property. The Court also stated that the remedy of injunction is available to restrain a void tax, but not a tax that is simply irregular or erroneous.

Peter Kiewit Sons Co. v. County of Douglas
161 Neb. 93, 72 N.W.2d 415

Synopsis: The county appealed from an order of the District Court authorizing Appellee to deduct from the value of its intangible Class "B" personal property $5,000,000 of U.S. governmental obligations in order to determine the value of its shares of stock for taxation purposes. The Supreme Court affirmed.

Appellee raised two questions in regard to the jurisdiction of the county board of equalization. First, Appellee contended no notice was given to the stockholders of the corporation of any proposed increase on their tax returns as required by section 77-1506, R.R.S. 1943. The Court held that under section 77-706, R.R.S. 1943 (subsequently repealed) domestic corporations are the agents of their stockholders for the purpose of assessing their stock in such corporation for taxation and paying the tax assessed thereon.

Appellee's second contention was that the board of equalization had no jurisdiction to act when it did because more than 40 days had elapsed since it first met. See section 77-1502, R.R.S. 1943. The Court has interpreted this statute to mean one session is to begin and end as provided in the act. Once started, the time continues to run. The time limited in the act constitutes the tern during which the county board can act for the purposes stated. However, a county board is authorized to meet in special session at any time after the close of the annual meeting for the purpose of equalizing assessments of omitted and undervalued property.

The Court held that the method authorized for valuing the shares of stock of domestic corporations under section 77-706, R.R.S. 1943, (subsequently repealed) results in discrimination against U.S. obligations.

Note: Missouri Valley Constr. Co. v. County of Douglas, 161 Neb. 109, 72 N.W.2d 425 (1955). See Peter Kiewitt Sons Co. v. County of Douglas, 161 Neb. 93, 72 N.W.2d 415 (1955).