Schmieg v. County of Chisago

Citations: 740 N.W.2d 770; 2007 Minn. LEXIS 652; 2007 WL 3208563Docket: A07-503

Court: Supreme Court of Minnesota; November 1, 2007; Minnesota; State Supreme Court

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Leonard Schmieg owned a 41.7-acre parcel in Harris, Minnesota, which was classified as commercial for property tax purposes by the Chisago County assessor for taxes payable in 2005. Schmieg appealed this classification to the Minnesota Tax Court, which ruled that the classification was erroneous and reclassified the property as agricultural non-homestead under Minn. Stat. 273.13, subd. 23(b)(3) (2006). The county contended that the rental income from a billboard on the property justified the commercial classification, arguing that the evidence did not support an agricultural designation.

The Supreme Court of Minnesota reviewed the tax court's decision, focusing on whether it was substantiated by evidence and adhered to legal standards. The court noted that while it is not bound by tax court decisions, it would only overturn them if they were clearly erroneous. The tax court's findings indicated that Schmieg engaged in various agricultural activities, including maintaining beehives and raising vegetables, although his income from these activities was minimal compared to expenses. The northern half of the property was largely inaccessible, and before reclassification, it had been designated agricultural.

Ultimately, the Supreme Court reversed the tax court's decision and remanded the case for further proceedings, indicating that the county's argument regarding the billboard did not sufficiently support the commercial classification against the backdrop of Schmieg's agricultural activities.

Legal determinations made by the tax court are reviewed de novo. Under Minnesota law, "agricultural land" is defined as at least ten contiguous acres used for agricultural purposes in the preceding year. To classify property correctly, the court must assess how the property was utilized, considering both the nature of the property and the specific uses it has undergone. "Agricultural purposes" encompasses the raising or cultivation of agricultural products, which include items like vegetables, grains, and apiary products. If a portion of the agricultural land is used commercially, that portion must be classified separately.

In Schmieg's case, the tax court found that he used about half of his 42 acres for beekeeping and processing honey. However, the evidence does not support this conclusion, showing that the beekeeping operation did not utilize ten contiguous acres for agricultural purposes. The documentation indicated that much of the property was unused, and the areas dedicated to vegetables and trees were minimal. Consequently, there was insufficient evidence for the tax court to classify the property as agricultural.

While the court identified a lack of evidence to support the agricultural classification, it refrained from reinstating the commercial classification previously assigned by the county assessor. Typically, the assessor's classification is presumed valid, placing the burden on the petitioner to demonstrate its incorrectness. However, in this case, affirming the commercial classification would contradict the overall statutory scheme. The assessor's classification relied on a "primary use" test from Barron v. Hennepin County, suggesting that income from a billboard on the property justified the commercial classification, irrespective of how the rest of the property was utilized.

The classification of Schmieg's property is evaluated under a legal framework established by the Barron case, which previously determined that 20 acres of land, with one acre as a homestead and the remaining 19 for crops, could not be classified as agricultural due to minimal income from the crops compared to the homestead's value. At that time, "agricultural land" was defined as land primarily used for agricultural purposes. However, the statute has since been amended to define "agricultural land" as any land used for agricultural purposes in the preceding year, eliminating the "primarily used" requirement.

This change raises questions about the ongoing relevance of the Barron decision. The current statute allows for multiple classifications of property based on its various uses, unlike the singular classification approach in Barron. Specifically, the statute mandates that if a parcel is used for both agricultural and other purposes, those portions must be classified accordingly. The assessor's classification of Schmieg's entire property as commercial appears inconsistent with this statutory language, especially given that parts of the property may still serve agricultural purposes.

Consequently, the court reverses the prior ruling and remands the case to the tax court for further proceedings to accurately classify the property based on its actual usage. The decision emphasizes the need for a classification that reflects the property's diverse uses rather than a blanket commercial designation.