Dierks Forests v. Shell

Citations: 240 Ark. 966; 403 S.W.2d 83; 1966 Ark. LEXIS 1434Docket: 5-3907

Court: Supreme Court of Arkansas; May 30, 1966; Arkansas; State Supreme Court

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Dierks Forests, Inc. is seeking to prevent the Saline County assessor, clerk, and collector from assessing its 1965 real estate taxes based on an increased valuation that exceeds Dierks's own assessment. The central issue is whether Dierks’s assessment was lawfully modified before the tax collection for 1965, payable in 1966. The chancellor ruled that Dierks failed to pursue its legal remedies, thus making the increased assessment final.

Key facts include a request by the county assessor and taxing units on January 4, 1965, for the county court to appoint professional appraisers to reappraise all taxable properties, which the court approved. The Universal Land Appraisal Company was hired to complete the reappraisal by September 1, 1965. Dierks assessed its 700 parcels at $496,180.00 on April 7, 1965. However, the appraisal by Universal was not finalized by July 1, the deadline for the county assessor to complete assessments. On July 30, the Assessment Coordination Department indicated that Saline County's assessed values were below state standards.

On August 5, the county assessor notified Dierks that the appraisal was complete, leading Dierks to investigate Universal's cards. By September, Dierks discovered its assessment had increased to $800,730.00, a rise of $304,550.00. No formal notification of this increase was provided to Dierks, nor did it file an appeal with the county equalization board. An informal protest was made on September 10, but the board upheld Universal's appraisal without detailed information on Dierks's properties. The assessor continued to compile assessment books until late October, by which time Dierks had already initiated this lawsuit on October 2.

Dierks argues that the late increase constitutes a due process violation, depriving it of judicial review. In contrast, county officials assert that Dierks should have utilized available legal remedies despite procedural irregularities. The court indicates that the governing statutes provide clarity on the methods for raising assessed values, necessitating further explanation.

Two assessment methods are identified: (a) the tract-by-tract procedure and (b) the across-the-board procedure. 

The tract-by-tract procedure has traditionally been used for property assessment. Landowners may voluntarily assess their property between January's first Monday and April 10, as per Section 84-414. Dierks assessed its property on April 7. Regardless of a landowner's action, the county assessor is mandated to assess all real estate from January to July 1 under Section 84-415. Should the assessor increase a landowner's assessment, written notice must be provided, granting the landowner the right to appeal to the equalization board by the third Monday in August (Section 84-437). In this case, the assessor failed to assess Dierks’s property by July 1 or notify them of any assessment increase. Landowners can petition the equalization board for review by the third Monday in August (Section 84-708), with the board's regular session from August 1 to September 1, extendable to October 1. Aggrieved landowners may appeal to the county court by the second Monday in October (Section 84-708). The opportunity for appeal is constitutionally mandated, ensuring property owners receive notice and a chance to contest the fairness of their assessments, supported by case law including McGregor v. Hogan and Londoner v. Denver.

The across-the-board procedure, established by Act 153 of 1955, is not a routine assessment method but an exceptional measure aimed at achieving a uniform statewide assessment system, preventing discrimination in property assessments across counties. Under this act, the Public Service Commission was tasked with creating assessment manuals that county assessors must follow. Effective March 7, 1955, the act required a comprehensive reassessment by January 1, 1957, with an extension to January 1, 1958, if needed. Assessors must keep assessments current by updating them for changes like construction or subdivision (Section 84-475). Section 12 of Act 153, now Section 84-477, mandates that the Assessment Coordination Department annually verify each county's assessed value ratio against a minimum threshold. If a county fails to meet this standard by August 1, it must rectify its assessments to qualify for full state turnback funds, enabling the implementation of across-the-board assessment increases.

The equalization board is required to complete tract-by-tract assessments by October 1, but if notified of a low assessment ratio, it has until the third Monday in November to implement an across-the-board increase. Such increases are uniform and do not allow for appeals from landowners, as they treat all properties equally. Any prior discrimination could have been addressed through the initial assessment appeals. The employment of professional appraisers does not impact the statutory assessment timelines, as their reports assist the county assessor rather than constitute assessments themselves.

In the case of Saline County in August 1965, confusion arose when the county assessor improperly attempted to incorporate a late professional appraisal into the already concluded tract-by-tract assessment process. The assessor’s actions violated several statutory requirements: the assessment was not completed by July 1, Dierks did not receive proper notice of the increased assessment, the opportunity to appeal was denied, and the equalization board's actions did not constitute a valid review or increase. Dierks was also denied a timely right to appeal to the county court, as no final, appealable decision was made by the deadline. The court concluded that the assessor's and board's actions were tentative and inconclusive, thus failing to provide Dierks with a legitimate legal remedy. Consequently, the court reversed the prior decision.