Summary
rehearing authority of Board of Tax Appeals
Summary of this case from State, ex Rel. Borsuk, v. ClevelandOpinion
No. 31576
Decided December 7, 1949.
Taxation — Board of Tax Appeals — Board has control over decisions until appeal instituted or limitation expires — Remission of taxes and penalties — Section 1464-1, subdivision 9, and Section 5624-10, General Code — Original jurisdiction depends upon nature of tax assessed.
1. The Board of Tax Appeals has control over its decisions until the actual institution of an appeal or the expiration of the time for an appeal.
2. Original jurisdiction of the Board of Tax Appeals to hear complaints under Sections 1464-1, subdivision 9, and 5624-10, General Code, depends upon the nature of the tax assessed rather than upon the nature of the property as it may finally be determined.
APPEAL from the Board of Tax Appeals.
This case, being an appeal from the Board of Tax Appeals, is in this court as a matter of right.
On April 11, 1947, the auditor of Lorain county made an additional assessment of realty taxes and penalties against the National Tube Company, for the years 1942, 1943 and 1944. The assessment was placed on the realty tax list and duplicate for the year 1946 as "Addition No. 409; delinquent only; buildings added."
On July 8, 1947, the National Tube Company filed an application with the Board of Tax Appeals for the remission of such additional assessment, in which application it is stated that the applicant is a New Jersey corporation authorized and qualified to do business in the state of Ohio and is the owner of property which is located in the city of Lorain and in the Lorain-Sheffield taxing district, Lorain county, Ohio.
The application sets forth that for the years 1940 to 1946, inclusive, the property of applicant was assessed on the tax list of the county; that the real estate taxes so assessed have been paid; and that on or about April 18, 1947, an additional levy and assessment of real estate taxes and penalties were made on the property of applicant in such county, and applicant was notified thereof by a tax bill containing the following words and figures:
"First half 1946 Book No. 66
Addn. No. 409
"`Gen. tax delinquent Lorain-Sheffield Corp. $99,808.76'
OL 88; 70.40 acres
Blds. added."
The application states that attached to the bill are certain schedules showing the basis of such additional taxes and penalties thereon.
The schedules set forth in the application show that for the year 1942 the auditor added to the real estate duplicate the following:
" Built Tax Value "No. 3 blast furnace 1941 $834,816. "Skip hoist house 1941 26,496. "Re Inf. concrete clay house 1941 3,041. "Brick pump house 1941 1,178."
For the year 1943 there were added:
" Built Tax Value "No. 4 blast furnace unit 1942 $886,992. "Skip hoist house 1942 27,072. "Re Inf. concrete clay house 1942 3,041. "Brick pump house 1942 1,203. "Brick pyrometer house 1942 1,480. "Brick substation 1942 790. "Crocker-Wheeler generator unit 1942 22,960."
For the year 1944 there were added:
" Built Tax Value "Brick sanitary bldg. 1943 $5,544. 41 x 51 "Brick sanitary bldg. 17 x 133 1943 6,019. "Brick san. bldg. passage 1943 7,524. "Nat. coke ovens gas lines 1943 1,832."
The total additional tax assessed for the three-year period was $66,539.24, to which a penalty of $33,269.52 was added, making a total assessment, by reason of the additions, in the sum of $99,808.76.
The application alleges further that additional taxes and penalties were illegally assessed; that no portion of them has been paid by applicant; and that the penalties were in consequence of the negligence or error of the auditor of Lorain county. Claims are then set forth in detail by applicant as to why the taxes and penalties were illegally assessed. It is claimed that all the property of applicant was assessed for the years 1940 through 1946 in a single lump sum, the amount being divided only into "land" and "buildings," except for the years 1940 and 1941 when it was not so separated; and that these assessments were intended to and did include all applicant's property, claimed by the auditor to be assessable as real estate, consisting of a completely integrated steel mill, including as parts thereof coke ovens, blast furnaces, open-hearth Bessemer converters and shaping mills. None of these items was separately assessed.
The application alleges further that blast furnaces Nos. 3 and 4 have been in existence many years and in 1941 were included in the annual lump sum assessment; that because of deterioration these blast furnaces were rebuilt and applicant believes and therefore states that the designation, "buildings added," in respect to these two furnaces refers to such rebuilding; and that no reductions were made in the assessment to eliminate the value previously included for blast furnaces Nos. 3 and 4, by reason of which the assessed valuation as shown on the tax list for the years 1941, 1942, 1943 and 1944 contained all the items as to which the auditor has now illegally made the described delinquent assessment and levy of real estate taxes.
The application alleges further that the delinquent assessment of taxes and penalties upon the buildings described as "brick sanitary" buildings and the coke-oven gas lines was illegal for the reason that such property was included in an increase theretofore made in the assessed value of the buildings for 1944 over the assessed value for 1943.
The application alleges further that the auditor of Lorain county at all times had full knowledge of the improvements being made to blast furnaces Nos. 3 and 4 and of the construction of the other buildings; that those buildings were brought to his attention again at the time of the reappraisal of all the real estate in Lorain county on or about December 20, 1945; that no additional assessment or levy was then made; and that by reason of such knowledge the auditor had no authority in law to assess the penalties on such additional assessment even though such assessment of taxes was lawful (which applicant denies).
The application states further that the additional taxes and penalties were illegally assessed in consequence of the negligence or error of the auditor in that the assessments relating to the property described as blast furnaces Nos. 3 and 4, with the appurtenances thereto for the manufacture of iron, were upon personal property which was not subject to taxation as real estate, and that the direct current electrical generating unit and the coke-oven gas lines were personal property and not improvements to real estate.
The application concludes with a prayer that the errors in the assessment of property and taxes be corrected; that the general tax list and duplicate for Lorain county theretofore described be corrected; and that the taxes illegally assessed be remitted, together with the penalties thereon and any additional penalties which may have or may accrue or be levied or assessed.
The matter was heard before an examiner of the Board of Tax Appeals. Many of the allegations in the application were stipulated by the parties to be true, and evidence was adduced concerning the method by which the delinquent assessment was determined and describing fully the nature of the property.
The Board of Tax Appeals entered its order and found that by agreement of the parties all property except blast furnaces Nos. 3 and 4 and a 12-inch steel pipe line appurtenant thereto had been withdrawn from its consideration; and that blast furnaces Nos. 3 and 4 and the coke-oven gas lines were in fact personal property and not real estate.
The Board of Tax Appeals held that, although it had jurisdiction by reason of Sections 5624-10 and 1464-1, subdivision 9, General Code, to remit "taxes and penalties against real property found to have been illegally assessed or to have been assessed in consequence of the negligence or error of an officer required to perform a duty relating to the assessment of such property for taxation, or the levy or collection of such taxes," inasmuch as the present controversy concerns the assessment of omitted property taxable as personal property and not property taxed as real estate, these sections of procedure and remedy do not apply.
The board further held that "inasmuch as there is no special statute covering procedure in a case of the present hybrid character, the procedure generally provided must be followed; and since the omitted property valued, assessed and placed upon the tax duplicate is actually personal property, Sections 5609, 5610, 5611-1, 5611-4 and 1464-1, subsection 5, General Code, must be followed. If this procedure be not pursued, the present complaint filed in this board is nothing more or less than a suit in equity for injunction to wipe the assessment from the duplicate and restrain its collection. This board possesses no equity powers. We are of further opinion that this board must be concerned, not with the ultimate effect of what was done by the county auditor, but with what was actually done by him. That which was done was to add what he considered as omitted real property to the tax duplicate when, in fact, that property was tangible personalty of such amount and value with which he as auditor might not be concerned."
The decision of the Board of Tax Appeals concludes with the following language:
"It is, therefore, the judgment of the Board of Tax Appeals that inasmuch as the omitted and assessed property herein in question is considered as personal property for the purpose of taxation, the Board of Tax Appeals is without jurisdiction to hear the application in the first instance. Its jurisdiction is that of an appellate tribunal and not that of a body exercising original jurisdiction in such cases. The complaint should have been prosecuted before the county board of revision in accordance with Section 5609, General Code, from which an appeal might be prosecuted to this board under the provisions of Section 5610 and 1464-1, subsection 5, General Code, or to the Court of Common Pleas under Section 5611-4, as the aggrieved party might elect. Possessing no original jurisdiction in such a case, it follows that the National Tube Company's application must be and is dismissed for want of jurisdiction."
That order was entered on June 22, 1948.
On July 6, 1948, applicant filed a motion for a rehearing, and on July 8, 1948, the Board of Tax Appeals vacated and set aside its order for the reason that one member of the board who actively participated in the case would probably be absent for two or three weeks, with the result that the board would not have time to determine the merits of the motion within the time prescribed by law within which any party could file an appeal to the Supreme Court from the decision of June 22, 1948.
On July 21, 1948, the Board of Tax Appeals entered as of that date its previous decision. An application to reconsider the motion for rehearing was filed on July 28, 1948, and overruled by the Board of Tax Appeals on August 6, 1948.
An appeal was thereafter taken by the applicant to this court on August 18, 1948. The case is before this court on the application for remission, testimony and exhibits and the findings and orders of the Board of Tax Appeals.
Messrs. Squire, Sanders Dempsey, Mr. Paul L. Holden, Mr. John Lansdale, Jr., Mr. Edmund Durkin, Jr., and Mr. George Farr, for appellant.
Mr. Wm. G. Wickens and Mr. Paul Mikus, prosecuting attorneys, Messrs. Miller Hornbeck and Mr. James J. Laughlin, for appellee Auditor of Lorain County.
Mr. Donald B. Leach, for appellee Tax Commissioner. Mr. Herbert S. Duffy, attorney general, and Mr. W.H. Annat, for appellee Board of Tax Appeals.
A motion was filed in this court by appellee Ayres, auditor of Lorain county, to strike the appeal for the reason that the notice of appeal was not filed within 30 days from the date of the decision of the Board of Tax Appeals of June 22, 1948, but, on the contrary, such notice of appeal was not filed until August 18, 1948.
As stated hereinbefore, the decision of the Board of Tax Appeals was entered June 22, 1948, and was set aside when a motion for rehearing was filed by applicant within 30 days from that date.
The auditor urges that there is no statutory authority for the Board of Tax Appeals to entertain motions for rehearing, and that the board had no authority upon such application to set aside its decision, and particularly so since the board again re-entered the same decision after disposing of the motion.
Cases from other states are cited in support of this position, wherein decisions of boards similar to the Board of Tax Appeals were held to be final upon entry thereof and subject to attack only by appeal. However, it has been a long established precedent in this state that boards such as the Board of Tax Appeals have control over their decisions until the actual institution of an appeal or the expiration of the time for appeal. Floyd, County Aud., v. Manufacturers Light Heat Co., 111 Ohio St. 57, 60, 144 N.E. 703; Zangerle, Aud., v. State, ex rel. Gallagher, 120 Ohio St. 139, 141, 165 N.E. 709; Miller, Pros. Atty., v. Lakewood Housing Co., 125 Ohio St. 152, 153, 180 N.E. 700, 81 A.L.R., 1239; Swetland Co. v. Evatt, Tax Commr., 139 Ohio St. 6, 37 N.E.2d 601; Society of the Precious Blood v. Board of Tax Appeals, 149 Ohio St. 62, 77 N.E.2d 459.
It is argued, in effect, by the auditor that the action of the board in vacating its first decision was a mere subterfuge of redating an entry for the sole purpose of making possible an appeal. As has been hereinbefore stated, the reason for vacating the decision was the extended absence of a member of the Board of Tax Appeals, depriving the board of the opportunity to give the matter proper consideration at that time. In addition, it must not be overlooked that the applicant should have the benefit of the consideration of its case by every member of the board who actively participated in the hearing.
The motion to strike must be and is overruled.
In view of the final order of the Board of Tax Appeals dismissing the application for remission for want of jurisdiction and in view of the further conclusion to which we have come in reference to the jurisdiction of such board, we need not discuss or decide the question whether the blast furnaces involved in this appeal are real or personal property.
Much space in the briefs of the parties and much time in the arguments before this court were taken up with that question. However, since we are of the opinion that the board had jurisdiction to entertain the application for remission, regardless of the property nature of the blast furnaces, we shall limit our opinion to giving our reasons for that conclusion.
With reference to a personal property tax, it is conceded that, under Sections 5609, 5609-1, 5610, 5611-1 and 5611-4, General Code, complaint must be filed with the county auditor who shall lay such complaint before the board of revision; and that when the board of revision has acted there is a right of appeal to the Board of Tax Appeals which is empowered to decide the matter upon such appeal, or an appeal may be prosecuted from a decision of the board of revision to the Court of Common Pleas. However, Section 5624-10, General Code, reads as follows:
"The Tax Commission of Ohio [Board of Tax Appeals] may remit taxes and penalties thereon, found by it to have been illegally assessed, and such penalties as have accrued or may accrue, in consequence of the negligence or error of an officer required to perform a duty relating to the assessment of property for taxation, or the levy or collection of taxes. It may correct an error in an assessment of property for taxation or in the tax list or duplicate of taxes in a county, but its power under this section shall not extend to taxes levied under the provisions of Subdivision 2 of Chapter 15 of Title 2, Part Second of the General Code."
This section of the Code apparently gives general power to the Board of Tax Appeals to consider the application for remission regardless of whether that application concerned a real estate or personal tax question. However, Section 5624-10 must be considered in the light of Section 1464-1, subdivision 9, General Code, which reads as follows:
"The Board of Tax Appeals shall exercise the following powers and perform the following duties of the Department of Taxation: * * *
"To exercise the authority provided by Section 5624-10 of the General Code relative to remitting taxes and penalties against real property found to have been illegally assessed or to have been assessed in consequence of the negligence or error of an officer required to perform a duty relating to the assessment of such property for taxation, or the levy or collection of such taxes."
It is apparent, therefore, that, in the instant case, the only tax questions of which the Board of Tax Appeals has jurisdiction, otherwise than by appeal, are those concerning real property.
Did the application for remission pertain to a real estate tax? If it did not then applicant is without remedy concerning such application.
The record in this case discloses that the addition by the county auditor of the alleged omitted properties to the duplicate for 1942, 1943 and 1944 was effected April 11, 1947; that the last day for the payment of realty taxes for the first half of the year 1946, without penalty, was March 31, 1947; and that no appeal by applicant to the board of revision was possible for the reason that under the provisions of Section 5609, General Code, such complaint or appeal must be filed "on or before the time limited for payment of taxes for the first half year, or at any time during which taxes are received by a county treasurer, without penalty, for the first half year."
The remedy of appeal ordinarily permitted taxpayers to the board of revision was therefore not available to applicant in the instant case.
There is no controversy in this case that the only taxes which were assessed against the property of applicant were assessed by the auditor as real property taxes. The stipulation among the parties reads:
"On the 11th day of April 1947, an additional assessment of real estate taxes and penalties was made by the county auditor of Lorain county and then placed on the tax list and duplicate for the year 1946 * * *."
The sole basis for this assessment was the claim that the items of property were not included in the real estate tax assessments for the years 1942, 1943 and 1944.
It is conceded by all parties that certain property with which the application was concerned consists of real estate, to wit, three sanitary buildings, two skip hoist houses, two reinforced clay houses, two brick pump houses, a brick pyrometer house and a brick substation. The three sanitary buildings are admitted by the auditor to have been illegally included in the assessment because they had previously been taxed, and, during the hearing, the examiner for the Board of Tax Appeals stated:
"If the property was as a matter of fact taxed and put it on as omitted property, he made an error, and he concedes that, so far as the sanitary buildings are concerned, and we will have to make an order accordingly * * *."
However, instead of making an order with reference to such admittedly real property, the board said:
"It might further be observed that when this application was filed with this board it then had some vestige of right to be heard by the Board of Tax Appeals as an original matter. It then embraced complaints of assessment of certain omitted real property. All of such, however, have since been withdrawn from applicant's complaint and the board's consideration."
It was stated in argument that the board was mistaken in this statement; that at least some of the conceded real property upon which the taxes have already been paid is still on the tax duplicate with a tax charge against applicant upon it; and that no order of the board has been made as contemplated by the language of the examiner, supra. However, we do not base our opinion that the board had jurisdiction to determinue the complaints in the application for remission upon the narrow ground that some of the property with which the application was concerned is admittedly real property and that the complaints concerning it are still pending, without disposition, but we hold, in applying Section 1464-1, subdivision 9, General Code, that the authority of the Board of Tax Appeals is determined by the nature of the tax in question rather than by the nature of the property assessed as it may finally be determined. As we have stated, all the property with which this case is concerned was placed upon the real estate duplicate of Lorain county and the additional assessment was for real estate taxes and penalties. The application for remission sets forth in detail the property so added and assessed and the amount by which the real property assessment has been increased. Since the facts with reference to the property and the assessment of taxes and penalties were concededly true, the application itself was sufficient to invoke the jurisdiction of the Board of Tax Appeals, for it clearly came within the provisions of Sections 1464-1, subdivision 9 and 5624-10.
Where property is added to the duplicate as real estate by a county auditor and as a result thereof the real estate property assessment of the owner of the property has been increased, the added taxes are in the nature of real estate taxes and that gives the Board of Tax Appeals original jurisdiction to hear complaints concerning such taxes, even though it subsequently may be determined that the property should not have been added because it is personal in nature.
The federal district courts of the United States have original jurisdiction of any civil action arising under any act of Congress relating to patents, copyrights and trademarks. The Supreme Court of the United States has decided that if a cause of action is alleged under the patent laws of the United States, the district court has jurisdiction even though the court might decide on the merits of the controversy that there had been no violation of a patent right and that no right was given plaintiff under the patent laws.
In the case of Fair v. Kohler Dye Specialty Co., 228 U.S. 22, 57 L. Ed., 716, 33 S. Ct., 410, Mr. Justice Holmes said:
"Jurisdiction is authority to decide the case either way. Unsuccessful as well as successful suits may be brought upon the act, and a decision that a patent is bad, whether on the facts or the law, is as binding as one that it is good. * * * But if the plaintiff really makes a substantial claim under an act of Congress there is jurisdiction whether the claim ultimately be held good or bad."
In the instant case the auditor made the claim that all the property with which the application is concerned is real estate. The property was added to the duplicate as real estate. The additional taxes and penalties were assessed as real estate taxes and penalties. The applicant filed his application to be relieved of real estate taxes and penalties which had been assessed. It is obvious, therefore, that the Board of Tax Appeals should have entertained the application for remission as one concerning taxes and penalties assessed against real property, and the decision of the board finding that it was without jurisdiction is unreasonable and unlawful.
The factual questions presented by the record in this case, including the real or personal property nature of the blast furnaces with their appurtenances, are matters to be considered and decided in the first instance by the Board of Tax Appeals and, since the Board of Tax Appeals dismissed the application for remission because of alleged lack of jurisdiction, whatever the board said in rendering its decision with reference to these factual questions is mere obiter dictum. We express no opinion in regard to them.
The case is remanded to the board for a hearing upon all the questions raised by the application for remission.
The decision of the Board of Tax Appeals is reversed and the cause is remanded for proceedings in accordance with this opinion.
Decision reversed and cause remanded.
WEYGANDT, C.J., MATTHIAS, HART, ZIMMERMAN, TURNER and TAFT, JJ., concur.