State Tax Commission of Missouri

ERNEST W. GIDDENS, TRUSTEE, )

)

Complainant, )

)

v. ) Appeal No. 05-33000

)

RICK KESSINGER, ASSESSOR, )

GREENE COUNTY, MISSOURI, )

)

Respondent. )

ORDER

AFFIRMING HEARING OFFICER DECISION

UPON APPLICATION FOR REVIEW

On January 10, 2007, Senior Hearing Officer W. B. Tichenor entered his Decision and Order (Decision) setting aside the assessment by the Greene County Board of Equalization and classifying the subject property as agricultural.

On February 8, 2007, the Commission received Respondent’s Application for Review of the Decision. On March 13, 2007, the Commission received Complainant’s Response.

CONCLUSIONS OF LAW

Standard Upon Review

The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide. St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968).

The Hearing Officer as the trier of fact may consider the testimony of a witness and give it as much weight and credit as he may deem it entitled to when viewed in connection with all other circumstances. St. Louis County v. Boatmen’s Trust Co., 857 S.W.2d 453, 457 (Mo. App. E.D. 1993); Vincent by Vincent v. Johnson, 833 S.W.2d 859, 865 (Mo. 1992); Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981).

The Commission will not lightly interfere with the Hearing Officer’s Decision and substitute its judgment on the credibility of witnesses and weight to be given the evidence for that of the Hearing Officer as the trier of fact. Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Lowe v. Lombardi, 957 S.W.2d 808 (Mo. App. W.D. 1997); Forms World, Inc. v. Labor and Industrial Relations Com’n, 935 S.W.2d 680 (Mo. App. W.D. 1996); Evangelical Retirement Homes v. STC, 669 S.W.2d 548 (Mo. 1984); Pulitzer Pub. Co. v. Labor and Indus. Relations Commission, 596 S.W.2d 413 (Mo. 1980); St. Louis County v. STC, 562 S.W.2d 334 (Mo. 1978); St. Louis County v. STC, 406 S.W.2d 644 (Mo. 1966).

DECISION

A review of the record in the present appeal provides support for the determinations made by the Hearing Officer. There is competent and substantial evidence to establish a sufficient foundation for the Decision of the Hearing Officer. A reasonable mind could have conscientiously reached the same result based on a review of the entire record. The Commission finds no basis to support a determination that the Hearing Officer acted in an arbitrary or capricious manner or abused his discretion as the trier of fact and concluder of law in this appeal. Hermel, Inc. v. STC, 564 S.W.2d 888 (Mo. 1978); Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Holt v. Clarke, 965 S.W.2d 241 (Mo. App. W.D. 1998); Smith v. Morton, 890

S.W.2d 403 (Mo. App. E.D. 1995); Phelps v. Metropolitan St. Louis Sewer Dist., 598 S.W.2d 163 (Mo. App. E.D. 1980).

Under Missouri statutory law, property shall be classified as agricultural and horticultural property when “real property [is] used for agricultural purposes and devoted primarily to the raising and harvesting of crops . . . .” Mo. Rev. Stat. §137.016(2), (2000). The classification is determined by the actual use put to the property. See Northtown Village v. Don Davis, Assessor, Jasper County, Mo., Appeal Nos. 03-62515 through 03-62558 (May 27, 2004) (providing that the definitions in Mo. Rev. Stat. §137.016, (2000) illustrate that “the classification turns on the actual use put to the property”). In previous decisions, the State Tax Commission has found that cutting hay is an agricultural activity and such activity is sufficient to cause real property to be classified as “agricultural property.” Dickerson v. Curtis Koons, Assessor, Cass County Mo., Appeal Number 01-49004 (June 11, 2002). In the hearing before the Hearing Officer, Complainant established by sufficient, substantial and persuasive evidence that the Property is used for agricultural purposes and devoted primarily to the raising and harvesting of hay.
Substantial and persuasive evidence is defined as “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Northtown Village v. Don Davis, Assessor, Appeal Nos. 03-62515-03-62558 (Oct. 22, 2004) (citations omitted). Substantial and persuasive evidence “does not depend upon the quantity or amount thereof, but on its effect in inducing belief.” Id. (citations omitted). While there is a presumption that an assessor’s actions are correct, the presumption is rebuttable and only serves the place of evidence until evidence to the contrary is presented by the taxpayer. State of Mo ex rel Kahier v. State Tax Commission, 393 S.W.2d 460,465 (1965).
Complainant filed his direct testimony, photographs of the Property, and an appraisal of the Property. Complainant testified that the property was undeveloped, flat, and suitable for growing hay; that the Property is used solely for agricultural purposes and is devoted to the raising and harvesting of hay; that Complainant has an agreement with a local farmer to come in and cut and bale the hay from the Property on a seasonal basis; and that these activities have occurred for as long as Complainant has owned the Property. Complainant’s photographs of the Property confirmed Complainant’s testimony that the Property is undeveloped, flat and suitable for growing hay, and that the Complainant does in fact cut and bale from the Property. The pictures capture the present state of the Property, including road, utility and other public improvements near the Property. In addition, the Complainant’s photographs provide solid documentary evidence that even after streets, curbs, guttering and other utilities were made in the subdivision in which the Property is located, Complainant has continued to cut and bale hay on the Property. This evidence is contrary to the action of the Respondent; and the Complainant’s evidence therefore rebutted the presumption of correctness in favor of Respondent. Respondent presented no evidence as to the actual use of the Property. The Hearing Officer was entitled to give Complainant’s evidence the weight he determined appropriate.

Complainant provided testimony that he has a contract with a local fanner to cut the hay on a seasonal basis. The Hearing Officer was entitled to use this testimony and give it the weight the Hearing Officer determined appropriate in connection with the circumstances. In addition, Complainant offered into evidence photographs of the property taken at the time the hay was cut from the Property. The road and utility improvements of Martin Investment Services subdivision are clearly visible in the pictures, as are the bales of hay. The evidence establishes that the agricultural activities have continued after the improvements were installed throughout Martin Subdivision. This evidence had the effect of inducing the belief that the Complainant does in fact use the Property primarily for agricultural purposes and that the Complainant cuts and bales hay from the Property on a seasonal basis. For these reasons, Complainant met its burden to establish the agricultural use of the Property. Complainant’s direct testimony and documentary photographic evidence was sufficient for the Hearing Officer to determine that the Complainant is putting the Property to an agricultural use and that the Complainant uses the Property primarily for the raising and harvesting of hay.

The facts of this case are distinguishable from the cases cited by Respondent.
In Monte Blue, the property owner’s complaint was that his taxes had increased too much from the past year. All of the harvestable timber had been removed from the property before the property owner purchased the property and the property owner did not replant any trees. Because all of the tree crop was removed from the property and was not replaced, the property was no longer in use as agricultural property. The property owner only engaged in occasional agricultural activities. Unlike the tree crop in Monte Blue, the hay has not been depleted and it continues to be cut and harvested on a seasonal basis off of the Property. The Complainant continues to engage in the agricultural activity and presented evidence regarding the same; therefore, unlike in Monte Blue, the proper classification of the Property is agricultural.

In Northtown Village, the accountant of the property owner testified that he usually found someone to cut and bale hay from property which had been subdivided into forty four lots, The State Tax Commission considered this testimony to be hearsay. In addition, the property owner presented no evidence that the agricultural activities continued once the road and utility improvements were made throughout the subdivision.

Unlike Monte Blue and Northtown Village, Complainant produced sufficient evidence to support the Hearing Officer’s Decision. Complainant provided testimony that he has a
contract with a local farmer to cut the hay on a seasonal basis. Property owners are entitled to give evidence about their property and hearing officers are allowed to determine the appropriate amount of weight to give to the testimony in connection with the circumstances. In addition, Complainant offered documentary evidence supporting Complainant’s testimony that hay is cut and baled from the Property, even after public improvements were made available to the Property. The photographs of Property were taken during Complainant’s ownership of the Property at the time the hay was cut from the Property. The road and utility improvements of Martin Investment Services subdivision are clearly visible in the pictures, as are the bales of hay. The evidence establishes that the agricultural activities have continued after the improvements were installed throughout Martin Subdivision. For these reasons, the evidence is sufficient to support the Hearing Officer’s Decision that the Complainant uses the Property for agricultural purposes.

For the foregoing reasons, Complainant met its burden of presenting sufficient, substantial and persuasive evidence that the Property is in use as agricultural property. Respondent did not demonstrate that the Hearing Officer acted in an arbitrary or capricious manner or abused his discretion. The Hearing Officer based his findings on sufficient, substantial and persuasive evidence that Complainant has a contract with a local farmer to cut and bale the hay on the Property on a seasonal basis. This testimony was substantiated by Complainant’s documentary evidence that illustrated that Complainant has cut and baled the hay off of the Property after the improvements to the subdivision known as Martin Investment Services were made. Complainant met its burden of establishing that the Property is being put to an agricultural use.

The Hearing Officer did not err in his determinations as challenged by Respondent.

ORDER

The Commission upon review of the record and Decision in this appeal, finds no grounds upon which the Decision of the Hearing Officer should be reversed or modified. Accordingly, the Decision is affirmed.

Judicial review of this Order may be had in the manner provided in Sections 138.432 and 536.100 to 536.140, RSMo within thirty days of the date of the mailing of this Order.

If judicial review of this decision is made, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the courts. If no judicial review is made within thirty (30) days, this decision and order is deemed final and the Collector of Green County, as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in this appeal. If any or all protested taxes have been disbursed pursuant to Section 139.031(8), RSMo, Complainant may apply to the circuit court having jurisdiction of the cause for disposition of the protested taxes held by the taxing authorities.

SO ORDERED April 19, 2007.

STATE TAX COMMISSION OF MISSOURI

Bruce E. Davis, Chairman

Jennifer Tidwell, Commissioner

Charles Nordwald, Commissioner

DECISION AND ORDER

HOLDING

Decision of the Greene County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE. Hearing Officer finds presumptions of correct assessment rebutted as to classification of the property, but not as to true value in money. True value in money for the subject property for tax year 2006 is set at $418,500, assessed value as agricultural use property of $50,220.

Complainant appeared by Counsel, Richard E. Walters, Springfield, Missouri.

Respondent appeared by Counsel, Theodore L. Johnson III, Greene County Counselor.

Case decided by Senior Hearing Officer W. B. Tichenor.

ISSUE

The Commission takes this appeal to determine the classification for the subject property on January 1, 2005, specifically, if the subject property’s use meets the definition for agricultural property.

SUMMARY

In order to prevail in the present case, Complainant must present substantial and persuasive evidence of the actual use of the subject property on January 1, 2005 to establish its classification as agricultural property. Hermel, Inc. v. State Tax Commission, 564 S.W.2d 888, at 897. Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See, Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959). Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact. The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief. Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975). See also, Westwood Partnership v. Gogarty, 103 S.W.3d 152 (Mo. App. E.D. 2003); Daly v. P. D. George Co., 77 S.W.3d 645 (Mo. App. E.D. 2002); Reeves v. Snider, 115 S.W.3d 375 (Mo. App. S.D. 2003).

Classification of Subject Property is Agricultural

The issue presented is simply an issue of law under the undisputed fact of the use of the subject property. Section 137.016.1(2), RSMo specifies that “all real property used for agricultural purposes and devoted primarily to the raising and harvesting of crops” is agricultural property. Complainant’s evidence established that the only use of the property under appeal was for the raising and harvesting of hay. Therefore, irrespective of any future use of the property or potential use of the property, it must be assessed as agricultural property. Highest and best use is relevant to establishing fair market value. It is not controlling on classification of property, since by statute the three classifications of real property are defined, without any qualification as to highest and best use. See, Park 370 Development LLC v. Muehlheausler, STC Appeals 02-10275 thru 02-10286 (Dec. 19, 2003).

An analysis under the provisions of Section 137.016.5 is not applicable in this case. The eight point analysis to determine the “most suitable economic use” is only appropriate for property “for which a determination as to its classification cannot be made under the definitions set out in subsection 1.” In an instance such as this, where the actual use of the property – raising and harvesting hay – dictates the classification, there is no need to resort to a subsection 5 analysis.

Each of the cases cited by Respondent in support of his commercial classification is distinguishable from the present appeal. Cases such as this are fact specific. In Monte Blue v. Overkamp, STC Appeal 01-72501 (Mar. 13, 2002) the harvestable timber had been cut. No replanting of trees had occurred. There was no active agricultural use, unlike the subject property where hay is harvested on a seasonal basis and has been for the past decade.

The case of Northtown Village v. Davis, STC Appeals 03-62515 thru 03-62558 (Oct. 22, 2004) clearly has a different fact basis than the current case. The only real similarity between this case and Northtown is that there was the factor of harvesting of hay. The evidence in Northtown failed to establish an active and ongoing pattern of raising and harvesting hay as is the case with the subject property. Nor was there any evidence of a past pattern of hay harvest as is the case with the Giddens property.

Finally, Harp v. Mundwiller, STC Appeal 05-57500 (Dec. 29, 2005) had an obvious difference in facts from the pending appeal. The alleged agricultural use, i.e. harvesting of timber, in Harp was not being done on any regular basis or in accordance with any plan for harvesting and replanting of timber. The timber cutting was only done as residential lots were sold so that mobile homes could be placed on the sold lots.

Agricultural property is to be assessed at twelve (12%) percent of its true value. §137.115.5(2), RSMo. No evidence was presented by Complainant to establish an agricultural land productive value for true value of the subject seven (7) acres. Therefore, the property must be assessed at twelve (12%) percent of its fair market value, as that is the only evidence of value in the record. The fair market value determined by the assessor of $418,500 assessed at .12 equals an assessed value of $50,220.