ALLEGHENY PITTSBURGH COAL v. WEBSTER COUNTY
Legal provision: Equal Protection
ORAL ARGUMENT OF E. BARRETT PRETTYMAN, JR. ON BEHALF OF THE PETITIONERS
Chief Justice William H. Rehnquist: We'll hear argument next in No. 87-1303, Allegheny Pittsburgh Coal Company v. County Commission of Webster County, and a companion case.
Mr. Prettyman, you may proceed whenever you're ready.
Mr. Prettyman: Thank you, Mr. Chief Justice and may it please the Court:
This case poses a question of whether a tax assessor in Webster County, West Virginia can adopt and apply the so-called welcome stranger doctrine to Petitioner taxpayers in a way that results in discriminatory taxes on their properties.
The welcome stranger doctrine favors long term residents of the county by leaving the valuations on their properties essentially as they have traditionally been, as they have been on the rolls, with only sporadic and de minimis increases, while valuing the properties of new purchasers at the prices they pay for similar properties.
As shown in this case, the result is very dramatic disparities between the taxes paid on comparable pieces of property.
Now, I don't think I need to review in any detail here with you the facts relating to the Petitioners.
Let me just say in a paragraph that in 1974 Allegheny Pittsburgh bought 7306 acres of land in Webster County which it sold to East Kentucky Energy in 1982, and in 1977, the Shamrock/Oneida property in Webster County was purchased, consisting of 7783 acres of land.
Applying the welcome stranger doctrine to these sales, the assessor revised the appraisals on each of the two sets of properties to conform to the statement of declaration in each deed.
In each deed you must state what the price is, and their, their assessments were conformed accordingly.
The assessor, however, did not revalue or reappraise any adjoining or comparable properties either then or at any--
Unidentified Justice: Well, Mr. Prettyman, are you suggesting that if there's a sale of a piece of property, the assessor has to go in and revalue all the adjoining property right then?
Mr. Prettyman: --The statute tells the assessor to revalue property at its true and actual value.
Unidentified Justice: Well, that's a matter of West Virginia law.
Mr. Prettyman: It is indeed, and consequently, she is under both a constitutional and a statutory duty in West Virginia which is very different than some other states, to--
Unidentified Justice: You mean a federal constitutional duty?
Mr. Prettyman: --Her federal constitutional duty is to make certain that there's no discrimination between like properties, and if they are going to value at a current value those properties which are sold, she must devise some system by which she, on some kind of current basis, revalues other properties.
We don't for a moment say she must rush in every month and look at--
Unidentified Justice: Well, must she rush in every year?
Mr. Prettyman: --The states have varied on that, industry.
Unidentified Justice: Well, but I mean as a matter... you are talking about a matter of federal equal protection doctrine, I take it.
Mr. Prettyman: What we say is that on any kind of a regular basis we would... whatever the circumstances are in the state... in some states it's every year, in some states it's every other year, and in some states it's every third or fourth year, but at least if there is a good faith attempt by the assessor to keep up with current market value, if that's the standard that they're going to use, then there cannot be the disparities that show up in this case.
But you've got to remember now that she didn't even attempt this.
This is not a case where she was lagging behind.
She didn't attempt in any way to revalue the property.
This, the other properties have not been revalued.
What she did was she let everything sit on the books until there was a sale, and then she did nothing.
Unidentified Justice: There's some dispute over that.
I thought that there is some contention by the other side that in fact remaining property has been revalued upwards about 30 percent.
You contest that, I understand, but--
Mr. Prettyman: Well, Your Honor, it doesn't make any difference whether that's true or not.
I take issue with it simply because the circuit court found that that in fact did not happen, and the circuit court was looking at the actual records of how properties were treated.
He found, for example, that some properties were raised $10 and not 10 percent.
He found that 35 percent of the properties weren't raised at all.
But even if you take 10 percent, even if you say that in the three years that she purported to do this, which was in '76, '81 and '83, even if she did that, you get nowhere near the evaluations that you're talking about for our property.
Moreover, that's not a re-evaluation of the property on the basis of current market value, which is what she did to us.
Rather, that's just simply an arbitrary 10 percent raise every few years, and the disparity remains; the disparity remains, because we're talking about disparities in our case are from 32 to 35 times, not percent, in regard to East Kentucky and Allegheny Pittsburgh, and 8 to 20 times the value in regard to Shamrock and Oneida.
Unidentified Justice: --Would it be lawful to have this kind of a system?
We have evaluated all the property on site on one occasion 50 years ago.
After that we simply increase the assessment on the basis of the inflation index for the area in question.
Mr. Prettyman: Sure.
Unidentified Justice: Except that where a property is sold, you have a more reliable valuation, so particular properties that are sold you reassess on the basis of the sales price.
Mr. Prettyman: If your system in the state, which it is in West Virginia, to value property on the basis of current market value and you are in fact valuing some properties, namely, recently sold properties, on that basis, and a disparity grows because of the system that you simply... that you just stated, and in fact the other are not being currently market valued, then you could indeed have discrimination, unconstitutional discrimination, particularly if you have the kind of disparities you have here.
What she's done is... and I want to make clear now, this lady testified in this case in '81, '82, '83, '84, '85, her testimony was completely consistent as to what she did.
There was no question about it, and she admitted it.
She said I left everything on the rolls.
This was a lady that was in the office, assessor's office for 27 years, not as the assessor but in the office.
She said, I did this for as long as I can remember.
We leave everybody's property just the way it is, and then if somebody sells it, wham, you get the new price.
Unidentified Justice: Is it your position that the classification used here could never be adopted by the legislature into a constitutional scheme?
Mr. Prettyman: No, sir, but I want to emphasize that there are no classifications here, either--
Unidentified Justice: No, but I'm saying... you're saying that, then that this could be a constitutional scheme if the legislature mandated it?
Mr. Prettyman: --Could be but you would test it under a rational basis test.
In other words, let's suppose the legislature--
Unidentified Justice: Well, why isn't it a due process argument that you have here then?
If we have that is de facto a constitutionally acceptable scheme, where is the constitutional violation?
Mr. Prettyman: --In, in that case, in the case that you posited, Justice Kennedy, let's suppose the state came along and they said we're going to make two classifications of property owners.
We are going to make those who purchased recently and we're going to make those who didn't purchase recently, and we're establishing those two classes under state law.
Now, the reason that we're going that is X, Y, Z, so forth.
Then they would come to this Court and they would try to say that X, Y, and Z had rational basis to state purposes and so forth and they'd have to convince you of that.
Now, that is nowhere near this case because under state law in West Virginia you cannot have classes of property.
You have, you have four classes that relate to the levy, but they don't relate in any way to appraisal or assessment.
Unidentified Justice: Well, I'm still not certain why, then, this isn't just a case, if we can assume at least for the moment that this could be a constitutional scheme, why this isn't just a state where the... case where the state law has been violated.
Mr. Prettyman: --The state law has been what?
Unidentified Justice: Has been violated.
If a state may reach a result by statute, why is it a denial of equal protection to reach it by an administrative device?
Mr. Prettyman: Well, I have not said for a moment that they could necessarily convince you of this.
What I've said is that the case would come to you in a different posture.
In that kind of a case they would try to be convincing you that somehow they had good state reasons for these two classifications.
Now, whether they could convince you of that or not is another question, but certainly that is more akin to what's happened in California, which I think is a very different situation under Proposition 13 than we have in this case.
Unidentified Justice: Well, may I, may I go back one more time then?
Mr. Prettyman: Sure.
Unidentified Justice: I take it, then you're arguing that the state could not constitutionally reach the result by statute that it in fact has reached here by administrative practice.
Mr. Prettyman: What I'm saying is that, that it is conceivable that the state could somehow come up with good grounds for this kind of distinction that might persuade this Court that it had a rational basis and the state could do it.
What I'm saying is that the state has not in any way purported to do that in this case.
It has not created any classifications.
It purports to treat everybody the same, but in fact... and in fact, has to under the constitution and state law of West Virginia which says in the constitution that taxes shall be equal and uniform, and that fair market value, in the statute, is to be the guide.
But they haven't done that, and they don't--
Unidentified Justice: Where these claims made to the Supreme Court of West Virginia, Mr. Prettyman?
Mr. Prettyman: --Pardon me?
Unidentified Justice: Were these claims of statutory and constitutional, of state constitutional violation made to the Supreme Court of West Virginia?
Mr. Prettyman: In other cases, the--
Unidentified Justice: I mean in this case.
Mr. Prettyman: --In this case, the Supreme Court of West Virginia come down with what I consider a rather odd decision because--
Unidentified Justice: Well, but I asked you not what kind of a decision it came down with but whether these claims were made to the Supreme Court of West Virginia, of state statutory violation and state constitutional violation.
Mr. Prettyman: --There was no claim made that somehow this conformed to the state constitution.
What they were saying was--
Unidentified Justice: Well, you're--
Mr. Prettyman: --that there was no systematic and intentional violation.
Unidentified Justice: --Well, I'm not asking what, what... I'm asking what claims your clients made.
Did they challenge the assessment practices here as being violative of either the state statute or the state constitution?
Mr. Prettyman: We argued both the state statute and the state constitution.
Unidentified Justice: In the Supreme Court of West Virginia.
Mr. Prettyman: We certainly did, yes.
Unidentified Justice: And they rejected your claim.
Mr. Prettyman: They rejected it, though, on only two narrow grounds, number one, that there was no systematic and intentional violation, without explanation.
I think what they're saying is that we treat everyone alike in the sense that if you're an old timer, you stay on the books as you were, and if you buy new, you get it changed, so that's okay.
And the second ground was that even if there was a discrimination... and this is the most important point... even if there was a discrimination, it doesn't make any difference because you have to due to get your neighbor's taxes raised.
And of course, that in itself is unconstitutional under this Court's cases.
This Court has squarely said four times that that is not the remedy that comes out of--
Unidentified Justice: Mr.--
--Well, don't we have to take it as given, then, that at least so far as the Supreme Court of West Virginia is concerned there wasn't any violation either of the state statute or of the state constitution?
Mr. Prettyman: --Well, that's why I began by saying the opinion is a little strange because this is one of a series of decisions in the West Virginia Supreme Court of Appeals, Mr. Chief Justice, and they have been quite clear all the way along that in fact taxation has to be at true market value for everybody, for everybody.
In fact, they struck down a statute which allowed assessment at between 50 and 100 percent of true market value because they said that allowed variance.
Now, this didn't... this case... our case--
Unidentified Justice: But, Mr. Prettyman, if we accept, just suppose that we accept the finding of the Supreme Court of West Virginia that there was no systematic of intentional violation here, and therefore no violation of state law, let's say we just accept that, then what is your federal constitutional argument?
Mr. Prettyman: --The federal constitutional argument is plain, I don't care what they said.
And that is that comparable equal properties are being taxed at totally different evaluations and assessments, resulting in great disparity in taxes, and you go back--
Unidentified Justice: Is it, is it a violation of the federal Constitution that equivalent properties are given disparate values as the result of an adopted policy?
Mr. Prettyman: --Absolutely.
I don't think there's any question about that, that this Court has held in a whole series of cases that even if your value is a true and actual value, if comparable properties are undervalued so that you are, you are paying disparate taxes, there is a constitutional violation.
We're talking about the Sunday Lake, Southern Railway, Sioux City Bridge, Cumberland Coal, all of these cases which we cite in our brief.
Unidentified Justice: Well, I thought you said a while ago that it's conceivable that, that recently-sold properties could be treated differently than properties that haven't been recently sold.
Mr. Prettyman: I guess what I'm really trying to do here--
Unidentified Justice: Well, isn't... that's what you said a while ago.
Conceivably, a state could convince us that there was a rational basis for that kind of a classification.
Mr. Prettyman: --What I'm really trying to do, Justice White, is to distinguish a Proposition 13 case.
There's been some suggestion in the briefs that your ruling in this case would necessarily overrule Proposition 13, and I don't think that's true at all.
Proposition 13 is part of a state constitution.
It comes from an entirely different theory.
Unidentified Justice: Well, I didn't ask you anything about Proposition 13.
If it's conceivable that a state could have a rational basis that would pass equal protection challenge to treat recently-sold property differently from property that hasn't been sold, why isn't the issue before us here that is there a rational basis for that difference?
Mr. Prettyman: Because not even the West Virginia Supreme Court has come forward and tried to tell you that there are two--
Unidentified Justice: Well, the West Virginia Supreme Court said this doesn't violate state law, so it's, so it's in effect a ruling that the assessors may treat, under Virginia law, West Virginia law, can treat recently sold property differently.
Mr. Prettyman: --If the West Virginia Supreme Court cannot come up here and try to give you a rational basis for a classification which they don't even say exists, I don't think it's up to this Court to try to, with great respect insinuate yourself into state law and try to dream up--
Unidentified Justice: We wouldn't be insinuating, but the State of West Virginia is... we're going to hear from the State of West Virginia.
They may have some rational basis for this.
Mr. Prettyman: --Well, I would be awfully... it'll be the first time in this case if they try to say that there are two classifications and that there's, and that there's some rational basis for the two classifications because neither state law nor the state Supreme Court did it.
It's just not a matter of state law in West Virginia that you can have these two classifications.
Every single case, including the constitution and the code of the state, make it clear that you can't.
Everybody is to be taxed at the same, assessed at the same rate.
That's the whole point: true market value.
Now, it's interesting what they tell you here because they tell you, well, the code requires you to take the market value of the property.
The code says something a little different.
The code says you are to value as if the property were sold.
In other words, the code doesn't assume that property is sold.
The code tells the assessor to go on the property and find out what it's value is if it were to be sold.
That's what her duty is, and that's what she hasn't done.
She takes our property out of the deed and she doesn't do anything to anybody else's property, she totally, flagrantly violates the state law, and then what results are these huge disparities.
Unidentified Justice: Well, suppose say that West Virginia didn't say that this system conformed to state law, but that it said there's no federal constitutional violation because what the assessor did wasn't done deliberately and intentionally, and hence, no equal protection violation.
Mr. Prettyman: With great respect, she testified for five years, and when she was specifically asked the question--
Unidentified Justice: Not consecutively, I trust.
Mr. Prettyman: --She did... she testified--
Unidentified Justice: It sounds like that airline case.
It's been around a long time.
Mr. Prettyman: --I was getting a little confused the last one.
She testified... she was asked.
Now, you've told us what you do.
Did you intentionally do that?
Was that part of a plan and a process?
And she said yes.
So they can't possibly say that in the constitutional sense--
Unidentified Justice: Well, so we just have to--
Mr. Prettyman: --that it wasn't systematic, and intentional.
Unidentified Justice: --Well, we just have to ignore what the West Virginia courts found in this respect?
Mr. Prettyman: You have to decide--
Unidentified Justice: Which is a finding of fact under our cases.
Mr. Prettyman: --No, sir.
Again, with great respect, I think that's a constitutional question as to whether this kind of discrimination is intentional and systematic, and you can't read her testimony with finding... without finding that it is.
Now, I do want to take a moment to talk about comparables because--
Unidentified Justice: Well, apparently the West Virginia courts seem to have read it and found precisely what you say it couldn't have found.
Mr. Prettyman: --Well, if you... all I can tell you is if you look at this record, there is no conclusion that you can conceivably reach as a matter of constitutional law but that it was indeed intentional and systematic.
Unidentified Justice: Can you cite me an authority outside of the tax area where it's unconstitutional for a state administrator to violate a state law, even though the administrator reaches a classification that's otherwise constitutional?
Mr. Prettyman: Well, I don't think... I don't think that's the situation we have here.
I'm not arguing that this is unconstitutional because she violated state law.
I'm just telling you she happened to have, and the state is not coming forward with a policy to sustain its discrimination here.
The problem from a constitutional standpoint is a very simple one, and that is she uses one method to tax us at a very high rate.
She takes comparable property and she taxes it at a much lower rate, and that is the discrimination, and that's unconstitutional.
It doesn't make any difference whether she's following state law or not.
Now, I've got to say something about comparables because I am afraid my opponent is going to get up here and say, well, you don't have to worry about any of this because these properties weren't comparable, and I just have to say that what they have not mentioned to you in their brief is a stipulation that they entered into, and the stipulation said that in lieu of evidence, the properties being compared were comparable properties, that they were substantially the same geologically, that they were neighboring, comparable properties.
They stipulated as to what the issues of law were in the case, and nothing was said about comparables.
The circuit court found that these properties were comparable.
The Supreme Court of Appeals not only didn't disagree, didn't disagree with that, but apparently agreed with it because they called the properties comparable.
They didn't go off on comparability.
There is evidence to that effect.
There was a stipulation, and most importantly, and I think you've really got to concentrate on this, is that the assessor did not compare properties.
She couldn't have cared less about any differences in properties.
She said it.
She didn't go out and look at properties.
She didn't even look at the tax commissioner's guide that was sent to her.
She testified she put it in a drawer and forgot it.
And the state statute told her she should have locked at it, used it.
She didn't look at geology, she didn't look at the oil differences in the seams and the coal deposits or the reserves.
She didn't, she didn't look at any of that.
So how can the state get up and say well, maybe these properties really aren't comparable when the lady who did the assessment couldn't have cared less about whether the properties were comparable or not comparable, better or worse?
She paid no attention to it whatever.
So I call those to your attention.
On the last point, as to the remedy--
Unidentified Justice: Excuse me.
Would you tell me... one thing I don't understand.
On what basis did she make some minimal adjustments in the valuation of land that had not recently been sold?
Mr. Prettyman: --Well, apparently, according to her, it was just kind of arbitrary.
Every few years she'd just kind of raise people 10 percent.
The record doesn't support her on that.
It just doesn't.
As a matter of fact, the circuit court found that if you take the actual increases that she made, it would take over 500 years for her to catch up to our assessments, over 500 years, they were so minimal, and he was looking at the actual records.
He was looking at the exhibits in evidence that showed the properties and how they were increased.
My point is that whether she raised them 10 percent in three years as an arbitrary matter, or whether she raised the more de minimis ones that he claimed, you still don't get up to us, and she's still not using obviously the same system in regard to everybody else.
Unidentified Justice: Mr. Prettyman, you mentioned Proposition 13 in California earlier.
Mr. Prettyman: Yes, sir.
Unidentified Justice: Isn't that in effect a legislatively mandated welcome stranger policy?
Mr. Prettyman: It is an entirely different system for this reason, Justice Brennan.
First of all, West Virginia, as I've indicated, has a current value system.
I mean, they start from the proposition that you're going to tax people at properties' current value, regardless.
California starts from the acquisition value system, and then it has several exceptions to it, one of which is when property is transferred.
They try not to tax unrealized paper gains whereas in West Virginia they do tax unrealized paper gains.
Most importantly, in California the system is based on the constitution itself whereas, and as I say, maybe they could come forward sometime and give you some reasons--
Unidentified Justice: Yes, but if welcome stranger is invalid as a denial of equal protection, as you are arguing today, how... why isn't that, if it is legislatively mandated as a welcome stranger policy, equally invalid?
Mr. Prettyman: --All I'm saying to you, Mr. Justice, is that if California eventually comes here, they may look at the history of Proposition 13 which is imbedded in the constitution, which is very different from West Virginia, could possibly come up with some grounds to convince you that there's a rational basis for what they have done.
All I'm saying is that this lady in West Virginia has done something totally on her own, that is, that goes in the face of the law.
Unidentified Justice: Mr. Prettyman, I thought you have a quite different point, which is that if a state wants to have a welcome stranger policy and that's what the state law says, no one is being denied the equal protection of that law, so long as it is applied honestly and there's a rational basis for it.
But West Virginia here does not have a welcome stranger law.
It has a law that everybody should be taxed at current valuation, and your client has not been given the equal protection of that law.
If this were a welcome stranger law, you wouldn't be here.
Mr. Prettyman: Yes.
Unidentified Justice: Or you'd be here on totally different grounds, right?
Mr. Prettyman: Yes.
I would certainly agree with the last part of that, and I see that I don't have time to maybe discuss a few nuances in the first part of it.
But just in regard to the remedy, I'll just say four times this Court has said that when this happens, you do not relegate the taxpayer to trying to sue to have other people's taxes raised because you'll never get it done.
These rolls are closed on these other taxpayers.
There's no way we can ever get their taxpayers... their taxes up.
We have to get our money back.
If I may reserve my time.
Unidentified Justice: Very well, Mr. Prettyman.
Mr. Ullrich, we'll hear now from you.
ORAL ARGUMENT OF WILLIAM ULLRICH ON BEHALF OF RESPONDENT
Mr. Ullrich: Mr. Chief Justice, and may it please Court:
I should indicate at the beginning that I am here representing Webster County, and Webster County Board of... Webster County Commission and not the State of West Virginia as my client, but we will offer to this Court a very serious interpretation of state law that we think is accurate.
Unidentified Justice: Could you tell me, just so we're on the last topic we were discussing, is this state law a welcome stranger law?
Mr. Ullrich: I don't think that it has to be a welcome stranger law, but to the extent that it is, it's certainly defendable.
It is not in violation of the constitution.
Unidentified Justice: Well, what does the state law require?
Does state law require all property to be taxed at current value?
Mr. Ullrich: Oh, yes, Your Honor.
It has a--
Unidentified Justice: It does.
Well, that's not a, that's not a welcome stranger law.
A welcome stranger law would be, say the property should be taxed at the value of its last sale.
Mr. Ullrich: --Justice Scalia, there are... there's more than one relevant law that applies to these facts.
There is the law that sets as a goal and one that under West Virginia law must be met by all the actions of the assessor, which is that she is to attempt to, in her actions, to determine true and actual value.
But there are specific guidelines which, if she follows, may result in some systematic discrimination.
We do not concede that it did, as a matter of fact.
We think that there are genuine differences in the values of these properties, and I will address that in a few moments.
But there is no inconsistency in the position that state law says accomplish a specific purpose, that's your goal, but I'm also going to create some procedures which, if they create some subclassifications under the kind of analysis that this Court acknowledged in prior cases, Carmichael, then that's a legitimate classification, and the deference that this Court gives to states should be given to the procedure and the law of West Virginia.
In fact, that should be construed as the law under the approach of the national... Nashville, Chattanooga & St. Louis v. Browning.
But the record here shows that the Petitioners are trying to take the actual market driven differences between the value of their property and other properties and wield that as a sign of discrimination.
I think if the Court looks closely at the record of the finding by the circuit court judge and the Justices in the West Virginia Supreme Court of Appeals, you will discover that it is not... the factual findings and the evidence do not preclude this Court from concluding that a reasonably accurate determination of true and actual value occurred.
I would focus the Court for a moment on the decision by the West Virginia Supreme Court of Appeals in the Petitioners' appendix on page 6a where the court indicates... pardon me, on page 8a, Your Honor, the remaining case... the remaining question presented by this case is whether the undervaluation of other property in Webster County was intentional and systematic, and on page 44a of the appellates... of the appendix, you'll note that the Court below never made any finding that any value was... any property was undervalued.
It simply made a finding that in the court's opinion, comparable properties should have created a different system of reaction.
So the fact that he made a finding of comparability, a finding that I think is not a term of art, although... or should be a term of art to have the consequences argued by Mr.... by the Petitioners, if you made a finding of comparability, the circuit court said, then you had to go on and have some other procedures or else you'd violate due process... violate equal protection, excuse me.
Unidentified Justice: I don't understand.
Did you stipulate, as counsel stated, the comparability of the parcels at issue in this case or not?
Mr. Ullrich: Yes, but I need to explain that that's why I said that a comparability is being used in different fashions.
I think it's quite arguable that that's the case.
Comparability was stipulated one time in 1984, comparability only insofar as properties were geologically similar, not that they were the same sufficiently that they should be treated identically or trigger some presumption of identity under equal protection.
Unidentified Justice: What would comparability mean in the context of this case except that they were of comparable value?
What would be the use of stipulating comparability in any other sense?
Mr. Ullrich: In the context of the--
Unidentified Justice: I mean, what, they are, they have the same elevation above sea level or... obviously the only comparability that's relevant in this case is whether they are of comparable value, and to stipulate to comparability without understanding that that's what's being stipulated I can't understand.
Mr. Ullrich: --Well, but to construe the stipulation, respectfully, Your honor, of similarity, of geological similarity, which is the limitation that was put on the stipulation as being a concession of identity or similarity to such an extent that they should be treated as--
Unidentified Justice: So if a property's highest and best use was mining coal or its coal reserve, then a certain acre of the... acreage of the comparable property would be expected to be roughly similar in value to these value of the property in question.
Mr. Ullrich: --Well, that's exactly what's not a legitimate conclusion from that stipulation.
Merely because it's geologically comparable at some level of the use of the word does not mean that there are proven reserves that would generate marketable strip mining or coal.
Being comparable at one level of similarity may be very consistent with; nevertheless, the geologically comparable minerals in one tract of land are a lot more easy to mine because of their location compared to the--
Unidentified Justice: You say the stipulation doesn't cover those factors; it just covers geological similarity?
Mr. Ullrich: --On the face of the stipulation itself, it says comparable insofar as they are geologically similar.
Unidentified Justice: It's certainly a silly stipulation.
Mr. Ullrich: And I would suggest to the Court that it was in fact a... not a stipulation that convinced convinced the circuit court of the identity of the values enough to apply a remedy that the true and actual value of the Petitioners' property should be applied to these "comparables".
He was reluctant to do that, and that's demonstrated on page 44a of his... of the Petitioners' Appendix.
He said that, if I may once again point that, point out the language of the court, he commented not only, on the first full paragraph of page 44a in relevant part, the differing abilities of various tax... estate owners to bear the burden of real estate taxes based on prices paid by the wealthy leads the undersigned to conclude that the consideration declared in petitioners' deeds should not, in this case, serve as the basis for the assessment of all substantially similar real estate in Webster County.
Apparently the court did not conclude that the owners of this property that was next door to this very expensive property were wealthy.
I think that looking at it carefully, you see that the judge himself didn't create a remedy consistent with his own conclusions.
Similarly, he indicated that it should... the fact, under these circumstances, the fact of similarity should not generate an automatic application of the price to the comparable properties.
Unidentified Justice: Well, suppose we don't agree with you?
Suppose we, as we read and understand it, the stipulation was or the finding was that these properties were comparable in actual, for assessment purposes?
Are you going to tell us why it's rational to treat recently purchased property differently than--
Mr. Ullrich: Absolutely, Your Honor.
In fact, we need to recognize the three relevant facts.
One, or context in which to ask that question.
It's not asserted or it's not proven that the assessor deliberately discriminated against any particular group as a... having intentionality to fly to a specific entity.
It is not--
Unidentified Justice: --Well, I guess it is clear, and I suppose you would concede, that the policy of the assessor was to revalue based on current sales.
Mr. Ullrich: --That's correct.
Unidentified Justice: And other properties that weren't sold were not revalued.
Mr. Ullrich: That's correct, Your Honor.
Unidentified Justice: That seems to be clear enough.
Mr. Ullrich: Oh, actually, excuse me, I misspoke.
It's not that the other properties were not revalued.
That is not accurate.
The assessor assessed, valued and was obligated to do so under the statutes of West Virginia, presumed to have performed the law, and the court didn't find otherwise, to make an assessment, a judgment decision regarding the true and actual value of every property every year, and the record is--
Unidentified Justice: But that assessment was made if there... if the properties had been sold within the year, then that sale price was used for a revalue.
Mr. Ullrich: --That is one of the factors and absolutely correct, Your Honor, she did do that.
She did use other factors as well.
Unidentified Justice: And she did not use that sale value to go re-examine adjacent properties.
Mr. Ullrich: She did not, and Your Honor, arguably she should not or could not absent some indi... some notice, some knowledge of relevant similarity at the time that she did her assessing, her discretionary act.
And in fact, that's a very important observation.
Unidentified Justice: Isn't it her job to find similarities?
I mean, you say the similarities have to come to her?
I thought it's her job to find out what's similar and what's dissimilar.
Mr. Ullrich: Whether it is her job or not, Your Honor, Justice Kennedy brought up I think a very important point.
If she didn't do her job well, she may have violated or failed to meet some minimum standard of West Virginia law, but that does not amount to a constitutional violation.
Unidentified Justice: I don't understand that.
So long as a denial of equal protection is done by a lower functionary, it's all right, it's just a technical--
Mr. Ullrich: No, Your Honor.
Equal protection, respectfully, doesn't guarantee 100 percent accuracy if she makes a... if her actions individually are part of a reasonable scheme, if she acted reasonably, nonarbitrarily in adopting a policy, then her actions aren't going... should not be construed to have violated equal protection.
The fact that an assessment or even a series of assessments--
Unidentified Justice: --Can you, can you look to state law to see whether or not the official acted rationally or reasonably?
Mr. Ullrich: --You say can you?
Unidentified Justice: Yes.
Mr. Ullrich: Yes, I think so, and the state can put any standard it wants, but I think that on the record before us--
Unidentified Justice: So there can be an equal protection violation for an irrational application of state law.
Mr. Ullrich: --Well, a state, I think it is very clear that the, that states can make classifications, and those classes, those classes have to be treated under the equal protection analysis.
Unidentified Justice: Well, didn't West Virginia classify these properties the same way and say that each should be given current value annually?
Mr. Ullrich: West Virginia certainly classified all properties as having to be--
Unidentified Justice: At current value?
Mr. Ullrich: --Absolutely, but it's not precluded from having some subclassifications under the Carmichael analysis, and in fact, the system that they create, which says you must use recent values, you should consider the Commissioner's report unless you have a reason not to, you should add all improvements, and you certainly should take the presumption of the last entry or that property as valid, that might result--
Unidentified Justice: I mean, the problem is that this looks like such an egregious situation, actually, I mean, you have properties side by side.
They have coal.
I mean, they are there to produce... their highest and best use appears to be coal production.
Mr. Ullrich: --That--
Unidentified Justice: And the paper increase in value of the adjacent properties is just not taken into account by the assessor, apparently.
Mr. Ullrich: --That, that... Your Honor put your finger on one of the critical concerns, which is why I feel that it's important that this Court look behind the conclusions at a superficial level of the circuit court.
That egregious difference, if it's a reflection, if in fact it's a reflection of real differences in value, that the Petitioners bought the property they did and they didn't try to buy the property next to it, then it would be a horrendous mistake for the... bad facts make bad law... for this Court to treat, to treat this as if properties that had the same value were treated in violation of equal protection.
The reality of coals and minerals and mountains are such that properties right next to each other can have geological similarity and absolute difference in value.
Unidentified Justice: But one would be more satisfied with your explanation if one felt that the assessor has made that sort of a determination rather than really doing nothing in the light of this recent sale.
Mr. Ullrich: That's the... we should start off with what is her job, what is the presumption, what are the presumptions that she's burdened with in performing her job, and under due process she can't go out, and in fact, had she, just because neighboring property was worth a lot more and was geologically similar, she tried to reassess somebody else's property based on that information, we'd be here on a different case, a violation--
Unidentified Justice: It happens every day, all over America, in every tax jurisdiction except apparently this one in West Virginia.
Mr. Ullrich: --Well, Your Honor, I do not suggest that she is precluded from doing an excellent and exotic job of assessing, but the equal protection does not place a burden on her, starting with a statutorily mandated presumption that the property was properly assessed in the previous year, and a duty to assess each piece of property accurately, that she should somehow explain why she doesn't treat this property similar to or the same as other properties.
Unidentified Justice: There is some fun's fun but you can't die laughing principle involved here.
I mean, there can be some, some dissimilarity that's tolerable, but the discrepancies here are incredible, don't you think?
Mr. Ullrich: Well, I think the discrepancies in value--
Unidentified Justice: Given geologically similar land.
Mr. Ullrich: --Your Honor, I think that the, that the market tested the reality of the value of that, of those lands, and I think it is not irrational, it's certainly a reasonable estimate that some of the land was worth more just because of the fact that it was purchased for the price that it was.
But it's important to know, Your Honor, that even if this land was grossly misvalued the actions that are being challenged here are the failure of the assessor and the Board of Equalization and Review to raise their, their valuations from the presumed accurate ones that they had initially made.
The West Virginia Supreme Court pointed out that that's actually what's being challenged here.
The assessor's decision to use the true, the recent transaction, the recent transfer price of the property to assess Petitioners' property was not unreasonable.
The circuit court below found that that would be okay.
The circuit court simply said that having done that, the circuit court found it was a violation of equal protection not to raise the rest, or not to explain why the failure to do so would have been... was not arbitrary.
So what we're really testing here is an actions of an assessor and the actions of a Board of Review in failing to believe the evidence that convinced the circuit court.
The assessor and the Board of Review heard the allegations, the complaints of the Petitioners, but knowing the nature of the region, knowing the nature of coal properties, knowing their duties under statute, did not think that they were on sufficient notice that they were deprived of a reasonable conclusion that the properties... that they should stick with the presumptions, and unless they have sufficient evidence to convince themselves in an honest way that the other people's properties have increased in value then, according to West Virginia law, they won't.
And if their actions were neither an intentional, deliberate discrimination against particular groups, if there was a reasonable, nonarbitrary decision by the assessors and the Board of Equalization Review to use certain policies as indicated by the government, and if these behaviors are part and parcel of a statutory scheme that results in unequal valuations, that's not a violation of the United States Constitution.
That would be, in fact, a state discrimination, a state classification of techniques that in some circumstances, or even predictably, would lead to differences in valuation.
By the way that would only occur in a time of inflation or deflation, but all we're really talking about here is the court says to the assessors, use this information because it's very accurate.
What we have is a... Petitioners were some individuals about whose property there was very probative evidence, and it was, according to West Virginia law, and properly so, considered by the West Virginia assessor regarding true and actual value.
Unidentified Justice: Well, do you know of any cases in West Virginia, either trial court or Supreme Court, that says that under West Virginia law that it's quite proper for an assessor just to increase the assessment of a recently sole property and not assess comparable property any higher until it's sold?
That's not West Virginia law, is it, or is there some case that says it is?
Mr. Ullrich: No, not that... not as stated, Your Honor.
There is West Virginia law that says, especially at the time that she was taking her actions, that her duties were primarily ministerial.
The court changed its focus in the late seventies and early eighties about what the relative roles of the county assessors were vis-a-vis the state tax commissioner, and at the times of this... these transactions, the assessor had the primary duty.
But it was in the context of a heavy recognition of a ministerial role, and there are clear presumptions that I think read in pari--
Unidentified Justice: But I just want, whoever is responsible for enforcing the West Virginia law--
Mr. Ullrich: --Yes, Your Honor.
Unidentified Justice: --is there any case that says in West Virginia that West Virginia's system is to tax recently sold property, or to assess recently sold property differently from property that hasn't been sold?
Mr. Ullrich: As stated, I think--
Unidentified Justice: Is it any closer, is there any closer decision than this one in this case?
Mr. Ullrich: --Not that I'm aware of, Your Honor, but the way you ask the question is important.
It's not that this property is to be assessed with a different purpose, but that it is to be... but that all properties in all of West Virginia, if there's evidence regarding true and actual value that is generated by a recent sale, should be given priority by the assessor.
So that's the law of West Virginia.
That is clearly the law, that if it's there, use it; don't ignore it, not try... but that does not exempt under West Virginia law the assessor of the duty to use it in a uniform manner to try to determine a uniform value, a uniform result, which is accuracy, true and actual value.
Your Honor, I would suggest that the Court before today has as its most appropriate option to dismiss this action as a petition for a writ of certiorari that was improvidently granted.
The record below, as I think Justice White pointed out a few moments ago, is a factual finding that is determinative of the issue.
It is settled that there was no intentional and systematic undervaluation, and absent that, there is no case that should be considered by this Court.
The Court should, for reasons that it's articulated many times in the past, leave facts, as it did in Sioux City, as it did in Iowa-Des Moines, to the justices of,... to the judges and the, ultimately the justices of the West Virginia Supreme Court.
So the facts are settled.
If the Court looks behind those facts, looks behind that conclusion and analyzes the evidence, I think the evidence, as I pointed out before, is very consistent with at least a suspicion, if not a conclusion, that these properties were not so similar as Petitioners would have this Court treat them that they had to be assessed on the basis... at the same price per acre merely because of some kinds of similarities.
Third, even if this system as applied in West Virginia was discriminatory, it's not prohibited.
Unidentified Justice: Mr. Ullrich, on this factual finding point, it can't be the case, can it, that so long as the state courts say, well, no, we haven't done anything bad, we have to accept that?
Mr. Ullrich: Oh, no, Your Honor.
It's not that--
Unidentified Justice: Isn't that a federal question?
Isn't the fact of whether there's been equal treatment or not equal treatment, isn't that a federal question itself?
Mr. Ullrich: --Equal treatment is, but not what you just said, respectfully, Your Honor.
The court didn't say, oh, this isn't bad.
The court said this didn't happen.
I... the court said the evidence is insufficient to support a finding that the assessor or the Board of Equalization and Review intentionally and systematically did an act that would result in an unconstitutional discrimination.
It's a threshold issue.
So the fact, the predicate facts were found not to exist.
It's not... this Court isn't even hearing from the West Virginia Supreme Court any proclamation about whether, had they done so, this would have been bad or good.
It's just that they didn't... the record didn't support a conclusion that the assessor did what she is alleged to do.
Unidentified Justice: Yes, but the reasons, the reasons that the West Virginia court gave for saying the evidence didn't support it are really pretty thin.
Mr. Ullrich: Well, I would say, I think, ion fact, the reasons aren't there.
They are not given.
But I don't think that the Supreme Court of West Virginia, to have its factfinding sustained and deferred to by this Court, needs to be explained in the written opinion.
It waxed eloquent, perhaps, regarding other procedures and options that were available under West Virginia law, assuming there were some inaccuracies that did not amount to a constitutional violation, and I don't think this Court should be seduced by misinterpreting either what the court said in its opinion or what it implied in its opinion.
It simply pointed out that having found no facts sufficient to make a constitutional violation, I'd like to gratuitously point out to the Petitioners that they have options to fix an inaccurately functioning system which they--
Unidentified Justice: No facts?
What facts didn't they find?
They had facts to show what, intentional under--
Mr. Ullrich: --And systematic discrimination, and in the paragraph before the court said the only issue left--
Unidentified Justice: --Is that a fact or a conclusion, really?
Mr. Ullrich: --I think that... well, I think it's a fact, but let me demonstrate that, Your Honor.
It's... the court said the only issue left for us to decide is whether there was an intentional and systematic undervaluation.
Those were the words of the court.
Intentional and systematic undervaluation, if proven, is not necessarily a violation of the Constitution.
The constitutional standard really is intentional and arbitrary discrimination.
So the court made a finding that the allegations below were not there, systematic and intentional undervaluation.
All three are definable and provable without reference to any legal standard, and the intentional and systematic discrimination, therefore, is a conclusion that must logically follow from that decision, and from that, of course, no violation of equal protection or a violation of the Constitution of West Virginia.
Your Honor, I would like to point out in closing that this Court should think, but what would happen if in fact Petitioners prevailed.
What it would be in danger of doing is creating a kind of an exclusionary rule that would benefit large investors, large mineral property owners that could buy properties and after making expensive explorations which are a prerequisite to their knowing it's worth it, and rest assured that because others won't be able to make that determination, they are not going to have to carry their fair tax burden unless the county goes out and does some exotic, complicated, expensive exploration and survive this exclusionary rule because the evidence won't have to come in against them.
I think that the Court should be aware of the fact that not merely Webster County will be subjected to tremendous, had its primary source of revenue--
Unidentified Justice: Can you name any state where that's happened?
Can you name any state where that's happened?
Mr. Ullrich: --Well, I cannot, Your Honor, although if... West Virginia would be the first if the Court ruled in favor of Petitioners.
Unidentified Justice: Why do you describe this business of appraising real estate as such an exotic new science?
Mr. Ullrich: Well, it isn't a--
Unidentified Justice: It's been going on for a long time.
Mr. Ullrich: --It's not that its an exotic science, Your Honor.
It's just that to discover true and actual value of underground minerals--
Unidentified Justice: Maybe it's difficult for the--
Mr. Ullrich: --takes expensive exploration.
Unidentified Justice: --More than the assessor in Webster County was willing to devote to the problem, at least.
Mr. Ullrich: And I think more than she had as a matter of resources available to her.
The bottom line is, Your Honor, that the county's--
Unidentified Justice: xxx... increased the assessment on some of the property, she'd have more resources.
You could hire a real assessor.
xxx... on itself.
It's a wonderful--
Mr. Ullrich: --Well, I think that the assessor, not having... if the Court doesn't find that... the court below found that she didn't act intentionally or systematically to under... even with the result of undervaluing, there's no finding anywhere that any property was undervalued.
There was... nor is there a finding anywhere in the record that any... what the true and actual value of the property was that was outside of the Petitioners' property.
The very worst that this Court should even consider doing is to remand under the kind of reasoning and thinking that it articulated in Sioux City for a finding of what the value was of those properties out there.
Or... but actually, the Court shouldn't go that far because unlike Sioux City, where there hadn't been a determination of the basic, the relevant facts of intentional and systematic discrimination, here there has been.
The Court should dismiss this case for want of a substantial federal question on this rather bizarre record, and this case, the Court should, even if it believes all of the conclusions of the circuit court, in view of its own doctrines, affirm the court below.
Unidentified Justice: --Thank you, Mr. Ullrich.
Mr. Prettyman, you have three minutes remaining.
REBUTTAL ARGUMENT OF E. BARRETT PRETTYMAN, JR. ON BEHALF OF THE PETITIONERS
Mr. Prettyman: Mr. Chief Justice just a few brief points.
Justice O'Connor and Justice Stevens, in regard to the points that you were just making, you'll be interested in the wording of the West Virginia code.
All property shall be assessed annually as of the first day of July at its true and actual value, that is to say, at the price for which the property would sell if voluntarily offered.
Apparently West Virginia in its code doesn't think it's such a difficult job.
Justice White, you were asking for a state case--
Unidentified Justice: Say assessed doesn't necessarily mean be reappraised.
Mr. Prettyman: --Well, it has to be reappraised in order to be, in order to be assessed.
The assessment is based, is simply 50 percent of the reappraisal.
The assessment is the automatic 50 percent.
Unidentified Justice: You could assess it annually.
You're not saying that that's necessarily... you're not going to be back in front of us and say that there has to be annual reassessment as well as annual reevaluation.
Mr. Prettyman: But it has to be, it has to be at its true and actual value.
You can't determine that without an appraisal.
Unidentified Justice: Well, you can make your best guess.
Maybe you can do, do it every other year and that's close enough.
Mr. Prettyman: Well, that's fine.
Let's have her do it, and maybe it'll come up to anywhere near where we're at.
Justice White, you asked about a case that was anywhere near this.
Back at the time when they had sort of a moving evaluation, in Killen, which is in the briefs, the West Virginia Supreme Court said equal and uniform taxation cannot result when each county assessor can vary assessments up to 50 percent of the appraised value both within and among classes of property, declared it unconstitutional.
In regard to the intimation here that no comparability findings were made, the circuit court made ten comparability findings, and I will cite you specifically to six, just to 16a, 24a, 72a and 74a out of those.
A point was made about the stipulation being, referring only to geologically.
It also said, Exhibit B, the comparables, accurately reflects the increase to neighboring comparable properties both as to assessment per acre and percentage increase for the period '75 through '74.
And also, the circuit court not only was banking on geological, which was the whole point... after all, we're talking about coal... but also had maps and, huge maps here showing where these properties were and so forth, they were adjoining, they were contiguous, and so forth.
And finally, let me just say that please remand this case in a way where we get something out of it.
You've been confronted with several cases recently where the Petitioners went back and thought they'd won, and they got nothing.
The only way... we're going back now eleven years.
The only way that we can possibly get any, our taxes back is for you to say that we are not relegated to suing somebody to get their taxes raised.
Chief Justice William H. Rehnquist: Thank you, Mr. Prettyman.
Mr. Prettyman: Thank you.
Chief Justice William H. Rehnquist: Your time has expired.
The case is submitted.
Argument of Chief Justice Rehnquist
Mr. Rehnquist: I have the opinion of the Court to announce in Allegheny Pittsburgh Coal Company versus the County Commissioner of Webster County, West Virginia.
The petitioners in these cases are coal companies that own property in Webster County, West Virginia.
Over a period of more than 10 years, their property was taxed significantly more than comparable properties in the County.
These disparities were solely the result of a tax assessment policy adapted by the Webster County tax assessor in which she would use the last sale price of the property as the value of the land for assessment purposes.
If the property had not been recently conveyed, she would carry over its assessment from the previous year and occasionally make a minor adjustment.
A petitioner's assessments were far higher than the carried over assessments of comparable neighboring properties despite the occasional adjustments.
The West Virginia Court of Appeals held that petitioners could not complain.
Their property was assessed at no more than its current value, and any complaint about the under-evaluation of neighboring property could only be remedied by an action to raise those other assessments.
We find the Webster County assessment scheme violates the equal protection clause of the Fourteenth Amendment because it creates significant assessment differences between similar parcels and does not equalize them in a reasonable amount of time.
We also hold that petitioners cannot be limited to seeking an increase in the taxes of others rather than the reduction in their own.
The judgment of the Supreme Court of Appeals of West Virginia is therefore, reversed.