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AGO 1986 No. 3 - February 18, 1986
AGO Opinion Header Image
Ken Eikenberry | 1981-1992 | Attorney General of Washington

COUNTIES ‑- ASSESSOR ‑- TAXES ‑- VALUATION OF PROPERTY ‑- PRESUMPTION OF CORRECTNESS 

In an appeal to the State Board of Tax Appeals from a county board of equalization, the presumption of correctness established by RCW 84.40.0301 in valuation of property for taxation applies to the determination of the assessor, not that of the board of equalization.

                                                              - - - - - - - - - - - - -

                                                                February 18, 1986 

Honorable Henry R. Dunn
Cowlitz County Prosecuting Attorney
Hall of Justice
312 South First Avenue W.
Kelso, Washington 98626

Cite as:  AGO 1986 No. 3                                                                                                                  

 Dear Sir:

             By letter previously acknowledged you requested our opinion on a question which we paraphrase as follows:

             When a county assessor appeals to the State Board of Tax Appeals for modification of that officer's valuation of property by the county board of equalization, should the Board of Tax Appeals apply the presumption of correctness in valuation required by RCW 84.40.0301 (1) to the value originally determined by the assessor, or alternatively (2) to the valuation determined by the Board of Equalization?

             We answer the foregoing question in the manner set forth in our analysis.

                                                                     ANALYSIS

             As you are aware, RCW 84.40.0301 set forth here in its entirety, for ease of reference, provides:

             "(1) Upon review by any court, or appellate body, of a determination of the valuation of property for purposes of taxation, it shall be presumed that the determination of the public official charged with the duty of  [[Orig. Op. Page 2]] establishing such value is correct but this presumption shall not be a defense against any correction indicated by clear, cogent and convincing evidence.

             "(2) In any administrative or judicial proceeding pending upon May 21, 1971 or arising from the property revaluation under the provisions of section 4, chapter 282, Laws of 1969 ex. sess., and section 1, chapter 95, Laws of 1970 ex. sess., the provisions of this section will apply.  This paragraph shall not be construed so as to limit in any way the provisions of subsection (1) of this section."

 Your inquiry relates to the operation of this statute in a situation in which a county assessor, pursuant to RCW 82.03.130(2), challenges the modification of the assessor's original determination of value by the county board of equalization.1/

             Before responding directly to your question, we find it useful to discuss as background the pertinent part of Title 84 RCW which relates to the process of valuing property for ad valorem taxation purposes and the roles of those officials and bodies who participate in that process.

            In Washington, as in other states, the county assessor is charged with the initial determination of value.  RCW 84.40.040 provides, in part, that such officer will list and place valuations on all property within that officer's jurisdiction.  These assessment responsibilities under current law are a continuation of earlier statutes and case law which recognize the role of the assessor in the initial establishment of property values.  See,e.g., Klickitat Warehouse Co. v. Klickitat County, 42 Wash. 299, 84 Pac. 860 (1906).  The Department of Revenue also performs an assessment role with respect to the property of public utilities operating in the state (chapter 84.12 RCW) and with respect to  [[Orig. Op. Page 3]] private car companies (chapter 84.16 RCW), in which it values such property and certifies those values to the counties on an apportioned basis for inclusion on the tax rolls.2/

             Upon completion of the work of listing and valuation, the assessor must then submit the tax rolls to the board of equalization which, as directed by RCW 84.48.010, meets annually in July in order to:

             ". . . examine and compare the returns of the assessment of the property of the county and proceed to equalize the same, so that each tract or lot of real property and each article or class of personal property shall be entered on the assessment list at its true and fair value, according to the measure of value used by the county assessor in such assessment year, . . ."

 County boards perform the function of equalization by passing upon property owners' appeals as provided for in RCW 84.48.010.  Under this same statute they may also raise or reduce the valuation of real or personal property reflected on the assessors' lists upon their own motion.  A further appeal to the State Board of Tax Appeals may be taken from the county board's determination by either the property owner or the assessor or by both as permitted by RCW 82.03.130.

             One other matter should be noted by way of background.  The language of RCW 84.40.0301 provides that the presumption of correctness, a presumption which can only be overcome by "clear, cogent and convincing evidence," attends the determination of valuation made by the "public official charged with the duty of establishing such value."  A presumption of correctness of the sort found in the statutory standard of review is one which was long  [[Orig. Op. Page 4]] recognized by the courts prior to the enactment of RCW 84.40.0301 in 1971.3/ Decisions preceding the enactment of the statute had held that both assessors and boards of equalization, acting in a quasi-judicial capacity, would be presumed to have performed their duties properly.  Accordingly, evidence to the contrary must be demonstrably clear.  See,e.g., Weyerhaeuser Timber Co. v. Pierce County, 97 Wash. 534, 543, 167 Pac. 35 (1917).

             However, earlier decisions made it equally clear that, where the action of the assessor was found to be arbitrary, the approval by the board of equalization of that result would be irrelevant.  No presumption of correctness would necessarily attach to the board's affirmation of the assessor's action.  Id., at 543.  See also,Knapp v. King County, 17 Wash. 567, 50 Pac. 480 (1897).

             With this background in mind, we now turn directly to your question repeated here for ease of reference as follows:

             When a county assessor appeals to the State Board of Tax Appeals for a modification of that officer's valuation of  [[Orig. Op. Page 5]] property by the county board of equalization, should the Board of Tax Appeals apply the presumption of correctness in valuation required by RCW 84.40.0301 (1) to the value originally determined by the assessor, or alternatively (2) to the valuation determined by the Board of Equalization?

 For purposes of analysis, we divide this question into two separate inquiries.  First, does the presumption of correctness in the determination of property valuation mandated by RCW 84.40.0301 attach to the actions of both the assessor and the board of equalization in respect to the particular situation you have presented?  Second, in the context of our answer to the first question, how is the presumption to be treated in the proceeding before the Board of Tax Appeals as an evidentiary matter?

             Our starting point must, of course, deal with the language of the statutory provision.  RCW 84.40.0301, again set forth for ease of reference, provides in pertinent part:

             "(1) Upon review by any court, or appellate body, of a determination of the valuation of property for purposes of taxation, it shall be presumed that the determination of the public official charged with the duty of establishing such value is correct but this presumption shall not be a defense against any correction indicated by clear, cogent and convincing evidence.

             ". . ."

             The statutory presumption thus operates "upon review by [an] . . . appellate body."  Quite clearly, the presumption would apply to the valuation of the assessor upon review by the county board of equalization.  The assessor is that officer charged by the statute, as previously noted, with fixing property valuations.  Those determinations may be challenged by appeal to the county board of equalization as RCW 84.40.040 and RCW 84.48.010, read together, expressly provide.  Review of the assessor's determination is a long recognized part of the valuation process.  Accordingly, we believe that review by an appellate body, when contrasted with the statutory language providing for review by a court, was intended not only to refer to an administrative appeal to the board of equalization but to embrace review by the State Board of Tax Appeals as well.

              [[Orig. Op. Page 6]]

            This conclusion is supported by a parallel construction of the language found in RCW 84.40.0301(2) which provides for the operation of the presumption in "any [earlier] administrative or judicial proceeding."  Nothing in the language of the statutory section, considered as a whole, indicates an intent on the part of the legislature to distinguish between the board of equalization and the Board of Tax Appeals in the use of the term "appellate body."

             A further contrast, however, between the statutory references to a "public official" and an "appellate body" leads us to conclude also that the statute was intended to apply this particular presumption to determinations by the assessor or other officials performing similar functions and not to determinations by the board of equalization which is an "appellate body."  It is true, of course, that the legislature used the term "public official" rather than "assessor."  In all likelihood, the term was intended to include the Director of the Department of Revenue or the appropriate official within that agency charged with the duty of centrally assessing, for example, the property of public utilities (chapter 84.12 RCW) or private car companies (chapter 84.16 RCW).

             Another reference to "public official" is found in the same session law, chapter 288, Laws of 1971, 1st Ex. Sess., from which RCW 84.04.0301 [84.40.0301] is drawn.  In § 14 of that enactment, RCW 84.69.020 was amended to allow for administrative refunds of property taxes paid as a result of mistake, inadvertence or lack of knowledge by a "public official."  The roles not only of county assessors but of county treasurers in the administration of property taxes at the local level strongly suggests that the legislature intended to address errors made by more than one office.  Thus, a comparison of these references to public official in both RCW 84.40.0301 and RCW 84.69.020, as the latter was in 1971 amended, reinforce the conclusion that, by contrasting public official and appellate body in the former section, the legislature did not intend to extend the presumption to the work of the county board of equalization.4/

              [[Orig. Op. Page 7]]

            While the legislative history surrounding the enactment of RCW 84.40.0301 is essentially silent, the setting in which the legislation was enacted supports a conclusion that the legislative focus was primarily upon the work of local assessors.  To understand that background, we look first to subsection (2) of RCW 84.40.0301.

             "(2) In any administrative or judicial proceeding pending upon May 21, 1971 or arising from the property revaluation under the provisions of section 4, chapter 282, Laws of 1969 ex. sess., and section 1, chapter 95, Laws of 1970 ex. sess., the provisions of this section will apply.  This paragraph shall not be construed so as to limit in any way the provisions of subsection (1) of this section."

             The 1969 and 1970 legislation here referred to contains appropriations to the counties to assist those jurisdictions in carrying out an immediate and extensive revaluation of all real property within their boundaries.  The occasion for such urgency was the directive of the Washington Supreme Court to counties and their assessors to place all such property on the rolls at the valuation then mandated by law, 50 percent of true and correct value, and to make those adjustments by January 1, 1970.  For background to the statewide revaluation program, see Carkonen v. Williams, 76 Wn.2d 617, 458 P.2d 280 (1969).  RCW 84.40.0301(2), seen in this light, was intended to apply not only for the future but to the valuation work of assessors mandated by the Court inCarkonen, previously commenced and already under challenge, in existing administrative and judicial proceedings.

             We thus find that the legislature limited the operation of the presumption of correct valuation to determinations of assessors and the work of the Department of Revenue.5/

              [[Orig. Op. Page 8]]

            We now turn to the second inquiry contained in your question.  That inquiry asks how the Board of Tax Appeals is to apply the presumption in RCW 84.40.0301 when an assessor appeals from a decision by the County Board of Equalization modifying the assessor's determination of value.

             Authorization for an assessor to take any appeal from a decision by the Board of Equalization is included in RCW 84.08.130 which, in its entirety, provides:

             "Any taxpayer or taxing unit feeling aggrieved by the action of any county board of equalization may appeal to the board of tax appeals by filing with the county auditor a notice of appeal in duplicate within thirty days after the action of such board of equalization, which notice shall specify the actions complained of, and said auditor shall forthwith transmit one of said notices to the board of tax appeals; and in like manner any county assessor may appeal to the board of tax appeals from any action of any county board of equalization.  The board of tax appeals shall require the board appealed from to certify the minutes of its proceedings resulting in such action and all evidence taken in connection therewith, and may receive further evidence, and shall make such order as in its judgment is just and proper."

 Correspondingly, the jurisdiction granted to the Board of Tax Appeals is not limited to the record made before the Board of Equalization, and, as a matter of practice is essentially a de novo hearing before the state board.  What follows from this and our conclusion that the presumption of correctness only applies to valuation of the county assessor is that the Board of Tax Appeals must determine independently whether the evidence before it, including that which may have been presented to the Board of Equalization, is sufficiently clear, cogent and convincing to overcome the presumption in favor of the assessor's determination.

             Practically speaking, this means that the property owner or taxpayer will effectively carry the same burden of proof both before the Board of Tax Appeals and before the Board of  [[Orig. Op. Page 9]] Equalization irrespective of the outcome in the Board of Equalization.  This result is required both by our conclusion that the presumption in RCW 84.40.030(1) is limited to determinations of the assessor and also by the fact that the Board of Tax Appeals does not simply sit to review the record made before the Board of Equalization, but rather conducts a full de novo hearing.

             By analogy, we would compare the review of an assessor's work conducted, first by the Board of Equalization and then by the Board of Tax Appeals, with the review of an administrative agency's work performed by a superior court and an appellate court under that standard of review found in the Administrative Procedure Act and more specifically in RCW 34.04.130(6)(e) which requires reversal of an agency determination where it is "clearly erroneous in view of the entire record as submitted . . ."  In the former situation, the Board of Tax Appeals is empowered to hear the case anew, while in the latter case, both reviewing courts will essentially be limited to consideration of the record.

             There is, however, despite this difference, a certain similarity between the functions of the superior court and an appellate court in reviewing a determination of an administrative agency under the "clearly erroneous" test, on the one hand, and the functions of the Board of Equalization and the Board of Tax Appeals, on the other, in reviewing an assessor's determination of value.  As stated in Farm Supply v. Util. & Transp. Comm'n, 83 Wn.2d 446, 518 P.2d 1237 (1974), both the superior court and the appellate court apply the "clearly erroneous" test to the administrative determination:

             ". . . Most courts that have considered the subject have held that appellate courts stand in the same position as trial courts when reviewing the decision of an administrative agency. . . ."  83 Wn.2d at 448.

             Further:

             ". . . We hold that the 'clearly erroneous' test . . . applies to the review of administrative decisions by trial courts and appellate courts as well."  Ibid.

             Insofar as the "clearly erroneous" test can be said to create a presumption of correctness, similar to that created by RCW 84.40.0301, that presumption applies solely to the administrative  [[Orig. Op. Page 10]] decision, and the decision of the superior court does not itself acquire any presumption of correctness for purposes of appellate review.

             So too under RCW 84.40.0301, as we have construed it, the presumption of correctness applies solely to the assessor's valuation, and the Board of Equalization's decision, whether it reduces the assessor's valuation or not, does not affect the operation of that presumption for purposes of review by the Board of Tax Appeals.6/

             We trust the foregoing will be of assistance to you.

 Very truly yours,
KENNETH O. EIKENBERRY
Attorney General 

LELAND T. JOHNSON
Senior Assistant
Attorney General

TIMOTHY R. MALONE
Assistant Attorney General 

                                                         ***   FOOTNOTES   ***

 1/RCW 84.08.130 permits an assessor to appeal an action of a county board of equalization reducing a property valuation determined by the assessor.  RCW 82.03.130(2) confers jurisdiction on the State Board of Tax Appeals to review such actions.

 2/The Department has more recently been assigned a similar central assessment function with respect to certain ships and vessels subject to ad valorem taxation.  See, RCW 84.08.200.

 3/Prior to the statute's enactment, the earliest decisions held that the evidence necessary to overcome the presumption of correctness for an assessor's valuation must be "clear."  Templetion v. Pierce County, 25 Wash. 377, 382, 65 Pac. 534 (1901).  That standard soon gave way to one of "clear or convincing" proof but the court never delineated the difference between the tests, if one in fact existed.  See,e.g.,Wash. Union Coal Co. v. Thurston County, 105 Wash. 208, 213, 177 Pac. 774 (1919).

 The standard of "clear, cogent and convincing" in RCW 84.40.0301 does not appear to have been clearly derived from any judicially imposed test that can be found in taxation cases.  However, the test is applied in civil fraud cases; but it is difficult to determine whether or not our court regards as interchangeable, the terms "clear and convincing" and "clear, cogent and convincing."  See,e.g.,Cheesman v. Sathre, 45 Wn.2d 193, 197, 273 P.2d 500 (1954), interpreting an earlier opinion in Harrington v. Richeson, 40 Wn.2d 557, 245 P.2d 191 (1952).  In any event, the court has interpreted the "clear, cogent and convincing" test more recently to connote a guantum of proof which is "highly probable."  Davis v. Labor and Industries, 94 Wn.2d 119, 126, 615 P.2d 1279 (1980).

 4/A contrary conclusion would lead to a variable definition of the term "public official" and "appellate body" contained in RCW 84.40.0301 depending on the level of review of the immediately preceding decision on valuation.  Thus, a decision of the Board of Tax Appeals, clearly an appellate body for purposes of RCW 84.40.0301, could be transformed into a determination of a "public official" for purposes of judicial review.  We cannot conclude that the legislature intended to transform by its use of the term "public official" either the Board of Tax Appeals or Board of Equalization into the category of "public official" after each has performed its appellate function as an appellate body.

 5/While your question does not address the matter, there will be occasions when the assessor may be content to accept modification of his or her valuation by the Board of Equalization, while the taxpayer will continue to contend for a still lower valuation before the Board of Tax Appeals.  In that situation, we would view the presumption of correctness as attaching to the assessor's valuation to the limited extent the Board of Equalization has found it correct, precisely because that body has determined the taxpayer has not established a lower value by clear, cogent and convincing evidence.

 6/While the language of RCW 84.40.0301 clearly carries over the presumption of correctness for a public official's determination to judicial proceedings, nothing in this opinion is intended to suggest that the statute modifies the standard of review that would otherwise be applied by the court.  For example, RCW 34.04.130(6)(e) directs reversal of an administrative determination upon review if the court finds the decision:

 ". . .

 "clearly erroneous in view of the entire record as submitted and the public policy contained in the act of the legislature authorizing the decision or order; . . ."

 Where a superior court considers an appeal from the Board of Tax Appeals, the evidentiary test of "clear, cogent and convincing evidence" required by RCW 84.40.0301 may be given its intended effect in the context of this standard of review.

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