APPEAL from the Circuit Court of Fulton County; the Hon. KEITH
SCOTT, Judge, presiding.
MR. JUSTICE ALLOY DELIVERED THE OPINION OF THE COURT:
This is an appeal from an order of the Circuit Court of Fulton County which affirmed the decision of the Property Tax Appeal Board with regard to classification of the Norris Mine preparation plant as well as the level of assessment which was used by the Board in computing the assessed valuation of plaintiff's property, but in which the trial court reversed the determination of the actual values of plaintiff's property made by the Property Tax Appeal Board. The appeal is taken from that portion of the trial court's order which reversed the determination of the actual values of plaintiff's property.
On appeal in this court, the defendants (Property Tax Appeal Board of the Department of Local Government Affairs of the State of Illinois and the Fulton County Board of Review) contend that the finding and decision of the Property Tax Appeal Board are supported by substantial competent evidence and are not against the manifest weight of the evidence; that the Property Tax Appeal Board used a proper method of evaluation in the instant case; that the figure which the trial court set as the actual value of the preparation plant was erroneous; and that the trial court erred in entering its own valuations as to the property in question.
Plaintiff Consolidation Coal Company (hereinafter called "Consolidation") commenced a strip mining operation at its Norris Mine in the middle of 1969, and moved in substantial heavy equipment and machinery in anticipation of an estimated 1970 output of over 3,000,000 tons of coal. It soon became apparent, however, that the mine would not be that productive. Consolidation was able to mine only 1.8 million tons in 1970. Revised forecasts disclosed that the amount of coal in the mine was much less than originally anticipated.
The Fulton County Board of Review determined the valuation for 1970 tax purposes of plaintiff's property at the mine. Plaintiff then sought to challenge the valuations of 11 pieces of heavy machinery (6 shovels, 3 wheels, and 2 drag lines) and of the coal preparation plant (the plant was classified as realty). Plaintiff appealed from the county valuations to the Property Tax Appeal Board under the provisions of section 111.1 of the Revenue Act of 1939 (Ill. Rev. Stat. 1969, ch. 120, § 592.1).
At the hearing before the Tax Appeal Board, plaintiff called five witnesses to establish estimated values of the property involved. These witnesses were the sales director of a power shovel company, the president of a dealer in heavy mining equipment, a self-employed used equipment broker, and two representatives of the American Appraisal Company, professional appraisers. Not all the witnesses testified to values for each item in dispute. The American Appraisal estimates totaled $4,475,000 actual value for all but one of the pieces of machinery and $1,600,000 for the preparation plant. The highest figure estimated for each item by any one of the plaintiff's witnesses would total, as the greatest total valuation for all of the 11 pieces of equipment, the sum of $5,148,000.
The County Board responded with testimony of a witness (Mr. Miller) from the Jacobs Company which had appraised the plant and equipment for the county. The estimates of the Jacobs Company representative, which are now challenged by the plaintiff, were $11,332,780 for the equipment and $2,659,320 for the preparation plant. The Jacobs appraisal for each item was determined by use of a formula in which the original cost of the item was "trended" up to 1970, a so-called current "replacement" cost, and then a factor for depreciation was subtracted to arrive at a value. Plaintiff's witnesses, on the contrary, testified as to what they estimated they could sell the various items for, although they admitted that for several of the items there would be little, if any, demand. Testimony indicated that most of the equipment was fairly old or obsolete compared to modern mining equipment, and much of it was in disrepair, though still functioning.
The Property Tax Appeal Board in its opinion, distinguished the "As is, Where is" appraisal method of plaintiff's witnesses from the "value in use" concept of the Jacobs appraisal, and held:
"* * * these specific pieces of mining machinery must be appraised for value in use as an integral part of a coal producing operation and, therefore, (the Board) accepts the Jacobs Company, Inc. appraisal as being the only one using the correct appraisal concept."
The Board, therefore, adopted the Jacobs figures for actual value though it did use a lower level of assessment and thus reached a somewhat lower value than imposed by the County Board.
Plaintiff brought an action for review of the Board decision in the Circuit Court of Fulton County under the Administrative Review Act (Ill. Rev. Stat. 1969, ch. 110, §§ 264-279). At the request of both parties for findings of fact by the trial court, the court made a determination as to the values and found that the equipment had an actual cash value of $7,197,070 and accepted the American Appraisal Company figure of $1,600,000 for the preparation plant. The trial court held that the Jacobs Company appraisal was not shown to be related to the statutory basis of fair cash value and that it was error for the Tax Board to rely exclusively on the Jacobs figures.
1 The parties agree as to the basic principles for judicial review of administrative proceedings. It is agreed that an administrative agency decision is upheld by the courts where it is supported by substantial competent evidence in the record and is reversed only where it is against the manifest weight of the evidence or where such evidence clearly indicates a contrary decision. Schnulle v. Board of Fire & Police Commissioners, 16 Ill. App.3d 812, 818, 306 N.E.2d 906 (1974).
There are also well-established rules for the challenge of property valuations for tax purposes. In Illinois, for purposes of property tax, both real and personal property are to be assessed according to "fair cash value." (Ill. Rev. Stat. 1969, ch. 120, §§ 501, 502.) This is generally interpreted to mean "fair market value" or the price that the property would bring at a sale where both parties are willing, ready and able to do business and under no duress to do so. Springfield Marine Bank v. Property Tax Appeal Board, 44 Ill.2d 428, 430, 256 N.E.2d 334 (1970); People ex rel. Rhodes v. Turk, 391 Ill. 424, 427, 63 N.E.2d 513 (1945).
2 It is well settled that a mere difference of opinion as to value will not be sufficient to warrant judicial interference in the assessment process. (Clarendon Associates v. Korzen, 56 Ill.2d 101, 104, 306 N.E.2d 299 (1973); People ex rel. Frantz v. M.D.B.K.W., Inc., 36 Ill.2d 209, 211, 221 N.E.2d 650 (1966), and cases cited therein.) It has been stated that constructive fraud must be shown though it need not be actual fraud. (Clarendon Associates v. Korzen, 56 Ill.2d 101, 104, 306 N.E.2d 299 (1973).) Pursuing this rule, it is apparent that it should be shown that the alleged overvaluation of the property of plaintiff is such as to be constructively fraudulent, so that the Board's approval of the valuation could be considered as being against the manifest weight of the evidence.
Defendants argue that since the trial court refused to say that the Jacobs Company appraisal was wholly wrong, there could be no finding by the trial court that the decision adopting the Jacobs figures was against the manifest weight of the evidence. This contention misapprehends the trial court's decision and reflects a viewpoint which is mistaken, that the Board was required to accept either the Jacobs appraisal or the American appraisal. The trial court is not required to rigidly follow either appraisal. The trial court held that it was against the manifest weight of the evidence for the Property Tax Appeal Board to rely solely on the Jacobs estimates to the exclusion of all other testimony.
In the briefs filed in this court as well as in the proceeding before the Property Tax Appeal Board and in the circuit court, the parties seem to view the issue as a battle between two conflicting methods of valuation, i.e., the "market value" doctrine and the "value in use" concept. The Board found that there was insufficient evidence of market values for the equipment, and that a "value in use" appraisal was necessary. It then looked to the Jacobs figures as the only ones based on "value in use." We do not specifically dispute the "value in use" concept, as it is obvious that a machine which is functioning as part of a production process may have little or no value to an outside buyer, while being worth more to the owner as a working piece of equipment. It may be proper in such instances to value the property for tax purposes at the latter level. In the cause before us, however, the testimony of plaintiff's witnesses indicated that there was a market (in several cases restricted) for most of the items in dispute. It also appears from the testimony of Anders, the equipment broker (and defendants appear to agree with this in ...