Parks v. Guckenberger

42 N.E.2d 784, 69 Ohio App. 33, 36 Ohio Law. Abs. 137, 23 Ohio Op. 371, 1942 Ohio App. LEXIS 699

• Court: Ohio Court of Appeals
• Decided: February 24, 1942
• Docket: 6065
• Status: Published

Opinions

OPINION

BY THE COURT:

This is an appeal from a judgment of the court of common pleas of Hamilton county, rendered on the hearing of an appeal from an order of the Tax Commission of Ohio, fixing the value for taxation purposes for the year 1936 of 250 shares of the preferred stock of The Pe.rks Woodworking Machine Company, owned by Frances R. Parks, the appellee.

The Tax Commission fixed the value at $100.00 per share. The court of common pleas reduced the valuation to $50.00 per share, which was the value fixed in the taxpayer’s return.

The record shows that this same stock was valued in prior years at $50.00 per share by the Tax Commission. It also shows that there was no substantial change in the financial condition of the corporation that would justify the difference in valuation. It is argued from that premise that this is clear and convincing evidence which shows that the increase in the valuation was purely arbitrary. As we view it, the circumstance has no evidential value. Of course, the valuation fixed for a prior year would not be binding on the Tax Commission when it came to fix the value for a subsequent year. State, ex rel. Methodist Book Concern v. Guckenberger, Auditor 57 Oh Ap, 13. To hold that the prior valuation overthrows the subsequent valuation is to give to the prior finding a greater sanction than the subsequent one, to which it is not entitled. They have no more relation to one another than two distinct trespasses upon Blackacre by the same trespasser would have in two distinct actions by the owner for the damage resulting from the trespasses. The validity of each finding is determined by the evidence by which it is supported. For even more obvious reasons, a valuation fixed in a subsequent year would have no probative value. We must, therefore, look to the evidence as to the value of this stock.

The record shows that this corporation had a capital stock of 250 shares of preferred stock par value of $100.00 per share and 500 shares of common stock of a par value of $100.00 per share. The statement of assets and liabilities shows that it had a surplus of $14,896.42 above debts and capital stock. As the preferred stock was entitled to be paid in full before anything could be paid to the common stockholders on liquidation, this means that every dollar of the preferred stock was secured by three and one-half dollars of assets.

However, no dividends had been paid on this stock since October, 1932, and -the corporation had actually suffered a loss during the years 1933, 1934, 1935, and 1936, but the loss was comparatively small and still left the corporation with the surplus already mentioned.

There is evidence that the plaintiff sold this stock in 1937 for $50.00 per share.

Objection was made to the introduction of all this evidence except the statment of assets and liabilities from the books of the corporation, but we do not stop to consider the objection. Our conclusion theron would not affect our decision.

By §5388 GC, non-productive intangibles are required to be listed and assessed “at the true value thereof,” and by §5375 GC, it is enacted that the assessor shall be guided by the statements contained in the taxpayer’s return “and such other rules and evidence as will enable him to arrive at such true value.”

And after the taxing authorities have fixed the value, the scope of judicial review is limited by §5611-2 GC (116 Ohio Laws, 123) as follows:

“***No determination of the tax commission as to the value of the property for taxation shall be reversed, vacated, or modified unless it is shown by clear and convincing evidence that the value of the property, as determined by the tax commission, is not the true value in money of such property.”

In Linch v. Heuck, 58 Oh Ap, 406, we had occasion to apply this section in an appeal from a valuation of real estate under the statute (§5560 GC) which required the assessment of real property “at its true value in money.” The cases were reviewed in extenso and our conclusion stated fully. We do not deem it necessary to repeat them here.

The officers and directors of this corporation represented its stockholders. In fixing the value of its assets and recording its liabilities they were the agents of the plaintiff as well as the other stockholders. Their record showed that the corporation had assets above liabilities sufficient to pay not only this preferred stock in full but also the common stock in full and still leave a surplus of more than $14,000.00. This was competent evidence of true value of a substantial nature.

We are of the opinion that the Tax Commission did not act arbitrarily in basing its valuation upon it.

The evidence of absence of dividends, profits and subsequent sale for ¡less, and prior valuation by the Tax •Commission for less in former years, even, if competent, would have little, if any, tendency to prove “true value” and, certainly, is not clear and convincing evidence that a valuation supported by the books of the corporation itself is wrong.

For these reasons, the judgment of the court of common pleas is reversed and final judgment will be entered in this court affirming the valuation of the Tax Commission.

MATTHEWS, PJ & ROSS J, concur. HAMILTON, J., Dissents.