For the prosecutor, Frank P. McCarthy.
For the defendants, A. Harry Moore.
Before Justices Case, Donges and Porter.
The opinion of the court was delivered by
DONGES, J. The writ of certiorari was allowed in this case to review the judgment of the State Board of Tax Appeals reducing the assessments for purposes of taxation for the year 1940 upon improvements of real property and upon personal property owned by the defendant Forstmann Woolen Co., and situated in the City of Garfield.
The question of laches is raised, it being argued that the city delayed an unreasonable length of time before seeking to review the judgment of the State Board. The allocatur reserved to the defendant the right to argue this question. It is claimed on behalf of the city that the delay was occasioned by the carrying on of negotiations for settlement of the controversy. In view of the fact that a municipality is involved, we prefer not to determine the case upon this question but to consider the merits.
The city assessed defendant's land at $162,350, and this assessment is not questioned and was not involved in the appeal to the State Board. The assessment on improvements made by the city was $880,675, and that on personal property was $1,364,850. The taxpayer sought reductions to $581,175 for improvements and $600,000 for personalty. The judgment of the State Board fixed valuations of $710,000 for improvements and $740,000 for the personal property, and these figures are here challenged by the prosecutor.
Before the State Board the defendant produced, as a witness on the subject of the value of improvements, one Thomas R. Lowrie, a qualified real estate expert. He gave his direct testimony in the form of a written appraisal which was admitted in evidence. He fixed a value on the buildings of $569,973, which he arrived at by a square foot unit value method of calculation. The witness used in making his appraisal information concerning sales of what he considered to be comparable manufacturing properties in the general locality during the few years preceding the assessing date.
On cross-examination the value of these sales as criteria of value was assailed on the ground that they were sales of properties not being used at the time of sale, it being the contention of prosecutor that such sales were not evidential in fixing the value of properties presently being operated as a going concern. That fact does not preclude the use of this type of evidence. The recognized standard of value is the price which a willing buyer would pay to a willing seller and the evidence of sales of that kind is admissible, notwithstanding the fact that the buildings might not be in actual use at the time of sale.
The city produced before the State Board an architect, James H. Dynes, whose appraisal was received in evidence. This appraisal was based upon a reproduction cost less depreciation basis. He testified to a reproduction cost of the buildings and improvements of $2,299,106, and, allowing depreciation of $761,937, he arrived at a valuation of $1,537,168. The buildings were constructed in 1908 and he allowed depreciation of 35%, based upon his personal opinion arrived at from an inspection of the buildings and observation of their condition.
This was all the testimony before the Board, but following the rendition of judgment and the allowance of the writ, depositions were taken. The city offered as a witness Arlyn W. Coffin, a qualified real estate expert experienced in industrial properties. This witness used three different methods of arriving at a valuation. By the comparable sale method he reached a figure of $1,150,000 for the improvements. Using the reproduction cost less depreciation method he fixed a valuation of $1,189,917. And using a net income capitalization method, by estimating the rental value of the premises from comparison of rents paid for comparable properties, he arrived at a valuation of $1,191,450. The lengthy cross-examination of this witness ...