Walters v. Knox County Board of Revision

Wright, J. Appellant board of revision argues that the BTA acted unreasonably and unlawfully when it accepted the sale prices the Walterses paid for the five Apple Valley Lake lots as the true values of the properties. In its first proposition of law, the board of revision contends that the BTA failed to consider factors other than the purchase prices of the five lots. R.C. 5713.03, which governs taxable valuation of real property, provides in pertinent part: “* * * In determining the true value of any tract, lot, or parcel of real estate under this section, if such tract, lot, or parcel has been the subject of an arm’s length sale between a willing seller and a willing buyer within a reasonable length of time, either before or after the tax lien date, the auditor shall consider the sale price of such tract, lot, or parcel to be the true value for taxation purposes.” This court held in Ratner v. Stark Cty. Bd. of Revision (1986), 23 Ohio St. 3d 59, 23 OBR 192, 491 N.E. 2d 680, that “[although the sale price is the ‘best evidence’ of true value of real property for tax purposes, it is not the only evidence.” Id. at syllabus. In other words, R.C. 5713.03 has not been given an “* * * absolutist interpretation * * *,” id. at 61, 23 OBR at 194, 491 N.E. 2d at 682; however, we do accept the “* * * presumption that the sale price reflects] true value,” id. at 61, 23 OBR at 193, 491 N.E. 2d at 682. (Emphasis added.) The board of revision presented evidence at the BTA hearing in an unsuccessful attempt to rebut the presumption that the sale prices of the five properties reflected their true values. The auditor and expert appraiser testified, appellant’s exhibits were accepted into evidence, and the hearing examiner took an active part in the proceeding. The BTA was obliged to examine this evidence, but not to hold that it rebutted the presumption that the sale prices were the true values of the five lots. “The Board of Tax Appeals is not required to adopt the valuation fixed by an expert or witness. * * *” (Citations omitted.) Cardinal Federal S. & L. Assn. v. Cuyahoga Cty. Bd. of Revision (1975), 44 Ohio St. 2d 13, 73 O.O. 2d 83, 336 N.E. 2d 433, paragraph two of the syllabus. The appraiser’s testimony was quite general, and neither the auditor nor the appraiser explained with any degree of precision how their list of sales or other information was [25] used to arrive at the values assigned the properties by the board of revision. “The BTA * * * has wide discretion to determine the weight given to evidence and the credibility of witnesses before it. Its true value decision is a question of fact which will be disturbed by this court only when it affirmatively appears from the record that such decision is unreasonable or unlawful. Cardinal Federal S. & L. Assn. v. Cuyahoga Cty. Bd. of Revision * * * [supra], paragraphs two, three, and four of the syllabus.” R.R.Z. Associates v. Cuyahoga Cty. Bd. of Revision (1988), 38 Ohio St. 3d 198, 201, 527 N.E. 2d 874, 877. The board of revision’s second proposition of law concerns a hearsay letter from the President of Talcon Corporation, the company that conducted the 1986 auction. The letter stated that the auction was an arm’s-length sale. Appellant objected to the admission of the letter into evidence during the BTA hearing. Appellant now contends that even though hearsay evidence may establish comparable sale prices, admission of hearsay becomes objectionable when a dispute arises over the credibility or condition of the sale. This contention is not well-taken. The BTA had the benefit of the testimony of Charles Walters, a participant in the auction who was cross-examined by appellant at the hearing. The letter appears to have played no part in the BTA’s decision, as it is not mentioned in the BTA opinion. Admission of the letter into evidence hardly amounts to reversible error. Appellant’s final proposition of law is that the sales were not conducted at arm’s length, as set forth in R.C. 5713.03, which directs the auditor to consider the sale price of a lot to be its true value if the sale was recent, if the buyer and seller were both willing, and “* * * if such tract, lot, or parcel has been the subject of an arm’s length sale * * * >> We have never defined “arm’s-length sale.”1 In its opinion below, the BTA defined it as “* * * one which encompasses bidding and negotiation on the open market between a ready, willing and able buyer, and a ready, willing and able seller, both being mentally competent, and neither acting under duress or coercion.” According to Black’s Law Dictionary (5 Ed. 1979) 100, in an arm’s-length transaction “* * * each [party] act[s] in his or her own self interest * * *.” In sum, an arm’s-length sale is characterized by these elements: it is voluntary, i.e., without compulsion or duress; it generally takes place in an open market; and the parties act in their own self-interest. All these elements were present in the auction sales in this case.2 The board of revision contends [26] that the Talcon auction sales of the five lots were not at arm’s length because the Walterses and sellers did not negotiate face to face, the Walterses did not learn the sellers’ reasons for selling, and the Walterses did not know the sellers’ identities until after the transactions. These circumstances have little or no bearing on whether the sales were at arm’s length. The BTA concluded that because there was no specific testimony to show forcible inducement in the resort developer’s sale of the sixth lot to the Walterses, that sale was also conducted at arm’s length. Thus, the $8,200 sale price represents the true value of the sixth lot. We agree. This valuation is consistent with the principle that the purchase price in a recent arm’s-length sale is presumed to represent the true value of the property. That presumption was not rebutted for any of the six lots in this case. The decision of the BTA is therefore affirmed. Decision affirmed. Sweeney, H. Brown and Resnick, JJ., concur. Douglas, J., concurs in judgment only. Moyer, C.J., and Holmes, J., dissent. Footnotes [1] In In re Estate of Sears (1961), 172 Ohio St. 443, 17 O.O. 2d 417, 178 N.E. 2d 240, paragraph two of the syllabus, we defined “market value” as “* * * the fair and reasonable cash price which can be obtained in the open market, not at a forced sale or under peculiar circumstances but at voluntary sale between persons who are not under any compulsion or pressure of circumstances and who are free to act; or, in other words, between one who is willing to sell but not compelled to do so and one who is willing to buy but not compelled to do so.” This is similar to the BTA’s definition of “arm’s-length” sale discussed infra. [2] R.C. 5713.04 provides in part: “* * * The price for which such real property would sell at auction or forced sale shall not be taken as the criterion of its value.” It is not clear whether the term “auction” in this statute applies to a voluntary sale where the seller could accept or reject a bid such as occurred in this case, or [26] applies only to auctions such as sheriff’s sales, sales pursuant to bankruptcy proceedings, and the like. We do not, however, decide this question as appellant did not raise this issue at the BTA hearing or on appeal.