{ "id": 1907731, "name": "IBM CREDIT CORPORATION v. PULASKI COUNTY, Arkansas", "name_abbreviation": "IBM Credit Corp. v. Pulaski County", "decision_date": "1994-04-11", "docket_number": "93-1194", "first_page": "580", "last_page": "586", "citations": [ { "type": "official", "cite": "316 Ark. 580" }, { "type": "parallel", "cite": "873 S.W.2d 161" } ], "court": { "name_abbreviation": "Ark.", "id": 8808, "name": "Arkansas Supreme Court" }, "jurisdiction": { "id": 34, "name_long": "Arkansas", "name": "Ark." }, "cites_to": [ { "cite": "212 S.W. 308", "category": "reporters:state_regional", "reporter": "S.W.", "year": 1919, "opinion_index": 0 }, { "cite": "138 Ark. 449", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1566982 ], "year": 1919, "opinion_index": 0, "case_paths": [ "/ark/138/0449-01" ] }, { "cite": "303 Ark. 387", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1882799 ], "weight": 3, "year": 1990, "opinion_index": 0, "case_paths": [ "/ark/303/0387-01" ] }, { "cite": "311 Ark. 145", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1897014 ], "weight": 3, "year": 1992, "opinion_index": 0, "case_paths": [ "/ark/311/0145-01" ] }, { "cite": "307 Ark. 171", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1902409 ], "weight": 2, "year": 1991, "opinion_index": 0, "case_paths": [ "/ark/307/0171-01" ] }, { "cite": "227 Ark. 1066", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1705578 ], "weight": 4, "year": 1957, "pin_cites": [ { "page": "1069" }, { "page": "299" } ], "opinion_index": 0, "case_paths": [ "/ark/227/1066-01" ] }, { "cite": "289 Ark. 113", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1875428 ], "weight": 2, "year": 1986, "opinion_index": 0, "case_paths": [ "/ark/289/0113-01" ] }, { "cite": "310 Ark. 1", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1898857 ], "weight": 2, "year": 1992, "opinion_index": 0, "case_paths": [ "/ark/310/0001-01" ] }, { "cite": "Ark. Code Ann. \u00a7 26-26-1202", "category": "laws:leg_statute", "reporter": "Ark. Code Ann.", "year": 1992, "pin_cites": [ { "page": "(c)" } ], "opinion_index": 0 } ], "analysis": { "cardinality": 572, "char_count": 10486, "ocr_confidence": 0.874, "pagerank": { "raw": 1.0870145053409524e-07, "percentile": 0.5639168538397412 }, "sha256": "d0f64139f322d405cc937c94c7ddf128d58de3498e9ae767e275c26d92fcd233", "simhash": "1:4c3cc93240a4d612", "word_count": 1680 }, "last_updated": "2023-07-14T14:45:44.703271+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Corbin, J., not participating." ], "parties": [ "IBM CREDIT CORPORATION v. PULASKI COUNTY, Arkansas" ], "opinions": [ { "text": "Robert L. Brown, Justice.\nThis is an assessment case which concerns the value that the Pulaski County Assessor, B.A. McIntosh, placed on used IBM mainline computers leased to Baptist Medical Center and Dillard Department Stores. The appellant, IBM Credit Corporation, advances the argument that certain trade publications like Computer Price Watch, Computer Price Guide, and the End-User Market Value Report published by Daley Marketing Corporation are more valid for determining the value of used IBM equipment since they depict the actual market for that equipment. The circuit court agreed with the valuation method used by the assessor\u2019s office which was the cost of the computers less straight line depreciation over six years. IBM Credit raises two points on appeal: (1) whether the circuit court erred in ignoring fair market value data as set out in those trade magazines; and (2) whether straight line depreciation for a term of years is a reasonable means of determining fair market value. We find no error in the circuit court\u2019s decision, and we affirm.\nIBM Credit is in the business of leasing IBM mainline computers. The customer and IBM Corporation, which manufactures the computers, negotiate a price for the equipment. Once the price is established, the customer then assigns the right to purchase the computer equipment to IBM Credit. IBM Credit purchases the computer equipment from IBM Corporation and leases it back to the customer.\nIn 1992, IBM Credit provided the Pulaski County Assessor with documentation which it claimed established the fair market value of the three leased units based on actual market conditions as of January 1992. This documentation included: (1) IBM Credit\u2019s experience as the largest dealer of used IBM computer equipment in the United States; and (2) data contained in published trade journals such as Computer Price Watch which list both wholesale and retail prices for used, intermediate-to-large IBM computer systems.\nThe assessor did not use IBM Credit\u2019s \u201cfair market\u201d figures to determine the value of the three used computers. Instead, he chose to use a cost-less-depreciation schedule over a six year period. This valuation method, according to the assessor, had been used to value all computers in Pulaski County since the early 1980\u2019s. He valued IBM Credit\u2019s two computer systems leased to Dillard\u2019s and one computer system leased to Baptist Medical Center at $7.61 million using straight line depreciation and a useful life of six years. IBM Credit\u2019s total value for these same three computer systems using its prices garnered from trade publications was $5.85 million.\nIBM Credit challenged the assessor\u2019s valuation methodology before the Board of Equalization, which affirmed the assessor\u2019s figures. It then appealed to the Pulaski County Court which also affirmed the assessor\u2019s decision. IBM Credit next appealed to Pulaski County Circuit Court and styled the case with Pulaski County, Arkansas as the sole appellee. Following a hearing, the circuit court issued a letter opinion, stating: \u201cAlthough IBM\u2019s proposed valuation might be accurate, if adopted, every computer in each \u2018mom and pop\u2019 business would have to be valued in the same manner. There is not a \u2018Computer Watch,\u2019 which mainly covers IBM products, for many of the manufacturers.\u201d The court concluded that the assessor\u2019s valuation figures were reasonable for the three IBM units in question and that the most practical method for arriving at the value of used equipment was the uniform method of cost less depreciation. An order affirming the decision of the county court was subsequently entered.\nIBM Credit first claims that the circuit court erred in not requiring the assessor to consider its fair market data pursuant to Ark. Code Ann. \u00a7 26-26-1202(c)(Repl. 1992). \u00a7 26-26-1202(c) reads:\n(c)(1) Personal property of any description shall be valued at the usual selling price of similar property at the time of listing.\n(2) If any personal property shall have no well-fixed or determined value in that locality at that time, then it shall be appraised at such price as in the opinion of the assessor could be obtained at that time and place.\nPulaski County, on the other hand, relies on Article 16, \u00a7 5 of the Arkansas Constitution, which provides in part:\n(a) All real and tangible personal property subject to taxation shall be taxed according to its value, that value to be ascertained in such manner as the General Assembly shall direct, making the same equal and uniform throughout the State. No one species of property for which a tax may be collected shall be taxed higher than another species of property of equal value. ...\nThe standard of review of a tax assessment is whether the assessment is \u201cmanifestly excessive or clearly erroneous or confiscatory.\u201d Summers Chevrolet, Inc. v. Yell County, 310 Ark. 1, 832 S.W.2d 486 (1992); Jim Paws, Inc. v. Equalization Bd. of Garland County, 289 Ark. 113, 710 S.W.2d 197 (1986), citing St. Louis-San Francisco Ry. Co. v. Arkansas Pub. Serv. Comm\u2019n, 227 Ark. 1066, 304 S.W.2d 297 (1957). The burden of proof is on the protestant assessed. Summers Chevrolet, Inc. v. Yell County, supra; Arkansas Elec. Coop. Corp. v. Arkansas Pub. Serv. Comm\u2019n, 307 Ark. 171, 818 S.W.2d 935 (1991).\nIt is only in the most exceptional cases that an appellate court will grant a reassessment. Jim Paws, Inc. v. Equalization Bd. of Garland County, supra. As we stated in St. Louis-San Francisco Ry. Co. v. Arkansas Pub. Serv. Comm\u2019n, supra, \u201cOrdinarily the Court has no jurisdiction to make a tax assessment, and if it finds error, it should remand the case to the assessing body for further proceedings in accordance with the Court\u2019s findings.\u201d 227 Ark. at 1069, 304 S.W.2d at 299, citing 84 C.J.S. 1123; see also Potlatch Corp. v. Arkansas City School Dist., 311 Ark. 145, 842 S.W.2d 32 (1992); Tuthill v. Arkansas County Equalization Board, 303 Ark. 387, 797 S.W.2d 439 (1990). Because of the separation of powers doctrine, it is not within the province of state courts to assess property. Tuthill v. Arkansas County Bd. of Equalization, supra.\nA review of the evidence reveals that the assessor\u2019s decision to value IBM Credit\u2019s computers by the cost-less-depreciation method was not clearly erroneous or arbitrary or confiscatory. The publications offered by IBM Credit to establish the true market value of its computers did not list all computers that need to be assessed. The publications, therefore, lacked uniformity and in that respect differed from the \u201cblue book\u201d for automobiles. While arguably the publications more accurately reflect the value of IBM Credit\u2019s computers, they do not reflect the value of all computers. To use Consumer Price Watch data to value IBM Credit\u2019s computers would result in IBM Credit\u2019s being treated differently than other owners of similar property, which is diametrically opposed to the dictates of Article 16, \u00a7 5. See Doniphan Lumber Co. v. Cleburne County, 138 Ark. 449, 212 S.W. 308 (1919).\nFurthermore, IBM Credit\u2019s proposed method of determining the value of computers in Pulaski County would be unduly burdensome. The evidence in the de novo hearing before the circuit court was that there are literally thousands of computers that must be assessed in Pulaski County. Not all of these computers have trade publications which list their used value; indeed, many do not.\nIn sum, to use a discrete methodology for valuing IBM computers and then cost less depreciation for many other brands sacrifices the very uniformity that the state constitution demands. Clearly, every other computer wholesaler and retailer assessed would have a meritorious argument of discrimination were the assessor to carve out one brand of computer for disparate treatment as compared to others.\nIBM Credit next asserts that even if the assessor was free to disregard the market value data, his adoption of the straight ' line depreciation schedule was arbitrary, capricious, and confiscatory. This is so, according to IBM Credit, because the schedule fails to account for computer equipment\u2019s functional obsolescence, as opposed to wear and tear, and assumes that all computers depreciate equally over a six year period and then cease to depreciate, which ignores market reality.\nWe conclude that the assessor\u2019s straight line depreciation schedule over six years is a reasonable means for determining fair market value. This court has approved the use of cost-less-depreciation schedules for assessing other forms of personal property. See, e.g., Potlatch Corp. v. Arkansas City School Dist., supra. In Potlatch, we noted that the Assessment Coordination Division of the Arkansas Public Service Commission, which has the power of supervision and control over county assessors and boards of equalization, had published a manual to be used by county assessors which recommended three methods to arrive at market value: (1) comparable sales; (2) capitalization of income; and (3) cost less depreciation. See also Tuthill v. Arkansas County Equalization Board, supra.\nThe county assessor, B.A. McIntosh, testified that he attempted to factor in functional obsolescence in computers in the early 1980\u2019s by assessing them based on a useful life of six years versus a longer term for other forms of tangible personal property. Moreover, IBM Credit\u2019s witness, Mike Costogan, a financial marketing advisor with the company, admitted that if he needed to value a computer not listed, he would use some alternative methodology that rapidly depreciates the value of the asset such as straight line depreciation. We are not prepared to say that straight line depreciation is an arbitrary, capricious, or confiscatory means of determining value for the computers in question. The circuit court did not err in finding that the assessed values were reasonable.\nThough the issue was not raised, we observe that IBM Credit failed to join as appellee any party that could have implemented a reassessment of the computer systems in question had we decided that a remand was appropriate. That failure to join the assessor or board of equalization as a party leaves a void as to who would effect the reassessment on remand.\nAffirmed.\nCorbin, J., not participating.", "type": "majority", "author": "Robert L. Brown, Justice." } ], "attorneys": [ "Hilburn, Calhoon, Harper, Pruniski & Calhoon, Ltd., by: James M. McHaney, Jr., for appellant.", "Nelwyn Davis, for appellee." ], "corrections": "", "head_matter": "IBM CREDIT CORPORATION v. PULASKI COUNTY, Arkansas\n93-1194\n873 S.W.2d 161\nSupreme Court of Arkansas\nOpinion delivered April 11, 1994\nHilburn, Calhoon, Harper, Pruniski & Calhoon, Ltd., by: James M. McHaney, Jr., for appellant.\nNelwyn Davis, for appellee." }, "file_name": "0580-01", "first_page_order": 614, "last_page_order": 620 }