Attorneys for relator Attorneys for respondents
Stephen A. Carter Treasurer of Lake County
Attorney General of Indiana John S. Dull
Gary Damon Secrest
Joby Jerrells George Patrick
Deputy Attorneys General Crown Point, Indiana
Miller Citizens Corporation
Kenneth D. Reed
John P. Reed
Gregory S. Reising
Douglas M. Grimes
Common Council of the
ity of Hammond
Robert G. Berger
Common Council of the City of
Indiana Supreme Court
State of Indiana ex rel.
The Attorney General of the State
The Lake Superior Court and
The Honorable Robert Pete,
As Judge Thereof,
On Petition for Writ of Mandamus and Prohibition
Attorneys For Appellants
Attorneys for Appellees
Governor of Indiana Miller Citizens Corporation
Attorney General of Indiana Kenneth D. Reed
Department of Local Government
Finance John P. Reed
Stephen A. Carter Hammond, Indiana
Attorney General of Indiana
Gregory S. Reising
Douglas M. Grimes
Joby Jerrells Gary, Indiana
Common Council of the City of
Deputy Attorneys General Hammond
Indianapolis, Indiana Robert G. Berger
United States Steel Corporation
Thomas Atherton Common Council of the City of
Ronald M. Soskin East Chicago
Indianapolis, Indiana Indianapolis, Indiana
International Steel Group, Inc.
the Treasurer of Lake County
Larry J. Stroble John Dull
Michael V. Knight
BP Products N. America, Inc.
Crown Point, Indiana
Jeffrey T. Bennett
Indianapolis, Indiana Common Council of the City of
Ispat Inland, Inc.
William Clyde Jones
Francina A. Dlouhy Gary, Indiana
James H. Ham, III
Christopher A. Ruhl
Indiana Supreme Court
Governor of the State of
Indiana, et al.,
Miller Citizens Corporation,
Appeal from the Lake County Superior Court, No. 45D05-0404-PL-91
The Honorable Robert A. Pete, Judge
On Direct Appeal
January 13, 2005
In 2001, the General Assembly passed two statutes that applied only in Lake
County and provided for countywide reassessment of property for tax purposes to be
conducted by the Department of Local Government Finance and by private contractors selected
by the DLGF. The plaintiffs are a group of taxpayers who brought
an action in April 2004 in Lake Superior Court seeking a declaratory judgment
that these statutes are unconstitutional. The bills for taxes due in 2003
had not yet been mailed due to delays in the reassessment process and
the plaintiffs asked that the taxing authorities in that county be enjoined from
mailing bills for the property taxes due in 2003.
The trial court found the statutes to violate five separate provisions of the
Indiana Constitution and granted the requested preliminary injunction. The Attorney General contended
that exclusive jurisdiction over this case lies in the Tax Court and on
that ground asked this Court for a writ of mandamus and prohibition.
While that writ proceeding was pending, an appeal of the preliminary injunction was
also initiated. This Court stayed the trial courts preliminary injunction. As
a result the taxing authorities were free to mail the bills for taxes
due in 2003. We then ordered the writ proceeding and the appeal
to be argued concurrently. This opinion addresses both.
We hold that the Lake Superior Court had no jurisdiction to entertain these
claims. We recognize that ordinarily lack of jurisdiction of the trial court
would preclude deciding any other issues. However, this case presents a challenge
to the entire assessment process in Indianas second most populous county. For
the reasons explained below, we think it is clear that the plaintiffs will
ultimately fail in their effort to enjoin the tax bills produced by the
2002 countywide reassessment. It is not in anyones interest to preserve false
hopes by resolving this appeal on jurisdictional grounds alone. In short, there
is broad public interest in a prompt resolution of this case, and the
parties ask us to address the merits of the plaintiffs claims without regard
to jurisdiction. For these reasons we do so without delaying a final
resolution of this matter.
We conclude that the statutes providing for private parties or the DLGF to
assess certain assets in Lake County violate one of the provisions of the
Indiana Constitution on which the plaintiffs rely, but not the other four.
Although the 2001 laws violated Article IV, Section 22 of the Indiana Constitution
as special legislation providing for the assessment of taxes, in 2004 the General
Assembly passed a statute authorizing the assessment conducted pursuant to the 2001 legislation.
This curative legislation validated the acts taken under the unconstitutional special legislation.
Moreover, plaintiffs waited until reassessment was completed to seek injunctive relief.
In the meantime, other taxpayers and local government units relied on the ongoing
reassessment process provided by statute to supply funding for essential day-to-day functions of
government. For that reason as well, plaintiffs claim for injunction was barred
by the delay in seeking equitable relief.
Factual and Procedural Background
In broad brush, the amount of property taxes owed for each individual property
is set by allocating the total amount of property taxes to be raised
in a taxing district among all pieces of property in proportion to their
assessed valuations. If the total to be raised increases, of course the
sum of all tax bills in the district goes up by that amount.
But, the total amount to be raised is unaffected by a reassessment
of property valuations. If all assessed valuations go up or down by
the same percentage as the result of a reassessment, even if there is
a large change in the dollar amount of the assessed valuation on each
property, there is no change in the tax burden of any individual property.
In simplified terms, if the assessed valuation of every property doubles, it
would have no effect on the tax bills of any of them.
If, however, some assessed valuations go up or down more than others, as
is always the case in the real world, some taxes go up and
some go down, but the gains by those whose assessed valuations go down
more than the average are offset by losses among those whose assessed valuations
increase more than the average. In other words, reassessment is a zero
sum game for all property in the affected area.
As explained in more detail below, Lake County has for several years had
a history of uneven assessments and generally lower assessed valuations than those in
other parts of the state for similar properties. In response to this
situation, the two challenged provisions were enacted by the 2001 session of the
General Assembly in the same law, H.B. 1902. Both by their terms
apply only in counties with populations between 400,000 and 700,000, and Lake County
is the single county meeting that criterion. The two statutes now appear
as Indiana Code section 6-1.1-4-32 (2004), which authorized the DLGF to employ private
firms to assess real property in Lake County, and Indiana Code section 6-1.1-8.5-1
et seq., which provided for the DLGF itself to assess industrial properties in
Lake County with an estimated assessed value in excess of $25 million.
Indiana property taxes are due in May and November of each year based
on assessed valuations as of March 1 of the preceding year. Both
of the challenged statutes provide procedures that formed a part of the process
of determining the assessed valuation of property in Lake County as of March
1, 2002. The 2002 reassessment was completed, although later than usual, by
a private firm selected by the State Board and by the DLGF.
In practical terms, the issue here is that the reassessment resulted in proportionally
lower assessed valuations of some large industrial properties in Lake County compared to
the changes in assessed valuations of some residential properties, notably those owned by
the plaintiffs. As a result, the 2003 taxes increased for the owners
of properties whose changes in assessments were proportionally higher. For some properties,
these new taxes were dramatically higher than their historic levels. The State
points out that if the reassessment is accurate, the increase in taxes compared
to prior years merely corrects an underpayment these residential properties have enjoyed in
the past. The plaintiffs counter that the effect of increased taxes is
to lower the market value of their residential properties because most homes are
purchased based on the monthly cash payments required for principal and interest on
a mortgage plus taxes and insurance. An increase in taxes means a
potential purchaser has less available for monthly mortgage payments and therefore produces a
reduced market value of the property.
Article IV, Section 22 of the Indiana Constitution prohibits local or special laws
dealing with a number of subject matters, one of which is providing for
the assessment and collection of taxes . . . . Article IV,
Section 23 provides that even if a law does not address one of
the Section 22 items, it nevertheless must be a general law where a
general law can be made applicable. Finally, Article X, Section 1 directs
the General Assembly to provide, by law, for a uniform and equal rate
of property assessment and taxation . . . . Plaintiffs brought this
action in Lake Superior Court, contending that these two statutes violate each of
these three provisions, and two others as well. For that reason they
claim that the collection of the 2003 property taxes in Lake County must
be enjoined. The State responds that the trial court lacks jurisdiction over
this case. The State also contends that the statutes are constitutional, and
in any event the resulting assessed valuations are correct, so there is no
point in redoing the assessment by some other agency that would, after some
extended time, arrive at the same results, and in the meantime severely interfere
with the day-to-day operation of local government in Lake County.
After a hearing in which no testimony was taken, the trial court granted
a preliminary injunction. The State first asked this Court, pursuant to Original
Action Rule 1(A), for a writ of mandamus and prohibition, contending that the
trial court lacked jurisdiction based on the plaintiffs failure to exhaust administrative remedies.
The State also initiated an appeal of the preliminary injunction pursuant to
Appellate Rule 14(A)(5). Because the preliminary injunction was based on a holding
that a statute was unconstitutional, the appeal also is directly to this Court.
App. R. 4(A)(1)(b). We granted the States request for a stay
of the trial courts preliminary injunction, permitting the tax bills to be mailed.
We then consolidated the argument on the two proceedings and now address
both in this opinion.
The parties do not dispute the underlying facts. The issues relating to
the jurisdiction of the trial court and the merits present only questions of
I. Jurisdiction of the Trial Court
Plaintiffs brought this suit contending their properties were incorrectly assessed and therefore their
soon-to-be mailed tax bills were too high. The statute creating the Tax
Court provides that that court has exclusive jurisdiction over any case that arises
under the tax law of this state and that is an initial appeal
of a final determination of the Indiana Board of Tax Review. Ind.
Code § 33-3-5-2 (2003).
See footnote Other statutes provide in some detail the procedure
for contesting an assessment of property. These include an appeal from county
determinations to the Board, and a provision in Indiana Code section 6-1.1-15-5(b) for
review of challenges to assessments by the Tax Court under I.C. 4-21.5-5.
This refers to the Judicial Review chapter of the Indiana Administrative Orders and
Procedures Act which includes Section 4(a) requiring exhaustion of administrative remedies before judicial
review may be initiated. In
State v. Sproles, 672 N.E.2d 1353, 1357
(Ind. 1996), we held that a taxpayer wishing to contest a tax must
first exhaust administrative remedies, and that these statutes collectively deprive the other trial
courts of this state of jurisdiction over any case that principally involves collection
of a tax or defenses to that collection. As explained in Lake
County Property Tax Assessment Board of Appeal v. BP Amoco Corp., ___ N.E.2d
___ (No. 49S10-0309-00400) (Ind. Jan. 13 2005), handed down today, a challenge of
the sort plaintiffs bring in this case is properly presented in the first
instance to the Indiana Board of Tax Review. Accordingly, judicial review lies
exclusively in the Tax Court. See also State Bd. of Tax Commrs
v. Mixmill Mfg. Co., 702 N.E.2d 701, 702 (Ind. 1998); Winski Bros. v.
Bayh, 679 N.E.2d 912, 915 (Ind. Ct. App. 1997). In 2001, after
these decisions, the statutes discussed above were amended to substitute the Board of
Review for the State Tax Board as the agency entertaining property tax appeals
from local taxing authorities, but the language conferring exclusive jurisdiction on the Tax
Court and requiring exhaustion of administrative remedies was preserved without change. Pub.
L. No. 198-2001, § 98, 2001-2 Ind. Acts 1293, 1407. We perceive
no legislative dissatisfaction with the construction of that provision we made explicit in
Sproles, and find it controlling here.
Plaintiffs contend that the Lake Superior Court, as a court of general jurisdiction,
has jurisdiction over the constitutionality of these statutes. Precisely the same claim
was advanced and rejected in Sproles, 672 N.E.2d at 1357. That case
involved a claim, asserted in a court of general jurisdiction, that a tax
could not be collected because the constitution prevented its collection. The claim
in Sproles was that the constitutional ban on double jeopardy prevented collection of
the Controlled Substance Excise Tax where the taxpayer had been convicted of a
crime for possession of the same marijuana that was the subject of the
tax. We held that such a case arises under the tax laws
and therefore must be brought in the Tax Court after exhaustion of administrative
remedies. Id. at 1361. The sole relief the plaintiffs seek here
is an injunction against the collection of property taxes, and their claim is
that the assessed valuations of Lake County property are invalid because the assessment
was done pursuant to unconstitutional statutes. These constitutional issues are asserted as
the basis of defense to the collection of the property taxes. Just
as Mr. Sproles did, Plaintiffs here seek to bring their claim in a
court of general jurisdiction to enjoin collection of a tax.
The trial court concluded that this case involves assessments, not taxation, and therefore
Sproles was inapplicable. As already noted, the statute governing challenges to assessments,
I.C. § 6-1.1-15-5 (2004), expressly incorporates the exhaustion requirement as to challenges to
assessments. Assessments, just as other challenges to a tax, are routed through
the Board of Tax Review, and we see no distinction for these purposes
between a challenge to assessments, whether procedural or substantive, and any other basis
to contest a tax.
We are equally unpersuaded by Plaintiffs suggestion that it makes a difference that
the tax in Sproles was a listed tax regulated by the Department of
Revenue, rather than the property tax administered through the Board of Tax Review.
The same statutory language imposes jurisdictional restrictions on both types of tax.
Both are subject to the same requirement of exhaustion of administrative remedies
and both are subject to the exclusive jurisdiction of the Tax Court by
the same language in Indiana Code section 33-3-5-2(a) (2003), which applies that language
to both listed taxes in subsection (a)(1) and to property taxes in subsection
In summary, the question whether the Tax Court jurisdiction is exclusive is purely
a matter of legislative intent. In 1996, we held that the purpose
of the 1986 legislation creating the Tax Court was to consolidate tax litigation
in one forum, and deprive the courts in various locations around the State
of jurisdiction to address these issues. Sproles, 672 N.E.2d at 1357.
Despite his claim that resort to his administrative remedy was futile, Sproles was
required to exhaust administrative remedies and present his constitutional claims to the Tax
Court. Id. at 1361. That result is dictated by the General
Assembly, and the same statutes govern the plaintiffs claim here.
II. The Merits of Plaintiffs Claims
Failure to exhaust administrative remedies is a defect in subject matter jurisdiction.
M-Plan, Inc. v. Ind. Comprehensive Health Ins. Assn, 809 N.E.2d 834, 837 (Ind.
2004) (citing Austin Lakes Joint Venture v. Avon Utils., Inc., 648 N.E.2d 641,
644 (Ind. 1998)). Accordingly, the trial court was without jurisdiction to entertain
this claim, and a writ of prohibition is properly requested. State v.
Allen Superior Court, 699 N.E.2d 1134, 1135 (Ind. 1998). Plaintiffs request us
to address the merits of their contentions, even if the trial court lacked
jurisdiction. We agree we should do so. The issues have been
fully briefed by the parties and by the intervenors, and a resolution of
the merits of these contentions is in the public interest.
A. Special Legislation Under Article IV of the Indiana Constitution
Both Section 22 and Section 23 of Article IV of the Indiana Constitution
prohibit special legislation under some circumstances. Plaintiffs contend that the statutes providing
for DLGF to assess industrial property and for private contactors to be hired
to assess residential property are local or special legislation as that term is
used in both sections. We agree that these laws are special for
purposes of Article IV. The statutes authorizing the 2002 reassessments by their
terms applied only in counties of population between 400,000 and 700,000, and Lake
County is the only such county. To be sure, some statutes applicable
only to areas with specified populations may be justifiable as special legislation, because
the parameters rationally relate to the subject matter of the legislation. They
may also be viewed as general legislation if the subject matter is one
that is rationally related to population, such as the basic structure of local
government. So, as we observed in City of South Bend v. Kimsey,
781 N.E.2d 683, 694 (Ind. 2003), the Unigov statute, which applies only to
counties with cities of the first class, and therefore only to counties with
cities of certain size, may properly be viewed as a general law even
if it applies in practice in only one place. By hooking the
defining characteristic (in Unigov a city of the first class) to the justifying
characteristic (rational desire for more expansive and encompassing form of metropolitan government), legislation
applicable in only one county may over time become applicable in others.
Here however, the apparent reasons for limiting the application of the statutes in
question are not related to population. Rather, they plainly derive from the
troubled history of property taxation in Lake County discussed below. Thus, the
rationale for population-based statutes relating to the organization of local government do not
apply here, and the law, applicable only in Lake County, is special legislation
whether it describes Lake County by name, by population parameters, or by some
other unique characteristic. Id. at 692.
1. Local laws providing for the assessment and collection of taxes
Article IV, Section 22 provides a list of subjects as to which local
or special laws are prohibited. Among these are laws providing for the
assessment and collection of taxes . . . . The State argues
that Section 22 does not apply to the statutes in question here because
the Section is written in the conjunctive, prohibiting local laws that provide for
the assessment and collection of taxes. Because there is no collection aspect
to these laws, the State contends Section 22 is inapplicable. We do
not agree. The constitutional debates make clear that lack of uniform assessment
practices was one of the principal concerns underlying both Article X, Section 1,
and Article IV, Section 22. See, e.g., Report of the Debates and
Proceedings of the Convention for the Revision of the Constitution of the State
of Indiana, Vol. II at 1290 (1850), where Douglass Maguire, a delegate from
Marion County, finding great inequality in the assessment and taxation of property, called
for checks upon county assessors through a Board of Equalization to value all
real property on an equal basis. Although and is normally taken as
conjunctive, it may be read as disjunctive if the context makes clear that
is the legislative intent. See, e.g., State v. Myers, 146 Ind. 36,
38, 44 N.E. 801, 801-02 (1896); Brook v. State, 448 N.E.2d 1249, 1251
(Ind. Ct. App. 1983).
We think the history of Section 22 makes clear that it was addressed
to local laws dealing with either assessment of property or collection of taxes,
or both. Section 22 had no counterpart in the 1816 Constitution and
appeared for the first time in the Indiana Constitution as a result of
the 1851 Constitutional Convention. It was the product of widespread dissatisfaction with
the large number of laws passed by the legislature in the early days
of this State dealing with purely local subjects. Many of these imposed
or authorized local taxes for specific projects, typically roads or schools. Others
addressed a variety of other special and local interests, even granting divorces.
To assess property is to value it. Merriam Websters Collegiate Dictionary 69
(10th ed. 1993). To assess a tax is to impose it.
Id. Thus, as a matter of syntax, Section 22s reference to laws
providing for the assessment and collection of taxes may be read to deal
only with laws passed for the imposition or collection of taxes, and not
the valuation of property for tax purposes. However, in State v. Hoovler,
668 N.E.2d 1229 (Ind. 1996), we addressed a claim that Section 22 prohibited
a statute raising the maximum local county option income tax rate to 1.25%
in Tippecanoe County from the 0.7% rate applicable statewide. The effect was
to permit county authorities to adopt an additional 0.55% local income tax.
After a review of the historical roots of Section 22, this Court held
that this statute, though a local law, did not violate Section 22 because
it did not authorize any new property valuations or changes in the system
of tax gathering. Id. at 1233. The authorization of an increase in
the rate of an existing tax was not the assessment and collection of
a tax. Indeed, we specifically referred to a dictionary of the time,
noting that assessment includes valuation of property . . . for purpose of
taxation. Id. Hoovler thus made clear that local laws dealing with
assessment of property for tax purposes were prohibited by Section 22. This
is of course consistent with the history of Section 22, as variations in
assessment procedures were the most frequently cited reasons for the need for constitutional
limits on local legislation. Accordingly, we agree with plaintiffs that these provisions
constitute special legislation providing for the assessment and collection of taxes, and therefore
violate Article IV, Section 22 of the Indiana Constitution. For the reasons
explained in Parts III and IV, however, the reassessments conducted under these statutes
are not invalid by reason of this flaw in the statutes.
2. Special laws under Article IV, Section 23
Plaintiffs contend these laws also violate Article IV, Section 23, which requires that
where a general law can be made applicable, all laws shall be general,
and of uniform operation throughout the State. As we held in Kimsey,
under Section 23, a law limited to a given county is prohibited unless
there are inherent characteristics of the affected locale that justify local legislation.
Kimsey, 781 N.E.2d at 692. If the affected county reflects unique circumstances
that rationally justify the legislation, then a general law is not applicable elsewhere
and Section 23 is not violated. Id.
The State points to the long and tortured history of property taxation in
Lake County, described in Mantonovich v. State Bd. of Tax Commrs, 705 N.E.2d
1093, 1095 (Ind. Tax Ct. 1999) as an endemic problem with the uniformity
of assessments within classes of property. As explained above, if some parts
of a county significantly underassess properties compared to the assessed valuations placed on
similar properties elsewhere, the effect is to shift tax burdens from the underassessed
properties. Indeed, that was the complaint of the town of St. John,
which is in Lake County, that led to the initial holding that the
then-prevailing true tax value system of assessment did not produce a uniform and
equal method of assessment in violation of Article X, Section 1 of the
Indiana Constitution. Boehm v. Town of St. John, 675 N.E.2d 318, 324
Until 2001, the State Tax Board had the functions of both the Board
of Tax Review and the DLGF. In 1998, the State Board had
concluded, after public hearings, that widespread underassessment in various units of Lake County
required ordering a countywide reassessment, and had employed a private contractor to reassess
all property in Lake County. Though noting the State Boards finding that
there was a widespread recognition that an assessment problem exists in Lake County,
the Tax Court concluded that the Board had no authority to employ a
private firm to perform the reassessment. Mantonovich, 705 N.E.2d at 1098.
In response to that decision, the General Assembly promptly granted the Board the
authority the Tax Court found lacking by enacting the statutes Plaintiffs challenge in
this case. We thus have administrative findings, judicial findings, and legislative action
all pointing to a unique circumstance created by uneven assessment practices in various
parts of Lake County. And, as Plaintiffs point out, a few huge
industrial complexes in Lake County constitute significant percentages of all taxable property in
some taxing districts, a situation not faced in any other county, and requiring
great care in valuing such a dominant asset of unique kind and character
for which there is no ready market comparable to that for residential housing.
We are directed to no comparable set of circumstances in any other
county producing such widespread tax inequities and unusual issues of valuation. These
conditions readily justify local legislation to deal with a reassessment problem of a
scale and complexity not found elsewhere in the state.
B. Other Constitutional Challenges
Plaintiffs contend without much explanation that these statutes violate Article X, Section 1
of the Indiana Constitution. That section requires a uniform and equal rate
of property assessment and taxation. We have held that the system of
property taxation must be based on a system that causes each taxpayers property
wealth bear its proportion of the overall property tax burden. Town of
St. John, 675 N.E.2d at 324. There is no basis to conclude
that the statutes in question produce a disproportionate assessment. Different procedures to
accomplish a reassessment based on the same substantive rules of valuation do not
violate that provision. Indeed, this Court has held that the goal of
statewide uniformity and proportionality trumps a local governments authority to value property.
Zoercher v. Agler, 202 Ind. 214, 225-26, 172 N.E. 186, 190-91 (1930).
The end resulta uniform and equal rate of assessmentis required, but there is
no requirement of uniform procedures to arrive at that rate. To the
contrary, the power of local authorities to implement tax laws is purely statutory
in nature. The only constitutional constraint under Article X, Section 1 is
upon the State itself, which must provide a uniform and equal rate of
assessment, but may provide whatever procedures are appropriate consistent with the other provisions
of the Constitution.
For the same reason that these statutes do not violate Article IV, Section
23, they also do not violate Article I, Section 23, which requires that
legislative classifications be reasonably related to inherent characteristics that define the class.
Plaintiffs do not elaborate on these claims and we are left to surmise
what the classification may be. Taking the complaint at face value, the
class appears to be Lake County taxpayers compared to those in all other
counties. As explained above, given the long history of systematic underassessment in
parts of Lake County, there is abundant reason to provide for reassessment of
property in that county by means different from those applied in other counties.
The statutes thus satisfy the first prong of the requirements of Article
I, Section 23. The separate treatment of Lake County is reasonably related
to its distinguishing characteristics. Collins v. Day, 644 N.E.2d 72, 80 (Ind.
Plaintiffs also advance an argument, not clearly tied to any specific constitutional provision,
the substance of which is that local assessors would recognize the adverse effect
that lowering valuations of industrial properties would have on some residential properties.
This is compounded, plaintiffs say, by the fact that this reassessment was performed
by two different agencies, private contractors for residential properties and DLGF for industrial
property. They claim a constitutional right to have locally elected officials perform
the assessments. There are several things wrong with this claim. First,
valuations, whether made by local authorities or by others, are as of March
1 of a given year. Any shift in valuations caused by tax
bills in the future is a matter for future reassessments. Second, this
argument boils down to a claim that these plaintiffs have a right to
preferential treatment under the property tax laws. That is precisely the contention
rejected by other taxpayers, including the residents of St. John, who felt disadvantaged
by selective underassessments in parts of Lake County and claimed those disparities violated
their rights to uniform and equal taxation. Without a showing that the
substantive results reached by the reassessments are incorrect, we will not indulge the
assumption that local officials would arrive at a different result. Finally, there
is nothing in the Constitution that guarantees an assessment by locally elected officials.
The clerk of the circuit court, auditor, recorder, treasurer, sheriff, coroner, and
surveyor are required by Article VI, Section 2 to be elected, in each
county. There is no such requirement as to assessors. Indeed, at
some points in the history of this state the disparities created by local
assessors responding to local election pressures created demand for a statewide equalization board
to eliminate the resulting unfairness. Justin E. Walsh, The Centennial History of
the Indiana General Assembly 1816-1978, 102-04 (1987).
Plaintiffs claim that these statutes violate Article I, Section 21 against taking of
property without compensation is frivolous. It is well established that taxation is
not a taking within the meaning of this provision. Hutchins v. Town
of Fremont, 194 Ind. 74, 83, 142 N.E. 3, 11-12 (1924); Bd. of
Commrs of Jackson v. State, 147 Ind. 476, 492, 46 N.E. 908, 912
(1897); 5A Ind. Law Encyclopedia, Constitutional Law § 446, at 427 (1984).
The properties remain in the hands of the owners, and their use is
unaffected by the reassessment.
Finally, Plaintiffs advance a number of arguments questioning the wisdom of the legislation,
but raise no constitutional issue. For example, they claim that local authorities
should be given the opportunity to perform the assessments. They also question
the lack of taxpayer awareness of the effect of reassessment based on the
fact that many homes are mortgaged and the mortgagees, as escrow agents, receive
the tax notices. These claims present no legal issue. The policy
arguments must be directed to the General Assembly, not this Court. Plaintiffs
other claims, such as the unconstitutionality of the homestead tax credit, were not
presented to the trial court and are not available on appeal.
III. The 2004 Law as Curative Legislation
A general law could readily have been crafted in 2001 that would have
accomplished what the General Assembly attempted to do. As explained in Part
II.A.2, Lake County has a long and troubled history of assessment of property,
including findings of the State Board as early as 1998 that systematic underassessment
required a countywide reassessment. A statute applicable to all counties permitting the
use of contracted private assessors or permitting the DLGF to perform that function
where such a finding is made would be a general law not subject
to Article IV challenge as special legislation. In 2004 such a law
Indiana Code section 6-1.1-4-35 (2004), applies by its terms to a county other
than a county subject to section 32 [I.C. § 6-1.1-4-32]. At the
time this law was passed, presumably the intent of this exception was to
exclude Lake County, which, as explained in Part II, is the only county
that meets the population parameters of section 32. Because section 32 violates
Article IV, Section 22, however, no county is subject to section 32 and
section 35 applies by its terms to Lake County and all ninety-one other
counties. Moreover, section 35(v) specifically provides that the provision of this section
are severable as provided in I.C. § 1-1-1-8(b) [the general severability statute].
Pursuant to Section 35(v), we are to sever any invalid portions of section
35. If section 35 were inapplicable in Lake County, it would constitute
special legislation for the same reasons section 32 runs afoul of Article IV,
Section 22 of the Indiana Constitution. Based on the effort in 2001
to accomplish essentially the same thing for Lake County, we think it clear
that the General Assembly would prefer statewide application of section 35 to its
statewide invalidity. Accordingly, even if section 35 is read to exclude Lake
County, that exclusion would fall, for the purpose of preserving the statute.
Section 35 provides for DLGF to order a State-conducted reassessment for a county
if it determines that the local officials are unable to complete the reassessment
by October 2003 or are likely to complete reassessment in an inaccurate manner.
The DLGF is authorized to contract with private parties to perform the
reassessment. Nothing precludes the DLGF from performing a part of the reassessment
itself and contracting for others. The DLGF was thus authorized by the
2004 legislation to do substantially the same things in Lake County that were
in fact done under color of section 32. We are unwilling to
fortify the armory of those who attack the law as famous for its
ability to elevate form over substance. We see no basis to trigger
the disruption that would be generated by invalidation of the entire countys property
tax base where there is no showing that any identifiable property has been
incorrectly assessed. Indeed, what plaintiffs seek is court preservation of a system
of taxation that was held invalid six years ago in State Board of
Tax Commissioners v. Town of St. John, 702 N.E.2d 1034 (Ind. 1998).
The 2004 law acts as curative legislation by authorizing actions taken pursuant to
an unconstitutional statute. A curative act is a statute passed to cure
defects in prior law, or to validate legal proceedings, instruments, or acts of
public and private administrative authorities. In the absence of such an act
the statute would be void for want of conformity with existing legal requirements.
. . . [A] curative act may validate any past action which the
legislature might have authorized beforehand. 2 Norman J. Singer, Statutes and Statutory
Construction, § 41.11, at 466-67 (6th ed. 2001). This Court has adopted
Judge Cooleys test for curative acts:
If the thing wanting or which failed to be done, and which constitutes
the defect in the proceedings, is something the necessity for which the legislature
might have dispensed with by prior statute, then it is not beyond the
power of the legislature to dispense with it by subsequent statute. And if
the irregularity consists in doing some act, or in the mode or manner
of doing some act, which the legislature might have made immaterial by prior
law, it is equally competent to make the same immaterial by a subsequent
See State ex rel. Harris v. Mutschler, 232 Ind. 580, 590-91, 115 N.E.2d
206, 210 (1953) (citing 2 Thomas M. Cooley, Constitutional Limitations at 775-76 (7th
ed.)). A curative act should be liberally construed. Mutschler, 232 Ind.
at 591, 115 N.E.2d at 210. A curative or validating statute is
a species of retrospective legislation, but that does not make such a curative
act unconstitutional unless violating some constitutional provision such as impairing the obligation of
a contract or the taking of property without due process. Martin v.
Ben Davis Conservancy Dist., 238 Ind. 502, 512, 153 N.E.2d 125, 130 (1958);
See Muncie Natl Bank v. Miller, 91 Ind. 441, 446 (1883). Therefore,
when passing curative legislation the legislature may recognize and validate a de facto
condition or status. There are limitations to this doctrine. For example
the legislature cannot authorize an unconstitutional act, Martin, 238 Ind. at 513, 153
N.E.2d at 130, or cure a jurisdictional defect in a court proceeding, Seitz
v. Mosier, 192 Ind. 416, 421-22, 136 N.E. 840, 842 (1922). But
none are applicable here. The legislature plainly could have authorized statewide reassessments
under the procedures of section 35.
The relevant point here is that the legislature may pass curative legislation that
validates official acts performed pursuant to an act which a court later determines
is unconstitutional so long as the curative statute does not suffer from any
of the same defects as the original law. Thus, in Martin, the
1947 legislature passed an act that gave trial courts the authority to establish
conservancy districts and appoint their directors and appraisers. Subsequently, the Court held
that the 1947 law violated the requirement, since removed from Article IV, Section
19 of the Indiana Constitution, that the subject of every act shall be
expressed in the title. State ex rel. Pa. R.R. Co. v. Iroquois
Conservancy Dist. Court, 235 Ind. 353, 359, 133 N.E.2d 848, 851 (1956).
In response, the legislature passed the Conservancy Act of 1957 which by its
terms authorized the conservancy districts established pursuant to the 1947 act and legalized
prior acts of the board of directors for those districts. This Court
held that because it was within the legislatures prerogative to establish the conservancy
districts in 1947, it was also within the power of the General Assembly
to cure any constitutional defects by passing curative legislation that meets constitutional requirements.
Martin, 238 Ind. at 512, 153 N.E.2d at 130. Similarly, this
Court in Mutschler, 232 Ind. at 591, 115 N.E.2d at 210, upheld a
general law that legalized consolidated school districts that were defectively formed due to
improper notice or invalid elections. It was within the legislatures discretion to
dispense with those requirements for consolidation, so it was permissible to validate consolidations
that had taken place without them, although they were required at the time
the consolidation originally took place. Id.
In Fahlor v. Board of Commissioners of Wells County, 101 Ind. 167, 171-72
(1885), this Court declared that the proceedings and orders of the Wells County
board were void because the board was not in a regular or special
session when it approved the construction of a road. The next year,
however, in Johnson v. Board of Commissioners of Wells County, 107 Ind. 15,
26 8 N.E. 1, 6 (1886), this Court upheld legislation passed one month
after the decision in Fahlor, to legalize the proceedings of the county board
as to the gravel road. The Court held that curative legislation is
invalid if it materially interferes with or overthrows vested rights, creates and imposes
new burdens, or infringes upon the judicial department of the government. Johnson, 107
Ind. at 19, 8 N.E. at 5-6; see also 5A Ind. Law Encyclopedia,
Constitutional Law § 272, at 188 (1984). But in the absence of
any of these, a curative law salvages actions taken under defective statutes or
in disregard of procedural requirements that are not required by due
process. This reasoning has been specifically followed by the United States Supreme
Court in sustaining curative laws authorizing assessments for tax purposes. In Williams
v. Supervisors of Albany, 122 U.S. 154, 164 (1887), the Court stated:
It is only necessary . . . to consider whether the assessment could
have been ordered originally . . . . If [the statutory flaws]
were not essential to any valid assessment, and therefore might have been omitted
or performed at another time, their omission or defective performance may be cured
by the same authority. And curative legislation has been specifically upheld to
validate acts taken pursuant to laws later held to be special legislation.
See Marfa Indep. Sch. Dist. v. S. T. Wood, 141 S.W.2d 590, 592
In sum, in 2004 the Legislature authorized the DLGF to contract with private
parties to perform property value reassessments or to conduct reassessments itself in counties
where DLGF determines that local officials are unable to complete the reassessment by
October 2003 or are likely to complete reassessment in an inaccurate manner.
The DLGF did find widespread unequal assessment practices in Lake County, and pursuant
to section 32 the countys property values were reassessed. The legislature had
the power to authorize the DLGF to order the reassessment of property values
in Lake County at the time it passed section 32. It therefore
also had the power to cure the constitutional defect of the act by
enacting section 35. Accordingly, the 2002 reassessment is valid subject to any
individual errors in assessment that are determined in the normal review process.
The doctrine of curative legislation permits the legislature in effect to ratify a
previously unauthorized reassessment. This produces no injustice. There are unconstitutional statutes
and unconstitutional statutes. The constitutional flaw claimed here is not that the
plaintiffs property is incorrectly valued, or that the assessments violated the substantive requirement
of Article X that they be uniform and equal. Indeed there is
no showing that the result would be different if the local assessors had
done the job and done it properly. The constitutional issue is merely
a claimed lack of authority of the persons who carried out the assessment
under color of a statute that had never been declared unconstitutional at the
time they acted. Moreover, as we hold today in Department of Local
Government Finance v. Commonwealth Edison Co. of Indiana, ___ N.E.2d ___ (No. 49S10-0307-TA-293)
(Ind. 2005) (slip op. at 6), the law permits an appeal of a
property owners assessments even if the basis of that appeal is an incorrect
assessment of other properties. The law thus affords a remedy for any
inequity. But that remedy is not upsetting the entire fiscal structure of
the county, which would be the result if some taxpayers are assessed on
the basis of pre-reassessment values and those who are pleased with the reassessment
get its benefits.
IV. Appropriate Relief
The injunctive relief granted by the trial court is inappropriate for reasons apart
from lack of jurisdiction. Both the balance of benefits and burdens and
the doctrine of laches preclude the injunctive relief awarded by the trial court.
These are different ways of making the legal point that this lawsuit
for declaratory judgment and injunction comes far too late in the process to
obtain the result the plaintiffs seek. Plaintiffs cannot wait until the eve
of the date on which already overdue tax bills are to be sent
out to launch an attack on a process that has been underway for
over three years and is critical to the operation of government.
A. Injunctive Relief is Improper
Although we find the statutes authorizing these assessments to violate Section 22, we
are given no basis to conclude that a different result would be produced
by a reassessment by local authorities. The trial court found, presumably correctly,
that the effect of the reassessment is to increase taxes on some properties
compared to the taxes on the same property for prior years. But
there is no finding that the reassessment done pursuant to these statutes produced
a different result from the assessments that will ultimately prevail if the tax
bills are enjoined. Indeed, if the local authorities do their jobs properly,
and the reassessment was done properly, there is no basis to conclude they
would reach a different result for any specific piece of property. Of
course, one can conjecture that there might be differences, but there is no
basis to conclude what those differences would be, at least without imputing improper
motives to the local authorities. As the State points out, the provisions
governing the values to be placed on property are applicable statewide. The
only effect of the statutes the plaintiffs attack is to change the agency
that performs the assessment, not the substance of what the assessor is to
do. Indeed, we have no basis to conclude that the assessed valuations
produced by the DLGF or the private firm are any different from what
would have been produced by a timely assessment if the local authorities had
been able to produce one, or would be produced by a reassessment in
As a matter of basic equity law, and the law of preliminary injunctions,
courts must consider the relative benefits and burdens of granting injunctive relief, even
if the plaintiffs are correct. See Ind. Family & Soc. Servs. Admin.
v. Walgreen Co., 769 N.E.2d 158, 161 (Ind. 2002). A court, considering
an application for preliminary injunction will consider the traditional balance of convenience; this
is to say, it will consider whether a greater injury would be done
by granting the injunction than would result from a refusal to do so.
43A C.J.S. Balancing Equities, Inconvenience, Hardship, or Injury-Temporary or Preliminary Injunction or
Restraining Order § 82, 102 (2004). Equity courts are traditionally free to
balance equities and hardships in determining whether or not to grant an equitable
remedy. Dan D. Dobbs, Law of Remedies, § 2.4(1), at 91 (2d
ed. 1993). Moreover, injunctive relief is equitable in nature, and courts will
not exercise that authority to produce useless results. State ex rel Board
of Sanitary Commissioners of Terre Haute v. Superior Court of Vigo Cty., 247
Ind. 617, 220 N.E.2d 336 (Ind. 1966). Given that the new law,
which became effective June 30, 2004, would permit the DLGF to redo the
entire reassessment and arrive at the same place, injunctive relief must be denied
on that ground alone. The jurisdiction of a court of equity extends
no farther than is necessary to do some equitable thing; it has no
jurisdiction to do useless, unjust, and inequitable things. In re Hawkins Mortgage
Co., 45 F.2d 937, 940 (7th Cir. 1931). It is an age
old axiom that equity will not do a useless thing. Townsend v.
Quern, 473 F. Supp 193, 198 (N.D. Ill. 1979). An injunction is
to be denied if the public interest would be substantially adversely affected, even
if the plaintiff has a claim. Fumo v. Medical Group of Mich.
City, Inc., 590 N.E.2d 1103, 1108 (Ind. Ct. App. 1992).
Finally, just as in any other case seeking equitable relief, undue delay in
seeking the relief may bar relief. Here the plaintiffs brought this suit
on April 29, 2004, seeking to enjoin the Lake County Treasurer from sending
out tax bills that should have been due in March 2003. But
due to delays in reassessment, the tax bills were already over a year
late. The claim is that these two statutes, on the books since
2001, were unconstitutional. Rather than seeking to enjoin the implementation of these
reassessment procedures, the plaintiffs waited until they were completed, no other reassessment having
been conducted, and then sought to enjoin the collection of 2003 taxes already
over one year delayed. This is a classic case for invoking of
the equitable doctrine of laches.
Laches is an equitable doctrine. Unlike statutes of limitations, it does not
principally turn on time alone. Rather, if a party, with knowledge of
the relevant facts, permits the passing of time to work a change of
circumstances by the other party, laches may bar the claim. Shafer v.
Lambie, 667 N.E.2d 226, 231 (Ind. Ct. App. 1996).
As early as
1996, the need for reassessment was obvious as a result of this Courts
decision in Boehm v. Town of St. John, 675 N.E.2d 318 (Ind. 1996).
The basic fact of the legislatures provision for reassessment in Lake County
by private contractors and the DLGF was in the public record and widely
publicized since 2001. The countys taxing authorities are now dependent on the
results of that process to move forward, if belatedly, to proceed with the
ordinary process of funding government. Under these circumstances laches bars granting of
an injunction based on facts and theories available to the plaintiffs three years
The preliminary injunction entered by the trial court is vacated. This case
is remanded with instructions to dismiss the complaint for lack of jurisdiction.
Dickson, J. concurs.
Shepard, C.J., and Sullivan J. concur in Part I with separate opinion by
Rucker, J. concurs in Parts I, II, and IV, and dissents as to
Part III with separate opinion.
Sullivan, Justice, concurring in Part I.
I concur with the Courts earlier decision to vacate the trial courts injunction
entered in this case and permit Lake County property tax authorities to mail
property tax bills based on the new assessments that are challenged in this
case. I also concur in part I of the Courts opinion.
More specifically, I agree that the Legislature has deprived Indiana trial courts of
jurisdiction to review the claims advanced by the taxpayers in this case.
The Sproles case is clear and unequivocal precedent on this point.
At the same time, I agree with the Court that taxpayers whose property
has been incorrectly assessed can appeal their assessments through administrative channels. This
Court in Dept of Local Govt Fin. v. Commonwealth Edison Co. of Ind.,
No. 49S10-0307-TA-293, __ N.E.2d __, slip op. at 6-7 (Ind. Jan. 13, 2005),
makes clear that the remedy is available even if the reason a taxpayer
contends the taxpayers assessment is too high is that other property in the
township or county is assessed contrary to law. (The Department of Local
Government Finance made clear in its filings in this case that it was
prepared to review the assessments of over 5,000 Lake County residential taxpayers before
the trial courts injunction in this case brought the proceedings to a halt.
See Reply Br. of Relator-Appellants at 4.)
I recognize that it appears unwieldy if not unfair that taxpayers who believe
they have been wrongly assessedparticularly, as in this case, where they believe they
have been assessed pursuant to an unconstitutional statutemust go through several layers of
administrative review before being allowed to appeal to the Tax Court. Indiana
trial courts review claims of unconstitutionality all the time; why, the plaintiffs ask,
should their claim be reviewed differently?
The short answer is, of course, that the Legislature has said so, and
under our laws, it is up to the Legislature to determine the jurisdiction
of Indiana trial courts. See Ind. Const., art VII, §§ 1, 8.
But sound reasons explain why the Legislature established this procedure. Protests
over taxes are frequent and yet taxes are needed to provide public safety
and other public services. A system that channels tax protests through an
orderly system of administrative and Tax Court review without risking abrupt stoppages in
tax collections by order of any one of the states hundreds of trial
courts protects the interests of both taxpayers and of all of us who
rely on government services. Furthermore, utilizing an orderly system of administrative and
Tax Court review allows the executive and legislative branches to effect compromises of
tax controversies, rather than have the answers dictated by (a variety of) courts.
It is in part because I believe that taxpayers and the executive and
legislative branches should have maximum freedom to effect compromise of this tax controversy
that I think the Court is wrong to reach the merits of the
various constitutional claims advanced. More than a century ago, this Court said:
Courts will not pass upon a constitutional question, and decide a statute to
be invalid, unless a decision upon that very point becomes necessary to the
determination of the cause. This court has repeatedly held that questions of
this character will not be decided unless such decision is absolutely necessary to
a disposition of the cause on its merits.
State v. Darlington, 153 Ind. 1, 4, 53 N.E. 925, 926 (1899); accord,
Elk Grove Unified Sch. Dist. v. Newdow, 124 S. Ct. 2301, 2308 (2004)
(quoting Ashwander v. Tennessee Valley Authority, 297 U.S. 288, 341 (1936) (Brandeis, J.,
concurring)); Spector Motor Service, Inc. v. McLaughlin, 323 U.S. 101, 105 (1944) (If
there is one doctrine more deeply rooted than any other in the process
of constitutional adjudication, it is that we ought not to pass on questions
of constitutionality . . . unless such adjudication is unavoidable.); Owens Corning Fiberglass
Corp. v. Cobb, 754 N.E.2d 905, 916 (Ind. 2001); Indiana Wholesale Wine &
Liquor Co. v. State ex rel. Indiana Alcoholic Bev. Commn, 695 N.E.2d 99,
106 (Ind. 1998); Citizens Natl Bank v. Foster, 668 N.E.2d 1236, 1241 (Ind.
Because a decision on the points discussed by the Court in Parts II
through IV are unnecessary to the determination of this case, I express no
opinion with respect thereto.
Shepard, C.J., concurs.
Rucker, Justice, concurring in part and dissenting in part.
I respectfully dissent from part III of the majority opinion. In all
other respects I concur.
The 2002 reassessment of real property in Lake County has resulted in a
dramatic increase in the property tax obligations for most Lake County homeowners in
general and the homeowners to this litigation in particular. In one instance
a homeowners tax bill increased by an astounding 208%, and in another instance
by an even more astounding 559%.
The tax increase has had a
devastating impact on the ability of many homeowners to meet their monthly mortgage
payment obligations. For others, it may mean losing their homes altogether.
This turn of events is not necessarily the result of entities other than
the elected Assessors conducting property tax reassessments. Rather, it is the result
of a shift in the tax burden to local homeowners from what has
been referred to as The Big Four (United States Steel Corporation; Ispat Inland,
Inc.; International Steel Group, Inc.; and BP Productions of North America, Inc.).
To be sure, the 2002 reassessment and the resulting shift in the property
tax burden were not unanticipated. In a 1996 study commissioned by the
then State Board of Tax Commissioners (now the Department of Local Government Finance,
DLGF), researchers predicted that the adoption of a market value methodology for the
assessment of real property, provided no other changes in the tax code were
adopted, would result in an average statewide increase of 39% in tax obligations
for residential property owners. 3 Appellants App. at 10. That estimate
was later adjusted to reflect an estimated 33% property tax payment increase statewide.
Id. Notably, the researchers observed, Lake and Crawford Counties stand out
as having the highest residential tax shifts, 91.7% and 73.7%, respectively. Id.
at 187. The reason for the estimated 91.7% tax shift in Lake
County was apparently due in part to the business and residential multipliers used
in the formula for determining market value assessments. Both multipliers were higher
in Lake County than in any other county in the State of Indiana.
With respect to the accuracy of these multipliers, the researchers concluded:
If anything, the business multiplier used in the baseline scenario overstates the actual
business multiplier in Lake County. Replacing the multipliers used in our analysis
with the multipliers [relied upon by the State experts assessment] would reduce the
homeowner shift in Lake County from 91.7% to 76.4%, which still would be
the highest shift among Indiana counties.
Id. at 187-88.
The record before us is silent regarding whether and to what extent the
DLGF took into account the results of its study and the researchers observations
as it began to craft a property assessment scheme that more accurately measures
property wealth. Equally important, the record does not reveal the formulae or
methodology used by the DLGF to assess the value of the real property
holdings of the Big Four.
See footnote We do know that the reassessments resulted
in tax shifts among some Lake County homeowners far in excess of those
predicted by the researchers. We also know the Big Four were provided
with special rules for the assessment and taxation of industrial facilities . .
. . Indiana Code § 6-1.1-8.5-13. The fact that special rules
were fashioned for industrial facilities coupled with the lack of any indication the
DLGF relied on its own study to develop the new property assessment system
is significant in my view because not only the assessed values of properties,
but also the tax rates at which properties are assessed, may be affected
by who conducts the assessments and under what rules the properties are assessed.
Having made the foregoing observations, I nonetheless agree with the majority that injunctive
relief is not an available remedy in this instance. And I do
so largely based upon the reasons the majority
explains. However, the majority
has declared, on the basis of curative legislation, that the 2002 reassessment is
valid subject to any individual errors in the assessment that are determined in
the normal review process. Slip op. at 21 (emphasis added). Not
only is the majoritys curative legislation analysis not applicable in this case, but
also by using this vehicle to validate the 2002 assessments, the majority forecloses
the most potent argument available to homeowners entitling them to administrative relief, namely:
because the assessment statutes are unconstitutional, the taxes collected pursuant to the statutes
are illegal as a matter of law.
First, although the Legislature certainly has the authority to enact curative legislation, there
is nothing in the text of the statute to suggest the Legislature intended
section 35 to serve that function. By specifically declaring that section 35
applied to a county other than a county subject to section 32 [Lake
County] it is clear section 35 was intended as an exception to section
32 not a cure of any perceived constitutional infirmity.
Second, to say that the DLGF was thus authorized by the 2004 legislation
to do substantially the same things in Lake County that were in fact
done under the color of section 32, slip op. at 17, is simply
not supported by the language of the statute. Section 32 as it
existed in 2002 specifically dictated that Lake County assessors may not appraise property,
or have property appraised . . . . The only duty of
the local assessors was to provide [the DLGF] or [the DLGFs] contractor .
. . any support and information requested by the [DLGF] or the contractor.
Id. By contrast, under the 2004 legislation there is no absolute
prohibition placed on local assessors from conducting reassessments. Rather, the DLGF may
order a state conducted reassessment in the county if it determines a reassessment
is necessary. I.C. § 6-1.1-4-35(e). Even then, provided the local assessors
act before the DLGF orders a state conducted reassessment, the local assessors may
enter into a contract with a professional appraising firm to conduct a reassessment
. . . . I.C. § 6-1.1-4-35(i). And that contract is
as valid as if it had been entered into by the [DLGF]; and
 shall be treated as the contract of the [DLGF]. Id.
In essence, the newly enacted statute, which supposedly applies statewide, essentially gives local
assessors an opt-out provision. Nothing resembling such a provision exists in the
Lake County-only statute. Thus, while it is true the DLGF may order
a statewide reassessment under section 35, it does not have carte blanche authority
to conduct the reassessment itself or to hire contractors for that purpose.
Rather, unlike section 32, under section 35 local Assessors still play a significant
role in the assessment of local property.
Finally, and perhaps most importantly, section 35 certainly has not cured the constitutionally
defective I.C. § 6-1.1-8.5-1 et seq. This statute, which has undergone no
substantial revision since its enactment, provides special rules for the assessment of the
Big Four. And the assessments conducted under this statute apparently have been
the greatest contributor to the significant tax increases for homeowners in Lake County.
A DLGF ordered reassessment of property today could not include this Lake
County-only provision. In sum, the doctrine of curative legislation saves neither I.C.
§ 6-1.1-4-32 nor I.C. § 6-1.1-8.5-1 et seq.
Indiana Code § 6-1.1-15-1 et seq. sets forth the procedures for review and
appeal of property tax assessments. Among other things, a taxpayer may file
a Form 133 Petition to request a correction of errors for one or
more of the following reasons:
The description of the real property was in error.
The assessment was against the wrong person.
Taxes on the same property were charged more than one (1) time in
the same year.
There was a mathematical error in computing the taxes or penalties on the
There was an error in carrying delinquent taxes forward from one (1) tax
duplicate to another.
The taxes, as a matter of law, were illegal.
There was a mathematical error in computing an assessment.
Through an error of omission by any state or county officer the taxpayer
was not given credit for an exemption or deduction permitted by law.
I.C. § 6-1.1-15-12(a).
Even though injunction may not be an available remedy, the fact remains that
the property taxes imposed in this case are based on unconstitutional reassessment statutes.
An unconstitutional act is not law; it confers no rights; it imposes
no duties; it affords no protection; it creates no office; it is, in
legal contemplation, as inoperative as though it had never been passed. State
v. Steinwedel, 203 Ind. 457, 180 N.E.2d 865, 867 (1932). Consequently, the
property taxes assessed pursuant to these unconstitutional statutes are illegal as a matter
of law. See I.C. § 6-1.1-15-12(a)(6). It is on this ground
that the homeowners here should be entitled to relief. And the relief
should entail payment of property taxes due and owing based on the preexisting
assessments with appropriate refunds for all or a portion of tax installments already
paid under the 2002 assessments. See I.C. § 6-1.1-26-1(4)(B). In the
meantime there is nothing to prohibit DLGF from ordering a State conducted reassessment
under the provisions of Indiana Code § 6-1.1-4-35 enacted in 2004.
The majority suggests that homeowners have an available remedy under the authority of
Department of Local Govt Fin. v. Commonwealth Edison Co. of Ind., ___ N.E.2d
___ (No. 49S10-0307-TA-293) (Ind. Jan. 13, 2005). However, it appears to me
that Commonwealth Edison must be read in conjunction with Lake County Prop. Tax
Assessment Bd. of Appeals v. BP Amoco Corp., ___ N.E.2d ___ (No. 49S10-0309-TA-400)
(Ind. Jan. 13, 2005). And as I read BP Amoco, only if
at least one taxpayer has already timely filed a Form 130 petition challenging
the methodology used in generating the 2002 Lake County assessments, and only if
through the administrative review process there is a determination that the taxpayer is
entitled to relief, then and only then may the homeowners in this case
possibly be afforded relief by filing Form 133 petitions. Id. at slip
op. 8-9 .
In sum, as I understand the majoritys position, although the taxes in this
case were assessed under unconstitutional assessment statutes, that fact alone has no practical
consequence. Rather, in order to obtain relief, homeowners must advance an argument
independent of the statutes unconstitutionality. I cannot endorse this view. It
is small comfort to these homeowners for the Court to declare in one
breath that the challenged statutes constitute unconstitutional special legislation, a proposition with which
I agree, and in the next breath declare the functional equivalent of so
what. Accordingly, I respectfully dissent from Part III of the majority opinion.
In all other respects I concur.
P.L. 98-2004 repealed and recodified Title 33. Effective July 1, 2004,
this section appears at Ind. Code § 33-26-3-1 (2004).
Footnote: For example, the property taxes of homeowners D.E. and N.E. increased from
$2000 to $9000; homeowner M.F.s tax obligation increased from $2400 to $5000; homeowner
M.G.s tax obligation increased from $1050 to $4320; homeowner B.H.s tax obligation increased
from $3756.48 to $11,460.08; homeowner E.R.s tax obligation increased from $2706 to $9267.90;
the taxes of homeowners K.S and D.S. increased from $1800 to $4600; and
the taxes of homeowners S.W. and A.H. increased from $2700 to $15,089.
R. at 55-61.
Footnote: There are three accepted methods by which to determine the value of
real property: the cost approach, the sales comparison approach, and the income approach.
All three of these approaches, when properly processed, should produce
same estimate of value. See State Board of Tax Commissioners, 2002 Real
Property Assessment Manual at 3 (2002), available at http://www.in.gov/dlgf/reassessment/approved_manuals/index.html (emphasis added).