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Schmieg v. County of Chisago: TAX - nonsufficent evidence for agricultural classification; no deference to assessor

1
STATE OF MINNESOTA
IN SUPREME COURT
A07-503
Tax Court Page, J.
Leonard Schmieg,
Respondent,
vs. Filed: November 1, 2007
Office of Appellate Courts
County of Chisago,
Relator.
S Y L L A B U S
1. Taxpayer failed to present sufficient evidence to sustain tax courts
agricultural classification of subject property.
2. Assessors classification of property conflicted with property classification
statute, making statutory deference to assessors classification inapplicable.
Reversed and remanded for further proceedings not inconsistent with this opinion.
Considered and decided by the court en banc without oral argument.
O P I N I O N
PAGE, Justice.
The Chisago County assessor classified a parcel of land owned by Leonard
Schmieg as commercial for property tax purposes for taxes payable in 2005. Schmieg
appealed the classification to the Minnesota Tax Court. The tax court concluded that the
2
classification was erroneous and ordered that the subject property be classified as
agricultural non-homestead under Minn. Stat. 273.13, subd. 23(b)(3) (2006). In its
brief, the county argues that the rental of a billboard located on the southern half of the
subject property justified a commercial classification, and that an agricultural
classification of the property is not supported by the evidence.1 For the reasons discussed
below, we reverse the decision of the tax court and remand for further proceedings.
The subject property is located in Harris, Minnesota, north of County Road 10 and
east of Interstate Highway 35. The property is approximately 41.7 acres in size, and is
divided roughly in half by a creek.
Schmieg conducted a variety of activities on the southern half of the property
during the time at issue. He maintained 34 beehives for the production of honey and
beeswax, as well as for pollinating crops.2 The hives had not yet yielded significant
amounts of honey, but Schmieg intended to enlarge his operation and had started a
business for that purpose. In 2005, the beehives brought in about 0 in income, but
also cost Schmieg ,887 in expenses. Schmieg also raised vegetables and corn on the
southern half of the property, along with a small number of tree saplings that he intends
to sell when they reach a sufficient height to transplant. In addition, Schmieg leased a
billboard on the southern half of the property to 3M Media. The lease called for Schmieg
1 Schmieg did not file a brief in response to the countys arguments.
2 The record does not indicate the exact location of the crops pollinated, but it
appears that they were not located on the subject property.
3
to be paid ,500 in 2005. The northern half of the property is largely inaccessible due to
the creek, which impedes access.
Before it was reclassified, the property had an agricultural classification.
According to the county, the reclassification of the property as commercial was justified
by the presence of the billboard on the southern half of the property. Schmieg appealed
the countys reclassification of the property to the tax court, claiming that the property
should have an agricultural classification. After a hearing, the tax court determined that
the countys classification of the property was erroneous and ordered that the entire
property be reclassified as non-homestead agricultural. This appeal followed.
I.
We review tax court decisions to determine whether the court lacked jurisdiction,
whether the courts decision is supported by the evidence and in conformity with the law,
and whether the court committed any other error of law. Jefferson v. Commr of
Revenue, 631 N.W.2d 391, 394 (Minn. 2001); see also Minn. Stat. 271.10, subd. 1
(2006). We are not bound by decisions of the tax court. A&H Vending Co. v. Commr of
Revenue, 608 N.W.2d 544, 546 (Minn. 2000). Before we will overrule the tax court,
however, we must conclude that the courts decision is clearly erroneousthat the
evidence as a whole does not reasonably support its decision. Lewis v. County of
Hennepin, 623 N.W.2d 258, 261 (Minn. 2001). When some evidence supports the tax
courts factual findings, we may nonetheless reverse those findings if, after reviewing the
entire evidence, we are left with a firm conviction that a mistake has been made.
Montgomery Ward & Co., Inc. v. County of Hennepin, 482 N.W.2d 785, 788 (Minn.
4
1992). We review the tax courts legal determinations de novo. Kmart Corp. v. County
of Clay, 711 N.W.2d 485, 488 (Minn. 2006).
Under Minnesotas statutory framework, agricultural land is defined as
contiguous acreage of ten acres or more, used during the preceding year for agricultural
purposes. Minn. Stat. 273.13, subd. 23(c) (2006). Thus, to determine whether the tax
court properly classified the subject property, we must look at how the property was used.
Whether land is used for agricultural purposes is determined by looking at the specific
nature of the property and the use or multiple uses to which that property has been put,
together with a subjective balancing of those relative uses. Barron v. Hennepin County,
488 N.W.2d 290, 293 (Minn. 1992). Agricultural purposes is in turn defined as the
raising or cultivation of agricultural products. Minn. Stat. 273.13, subd. 23(c) (2006).
The statutory list of agricultural products encompasses the production for sale of
vegetables, forage, grains, bees, and apiary products, as well as trees, grown for sale
as a crop, and not sold for timber, lumber, wood, or wood products. Minn. Stat.
273.13, subd. 23(e) (2006). To the extent agricultural land is used commercially, the
portion of the land used for commercial purposes is to be classified separately. Minn.
Stat. 273.13, subd. 23(f) (2006).
The tax court based its classification determination on its finding that Schmieg
used approximately half of his 42 acres of land for his bee keeping operation, including
maintaining the hives, as well as using the shed and well house for processing the
honey. Schmieg v. County of Chisago, No. 13-CV-06-92, 2007 WL 491610, at *3
(Minn. T.C. Feb. 7, 2007). The record, however, does not reasonably support that
5
finding. Although the record indicates that a number of bees were raised on the property,
there is nothing in the record suggesting that the beekeeping operation utilized ten
contiguous acres for agricultural purposes. Aside from the beehives and the space
occupied by the shed and the well house, which occupied a relatively small portion of the
property, there is no evidence as to how much of the remainder of the property was used
for the beekeeping operation. Further, it is clear from the record that the vegetables and
trees grown by Schmieg only took up a small portion of the property. Moreover, the
record indicates that at least half of the subject property was unused. Because the record
before us does not support the tax courts finding that Schmieg used approximately half
of the subject property for his beekeeping operation, we conclude that there was
insufficient evidence for the tax court to have concluded that ten contiguous acres were
used for agricultural purposes. Thus, we hold that the tax courts classification of the
subject property as agricultural was erroneous.
II.
Although we conclude that the record lacks sufficient evidence to support a nonhomestead
agricultural classification for Schmiegs property, we decline, on this record,
to simply reinstate the commercial classification set by the county assessor. Under
Minnesota law, an assessors classification of land for tax purposes is prima facie valid,
Minn. Stat. 271.06, subd. 6 (2006), and the petitioner carries the burden of showing that
the classification is incorrect. In normal circumstances, a taxpayers failure to satisfy his
burden of proof would result in the assessors initial classification being affirmed. On the
6
particular facts before us here, however, deference to the assessors classification would
serve to undermine the statutory classification scheme as a whole.
In this case, the record suggests that the assessors classification of the property as
commercial was based upon our decision in Barron v. Hennepin County, which imposed
a primary use test for determining how property was to be classified. See Barron, 488
N.W.2d at 293. According to the county, Barrons primary use test mandates a
commercial classification of the property because of the income produced by the
billboard located on the property, regardless of how the remainder of the property was
used. Whether Barron guides the classification of Schmiegs property is a question of
law we address de novo.
In Barron, the classification to be given 20 acres of landone acre used by a
family home, the other 19 planted with cropswas at issue. Id. at 291. At the time, the
property tax classification statute defined agricultural land as contiguous acreage of
ten acres or more, primarily used during the preceding year for agricultural purposes.
Minn. Stat. 273.13, subd. 23(c) (1992) (emphasis added). Based upon the statutes use
of the phrase primarily used, we held that none of the land in question could be
classified as agricultural because the crops grown on that land had produced almost
insignificant income when compared with the valuation of the homestead. Barron, 488
N.W.2d at 293.
While we have never overturned Barron, its applicability today is undermined by
the classification statutes current language. After Barron was decided, the legislature
redefined agricultural land. Under this new definition, the term agricultural land
7
means all land used during the preceding year for agricultural purposes. Minn. Stat.
273.13, subd. 23(c) (emphasis added). As a result, the primarily used language relied
on in Barron is no longer part of the statutory scheme, and its removal calls into question
Barrons continued viability.
Moreover, the classification statute clearly contemplates that property may be used
for more than one purpose and therefore subject to more than one classificationa
possibility not addressed in Barron. For example, Minn. Stat. 273.13, subd. 23(f),
provides that, [i]f a parcel used for agricultural purposes is also used for commercial or
industrial purposes, * * * the assessor shall classify the part of the parcel used for
agricultural purposes [accordingly], and the remainder in the class appropriate to its
use. (Emphasis added.) This language is in direct conflict with our holding in Barron.
Here, it appears that the assessors rationale for classifying the entire property as
commercial was derived from our holding in Barron. But given the language of section
273.13, subdivision 23(f), and the fact that at least some of the subject property appears
to be used for agricultural purposes, some for commercial purposes, and some unused, it
would seem that commercial classification of the entire property is inappropriate.
Therefore, we remand to the tax court for further proceedings to determine the proper
classification for the property.
Reversed and remanded for further proceedings not inconsistent with this opinion.
 

 
 
 

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