
    LOCHMOOR CLUB v. CITY OF GROSSE POINTE WOODS.
    1. Taxation — State Tax Commission — Finality of Action.
    Action of the State tax commission in- the assessment of property is final in the absence of fraud, error of law, or adoption of wrong principles (Const 1963, art 6, § 28).
    2. Same — Assessment—Wrong Principle — Use Restrictions.
    Plaintiff’s contention that the State tax commission erred in reaching an assessment figure where it based its evaluation upon the value of the land for vacant, unimproved, residential, subdivision property, but ignored deed restrictions limiting . the use of plaintiff’s property to park and country club use held, well founded, where the restrictions were there for everyone to see, and for the tax commission to evaluate in the course of the appeal (CLS 1961, § 209.102, as amended by PA 1965, No 192).
    3. Same — Proper Assessment — Relevant Elements and Factors.
    Consideration of all relevant elements and factors, including deed use restrictions, is essential to proper assessing.
    4. Same — Order of State Tax Commission — Forms—Statutes.
    Form of order of State tax commission does not meet statutory requirements, where it lacks a concise statement of facts and reasons for decision as to an assessment of plaintiff taxpayer’s country club and park property (CLS 1961, § 209.102, as amended by PA 1965, No 192).
    References for Points in Headnotes
    [1] 51 Am Jur, Taxation §§ 770-774.
    [2] 51 Am Jur, Taxation § 654.
    [3] 51 Am Jur, Taxation § 701.
    [4] 51 Am Jur, Taxation §§ 647, 649, 651, 652.
    [5] 51 Am Jur, Taxation §§ 767, 768, 770; 2 Am Jur 2d, Administrative Law §§ 610, 612, 628, 755, 764-766.
    [6] 5 Am Jur 2d; Appeal and Error § 1009.
    
      5. Same — State Tax Commission — Court op Appeals — Remand— Value — Use Restrictions.
    The review of a tax assessment by the Court of Appeals on appeal from the State tax commission because of an alleged use of wrong principles in making the assessment does not, in effeet, result in a substitution of the Court’s judgment for that of the commission, where the proceeding is remanded to the commission for the determination of the extent of the effect of use restrictions, hitherto specifically ignored, upon the value of the parcels (CLS 1961, § 209.102, as amended by PA 1965, No 192).
    6. Costs — Public Question — -Taxation—Assessment op Country Club and Park Property.
    No costs are allowed on appeal to Court of Appeals from State tax commission relative to the assessment of property restricted to use for country club and park purposes, where a public question is involved (CLS 1961, § 209.102, as amended by PA 1965, No 192).
    Appeal from State Tax Commission.
    Submitted Division 1 February 8, 1966, at Detroit.
    (Docket No. 589.)
    Decided June 28, 1966.
    Assessment by City of Grosse Pointe Woods of real property owned by Lochmoor Club, a Michigan nonprofit corporation. Appeal to Michigan State Tax Commission. Assessment modified. Lochmoor Club appeals.
    Reversed and remanded for further proceedings.
    
      Dykema, Wheat, Spencer, Goodnow & Trigg (James D. Tracy and William T. Myers, of counsel), for complainant and appellant Lochmoor Club.
    
      Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, T. Carl Holbrook and Richard R. Roesch, Assistant Attorneys General, for the State Tax Commission.
    
      
      Samuel H. Olsen, Prosecuting Attorney, Aloysius J. Suchy and William F. Koney, for the county of Wayne.
    
      Glenn M. Coulter, for amicus curiae Grosse Pointe School System.
    
      George B. Catlin, for city of Grosse Pointe Woods, appellee.
   Fitzgerald, J.

The facts in this appeal from a decision of the state tax commission are not disputed. They are as follows:

Lochmoor Club, appellant, is the owner of real property situated in Grosse Pointe Woods, used as a country club and golf course. The property consists of three parcels, the first of which comprises 128.65 acres and is the golf club property, known as outlot A. The two additional parcels are known as outlots C and D. These lots are each approximately one acre in size and extend between two residential streets adjacent to the entrance to the country club.

The three parcels were respectively assessed for the tax year 1963 as follows:

Outlot A $308,760

Outlot C 50

Outlot D 50

The three parcels were initially assessed for the tax year 1964 as follows:

Outlot A $687,490

Outlot C 6,060

Outlot D 6,410

Appellant protested the 1964 assessments to the board of review for the city of Grosse Pointe Woods, resulting in a reduction of the initial assess.ments to the following amounts:

Outlot A $584,570

Outlot 0 4,850

Outlot D 5,130

Appellant then appealed the reduced assessments to the State tax commission. On February 17,1965, the tax commission entered an order determining the respective assessments of the parcels to he placed lipón the rolls of defendant city as:

Outlot A $830,520

Outlot C 9,910

Outlot D 9,680

Some historical background is now necessary. In 1919, appellant purchased all of the property in question from the Grosse Pointe Township Improvement Company and received title thereto by deed dated March 15, 1919. Grosse Pointe Township Improvement Company was the developer and subdivider of Lochmoor subdivision of which the property in question comprises a part. All other lots in Loch-moor subdivision have been sold by the original developer and most have been improved and are occupied for residential purposes.

Outlot A is restricted to use solely for country club purposes by the following covenant in the deed of conveyance:

“It is expressly understood between the parties hereto that said outlot A shall be used only for country club purposes and that the same will not be used for any other purposes. This condition and restriction shall he and remain operative to and including December 31, 1967, hut not thereafter.”

Outlots C and D are restricted by a covenant in the deed solely to use for park purposes. This deed provides that:

“It is expressly understood and agreed between the parties hereto that these two outlots C and D shall be maintained as parks by said party of the second part and shall not be used for any other purpose or purposes whatever.”

The deed further states:

“It is hereby expressly understood between the parties hereto and made a part of this agreement that the * * * conditions and restrictions are of the essence of this agreement and the said party of the second part purchases said premises upon the express understanding that these conditions and restrictions run with the land and that said party of the second part will comply with the same in every respect.”

These restrictions form the prime basis for this appeal. Lochmoor Club contends that the State tax commission adopted a wrong principle of valuation and committed an error of law when it based the assessment upon its value for residential subdivision purposes and ignored deed restrictions on the parcels which limited their uses to country club and park purposes.

The tax commission appraised the property based upon its value for vacant, unimproved, residential, subdivision property. With regard to outlot A, the commission said:

“Subject property is assessed comparably to subdivision lots because its highest and best use is considered to be as a residential subdivision.”

With respect to outlots C and D, the commission said:

“Property is located in a fully developed subdivision and its highest and best use is as residential improved property. In making our appraisal, we have priced the land accordingly.”

It is obvious from the foregoing that Lochmoor Club found itself in a peculiar position, to say nothing of its increased tax burden, by this determination of the commission. In the first place, Lochmoor holds its property under a deed where the intention of the parties was clear in the creation of use restrictions which on their face would appear to be valid and enforceable. On the other hand, they are told that the highest and best use of their land is as a residential subdivision, despite the fact that it may not effectively be conveyed or used for this purpose.

In assigning its reasons on the form for appeal to the State tax commission, Lochmoor stated under the heading:

“List Reasons for Appeal: ‘Property involved is 128 acres of vacant land except for clubhouse and locker room. It is used for golf club and swimming pool purposes only. This parcel is subject to a restriction running with the land and included in the deed of conveyance (hereto attached) restricting the use of said land for “country club purposes” to and including December 31, 1967.’ ”

Regarding outlots C and D, under the same heading, they ascribe the reason for their appeal to the fact that the property was subject to a restriction running with the land, restricting the use of said land for “park purposes”, without time limitation.

In the course of the appeal, the property was appraised by the commission field staff and the following appears in the appraisal report:

“In making our appraisal, the restriction in the deed of conveyance limiting the property to country club purposes only, to and including December 31, 1967, was ignored.”

With respect to its determination of values of both outlots C and D, the- appraisal stated:

“In making our appraisal, the restriction in the deed of conveyance limiting the use of the property for park purposes without time limitation was ignored.”

In its order of February 17, 1965, the figures submitted in the field staff appraisal were adopted without alteration by the tax commission as the proper assessment of the Lochmoor property.

In its brief, the tax commission states that its order shows on its face that the commission gave consideration to the use restrictions placed upon the property. In support of this statement, it cites the following words found in a printed portion of the order form:

“After consideration of the reasons spelled out in the taxpayer’s written appeal.”

In light of its adoption of the figures submitted in the field staff appraisal, which ignored the restrictions, we must conclude that the consideration given the taxpayer’s reasons on appeal resulted in a determination that the deed restrictions were without import for appraisal purposes.

We will not belabor the fact that the action of the State tax commission is final “in the absence of fraud, error of law or adoption of wrong principles,” (Const 1963, art 6, § 28) and that this guideline has been consistently reiterated by our Supreme Court. Hudson Motor Car Co. v. City of Detroit (1937), 282 Mich 69 (113 ALE 1472); Twenty-Two Charlotte, Inc., v. City of Detroit (1940), 294 Mich 275; Moran v. Grosse Pointe Township (1947), 317 Mich 248; Naph-Sol Refining. Co. v. Township of Muskegon (1956), 346 Mich 16; Kingsford Chemical Company v. City of Kingsford (1956), 347. Mich 91. We do no violence to these landmark cases, however, by holding that the record before us discloses utilization of a wroxxg principle in this taxpayer’s appeal.

We cannot dismiss the taxpayer’s complaint as the commission does in its brief by sayiixg, “Its contention that the restrictions upon the use of its real property detracted from its value were mere argument, pure speculation.” The restrictions were there; they were there for everyone to see; they were there for the tax commission to evaluate in the course of the appeal. To state flatly that they were “ignored” compels us to hold that the appellant’s contention on appeal is well-founded, i.e. that a wrong principle of valuation was utilized.

Consideration of all relevant elements and factors (and these restrictions were certainly relevant) is essential to proper assessing. Conroy v. City of Battle Creek (1946), 314 Mich 210.

The tax commission in its brief states:

“At no time has appellant presented any evidence relative to the true cash value of its unique property. The only such evidence is contained in the appraisal of appellant’s property by the State tax commission’s field staff. Basic considerations of fair play and due process require the tax commission determinations of values for tax purposes be based upon the available evidence.”

In ignoring the deed restrictions, the tax commission loses sight of these basic considerations.

The commission, with much hand-wringing, states that since financial gain is not the motivation of Lochmoor, a capitalized income method of valuing its properties could not be utilized, and since real property cannot be valued by a reproduction cost approach there remained only a comparable sales data approach to its valuation. The commission’s appraisal set forth various examples of sales of vacant land in the vicinity of appellant’s property, but overlooks the fact that any sales price on this, property would, perforce, reflect the fact that it could not be used for the purpose which they contend is its highest and best use.

We can agree with the tax commission’s observation that the courts have been slow to interpose their judgment and say that the assessment of property for taxes has, transgressed reasonable limits. But, as with all generalizations of this sort, there are exceptions. We cannot conceive of any responsible court sitting idly by when faced with a record, on appeal which reflects the utilization of wrong principles through the adoption of an appraisal which ignores a legal fact of life. This is especially so where, as in this instance, the fact ignored was the basic issue raised in the appeal to the tax commission in the first instance.

Lochmoor, like many appellants, complains of the tax commission’s order, specifically charging that a legally sufficient statement of facts or reasons was not included. This order form has been commented upon by both the Supreme Court in Pavilion Apartments, Inc., v. State Tax Commission (1964), 373 Mich 601, and by this Court in O. M. Scott & Sons Co. v. State Tax Commission (1965), 1 Mich App 184, and Pantlind Hotel Company v. State Tax Commission (1966), 3 Mich App 170. By now it should be no mystery as to what the appellate courts of this State feel measures up to a sufficient statement of facts and reasons.

We are certain that upon remand the State tax commission will evaluate and recite adequately their finding of facts and statement of reasons under the guidelines furnished by Pavilion, Scott and Pantlind, supra, and under CLS 1961, § 209.102, as amended by PA 1965, No 192 (Stat Ann 1965 Cum Supp § 7.632).

The thrust of the brief amici ctiriae on behalf of the city of Grosse Pointe Woods, the county of Wayne, and the Grosse Pointe school system is that Lochmoor is here ashing the Court to substitute its judgment as to the proper valuation of the property for assessment purposes. It is not so much that we are substituting our judgment as that we are asking the State tax commission to exercise its judgment by evaluating what this Court feels is an indispensable factor for proper assessment of this property.

The matter is remanded to the State tax commission for further proceedings to determine the extent of the effect of the use restrictions upon the value of the parcels to which they are applicable and to perform such other acts as shall be necessary for the efficacious consideration of this taxpayer’s appeal.

No costs, a public question being involved.

Gillis, P. J., concurred.

The late Judge Watts who was a member of the panel of judges to whom this case was submitted for determination took no part in this decision.  