Who Gets to Decide Fair Market Value?
May 19, 2015 § 2 Comments
Gary Marter and his wife Celeste were divorced, and Gary appealed complaining that the chancellor erred when he assigned a value of $110,000 to 120 acres of jointly-owned real property. The COA found that the chancellor had not adequately explained how he arrived at the figure, and so remanded the case in Marter v. Marter, 95 So.3d 733 (Miss. App. 2012).
On remand the chancellor conducted a hearing, and both sides had the opportunity to present evidence. The court heard from two appraisers hired by Gary, and from both of the parties. The chancellor then rendered an opinion concluding that the property was worth $110,000. Gary appealed again.
In Marter v. Marter, handed down by the COA May 12, 2015, the COA, by Judge Fair, affirmed. The main issue I want to address is what the chancellor is to do when confronted by conflicting and inconclusive proof of fair market value. Here’s what Judge Lee said in his opinion:
¶12. Gary first argues that the chancellor erred in valuing the 120 acres at $110,000 because neither party placed that specific value on the property . But he presents no authority supporting this proposition. Instead, the chancellor is the ultimate finder of fact, and as the finder of fact he is entitled to accept or reject the testimony of witnesses, in whole or in part, and to give the various testimony the weight it deserves; the chancellor’s findings can be disturbed only if clearly wrong or derived from the application of an erroneous legal standard. Mize v. Westbrook Constr. Co. of Oxford LLC, 146 So. 3d 344, 348 (¶6) (Miss. 2014). Our courts have repeatedly recognized that the chancellor is entitled to make an independent judgment of a property’s value, especially where the estimates of the parties vary widely. In McKnight v. McKnight, 951 So. 2d 594, 596 (¶¶7, 10) (Miss. Ct. App. 2007), this Court affirmed a valuation where the chancellor had apparently just averaged the two proposed values, because the evidence in the record supported the conclusion that the low estimates were too low and the high estimates were too high. We reached the same result in Williams v. Williams, 129 So. 3d 233, 241 (¶32) (Miss. Ct. App. 2013). “If the court finds all of the competing values to be inaccurate, it may make its own independent valuation.” Brett R. Turner, 2 Equitable Distribution of Property § 7:12 (3d ed. 2005).
¶13. Gary next contends that the chancellor erred in considering the tax assessor’s appraisal of the property, which was noted to be approximately $49,000. The chancellor took notice of the tax appraiser’s valuation on his own initiative, but without objection from either party. Gary cites to Watson v. Watson, 882 So. 2d 95, 106-07 (¶¶55-57) (Miss. 2004), where the supreme court reversed a valuation determined by simply adding 15% to the tax roll assessment. The chancellor derived this formula from his own experience, and he applied it despite all the other evidence in the record supporting a higher value. But, in today’s case, the chancellor did not apply a rigid formula; he merely noted that he had found the value of the 120 acres to be significantly in excess of the tax assessment. The chancellor’s observation does not demonstrate a defect in his reasoning.
¶14. Finally, Gary argues that the chancellor committed reversible error when he failed to consider the value of the timber separately from the land. In the judgment on remand, the chancellor expressly noted that there was timber on the property, but he treated it as a fixture of the land and did not assign it a separate value. Gary offers no authority requiring land and timber to be valued separately; he only supports this claim by saying that “[Celeste] has never presented any evidence to contradict [his] contention.” Gary suggests that the chancellor could not disregard the testimony of Gary’s timber appraiser, but that appraisal was done years after the divorce, and there was greatly varying testimony as to the value of the timber. Celeste and the tax assessor valued the land, including the trees, at approximately $50,000. Gary points out that both of these valuations have their flaws, which the chancellor was very much aware of. But Gary himself originally valued the land at $55,000 plus the unspecified value of 28 acres of trees. The timber appraisal he now relies upon was conducted several years after the divorce and valued 108 acres of timber. “Expert opinions are not obligatory or binding on triers of fact but are advisory in nature.” Downs v. Ackerman, 115 So. 3d 785, 791 (¶18) (Miss. 2013). In situations like this, “where there is reason to doubt the trustworthiness of the appraisal,” the “chancellor is justified in rejecting the values an appraiser places.” A & L Inc. v. Grantham, 747 So. 2d 832, 842 (¶44) (Miss. 1999).
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¶15. The chancellor has twice found himself in circumstances such as those described by this Court in the oft-cited case of Dunaway v. Dunaway, 749 So. 2d 1112, 1121 (¶28) (Miss. Ct. App. 1999), in which this Court said:
It is our conclusion that the chancellor, faced with proof from both parties that was something less than ideal, made valuation judgments that find some evidentiary support in the record. To the extent that the evidence on which the chancellor based his opinion was less informative than it could have been, we lay that at the feet of the litigants and not the chancellor.
¶16. We conclude that, as in Dunaway, the chancellor did the best he could with the evidence presented to him. Id. at 118 (¶14). As this Court will not disturb a chancellor’s findings unless manifestly wrong or clearly erroneous, our standard of review requires that the judgment be affirmed. Johnson v. Johnson, 650 So. 2d 1281, 1285 (Miss. 1994) (citation omitted).
There’s really nothing more to add to that.