ÿWPC" …# VUNa %¯ 0 (µw@Ý4 1 UH@ bˆ 0D 0lÔ 0D@ 0J„ 0TÎ 0^" € 0hˆ 0rð 0|b 0†Þ 0d Bô 1u 0d†U>ê D3(U*[U6… 0@»™ûB)”DC½ AMU*MwZ1çv~vÓ– AOi Ƹ 0D~! D/Â! Bñ!˜HP LaserJet 4SiHPPCL5MS,ü,,,,,ü0nL$Ò(ÈhH  Z ‹6Times New Roman RegularX($¡¡ ÎÏ#eÐDÑÓ€ÝPÞPßDàPáEâP­M³$d°$3|xâ<à09Z 0Courier (WT) Regular- ù-(3¯$©©Ý ƒ!ÝÝ  Ý((3üÝ$¤¤Ý ƒ!ÝÝ  Ýà  àòòÚ  Ú0Ú  Úóó(#Ã$òòÚ  Ú0Ú  Úóó2 ÿÿ0Indent1Ô2ÔÔ3  Ô2" ÿÿ0Indent2à0 àÔ2ÔÔ3  Ô2, ÿÿ0Indent3à0 àà0 àÔ2ÔÔ3  Ô26 ÿÿ0Indent4à0 àà0 àà0 àÔ2ÔÔ3  Ô2@ ÿÿ0Indent5à0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2J ÿÿ0Indent6à0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2T ÿÿ0Indent7à0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2^ ÿÿ0Indent8à0 àà0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô d ÿÿ?AGMSYaioIndent0I.A.1.a.(1)(a)i)a)P ÿÿ8Mac DefaultMac DefaultÓ ` °šXÓ< Œ 9p`(&Times New Roman 'ÿÿdxd< Œ 9p`(Times< Œ 9p`(Courier New("ÿÿ$££Ò  ÒÒ  Ò Ý ƒ!ÝÑ  ÑÑ#€d#ÑÔ€)ÔÝ  ÝÝ ƒ )ÝÝ  ÝÌÌÌÔ€,Ô% Line 7 d////7Border 1dd€-0Cþÿ << Gÿÿ< Œ 9p`(Arial Ý ƒ!ÝÑ  ÑÑ#€d#ÑÔ€)ÔÝ  ÝÔ€2ÔÔ€2ÔÓ  ÓÔ YYY ÔFILEDÔ€2XÔÌÌò òJune€1,€1998ÌÌCecil€Crowson,€Jr.ÌÔ€2ôÔAppellate€Court€Clerkó ó PÝ ƒ!ÝÑ#€d#ÑÔ€)ÔÝ  ÝÝ ƒ$Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝÔ€,ÔÔ€,ôÔ€òòSeeóó€U.S.€Const.€Amend.€XIV,€ðð€1.€The€Court€of€Appeals€did€not€considerÏthe€federal€constitutional€issue€but€it€is€asserted€on€this€appeal.Ì 'Ý ƒ!ÝÑ#€d#ÑÔ€)ÔÝ  ÝÝ ƒ$Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝÔ€,ÔÔ€,ôÔ€The€record€is€insufficiently€developed€to€address€the€proceduralÏissues€raised€by€the€defendants€„€whether€Castlewood€failed€to€pay€theÏdisputed€taxes€under€protest,€whether€failing€to€pay€the€taxes€under€protestÏprohibits€an€appeal€of€the€assessment,€and€whether€a€taxpayer€must€appeal€anÏassessment€to€the€State€Board€of€Equalization€before€proceeding€to€ChanceryÏCourt.€€Furthermore,€the€parties€stipulated€as€follows:€€ÌÌà8 àCastlewood€appealed€the€action€taken€to€the€appropriateÏgovernmental€agencies.€€The€appeal€ultimately€reached€theÏAssessment€Appeals€Commission€which€affirmed€the€Anderson€CountyÏBoard€of€Equalization€and€issued€its€official€certificate€on€MayÏ4th,€1993..€.€.€€€As€provided€for€in€the€certificate,€aÏdissatisfied€party€is€entitled€to€judicial€review€by€filing€aÏpetition€in€Chancery€Court€within€sixty€days€of€the€date€of€theÏcertificate.Ì öÝ ƒ!ÝÑ#€d#ÑÔ€)ÔÝ  ÝÝ ƒ$Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝÔ€,ÔÔ€,ôÔ€Tenn.€Code€Ann.€ðð€66„27„101€òòetóó€òòseqóó€(1993).ÌPtPtHHØ(ÿáÿâùFG(üHHØ(d'`Styl{WP}01•ÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃà Ãà Ãà Ãà Ãà ÃÃÃÃÃÃÃÃÃÃÃÐ ÐÐHHÐÐ  ÐÐ2ÐÐÿÿ¸æ$ÿÐÐHHÐÐÐÐÐÐÐÐ  ÐÐ ÐÐ ÐÑÑÑGenevaÑÑ ÑÑ € ÑÑ<Px–ÈÑÒÒÒ443!#4ÒÒ$ *$ÒÒ$*$ÒÒ ÿKK ÒÒ  Geneva ÒÒ  Geneva ÒÓ.,ÓÓÓÓ6ÓÓ ÓßßßßßßßßßßßßßßßßßßÑGenevaÑÑ ÑÒ  ion-F Geneva ÒÒ  ion-F Geneva Ò€-‚ƒCþÿ<< CÿÿƒLevel 1Level 2Level 3Level 4Level 5($$””ò òÚ  Ú1Ú  Úó ó„„'÷ÿ dxdüÿP PdÝ ƒ!ÝÔ . ÔÔ€)ÔÝ  ÝÒ À ÒÒ À ÒØ ØÓ&€++XÐd&ÓÑ  ÑÔ€,ԛр ÑÑ7€!XXdÈdÈ7ÑÑ  ÑÖ€.ÖÓ ` Ü›XÓÑ\R AØ'\ÑÞ ÞÌà àà àà àà àà àà àà àà àòòFOR€PUBLICATIONóóÌÌÙ€€ÙœßR€130A1-j|` Å `€€@ÿRß›à@ àIN€THE€SUPREME€COURT€OF€œTENNESSEEà àà à›ÌÌà@ àAT€KNOXVILLEÌÌCASTLEWOOD,€INC.,à àà àœ›à àà àœ(à àà àà àà àà àà àÌÌ›Ìà àà àà àà àà àà àà à(Ìà àPlaintiff„Appellant,à àà à(Ìà àà àà àà àà àà àà à(Ìà àà àà àà àà àà àà à(€€Anderson€CountyÌv.à àà àà àà àà àà àà à(Ìà àà àà àà àà àà àà à(€€Hon.€William€E.€Lantrip,Ìà àà àà àà àà àà àà à(€€ChancellorÌANDERSON€COUNTY,€TENNESSEE;€PATSYà à(ÌÒ À ÒÒ X ÒSTAIR,€TRUSTEE;€OWEN€K.€RICHARDSON,(€€S.€Ct.€No.€03S01„9705„CH„00053€ÌTAX€ASSESSOR;€CITY€OF€OAK€RIDGE,à à(ÌTENNESSEE;€AND€THE€TENNESSEE€STATEà à(ÌBOARD€OF€EQUALIZATION,à àà àà à(Ìà àà àà àà àà àà àà à(Ìà àDefendants„Appellees.à àà à(ÌÌòòFor€Plaintiff„Appellantóó:à àà àà àòòFor€Defendants„Appelleesóó:ÌÌBernard€E.€Bernsteinà àà àà àDavid€A.€StuartÌKnoxvilleà àà àà àà àà àà àClintonÌÌDoris€C.€Allenà àà àà àà àà àRobert€W.€WilkinsonÌKnoxvilleà àà àà àà àà àà àOak€RidgeÌÌà àà àà àà àà àà àà àJohn€Knox€WalkupÌà àà àà àà àà àà àà àAttorney€General€&€ReporterÌà àà àà àà àà àà àà àNashvilleÌÌà àà àà àà àà àà àà àMichael€E.€MooreÌà àà àà àà àà àà àà àSolicitor€GeneralÌà àà àà àà àà àà àà àNashvilleÌÌà àà àà àà àà àà àà àChristine€LappsÌà àà àà àà àà àà àà àAssistant€Attorney€GeneralÌà àà àà àà àà àà àà àNashvilleÌÌÌÌà@ àò òòòO€P€I€N€I€O€Nóóó óÌÌÌÌÌJUDGMENT€OF€COURT€OFÌAPPEALS€AFFIRMED.à àà àà àà àà àà àà àREID,€SP.€J.ÌÌÒ À ÒÒ À ÒÓ` ` h—XÓÓÓà àThis€case€presents€for€review€the€Court€of€Appealsðð€decisionÏthat€the€classification€as€industrial€and€commercial€of€two€or€moreÏcondominium€units€rented€by€the€owner€to€others€for€their€use€asÏresidences€does€not€violate€Article€II,€Section€28€of€the€TennesseeÏConstitution.€€Nor€does€the€statute€violate€the€equal€protectionÏclause€of€the€United€States€Constitution.× ƒ4 ××  ×€€That€decision€is€affirmed.× ƒ5 ××  ×€€ÌÌà@ àò òIó óÌÌà àThe€essential€facts€were€stipulated.€€Pursuant€to€theÏHorizontal€Property€Act,× ƒ6 ××  ×€the€plaintiff,€Castlewood,€Inc.,€developed€inÏOak€Ridge€a€real€estate€condominium€project€consisting€of€86€two„bedroom€units€situated€in€19€separate€buildings€containing€from€fourÏto€six€units€or€apartments€each.€€The€units€were€offered€for€sale€asÏseparate€residences.ÌÌà àSix€units€that€had€been€sold€to€individual€owners€wereÏclassified€by€the€county€property€assessor€as€residential€property€andÏassessed€for€county€and€city€taxes€at€25€percent€of€value,€while€theÏremaining€80€units,€which€were€held€by€Castlewood€to€be€rented€toÏseparate€occupants,€were€classified€as€industrial€and€commercialÏproperty€and€assessed€at€40€percent€of€value.€€€ÌÌà àThe€trial€court€found€that€the€units€owned€by€CastlewoodÏshould€be€classified€as€residential€property.€€The€Court€of€AppealsÏreversed,€holding€that€the€rental€units€are€industrial€and€commercialÏproperty€within€the€meaning€of€Article€II,€Section€28€of€the€TennesseeÏConstitution.€€ÌÌà@ àò òIó óÌÌà àArticle€II,€Section€28€classifies€real€property€into€fourÏcategories:€€public€utility,€industrial€and€commercial,€residential,Ïand€farm.€€The€constitution€does€not€further€define€the€classes€ofÏproperty€other€than€to€state,€ð ðresidential€property€containing€two€(2)Ïor€more€rental€units€is€hereby€defined€as€industrial€and€commercialÏproperty.ðð€€The€distinction€between€industrial€and€commercial€andÏresidential€is€set€forth€in€the€statute:ÌÌÓÓà8 àð ðIndustrial€and€commercial€propertyðð€includes€allÏproperty€of€every€kind€used,€directly€orÏindirectly,€or€held€for€use,€for€any€commercial,Ïmining,€industrial,€manufacturing,€trade,Ïprofessional,€club€(whether€public€or€private),Ïnonexempt€lodge,€business,€or€similar€purpose,Ïwhether€conducted€for€profit€or€not.€€All€realÏproperty€which€is€used,€or€held€for€use,€forÏdwelling€purposes€which€contains€two€(2)€or€moreÏrental€units€is€hereby€defined€and€shall€beÏclassified€as€ð ðindustrial€and€commercialÏproperty.ððÌÌÓÓÌTenn.€Code€Ann.€ðð€67„5„501(4)(1994).ÌÌÓÓà8 àð ðResidential€propertyðð€includes€all€real€propertyÏwhich€is€used,€or€held€for€use,€for€dwellingÏpurposes€and€which€contains€not€more€than€one€(1)Ïrental€unit.€€All€real€property€which€is€used,€orÏheld€for€use,€for€dwelling€purposes€but€whichÏcontains€two€(2)€or€more€rental€units€is€herebyÏdefined€and€shall€be€classified€as€ð ðindustrial€andÏcommercial€property.ððÌÌÓÓÌTenn.€Code€Ann.€ðð€67„5„501(10)(1994).€€ÌÌà àNeither€the€constitution,€these€statutes,€nor€the€HorizontalÏProperty€Act€makes€any€specific€reference€to€the€classification€ofÏcondominium€property€for€taxation€purposes.€€The€Horizontal€PropertyÏAct€provides€that€taxes€on€condominiums€ð ðshall€be€assessed€against€andÏcollected€on€each€individual€apartment,€each€of€which€shall€be€carriedÏon€the€tax€books€as€a€separate€and€distinct€entity€for€that€purpose,Ïand€not€on€the€building€or€property€as€a€whole.ðð€€Tenn.€Code€Ann.€ððÏ66„27„120(a)€(1993).€€Castlewood€insists€that€because€the€HorizontalÏProperty€Act€deems€each€condominium€unit€to€be€a€separate€parcel€forÏownership€and€taxation€purposes,€its€80€condominium€units€are€separateÏresidential€dwellings€rather€than€ð ðtwo€or€more€rental€units.ðð€€TheÏprovisions€of€the€Horizontal€Property€Act€do€not€support€theÏtaxpayerððs€position.€€ÌÌà àThere€is€no€mistaking€the€meaning€of€the€constitutionalÏprovision€or€the€statute.€€The€buildings€owned€by€Castlewood€containÏtwo€or€more€rental€units€held€for€dwelling€purposes.€€Neither€theÏconstitution€nor€the€statute€suggests€that€condominiums€should€beÏclassified€for€assessment€purposes€differently€than€other€residentialÏproperty.€€Consequently,€the€appropriate€classification€of€theÏplaintiffððs€multiple€condominium€units€is€industrial€and€commercial.€€ÌÌà@ àò òIIó óÌÌà àIn€òòSnow€v.€City€of€Memphisóó,€527€S.W.2d€55€(Tenn.€1975),€€theÏtaxpayer€claimed€that€the€constitutional€amendment€definingÏresidential€property€containing€two€or€more€rental€units€as€commercialÏproperty€violates€the€equal€protection€clause€of€the€FourteenthÏAmendment€of€the€United€States€Constitution.€€In€that€case,€the€CourtÏfirst€noted€the€latitude€given€the€states€in€matters€of€governance:ÌÌÓÓà8 àð ðThe€States€have€a€very€wide€discretion€in€theÏlaying€of€their€taxes.€€...the€States€have€theÏattribute€of€sovereign€powers€in€devising€theirÏfiscal€systems€to€ensure€revenue€and€foster€theirÏlocal€interests.€€Of€course,€the€States,€in€theÏexercise€of€their€taxing€power,€are€subject€to€theÏrequirements€of€the€Equal€Protection€Clause€of€theÏFourteenth€Amendment.€€But€that€clause€imposes€noÏiron€rule€of€equality,€prohibiting€the€flexibilityÏand€variety€that€are€appropriate€to€reasonableÏschemes€of€state€taxation.ððÌÌÓÓÌòòIdóó€at€64€(quoting€òòAllied€Stores€of€Ohio,€Inc.€v.€Bowersóó,€358€U.S.€522,Ï79€S.€Ct.€437€(1959)).ÌÌà àThe€Court€then€held€that€the€Stateððs€action€will€beÏsustained€if€there€is€a€ð ðrational€basisðð€for€the€classification:ÌÌÓÓà8 àð ðBut€there€is€a€point€beyond€which€the€StateÏcannot€go€without€violating€the€Equal€ProtectionÏClause.€€The€State€must€proceed€upon€a€rationalÏbasis€and€may€not€resort€to€a€classification€thatÏis€palpably€arbitrary.€€The€rule€often€has€beenÏstated€to€be€that€the€classification€ððmust€restÏupon€some€ground€of€difference€having€a€fair€andÏsubstantial€relation€to€the€object€of€theÏlegislation.ðð€(Citations€omitted.)€ððIf€theÏselection€or€classification€is€neither€capriciousÏnor€arbitrary,€and€rests€upon€some€reasonableÏconsideration€of€difference€or€policy,€there€is€noÏdenial€of€the€equal€protection€of€the€law.ðð€ÏòòBrown„Forman€Co.€v.€Commonwealth€of€Kentuckyóó,€217ÏU.S.€563,€573,€30€S.€Ct.€578,€580€[(1910)]€òòStateÏBoard€of€Tax€Comððrs€of€Indiana€v.€Jacksonóó,€283ÏU.S.€527,€537,€51€S.€Ct.€540,€543€[(1931)].€€ThatÏa€statute€may€discriminate€in€favor€of€a€certainÏclass€does€not€render€it€arbitrary€if€theÏdiscrimination€is€founded€upon€a€reasonableÏdistinction,€or€difference€in€state€policy.ððÌÓÓÌÌòòId.óó€at€64„65.€€It€concluded€that€the€test€of€whether€a€classificationÏwhich€discriminates€will€survive€an€equal€protection€challenge€ofÏarbitrariness,€is€whether€ð ðany€state€of€facts€reasonably€can€beÏconceived€that€would€sustain€it.ðð€€òòId.óó€at€65.ÌÌà àThe€Court€in€òòSnow€v.€City€of€Memphisóó,€found€that€ð ð[t]heÏpurpose€and€objective€of€the€[amendment€to€Article€II,€Section€28]€isÏto€tax€income„producing€property€at€a€higher€rate€than€owner„occupiedÏresidences€and€farms.ðð€€òòIdóó.€at€66.ÌÌÓÓà8 à...€[I]t€is€clear€that€there€is€discriminationÍin€favor€of€the€real€property€owner€who€lives€inÏone„half€of€a€duplex€and€rents€the€other€half€andÏin€favor€of€the€real€property€owner€who€rents€oneÏor€more€single„family€residences.€€There€isÏsubstantial€proof€in€the€Nashville€case€thatÏsingle„family€residences€for€rental€purposes€makeÏa€poor€investment.€€The€cost€of€land€on€the€oneÏhand€and€the€savings€to€be€effected€in€theÏconstruction€and€operation€of€multi„unitÏapartments€render€it€inconceivable€that€anyÏinvestor€would€be€in€the€business€of€rentingÏsingle„family€residences.€€It€is€obvious€that€theÏConvention€and€the€people€deemed€it€reasonable€toÏembrace€within€the€favored€classification€of€aÏowner„occupied€residence,€owners€of€additionalÏsingle„family€residences€and€the€owner€who€livesÏin€one„half€of€his€duplex.ÌÌÓÓÌòòIdóó€at€66.€€This€favored€classification€does€not€extend€to€the€owner€ofÏthe€80€condominium€rental€units€which€are,€to€the€owner„taxpayer,Ïincome€producing€property.€ÌÌà àThe€decision€of€the€Court€of€Appeals€is€affirmed,€and€costsÏare€taxed€against€Castlewood,€Inc.ÌÌÓÓà àà àà àà àà à_____________________________Ìà àà àà àà àà àLyle€Reid,€Special€JusticeÌœ›ÌConcur:ÌÌDrowota,€Birch,€and€Holder,€JJ.ÌÌAnderson,€C.J.€„€Not€participating.