No. 14798
IN THE SUPREME COURT OF THE STATE OF MONTANA
1979
* BUTTE COUNTY CLUB, a non-profit corporation,
Relator and Respondent,
VS .
THE DEPrRTEIENT OF REVENUE OF THE STATE OF MONTANA,
Respondent and Appellant,
and
EDWARD WHEELER et al.,
Relators and Respondents,
VS .
THE DEPARTMENT OF REVENUE OF THE STATE OF MONTANA,
Respondent and Appellant.
Appeal from: District Court of the Second Judicial District,
Honorable Arnold Olsen, Judge Presiding.
Counsel of Record:
For Appellants:
R. Bruce McGinnis argued, Dept. of Revenue, Helena,
Montana
For Respondents:
McCaffery and Peterson, Butte, Montana
John L. Peterson argued, Butte, Montana
Submitted: November 2, 1979
Deicded: MAR 1 ?. 1984
MAR 1 "980
Filed:
Mr. Justice Daniel J. Shea delivered the Opinion of the
Court.
The Department of Revenue (herein referred to as DOR)
appeals from the judgment of the Silver Bow County District
Court granting writs of prohibition restraining the DOR from
assessing the Butte Country Club and Grand Hotel at the
appraised values determined by the DOR in 1978.
The Butte Country Club, a nonprofit corporation, owns
real property and improvements consisting of a clubhouse,
golf course, swimming pool, tennis courts and other facilities.
Butte Country Club owned the real property and improvements
on January 1, 1978; and this property was duly and regularly
assessed for tax purposes for 1977 and prior years in the
amount of $239,570. On August 31, 1978, Butte Country Club
received a notice of change in property valuations from the
DOR, in which the assessed value of the Butte Country Club's
land and improvements was increased to $1,490,272.
The Wheelers, owners of the Grand Hotel, owned the real
property and improvements on January 1, 1978. That property
was duly assessed for tax purposes for the year 1977 after a
hearing before the State Tax Appeal Board (herein referred to
as STAB) on December 16, 1977. By virtue of the STAB hearing,
the land and improvements were assessed at a value of $43,179
for 1977. In late August 1978, the Wheelers received from
the DOR a notice of change in property valuations dated July
27, 1978, erroneously stating that the 1977 valuation was
$79,680; and increasing the assessed value of the property to
$134,600.
On September 8, 1978, the Wheelers filed a notice of
appeal with the Butte-Silver Bow County Tax Appeal Board
(herein referred to as Local Board) . On September 20, 1978,
Butte Country Club filed a notice of appeal with the Local
Board. The taxpayers sought a hearing before the Local Board
on the issue of the change in appraised value.
The Local Board convened in 1978 to hear taxpayer appeals;
however, the taxpayers in the instant case were not afforded
a hearing before the Local Board. STAB granted the Local
Board additional time, until October 1, 1978, to hear appeals,
however, the taxpayers' appeals in the instant case were not
heard by the Local Board by October 1, 1978. The appeals still
pending before the Local Board on October 1, 1978, were sent
to STAB for hearings.
On November 8, 1978, the taxpayers brought suit in Silver
Bow County District Court seeking writs of prohibition; and a
hearing was held on December 20, 1978. The taxpayers requested
the District Court to declare the 1978 assessments of their
property to be null and void.
On March 16, 1979, the District Court entered its findings
of fact and conclusions of law. The District Court concluded
that the assessments were illegal and contrary to law, deter-
mining that the assessment was made after the second Monday
in July 1978, contrary to 1972 Mont. Const., Art. VIII, § 3
and section 15-8-201, MCA. The District Court further
determined that the late assessments by the DOR effectively
denied the taxpayers their right to a hearing before the
Local Board, constituting a violation of their constitutional
and statutory right to a hearing at the local government level.
The District Court also determined that a hearing before STAB,
without a prior hearing before the Local Board, was contrary to
law and would not cure the violation of the taxpayers' rights.
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The District Court concluded that the DOR assessments in
each case were in excess of the true market value of the
property, and therefore were arbitrary and capricious.
The District Court granted the taxpayers' writs of
prohibition, holding that the DOR's assessment in each case
was contrary to law. The District Court determined that the
assessment of the Butte Country Club for 1978 should be
$239,570; and the assessment of the Grand Hotel for 1978 should
be $43,179. The District Court awarded each taxpayer costs
and $1,250 for attorney fees.
The DOR raises the following issues on appeal:
1. Whether the District Court erred in finding that the
assessment of the taxpayers' properties was illegal and contrary
to law because it was made after the second Monday in July 1978.
2. Whether the District Court erred in finding that
the late assessment by the DOR denied the taxpayers a con-
stitutional right to a hearing before the Local Board.
3. Whether the District Court erred in finding that the
assessment of the taxpayers' properties was illegal and contrary
to law because it was in excess of the true market value, and
therefore arbitrary and capricious.
Under its first specification of error, the DOR contends
that the District Court ruled on technical grounds that the
assessments were void because they were made after the second
Monday in July 1978; and further contends that under section
15-8-308, MCA, assessments are not illegal if made untimely.
The taxpayers contend that under section 15-8-201, MCA, the
failure of the DOR to make the assessments before the second
Monday in July 1978 renders the assessments invalid because
of untimeliness. The taxpayers further contend that the DOR
cannot lightly ignore the entire assessment scheme enacted by
the legislature by making assessments at anytime it so
desires. We agree and find that the DOR's contentions
lack merit.
Montana's 1972 Constitution provides: "The state shall
appraise, assess, and equalize the valuation of all property
which is to be taxed in the manner provided by law." Art.
VIII, s 3 .
Pursuant to this constitutional mandate, the Montana
Legislature enacted section 15-8-201, MCA. Section 15-8-201
(1), MCA, provides:
"The department of revenue or its agent must,
between January 1 and the second Monday of July
in each year, ascertain the names of all taxable
inhabitants and assess all property subject to
taxation in each county. The department or its
agent must assess property to the person by whom
it was owned or claimed or in whose possession or
control it was at midnight of January 1 next
preceding. It must also ascertain and assess all
mobile homes arriving in the county after midnight
of January 1 next preceding. No mistake in the name
of the owner or supposed owner of real property,
however, renders the assessment invalid." (Emphasis
added. )
It is well established that when the terms of a statute
are plain, unambiguous, direct and certain, the statute speaks
for itself and there is nothing for this Court to construe.
Cherry Lane Farms of Montana, Inc. v. Carter (1969), 153
Mont. 240, 249, 456 P.2d 296, 301; In Re Kesl's Estate
(1945), 117 Mont. 377, 161 P.2d 641. The words of section
158-201, MCA, are plain, unambiguous and certain. This
statute requires the DOR to assess all property subject to
taxation between January 1 and the second Monday of July.
The statute contains the word "must", and this clearly
indicates that the statutory commands are mandatory, and not
discretionary. The DOR must assess property by the second
Monday in July, and that was not complied with in the
instant case. Section 15-8-201(2), MCA, outlines specific
exceptions to the assessment procedures contained in
section 15-8-201(1), MCA; however, the legislature did not
specifically exclude the second Monday in July time limit
for the type of property involved in the instant case.
The DOR's argument that section 15-8-308, MCA, allows
late assessments is without merit in the context of the
instant case. Section 15-8-308, MCA, provides:
"No assessment or act relating to assessment
or collection of taxes is illegal on account
of informality,or because the same was not
completed within the time required by law."
The cases interpreting this statutory provision have
made a distinction between irregularities regarding assess-
ments which are informalities, and those which are matters
of substance. See Anderson v. Mace (1935), 99 Mont. 421, 45
P.2d 771; Perham v. Putnam (1928), 82 Mont. 349, 267 P.
305; Cobban v. Hinds (1899), 23 Mont. 338, 59 P. 1. A
departure from a legal requirement is not an informality,
but rather is a matter of substance and is vital. Perham v.
Putnam, supra, 82 Mont. at 361.
Section 15-8-201, MCA, specifically requires the DOR
to make assessments no later than the second Monday of July,
The statutory time period for making assessments is mandatory,
and section 15-8-308, MCA, does not provide the DOR with a
remedy in the instant case because the departure from a legal
requirement is a matter of substance, not one of informality.
Additionally, section 15-8-201, MCA is a specific statute
which must prevail over section 15-8-308, MCA, which is a
general statute. In interpreting tax statutes it should always
be kept in mind that they are to be strictly construed against
the taxing authorities, and in favor of the taxpayer. Cherry
Lane Farms Qf Montana, Inc. v. Carter, supra, 153 Mont. at
249; Swartz v. Berg (1966), 147 Mont. 178, 182-183; 411 P.2d
The assessments in the instant case were made after the
second Monday in July, and are therefore invalid. A valid
assessment is indispensable to the levy of a tax. Swartz v.
Berg, supra, 147 Mont. at 182. Only the legislature may correct
a problem arising from a lack of sufficient time to complete
assessments under the present statutory scheme. See Depart-
ment of Revenue v. Burlington Northern, Inc. (1976), 169
Mont. 202, 215, 545 P.2d 1083, 1090.
Under its second specification of error, the DOR contends
that the essence of 1972 Mont. Const., Art. VIII, 57 is that
a taxpayer have some independent body review his grievance and
that body be able to do something about it. The DOR also
contends that the taxpayers in the instant case have been
afforded that right because STAB stands ready and willing to
hear their appeals and grant whatever relief is warranted.
The DOR further contends that there may have been a technical
violation of the taxpayers' constitutional rights, but that
the taxpayers have not been harmed or injured.
The taxpayers contend that an appeal to the Local Board
is the exclusive remedy granted to a taxpayer; and that the
only power of STAB is to hear appeals from the decisions of
Local Boards. The taxpayers also contend that since a taxpayer
must follow such an exclusive remedy in attacking an assessment
or be without a remedy, the denial of allowing the taxpayer
its remedy is harm and prejudice to the taxpayer. The taxpayers
further contend that STAB does not have jurisdiction to
unilaterally change the law and provide for the circumvention
of the Local Board by hearing appeals directly. The DOR's
contentions are without merit.
Montana's 1972 Constitution provides: "The legislature
shall provide independent appeal procedures for taxpayer
grievances about appraisals, assessments, equalization, and
taxes. The legislature shall include a review procedure at
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the local government unit level." Art. VIII, 5 7 .
Pursuant to this constitutional mandate, the Montana egis-
lature determined that the County Tax Appeal Board (Local
Board) would be the review procedure at the local government
unit level. Under section 15-15-102, MCA, no reduction may
be made in the valuation of property unless the taxpayer
seeking the reduction files a written application with the
Local Board. Additionally, section 15-15-103, MCA, provides
in relevant part that "[nlo reduction must be made unless
such person or agent makes an application as provided in
15-15-102, and attends and answers all questions pertinent
to the inquiry. "
These statutory provisions, when read together, clearly
show that before a reduction in property valuation may be
granted, a hearing before the Local Board is required.
Following a hearing before, and decision of the Local Board,
section 15-15-104, MCA, provides for an appeal to the State
Tax Appeal Board (STAB) in accordance with the provisions
of section 15-2-301, MCA, which in relevant part provides
that:
"Any person or the department of revenue in
behalf of the state or any municipal corporation
aggrieved by the action of any county tax appeal
board may appeal to the state board by filing with
the county tax appeal board a notice of appeal and
a duplicate thereof with the state board within 20
calendar days after the receipt of the decision of
the county board, which notice shall specify the
action complained of and the reasons assigned for
such complaint."
The statutory scheme enacted by the legislature allowing
taxpayers to appeal assessments clearly shows a legislative
intent that an appeal and review before the Local Board be a
condition precedent to STAB review. This Court has determined
that as a condition precedent to the reduction of the valuation
of property, the taxpayer must appeal at the local level. See
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Barrett v. Shannon (1897), 19 Mont. 397, 399-400, 48 P. 746.
Further, this Court has determined that except in cases
where fraud or the adoption of a fundamentally wrong principle
of assessment is shown, an appeal to the Local Board is the
exclusive remedy granted the taxpayer. Keller v. Department
of Revenue (1979), - Mont . , 597 P.2d 736, 36 St.Rep.
1253; Larson v. State (1975), 166 Mont. 449, 534 P.2d 854.
STAB has authority under section 15-15-101(1), MCA, to
extend the time in which the Local Board may meet to hear
taxpayer appeals. An extension until October 1, 1978, was
granted to the Local Board in the instant case. However, no
further extensions were granted and the taxpayers' cases
were transferred to STAB for hearings; bypassing the local
unit of government. 1972 Mont. Const., Art. VIII, 87 and
the statutes previously discussed clearly show that taxpayers
must have a hearing before the Local Board. The DOR's late
assessments effectively precluded review by the Local Board
in the instant case. STAB lacks the authority to directly
hear taxpayer appeals concerning reductions in property
valuations when there has not first been a hearing before
the Local Board.
Our resolution of the first and second issues renders
consideration of the third issue is unnecessary. Affirmed.-
We Concur: Justice
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