NO. 83-45
I N THE S P U M COURT O THE STATE O M N A A
UF 3 E F F O T N
1983
TIIE DEPARTMENT OF REVENUE OF
T E STATE O MONTANA,
H F
Appellant,
SHIRLEY PAXSON,
Respondent.
Appeai from: D i s t r i c t C o u r t o f t h e Second J u d i c i a l D i s t r i c t ,
I n a n d f o r t h e County o f S i l v e r Bow,
The B o n o r a b l e Mark P. S u l l i v a n , J u d g e p r e s i d i n g .
Counsel of Record:
For Appellant:
L a r r y G. S c h u s t e r , Dept. of Revenue, H e l e n a , Montana
For Respondent :
James E . P u r c e l l ; B e n n i n g s e n , P u r c e l l l & G e n z b e r g e r ,
B u t t e , Xoritana
S u b m i t t e d on B r i e f s : March 31, 1 9 8 3
Decided: J u l y 211 1983
Filed: JUL 2 "1983
Clerk
Mr. Justice Daniel J. Shea delivered the Opinion of the
Court.
The Department of Revenue (DOR) appeals from an error of
the Silver Bow County District Court that set aside the order
of the State Tax Appeal Board relating the taxable valuation
of 6 lots in Silver Bow County owned by the plaintiff,
Shirley Paxon. The plaintiff had argued to the trial court
that a 20 percent reduction in the assessed valuation of her
property because the property was partly in a flood plain,
was insufficient. The trial court agreed, and not only set
aside this 20 percent reduction as unsupported by the record,
but also set the tax by applying the taxpayer's theory of tax
reduction and the exact figures she had presented to the
State Tax Appeal Board and before that, the Silver Bow County
Tax Appeal Board.
We affirm that part of the order setting a s i d e the 20
percent reduction. Clearly, not only was there no
substantial credible evidence to support this figure, there
was no evidence. However, we vacate that part of the order
which also determined that the tax should be based solely on
the taxpayer's theory of reduction and the taxpayer's
estimates of taxable value. We cannot say as a matter of law
that the administrative bodies charged with sett-ivq the
taxable valuations were bound to accept either the taxpayer's
theory or the taxpayer's figures for the tax reduction. The
trial court clearly overstepped its bounds when it usurped
the function of the administrative bodies charged with the
responsibility of finding the facts and arriving at the
proper taxable valu-ation.
The a.ssessment of the taxpayer's property is part of the
continuing state-wide reassessment of real property in this
state mandated by the 1972 Montana Constitution. The
taxpayer's land, before the new assessment, was assessed at
$10,425. However, the DOR's new assessment was $146,245 and
taxes were to be based on this figure. The taxpayer filed a
request for review with the county tax appeal board,
cortending that the property was overvalued because parts of
her property taxed were within a flood plain and therefore,
that her property had less value than comparable property not
wlthin the flood plain.
At the heari-nq before the county tax appeal board, the
taxpayer presented evidenc~ 7 a contractor that it would
cost $87,294.60 to haul fill onto the lots to build them up
so that they would not be within the flood plain. The
"Laxpayer, therefore, argued that the $146,245 valuation set
by the Department of Revenue should be reduced by $87,294
leaving a taxable value at $58,951.
The county tax appeal board provides a form specifying
the action the board took on the taxpayer's request, and this
form also provides language indicating that the board is to
glve reasons for its action taken. However, with no reasons
given, the county tax appeal board simply entered a one-line
order stating that a 20 percent reduction of the ta::ahl-e
valuation would be granted because of terrain factors. No
oile knows 1~7hy the 20 percent figure was chosen.
The taxpayer then 3ppealed this decision to the State
Tax Appeal Board, and this board held another hearinq. The
board heard additional testimony and took judicial notice of
evidence relating to other properties in the same vicinity as
the taxpayer's property. In addition, the DOR, apparently at
the board's request, submitted a list of comparable property
valuations. Althouvh the 20 percent reduction figure was
referred to by one of the witnesses, no indication appears
the record why this figure was chosen as the appropriate
reduction factor.
The state board denied the taxpayer's appeal and
affirmed the county board's decision. In its order the state
board noted that a 20 percent reduction figure for terrain
features was a proper figure to use in reducing the taxable
valuation of the taxpayer's property. This order also failed
to explain how the 20 percent figure was reached. The
taxpayer then appealed this order to the District Court, the
scope of review being limited by the Montana Administrative
Procedures Act (sections 15-2-301 through 15-2-304, MCA).
After the notice of appeal was filed, the trial court
apparently held a pre-trial conference, althouah what took
place is not revealed in the record. However, no hearing was
held and. the parties did not file briefs. Whether the
parties expected that a hearing would be held before the
decision, or at least that briefs would be filed before the
decision, is also not revealed by the record. In any event,
the trial court simply reviewed the record on file and
granted all the relief the taxpayer requested. In its order
of May 13, 1982, the trial court ruled that the 20 percent
figure was supported by no evidence and that no reasons were
given for adoption of that figure by the tax appeal board.
The court concluded this figure was arrived at in an
arbitrary and capricious manner and set the board's order
aside. We affirm this part of the trial court's order.
But, the trial court went an additional step and ruled
that the State Tax Appeal Board should have accepted and
adopted the taxpayer's theory of reduction and the taxpayer's
figures. The court, therefore, set the taxable value of the
taxpayer" property for the years 1980, 1981, and 1982, at
$58,951. This ruling exceeded the powers of the trial court
sitting as a reviewing court and it is reversed.
The focus of the Department of Revenue's appeal is
simply a contention that the trial court had no right to set
aside the 20 percent figure arrived at by both tax appeal
boards, the contention being that substantial evidence
supported this figure and the trial court had no riqht to set
it aside. However, substantial evidence did not support this
figure; no evidence supported this figure. The trial court
was clearly correct in setting it aside. On the other hand,
we cannot ignore the fact that the trial court became the
finder of fact by determining what the proper tax should be,
and that is not the function of the trial courts sitting as
reviewing courts. The effect of the trial court's order is
that the county and state boards were required to accept and
adopt that precise theory and figures urged by the taxpayer
as to what the tax should be. That is not the law.
Although, the county and state boards should have
considered the theory and the figures offered by the taxpayer
and given some indication of why they did not adopt this
approach, it does not follow that these boards were bound to
adopt the theory and figures offered by the taxpayer.
Because the boards were wrong in adopting the 20 percent
reduction figure without an evidentiary foundation, it does
not follow that the taxpayer was riqht in contending that the
taxable valuation must be reduced by the cost required to
build the land up to a level that would take it out of the
flood plain. This function is initially one for the
administrative agencies or boards, and not one for the
courts.
We must rerr~a.ndthis case for further hearings because
the 20 percent reduction figure adopted by th.e tax appeal
b0ard.s was not supported by any evidence, let alone
substantial evidence. It appears, however, that it would be
too time consuming to remand it to the county tax appeal
board to start the process all over again. Because the State
Tax Appeal Board not only has review authority, but also can
reopen the case to take additional evidence (section
15-2-301 ( 2 ) , MCA) , it is proper that the state board again
hear this case to determine the proper valuation of the
taxpayer's property.
We affirm in part and reverse in part, with directions
that the District Court remand this cause t.o the State Tax
Appeal Board for further proceedings
We Concur:
k -
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Chief ~dstice