NO. 91-108
IN THE SUPREME COURT OF THE STATE OF MONTANA
1992
HOLLY SUGAR CORPORATION,
Plaintiff and Appellant,
V.
THE DEPARTMENT OF REVENUE OF THE STATE OF MONTANA: 9 -gggz’
THE STATE OF MONTANA: THE COUNTY OF RICHLAND: ‘7
, I
THE TREASURER OF RICHLAND COUNTY: THE ASSESSOR OF > - L >,:,c.$
RICHLAND COUNTY; HIGH SCHOOL DISTRICT NO. 1, R I C H W D .I CCJil
COUNTY: DISTRICT NO. 5, RICHLAND COUNTY: BOARD OF - ‘ “ ’ - ’ ‘
TRUSTEES, HIGH SCHOOL DISTRICT NO. 1, RICHLAND COUNTY:
BOARD OF TRUSTEES, DISTRICT NO. 5, RICHLAND COUNTY:
SUPERINTENDENT OF SCHOOLS, SIDNEY PUBLIC SCHOOLS: and
SUPERINTENDENT OF SCHOOLS, RICHLAND COUNTY,
Defendants and Respondents.
APPEAL FROM: District Court of the Seventh Judicial District,
In and for the County of Richland,
The Honorable Richard G. Phillips, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
James P. Sites, Argued, Crowley, Haughey, Hanson,
Toole & Dietrich, Billings, Montana
For Respondents:
Phillip N. Carter, Argued, Koch & Carter, Sidney,
Montana: David Woodgerd, Chief Legal Counsel,
Department of Revenue, Helena, Montana
Submitted: February 19, 1992
Decided: April 9, 1992
Filed:
Justice William E Hunt. Sr., delivered the opinion of the Court.
.
Plaintiff/appellant (hereinafter lttaxpayerft)brought a
declaratory judgment action in District Court pursuant to
j
! 15-1-406, MCA, alleging that certain property taxes levied
against the taxpayer were '*illegally or unlawfully imposed or
exceeded the taxing authority of the entity imposing the tax."
Taxpayer alleged that the requirements of 5 15-10-412(9), MCA, were
not satisfied by the taxing authority. The District Court did not
consider the merits of taxpayer's contention, as the court granted
summary judgment for all defendants on the grounds that the statute
of limitations for bringing such actions had run on the taxpayer.
We reverse.
We phrase the issues before this Court as follows:
1. Did the District Court err in holding that the 90-day
statute of limitations for bringing an action pursuant to
§ 15-1-406, MCA, began running on the date the amount of tax due
was entered on the assessment book and the Department of Revenue
affixed their affidavit thereto?
2. Did the District Court err in not finding that
jurisdiction was present under the Uniform Declaratory Judgments
Act?
The facts in this case can be briefly stated. The District
Court Judge summarizedthe relevant facts in his Memorandum Opinion
and Order as follows:
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This action stems from a tax increase that was the
result of a request by Richland County School Districts
1 and 5 for voter approval to exceed the limitations of
15-10-402 MCA. Resolutions calling for an election were
adopted on March 13, 1989 and an election was held on
April 4, 1989. At the election the question was approved
by the voters. Plaintiff paid the portion of its taxes
dealing with the increased school levy under protest on
November 30, 1989 and filed this action January 26, 1990.
The total amount of taxes in dispute is $169,915.64. The tax
statement, which is the notice of the property tax due, was mailed
on October 31, 1989. Taxpayer received the tax statement
indicating the amount of property taxes owed on November 1, 1989.
In response to taxpayer's declaratory judgment action, the
defendants moved for summary judgment. This motion was based upon
three separate grounds: (1) the statute of limitations set forth in
5 15-1-406, MCA, had run; (2) laches, in that the taxpayer should
have taken action earlier based upon the school levy election
results; and ( 3 ) taxpayer was estopped from bringing the action in
that the taxpayer's delay in filing suit allowed the defendants to
change their position detrimentally relying on the election
results. The court did not address issues 2 and 3 , but granted
summary judgment based on the statute of limitations.
Section 15-1-406(2), MCA, states that a declaratory judgment
action of this nature '#must be brought within 90 days of the
imwosition of the tax." [Emphasis added.] The question before the
District Court was when the actual "imposition" of the tax
occurred. Defendants argued that the imposition of the tax
occurred on April 4, 1989, when the emergency levy election was
3
held. The 90-day statute of limitations began running at that time
according to the defendants. The taxpayer argued that the
imposition of the tax was not until November 1, 1989, when they
received notice of the amount of the tax due. Taxpayer then
contended that since the 90-day statute of limitations began to run
on November 1, 1989, taxpayer's suit filed on January 26, 1990, was
within the 90-day period provided by statute in which to bring an
action. The District Court, in its January 29, 1991, memorandum,
opinion, and order, determined that I'[w]hen the final steps to
impose the tax were taken the cause of action to challenge the tax
accrued to the Plaintiff .'I According to the court this date was
October 25, 1989. By October 25, 1989, the court found that all
the necessary steps had been taken and the tax was imposed as of
that date. The property had been assessed, the final budget and
levy had been determined, and the actual tax liability was set and
entered in the assessment book. Taxpayer's declaratory judgment
action was filed January 26, 1990, which is just over the 90 days
allowed to bring the action. The court found it was not
significant that the notice was not sent until October 31, 1989,
and that the taxpayer did not receive the notice of the actual tax
liability until November 1, 1989. The court stated that the actual
tax liability had been determined and it was the taxpayer's own
fault that he was unaware of the actual tax liability. Taxpayer
could have checked to determine if his tax liability had been
entered on the books and his lack of knowledge as to when the tax
4
was entered on the books did not postpone the beginning of the
period of limitations.
Did the District Court err in holding that the 90-day statute
of limitations for bringing an action pursuant to § 15-1-406, MCA,
began running on the date the amount of tax due was entered on the
assessment book and the Department of Revenue affixed their
affidavit thereto?
The outcome of this case turns on this Court's determination
of when the imposition of the tax in question occurred. It is only
upon the imposition that the 90-day period of statute of
limitations begins to run. The question presented here has not
been previously addressed by this Court. However, there are a
number of District Court decisions on when the imposition of a tax
occurs. The present case presents this Court with the opportunity
to clarify the existing law in this area and settle a point of some
contention in the lower courts.
Taxpayer filed suit on January 26, 1990, and therefore,
taxpayer's declaratory judgment action was filed within the
required 90 days pursuant to § 15-1-406, MCA, if the "imposition1'
of the tax is determined to have occurred after October 28, 1989.
Section 1-1-306, MCA. On appeal, taxpayer argues that the District
Court erred in determining that the imposition of the tax was on
October 25, 1989, seven days prior to the time taxpayer received
notice of the tax.
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The defendants also argue on appeal that the District Court
erred in its determination of when the tax was imposed. Defendants
contend that the tax was imposed on April 4, 1989, when the
election was held and request that we modify that part of the
District Court's decision which found that the imposition of the
tax occurred on October 25, 1989.
Section 15-1-406, MCA, the primary statute in question in this
case, reads as follows:
(1) An aggrieved taxpayer may, in lieu of proceeding
under 15-1-402 or 15-1-211, bring a declaratory judgment
action in the district court seeking a declaration that
a tax levied by the state or one of its subdivisions was
illegally or unlawfully imposed or exceeded the taxing
authority of the entity imposing the tax.
( 2 ) The action must be brouaht within 90 days of the
imvosition of the tax. The court shall consolidate all
actions brought under subsection (1) which challenge the
same tax levy. The decision of the court shall apply to
all similarly situated taxpayers except those taxpayers
who are excluded under 15-1-407.
(3) The taxes that are being challenged under this
section must be paid when due as a condition of
continuing the action. [Emphasis added.]
Section 15-16-101, MCA, mandates that within ten days after
the tax liability is entered on the assessment books, the county
treasurer must send a notice to taxpayers indicating the amount of
taxes due. Taxpayer contends that it is only upon receipt of this
notice that the tax is actually imposed. The District Court's
decision imposes an affirmative duty upon taxpayers to check with
the taxing authorities from time to time to determine if their tax
liability has been determined yet. Taxpayer contends this decision
6
not only disregards the purpose of the required statutory notice,
but would be an administrative nightmare for local taxing
authorities.
Unlike personal income taxes, property taxes are
'Inon-self
-assessing, and are assessed and determined by the
government. Taxpayer argues that the process of determining
property taxes is complicated and that the necessary information is
in the hands of the government, and therefore, individual taxpayers
should not be expected to know what their property taxes will be
prior to receiving notice.
Defendants counter by arguing that the taxpayer should have
been aware of the tax, and that they were in a position to easily
figure out what the tax would be. Defendants also argued that
public policy requires that Itan aggrieved taxpayer should be
required to file its declaratory judgment action at the point in
time when it first learns that its taxes are going to be
increased," and that this should be "prior to the time when the
school authorities are forced to commit to the expenditure of this
expected revenue." Allowing taxpayers 90 days from the time they
receive notice of their tax liability to file suit creates too much
uncertainty for the schools. They will not be able to properly
determine the amount of money they will actually have until this
time period has passed.
The public policy arguments raised by the defendants are
indeed important, but this Court is bound to follow and apply the
7
intent of the legislature, as manifested in constitutionally sound
statutes. As we have stated in the past:
In construing a statute, it is our function as an
appellate court to ascertain and declare what in terms or
in substance is contained in a statute and not insert
what has been omitted.
State v. Crane (1989), 240 Mont. 235, 238, 784 P.2d 901, 903.
Whenever possible, this court is to look to the plain meaning of
the statute in determining the legislative intent. State Ex Rel.
Roberts v. Public Service Commission (1990), 242 Mont. 242, 790
P.2d 489.
As previously mentioned, this Court has not interpreted the
term imposition as it is used in 5 15-1-406, MCA. Additionally,
the term has not been defined by the legislature. The statutes are
silent as to when the actual imposition of the tax occurs. The
District Court concluded that the imposition of the tax occurred
when the taxing authority had completed all the steps necessary to
impose the tax and there was nothing remaining for the government
to do. The District Court determined that all the steps necessary
to impose the tax had been completed when the taxes were entered on
the assessment book and the Department of Revenue affixed its
affidavit to the assessment book as provided in 5 15-10-305, MCA.
This date was October 25, 1989. The basic framework utilized by
the District Court was correct, but the analysis of the District
Court stopped one step short of completion. The tax is imposed
when the taxing authority completes all the steps necessary to
8
impose the tax, including the final step that the taxing authority
is statutorily bound to comply with before the tax is imposed.
Pursuant to 5 15-16-101, MCA, the county treasurer is required,
within ten days after receipt of the assessment book, to send each
taxpayer a written notice showing the amount of taxes and
assessments due. It is not until this notice has been sent that:
the government has taken all the steps necessary to impose the tax.
We hold that the imposition of the tax, for purposes of bringing an
action under 5 15-1-406, MCA, occurs on the date the actual notice
of taxes due is sent. In this instance, that occurred on
October 31, 1989. Taxpayer filed suit on January 26, 1990, which
is within the 90-day period allowed for bringing an action under
5 15-1-406, MCA. We must, therefore, reverse the decision of the
District Court and remand for further proceedings consistent with
this opinion.
I1
Did the District Court err in not finding that jurisdiction
was present under the Uniform Declaratory Judgments Act?
In light of our holding on the first issue, a determination
of the question of jurisdiction under the Uniform Declaratory
Judgments Act is not essential to the outcome of this case.
Reversed and remanded to the District Court for further
proceedings consistent with this opinion.
Justice
9
We concur:
Justices
10
Justice R. C. McDonough dissents.
The District Court in its opinfion and order was correct. All
the necessary steps to impose the tax were completed on October 25,
1989. An action of this nature must be brought within 90 days of
the imposition of the tax. Section 15-1-406(2), MCA. There are no
cases in Montana which have interpreted the term "imposition"
relative to the imposition of a property tax.
In So0 Line Railroad Company v. Commissioner of Revenue (Minn.
1985), 377 N.W.2d 453, 458, the court, in what I feel to be a
correct analysis, discussed the use of the term in the process of
taxation as follows:
[Taxation] consists of two distinct processes-
-the one relating to the levying or imposition
of the taxes on persons or property: the other
the collection of the taxes levied. The first
is constituted of the provisions of law which
determine or work out the determination of the
persons or property to be taxed, the sum or
sums to be thus raised, the rate thereof and
the time and manner of levying and receiving
and collecting the taxes.. It definitelv and
conclusivelv establishes the sum to be uaid bv
each person taxed, or to be borne by each
property sueciallv a s s e s w , and creates a
fixed and certain demand fn favor of the state
i
or a subordinate governmental agency, and a
definite and positive obligation on the part
of those taxed, and prescribes the manner of
its voluntary or enforced fulfillment.
Mayor and City Council of Baltimore v. Perrin, 178 Md.
101, 12 A.2d 261, 264-65 (1940).
When used in connection with the authority to tax,
tllevy,tt
strictly speaking, denotes the exercise of a
legislative function, which imposes the tax and sets the
amount, purpose, and subject of the exaction. Carkonen
v. Williams, 76 Wash.2d 617, 458 P.2d 280, 286 (1969).
See also Fichtner v. Schiller, 271 Minn. 163, 135 N.W.2d
877, 879 (1965). In view of the interchangeable use of
the terms "impose11and "levygtby the United States
Supreme Court, e.g., Minneapolis Star ti Tribune Co. v.
Minnesota Commissioner of Revenue, 460 U.S. 575, 103
S.Ct. 1365, 75 L.Ed.2d 295 (1983), we conclude the excise
tax was imposed by legislative action, i.e., 5 290.02,
not by the commissioner's attempt to collect it, . . .
(Emphasis added.)
The components that are necessary to impose a tax on pieces of
property in Montana are the value of the property, the amount of
the millage and the establishment of the sum to be borne by each
piece of property. The value of the property is established by the
application of the assessment and equalization statutes which is
not contested here. The millage, or the rate of tax, was
established in this case by the certification of the school board
to the county commissioners after public notice of the amount of
millage needed. The commissioners then, at their meeting on the
second Monday in August of 1989, and after notice to the public,
levied the millage and taxes against the taxable property of the
district. See 5 7-6-2502, MCA. The third step is the computations
by the county assessor of the exact tax to be paid by each piece of
property and its entry on the assessment book. This, by statute,
is to be done by the second Monday in October, and the assessment
book is then delivered to the county clerk and recorder with the
assessorls affidavit of completion. See 5 15-10-305, MCA. This
completes the first step as set forth in the above quotation; it
definitely and conclusively establishes the sum to be paid by each
person taxed and the sum to be borne by each property specially
assessed.
The second step in the process starts by requiring that on or
before the third Monday in October, the county clerk and recorder
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charges the county treasurer with the full amount of the taxes
levied and delivers the assessment book to the treasurer. This
second process, the collection of the taxes, is not governed by
Chapter 10 which provides for the levy or imposition of the taxes.
Rather, the collection is governed by law in a different chapter,
Chapter 16 of Title 15 of the MCA. Part 1 of said Chapter 16
provides for the notice to be given to the taxpayers, what the
notice shall contain, the time and place of payment, etc.
In this specific case the county assessor was late in
completing and delivering the assessment book together with the
affidavit and it was not done until October 25, 1989. On this date
then, all the steps necessary to levy and impose a tax on a
specific piece of property owned by a specific person were
completed. The 90 day statute of limitations began to run on this
date. This action was not filed until January 26, 1990, which is
more than 90 days after the tax was imposed.
What the majority opinion has done is add the requirement of
the mailing of the notice of taxes due, which is governed by said
Chapter 16, as a requirement to the levy and imposition of the
taxes. The notice requirement is actually a part of the second
process, to wit: the collection of the taxes. I would affirm the
order granting summary judgment.
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