No, 13090
I N THE SUPREME COURT O THE STATE O MONTANA
F F
1975
THE DEPARTMENT O REVENUE
F
O THE STATE O MONTANA,
F F
Appellant,
BURLINGTON NORTHERN I N C , ,
Respondent.
ORIGINAL PROCEEDING:
Counsel of Record:
F o r Appellant :
R. Bruce McGinnis argued, Helena, Montana
Poore, McKenzie, Roth, Robischon & Robinson,
B u t t e , Montana
Robert Poore argued, B u t t e , Montana
For Respondent:
Gough, Booth, Shanahan and Johnson, Helena,
Montana
Ward Shanahan argued, Helena, Montana
Submitted : December 9 , 1975
?, % - - ,
Filed :
7, 4-
14t i t
Mr. Chief J u s t i c e James T . H a r r i s o n d e l i v e r e d t h e Opinion of
t h e Court.
T h i s i s a n a p p e a l from an o r d e r and judgment o f t h e
d i s t r i c t c o u r t , Lewis and C l a r k County, a f f i r m i n g t h e o r d e r
of t h e S t a t e Tax Appeal Board s e t t i n g a s i d e t h e 1974 assess-
ment made by t h e Department of Revenue o f t h e o p e r a t i n g r a i l r o a d
p r o p e r t i e s o f t h e B u r l i n g t o n N o r t h e r n r a i l r o a d system i n Montana.
B u r l i n g t o n Northern (BN) o p e r a t e s a n i n t e r s t a t e r a i l r o a d
system, w i t h l i n e s e x t e n d i n g i n t o f o r t y - e i g h t c o u n t i e s o f Montana.
Each y e a r t h e Department o f Revenue (Department) makes a n a s s e s s -
ment of t h e r a i l r o a d o p e r a t i n g p r o p e r t i e s of BN.
A s r e q u i r e d by s t a t u t e , s e c t i o n 84-801, R.C.M. 1947, BN
p r o v i d e d t h e Department w i t h a v e r i f i e d s t a t e m e n t o f t h e e x t e n t
and v a l u e s o f B N 1 s o p e r a t i n g p r o p e r t i e s . The Department a s s e s s e d
B N 1 s f r a n c h i s e , roadway, r o a d b e d , r a i l s and r o l l i n g s t o c k pur-
s u a n t t o s e c t i o n 84-802, R.C.M. 1947.
The a s s e s s m e n t was made by t h e u n i t method, whereby t h e
entire. interstate BN system i s v a l u e d by t h r e e d i s t i n c t and
d i f f e r e n t methods: (1) c a p i t a l i z e d income; ( 2 ) p r o p e r t y and
plant; ( 3 ) s t o c k and d e b t . Under t h e c a p i t a l i z e d income method
t h e Department a v e r a g e d B N 1 s e a r n i n g s f o r t h e p a s t two y e a r s and
c a p i t a l i z e d such e a r n i n g s by 8.25%. The t o t a l d e p r e c i a t e d c o s t
of t h e system g i v e s t h e p r o p e r t y and p l a n t v a l u e . To f i n d t h e
s t o c k and d e b t v a l u e , t h e Department u s e s t h e a c c o u n t i n g t h e o r y
t h a t l i a b i l i t i e s are matched by assets w i t h t h e s t o c k v a l u e d a t
i t s p r i c e on n a t i o n a l s t o c k exchanges and d e b t v a l u e d a s shown
on B N ' s books. The t h r e e v a l u e s a r e weighted depending on t h e
t y p e of i n d u s t r y and t h e economics o f t h e t i m e .
The 1974 weighted f a c t o r s w e r e : 35% f o r r e v e n u e , 35%
f o r p l a n t , and 30% f o r s t o c k and d e b t . The t o t a l v a l u e o f t h e
system i n 1974 w a s d e t e r m i n e d t o be $1,272,557,576. This t o t a l
was f u r t h e r f a c t o r e d by 17.55% t o d e t e r m i n e t h e p r o p o r t i o n o f t h e
system i n Montana ( $ 2 2 3 , 2 3 3 , 8 5 5 ) . T h i s Montana v a l u e w a s
e q u a l i z e d a t 4 0 % t o g i v e BN a t o t a l a s s e s s m e n t of $89,333,542.
D e s p i t e a s e r i e s of c o n f e r e n c e s between BN and t h e
Department, t h e f i n a l a s s e s s m e n t d i d n o t r e s o l v e a l l t h e d i f -
f e r e n c e s between t h e p a r t i e s . BN r e q u e s t e d a f o r m a l h e a r i n g
b e f o r e t h e Department t o show why t h e a s s e s s m e n t s h o u l d be
lowered. S e c t i o n 84-802. The h e a r i n g was h e l d J u n e 1 9 , 1974.
A t t h e h e a r i n g BN was r e p r e s e n t e d by two o f f i c e r s know-
l e d g e a b l e i n t h e p r o p e r t y t a x a r e a , b u t n o t by l e g a l c o u n s e l .
BN o b j e c t e d t o i n c l u s i o n as d e b t t h e amount owed by BN t o i t s
wholly owned s u b s i d i a r y , Spokane, P o r t l a n d and S e a t t l e Railway
and o b j e c t e d t o t h e nonuse o f a n economic o b s o l e s c e n c e f a c t o r .
A t t h e h e a r i n g a f i v e page l e t t e r from BN was i n t r o d u c e d and
t h e company o f f i c e r s answered q u e s t i o n s from t h e h e a r i n g o f f i c e r
and t h e Department a t t o r n e y p r i o r t o r e s t i n g . Other e v i d e n t i a r y
m a t e r i a l may have been g i v e n t o t h e Department a t t h e series of
m e e t i n g s conducted d u r i n g t h e a s s e s s m e n t p r o c e s s . The a s s e s s m e n t
was upheld by t h e h e a r i n g o f f i c e r .
BN a p p e a l e d t h e D e p a r t m e n t ' s h o l d i n g t o t h e S t a t e Tax
Appeals Board (STAB). A h e a r i n g was h e l d b e f o r e STAB on August
28, 1974. BN w a s r e p r e s e n t e d a t t h i s h e a r i n g by l e g a l c o u n s e l .
BN i n t r o d u c e d f i v e w r i t t e n e x h i b i t s , which were a l l o w e d i n t o
e v i d e n c e o v e r t h e o b j e c t i o n o f t h e l e g a l c o u n s e l f o r t h e Depart-
ment. The Department argued t h e m a t e r i a l and a d d i t i o n a l arguments
were a t r i a l d e -
- novo beyond t h e a p p e a l power o f STAB a s c o n t a i n e d
i n s e c t i o n 84-709, R.C.M. 1947.
On September 1 8 , 1974, STAB r e v e r s e d t h e D e p a r t m e n t ' s
a s s e s s m e n t and o r d e r e d t h e BN s y s t e m ' s t o t a l v a l u e be reduced by
2 5 % f o r economic o b s o l e s c e n c e ; t h e SP&S d e b t was t o t a l l y e l i m i n a t e d ;
and t h e c o s t of p l a n t was augmented t o i n c l u d e t h e n e t v a l u e of
l e a s e d equipment.
The Department s o u g h t and w a s g r a n t e d , u n d e r s e c t i o n
82-4216, R.C.M. 1947, j u d i c i a l r e v i e w of t h e STAB f i n d i n g s , con-
c l u s i o n s and o r d e r . The d i s t r i c t c o u r t found STAB, n o t t h e D e -
p a r t m e n t , had r e p l a c e d t h e S t a t e Board of E q u a l i z a t i o n ; d e -
- novo
t r i a l s by STAB were p r o v i d e d f o r by s e c t i o n 84-709, R.C.M. 1947;
t h e a s s e s s m e n t made by t h e Department was n o t e n t i t l e d t o any
presumption of c o r r e c t n e s s ; and STAB c o u l d h e a r s u c h e v i d e n c e
a s i t d e s i r e d and form i t s own c o n c l u s i o n s a s t o a s s e s s m e n t v a l u e s .
The Department a p p e a l s from t h e d i s t r i c t c o u r t o r d e r and
judgment t o t h i s C o u r t under s e c t i o n 82-4217, R.C.M. 1947.
The i s s u e s p r e s e n t e d f o r r e v i e w by t h i s C o u r t a r e :
(1) Did STAB r e p l a c e t h e o l d S t a t e Board o f E q u a l i z a t i o n
o r d i d t h e Department r e p l a c e t h e o l d s t a t e board w i t h STAB coming
i n t o s e p a r a t e and d i s t i n c t a p p e l l a t e board s t a t u s w i t h powers o f
r e v i e w o v e r a p p e a l s from t h e Department?
( 2 ) Does STAB have t h e power t o c o n d u c t t r i a l s - -
d e novo
on a p p e a l s from t h e Department?
( 3 ) Are t h e f i n d i n g s and c o n c l u s i o n s o f t h e Department
e n t i t l e d t o a presumption of c o r r e c t n e s s ?
T h i s C o u r t h a s been asked t o i n t e r p r e t t h e p r o v i s i o n s o f
t h e 1972 Montana C o n s t i t u t i o n and t h e l a w s e n a c t e d p u r s u a n t t o
t h a t p r o v i s i o n c r e a t i n g an i n d e p e n d e n t a p p e a l p r o c e d u r e f o r
aggrieved taxpayers.
A r t i c l e V I I I , S e c t i o n 7 , 1972 Montana C o n s t i t u t i o n , p r o v i d e s :
"Tax a p p e a l s . The l e g i s l a t u r e s h a l l p r o v i d e i n -
dependent a p p e a l p r o c e d u r e s f o r t a x p a y e r g r i e v a n c e s
a b o u t a p p r a i s a l s , a s s e s s m e n t s , e q u a l i z a t i o n , and
taxes. The l e g i s l a t u r e s h a l l i n c l u d e a r e v i e w
p r o c e d u r e a t t h e l o c a l government u n i t l e v e l . "
C h a p t e r 405, Laws o f 1973, w a s e n a c t e d t o implement t h e
constitutional directions. C h a p t e r 405 i s e n t i t l e d :
"An A c t t o P r o v i d e f o r a G e n e r a l R e v i s i o n o f t h e
Tax Laws o f Montana t o Implement A r t i c l e V I I I ,
S e c t i o n s 3 and 7 o f t h e 1972 Montana C o n s t i t u t i o n
by Designating the State Department of Revenue
as the Tax Administration Agency for the State
of Montana, by creating a State Tax Appeal
Board, by Designating County Assessors as Agents
of the State Department of Revenue and by Pro-
viding for County Tax Appeal Boards; and to
Repeal * * *."
Under the 1973 Act, the old State Board of Equalization
(SBE) ceased to exist, its members becoming the first STAB, sec-
tion 84-701, R.C.M. 1947. In section 84-402(3), R.C.M. 1947,
the Department was given:
" * * * full charge of appraising all property
subject to taxation and equalizing values * * *."
The Department's powers and duties include the following as set
forth in section 84-708.1, R.C.M. 1947:
"(1) To annually assess the franchise, roadway,
roadbeds, rails, and rolling stock, and all other
property of all railroads * * * constituting a
single and continuous property operated in more
than one (1) county in the state, and to apportion
such assessments to the counties in which such
properties are located on a mileage basis * * *."
"(3) To adjust and equalize the valuation of
taxable property among the several counties, and
the different classes of taxable property in any
county and in the several counties and between
individual taxpayers; * * * and exercise such
authority and do all things necessary to secure
a fair, just and equitable valuation of all tax-
able property among counties between the differ-
ent classes of property and between individual
taxpayers."
The STAB was formed pursuant to section 84-708, R.C.M.
1947, and given the following powers and duties:
"(1) To prescribe rules and regulations for
the tax appeal boards of the different counties
* * *
"(2) To hear appeals from decisions of the
county appeals boards;
"(3) To hear appeals from decisions of the de-
partment of revenue in regard to business licenses,
property assessments, taxes and penalties.
" (5) The state tax appeal board shall have the
d u t i e s of a n a p p e a l board r e l a t i n g t o such o t h e r
matters a s may be p r o v i d e d by law."
Following t h e a s s e s s m e n t of r a i l r o a d s by t h e Department,
i n s e c t i o n 84-802.1, R.C.M. 1 9 4 7 , it s t a t e s :
" * * * any a g g r i e v e d p a r t y may a p p e a l t o t h e
s t a t e t a x a p p e a l board a c c o r d i n g t o t h e r u l e s and
r e g u l a t i o n s of s a i d b o a r d . "
The Department a s k s t h i s C o u r t t o make a d e t e r m i n a t i o n
a s t o which b o d i e s r e c e i v e d t h e powers o f t h e o l d S t a t e Board
of E q u a l i z a t i o n . The Department c o n t e n d s it i s t h e s u c c e s s o r
t o t h e SBE i n a l l r e s p e c t s , b u t a r e a d i n g o f t h e c l e a r l a n g u a g e
of t h e p r e s e n t and former r e v e n u e s t a t u t e s i n d i c a t e s o t h e r w i s e .
The Department r e c e i v e d t h e a d m i n i s t r a t i v e powers o f t h e SBE
c o n t a i n e d i n former s e c t i o n 84-708. See s e c t i o n 84-708.1,
and t h e t i t l e t o C h a p t e r 405, Laws o f 1973. The a p p e l l a t e powers
of t h e SBE were t r a n s f e r r e d t o STAB by t h e new s e c t i o n 84-708.
The i n t e n t of t h e l e g i s l a t u r e t o m a i n t a i n c o n t i n u i t y and
t r a n s f e r S B E ' s t a x a p p e l l a t e powers t o STAB i s shown by S e c t i o n
51, C h a p t e r 405, Laws of 1973:
" S e c t i o n 84-707, R.C.M. 1947, i s amended t o r e a d
a s follows:
"'84-707. C o n t i n u i t y of a c t i o n o f former b o a r d .
A l l r e c o r d s , books, documents, r e p o r t s , and
correspondence r e l a t i n g t o t a x appeals, received
and k e p t by t h e former s t a t e board of e q u a l i z a -
t i o n , s h a l l immediately, upon t h e o r g a n i z a t i o n o f
t h e new board [STAB], be t r a n s f e r r e d t o it f o r
i t s u s e and c o n v e n i e n c e . The board s h a l l c o n t i n u e
and c o m p l e t e any and a l l work r e l a t i n g t o t a x
a p p e a l s u n d e r t a k e n o r commenced and n o t completed
by i t s p r e d e c e s s o r . ' "
U n f o r t u n a t e l y , t h e l e g i s l a t u r e had e a r l i e r r e p e a l e d s e c t i o n 84-
7 0 7 , R.C.M. 1947, i n S e c t i o n 58, C h a p t e r 1 0 0 , Laws of 1973. Sec-
t i o n 43-515, R.C.M. 1947, p r o v i d e s :
"An a c t amending a s e c t i o n of a n a c t r e p e a l e d
is void."
T h i s i s t r u e , even i f t h e r e p e a l w a s i n a d v e r t e n t . I n r e Naegele,
7 0 Mont. 1 2 9 , 224 P . 269; S t a t e v. Brennan, 89 Mont. 479, 300 P .
273. The c o n t i n u i t y s t a t u t e i s v o i d , b u t t h e i n t e n t of t h e
l e g i s l a t u r e t o t r a n s f e r t h e a p p e l l a t e power t o STAB i s shown
by t h e a t t e m p t e d amendment o f t h e s t a t u t e . The l a s t a c t of t h e
legislature indicates its intent. I n r e Naegele, s u p r a .
STAB i s i n d e p e n d e n t o f t h e Department. Article V I I I ,
S e c t i o n 7 , 1972 C o n s t i t u t i o n , mandated t h e t a x a p p e a l p r o c e d u r e s
be i n d e p e n d e n t . STAB was t r a n s f e r r e d t o t h e Department of Ad-
m i n i s t r a t i o n f o r a d m i n i s t r a t i v e purposes only. S e c t i o n 84- 702,
R.C.M. 1947. I t i s s t a t e d i n 8 2 A - 1 0 8 ( 1 ) ( a ) , R.C.M. 1947, t h a t
an agency a l l o c a t e d t o a d e p a r t m e n t f o r a d m i n i s t r a t i v e p u r p o s e s
only s h a l l :
"Exercise i t s quasi-judicial, q u a s i - l e g i s l a t i v e ,
l i c e n s i n g , and policy-making f u n c t i o n s independ-
e n t l y of t h e d e p a r t m e n t and w i t h o u t a p p r o v a l o r
c o n t r o l of t h e d e p a r t m e n t . "
W e a r e r e q u i r e d by s t a t u t e , s e c t i o n 93-401-16, R.C.M.
1 9 4 7 , t o l o o k t o t h e p l a i n language of t h e l e g i s l a t i v e enactment
t o f i n d t h e i n t e n t of t h e l e g i s l a t u r e . S t a t e v . Midland N a t ' l .
Bank, 132 Mont. 339, 317 P.2d 880; Morrison v . F a r m e r s ' E t c .
S t a t e Bank, 70 Mont. 146, 225 P. 123. The c l e a r i n t e n t o f t h e
l e g i s l a t u r e , a s s e t f o r t h i n Chapter 405, Laws of 1973, was t o
p l a c e t h e t a x a d m i n i s t r a t i v e powers i n t h e Department and t h e
t a x a p p e l l a t e powers i n STAB.
W must now d e t e r m i n e whether STAB, a s t h e t a x a p p e a l s
e
body, h a s t h e a u t h o r i t y t o r e c e i v e , d u r i n g a h e a r i n g on a n a p p e a l
from a d e c i s i o n by t h e Department, e v i d e n c e n o t p r e s e n t e d t o t h e
Department d u r i n g t h e t a x a s s e s s m e n t p r o c e d u r e .
As was s t a t e d above, STAB i s a l l o c a t e d t o t h e Department
of A d m i n i s t r a t i o n f o r a d m i n i s t r a t i v e p u r p o s e s o n l y . S e c t i o n 84-
702. The h e a r i n g p r o c e d u r e s p r o v i d e d i n t h e A d m i n i s t r a t i v e Pro-
c e d u r e Act (Chapter 4 2 , T i t l e 8 2 , R.C.M. 1947) d o e s n o t a p p l y t o
STAB s i n c e s e c t i o n 84-709, R.C.M. 1947, l i m i t s t h e e f f e c t of t h e
A c t on STAB. S e c t i o n 82-4223, R.C.M. 1947. The STAB h e a r i n g
procedures are contained in section 84-709:
"Appeal to state tax appeal board--hearing. Any
person, firm or corporation 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
* * * at the time of giving notice [to the county
board and appellant] the state board may require
the county board to certify to it the minutes of
the proceedings resulting in such action and all
testimony taken in connection therewith, and the
state board may, in its discretion, determine the
appeal on such record if all parties receive a
copy of the transcript and are permitted to submit
additional sworn statements, or may hear further
testimony. * * * In connection with any appeal
the state board shall have the authority to affirm,
reverse, or modify any decision appealable to the
state tax appeal board; the decision of the state
tax appeal board shall be final and bindinq upon
all interested parties unless reversed or modified
by judicial review. To the extent this section
is in conflict with the Montana Administrative
Procedure Act, this section shall supersede the
Montana Administrative Procedure Act. The state
tax appeal board shall not have authority to amend
or repeal any administrative rule or regulation.
The state tax appeal board must give an-adminis-
trative rule or requlation full effect unless the
board finds any such rule or requlation arbitrary,
capricious or otherwise unlawful." (Emphasis added.)
The Department places great emphasis on the fact that
the final four sentences of section 84-709 (added by Chapter 277,
Laws of 1974) do not contain language permitting additional
statements or testimony, as does the preceding portions of the
statute. We cannot place the same emphasis on this language.
We must presume the legislature knew what it was doing
and was cognizant of the statutes of Montana as then enacted.
Helena Valley Irrigation Dist. v. St. Hwy. Comm'n, 150 Mont. 192,
433 P.2d 791. STAB had been transferred to the Department of
Administration by Chapter 405, Laws of 1973, for administrative
purposes only. Therefore, the executive reorganization statutes
(Chapter 82A, R.C.M. 1947) would apply to STAB. The following
two definitions in section 82A-103, R.C.M. 1947, apply to STAB:
"(2) 'Agency' means an office, position, com-
mission, committee, board, department, council,
division, bureau, section, or any other entity
o r i n s t r u m e n t a l i t y of t h e e x e c u t i v e b r a n c h of
s t a t e government.
" ( 9 ) ' Q u a s i - j u d i c i a l f u n c t i o n ' means a n a d j u d i -
c a t o r y f u n c t i o n e x e r c i s e d by a n agency, i n v o l v -
i n g t h e e x e r c i s e of judgment and d i s c r e t i o n i n
makins d e t e r m i n a t i o n s i n c o n t r o v e r s i e s .
d
The
t e r m i n c l u d e s , b u t i s n o t l i m i t e d t o , t h e func-
t i o n s of i n t e r p r e t i n g , a p p l y i n g , and e n f o r c i n g
e x i s t i n g r u l e s and l a w s ; g r a n t i n g o r denying
p r i v i l e g e s , r i g h t s , o r b e n e f i t s ; i s s u i n g , sus-
pending, o r r e v o k i n g l i c e n s e s , p e r m i t s , and
c e r t i f i c a t e s ; d e t e r m i n i n g r i g h t s and i n t e r e s t s
of a d v e r s e p a r t i e s ; e v a l u a t i n g and p a s s i n g on
f a c t s ; awarding compensation; f i x i n g p r i c e s ;
o r d e r i n g a c t i o n o r abatement o f a c t i o n ; a d o p t -
i n g p r o c e d u r a l r u l e s ; h o l d i n g h e a r i n g s ; and any
o t h e r a c t n e c e s s a r y t o t h e performance of a
quasi- j u d i c i a l function. " (Emphasis added. )
The Department a r g u e s STAB i s n o t a q u a s i j u d i c i a l body;
w e agree. STAB d o e s n o t q u a l i f y a s such a body a s d e f i n e d i n
s e c t i o n 82A-112(1), R.C.M. 1947. But, q u a s i j u d i c i a l f u n c t i o n s
c a n be performed by a g e n c i e s which a r e n o t q u a s i j u d i c i a l b o d i e s .
I f t h i s were n o t s o , t h e t r a n s f e r of STAB t o t h e Department of
A d m i n i s t r a t i o n would be m e a n i n g l e s s . S e c t i o n 84-702 r e f e r s t o
s e c t i o n 82A-108 a s s p e c i f y i n g t h e l i m i t s o f t h e t r a n s f e r . The
l a t t e r s e c t i o n p r o v i d e s f o r t h e e x e r c i s e of q u a s i j u d i c i a l ,
q u a s i l e g i s l a t i v e , l i c e n s i n g and p o l i c y making f u n c t i o n s i n d e -
p e n d e n t l y o f t h e Department. O f t h e d e n o t e d f u n c t i o n s , STAB
c l e a r l y can perform none o f t h e s e , e x c e p t t h e q u a s i j u d i c i a l
function. T h e r e f o r e , w e must presume t h e l e g i s l a t u r e i n t e n d e d
STAB t o perform q u a s i j u d i c i a l f u n c t i o n s o r r e n d e r t h e s t a t u -
t o r y a c t i o n meaningless. A s s t a t e d i n Kish v . Mont. State Prison,
1 6 1 Mont. 297, 301, 505 P.2d 891, w e have h e l d many t i m e s :
"The l e g i s l a t u r e d o e s n o t perform u s e l e s s a c t s . "
S e e a l s o , Helena V a l l e y I r r i g a t i o n D i s t . v . S t . Hwy. Comrn'n, s u p r a ;
Missoula R u r a l F i r e D i s t r i c t v . C i t y of M i s s o u l a , Mont . I
STAB i s empowered t o e x e r c i s e i t s judgment and d i s c r e t i o n .
To a s s i s t i n t h e e x e r c i s e of t h i s power STAB may do t h e f o l l o w -
i n g , p u r s u a n t t o s e c t i o n 84-708, R.C.M. 1947:
"(4) H e a r i n g s , w i t n e s s e s , contempt, f e e s and
subpoenas. Oaths t o w i t n e s s e s i n any i n v e s t i -
g a t i o n by t h e s t a t e t a x a p p e a l board may be ad-
m i n i s t e r e d by a member of t h e board o r h i s a g e n t .
I n c a s e any w i t n e s s s h a l l f a i l t o obey any
summons t o a p p e a r b e f o r e s a i d b o a r d , o r s h a l l
refuse t o
t i o n s , o r t o produce r e c o r d s , books, p a p e r s , o r
documents when r e q u i r e d t o do s o , such f a i l u r e
o r r e f u s a l s h a l l be r e p o r t e d t o t h e a t t o r n e y
g e n e r a l , who s h a l l t h e r e u p o n i n s t i t u t e p r o c e e d i n g s
i n t h e proper d i s t r i c t c o u r t t o punish t h e witness
f o r such n e g l e c t o r r e f u s a l . * * *I1 (Emphasis a d d e d . )
I f a w i t n e s s r e f u s i n g t o t e s t i f y o r p r o v i d e documents
c a n be h e l d i n contempt, STAB must have t h e power t o c a l l w i t n e s s e s
t o t e s t i f y o r p r e s e n t documents, n o t o n l y on a p p e a l s from c o u n t y
b o a r d s , b u t a l s o on s u b j e c t s n o t p r e s e n t e d t o t h e Department d u r -
i n g t h e assessment procedure. I f t h i s were n o t t h e c a s e , STAB
c o u l d o n l y d e c i d e m a t t e r s on t h e r e c o r d forwarded by t h e Depart-
ment, w i t h s e c t i o n 8 4 - 7 0 8 ( 4 ) , R.C.M. 1947, l i m i t e d t o a p p e a l s
from c o u n t y b o a r d s . W e have a l r e a d y d i s c u s s e d t h e presumption
t h e l e g i s l a t u r e knows t h e l a w a s t h e n e n a c t e d , t h e r e f o r e t h e
l e g i s l a t u r e must have i n t e n d e d STAB under C h a p t e r 277, Laws o f
1974 ( t h e l a s t f o u r s e n t e n c e s of s e c t i o n 84-709) would have t h e
u s e o f t h e o a t h and contempt powers of s e c t i o n 8 4 - 7 0 8 ( 4 ) . To do
s o , STAB must be a b l e t o t a k e a d d i t i o n a l t e s t i m o n y and r e c e i v e
a d d i t i o n a l evidence.
The Department c o n t e n d s t h e h e a r i n g b e f o r e STAB w a s a
t r i a l --
d e novo. I n t h e i n s t a n t c a s e t h e r e was no - -
d e novo t r i a l .
STAB h e a r d e v i d e n c e a d d i t i o n a l t o t h a t p r e s e n t e d t o t h e Depart-
ment, b u t d i d n o t d i s r e g a r d t h e D e p a r t m e n t ' s f i n d i n g s . The e v i -
dence was supplementary t o , n o t i n r e p l a c e m e n t o f , t h e r e c o r d
p r o v i d e d by t h e Department. The a s s e s s m e n t f u n c t i o n s remained
i n t h e Department, w h i l e STAB reviewed t h e a s s e s s m e n t ( a s i t may
under s e c t i o n 8 4 - 7 0 8 ( 3 ) , R.C.M. 1 9 4 7 ) , augmenting t h e r e c o r d
so it might better perform its duty, as stated in section 8 4 -
709:
" * * * to affirm, reverse or modify any
decision appealable to the state tax appeal board
* * *I!.
To perform this function, STAB may have a complete - -
de novo
hearing, for the infrequent case in which the board is of the
opinion that it should examine all of the record of the Depart-
ment, and additional evidence, on a firsthand basis, so as to
reach a fair, just and equitable holding.
In the instant case STAB did not affirm nor reverse the
decision of the Department; it modified the decision to include
or exclude matters which it, in its judgment and discretion,
believed should be taken into consideration in the process of
assessing BN for its property in this state.
The Department argues it should have a presumption of
correctness, thereby saddling BN with the burden of proving the
Department's conclusions were arbitrary or capricious or illegal.
The Department does have a presumption of correctness if its
decisions are pursuant to an administrative rule or regulation,
and the rule or regulation is not arbitrary, capricious or other-
wise unlawful. Section 84-709. The Department has not promul-
gated a rule or regulation prescribing the method to be used in
assessing railroad property. Without such a rule or regulation,
STAB has the discretion to examine the procedures used by the
Department, with any additional evidence it may receive, to deter-
mine whether the procedures, and decisions based on such procedures,
are fair, just and equitable.
The Department contends a rule or regulation describing
the method of assessment of railroads would freeze the weight
given each assessment factor. We do not agree. The Department
can draft a rule or regulation setting forth the assessment
methods without freezing the factor weights, if the method
used to determine the weights on a year to year basis is in-
cluded in the rule or regulation; e.g. a listing of the con-
siderations to be used to determine the weights given each
factor.
The Department also raises the issue of whether a full
de -
- novo hearing allows sufficient time to complete the tax
assessment and allocation procedures in the time prescribed by
statute (section 84-802). The legislature, in its wisdom, has
decreed that the procedure as described in this opinion be used
in assessing and contesting tax cases. If insufficient time
to complete the procedure is a reality, the legislature may take
action to correct the problem. The Department has the duty to
recommend such legislation. Section 84-708.1(14), R.C.M. 1947.
To summarize, we hold the powers and duties of the old
SBE were divided between the Department (administrative) and
STAB (appellate). STAB has the authority to receive, during a
hearing, testimony and evidence not presented to the Department
during the tax assessment procedure. STAB performs quasi judicial
functions, although not a quasi judicial body. While performing
these functions, it may conduct a - -
de novo hearing in the event
the Department has (a) not promulgated administrative rules or
regulations covering the tax matter over which the appeal arises,
and (b) STAB is of the opinion firsthand knowledge of all facts
of the matter is necessary. A decision of the Department is not
entitled to a presumption of correctness if the decision is not
pursuant to an administrative rule or regulation, or the decision,
rule or regulation is arbitrary, capricious or otherwise unlawful.
A rule or regulation describing the method of assessing rail-
roads need not freeze the weight given assessment factors. Only
the legislature may correct any problem arising due to any lack
of s u f f i c i e n t t i m e t o complete a s s e s s m e n t and a l l o c a t i o n pro-
c e d u r e s under t h e s t a t u t o r y scheme s e t o u t i n T i t l e 3 4 , R.C.M.
W a f f i r m t h e judgment and o r d e r o f t h e d i s t r i c t c o u r t ,
e
e x c e p t t h e h o l d i n g t h a t STAB r e p l a c e d t h e o l d SBE a s w e have
h e l d b o t h t h e Department
Chief J u s t i c e
W e concur: