No. 85-150
I N THE SUPREME COURT OF THE STATE O F MOTJTANA
1985
DARBY S P A R , L T D . ,
P e t i t i o n e r and A p p e l l a n t ,
DEPARTMENT OF REVENUE O F THE
STATE OF MONTANA,
R e s p o n d e n t and R e s p o n d e n t .
APPEAL FROM: D i s t r i c t C o u r t of t h e F o u r t h J u d i c i a l D i s t r i c t ,
I n and f o r t h e C o u n t y of R a v a l l i ,
T h e H o n o r a b l e D o u g l a s H a r k i n , Judge p r e s i d i n g .
COUNSEL OF =CORD:
For Appellant:
G a r l i n g t o n , Lohn & Robinson, Missoula, Xontana
F o r Respondent:
P a u l Van T r i c h t , Dept. of R e v e n u e , H e l e n a , Montana
S u b m i t t e d on B r i e f s : June 28, 1 9 8 5
Decided: August 22, 1985
Filed:
4bb L 1985
Clerk
Mr. Justice John C. Sheehy delivered. the Opinion of the
Court.
Darby Spar, the taxpayer, sought a determination from
the Montana Department of Revenue of the application of the
mine net proceeds tax, S 15-23-501 through § 15-23-523, to
its operation. The Department of Revenue determined that
Darby Spar was subject to the mine net proceeds tax for
yields from dumps and tailings. Darby Spar appealed to the
State Tax Appeals Board (STAB) which also determined the tax
applied. Darby Spar then filed for judicial. review in the
District Court which affirmed the STAR decision.
Darby Spar now appeals to this Court. We affirm the
order of the District Court.
The facts in this case are undisputed. The tax year in
question is 1980. Darby Spar's predecessors removed ore from
a mine and transported it to another site. Residue from the
mining and processing of the ore, "tailings," were dumped on
land in Ravalli County that Darby Spar purchased. Darby Spar
sells fluorspar. Fluorspar is a mineral, calcium fluoride,
contained in the tailings, and used in a number of commercial
processes.
The issue is whether the net proceeds tax applies to
fluorspar removed by Darby Spar from the tailings of a prior
mining operation.
Section 15-6-101(2), MCA, states "For the purpose of
taxation, the taxable property in the state shall be
classified in accordance with 15-6-131 through 15-6-141."
Darby Spar's argument is based on the absence of the phrase
"dump or tailings" in § 15-6-131.
Section 15-6-131, MCA, states:
" (1) Class one property includes the annual net
proceeds of all mines and mining claims except coal
and metal mines.
" (2) Class one property is taxed at 100% of its
annual net proceeds after deducting the expenses
specified and allowed by 15-23-503."
Section 15-23-502, MCA, states:
"Every person engaged in mining, extracting, or
produci.ng from any quartz vein or lode, placer
claim, dump or tailings, or other place or source
whatever precious stones or gems, vermiculite,
bentonite, or other valuable mineral, except coal
and metals, must on or before March 31 each year
make out a statement of the gross yield and value
of the above-named metals or minerals from each
mine owned or worked by such person during the year
preceding January 1 of the year in which such
statement is made . . ."
Section 15-6-131, MCA, unlike § 15-23-502, MCA, does not
mention dumps or tailings. The reason for this discrepancy
in the statutes is found in a 1945 case, Foreman v.
Beaverhead County (1945), 1.17 Mont. 557, 161 ~ . 2 d524. he
issue in that case was whether the net proceeds from the
treatment of tailings constituted net proceeds of a mine.
This Court held that the tailings were personal property, not
a mine, and the production of minerals from the tailings
could not be considered the proceeds of a mine. This
conclusion was based on the wording of statutes that used the
phrases "mining claims" or "mines" and did not use "tailings"
or "dumps." The Court stated "The legislature could have
specifically extended the net proceeds tax to valuable
minerals recovered from tailings dumps but has not done so.
The Court must construe the statutes as it find them."
At the next session, 1947, the legislature overturned
Foreman by amending the statute that is now codified as §
15-23-502 to include tailings and. dumps by adding the
underlined words:
"Every person, . . .
engaged in mining, extracting
or producing from any quartz vein or lode, placer
-
claim, dump or tailings, or other place - sources
or
whatever, precious stones-or- gems or other . . .
valuable minerals, must . . ."
For almost 40 years this language has been relied on to
impose the net proceeds tax on the yield from tailings and
dumpings. Administra.tive rules were drafted to this effect
and the legislature acquiesced in this construction of the
statute.
Darby Spar argues that § 15-23-502, MCA, requires that a
taxpayer report the yield from the dumps and tailings on a
statement of yield but that the omission in § 15-6-131, MCA,
precludes imposition of the net proceeds tax on the yield
from disposed tailings. Although we are impressed by the
ingenuity of the argument we do not agree.
construing statutes this Court's role to let the
intent of the legislature control if possible. Baker Nat.
Ins. Agency v. DOR (1977), 75 Mont. 9, 571 P.2d 1199. The
legislative response to Foreman made it clear it was the
legislature's intent to tax the net yield from dumps and
tailings. Further evidence of the legislative intent to tax
the yield from dumps and tailings is its acquiescence for 40
years to administrative rules adopted by the Department of
Revenue to impose the tax. Forty years is adequate time for
the legislature to become aware of how the legislation it
drafted is being interpreted and enforced. The legislature's
inaction is a strong indication that the intent of §§
15-6-131 and 15-23-502 is to impose a net proceeds tax
regarding yield from dumps and tailings.
Statutes should not be construed absurdly when
reasonable construction can avoid it. McClanathan v. Smith
(1980), 186 Mont. 56, 606 P.2d 507. Darby Spar is asking us
to construe 15-23-502 and 15-6-131 to mean that the
legislature intended taxpayers to report the minimal yield
from tailings but did not intend to impose a tax on the
yield. It would be an absurd, meaningless act to require the
reporting of yields but to assess no tax against them.
In construing statutes this Court must give effect to
all provisions of statutes if possible. Continental Oil Co.
v. Board of Labor Appeals (1978), 178 Mont. 143, 582 P.2d
1236. The statutes must be read as a whole, not in
isolation. When § 15-6-131, MCA, is read in conjunction with
§ 15-23-502, MCA, it is clear to any reasonable reader that
the net proceeds tax applies to the yield from tailings and
dumps.
Darby Spar's entire argument hinges on. a 1945 reading of
the phrases "mines" and "mining claims" in Foreman. In light
of the legislative history after 1945 and the collection of
the tax for 40 years, the narrow interpretation of the word
"mines" in Foreman no longer applies. The District Court
order is affirmed.
We Concur: