EVANS PRODUCTS CO v MISSOULA COUN

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No. 51-417 IN THE SUPREME COURT OF THE STATE OF MONTANA 1982 EVANS PRODUCTS COMPANY, a Delaware Corporation, Plaintiff and Respondent, MISSOULA COUNTY, a municipal corporation of the State of Montana; FERN HART, as Clerk and Recorder & Treasurer, et al., Defendants and Appellants. Appeal from: District Court of the Fourth Judicial District, In and for the County of Missoula Honorable John Henson Judge presidinq. Counsel of Record: For Appellants: Robert L. Deschamps,III, County Attorney, Missoula, Montana R. Bruce McGinnis, Dept. of Revenue, Helena, Montana For Respondent: Mulroney, Delaney & Dalby, Missoula, Montana Submitted on briefs: Decided: Filed: $ k c - ' j i98Z September 13, 1982 December 3, 1982 J u s t i c e Gene B . Mr. Missoula from a Fourth County summary , and the judgment Evans S t a t e D e p a r t m e n t of issued District, Judicial plaintiff Daly d e l i v e r e d t h e O p i n i o n of t h e C o u r t . Products by the Missoula Company, Revenue Court District County, was in refunded appeal of the which real the property t a x e s it had p a i d u n d e r p r o t e s t . Evans P r o d u c t s Company a plywood (Evans) operated and wood p r o d u c t s m i l l i n Missoula County d u r i n g t h e t a x y e a r s 1977, 1978, and 1 9 7 9 . In 1978 and 1979, Evans received a tax list, assessment s t a t i n g t h a t t h e m a r k e t v a l u e f o r E v a n s 1 b u i l d i n g s was $ 3 9 6 , 0 5 0 , and t h e t a x a b l e v a l u e was $ 3 3 , 8 6 2 . Evans p a i d b o t h t h e 1 9 7 8 and 1 9 7 9 t a x e s on i t s b u i l d i n g s b a s e d on t h e s e f i g u r e s . Missoula County discovered that it had miscalculated the m a r k e t v a l u e a s s i g n e d t o E v a n s 1 b u i l d i n g s f o r t h e y e a r s 1 9 7 8 and 1979. On December Office sent Evans 27, the 1979, the following Missoula notice and County Assessor's explanation error: " T h i s is t o i n f o r m you t h a t i n 1 9 7 8 t h e r e was a n i n c o r r e c t a s s e s s m e n t of t h e Evans P r o d u c t s Co. improvements on N.P. land here in Missoula. P r i o r to 1978 t h e improvement values shown on assessment notices were a s s e s s e d v a l u e s and were 40% o f f u l l or appraised value. Then 3 0 % o f t h e a s s e s s e d v a l u e was u s e d t o a r r i v e a t a t a x a b l e v a l u e which e q u a l l e d 12%o f f u l l v a l u e . I n 1978, a s a r e s u l t o f t h e s t a t e - w i d e r e a p p r a i s a l of r e a l p r o p e r t y t -h- i s- - - - - -- w a - c h-a- --g e d- s - - h a - t h e method s - n -o t - -t f i g u r e shown o n t h e -a s s - ---s-e-t n o t i c e w o u l d - b e es m n --- f u l i marke-t - - v a l u e a n d t h e n 8;55% would b e - - -a p p i - i e d t o a r r i v e a t - a - t a x a - -l e - - v a l u e . B e c a u s e b y o u r - - p l a n t - h a d n o t been r e a p p r a i s e d a t t h e time t h e 1 9 7 8 a s s e s s m e n t s w e n t o u t , - t h e 197-7 a s s e s s e d v a l u e o£ -the i m p r o v ~ e f i s - - w a sinad-- - v e r t e n t l -y c a r r i e d f-o -- a r-- - - - a s f u l l --ma-rket r w -- d value. ~ h i - s - - ? i g u r e was $ 3 9 6 , 0 5 0 when i t s h o u l d h a v e b e e n $ 9 9 0 , 1 2 5 a s shown on t h e 1 9 7 9 assessment. T h i s r e s u l t e d i n an underassessment of $594,075 w i t h a t a x a b l e v a l u e of $50,794. " 1 9 7 8 method u s e d i n e r r o r : $396,050 ( a s s e s s e d v a l u e ) x 8.55% = taxable value $33,862 "Should have been t $990,125 ( f u l l value) taxable value $84,656 - 2 - x 8.55% = of the "A corrected 1978 assessment notice is e n c l o s e d w i t h t h i s l e t t e r and a s u p p l e m e n t a l t a x b i l l w i l l be s e n t t o you f o r t h e b a l a n c e i n t h e amount o f $ 1 1 , 5 0 7 . 8 9 . " A new 1 9 7 9 a s s e s s m e n t n o t i c e was a l s o s e n t Evans w i t h t h e same corrections. Missoula C o u n t y a d m i t t e d l y made proper market value t o Evans' the error in assigning the The e r r o r was made building. in 1 9 7 8 , when a l l t h e r e a l p r o p e r t y and improvements i n t h e county were the same new data being making reappraised, at change-over a and to a time the county processing was system. P r i o r t o 1 9 7 8 , t h e M i s s o u l a County Assessor had o n l y r e c e i v e d a -s-s -s s e d v a l u e s ( 4 0 p e r c e n t of m a r k e t v a l u e ) o f p r o p e r t y from t h e e county appraisers value. In and with a l l of 1978, these these figures computed the taxable v a l u e s were keypunched assessed i n t o t h e new d a t a p r o c e s s i n g s y s t e m : v a l u e s t h a t were t o be im- mediately a reappraisal was reappraisal, the done. replaced For those by t h e m a r k e . v a l u e when t - . -- - - - properties missed by the t r- r - o a s s e s s e d v a l u e had t o be m u l t i p l i e d by 2 . 5 i n o r d e r - -o -c -a-..-y. -f-r-ward -t..h e -m a r. e.t v a l--u e . k -p r o p e r t y was n e v e r r e a p p r a i s e d . Evans' value was erroneously carried Someone in the Assessor's Evans' o l d assessed f o r w a r d as t h e f u l l m a r k e t v a l u e . Office, whoever keypunched in the i n f o r m a t i o n , had f a i l e d t o m u l t i p l y t h e a s s e s s e d v a l u e by 2 . 5 order to carry forward the true market value, resulting in in a s i g n i f i c a n t t a x d e c r e a s e f o r Evans. When Evans the year Evans 1 9 7 8 and filed protest. received 1979, a complaint Both parties the notices it p a i d to p a y taxes them u n d e r p r o t e s t . seeking refund moved increased for of the summary I n 1980, taxes paid judgment, for under which was g r a n t e d t o Evans. On appeal, Missoula County and the Department of Revenue ( D O R ) a d m i t t h a t t h e t a x e s s h o u l d be r e f u n d e d a t t h i s t i m e b e c a u s e t h e c o u n t y i n i t i a l l y f a i l e d t o f o l l o w t h e p r o c e d u r e s s e t down i n s e c t i o n 15-8-601, MCA. S e c t i o n 15-8-601 provides t h a t whenever t h e DOR d i s c o v e r s t h a t a n y t a x a b l e p r o p e r t y h a s b e e n " e r r o n e o u s l y assessed" to i t may reassess reassess 15-8-601, the property. then MCA, the property. Subsections provide that is g i v e n t e n y e a r s DOR ( 2 ) and when the ( 3 ) of DOR section proposes to i n c r e a s e t h e p r i o r v a l u a t i o n , it m u s t g i v e n o t i c e o f t h e p r o p o s e d c h a n g e , w i t h t h e o p p o r t u n i t y f o r a c o n f e r e n c e and a p p e a l t o t h e s t a t e tax appeal board. Here, tunity Evans was n o t g i v e n for a conference and the proper an appeal n o t i c e n o r t h e oppor- to state tax the appeal board. B e c a u s e DOR a d m i t s t h a t we must affirm judgment. that part t h e t a x e s s h o u l d have been refunded of the we r e v e r s e However, Court's District t h a t p a r t of the summary judgment which would p r e c l u d e DOR f r o m p r o c e e d i n g anew u n d e r s e c t i o n 15-8-601, MCA. Evans claims t h a t t h e DOR u n d e r s e c t i o n 15-8-601, MCA, d u r e s were n o t f o l l o w e d . r e c e n t case B a l o c k v . 607 P.2d taxation 545, 37 is precluded from now p r o c e e d i n g because i n i t i a l l y the p r o p e r proce- W e r e s o l v e d t h i s i s s u e i n d i c t a of Town o f M e l s t o n e ( 1 9 8 0 ) , St.Rep. as a r e s u l t of 288. While k -B a l o-c - -- --. .- a n n e x a t i o n , we noted .. . -.- Mont. - .- -- . . I d i r e c t l y involved t h a t a f i n d i n g of i m p r o p e r p r o c e d u r e d o e s n o t p r o h i b i t t h e c o l l e c t i o n of t a x e s u n d e r s e c t i o n 15-8-601, the disputed MCA: "As a p r a c t i c a l m a t t e r , f i n d i n g t h e i m p r o p e r p r o c e d u r e was f o l l o w e d by t h e r e s p o n d e n t s d o e s n o t p r o h i b i t t h e c o l l e c t i o n of t h e d i s p u t e d MCA, allows the taxes. S e c t i o n 15-8-601, D e p a r t m e n t o f Revenue t o reassess p r o p e r t y erroneously assessed within the preceding ten years. The s e c t i o n s e t s up p r o c e d u r a l g u i d e l i n e s f o r c o r r e c t i n g p a s t i m p r o p e r assessm e n t s . The r e s p o n d e n t s h e r e c a n f o l l o w t h e s t a t u t o r y p r o c e d u r e s and c o l l e c t t h e t a x e s on appellants' property for the years in question." 607 P.2d a t 549 DOR may assuming t h e r e f o r e p r o c e e d p r o p e r l y u n d e r s e c t i o n 15-8-601, 15-8-601, MCA, applies to t h e type of error here. S e c t i o n 15-8-601 ( I ) , MCA, p r o v i d e s : "Whenever t h e d e p a r t m e n t of r e v e n u e d i s c o v e r s t h a t a n y t a x a b l e p r o p e r t y of a n y p e r s o n h a s i n a n y y e a r e s c a p e d a s s e s s m e n t , b e e-n e-- - -- -e o- u s l y r r o n - - -- -. -- - . MCA, involved a s s e s s e d , o r b e e n o m i t t e d from t a x a t i o n , t h e d e p a r t m e n t may a s s e s s t h e same p r o v i d i n g t h e p r o p e r t y is u n d e r t h e o w n e r s h i p or c o n t r o l of t h e same p e r s o n who owned o r c o n t r o l l e d it a t t h e time i t e s c a p e d a s s e s s m e n t , was e r r o n e o u s l y a s s e s s e d , o r was o m i t t e d from t a x a tion ." Evans Here, claims t h a t DOR may n o t proceed under section MCA, b e c a u s e t h e e r r o r is n o t an " e r r o n e o u s a s s e s s m e n t " 15-8-601, b u t r a t h e r an " e r r o n e o u s a p p r a i s a l . " This technical d i s t i n c t ion d r a w n by Evans i s n o t c o r r e c t . The record simply does not support the s t a t e m e n t s made by Evans i n i t s b r i e f t h a t t h e e r r o r here occurred i n t h e Missoula County Off i c e Appraiser's and not in the Assessor's Off i c e . N e i t h e r d o e s t h e r e c o r d s u p p o r t t h e s t a t e m e n t made by Evans t h a t this is solely an "appraisal" The error. error b e c a u s e a k e y p u n c h e r i n t h e County A s s e s s o r ' s m u l t i p l y t h e a s s e s s e d v a l u e by 2 . 5 . here arose Office failed to An i n c o r r e c t m a r k e t v a l u e was t h e r e f o r e c a r r i e d f o r w a r d . T h i s e r r o r was m e r e l y a c l e r i c a l o n e . a s c h a r a c t e r i z e d by E v a n s , of of reappraisal. Such a I t was n o t an e r r o r , undervaluation during the process clerical error falls under the plain l a n g u a g e meaning of " e r r o n e o u s a s s e s s m e n t " a s it is used i n sect i o n 15-8-601, MCA. Evans a r g u e s t h a t t h i s c a s e is s i m i l a r t o t h o s e c a s e s w h e r e a county assessor has, property. above, an e r r o r i n -u--g-m - -, j d - -e n t through . undervalued The e r r o r h e r e was n o t one of j u d g m e n t , b u t , a s n o t e d only a miscalculation. The Florida Supreme Court has e x p r e s s e d w e l l t h e d i f f e r e n c e be tween v a l u a t i o n r e s u l t i n g from a n error in judgment and one resulting from a clerical " W e must k e e p i n mind t h e d i s t i n c t i o n b e t w e e n c h a n g e s and ' m i s c a l c u l a t i o n s ' by t h e a s s e s s o r which ' u p ' t h e amount p r e v i o u s l y a s s e s s e d roll certification, and the after tax s i t u a t i o n h e r e where t h e r e h a s b e e n no b i l l i n g a t a l l on t h e improvement ( o r i t c o u l d be a s e p a r a t e , ' o v e r l o o k e d ' p a r c e l of land ) which h a s b e e n c o m p l e t e l y e x c l u d e d from t h e t a x roll. T h i s is o b v i o u s l y a m i s t a k e , e r r o r , o v e r s i g h t , which c a n n o t be p r e j u d i c i a l to t h e c h a -- e i t a x p a y e r a s i n t h o s e c a s e s where a -- --n g--- --n judgment b y t h e t a x a s s e s s o r was i n v o l v e d , --b e l a t e d l y i n c r e a s i n g t h e v a l u a t i o n which had i n f a c t e a r l i e r b e e n a s s i g n e d , and e n t e r e d on 1I the tax roll. . - .. error: Korash v. Even the if _ (1972), M i l l s clerical " a p p r a i s a l " e r r o r , Evans Fla . -- error 263 So.2d can 579, termed solely be argument f a i l s . 581. an The b u l k of a u t h o r i t y and p r i o r Montana case l a w s u g g e s t t h a t a p p r a i s a l , t h e s e t t i n g of market value, is a n i n t e g r a l p a r t of the taxation process. Am. J u r . 2 d S t a t e and L o c a l T a x a t i o n , S e c t i o n 7 0 4 ; and L a r s o n v . S t a t e ( 1 9 7 5 ) , 1 6 6 Mont. 4 4 9 , 534 P.2d I n -.--. r-s o - , w e s t a t e d t h a t L a -n 854. t h e s u g g e s t e d d i s t i n c t i o n b e t w e e n t h e s t a t u t o r y use of "tax" and the operative fact of an "appraisal" t h e word was without s u b s t a n c e b e c a u s e t h e a p p r a i s a l would h a v e b e e n used a s t h e b a s i s 534 P.2d f o r the tax computation. a t 858. Likewise, here, the m i s t a k e n l y u s e d a s s e s s e d v a l u e was t h e b a s i s f o r t h e c o m p u t a t i o n of the taxable value. Whether the error "appraisal" error, assessing the is termed because taxable an it w a s value "erroneous assessment" within a "assessment" error, or an c l e r i c a l e r r o r made w h i l e on Evans' property, the meaning of it was an s e c t i o n 15-8-601, MCA. We the therefore affirm the t a x e s must now be summary j u d g m e n t refunded p r o c e d u r e s o f s e c t i o n 15-8-601, We reverse would 15-8-601, to Evans because MCA. DOR from t h e mandatory MCA, were n o t i n i t i a l l y f o l l o w e d . the District Court's decision preclude t o the extent t h a t now p r o c e e d i n g t o the extent t h a t properly under /- it section