FIRST NAT BANK v DEPT OF REVENUE

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No. 13170 I N THE SUPREME COURT OF THE STATE OF M N A A OTN 1975 FIRST NATIONAL BANK OF LEWISTOWN, M N A A e t a l . , OTN -vs Petitioners, - DEPARTMENT OF REVENUE O F THE STATE O MONTANA, F Respondent. OKIGINAL PROCEEDING: Counsel of Record : For P e t i t i o n e r s : Gough, Booth, Shanahan and Johnson, Helena, Montana Ronald F. Waterman a r g u e d , Helena, Montana Luxan, Murf i t t and Davis, Helena, Montana Howard J o Luxan J r . a r g u e d , Helena, Montana For Respondent: Joseph R o Massman a r g u e d , Helena, Montana October 1 7 , 1975 Submitted : Decided : :' Filed : 1 + 1 C , . M r . J u s t i c e C a s t l e s d e l i v e r e d t h e Opinion o f t h e Court. This i s an a c t i o n brought under t h e Uniform D e c l a r a t o r y Judgments Act, s e c t i o n 93-8901, e t seq., R.C.M. t h i s Court t o assume o r i g i n a l j u r i s d i c t i o n . t h e r e a r e no f a c t s i n d i s p u t e . 1947, and r e q u e s t s Both s i d e s a g r e e T h i s Court agreed t o a c c e p t j u r i s - diction. This a c t i o n a r i s e s out of a d i s p u t e between t h e v a r i o u s banks involved i n t h i s l i t i g a t i o n and t h e Department o f Revenue a s t o t h e i n t e r p r e t a t i o n of one s t a t u t e , s e c t i o n 84-308, R,C.M, 1947. Each y e a r banks doing b u s i n e s s i n t h e s t a t e of Montana a r e r e q u i r e d t o complete a " ~ a n kStatement f o r Assessment" showing a l l t h e r e s o u r c e s and l i a b i l i t i e s o f t h a t bank a s d i s c l o s e d by i t s books, a t twelve o ' c l o c k noon on t h e f i r s t Monday of March. Each of t h e banks involved i n t h i s a c t i o n complied w i t h t h a t requirement. Each e n t e r e d on t h e Bank Statement f o r Assessment, t h e d o l l a r amount o f t h e c a p i t a l s t o c k a s shown on t h e books of t h e bank and i n s e r t e d a s s u r p l u s t h e d o l l a r amount of t h e s u r p l u s a s shown on t h e books of t h e bank. F u r t h e r , each bank s e t f o r t h on t h e statement t h e amount of undivided p r o f i t s and o t h e r r e s e r v e s a s shown on t h e books of t h e bank. I n each i n s t a n c e , each o f t h e f i g u r e s s u p p l i e d t o t h e Department of Revenue by t h e i n d i v i d u a l banks was t h e f i g u r e shown on t h e books of each bank, a s r e q u i r e d by s t a t u t e and regulation. Also, pursuant t o t h e Department's r e g u l a t i o n MAC 42-2.22 (20) - S22410, each bank had i t s bond p o r t f o l i o valued w i t h i n t h e time designated by r e g u l a t i o n . The banks and t h e Department do n o t d i s a g r e e a s t o t h e amounts e n t e r e d on each of t h e banks' Bank Statement f o r Assessment. Nor i s t h e r e a q u e s t i o n a s t o any o t h e r i s s u e involved i n r e a c h i n g t h e v a l u a t i o n of s t o c k t o b e a s s e s s e d t o t h e s t o c k h o l d e r s of each bank. From t h e assessment statement f i l e d by each bank, t h e Department made v a r i o u s c a l c u l a t i o n s a p p o r t i o n i n g t h e v a l u e of s t o c k a s s e s s e d t o t h e s t o c k h o l d e r s a s shown on each bank a s s e s s ment s t a t e m e n t , between t h e 7% and 30% c a t e g o r i e s a s r e q u i r e d by s e c t i o n 84-308. The c a l c u l a t i o n s were based upon adjustments made by t h e Department t o t h e amount of s u r p l u s a s shown on t h e books of each bank. The Department took t h e d e p r e c i a t e d o r a p p r e c i a t e d v a l u e of t h e bond p o r t f o l i o , a p p l i e d t h a t . f i g u r e a g a i n s t t h e amount of undivided p r o f i t as shown on t h e books o f t h e bank; i f t h e r e s u l t of t h o s e c a l c u l a t i o n s was a n e g a t i v e undivided p r o f i t f i g u r e , t h e Department then a d j u s t e d t h e s u r p l u s o f each bank by deducting from t h e s u r p l u s f i g u r e a s shown on t h e books of t h e bank, t h e n e g a t i v e undivided p r o f i t f i g u r e and used t h i s a d j u s t e d s u r p l u s f i g u r e , r a t h e r than t h e amount of s u r p l u s a s shown on t h e books o f each bank. The Department then determined what p r o p o r t i o n of t h e v a l u e of s t o c k a s s e s s e d t o t h e s t o c k h o l d e r was t o be c l a s s i f i e d w i t h i n t h e 7% c l a s s i f i c a t i o n and what proport i o n was t o b e c l a s s i f i e d w i t h i n t h e 30% c l a s s i f i c a t i o n . The banks involved i n t h i s l i t i g a t i o n a l l e g e t h a t t h e above adjustment of t h e amount of s u r p l u s a s shown on t h e books of each bank by n e g l a t i v e undivided p r o f i t s f o r u s e i n a p p o r t i o n i n g t h e v a l u e of s t o c k t o be a s s e s s e d t o t h e s t o c k h o l d e r between t h e 7% and 30% c l a s s i f i c a t i o n was i n c o r r e c t , i l l e g a l and c o n t r a r y t o s t a t u t e and i l l e g a l l y i n c r e a s e d t h e t a x a b l e v a l u e of each bank. Each bank appealed t h e c l a s s i f i c a t i o n and t a x a b l e v a l u e a s determined by t h e Department t o t h e a p p r o p r i a t e county t a x appeal board i n each o f t h e c o u n t i e s where t h e i n d i v i d u a l banks t r a n s a c t business. The d e c i s i o n s of t h e county t a x a p p e a l boards were then appealed t o t h e S t a t e Tax Appeal Board where they were pending upon t h i s C o u r t ' s acceptance o f j u r i s d i c t i o n . The s o l e i s s u e i s whether o r n o t t h e Department may make adjustment i n t h e f i g u r e s shown on t h e books o f t h e v a r i o u s banks involved i n t h i s l i t i g a t i o n i n determining what p r o p o r t i o n of t h e v a l u e of s t o c k a s s e s s e d t o t h e stockholder i s t o be c l a s s i f i e d w i t h i n t h e 7% c l a s s i f i c a t i o n and what p r o p o r t i o n i s t o be c l a s s i f i e d w i t h i n t h e 30% c l a s s i f i c a t i o n . The p e r t i n e n t p o r t i o n of s e c t i o n 84-308, R.C.M. 1947, which t h i s Court f i n d s t o be c o n t r o l l i n g provides: "Moneyed c a p i t a l and s h a r e s of banks, both n a t i o n a l and s t a t e , t h i r t y p e r centum (30%) of t r u e and f u l l v a l u e on t h a t p o r t i o n of t h e t r u e and f u l l v a l u e n o t r e p r e s e n t e d by s u r p l u s , a s shown on t h e books of t h e bank^ seven p e r centurn (7%) on t h a t c or ti on of t h e t r u e and f u l l . . v a l u e r e p r e s e n t e d byLs u r p l u s a s shown on t h e books of t h e bank; provided t h a t on t h a t p o r t i o n of any such s u r ~ l u s which i s over and above t h e amount represenked by s t a t e d c a p i t a l of a bank, t h e excess s h a l l be s u b j e c t t o t h i r t y p e r centum (30%) of t r u e and f u l l value. " (Emphasis added. ) W f i n d t h e quoted s t a t u t e ' s meaning t o be c l e a r and e unambiguous. There a r e no t e c h n i c a l words and a common under- s t a n d i n g of t h e s t a t u t e i s c l e a r from i t s reading. The d r a f t e r s of t h e l e g i s l a t i o n obviously intended t h e r e should be no accounting adjustments made t o t h e f i g u r e shown on t h e books of t h e bank when a p p o r t i o n i n g t h e amounts between t h e 7% and 30% classifications. I n Morrison v. Farmers & ~ r a d e r s ' S t a t e Bank, 70 Mont. 146, 150, 225 P. 1 2 3 , t h i s Court recognized: "* * The i n t e n t i o n of t h e l e g i s l a t u r e i n e n a c t i n g t h e s t a t u t e i s t h e c o n s i d e r a t i o n which must c o n t r o l and t o a s c e r t a i n t h a t i n i n i t s construction t e n t i o n r e c o u r s e must be had, f i r s t , t o t h e language employed 9: 9~ i n d u l g i n g t h e presumption t h a t t h e terms used were intended t o be understood i n t h e i r o r d i n a r y s e n s e , u n l e s s i t i s made apparent from t h e c o n t e x t t h a t t h e y i n t e n d e d t o be given a d i f f e r e n t meaning. f; *I' (Emphasis added.) + : *** * * W e t h e r e f o r e f i n d t h e Department cannot t a k e t h e d e p r e c i a t e d o r a p p r e c i a t e d value of t h e bond p o r t f o l i o , and apply t h o s e f i g u r e s a g a i n s t t h e amount of undivided p r o f i t a s shown on t h e books of t h e bank, and a d j u s t t h e s u r p l u s f i g u r e a s shown on t h e books of t h e bank, t o a r r i v e a t t h e bank's a s s e s s e d v a l u e . It must u s e only t h o s e f i g u r e s shown on t h e books of t h e bank, a s r e q u i r e d by s t a t u t e . The Department argues t h a t i t does n o t know what t o do w i t h t h e newly c r e a t e d bond assessment t h a t i s r e q u i r e d by MAC 4 2 - 2 . 2 2 ( 2 0 ) - S 2 2 4 1 0 . That r e g u l a t i o n was adopted by t h e Department when i t was determined by t h e Department t h a t t h e p r e s e n t assessment system d i d n o t a c c u r a t e l y p o r t r a y t h e t r u e p i c t u r e of t h e bank's property. This Court can sympathize w i t h t h e ~ e ~ a r t m e n t ps s i t i o n ; however, we must p o i n t o u t t h a t t h e ' o s o l u t i o n t o t h a t problem l i e s with t h e l e g i s l a t u r e , and cannot be solved by d r a f t i n g assessment r e g u l a t i o n s and u s i n g them f o r c l a s s i f i c a t i o n purposes. This Opinion s h a l l c o n s t i t u t e a d e c l a r a t o r y judgment.

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