Edgemont Sch. Dist. v. State Dept. of Revenue

Unified Judicial System

Formatting provided courtesy of State Bar of South Dakota
and South Dakota Continuing Legal Education, Inc.
222 East Capitol Ave.
Pierre, SD 57501-2596

EDGEMONT SCHOOL DISTRICT 23-1,
Appellant,
v.
SOUTH DAKOTA DEPARTMENT OF REVENUE,
Burlington Northern Railroad Co., and Counties of Beadle, Brown, Clark,
Codington, Corson, Custer, Day, Edmunds, Grant, Hamlin, Kingsbury, Lake,
Marshall, Minnehaha, Perkins, Roberts, Walworth, Political Subdivisions,
For Themselves and On Behalf of All Municipalities, School Districts, Townships,
and All Other Public Taxing Districts and Governmental Subdivisions Located Therein,
Appellees.

Fall River County,
Appellant,
v.
South Dakota Department of Revenue,
Burlington Northern Railroad Company, and The Counties of Beadle, Brown, Clark,
Codington, Corson, Custer, Day, Edmunds, Grant, Hamlin, Kingsbury, Lake,
Marshall, Minnehaha, Perkins, Roberts, Walworth, Political Subdivisions,
For Themselves and On Behalf of All Municipalities, School Districts, Townships,
and All Other Public Taxing Districts and Governmental Subdivisions Located Therein,
Appellees.

South Dakota Supreme Court
Appeal from the Sixth Judicial Circuit, Hughes County, SD
Hon. James W. Anderson, Judge
#20572--Affirmed

Richard A. Pluimer, PC, Belle Fourche, SD
Attorney for Appellant, Edgemont School District 23-1.

Patrick M. Ginsbach, Fall River County State's Attorney, Hot Springs, SD
Attorney for Appellant, Fall River County.

Mark Barnett, Attorney General
David D. Wiest, Assistant Attorney General, Pierre, SD
Attorneys for Appellee, South Dakota Department of Revenue.

Mark F. Marshall, Johnson, Heidepriem, Miner, Marlow & Janklow, Sioux Falls, SD
Richard A. Malm, Dickinson, Mackaman, Tyler & Hagen, PC, Des Moines, IA
Attorneys for Appellee, Burlington Northern Railroad Company.

Considered on Briefs Feb 24, 1999; Opinion Filed Apr 14, 1999

SABERS, Justice.

[¶1] Edgemont School District (District) and Fall River County (County) appeal a partial summary judgment that SDCL 10-28-16 mandates distribution of a railroad's statewide value to counties on a pro rata per mile of track basis. We affirm.

FACTS

[¶2] Burlington Northern Railroad (BNRR) is an interstate railroad which owns operating property in several counties in South Dakota. Its operating property within South Dakota is subject to tax assessment by the South Dakota Department of Revenue (Department). SDCL 10-28-1. The tax assessment process involves valuing the railroad operating property as a total unit, allocating a proportionate value to the state, and then distributing the taxable value among the various local taxing jurisdictions. SDCL 10-28-9, -12, and -16.

[¶3] The assessment and distribution of the value of BNRR's operating property for property tax purposes has a history of controversy. These same parties were before the court in Fall River County v. S.D. Dept. of Rev., 1996 SD 106, 552 NW2d 620. In Fall River County, the Department distributed BNRR's statewide taxable value among the counties using a formula which consisted of two factors: 1) miles of line in each county weighted twenty-five percent and 2) the density of rail traffic in each county weighted seventy-five percent. 1996 SD 106 at ¶34, 552 NW2d at 628. The circuit court concluded that SDCL 10-28-16 required the statewide value to be distributed on a strict pro rata per mile basis. On appeal, we found that the distribution issue was not appealed to the circuit court by any of the parties. Therefore, we reversed and remanded the circuit court's decision on distribution because it lacked jurisdiction. Id. at ¶44, 552 NW2d at 631. The issue of distribution now properly comes before the court.

[¶4] This case involves an appeal by District and County to the circuit court contesting the 1995 tax assessment of BNRR by the Department, including the distribution of the statewide value to the counties and other governmental subdivision. In 1995 Department distributed BNRR's statewide value on a strict pro rata per mile of track basis. The circuit court granted Department and BNRR(fn1)  a partial summary judgment finding that SDCL 10-28-16 mandates distribution of the railroad's statewide value to the counties based on a pro rata per mile of track basis. District and County appeal claiming that: 1) the circuit court erred in interpreting SDCL 10-28-16 or, alternatively, 2) SDCL 10-28-16 is unconstitutional in violation of Article XI, Section 2 of the South Dakota Constitution.

STANDARD OF REVIEW

[¶5] Our standard of review on a motion for summary judgment is well established:

In reviewing a grant or a denial of summary judgment under SDCL 15-6-56(c), we must determine whether the moving party demonstrated the absence of any genuine issue of material fact and showed entitlement to judgment on the merits as a matter of law. The evidence must be viewed most favorably to the nonmoving party and reasonable doubts should be resolved against the moving party. The nonmoving party, however, must present specific facts showing that a genuine, material issue for trial exists. Our task on appeal is to determine only whether a genuine issue of material fact exists and whether the law was correctly applied. If there exists any basis which supports the ruling of the trial court, affirmance of a summary judgment is proper.

Walz v. Fireman's Fund Ins. Co., 1996 SD 135, ¶6, 556 NW2d 68, 70 (quoting Lamp v. First Nat'l Bank of Garretson, 496 NW2d 581, 583 (SD 1993) (citation omitted)). There are no factual issues in this case. There is only the legal question of the statutory interpretation of SDCL 10-28-16 which we review de novo. Dahn v. Trownsell, 1998 SD 36, ¶14, 576 NW2d 535, 539 (citing Moss v. Guttormson, 1996 SD 76, ¶10, 551 NW2d 14, 17) (citations omitted).

[¶6] 1. Whether SDCL 10-28-16 Mandates Distribution Of A Railroad's Statewide Tax Value On A Pro Rata Per Mile Basis.

[¶7] District and County claim that distribution on a strict pro rata per mile basis "result[s] in a purely arbitrary calculation that every mile of rail line within the State of South Dakota has a value of approximately $66,000." They claim that SDCL 10-28-16 does not mandate a pro rata per mile distribution. We disagree.

[¶8] The rules of statutory interpretation are well established:

The purpose of statutory construction is to discover the true intention of the law which is to be ascertained primarily from the language expressed in the statute. The intent of a statute is determined from what the legislature said, rather than what the courts think it should have said, and the court must confine itself to the language used. Words and phrases in a statute must be given their plain meaning and effect. When the language in a statute is clear, certain and unambiguous, there is no reason for construction, and the Court's only function is to declare the meaning of the statute as clearly expressed. Since statutes must be construed according to their intent, the intent must be determined from the statute as a whole, as well as enactments relating to the same subject. But, in construing statutes together it is presumed that the legislature did not intend an absurd or unreasonable result.

Dahn, 1998 SD 36 at ¶14, 576 NW2d at 539 (citing Moss, 1996 SD 76 at ¶10, 551 NW2d at 17) (citations omitted)).

[¶9] SDCL 10-28-16 provides:(fn2) 

The department of revenue shall on or before the fourth Monday in August, each year, transmit to the county auditor of each county through which any railroad runs, a statement showing the length of main track, of main line or lines and the branches thereof and sidetracks within such county, not located within the limits of any city or incorporated town, and the assessed value per mile of such main line or lines and branches and sidetracks as fixed by a pro rata distribution per mile of the assessed valuation of such property, except that part located within the limits of cities or incorporated towns, as aforesaid, and such statement shall be entered upon the proper records of the county.

(Emphasis added).

[¶10] "In arriving at the intention of the Legislature, it is presumed that the words of the statute have been used to convey their ordinary, popular meaning." Mid-Century Ins. Co. v. Lyon, 1997 SD 50, ¶9, 562 NW2d 888, 891 (quoting National Farmers v. Universal, 534 NW2d 63, 65 (SD 1995); Weger v. Pennington County, 534 NW2d 854, 856 (SD 1995); Meyerink v. Northwestern Public Service Co., 391 NW2d 180, 183-84 (SD 1986)). "This court assumes that statutes mean what they say and that legislators have said what they meant." Mid-Century Ins. Co., 1997 SD 50 at ¶9, 562 NW2d at 891 (quoting In re Famous Brands, Inc., 347 NW2d 882, 885 (SD 1984)). "When the language of the statute is clear, certain, and unambiguous, there is no occasion for construction, and the court's only function is to declare the meaning of the statute as clearly expressed in the statute." Id. The language of SDCL 10-28-16 is clear and unambiguous. The language mandates "pro rata distribution per mile" of a railroad's statewide value. SDCL 10-28-16 does not grant the Department discretion to adopt a different method of distribution. The power to change the method of distribution is left to the legislature who exercised that power by amending the statute in 1996. Therefore, we affirm the Department's distribution of BNRR's 1995 tax assessment on a pro rata per mile basis.

[¶11] 2. Whether SDCL 10-28-16 Is Unconstitutional In Violation Of Article XI, Section 2 Of The South Dakota Constitution.

[¶12] District and County claim that if the trial court's interpretation of SDCL 10-28-16 is correct, then the statute is unconstitutional in violation of Article XI, Section 2 of the South Dakota Constitution. They claim that such an interpretation "would constitute a purely arbitrary and unreasonable division of statewide value of the railroad not supported by any fact or reason, and would give situs for purposes of taxation that would be discriminatory and lack uniformity." Department and BNRR claim that District and County lack standing to challenge the constitutionality of SDCL 10-28-16. We agree.

[¶13] "Standing is established through being a 'real party in interest' and it is statutorily controlled." Agar Sch. Dist. No. 58-1 v. McGee, 527 NW2d 282, 284 (SD 1995) (quoting Wang v. Wang, 393 NW2d 771, 775 (SD 1986)). SDCL 15-6-17(a) provides, in part: "Every action shall be prosecuted in the name of the real party in interest."

[¶14] "Political subdivisions of state--such as counties ... are not sovereign entities; they are subordinate governmental instrumentalities created by the state to assist in carrying out state governmental functions." Bailey v. Jones, 81 SD 617, 139 NW2d 385, 388 (1966) (citation and footnote omitted). "The power of the legislature in the control of counties and other political subdivisions is unrestrained by requirements of due process." Chicago, Milwaukee, St. Paul & Pac. R.R. Co. v. Bd. of Comm'rs, 248 NW2d 386, 390 (SD 1976) (citations omitted).

[¶15] District and County are creations of the legislature and lack standing to challenge the constitutionality of SDCL 10-28-16. See Exira Community Sch. Dst. v. State, 512 NW2d 787, 790 (Iowa 1994) (stating: "The well-settled rule in Iowa is that school districts, as political subdivisions of the state, lack standing to mount a constitutional attack against a state statute."); Polk County v. Iowa State Appeal Bd., 330 NW2d 267, 271 (Iowa 1983) (stating: "Our cases have held uniformly that a county lacks standing to challenge the constitutionality of state statutes."); Bd. of Supervisors of Linn County v. Dept. of Rev., 263 NW2d 227, 234 (Iowa 1978) (stating: "A county and its ministerial officers ordinarily have no right, power, authority, or standing to question the constitutionality of a state statute.").

A school district] is a legislative creation ... . It is not a "person," within the meaning of any bill of rights or constitutional limitation. It has no rights, no functions, no capacity, except such as are conferred upon it by the legislature.

Exira Community Sch. Dist., 512 NW2d at 790 (alterations in original) (quoting Boyd v. Johnson, 238 NW 61, 68 (Iowa 1931)).

Counties and other municipal corporations are, of course, the creatures of the Legislature; they exist by reason of statutes enacted within the power of the Legislature, and we see no sound basis upon which a ministerial (or, for that matter, any other) office may question the laws of its being. The creature is not greater than its creator, and may not question that power which brought it into existence and set the bounds of its capacities.

Bd. of Supervisors of Linn County, 263 NW2d at 232 (quoting C. Hewitt & Sons Co. v. Keller, 275 NW 94, 97 (Iowa 1937)).

[¶16] None of the exceptions to this general rule regarding standing apply because the taxpayers within the district and county are the real parties in interest and can satisfy the traditional standing requirements. Agar Sch. Dist., 527 NW2d at 284. "The real party in interest requirement for standing is satisfied if the litigant can show 'that he personally has suffered some actual or threatened injury as a result of the putatively illegal conduct of the Defendant.'" Id. (citing Parsons v. South Dakota Lottery Comm'n, 504 NW2d 593, 595 (SD 1993) (quoting Gladstone, Realtors v. Bellwood, 441 US 91, 99, 99 SCt 1601, 1608, 60 LEd2d 66, 76 (1979))). "[A] taxpayer need not have a special interest in an action or proceedings nor suffer special injury to himself to entitle him to institute an action to protect public rights." Agar Sch. Dist., 527 NW2d at 284 (alteration in original) (quoting Wyatt v. Kundert, 375 NW2d 186, 195 (SD 1985) (citing State ex rel. Jensen v. Kelly, 65 SD 345, 347, 274 NW 319, 321 (1937))).

[¶17] Therefore, we affirm the granting of partial summary judgment.

[¶18] MILLER, Chief Justice, and AMUNDSON, KONENKAMP and GILBERTSON, Justices, concur.

Footnotes

1.  The issue of distribution is significant to BNRR because it may claim greater tax credits under SDCL 10-28-21.1 if its taxable value is distributed to the counties on a pro rata per mile basis

2.  SDCL 10-28-16 was amended in 1996 and now provides:

The Department of Revenue shall on or before the fourth Monday in August, each year, transmit to the county auditor of each county through which any railroad runs, a statement showing the length of main track, of main line or lines and the branches thereof and sidetracks within such county, and the assessed value based on a statewide formula that weights traffic (ton miles) seventy-five percent and miles of track in the county by twenty-five percent. The county auditor shall then distribute the value to each taxing district where the line runs on a per mile basis within the county.