Arcadia Development Corp. v. County of Hennepin

• Decision Date: 03 March 1995
• Docket Number: No. C0-94-574,C0-94-574
• Citation: 528 N.W.2d 857
• Parties: ARCADIA DEVELOPMENT CORPORATION, et al., Relators, v. COUNTY OF HENNEPIN, Respondent.
• Court: Minnesota Supreme Court

Page 857

528 N.W.2d 857

ARCADIA DEVELOPMENT CORPORATION, et al., Relators, v. COUNTY OF HENNEPIN, Respondent.

No. C0-94-574.

Supreme Court of Minnesota.

March 3, 1995.

Rehearing Denied April 12, 1995.

Syllabus by the Court

Minnesota Statute Sec. 549.09 (1994) governs the appropriate interest rate applicable to property tax refunds made pursuant to Minn.Stat. Sec. 278.08, subd. 2 (1992), and the ----------

1990 amendment to Minn.Stat. Sec. 279.03, adding subd. 1a, applies only to real estate tax delinquency proceedings and not to chapter 278 tax petition proceedings.

Gary A. Van Cleve, Larry D. Martin, Larkin, Hoffman, Daly & Lindgren, Bloomington, for relators.

Michael Freeman, Hennepin County Atty., Robert T. Rudy, Sr. Asst. Hennepin County Atty., Minneapolis, for respondent.

Heard, considered and decided by the court en banc.

OPINION

STRINGER, Justice.

This case concerns the appropriate interest rate applicable to property tax refunds made pursuant to Minn.Stat. Sec. 278.08, subd. 2 (1992). The issue presented on appeal is whether the Minnesota Tax Court correctly granted summary judgment in favor of the County of Hennepin (County) on the question whether the County properly applied Minn.Stat. Sec. 549.09 (1994) to calculate the interest due on property tax refunds. We affirm the decision of the tax court.

Arcadia Development Corporation (Arcadia), Computer Parts and Services, Inc. (CPSI), and Jerry's Enterprises (Jerry's) (collectively referred to as "relators") each own real estate in Hennepin County. Relators separately petitioned for review of one or both of their annual real estate tax assessments for levy years 1990 and 1991 pursuant to Minnesota Statutes, chapter 278. After hearing Arcadia's tax petition, the tax court entered an amended judgment reducing the estimated fair market value (EMV) of Arcadia's real property. The amended judgment directed the County to recompute Arcadia's real estate taxes due and payable in 1991 and 1992, and to pay Arcadia any refunds due, with interest. The tax petitions of CPSI and Jerry's were settled with the County agreeing to reduce the EMV of their real property. The stipulations provided the County compute the refunds with interest, as provided by law. Each relator received a refund, with interest calculated at a rate of seven percent for 1991, five percent for 1992, and four percent for 1993, the rates applicable pursuant to the judgment interest rate statute, Minn.Stat. Sec. 549.09.

Relators filed a class action against the County on December 9, 1993, asserting the County underpaid interest on real estate tax refunds. Specifically, relators contest the County's use of Minn.Stat. Sec. 549.09, the judgment interest rate statute, to determine the interest rate applicable to real property tax overpayment refunds issued pursuant to Minn.Stat. Sec. 278.08, subd. 2 (1992). Relators contend they are entitled to interest on the tax overpayments at a rate of ten percent for 1991, 1992, and 1993 pursuant to Minn.Stat. Sec. 279.03, subd. 1a (1990), which relators assert governs the interest rate for property tax refunds for the years in question.

The parties filed cross-motions for summary judgment and relators moved for class certification. By Order dated February 18, 1994, the tax court granted summary judgment in favor of the County, denying relators' motions for summary judgment and class certification. This appeal followed.

Three statutes are involved in this matter: (1) Minn.Stat. Sec. 278.08, subd. 2, which deals with interest paid to the taxpayer by the County on refunds in tax petition cases; (2) Minn.Stat. Sec. 279.03, which deals with interest charged to taxpayers if their taxes are delinquent; and (3) Minn.Stat. Sec. 549.09, which relates to interest on verdicts, awards, and judgments.

Both parties agree that Minn.Stat. Sec. 278.08, subd. 2 is the starting point for determining the correct interest rate applicable to refunds for property tax overpayments. For the years in question, Minn.Stat. Sec. 278.08, subd. 2 provided as follows:

Refund. If the petitioner has overpaid the tax determined or stipulated to be due, the county auditor shall compute interest on the overpayment from the date of the filing of the petition for review or from the date of payment of the tax, whichever is later, until the date of issuance of the refund warrant. Interest shall be calculated on the overpayment at the rate provided in section 279.03 for delinquent property taxes for the levy year involved.

Minn.Stat. Sec. 278.08, subd. 2 (1992). ¹

The question is which provision of Minn.Stat. Sec. 279.03 controls the applicable interest rate. Questions of statutory construction, including construction of tax statutes, are subject to de novo review. United Power Ass'n v. Commissioner of Revenue, 483 N.W.2d 74, 77 (Minn.1992); see also Nagaraja v. Commissioner of Revenue, 352 N.W.2d 373, 376 (Minn.1984).

Minnesota Statute Sec. 279.03, entitled "Interest on Delinquent Property Taxes," provides in pertinent part as follows:

Subdivision 1. Rate. The rate of interest on delinquent property taxes levied in 1979 and prior years is fixed at six percent per year until January 1, 1983. Thereafter interest is payable at the rate determined pursuant to section 549.09. The rate of interest on delinquent property taxes levied in 1980 and subsequent years is the rate determined pursuant to section 549.09. All provisions of law except section 549.09 providing for the calculation of interest at any different rate on delinquent taxes in any notice or proceeding in connection with the payment, collection, sale, or assignment of delinquent taxes, or redemption from such sale or assignment are hereby amended to correspond herewith. Section 549.09 shall continue in force with respect to judgments arising out of petitions for review filed pursuant to chapter 278 irrespective of the levy year.

Minn.Stat. Sec. 279.03 (1990). The legislature amended Minn.Stat. Sec. 279.03 in 1990, adopting the following subdivision:

Subd. 1a. Rate after December 31, 1990. Interest on delinquent property taxes, penalties, and costs unpaid on or after January 1, 1991, shall be payable at the per annum rate determined in section 270.75, subdivision 5. If the rate so determined is less than ten percent, the rate of interest shall be ten percent. The maximum per annum rate shall be 14 percent if the rate specified under section 270.75, subdivision 5, exceeds 14 percent. The rate shall be subject to change on January 1 of each year.

Minn.Stat. Sec. 279.03 (1990). ² Upon adopting subdivision 1a, the legislature neither amended nor repealed subdivision 1 of Minn.Stat. Sec. 279.03.

Relators argue that since its adoption in 1990, Minn.Stat. Sec. 279.03, subdivision 1a controls the applicable interest rate for property tax overpayments. According to relators, the plain language of Minn.Stat. Sec. 278.08 (1992) directs the County to compute interest due on property tax refunds in exactly the same manner as interest incurred on delinquent property taxes.

The County contends that Minn.Stat. Sec. 279.03, subd. 1 remains the operative provision. Specifically, the County cites the following sentence: "[s]ection 549.09 shall continue in force with respect to judgments arising out of petitions for review filed pursuant to chapter 278 irrespective of the levy year." Minn.Stat. Sec. 279.03, subd. 1 (1990). ³

Relators' argument as to the "plain meaning" of the relevant statutory provisions must fail because the statute does not speak plainly. The legislature's enactment of Minn.Stat. Sec. 279.03, subd. 1a generated confusion among the Counties as to the proper interest rate applicable to property tax refunds issued pursuant to chapter 278. To resolve this conflict, we apply principles of statutory construction to discern the legislature's intent.

Where, as here, two interpretations of a statute are possible, the court's role is to ascertain probable legislative intent to give the statute a construction consistent with that intent. Beck v. City of St. Paul, 304 Minn. 438, 445, 231 N.W.2d 919, 923 (1975); see also Minn.Stat. Sec. 645.16 (1994). To ascertain legislative intent, the court should consider the purpose of the legislation. State v. Ritschel, 220 Minn. 578, 583, 20 N.W.2d 673, 676 (1945).

The tax court reviewed the statutory scheme encompassing Minn.Stat. Sec. 279.03, subd. 1a and concluded the legislature did not intend to alter the method for calculating interest on refunds in chapter 278 proceedings. Rather, the legislature intended only to change the interest rate delinquent property owners must pay. Thus, the tax court held that the 1990 amendment to Minn.Stat. Sec. 279.03, adding subd. 1a, applies only to real estate tax delinquency proceedings and not to chapter 278 tax petition proceedings. While the statute as amended may appear to support either construction, we agree with the tax court's interpretation and affirm its decision.

Minnesota Statute Sec. 279.03, subd. 1 refers specifically to chapter 278 proceedings. ("Section 549.09 shall continue in force with respect to judgments arising out of petitions for review filed pursuant to chapter 278 irrespective of the levy year.") This is compelling evidence that the legislature intended subdivision 1 to control the interest rate applied in chapter 278 proceedings. By contrast, Minn.Stat. Sec. 279.03, subd. 1a refers only to "interest on delinquent property taxes," and upon enacting subdivision 1a, the legislature neither amended nor repealed subdivision 1 of Minn.Stat. Sec. 279.03. Consequently, it appears Minn.Stat. Sec. 279.03, subd. 1 remains the operative provision.

The legislature, by enacting the 1990 amendment to Sec. 279.03, apparently sought to encourage the timely payment of real property taxes. By raising the interest rate applicable to delinquent property taxes to the same rate taxpayers pay to the Commissioner of Revenue for other delinquent...