Burlington Northern R. Co. v. Green

• Decision Date: 18 April 2001
• Docket Number: No. 21609-21611, No. 21631., No. 21604-21606, No. 21613-21615
• Citation: 2001 SD 48,624 N.W.2d 826
• Parties: BURLINGTON NORTHERN RAILROAD COMPANY, Plaintiff and Appellee, v. Shirley GREEN, Fall River County Treasurer, Defendant and Appellant, and Franklin Manke, Intervenor and Appellant.
• Court: South Dakota Supreme Court

624 N.W.2d 826

2001 SD 48

BURLINGTON NORTHERN RAILROAD COMPANY, Plaintiff and Appellee, v. Shirley GREEN, Fall River County Treasurer, Defendant and Appellant, and Franklin Manke, Intervenor and Appellant.

Nos. 21604-21606, 21609-21611, 21613-21615, 21631.

Supreme Court of South Dakota.

Argued February 14, 2000.

Decided April 18, 2001.

Mark F. Marshall, Davenport, Evans, Hurwitz & Smith, Sioux Falls, SD, Attorneys for appellee.

Lance Russell, Fall River County States Attorney, Hot Springs, SD, Attorney for appellant Fall River County.

Richard A. Pluimer, Belle Fourche, SD, Attorney for appellant Manke. SABERS, Justice.

[¶ 1.] Burlington Northern Railroad Company (Burlington) instituted a refund action in circuit court to recover improperly collected taxes in Fall River County for the tax year 1993 (# 21604) (# 21605), and 1994 (# 21606). Franklin Manke, County Commissioner and a taxpayer in Fall River County, intervened and challenged the refund action. The circuit court granted summary judgment to Burlington. We affirm.

FACTS

[¶ 2.] The facts of this case will be only briefly discussed as they have been before this Court numerous times.¹ Fall River County collected taxes in excess of that legally due and owing due to a method which this Court determined to be contrary to SDCL 10-28-16. Edgemont Sch. Dist. 23-1 v. Dept. of Rev., 1999 SD 48, ¶ 10, 593 N.W.2d 36, 39. The defendant paid these taxes to Fall River County under protest. After legal challenges to the valuation and assessment process were concluded, Burlington brought this refund action under SDCL chapter 10-27.

[¶ 3.] Manke is a County Commissioner and taxpayer in Fall River County. The trial court granted leave for Manke to intervene based on his status as a taxpayer in Fall River County. Manke claims that Burlington's refund action is unconstitutional, barred by the doctrine of res judicata, collateral estoppel or law of the case, and jurisdiction in circuit court is not proper. Fall River County, through its Treasurer Shirley Green, joins in those claims. All of these appeals and their corresponding notices of review were eventually consolidated for appellate review.

[¶ 4.] The circuit court granted summary judgment to Burlington and awarded damages and prejudgment interest.² Manke and Fall River County (Manke) appeal contending: 1.) the trial court lacked jurisdiction to order a refund; 2.) this action was barred as collaterally estopped, res judicata or under the law of the case doctrine; 3.) SDCL 10-28-16 is unconstitutional; and 4.) the circuit court erred in granting summary judgment on damages without assessing Burlington's full and true value of the property in Fall River County.

[¶ 5.] Burlington raises two issues by notice of review: 1.) whether the circuit court abused its discretion by granting Manke's motion to intervene; and 2.) whether the circuit court erred in denying Burlington's motion to serve and file a supplemental complaint.

STANDARD OF REVIEW

[¶ 6.] Our standard of review for summary judgment is well established and briefly is "whether a genuine issue of material fact exists and whether the law was correctly applied." Manuel v. Wilka, 2000 SD 61, ¶ 17, 610 N.W.2d 458, 462. A motion to amend is addressed to the sound discretion of the trial court and will not be disturbed on appeal absent a clear abuse of discretion which results in prejudice to the moving party. Tesch v. Tesch, 399 N.W.2d 880, 882 (S.D.1987). A decision to grant a motion to intervene as a matter of right is also governed by the abuse of discretion standard. Weimer v. Ypparila, 504 N.W.2d 333, 334 (S.D.1993). "Our review of a challenge to the constitutionality of a statute is de novo." Green v. Siegel, Barnett & Schutz, 1996 SD 146, ¶ 7, 557 N.W.2d 396, 398 (citing Kyllo v. Panzer, 535 N.W.2d 896, 897 (S.D.1995)).

[¶ 7.] 1. WHETHER THE CIRCUIT COURT LACKS JURISDICTION TO ORDER A REFUND.

[¶ 8.] Manke claims that the circuit court lacks jurisdiction to entertain the refund action brought by Burlington based on our prior decisions. We disagree.

[¶ 9.] In Fall River County v. SD Dept. of Rev., 1996 SD 106, ¶ 44, 552 N.W.2d 620, 631, we determined that "the trial court lacked jurisdiction to entertain the distribution issue." However, in so holding our analysis was limited to the circuit court's jurisdiction as an appellate court. Id. The circuit court lacked jurisdiction in that case because the issue raised was not properly noticed for review from the departmental decision. Id. Therefore, that is distinguishable here.

[¶ 10.] A circuit court sitting in an appellate capacity is fundamentally different than the jurisdiction a circuit court employs when it sits as a court of original jurisdiction. Burlington instituted this refund action in accord with SDCL chapter 10-27. The provisions of this chapter entitle Burlington to "commence an action against such treasurer for recovery of the tax in any court of competent jurisdiction." SDCL 10-27-2. The provisions of chapter 10-27 are designed to provide a plain, speedy, adequate remedy at law. See Holdcroft v. Murphy, 66 S.D. 388, 283 N.W. 860, 862 (1939). As such, the jurisdiction of the circuit court was proper.

[¶ 11.] The second part of Manke's jurisdictional argument claims that this tax was improperly before the circuit court as Burlington failed to exhaust its administrative remedies. This Court has held that "before a property taxpayer may apply for judicial relief from an alleged error in valuation, he must exhaust his remedies before the board of equalization empowered to correct the error." Chicago, Milwaukee, St. Paul & Pacific Railroad Co. v. Bd. of Com'rs, 248 N.W.2d 386, 389 (S.D.1976). "It is well settled law in South Dakota that a party who fails to complain to his county board of equalization as to excessive valuation may not question the validity of the valuation assessment to his property via SDCL 10-27-2." Wharf Resources Inc. v. Farrier, 1996 SD 110, ¶ 12, 552 N.W.2d 610, 613. (emphasis in original). However, we have recognized that when a challenge is not merely to valuation but to whether the tax levied was in violation of South Dakota law, exhaustion is not required. Id. ¶ 13.

[¶ 12.] Burlington successfully challenged the legality of the assessment of its property in Fall River County. In Wharf Resources Inc., we held the exhaustion requirement need not be met when "Wharf challenged the legality of the tax levied, not the assessed value of its property." Id. (emphasis in original). This rationale is equally applicable here. "[W]here a party alleges the assessment was illegal and void, and not a mere error in valuation, he is not required to challenge that assessment with the county board of equalization, but may apply directly for judicial relief." Id. ¶ 12.

[¶ 13.] 2. WHETHER THE DOCTRINE OF RES JUDICATA, COLLATERAL ESTOPPEL, OR LAW OF THE CASE BAR THIS ACTION.

[¶ 14.] Manke asserts that the prior decisions of this Court bar this refund action by Burlington. In support of this position, Manke once again maintains that we have previously held that the circuit court has no jurisdiction to entertain this refund action. Additionally, it is Manke's contention that all issues relating to the tax refund have been previously adjudicated. This argument is without merit.

[¶ 15.] These doctrines only apply if there was a final judgment on the merits of the issues to be precluded. Poindexter v. Hand County Bd. of Equal., 1997 SD 71, ¶ 15, 565 N.W.2d 86, 90. A prior dismissal for lack of jurisdiction does not operate to invoke the doctrines of res judicata or collateral estoppel as an adjudication on the merits. Springer v. Black, 520 N.W.2d 77, 80 (S.D.1994).³

[¶ 16.] Moreover, it is particularly important to this determination that the cause of action previously before this Court did not seek to redress this same wrong. Nelson v. Hawkeye Sec. Ins. Co., 369 N.W.2d 379, 381 (S.D.1985). Burlington's prior litigation involved the determination of the appropriate valuation, assessment and distribution of the taxes due and owing. See Fall River County, 1996 SD 106,

552 N.W.2d 620; Edgemont Sch. Dist.,

1999 SD 48, ¶ 4,

593 N.W.2d 36, 38. Therefore, an action to obtain a refund from taxes paid under protest after the legal challenges concluded is not barred by the doctrines of res judicata or collateral estoppel. The law of the case doctrine is inapplicable on these facts and the prior decisions relating to these taxes do not have a preclusive effect in this refund action.⁴

[¶ 17.] 3. WHETHER SDCL 10-28-16 IS UNCONSTITUTIONAL.

[¶ 18.] Manke challenges the constitutionality of SDCL 10-28-16 asserting that it violates the provisions of the South Dakota Constitution requiring uniformity and equalization of taxes. S.D. Const. Art. XI, § 2, Art. VIII, § 15. Challenges to the constitutionality of a statute are not lightly met:

There is a strong presumption that the laws enacted by the [L]egislature are constitutional and that presumption is rebutted only when it clearly, palpably and plainly appears that the statute violates a provision of the constitution." Further, the party challenging the constitutionality of a statute bears the burden of proving beyond a reasonable doubt that the statute violates a state or federal constitutional provision.

Sedlacek v. South Dakota Teener Baseball Program, 437 N.W.2d 866, 868 (S.D.1989) (quoting Oien v. City of Sioux Falls, 393 N.W.2d 286, 289 (S.D.1986) (other citations omitted)).

[¶ 19.] During all relevant times to this litigation SDCL 10-28-16 required a tax distribution on a pro rata per mile basis within the county for railroad operating property. In Edgemont Sch. Dist., 1999 SD 48, ¶ 7, 593 N.W.2d 36, 38, we upheld this requirement.⁵ Our Constitution requires that "taxes shall be uniform on all property of the same class." S.D. Const. Art. XI, § 2, Art. VIII, § 15. The constitutional demand for uniformity applies within a class, and not...