Calvin v. Custer County

• Decision Date: 01 November 1940
• Docket Number: 8115.
• Citation: 107 P.2d 134,111 Mont. 162
• Parties: CALVIN v. CUSTER COUNTY et al.
• Court: Montana Supreme Court

107 P.2d 134

111 Mont. 162

CALVIN v. CUSTER COUNTY et al.

No. 8115.

Supreme Court of Montana

November 1, 1940

Rehearing Denied Nov. 28, 1940.

Appeal from District Court, Sixteenth Judicial District, Custer County; S.D. McKinnon, Judge.

Action by Carl B. Calvin against Custer County and another to recover taxes paid under protest.From a judgment for plaintiff, defendants appeal.

Affirmed.

I. W Choate, Co. Atty., of Miles City, H. J. Freebourn, Atty Gen., Enor K. Matson, Asst. Atty. Gen., and Ralph J Anderson, Counsel for Board of Equalization, of Helena, for appellants.

W. B Leavitt, of Miles City, for respondent.

ANGSTMAN Justice.

This action was brought to recover taxes on real property paid under protest.Judgment on the pleadings was entered in favor of plaintiff, and defendants appealed.The facts submitted in the pleadings are these:

Plaintiff on and prior to April 28, 1938, was the owner of certain land in Custer county.On that day he granted to the United States a written option to purchase the land for the sum of $53,185.37, which contained this clause: "To accept this option, the United States shall within six (6) months from the date hereof mail or telegraph a notice of acceptance to Carl B.

Calvin in the city of Miles City, State of Montana, and the United States shall thereafter have a reasonable time within which to examine the abstract of title to be furnished by the vendor as hereinafter provided."The written option provided that if the United States determines the title to be unsatisfactory, it might acquire title by condemnation, Calvin agreeing to accept the above sum as the amount to be paid for all damages sustained by reason of the taking.It provided that the United States, after accepting the option, should have the right of possession "for the purpose of clearing, plowing, planting, constructing, and maintaining such permanent or temporary structures and improvements, and to do all other things necessary or desirable for or incidental to development of the land as a part of the project area; that in the event title to such land does not become vested in the United States, it shall have the right to enter upon and remove any or all equipment, appliances, materials, structures, fixtures, and other property whatever placed by it upon said land; and the vendor waives all claims for damages arising from the activity or inactivity of the United States in the exercise of any or all of said rights."

Plaintiff agreed to deliver at his expense an abstract of title to the property which was to become the property of the United States "upon the consummation of the contemplated purchase but otherwise shall remain the property of and be returned to"plaintiff.The United States was authorized to pay the taxes and deduct the same from the purchase price.In the event of damage to the property by fire, the loss was that of plaintiff, and the United States had the right to refuse to accept conveyance of title, or it might elect to accept conveyance subject to an equitable adjustment of the purchase price.Plaintiff was not to receive the purchase price until title was approved by a duly authorized representative of the United States.

On June 17, 1938, the United States accepted the option and entered into possession and made extensive improvements, all prior to the first Monday in March, 1939.After the United States took possession plaintiff was not permitted to use the land or receive any benefit therefrom.After the acceptance of the option by the United States plaintiff was required to clear up certain irregularities in the chain of title to certain parcels of the land.The formal deed to the United States was executed and delivered on November 15, 1939.

Defendants assessed the land for the year 1939, the tax being $474.76, which was paid before delinquency by a representative of the United Staes under protest.The United States assigned to plaintiff its claim to recover the tax.The question for determination is whether the land was taxable for the year 1939.

Under section 2, Article XII of our Constitution, "the property of the United States *** shall be exempt from taxation."Plaintiff contends that the property in question became that of the United States upon the acceptance of the option of June 17, 1938, and hence that it was not taxable for the year 1939.Defendants contend that it did not become property of the United States until the execution and delivery of the deed of conveyance on November 15, 1939, and therefore that it was taxable for the year 1939.

It should first be noted that while the writing in question here was called an "exclusive and irrevocable option and right to purchase," yet it is clear from its terms as a whole that after its acceptance by the United States it became a contract of sale and purchase.In other words, by the word "accept" as used in the contract, the parties evidently meant the same as "exercising" the option.There are many provisions of the contract that lead to this result.One paragraph which points to this conclusion is the one reading as follows: "In consideration of the foregoing, the United States agrees upon acceptance of this option, to acquire the land herein described at the consideration set forth, if the land may be so acquired in accordance with the terms of this option, and further agrees, after the execution, delivery, and recordation [of] the said deed or deeds vesting title in the United States, the approval of title by a duly authorized representative of the United States, and the signing of the regular Government voucher or vouchers therefor, to cause final settlement to be made by the issuance of a United States Treasury check."

Under our statute taxes become a lien upon property on the first Monday of March in each year (sec. 2154,Rev.Codes 1935), and under section 2002, as amended byChapter 72, Laws of 1937, property must be assessed to the persons by whom it is owned or claimed, or in whose possession or control it was at 12 o'clock M. of the first Monday in March.In effect the law contemplates that the property shall be taxed in the name of its owner.The question then resolves itself into this: Who was the owner of the property on the first Monday in March, 1939?

It is conceded, of course, that the legal title was in plaintiff.The trial court, however, found that the equitable title or estate was in the United States and, that being the case, found that the property was exempt from taxation.The court was correct in its conclusion.

In the case of Town of Cascade v. County of Cascade,75 Mont. 304, 243 P. 806, 808, it was said: "It is the situation or character of the beneficial owner, the holder of the equitable title or estate, and not that of the holder of the legal title, *** determines the question of exemption from taxation under our constitutional provisions and those of like import."

In Kern v. Robertson,92 Mont. 283, 12 P.2d 565, 567, we said: "The authorities are in accord that an enforceable contract for the purchase and sale of real property passes to...