Chicago, M., St. Paul & P. R. Co. v. Board of Com'rs of Walworth County, 11584

• Decision Date: 31 December 1976
• Docket Number: No. 11584,11584
• Citation: 248 N.W.2d 386
• Parties: CHICAGO, MILWAUKEE, ST. PAUL AND PACIFIC RAILROAD COMPANY, Petitioner and Appellant, v. The BOARD OF COMMISSIONERS OF WALWORTH COUNTY, South Dakota, et al., Respondents.
• Court: South Dakota Supreme Court

Page 386

248 N.W.2d 386

CHICAGO, MILWAUKEE, ST. PAUL AND PACIFIC RAILROAD COMPANY Petitioner and Appellant, v. The BOARD OF COMMISSIONERS OF WALWORTH COUNTY, South Dakota et al., Respondents.

No. 11584.

Supreme Court of South Dakota.

Dec. 31, 1976.

Lloyd C. Richardson, Jr., and Chester A. Groseclose, Jr., of Richardson, Groseclose, Kornmann & Wyly, Aberdeen, for petitioner and appellant.

Robert R. Slocum, Walworth County State's Atty., A. N. Buckmeier, of Bormann & Buckmeier, Mobridge, for respondents.

EVANS, Circuit Judge.

This is an appeal from a judgment denying appellant's application for a writ of mandamus. The writ sought to require Walworth County to pay or make provisions to satisfy a judgment previously entered by the circuit court in an appeal from the State Board of Equalization, fixing the 1967 valuation of appellant's operating property.

Appellant is a railroad company subject to the central assessment of its operating property for taxation purposes. In September of 1967, it appealed from the decision of the State Board of Equalization to the circuit court. This appeal raised issues which were then on appeal to this court in other cases. Appellant and the State Department of Revenue agreed to hold further proceedings in the circuit court appeal in abeyance pending disposition of the other appeals. Appellant made timely payments of its 1967 taxes, the first half not paid under protest and the second half paid under protest, but no action was brought thereon within thirty days as contemplated by SDCL 10--27--2.

In November of 1971, after this court had decided the issues in the other cases, appellant and the State Board of Equalization stipulated to the average assessment ratios, equalization factor, and to an obsolescence factor to be applied to all of appellant's operating property in each of the forty-four counties in the state. This stipulation, which was filed with the circuit court, applied these factors against the respective amounts paid by appellant, determined the amount appellant should have paid in each county, determined the amount of refund, and stipulated that judgment should order a refund of the overpayment with interest at six percent from the date the taxes were paid.

The circuit court entered a judgment that ordered and decreed that the county auditor, treasurer and other officials refund and pay appellant $13,725.85, plus six percent interest, and directed the clerk of courts of Brown County to transmit the judgment to each affected county. Although the judgment recites that a stipulation was made and that the facts contained therein were reasonable and true representations, the judgment does not set forth the valuation or other figures which were in the stipulation. After Walworth County refused to pay appellant the amount of the judgment, appellant brought this action in mandamus to require payment.

Respondent, in answer to the alternative writ of mandamus, contended that the judgment was invalid because:

1. Respondent was not a party to the proceedings.

2. Appellant did not protest the tax payment and sue to recover as provided by SDCL 10--27--1 and 10--27--2.

3. The circuit court had no authority to enter a money judgment or order a refund with interest.

The first issue we discuss is whether appellant was required to pay the taxes under protest and bring suit within thirty days against the county treasurers to recover the same. SDCL 10--27--1, which is referred to as the 'Protest and Suit Statute,' provides 'No injunction to restrain or delay the collection of any tax claimed to be due shall be issued by any court, but in all cases in which, for any reason, it shall be claimed that any tax about to be collected is wrongful or illegal, in whole or in part, the remedy, Except as otherwise expressly provided by this code, shall be by payment under protest and action to recover, as provided in § 10--27--2.' (emphasis supplied) ¹

One remedy excepted from the protest and suit statute is the refund and abatement statutes found in SDCL 10--18--1 and 10--18--2 as provided in SDCL 10--18--12. Casey v. Butte County, 1927, 52 S.D. 334, 217 N.W. 508. There is no other statutory remedy which the code expressly excepts from this statute.

Appellant contends that the protest and suit statute does not provide a remedy which was open to a centrally assessed taxpayer contesting the valuation and assessment of its property as provided in SDCL 10--38, or if available is not the exclusive or mandatory remedy.

SDCL 10--38 provides that all utilities assessed by the Department of Revenue have an opportunity for a hearing before the Department for the purpose of determining the true and full value of such utility, with a right to appeal to the State Board of Equalization and to appeal thereafter to the circuit court and to this court. Such appeals may be pending when the tax becomes due and delinquent if not paid. The court cannot issue an order restraining collection of the tax and the county would be authorized to seize and sell appellant's engines or other property to have the tax paid. If a taxpayer paid the tax and brought suit within thirty days to recover the tax, his suit would be subject to dismissal for failure to exhaust administrative remedies.

Yusten v. Morrison, 1960, 78 S.D. 426, 103 N.W.2d 653, 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. Other similar cases are Holbrook v. Gallagher, 1929, 56 S.D. 54, 227 N.W. 461; George C. Bagley Elevator Co. v. Butler, 1909, 24 S.D. 429, 123 N.W. 866; Sioux Falls Savings Bank v. Minnehaha County, 1912, 29 S.D. 146, 135 N.W. 689; Beadle County v. Eveland, 1920, 43 S.D. 447, 180 N.W. 65.

We determine that appellant could seek relief under SDCL 10--38 and was not required to pay its taxes under protest or bring suit thereon within thirty days. The legislature, by setting up the procedure for valuation and a method for the taxpayer to contest the same and appeal therefrom, thereby provided a 'remedy as otherwise provided by this code' as excepted from the protest and suit statute. Further support that the protest and suit statute does not apply is found in SDCL 10--38--14, which requires the Commissioner of Revenue to redetermine the taxable value of property whenever any tax assessment shall have been set aside by a court, whether any part of the taxes assessed or levied has been paid or not. The purpose of the protest and suit remedy is to permit taxing districts which have made levies for their needs to receive the contemplated revenue whereby they will not be crippled in operation, and disputes with reference to the legality thereof are to be deferred for subsequent decision with the opportunity to make adequate provisions for refund if adjudged. Salem Independent School Dist. v. Circuit Court, 1932, 60 S.D. 341, 244 N.W. 373. These purposes have been accomplished by the payment of the tax and the appeals already taken. To require appellant to bring on an additional forty-four suits, one in each county, with the resultant expense to all parties and with all parties being powerless to proceed with the issues until the valuation appeals were concluded would be a nearly useless requirement. ²

If we were dealing with a locally assessed taxpayer, the county would have already been a party or participant to the dispute in the valuation proceedings and appeals therefrom. Nothing further would have been gained by such county by the taxpayer's bringing an additional suit. The only difference is that with a centrally assessed taxpayer the Department of Revenue acts for each of the counties concerned.

The next issue is whether the judgment that was entered by the circuit court in the appeal from the State Board of Equalization was invalid because respondent was not a party to the proceedings. Respondent successfully argued in the lower court that the judgment entered in November 1971 was ineffectual because the officials of Walworth County did not join in the stipulation for judgment, were not joined in the appeal, did not participate in the appeal, and were therefore denied due process.

There is no statute that requires a county official to be joined in an appeal. In Williams v. Book, 1953, 75 S.D. 173, 181, 61 N.W.2d 290, 294, we said:

'The power of the legislature in the control of counties and other political subdivisions is unrestrained by requirements of due process.' (authorities cited)

In State v. Board of Com'rs of Edmunds County, 1916, 36 S.D. 606, 156 N.W. 96, it was argued that the statute that would require the county commissioners to issue a warrant on claims by the state treasurer to reimburse the state treasury for expenses incurred in counties' accounts, without giving the commissioners the right of appeal, would amount to taking the property of the people of the county without due process. The court rejected that argument saying:

'In answer to that we may observe that a county is merely a governmental subdivision of the state. In Stuart v. Kirley, 12 S.D. 245, 81 N.W. 147, this court said:

'It is too well settled to require the citation of authorities that counties are local subdivisions of the state for governmental purposes, created by the sovereign power of the state, without the consent or concurrent action of the people who inhabit them.' (citation omitted)

There is nothing in the Constitution that limits the authority of the Legislature relative to the fiscal affairs of counties. * * * If it chooses to lay upon a state officer certain duties that might have been laid upon the officers of the county, that is solely a matter of legislative policy. * * *

We therefore conclude that the county, being merely a governmental subdivision of the state, is not deprived of any of its constitutional rights by statutes which make the state auditor the auditing officer...