Fall River County v. South Dakota Dept. of Revenue, Nos. 19379

CourtSupreme Court of South Dakota
Writing for the CourtMILLER
PartiesFALL RIVER COUNTY, a Political Subdivision of the State of South Dakota, Appellant, v. SOUTH DAKOTA DEPARTMENT OF REVENUE and Burlington Northern Railroad Co., Appellees. EDGEMONT SCHOOL DISTRICT 23-1, Appellant, v. SOUTH DAKOTA DEPARTMENT OF REVENUE and Burlington Northern Railroad Co., Appellees.
Decision Date28 August 1996
Docket NumberNos. 19379,19380

Page 620

552 N.W.2d 620
1996 SD 106
FALL RIVER COUNTY, a Political Subdivision of the State of
South Dakota, Appellant,
v.
SOUTH DAKOTA DEPARTMENT OF REVENUE and Burlington Northern
Railroad Co., Appellees.
EDGEMONT SCHOOL DISTRICT 23-1, Appellant,
v.
SOUTH DAKOTA DEPARTMENT OF REVENUE and Burlington Northern
Railroad Co., Appellees.
Nos. 19379, 19380.
Supreme Court of South Dakota.
Argued May 21, 1996.
Decided Aug. 28, 1996.

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

Richard A. Pluimer of Carr and Pluimer, Belle Fourche, for appellant Edgemont School District 23-1.

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

Mark F. Marshall of Johnson, Heidepriem, Miner & Marlow, Sioux Falls, and Richard A. Malm of Dickinson, Mackaman, Tyler & Hagen, Des Moines, IA, for appellee Burlington Northern Railroad Co.

MILLER, Chief Justice.

¶1 Fall River County and Edgemont School District appeal the trial court's partial affirmance and partial reversal of the 1993 tax assessment of Burlington Northern Railroad (BNRR) performed by the South Dakota Department of Revenue (Department). We affirm in part, reverse in part, and remand.

FACTS

¶2 BNRR is an interstate railroad that operates in twenty-seven states and two Canadian provinces. It owns railroad operating property in seventeen counties in South Dakota. Part of BNRR's operating property is located in Fall River County, wherein Edgemont School District is located.

¶3 Under South Dakota law, BNRR's operating property is subject to tax assessment by Department. SDCL 10-28-1. The assessment process requires valuing the railroad operating property as a total unit, allocating a proportionate value to the state, and then distributing the taxable value among local taxing jurisdictions. SDCL 10-28-9, -12 and -16.

¶4 Department calculated BNRR's total value at $3,412,000,000. Department determined BNRR's statewide fair market value to be $44,173,000 for the 1993 assessment year. Roughly half of this statewide total, $21,753,534, was distributed to Fall River County. This figure was then equalized at 67.8%. Consequently, the value of BNRR's property subject to tax in Fall River County was $14,748,897 for the 1993 assessment year.

¶5 Fall River County and Edgemont School District appealed this assessment to the circuit court. They contended the assessment was too low and raised two primary issues: (1) whether Department's method of assessing BNRR's total unit value was correct; and (2) whether Department allocated to South Dakota its fair share of BNRR's total unit value.

¶6 At trial before the circuit court, Department acknowledged various errors in valuing and allocating BNRR's taxable value. Department submitted a revised assessment for 1993 that valued BNRR's total operating property at $3,414,383,500 (approximately

Page 623

$2.4 million more than the original valuation) and allocated 1.9193% (rather than 1.8374%) of this value to South Dakota. After applying a deduction for personal property owned by BNRR, the revised statewide value was roughly $44,204,000, only slightly more than the original figure submitted by Department.

¶7 In its findings and conclusions, the trial court largely adopted the revisions of BNRR's total value and the new statewide figure offered by Department. However, in response to a summary judgment motion by BNRR, the trial court further ruled that Department had erred in its distribution of taxable value among South Dakota counties. Department had distributed BNRR's statewide value based on a formula that considered not only the miles of railroad track in each county, but also the density of rail traffic on these lines. The trial court interpreted South Dakota law as requiring distribution of value based only on the miles of track in each county. See SDCL 10-28-16 (prior to 1996 amendment, 1996 S.D. Sess. L. ch. 78, § 1). Because Fall River County has a comparatively short length of heavily traveled track, its 1993 assessment for BNRR decreased from $14,748,897 to approximately $2,050,000 under the trial court's ruling. 1

¶8 County and School District appeal, claiming the trial court erred in: (1) applying a deferential standard of review to Department's assessment; (2) approving Department's modified valuation of BNRR; (3) adopting Department's figures for allocating total value to the state; (4) ruling that federal law requires the deduction of BNRR's personal property from its statewide taxable value; and (5) holding that SDCL 10-28-16 mandates distribution of statewide taxable value to counties solely on the basis of miles of track in each county and does not permit consideration of traffic density.

ISSUES

¶9 I. Did the trial court err in applying the standard of review set forth in SDCL 1-26-36 to an appeal brought by governmental entities under SDCL 10-38-30 through -34?

The provisions of SDCL 10-38-30 to -34 give local governments the right to appeal taxing decisions by Department concerning centrally assessed utilities. SDCL 10-38-31 provides that all such appeals "shall be considered de novo by the sixth judicial circuit in Hughes County."

¶10 In assessment appeals by a taxpayer, de novo review requires the circuit court to hear evidence and apply independent judicial judgment to determine valuation. Chicago and Northwestern Railway v. Gillis, 82 S.D. 470, 484, 148 N.W.2d 581, 590 (1967). The circuit court sits as another board of assessment and is not required to give any deference to the decision below. Riverview Properties, Ltd. v. South Dakota State Bd. of Equalization, 439 N.W.2d 820, 822 (S.D.1989); Chicago, Milwaukee, St. Paul and Pacific Railroad Co. v. Bd. of Commissioners of Walworth County, 248 N.W.2d 386, 391 (S.D.1976) (citing In re Robinson, 73 S.D. 580, 46 N.W.2d 908 (1951)).

¶11 Interestingly, the trial court in this case differentiated between taxpayer appeals and appeals brought by a subdivision of the State, such as a county or school district. The court reasoned that taxpayers have a state constitutional right of uniformity and equality of taxation that does not apply to local governments. The court further noted that Article II of the South Dakota Constitution recognizes the separation of powers among the legislative, executive and judicial branches of government and that County and School District were creatures of the state. The court concluded that, when a county or school district appeals a tax assessment by Department, it is "a dispute between agencies of the executive branch of government concerning the discharge of their executive powers." Citing the separation of powers doctrine, the court ruled the case must be reviewed according to the more deferential standard of review set forth in SDCL 1-26-36, which provides:

The court shall give great weight to the findings made and inferences drawn by an agency on questions of fact. The court

Page 624

may affirm the decision of the agency or remand the case for further proceedings. The court may reverse or modify the decision if the substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions, or decisions are:

(1) In violation of constitutional or statutory provisions;

(2) In excess of the statutory authority of the agency;

(3) Made upon unlawful procedure;

(4) Affected by other error law;

(5) Clearly erroneous in light of the entire evidence in the record; or

(6) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

A court shall enter its own findings and conclusions of law or may affirm the findings and conclusions entered by the agency as part of its judgment. The circuit court may award costs in the amount and manner specified in chapter 15-17.

¶12 Citing SDCL 10-38-31, the statute expressly requiring "de novo" review, County and School District claim the trial court erred when it adopted the more deferential standard of review contained in SDCL 1-26-36. We agree.

¶13 Construction of a statute is a question of law, and we give no deference to the trial court's interpretation. In re Certification of a Question of Law from the United States District Court, 1996 SD 16, p 4, 543 N.W.2d 787, 789 (citing Stover v. Critchfield, 510 N.W.2d 681, 683 (S.D.1994)); State Farm Mut. Auto. Ins. Co. v. Wertz, 540 N.W.2d 636, 638 (S.D.1995). "We interpret statutes in accord with legislative intent." Id. (citing Whalen v. Whalen, 490 N.W.2d 276, 280 (S.D.1992)). "Such intent is derived from the plain, ordinary and popular meaning of statutory language." Id. (citing Whalen, 490 N.W.2d at 280).

¶14 In this case, SDCL 10-38-31 plainly provides for "de novo" review. De novo refers to a plenary form of review that affords no deference to the previous decision maker. Grode v. Grode, 1996 SD 15, p 6, 543 N.W.2d 795, 799 (citing Bess v. Bess, 534 N.W.2d 346, 347 (S.D.1995)). Although the trial court concluded that the separation of powers doctrine mandated a more limited review, we do not agree. First, the taxpayer's constitutional right to uniformity and equality of taxation is not jeopardized by de novo consideration of an appeal brought by a governmental entity or taxing district. The court is simply required to conduct its review in keeping with constitutional mandates, as it does when reviewing taxpayer appeals. Second, contrary to the trial court's conclusion, this case does not violate the separation of powers doctrine. The trial court characterized this case as "a dispute between agencies of the executive branch of government concerning the discharge of their executive powers." However, the process of tax assessment is not a purely executive or political function that must be protected from judicial encroachment. In fact, tax assessment is a "quasi-judicial" function. Williams v. Stanley...

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  • West Virginia Div. of Environmental Protection v. Kingwood Coal Co., No. 23876
    • United States
    • Supreme Court of West Virginia
    • July 16, 1997
    ...205 N.J.Super. 18, 500 A.2d 10, 14 (1985), cert denied, 103 N.J. 453, 511 A.2d 639 (1986); Fall River County v. S.D. Dept. Of Rev., 552 N.W.2d 620, 624 (S.D.1996) ("De novo refers to a plenary form of review that affords no deference to the previous Based on the above, we find the Board's s......
  • State ex rel. Pros. Atty. v. Bayer Corp., No. 33871.
    • United States
    • Supreme Court of West Virginia
    • November 5, 2008
    ...of Envtl. Prot. v. Kingwood Coal Co., 200 W.Va. 734, 745, 490 S.E.2d 823, 834 (1997) (quoting Fall River County v. S.D. Dept. of Rev., 552 N.W.2d 620, 624 11. This Court has previously explained the development of the writ of certiorari in this State as follows: Originally the writ of certi......
  • Blake v. Charleston Area Medical Center, No. 24132.
    • United States
    • Supreme Court of West Virginia
    • November 25, 1997
    ...form of review that affords no deference to the previous decisionmaker.'" (quoting Fall River County v. South Dakota Dep't of Revenue, 1996 SD 106, ¶ 14, 552 N.W.2d 620, 624 (1996) (citations omitted))). See also West Virginia Div. of Envtl. Protection v. Kingwood Coal Co., 200 W.Va. at 745......
  • State ex rel. Prosecuting Attorney of Kanawha County v. Bayer Corporation, No. 33871 (W.Va. 11/5/2008), No. 33871
    • United States
    • Supreme Court of West Virginia
    • November 5, 2008
    ...of Envtl. Prot. v. Kingwood Coal Co., 200 W. Va. 734, 745, 490 S.E.2d 823, 834 (1997) (quoting Fall River County v. S.D. Dept. of Rev., 552 N.W.2d 620, 624 (S.D. 11. This Court has previously explained the development of the writ of certiorari in this State as follows: Originally the writ o......
  • Request a trial to view additional results
15 cases
  • West Virginia Div. of Environmental Protection v. Kingwood Coal Co., No. 23876
    • United States
    • Supreme Court of West Virginia
    • July 16, 1997
    ...205 N.J.Super. 18, 500 A.2d 10, 14 (1985), cert denied, 103 N.J. 453, 511 A.2d 639 (1986); Fall River County v. S.D. Dept. Of Rev., 552 N.W.2d 620, 624 (S.D.1996) ("De novo refers to a plenary form of review that affords no deference to the previous Based on the above, we find the Board's s......
  • State ex rel. Pros. Atty. v. Bayer Corp., No. 33871.
    • United States
    • Supreme Court of West Virginia
    • November 5, 2008
    ...of Envtl. Prot. v. Kingwood Coal Co., 200 W.Va. 734, 745, 490 S.E.2d 823, 834 (1997) (quoting Fall River County v. S.D. Dept. of Rev., 552 N.W.2d 620, 624 11. This Court has previously explained the development of the writ of certiorari in this State as follows: Originally the writ of certi......
  • Blake v. Charleston Area Medical Center, No. 24132.
    • United States
    • Supreme Court of West Virginia
    • November 25, 1997
    ...form of review that affords no deference to the previous decisionmaker.'" (quoting Fall River County v. South Dakota Dep't of Revenue, 1996 SD 106, ¶ 14, 552 N.W.2d 620, 624 (1996) (citations omitted))). See also West Virginia Div. of Envtl. Protection v. Kingwood Coal Co., 200 W.Va. at 745......
  • State ex rel. Prosecuting Attorney of Kanawha County v. Bayer Corporation, No. 33871 (W.Va. 11/5/2008), No. 33871
    • United States
    • Supreme Court of West Virginia
    • November 5, 2008
    ...of Envtl. Prot. v. Kingwood Coal Co., 200 W. Va. 734, 745, 490 S.E.2d 823, 834 (1997) (quoting Fall River County v. S.D. Dept. of Rev., 552 N.W.2d 620, 624 (S.D. 11. This Court has previously explained the development of the writ of certiorari in this State as follows: Originally the writ o......
  • Request a trial to view additional results

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