Montana Dept. of Revenue v. Sheehy, 93-193

Decision Date18 November 1993
Docket NumberNo. 93-193,93-193
Citation262 Mont. 104,862 P.2d 1181
PartiesThe MONTANA DEPARTMENT OF REVENUE, Petitioner and Appellant, v. John C. and Rita Ann SHEEHY, Respondents and Respondents.
CourtMontana Supreme Court

David W. Woodgerd, Chief Legal Counsel, Lawrence G. Allen, Tax Counsel, Dept. of Revenue, Helena, for petitioner and appellant.

John C. Sheehy, pro se.

HUNT, Justice.

This is an appeal from an order of the First Judicial District Court affirming the decision of the State Tax Appeal Board (STAB). The STAB ruled that DOR's use of a stratified sales assessment ratio study to determine a value multiplier, as applied to the respondents' (Sheehys) home, caused the same disparity of treatment of taxpayers within a specified area as that determined by this Court in Department of Revenue v. Barron (1990), 245 Mont. 100, 799 P.2d 533.

We affirm.

Both parties raise several issues. However, we find the following issue dispositive:

Is Senate Bill 412, Chapter 680, 1991 Mont. Session Laws (S.B. 412) unconstitutional?

During the 1991 Session, the Legislature enacted S.B. 412 to address the constitutional problems identified in Barron, 799 P.2d 533. Senate Bill 412 authorized DOR to use a specific stratified sales ratio study to adjust property values in a given district during an appraisal cycle. The DOR divided the State into 48 areas. In each area, DOR determines a ratio. The DOR established a ratio by comparing the assessed value of various pieces of property in the district to the actual sales price of each property sold.

Sheehys live in Urban Helena Area 5.1, where they are joint tenant owners of a home. In 1982, DOR appraised the property at a value of $10,500 for the land and $66,007 for the improvements, for a total of $76,507. In 1991, DOR increased those values to $10,920 for the land and $68,647 for the improvements, for a total of $79,567.

In the area, there were 20,535 pieces of property. From November 1989 to November 1990, 249 of those properties were sold. The stratified sales assessment ratio study conducted in Area 5.1 found that 19.3 percent of the properties were within the 95 to 105 percent of their true market value; 65.1 percent were appraised under 95 percent of their true market value; while 15.6 percent were appraised in excess of 105 percent of their market value. A ratio of 0.9138 was found for Urban Helena Area 5.1. The inverse ratio is 1.09433 (1 divided by 0.9138). DOR subtracted 5 percent from this inverse to bring it closer to 0.95, resulting in an adjustment multiplier of 1.04 percent, or 4 percent. As a result, DOR raised 1990 appraised value of all properties in Area 5.1 by 4 percent.

Prior to the application of the adjustment multiplier, of the 249 properties sold, 39 were considered over-appraised, 162 properties were considered under-appraised, and 48 fell between the 95 percent to 105 percent range. After the application of the adjustment multiplier, 58 properties were considered as over-appraised, 123 properties remained under-appraised, and 68 fell into the 95 percent to 105 percent range. Expanded to the entire population of 20,535 parcels, this would mean that 49.4 percent or 10,144 parcels remain under-appraised.

Sheehys purchased the property in 1979 for $69,000. In 1990, the DOR appraised value was 10.8 percent over the purchase price. The revised 1991 appraised value and assessment would increase the DOR appraised value to 15.3 percent over the 1979 purchase price. Sheehys accept the 1990 DOR appraised value, which is the same as the 1982 appraisal.

On June 12, 1991, Sheehys appealed their tax assessment to the County Tax Appeal Board of Lewis and Clark County (CTAB). After a hearing, CTAB denied the appeal. On July 24, 1991, Sheehys appealed the CTAB decision to STAB. After conducting a hearing, on June 5, 1992, STAB ruled in favor of Sheehys.

On August 4, 1992, DOR filed a petition for judicial review in the First Judicial District Court. On February 2, 1993, the court issued an order affirming STAB's decision based upon Barron. On April 5, 1993, DOR appealed the District Court decision to this Court.

In Barron, we held that the use of the 1990 tax values derived from the ratio studies and the application of the 30 percent factor to residential properties in Area 2.1 required certain...

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8 cases
  • Kottel v. State
    • United States
    • Montana Supreme Court
    • December 5, 2002
    ...protection); Roosevelt, ¶ 19-20; Montana Dep't of Revenue v. Barron (1990), 245 Mont. 100, 799 P.2d 533; Montana Dep't of Revenue v. Sheehy (1993), 262 Mont. 104, 862 P.2d 1181 (guaranteeing equal protection under Article VIII, Section 3, by striking down property valuation systems that are......
  • Roosevelt v. Montana Dept. of Revenue
    • United States
    • Montana Supreme Court
    • December 29, 1998
    ...Constitutions, as interpreted in Department of Revenue v. Barron (1990), 245 Mont. 100, 799 P.2d 533, and Department of Revenue v. Sheehy (1993), 262 Mont. 104, 862 P.2d 1181. ¶12 1. Article VIII, Section 3, merely provides for appraisal, assessment, and equalization of value, as provided b......
  • Albright v. State By and Through State
    • United States
    • Montana Supreme Court
    • February 27, 1997
    ...studies), which we condemned in Department of Revenue v. Barron (1990), 245 Mont. 100, 799 P.2d 533, and Department of Revenue v. Sheehy (1993), 262 Mont. 104, 862 P.2d 1181. We disagree. The ratio studies at issue there were the statutorily mandated method of appraisal and the issue was wh......
  • Duane C. Kohoutek, Inc. v. State
    • United States
    • Montana Supreme Court
    • May 16, 2018
    ...Storeowners rely on Montana Department of Revenue v. Barron , 245 Mont. 100, 799 P.2d 533 (1990), and Montana Department of Revenue v. Sheehy , 262 Mont. 104, 862 P.2d 1181 (1993), to support their contention that the WADR violates their rights to equal protection. Barron and Sheehy both ex......
  • Request a trial to view additional results

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