CourtSupreme Court of South Dakota
Writing for the CourtGILBERTSON, Justice.
Citation2000 SD 114,616 N.W.2d 380
Docket NumberNo. 21366.
Decision Date23 August 2000
PartiesJames L. THARES and Traci L. Thares, Plaintiffs and Appellants, v. BROWN COUNTY BOARD OF EQUALIZATION, Defendants and Appellees.

616 N.W.2d 380
2000 SD 114

James L. THARES and Traci L. Thares, Plaintiffs and Appellants,

No. 21366.

Supreme Court of South Dakota.

Considered on Briefs May 30, 2000.

Decided August 23, 2000.

616 N.W.2d 381
James M. Cremer of Bantz, Gosch, Cremer, Peterson & Sommers, Aberdeen, Attorneys for plaintiffs and appellants

Mark Barnett Attorney General David D. Wiest Assistant Attorney General, Pierre, Harvey A. Oliver, Jr., Brown County State's Attorney Victor B. Fischbach Brown County Deputy State's Attorney, Aberdeen, Attorneys for defendants and appellees.


[¶ 1.] James L. Thares and Traci L. Thares (Thares) appeal the Brown County Board of Equalization's (County) assessment of their property, which was based on SDCL 10-6-33.14. Thares challenge the constitutionality of this statute. We affirm.


[¶ 2.] The facts in this case are stipulated. Thares purchased approximately 80 acres of land in Brown County on July 30, 1998 for $125,456, or $1600 per acre. They constructed a house, shop, and a horse barn on a portion of the land. They used the remainder of the land to grow crops and pasture livestock. Just prior to the purchase, the land was assessed and classified for tax purposes as agricultural property in the amount of $450 per acre, or $35,290. After the sale, County reclassified the Thares' property as non-agricultural, and the 1999 assessment raised the valuation of the land for tax purposes to $116,690. County relied upon SDCL 10-6-33.14 in raising the assessment, which requires all agricultural property that sells for more than 150 percent of its agricultural income value to be classified as a non-agricultural acreage.

[¶ 3.] After a parcel of agricultural property meets the sale1 requirements of SDCL 10-6-33.14, the land is then valued "at the price for which such land sold multiplied times the level of assessment

616 N.W.2d 382
for non-agricultural property within the county." SDCL 10-6-33.18. Barring a successful administrative appeal by the taxpayer, once the land is classified as non-agricultural land, it remains so classified for a minimum of five years pursuant to SDCL 10-6-33.17. After the five-year period, the director of equalization may reclassify the non-agricultural acreage as agricultural land if the land remains in agricultural use and the landowner submits an annual application to County

[¶ 4.] The circuit court upheld the constitutionality of SDCL 10-6-33.14. Thares now challenge the constitutionality of SDCL 10-6-33.14 et seq. in this Court.


[¶ 5.] Since the parties have stipulated to the facts in this case, there are no factual issues to be resolved. Thus, this case presents a question of law, and this Court reviews the circuit court's decision de novo, giving no deference to its legal conclusions. Yankton Ethanol, Inc. v. Vironment, Inc., 1999 SD 42, ¶ 6, 592 N.W.2d 596, 598 (citing Thompson v. Summers, 1997 SD 103, ¶ 5, 567 N.W.2d 387, 390) (other citation omitted).


[¶ 6.] The South Dakota Constitution gives the legislature authority to create as many classes of non-agricultural property as it desires, so long as taxes are uniform on property within the same class. Great Northern Railway v. Whitfield, 65 S.D. 173, 272 N.W. 787, 791 (1937). S.D. Const. Art. VIII, § 15 provides:

The Legislature shall make such provision by general taxation and by authorizing the school corporations to levy such additional taxes as with the income from the permanent school fund shall secure a thorough and efficient system of common schools throughout the state. The Legislature is empowered to classify properties within school districts for purposes of school taxation, and may constitute agricultural property a separate class. Taxes shall be uniform on all property in the same class.

Thus, under the state constitution, agricultural land constitutes its own, separate and distinct class. See also SDCL 10-6-31, which states all property for the purposes of taxation is classified into separate classes of agricultural property and non-agricultural property.

[¶ 7.] In Gould v. Pennington County Bd. of Equalization, 1997 SD 129, 570 N.W.2d 846, we held SDCL 10-6-58 to be unconstitutional, as it created two classes of agricultural property, by classifying in its own separate agricultural class, agricultural property which sold for a price greater than 150 percent of its agricultural income producing value. SDCL 10-6-58 provided:

Any agricultural land, as defined in § 10-6-31.3, which sells for more than one hundred fifty percent of its agricultural income value is hereby classified for purposes of ad valorem taxation. The agricultural income value shall be determined pursuant to § 10-6-62.

We again reaffirmed our previous holding that while classes of non-agricultural property can be created by the legislature without limit, agricultural land is limited by the constitution to but a single class. Gould, 1997 SD 129, ¶ 8, 570 N.W.2d at 848 (citing Great Northern Railway, 65 S.D. 173, 272 N.W. 787, 792). We then determined that:

The adopted criteria [of SDCL 10-6-58] bears no relationship to any agricultural factors (type of land, productivity, etc.) but is based almost entirely on its sales price. Valuing the agricultural land, as in the present case, based upon its sales price is to set it apart from agricultural property and treat it as "non-agricultural," or other property. (emphasis in original).

Id. ¶ 17, 570 N.W.2d at 849-50. Thus the constitutional infirmity was not a separate classification for this type of property, but

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making the classification an agricultural one

[¶ 8.] In 1998 the legislature enacted a new statutory classification2 in response to our decision in Gould. It included SDCL 10-6-33.14, "[c]lassification of non-agricultural acreage," which provides:

Any agricultural land, as defined in § 10-6-31.3, which sells for more than one hundred fifty percent of its agricultural income value is hereby classified for purposes of ad valorem taxation as a non-agricultural acreage. The agricultural income value shall be determined pursuant to § 10-6-33.15. (emphasis added).

Thares now challenge the constitutionality of the statute, contending that even with the added phrase "as a non-agricultural acreage," based upon our analysis in Gould, SDCL 10-6-33.14 is unconstitutional. Thares contend that SDCL 10-6-33.14 still creates an impermissible subclassification of agricultural property which is taxed at a higher rate. County argues that SDCL 10-6-33.14 is constitutional, because instead of placing Thares' land into a subclass of agricultural property, their property is reclassified from agricultural to non-agricultural acreage. We agree with County.

[¶ 9.] Initially, we must note that "there is a strong presumption that the laws enacted by the legislature are constitutional and that presumption is rebutted only when it clearly, palpably and plainly appears that the statute violates a provision of the constitution." Gould, 1997 SD 129, ¶ 6, 570 N.W.2d at 847. "[T]he 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." Id. (citing Cary v. City of Rapid City, South Dakota, 1997 SD 18, ¶ 10, 559 N.W.2d 891, 893 (citing Sedlacek v. South Dakota Teener Baseball Program, 437 N.W.2d 866, 868 (S.D.1989))).

[¶ 10.] Additionally, the legislature has broad power to classify property for taxation purposes:

Where there is power to impose a license or privilege tax, the Legislature may classify and may subclassify the objects of the tax upon some reasonable basis.... The determination of the question of classification is primarily for the Legislature and courts will not interfere unless the classification is clearly arbitrary and unreasonable. "The power of the state to classify for purposes of taxation is of wide range and flexibility." Louisville Gas & Electric Co. v. Coleman, 277 U.S. 32, 37, 48 S.Ct. 423, 425, 72 L.Ed. 770, 774.

State v. Black Hills Transportation Co., 71 S.D. 28, 20 N.W.2d 683, 685 (1945). "`It is well agreed that the legislature may select some occupations for taxation and not others, and may classify for the purpose provided the classification is reasonable and not arbitrary and bears some relation to the subject in hand.'" Berdahl v. Gillis, 81 S.D. 436, 136 N.W.2d 633, 638 (1965) (quoting State v. Welsh, 61 S.D. 593, 641, 251 N.W. 189, 210 (1933)); see also Brink Electric Construction Co. v. State, 472 N.W.2d 493, 501 (S.D.1991) (quoting Phillips Chemical Co. v. Dumas School District, 361 U.S. 376, 385, 80 S.Ct. 474, 480, 4 L.Ed.2d 384, 390 (1960) (stating "the State's power to classify is, indeed, extremely broad, and its discretion is limited only by constitutional rights and by the doctrine that a classification may not be palpably arbitrary.")); Enron Corp. v. Spring Indep. School Dist., 922 S.W.2d 931, 936 (Tex.1996) (stating the state legislature may constitutionally draw any distinction in classifying property for ad valorem tax purposes, as long as the classifications are not unreasonable, arbitrary, or capricious). Notably, Thares do not argue County's decision to classify their property as non-agricultural land

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was arbitrary and capricious, but instead focus solely on their constitutional claim.

[¶ 11.] We concluded in Gould that the phrase "... may constitute agricultural property as a separate class," indicates that agricultural property, if classified separately, was to form a class unto itself. 1997 SD 129, ¶ 13, 570 N.W.2d at 849. "The use of the language `a separate class' in the singular, ... [establishes] that agriculture was to be designated as one class of property and all other properties were the other classes of property." Id. (emphasis in...

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