U.S. Nat. Bank of Red Lodge v. Montana Dept. of Revenue, 13758

• Decision Date: 30 December 1977
• Docket Number: No. 13758,13758
• Parties: The UNITED STATES NATIONAL BANK OF RED LODGE, Farmers Citizens Bank of Worden, and First Citizens Bank of Billings, Montana, Plaintiffs and Appellants, v. MONTANA DEPARTMENT OF REVENUE et al., Defendants and Respondents.
• Court: Montana Supreme Court

Page 188

573 P.2d 188

175 Mont. 205

The UNITED STATES NATIONAL BANK OF RED LODGE, Farmers Citizens Bank of Worden, and First Citizens Bank of Billings, Montana, Plaintiffs and Appellants, v. MONTANA DEPARTMENT OF REVENUE et al., Defendants and Respondents.

No. 13758.

Supreme Court of Montana.

Dec. 30, 1977.

Berger, Anderson, Sinclair & Murphy, Billings, Chris J. Nelson, argued, Billings, Robert F. Conwell, Red Lodge, for plaintiffs and appellants.

Harold F. Hanser, County Atty., Billings, R. Bruce McGinnis, argued, Helena, for defendants and respondents.

HATFIELD, Chief Justice.

Appellants appeal from orders of the District Courts of Yellowstone and Carbon Counties granting respondents' motions to dismiss.

In January, 1977, appellants, The United States National Bank of Red Lodge, Farmers State Bank of Worden, Montana, and First Citizens Bank of Billings, Montana, filed virtually identical complaints in the District Courts of Yellowstone and Carbon Counties. In their complaints appellants alleged that they are banking corporations engaged in the banking business in the State of Montana; that appellants at all times material to the complaint were owners of United States obligations within the meaning of 31 U.S.C. § 742 (1970); that, for the taxable year 1976, respondent Montana Department of Revenue determined the assessed value of appellants' shares of stock without allowance of a deduction for the value of the United States obligations held by appellants during the taxable year 1976; that appellants timely paid taxes on the total assessed value of its stock under written protest; that the assessment and taxation of appellants' shares of stock, without allowance of a deduction from assessed value equal to the value of appellants' United States obligations for the taxable year 1976, is an unlawful tax in violation of 31 U.S.C. § 742 (1970). Appellants in their complaints asked for a finding that the 1976 property taxes on their shares of stock were illegal, and requested a refund of the taxes paid on the shares.

Respondents filed Rule 12(b)(1), M.R.Civ.P., motions to dismiss appellants' complaints, alleging that the District Courts lacked jurisdiction over the subject matter of the cases. In its briefs in support of the motions to dismiss, respondent Montana Department of Revenue (hereinafter referred to as "the Department") asserted that appellants' complaints concerned the valuation of the banks' shares, and as such, appellants were required by Title 84, Chapters 6 and 7, R.C.M.1947, to appeal to the county and state tax appeal boards. The Department contended that appeal to the tax appeal boards was a condition precedent to taxpayer appeal on a valuation issue to the District Courts. Since appellants did not first appeal these cases to the tax appeal boards, the Department concluded that appellants had failed to exhaust their administrative remedies and that the District Courts therefore lacked subject matter jurisdiction in these cases. It is from the District Courts' orders granting the Department's motions to dismiss that appellants appeal.

The sole issue on appeal is whether the District Courts erred in granting the Department's motions to dismiss.

We first note that the District Court orders granting the motions to dismiss were appealable orders. Section 84-603, R.C.M.1947, as it was in effect in 1976, required that appeals to the county tax appeal boards be made on or before the third Monday of July in the year in which the property was assessed. Since the section 84-603 statute of limitations for 1976 appraisals has long since passed, " * * * the practical effect of the district court's order is to leave appellant without opportunity for further judicial relief, just as if judgment had been rendered against him. Therefore, the order * * * is properly before this Court on appeal." Hasbrouck v. Krsul (1975), 168 Mont. 270, 272, 541 P.2d 1197, 1198.

In reviewing the propriety of an order granting a motion to dismiss, we repeat the oft-quoted rule that " * * * the allegations of the complaint must be viewed in a light most favorable to plaintiffs, admitting and accepting as true all facts well-pleaded." Board of Equalization v. Farmers Union Grain Terminal Assoc. (1962), 140 Mont. 523, 531, 374 P.2d 231, 236. Admitting and accepting as true all facts well-pleaded in appellants' complaints, the District Courts in this case did indeed have subject matter jurisdiction, and the Department's Rule 12(b)(1) motions to dismiss were therefore improperly granted. Appellants, in their complaints, alleged that the Department had illegally taxed appellants' United States obligations, in violation of 31 U.S.C. § 742 (1970), which provides:

"All stocks, bonds, Treasury notes, and other obligations of the United States, shall be exempt from taxation by or under State or municipal or local authority * * *."

The allegations of the complaints thus raised a question as to the legality of the tax imposed, and did not put into issue any question of valuation. Where the issue is...