Yellowstone Bank v. State Bd. of Equalization

• Decision Date: 04 May 1960
• Docket Number: No. 10024,10024
• Citation: 351 P.2d 904,137 Mont. 198
• Parties: YELLOWSTONE BANK, Columbus, Montana, a corporation, Plaintiff and Respondent, v. STATE BOARD OF EQUALIZATION of the State OF MONTANA; and J. F. Reid, W. J. Winters, and E. J. Byrne, as members of and constituting the said State Board of Equalization of the State of Montana, Defendants, Stillwater County, Montana, a municipal corporation and political subdivision of the State of Montana; Alice Marvin, as county treasurer of said Stillwater County, Montana, a municipal corporation; The Stillwater County, Montana, Board of Equalization; and Harry T. Brown, Ernie Hudson and Ted Keating, as members of the Stillwater County, Montana, Board of County Commissioners, and ex-officio members of and constituting the said Stillwater County, Montana, Board of Equalization, Defendants and Appellants.
• Court: Montana Supreme Court

Page 904

351 P.2d 904

137 Mont. 198

YELLOWSTONE BANK, Columbus, Montana, a corporation Plaintiff and Respondent, v. STATE BOARD OF EQUALIZATION of the State OF MONTANA; and J F. Reid, W. J. Winters, and E. J. Byrne, as members of and constituting the said State Board of Equalization of the State of Montana, Defendants Stillwater County, Montana, a municipal corporation and political subdivision of the State of Montana; Alice Marvin as county treasurer of said Stillwater County, Montana, a municipal corporation; The Stillwater County, Montana, Board of Equalization; and Harry T. Brown, Ernie Hudson and Ted Keating, as members of the Stillwater County, Montana, Board of County Commissioners, and ex-officio members of and constituting the said Stillwater County, Montana, Board of Equalization, Defendants and Appellants.

No. 10024.

Supreme Court of Montana.

Argued Oct. 15, 1959.

Decided April 29, 1960.

Dissenting Opinion May 4, 1960.

Henry I. Grant, Jr., County Atty., Columbus, for appellant.

E. A. Blenkner, Columbus, Wesley W. Wertz, Helena, for respondent. Wesley W. Wertz, argued orally.

W. W. LESSLEY, District Judge, sitting in place of HARRISON, Chief Justice.

This is an appeal from a judgment entered in the District Court of the Thirteeth Judicial District in favor of the plaintiff, Yellowstone Bank of Columbus and against the defendants, Stillwater County, et al.

In this cause, the plaintiff and respondent Bank (hereinafter simply referred to as respondent), after assessment of its surplus by the Stillwater County assessor at 30 percent, paid its tax under protest; subsequently, it filed its complaint and later its amended complaint. The defendants and appellants (hereinafter referred to as appellants), Stillwater County, Montana, Alice Marvin, then County Treasurer of Stillwater County, the Stillwater County Board of Equalization, and Harry T. Brown, Ernie Hudson and Ted Keating, as members of the Board of County Commissioners of Stillwater County, Montana, and ex-officio members of and constituting the Stillwater County, Montana, Board of Equalization together with the State Board of Equalization filed their demurrer, which was overruled by the trial court.

The State Board of Equalization then filed an answer, taking the same legal position as the respondent Bank. The appellants chose to stand on their demurrer, and judgment was entered by the lower court for respondent Bank and against appellant Stillwater County. The case comes here on appeal from the trial court's ruling on the demurrer and its subsequent judgment.

This case is concerned with the fixing of the value of bank shares for purposes of taxation.

In accordance with Chapter 172, Session Laws of 1957, the Board had directed the county assessor of Stillwater County to fix the basis for imposition of taxes of the 'moneyed capital' of the plaintiff Bank as follows: $100,000 in 'Class 5', and $127,277 in 'Class 4'. The use of the words 'Class 5' and 'Class 4' is nothing more than a simple method of referring to the application of 7 percent and 30 percent of true and full value in determining the 'basis for imposition of taxes' with respect to 'moneyed capital and shares of banks' under section 84-308, as amended by Chapter 172 of the Session Laws of 1957.

The County authorities refused to follow the provisions of the new law and also refused to follow the directions of the Board that the new law, Chapter 172, must be followed.

We shall not concern ourselves with whether the county officials may disregard the instructions of the Board of Equalization or whether the county has sufficient standing to challenge the constitutionality of a legislative act. We shall assume, without deciding these matters, and go directly to the merits of the statutes involved.

The law we are here concerned with is section 84-308, which was the governing law from 1929 until amended in 1957. Before amendment in 1957, it read as follows:

'As a basis for the imposition of taxes upon the different classes of property herein specified, a percentage of the true and full value of each class shall be taken as follows:

'Moneys and credits, seven per centum (7%) of true and full value.

'Moneyed capital and shares of banks, both national and state, thirty per centum (30%) of true and full value.'

Chapter 46 of Titled 84, Revised Codes of Montana 1947, now sections 84-4601 to 84-4605, R.C.M1947, is the basic statutory authority in this area. This law is designed to comply with and meet the demands of the Federal law. The Federal statute is section 5219 of the Revised Statutes of the United States (section 548 of Title 12 of United States Code). It may be paraphrased as allowing a state to tax the shares of national banks, or follow three other alternatives, not relevant here; but use of one is and must be in place of all others. The State of Montana taxes the shares of national banks and imposes the same tax on state banks. The bank shares are the property of the owner of the shares.

The specific law on which this case is centered is the amendment to section 84-308. This amendment is Chapter 172 of the Session Laws of 1957. As Senate Bill 15, it was introduced, passed and signed by the governor into law on March 8, 1957. We set it out in full:

'84-308 (2000.6) Basis for imposition of taxes on moneys and credits, moneyed capital and bank shares. As a basis for the imposition of taxes upon the different classes of property herein specified, a percentage of the true and full value of each class shall be taken as follows:

"Money and credits, seven per centum (7)% of true and full value.

"Moneyed capital and shares of banks, both national and state, thirty per centum (30%) of true and full value on that portion of the true and full value not represented by surplus, as shown on the books of the bank; seven per centum (7%) on that portion of the true and full value represented by surplus as shown on the books of the bank; provided that on that portion of any of such surplus which is over and above the amount represented by the stated capital of a bank, the excess shall be subject to thirty per centum (30%) of true and full value. The state board of equalization shall prepare, distribute and cause to be used such forms as it may require to obtain from the banks doing business in this state reports of such facts and figures as may be necessary to ascertain the taxable value of bank shares as a basis for the imposition of taxes."

With the original law and the amendment before us, we may epitomize its meaning and effect. Section 84-302 specifies classes as the basis for the imposition of taxes. The classification of 'moneyed capital' and shares of banks is fixed by section 84-308; this effect has not been changed by the amendment, and a review of the statutes will show that the 'basis' as set out in section 84-308, as amended, corresponds with Classes 4 and 5 that appear in section 84-302. However, we have on our statute books special classification laws relating only to moneys and credits, money capital and bank shares; it is Chapter 64, Session Laws of 1929, now section 84-303 to 84-308; section 84-308, as amended, of course being the law construed and passed upon in this decision. A reading of Chapter 64 must make it clear that it does not relate itself specifically to our original classification law and the several different classes of property specified. Thus, it must be clear that the State Board of Equalization's use of the terms 'Class 4' and 'Class 5' is a term of reference on application of 7 percent and 30 percent of true and full value in determining the basis for tax imposition as to moneyed capital and shares of banks under the law with which we are here concerned.

It is true, section 84-4605 makes this reference: 'such moneyed capital to be ascertained as provided by section 84-301'. This is ineffective because of the operative effect of section 84-304 and 84-305, since their enactment in 1929.

The above constitutes the legislative and factual background of the amendatory law we now consider.

Two specifications of error are raised in this appeal:

1. That Chapter 172 was not effective until approved by the governor; that he did not approve it until March 8, 1957; that this was after the first Monday in March (March 4, 1957) the time the tax lien attached; that after lien time, no one may diminish that obligation; that this amendment seeks to do that and is thus in direct conflict with section 39 of Article V of the Constitution of the State of Montana.

2. That Chapter 172 is unconstitutional, in that it allows portions of bank property--a part of the surplus to be taxed at a lower rate than other property in the same class, to-wit: property in the 'moneyed capital' class. This is claimed to be a discrimination as to taxation within a class, a discrimination clearly prohibited by sections 1, 11, and 17 of Article XII of the Constitution of the State of Montana.

The additional specification of error, that Chapter 172, Session Laws of 1957 is unconstitutional, in that it is a graduated ad valorem tax in reverse, is not advanced with much force and effect, and is in fact abandoned in appellants' argument.

We consider the first contention of the appellants.

The first Monday in March is significant to determine and fix the situs and ownership of property for tax purposes. Sections 84-406 and 84-409, R.C.M.1947; Ford Motor Co. v. Linnane, 102 Mont. 325, 57 P.2d 803; Hayes v. Smith, 58 Mont. 306, 192 P. 615. To place other significance upon that date is to isolate it from the toal taxing process and procedure and to ignore other vital and subsequent steps in the process.

The 'assessing' of the property is done after situs is acquired. Section 84-406 and 84-409, R.C.M.1947. The shares of a bank are assessed under Chapter 46, Title 84, R.C.M.1947; the assessing is not done until the statements are furnished by the banks (both state and national),...