Yellowstone Pipe Line Co. v. State Bd. of Equalization
| Decision Date | 30 December 1960 |
| Docket Number | No. 10069,10069 |
| Citation | 138 Mont. 603,358 P.2d 55 |
| Parties | YELLOWSTONE PIPE LINE COMPANY, a Delaware Corporation, Plaintiff and Respondent, and Cross-Appellant, v. STATE BOARD OF EQUALIZATION of the State of Montana; J. F. Reid, W. J. Winters and E. J. Byrne, as members of and constituting said The State Board of Equalization of the State of Montana; Yellowstone County, Montana, a political subdivision of the State of Montana; C. O. Thompson as Treasurer of said Yellowstone County, Montana; and T. A. Cothron as Assessor of said Yellowstone County, Montana, Defendants and Appellants, and Cross-Respondents. OIL BASIN PIPE LINE COMPANY, a Delaware Corporation, Plaintiff and Respondent, and Cross-Appellant, v. STATE BOARD OF EQUALIZATION of the State of Montana; J. F. Reid, W. J. Winters and E. J. Byrne, as members of and constituting said The State Board of Equalization of the State of Montana; Yellowstone County, Montana, a political subdivision of the State of Montana; C. O. Thompson as Treasurer of said Yellowstone County, Montana; and T. A. Cothron as Assessor of said Yellowstone County, Montana, Defendants and Appellants, and Cross-Respondents. |
| Court | Montana Supreme Court |
George T. Bennett, Edward C. Schroeter, Helena, William J. Speare, Billings, for appellants.
George T. Bennett, Helena, argued orally for appellants.
Toomey & Hughes, Helena, R. C. Hawley and A. T. Smith, Denver, Colo., for respondents.
Edmond G. Toomey, Michael J. Hughes, Helena, A. T. Smith, Denver, Colo., argued orally for respondents.
In this cause a rehearing was granted and it appearing that the opinion heretofore promulgated herein should be redrafted, the same is hereby withdrawn and the following opinion substituted therefor.
This is an appeal by the State Board of Equalization from a judgment of the district court of the thirteenth judicial district whereby assessments by the State Board of Equalization for ad valorem tax purposes of the property of two oil products pipe line companies, the Yellowstone Pipe Line Company, and the Oil Basin Pipe Line Company, were set aside in part as excessive, discriminatory, and in contravention of the provisions of sections 1 and 11 of Article XII, and section 27 of Article III, of the Constitution of Montana, and in violation of the Equal Protection Clause of the Fourteenth Amendment to the Constitution of the United States. The pipe line companies, hereafter referred to as 'Yellowstone' and 'Oil Basin', each brought suit to recover taxes paid under protest to the assessor of Yellowstone County, Montana. The causes were consolidated for trial upon stipulation of the parties.
Both pipe line companies appealed from the findings below that their property was correctly placed in Class 7 under section 84-301, R.C.M.1947, the Montana Classification statute, each contending that its proper classification is Class 4, i. e., 'land, town and city lots, with improvements, manufacturing and mining machinery, fixtures, and supplies.'
Since November 14, 1954, Oil Basin has been engaged in business as a common carrier, transporting refined oil products from Billings to Glendive, Montana, via an underground pipe line. Its pipe line extends 234.776 miles through Yellowstone, Treasure, Rosebud, Custer, Prairie, and Dawson Counties. Oil Basin also owns personal property used in its business which is located in Yellowstone County, Montana.
Since September 30, 1954, Yellowstone has been engaged in business as a common carrier, transporting oil products between Billings, Montana, and Spokane, Washington. It owns 440.65 miles of 10 inch pipe in Montana, traversing the counties of Yellowstone, Stillwater, Sweetgrass, Park, Gallatin, Jefferson, Broadwater, Lewis and Clark, Powell, Granite, Missoula, Lake, and Sanders; 4.16 miles of 8 inch pipe in Yellowstone County; 4.20 miles of 4 inch pipe in Yellowstone County, and delivery facilities, pump stations, and other property necessary to its business.
In 1955, both Yellowstone and Oil Basin filed reports with the State Board of Equalization wherein the financial condition of each company was shown along with statements showing the mileage of pipe to be found in the various counties and school districts through which the pipe lines pass.
The State Board of Equalization, hereinafter referred to as the Board, considered the property of both Yellowstone and Oil Basin to be 'property * * * which constitute a single and continuous property throughout more than one county' within the meaning of section 84-901, R.C.M.1947, and subject to assessment by the Board by virtue of section 84-905, R.C.M.1947.
The Board then assessed all the properties of Oil Basin at a figure of $3,856,166. From this sum the Board deducted the value of property which had been locally assessed by the county assessors of Dawson and Yellowstone Counties in the amount of $99,750. The remainder, $3,756,416 was apportioned among the counties through which Oil Basin's pipe line pass at the rate of $16,000 per mile. In Yellowstone County, where Oil Basin owned 74.374 miles of pipe line, the Board notified the County Assessor that Oil Basin's property in Yellowstone County had an assessed valuation of $1,189,984. Further, the Board classified the pipe line property of Oil Basin as property in Class 7, within the meaning of section 84-301, R.C.M.1947.
The property of Yellowstone in Montana was assessed by the Board at $8,468,250. From this figure, the Board deducted the value of Yellowstone's property which was locally assessed by the County Assessors of Yellowstone, Gallatin, Lewis and Clark, Missoula, Sanders, Granite, and Sweetgrass Counties in the aggregate of $303,984. The remaining figure, $8,164,266, was apportioned among the counties through which Yellowstone's pipe line passed at the rate of $18,310 per mile for 10 inch pipe, $16,000 per mile for 8 inch pipe, and $7,000 per mile for 4 inch pipe. Yellowstone's property in Yellowstone County was assessed at $513,978. Yellowstone's property also was placed in Class 7 under section 84-301, R.C.M.1947.
Both Oil Basin and Yellowstone applied to the Board for a hearing and petitioned for a reassessment and a reclassification of their respective properties. After a hearing before the Board on September 19, 1955, the Board denied any relief.
Oil Basin's taxes for Yellowstone County were computed at $37,944.01 for 1955. Oil Basin paid one-half of that sum, $18,972.01 on November 30, 1955, under protest, claiming that $16,896.94 of that sum was unlawful. Within 60 days after paying such taxes, Oil Basin commenced this action to recover the taxes paid under protest, joining the Board, Yellowstone County, and the Treasurer and assessor of Yellowstone County as parties defendant.
Yellowstone Pipe Line Company's taxes for Yellowstone County were computed at $18,313.39. On November 26, 1955, Yellowstone paid this sum under protest, and within 60 days after such payment commenced this action against the same defendants, claiming that $8,745.36 was excessive and unlawfully demanded.
Both causes were consolidated and came on regularly for trial before the court sitting without a jury on August 27, 1958. The court made findings of fact and conclusions of law and entered judgment in favor of both plaintiffs, from which judgment this appeal followed.
This case concerns itself with one of the most complicated and easily misunderstood aspects of taxation in Montana, that is, the assessment of property. Not only this court, but the courts of many other states have been confronted with the problem of judging the legality of assessment procedures. The Constitutions and statutes of the various states differ with respect to the process of assessment for tax purposes. About the most that can be said is that the Constitutions and statutes of all states forbid discrimination among owners of the same type of property. And whether or not the plaintiffs here have been discriminated against by the State Board of Equalization in the assessment of their property is the basic question on this appeal.
To understand the issues in this case, it is necessary to consider first, the overall status of assessment in Montana, and second, the method of assessment used by the State Board of Equalization with respect to property that extends through more than one county and is subject to original assessment by the Board pursuant to sections 84-901 and 84-905, R.C.M.1947.
At the trial in the district court, Mr. Edward J. Byrne, a member of the Board, testified at great length as to the status of assessments generally in Montana. Section 84-401, R.C.M.1947, requires that all taxable property be assessed at its full cash value. Mr. Byrne testified that for many years there has been a substantial departure from the language of this statute with the result that local property has been and is assessed quite low in many fields. The Board for many years has sought to bridge the gap between assessments among the various counties and has sought to establish some uniformity among the counties. Mr. Byrne stated that the Board, consequently, has been confronted with the alternative of trying to equalize assessments even though the level at which they are fixed is below the statutory requirement of true cash value. As an example of the Board's attempt to unify assessments even though it may result in an assessment lower than true cash value, Mr. Byrne indicated that the Board has promulgated schedules of oil drilling equipment which set forth the value at which various types of drilling equipment should be assessed. These have been distributed among the various county assessors with the result that now most of this property is uniformly assessed.
The situation remains, however, that much property in the State of Montana is placed on the assessment rolls at only a percentage of its true and actual value, in violation of the statute. Mr. Byrne's testimony reveals...
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