                                                No.     84-438

                   I N THE SUPREME COURT OF THE STATE O F MONTANA

                                                        1985




OEA RESEARCH, I N C . , a M o n t a n a C o r p . ;
and ANDREW J. SCHEET and V I R G I N I A
M. SCHEET,

                                 P l a i n t i f f s and A p p e l l a n t s ,



MARTHA B. McGEE, T r e a s u r e r of
L e w i s & C l a r k C o u n t y ; L I L I A "LEE"
WILLIAMS, A s s e s s o r of L e w i s & C l a r k
C o u n t y ; and DEPARTMENT O F REVENUE
OF THE STATE OF MONTANA,

                                 D e f e n d a n t s and R e s p o n d e n t s .




APPEAL FROM:          D i s t r i c t C o u r t of t h e F i r s t J u d i c i a l D i s t r i c t ,
                      I n and f o r t h e C o u n t y of L e w i s & C l a r k ,
                      T h e H o n o r a b l e G o r d o n B e n n e t t , Judge p r e s i d i n g .


COUNSEL O F RECORD:

         For A p p e l l a n t s :

                   L e a p h a r t Law F i r m ,    Helena,       Montana


         For Respondents:

                   Mike M c G r a t h , C o u n t y A t t o r n e y , H e l e n a , M o n t a n a
                   L a r r y G. S c h u s t e r , D e p t . of R e v e n u e , H e l e n a ,
                   Montana




                                                 S u b m i t t e d on B r i e f s :   Jan.    24,      1985

                                                                      Decided:        A u g u s t 15, 1 9 8 5


Filed:     AUG151985



                                                 Clerk
Mr. Justice Fred J. Weber delivered the opinion of the Court.
     OEA Research, Inc., Andrew J.        Scheet and Virginia M.
Scheet appeal from an order of the District Court of Lewis
and Clark County quashing a temporary writ of prohibition and
dismissing the request for a permanent writ of prohibition.
We affirm.
     Appellants raise two issues:
     1.    In the event that annual assessments are not dis-

patched pursuant to 5 15-8-201, MCA, may the Department of
Revenue subsequently assess such escaped property pursuant to
5 15-8-601, MCA?
     2.    Have appellants been denied due process and equal
protection of the laws by an assessment of escaped property?
     OEA Research, Inc. is a Helena-based consulting firm.
Andrew J. Scheet and Virginia M. Scheet (Taxpayers) operate
an excavating business in Lewis and Clark County, Montana.
     The Department of Revenue (DOR) and the County Assessor
failed to assess the personal property of the Taxpayers in
the normal manner for each of the years 1975 through 1983.
     On December 29, 1983, OEA Research, Inc. (OEA) received
an assessment from DOR for $6,520.05 covering the years 1975
through 1983.   OEA appealed that assessment to the County Tax
Appeal Board.
     On March 9, 1984, OEA received a "Notice of Execution"
from the County Treasurer's Office covering the December 29,
1983, assessment of $6,520.05.       On March 29, 1984, the County
Assessor   sent a    "revised assessment" to OEA in the same
amount, but referred to    §   15-8-601, MCA.
     On March 20, 1984, the Taxpayers received an assessment
from the County Assessor in the amount of $23,564 for the

years 1975 through 1983.       This assessment also reflected that
DOR was relying on   §   15-8-601, MCA, for authority to make the
assessment.
        Taxpayers filed a petition for a declaratory judgment,
writ    of   prohibition      or   other appropriate relief         in    the
District Court.       They alleged that the DOR, the assessor and
the treasurer were proceeding in excess of their jurisdiction
because the assessments in question were not timely under
S 15-8-201, MCA.        That section requires that assessments be
completed on an annual basis before the second Monday in
July.        The   District    Court     issued    a   temporary   writ   of
prohibition.       The District Court later determined that the
DOR    had   acted   properly,       quashed     the   temporary   writ   of
prohibition and       dismissed        the Taxpayers' petition       for a
permanent writ of prohibition.


        In the event that annual assessments are not dispatched
pursuant to S 15-8-201, MCA, may the Department of E.evenue
subsequently       assess     such     escaped     property   pursuant    to
§   15-8-601, MCA?
       Three statutes are pertinent.             Section 15-6-101(1), MCA,
provides :
         "All property in this state is subject to
         taxation, except as provided otherwise."
Section      15-8-201 (I), MCA, provides           in pertinent part      as
follows:
         "The department of revenue or its agent
         must, between January 1 and the second
         Monday of July in each year, ascertain
         the names of all taxable inhabitants and
         assess all properties subject to taxation
         in each county       . . ."
Section 15-8-601(1), MCA, provides in pertinent part:
       "Whenever the department of revenue discovers that
       any taxable property of any person has in any year
       escaped assessment, been erroneously assessed, or
       been omitted from taxation, the department may
       assess the same provided the property is under the
       ownership or control of the same person who owned
       or controlled it at the time it escaped assessment,
       was erroneously assessed, or was omitted from
       taxation.   All such revised assessments must be
       made within 10 years after the end of the calendar
        y e a r i n which t h e o r i g i n a l a s s e s s m e n t was o r s h o u l d
        h a v e been made."

        T a x p a y e r s a r g u e t h a t S 15-8-201,             MCA,    cannot be recon-

ciled with          §   15-8-601,       MCA.      They a r g u e t h a t t h e r e q u i r e m e n t

of    y e a r l y a s s e s s m e n t s by t h e second Monday o f J u l y i n e a c h

year     negates        any      possibility           of    assessing         a    tax    in    later

years,        even      though      S 15-8-601           provides        that       when    the    DOR

" d i s c o v e r s " t a x a b l e p r o p e r t y which h a s      "escaped          assessment"

o r "been o m i t t e d from t a x a t i o n , " t h e DOR may a s s e s s i t .                    In

view o f       t h e s t a t u t o r y r e q u i r e m e n t t h a t t h e DOR must a s s e s s

p r o p e r t y by t h e second Monday o f J u l y and o u r i n t e r p r e t a t i o n

o f t h a t r e q u i r e m e n t i n B u t t e C o u n t r y C l u b v . Dept. o f Revenue

(1980),          186     Mont.        424,        608       P.2d     111,          this    apparent

c o n t r a d i c t i o n i n s t a t u t e s must b e c o n s i d e r e d .

        A review of o l d e r cases w i l l a s s i s t i n p l a c i n g t h e i s s u e

i n perspective.               I n H i l l v . Lewis and C l a r k County ( 1 9 1 8 ) , 54

Mont.     479,      1 7 1 P.     929, t h i s C o u r t c o n s i d e r e d    §    2542, R e v i s e d

Codes ( 1 9 0 7 ) , which i n p e r t i n e n t p a r t p r o v i d e d :

             "Any p r o p e r t y d i s c o v e r e d by t h e a s s e s s o r
             t o have e s c a p e d a s s e s s m e n t may b e a s -
             s e s s ~ da t a n y t i m e , i f s u c h p r o p e r t y i s
             i n t h e ownership o r under t h e c o n t r o l o f
             t h e same p e r s o n who owned o r c o n t r o l l e d
             it a t t h e t i m e it s h o u l d h a v e b e e n
             assessed."

This s e c t i o n i l l u s t r a t e s t h a t i n        1918,    a s i n 1 9 8 4 , t h e law

provided        f a r a s s e s s i n g p r o p e r t y which i s d i s c o v e r e d t o h a v e

escaped assessment.                   In H i l l ,      t h e c o n t e n t i o n was made t h a t

the     assessment         was      invalid       because          the   property          has    been

assessed         long     after       the    assessment            deadline.           This      Court

r e f u s e d t o a c c e p t t h a t t h e o r y and u p h e l d t h e a s s e s s m e n t and

taxation of the property.

        In      a    similar        way      in      B u t t e & S u p e r i o r Mining Co.         v.

McIntyre         (1924) , 71 Mont.             254,      229 P.      730,      t h i s Court held

t h a t t h e Board o f E q u a l i z a t i o n c o u l d a s s e s s and t a x p r o p e r t y

i n 1923 which had been o m i t t e d from t a x a t i o n i n 1920.                              This
Court emphasized the plenary power of taxing authorities to
assess property which has escaped assessment.            It stated:

        "In contemplation of our law it is the
        duty of every citizen to return his
        property for taxation and to pay the
        taxes levied upon it. It was the obliga-
        tion of the plaintiff to return this
        property for assessment in 1920, and to
        pay taxes thereon.   That was settled in
        the Bourquin Case. These taxes are just
        1920.
        present and subsistinq. The duty -
                -                         to
                                               =
        as much due now as they were in the year
                The legal obligation to       is-
        - - continuinq, present obligation just
        is a
        as imperative to-day - - - - -
        -                    as it was in 1920."
        Butte & Superior Mining Co., 71 Mont. at
        263, r29 P. at 733 (emphasis added).
       At the time these older cases were decided, the prede-
cessor of 5 15-8-201, MCA, required the assessment of taxable
property by the second Monday in July of each tax year.           See
5   2510, Revised    Codes   (1907)    &      2002, R.C.M.     (1921).
Nevertheless, this Court recognized that if property had been
omitted   from or escaped     assessment, the taxing authority
could correct the omission in order to see that all property
liable to assessment and taxation is taxed so that burdens of
government may fall in like proportion upon all.        See Simpson
v. Silver Bow County      (1930), 87 Mont. 83, 93, 285 P. 195,
199.
       In Evans Products Co. v. Missoula County (Mont. 1982),
654    P.2d   523,   39   St.Rep.     2149,   this   Court    applied
$
S   15-8-601(1), MCA, to an erroneous assessment.             In that
case, the full value of real property was incorrectly shown
for the 1978 tax assessment as $396,050.         The correct figure
was $990,125.    On December 27, 1979, the County Assessor's
Office informed the taxpayer of the error in the 1978 and
1979 tax and enclosed a new tax assessment notice for 1978
showing a tax balance of $11,507.89.          The taxpayer claimed
that the DOR was precluded from proceeding under        §    15-8-601,
MCA, because it had initially followed improper procedures.
This Court concluded that the clerical error made in the tax
assessment           came w i t h i n     t h e p l a i n meaning o f            "erroneous as-

sessment" a s used i n t h e s t a t u t e .                   The C o u r t t h e n c o n c l u d e d

that     because         inadequate          notice      was     given      to    the    taxpayer

u n d e r $ 15-8-601,
          3                     MCA,      t h e t a x e s had n o t b e e n p r o p e r l y a s -

s e s s e d and      levied.         Evans P r o d u c t s i s t h e most r e c e n t c a s e

involving an i n t e r p r e t a t i o n of S 15-8-601(1),                   MCA.       While n o t

f a c t u a l l y on p o i n t ,     it d o e s d e s c r i b e t h e s t a t u t o r y r i g h t o f

t h e DOR t o c o r r e c t e r r o n e o u s a s s e s s m e n t s f o r a p e r i o d o f up

t o 10 y e a r s .

        B u t t e C o u n t r y C l u b v. Dept. o f Revenue (19801, 186 Mont.

424,     608      P.2d        111,    is the principal              case     upon       which    the

Taxpayers         rely.         It    i s important t o consider t h e f a c t s i n

t h a t case.         There t h e taxpayers w e r e r e g u l a r l y a s s e s s e d f o r

r e a l p r o p e r t y t a x e s and improvement t a x e s f o r t h e y e a r 1978.

O August 31, 1978, one t a x p a y e r r e c e i v e d a n o t i c e o f c h a n g e
 n

i n p r o p e r t y v a l u a t i o n from t h e DOR.              The a s s e s s e d v a l u e o f

the    land       and     improvements           was    increased         from     $239,570       to

$1,490,272.              In    l a t e August,        the    other      taxpayers        received

from t h e DOR a n o t i c e o f change i n p r o p e r t y v a l u e s o f                     land

and improvements from $43,179 t o $134,600.                               I n September, t h e

taxpayers         filed       notices       of   appeal      t o the       l o c a l Tax Appeal

Board.       When t h e l o c a l Board was n o t a b l e t o h e a r a l l o f t h e

c a s e s by O c t o b e r 1, 1978, t h e a p p e a l s w e r e s e n t t o t h e S t a t e

Tax Appeal Board f o r h e a r i n g s .

        The T a x p a y e r s i n t h e p r e s e n t c a s e r e l y upon t h e f o l l o w -

i n g l a n g u a g e i n B u t t e C o u n t r y Club:

           ". . .         The words o f s e c t i o n 15-8-201,
           MCA,      a r e p l a i n , unambiguous and c e r t a i n .
           T h i s s t a t u t e r e q u i r e s t h e DOR t o a s s e s s
           a l l p r o p e r t y s u b j e c t t o t a x a t i o n between
           J a n u a r y 1 and t h e second Monday o f J u l y .
           The s t a t u t e c o n t a i n s t h e word ' m u s t ' , and
           t h i s clearly indicates that the statutory
           commands a r e m a n d a t o r y , and n o t d i s c r e -
           tionary.         The DOR must a s s e s s p r o p e r t y by
           t h e s e c o n d Monday i n J u l y , and t h a t was
           n o t complied w i t h i n t h e i n s t a n t c a s e . ' '
           186 Mont. a t 429, 608 P . 2 d a t 1 1 4 .
Taxpayers          here argue           t h a t because             no a n n u a l a s s e s s m e n t was

made a g a i n s t t h e m ,         it i s t o o l a t e f o r t h e DOR t o a t t e m p t t o

proceed            under         S 15-8-601,              MCA.                  We        reject         that

interpretation.

        Butte        Country         Club     involved          a     change         in   1978 t a x      as-

s e s s m e n t s t o s e v e r a l t a x p a y e r s i n which i n i t i a l a s s e s s m e n t s

were     made,       revised          tax    assessments              were       sent      out     in    late

August,        and no          l o c a l Tax Appeal         Board h e a r i n g was a l l o w e d .

It    was      based          upon    such       late     assessments             that         this     Court

concluded:

             "The a s s e s s m e n t s i n t h e i n s t a n t c a s e w e r e
             made a f t e r t h e s e c o n d Monday i n J u l y , and
             are therefore invalid.                 A valid assess-
             ment i s i n d i s p e n s a b l e t o t h e l e v y o f a
             tax."     B u t t e c o u n t r y C l u b , 186 ~ o n t . a t
             430, 608 P.2d a t 1 1 5 .

T h a t i s a c o r r e c t c o n c l u s i o n b a s e d upon t h e f a c t s i n v o l v e d i n

B u t t e Country Club,               where a n a t t e m p t was made t o r a i s e t h e

assessment           on       various       property       after          the    second         Monday     of

July,     i n derogation of                 S 15-8-201,             MCA.        However,        t h a t does

n o t l e a d t o a c o n c l u s i o n t h a t a l l a s s e s s m e n t s made a f t e r t h e

s e c o n d Monday o f J u l y a r e i n v a l i d .

        Section           15-8-601,         MCA,    was     not          involved         in    the     Butte

Country Club c a s e .                Under t h a t s e c t i o n , a s s e s s m e n t s p r o p e r l y

may     be     made       after        the       second     Monday          of       July      under      the

circumstances described i n t h a t section.

        We      conclude             that     under        the         facts         of     this        case,

S 15-8-601,          MCA,        authorized         t h e DOR t o a s s e s s t h e p r o p e r t y

which        had     escaped          assessment           or        had     been         omitted        from

taxation         for      a    number       of    years.            We     therefore           affirm     the

q u a s h i n g of     the w r i t of         prohibition             by t h e D i s t r i c t C o u r t .

                                                   I1

        Have       appellants            been      denied            due     process           and      equal

p r o t e c t i o n o f t h e l a w s by a n a s s e s s m e n t o f e s c a p e d p r o p e r t y ?
        Here, no due process right was denied the Taxpayers.
Notice was given to the Taxpayers, conferences were held and
ultimately an appeal was taken to the Lewis and Clark County
Tax Appeal Board as provided in   §   15-8-601, MCA.   There is no
showing of a denial of the right to a hearing, as was the
case in Butte Country Club.    We conclude that the Taxpayers
have not been denied due process or equal protection of the
laws.
    We affirm the District Court's order quashing the writ
of prohibition and dismissing the petition for a permanent
writ of prohibition.




We concur:       /




Justices
Mr. Justice John C. Sheehy, dissenting:


       I dissent.
       The taxpayers contend that a valid and timely assessment
each year as required by 5 15-8-201, MCA, is indispensable to
the levy of a tax.         They rely essentially on our decision of
Butte Country Club v. Dept. of Revenue (1980), 186 Mont. 424,
608 P.2d       111.      In that case, the Department of Revenue
through its agent had delivered to Butte Country Club a 1978
assessment       in     August   which    purported      to     increase       the
assessment value of the Country Club's property.                   We said in
that case that the word "must" in 5 1.5-8-201 was mandatory
and    that     the     late   issuance    of    the    assessment       by    the
Department was a departure               from legal requirements which
resulted in invalidity.
       The     District    Court    here,       however,      discounted       the
precedential value of the Butte Country Club case because in
that case the Department of Revenue had made no contention
that the property had escaped assessment or that                   §    15-8-601,
was in any way applicab1.e.         The District Court further relied
as does the majority on three earlier cases from this Court
in    reaching    its     decision, Simpson v.          Silver Bow County
(1930), 87 Mont. 83, 285 P. 195; Butte              &   Superior Mining Co.
v. McIntyre       (1924), 71 Mont. 254, 229 P. 730; and Hill v.
Lewis and Clark County           (1918), 54 Mont.          479, 171 P. 929.
       In the Hill case, it appears that the executors of the
estate of Samuel T. Hauser failed to list certain property
belonging to the estate although the executors had a clear
legal duty to do so.           Upon discovery of the concealment, the
county       assessor    assessed   the     property,       long       after   the
statutes then pertaining permitted him to do so.                       On appeal
to this Court, we condemned tax avoidance in that manner, the
purposeful concealment of taxable property until after the
assessment roll went to the county treasurer.                  The cases at
bar   do not involve purposeful concealment from taxation.
       In Butte     &   Superior Mining Co. v. PlcIntyre, supra, the
property       in   question       escaped    taxation   due    to     active
concealment by the taxpayer.                 In that case, the taxpayer
filed a return deducting $2,719,000 of royalties to other
companies as a "cost of owners purchase."                As a consequence
of    the deduction, the company's books               showed a      loss of
$1,500,000.         The county attorney challenged the deduction
quoted and was successful in getting the deduction declared
unlawful.      Again the case involved concealment.
       The Simpson case is not strong as authority for the
problem involved in the case at bar.                In Simpson, the Board
of    County    Commissioners of         Silver Bow County       had    hired
Simpson, as a "tax ferret" to search out and furnish the
Commissioners, sitting as the County Board of Equalization,
information which would enable the Board to assess and tax
net proceeds which had escaped taxation in 1920.                Simpson had
a 20 percent contract which entitled him to $9,069.27.                   The
County refused to pay, and he received a judgment for that
amount in the District Court.              On appeal to this Court, the
case principally          turned    on   whether    the County Board       of
Commissioners, sitting as a County Board of Equalization, had
the    authority, in        the    light     of   statutes   granting    like
authority to the State Board of Equalization, to hire a tax
ferret.     The incidental comments of the Court with respect to
the duty of assessments in Simpson are largely dicta, and
have no precedential force in this case.
       We should come to grips in this case with the effect of
the decision of the District Court:                 although the Department
of   Revenue has       a mandatory          duty   to assess all personal
property in each county before the second Monday of July in
each year, under S 15-8-201, the d-ecision of the District
Court allows the Department to neglect this duty, and up to
ten years later, under            §   15-8-601, still assess and collect
the neglected taxes.
       The conflict in the statutes that arises in this case
comes about because the Department did not do its duty under
the first statute, 5             15-8-201.         It did not complete its
annual assessment of the property of the relators before the
second Monday of January of each year.                     Had the Department
performed its duty of annual assessments, there would arise
no conflict between 5 15-8-201 and S 15-8-601., because then
escaped property or omitted property could be assessed by the
Department of Revenue and taxed under S 15-8-601, during the
succeeding 10 years.            The legislature must have comprehended,
in adopting     §    15-8-201 and S 15-8-601, that the Department
would act in conformance with its mandated duties.                      It must
not have      comprehended the conflict that arises when                       the
Department      does      not    follow      its   mandated    duty    under     S
15-8-201, and later attempts to make amends und.er                 §   15-8-601.
       The    duty   of    courts      in    interpreting statutes is           to
harmonize conflicting statutes, and to make them produce the
effects intended by the legislature.                 The statutes here will
harmonize when         the      Department follows the mandate             of   S

15-8-201.       The conflict in this case will persist through
this    and    other      cases       if    we   condone    the   Department's
nonfeasance of duties under S 15-8-201, by permitting it to
recoup under S 15-8-601.
       The obvious design of S 15-8-601, is to allow the taxing
authorities to assess and collect taxes on properties that
escape or are omitted through no fault of the Department.                                    We
would preserve that design by holding that if the Department
has followed its mandated duties under 5 15-8-201, it can
thereafter proceed to assess and collect taxes which have
escaped or been omitted for taxation under S 15-8-601.                                        If
the    Department     has    failed      its   responsibilities under                             5
15-8-201, and because of such failure the property escapes or
is omitted        from taxation, the Department shou1.d bear the
responsibility for the loss of tax revenues resulting.                                     This
holding would do no more than require the Department to act
a s the legislature directed.
 .
       This decision relates to the assessment and taxation of
personal        property   only    and   would        not          be        considered       as
authority with respect to the assessment of real property or
interests therein.           The    provisions                of   5 15-8-308, MCA,
provide that no assessment or act relating to assessment or
collection of taxes is illegal on account of informality or
because the same is not completed within the time required by
law.       We    specifically held       in Butte Country Club, above
cited, that 5 15-8-201, prevails over the provisions of S
15-8-308.
       I   would     reverse      and    remand           with           instructions         to
reinstate the petitions of the relators, and to issue a
permanent writ of prohibition against the assessments charged
here against the taxpayers.

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