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                                                                No. 97-464



                              IN THE SUPREME COURT OF THE STATE OF MONTANA



                                                              1998 MT 285



                                                    MADISON COUNTY, et al.,

                                                     Plaintiffs and Respondents,

                                                                      v.

                                              STATE OF MONTANA, acting by and

                                         through its office of PUBLIC INSTRUCTION,

                                        and NANCY KEENAN, in her official capacity

                                        as the State Superintendent of Public Instruction,

                                                     Defendants and Appellants.




                                APPEAL FROM: District Court of the Fifth Judicial District,

                                                 In and for the County of Madison,

                                   The Honorable William Nels Swandal, Judge presiding.

                                                      COUNSEL OF RECORD:

                                                              For Appellant:

Geralyn Driscoll, Office of Public Instruction, Helena, Montana; Lawrence G. Allen, Department of Revenue,
                                       Helena, Montana (Amici Curiae)


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                                                             For Respondent:

Robert R. Zenker, Madison County Attorney, Virginia City, Montana, (Madison County); R. J. "Jim" Sewell, Jr.,
  Smith Law Firm, Helena, Montana (Ennis School District No. 52); Lance Melton, Montana School Boards
                              Association, Helena, Montana (Amici Curiae)




                                                Submitted on Briefs: March 12, 1998

                                                     Decided: November 24, 1998

                                                                    Filed:

                                      __________________________________________

                                                                    Clerk




Justice James C. Nelson delivered the Opinion of the Court.

¶1. The Fifth Judicial District Court, Madison County, entered summary judgment
for the Plaintiffs in this declaratory judgment action. We reverse and remand.

¶2. The issue is whether the District Court erred in holding that Madison County is
not required to distribute tax revenues collected by means of a tax settlement
agreement to the State of Montana and other taxing authorities in accordance with
statutory levies.

¶3. In August 1992, Cyprus Mines Corporation paid $4,432,584 to the Madison
County Treasurer pursuant to a settlement agreement resolving a dispute concerning
deficiency tax assessments by the Montana Department of Revenue (DOR). Cyprus
had two tax liabilities for the calender/production years 1980 through 1987. The
larger liability concerned the mines net proceeds tax, pursuant to §§ 15-23-501
through -523, MCA. Cyprus's second tax liability concerned the Resource Indemnity
Trust Tax (RITT), imposed pursuant to §§ 15-38-101 through -203, MCA. Under the
settlement agreement, Cyprus also paid $67,416 to the Treasurer of the State of
Montana.

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¶4. Madison County, wishing to place the settlement proceeds it received into a
capital improvement fund, invested all of that money and has reinvested the interest
income. The plaintiffs, Madison County taxing districts, political subdivisions, and
individual taxpayers (collectively, "Madison County"), brought this declaratory
judgment action seeking a ruling that all of the settlement proceeds Madison County
received from Cyprus may be distributed to certain Madison County taxing districts
under a separate agreement they had reached. The complaint alleged that the State
of Montana, through the Office of Public Instruction (OPI), has taken the position
that the funds must instead be allocated according to the mill levies in place on the
date when the funds were received. That would require, among other things, that
funds representing 101 mills must be allocated to state university levies pursuant to §
20-25-423, MCA, and to county and state school equalization aid payments pursuant
to OPI's calculations under the statutory requirements of §§ 20-9-331, -333, and -360,
MCA. The answer filed by OPI indicated that this was, indeed, OPI's position.

¶5. Madison County moved for summary judgment, and the District Court granted
that motion based on the briefs submitted by the parties. Noting that the settlement
amount was less than one-third of the actual assessment amount in dispute, the court
ruled that under the terms of the settlement agreement the money paid to Madison
County was not subject to any claim by the State. OPI appeals.

                                                            DISCUSSION

¶6. Did the District Court err in holding that Madison County is not required to distribute tax revenues
collected by means of a tax settlement agreement to the State of Montana and other taxing authorities in
accordance with statutory levies?

¶7. This Court's standard of review of a summary judgment ruling is de novo.
Treichel v. State Farm Mut. Auto. Ins. Co. (1997), 280 Mont. 443, 446, 930 P.2d 661,
663. The party moving for summary judgment must first demonstrate that no
genuine issues of material fact exist; if none exist, then the Court must determine
whether the moving party is entitled to judgment as a matter of law. Rule 56(c), M.R.
Civ.P.

¶8. In this case, the parties agree that there is no issue of material fact and that the
question is whether, as a matter of law, the proceeds of the settlement agreement
must be distributed pursuant to statutory provisions regarding tax payments. The

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District Court ruled that because the agreement provided for separate payments to
the county and the state, it was intended to be a final determination of all debts and
obligations between the parties. Similarly, on appeal, Madison County argues that
the settlement contract is the full, final, and conclusive agreement between the
parties and that its terms may not be avoided or altered.

¶9. The District Court noted that the settlement agreement is governed by § 15-1-211
(8), MCA, which authorizes the DOR to enter into settlement agreements concerning
a taxpayer's liability. In its analysis, the court assumed that the DOR and Madison
County had a dispute to settle which was somehow resolved under the settlement
agreement. There are no facts in the record establishing this. Furthermore, § 15-1-211
(8), MCA, does not address a county's obligations vis a vis distribution of tax
revenues. That subject is addressed in an entirely different part of the Montana
Code. Section 15-1-211(8), MCA, is limited in its scope to allowing DOR to enter
agreements concerning taxpayer liability for taxes which DOR administers.

¶10. In reaching its conclusion, the District Court ignored not only the limited
statutory scope of the agreement, but also the agreement's plain language. The sole
purpose of the agreement was to settle Cyprus Mine Corporation's tax liabilities for
the years 1980 through 1987. By its express terms, the agreement did not settle the
obligations of Madison County, a third party, with respect to the county's statutory
obligation to distribute the tax revenue to other taxing authorities. Under a section of
the agreement appropriately entitled "Limitations of Agreement", the following
language appears:

This agreement and the mutual releases contained herein apply only to the liability of
Cyprus for RITT and net proceeds taxes and interest thereon for calendar/production years
1980 through 1987, inclusive. This Agreement and the releases contained herein do not
apply to the RITT or net proceeds taxes for any other calendar/production year or to any
other tax or taxes or to the release of any party from any other obligation due another
party. [Emphasis added.]

Quite simply, the agreement settled Cyprus's tax liability, not Madison County's statutory
obligations to the State of Montana or other entities regarding property tax distribution.

¶11. In opposing Madison County's motion for summary judgment, OPI filed with
the District Court an affidavit in which the DOR's Director denied that DOR had


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entered into an agreement with Madison County which would negate the taxing
powers of the State of Montana or any other taxing jurisdiction. OPI states that the
DOR could not compromise and settle a property tax dispute with Cyprus by
agreeing that Cyprus's property tax liability was zero if it paid $4.4 million to
Madison County, which, in effect, is Madison County's argument.

¶12. On its face, the settlement agreement does not specify why the lump sum
settlement was paid by two checks, one to Madison County and the other to the State
Treasurer. Madison County's position is that this represents the intended ultimate
distribution of the settlement monies. However, immediately following the recitation
in the settlement agreement that Cyprus shall deliver the two checks, the agreement
provides:

The payments above described shall be in consideration for the full release, acquittal and
discharge of all deficiency assessments and claims of any kind including interest by the
Department against Cyprus for RITT, and net proceeds taxes for calendar/production years
1980 through 1987 inclusive, subject to the provisions of § 15-1-211(8), MCA.

OPI's position is that the two checks represent payment for the RITT, which is payable to
the State pursuant to § 15-38-106, MCA, and for the mines net proceeds tax, which is
payable to the county treasurer. See § 15-23-507, MCA. Madison County has shown no
reason why this explanation of the two checks as divided by type of tax is any less viable
than is its explanation that the two checks were divided according to which governmental
entity was ultimately entitled to the money.

¶13. The District Court noted as support for its conclusion the absence of any
evidence of distribution of the check made out to the Montana State Treasurer. If
that check represents RITT funds, however, § 15-38-106(2), MCA, requires that the
State deposit that money into the Resource Indemnity Trust Fund. Therefore, the
fact that these funds were not distributed to various taxing authorities does not
support the District Court's conclusion. Mines net proceeds taxes, on the other hand,
are collected by the county treasurer, see § 15-23-507, MCA, who must later remit all
money belonging to the state to the State Treasurer. Section 15-1-504, MCA.

¶14. The question of how to distribute a property tax settlement which states a dollar
amount without allocation based on value or years has been addressed, as OPI
argued below, in 41 Att'y Gen. Op. No. 67. In that opinion, the Montana Attorney


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General addressed a question concerning distribution of a settlement for disputed
taxes on mining property in Butte-Silver Bow County. The taxes involved were RITT
and mines net proceeds taxes as well as other natural resources taxes. The Butte-
Silver Bow County Attorney asked the Attorney General how the county should
divide and distribute the settlement revenues among the various taxing jurisdictions
in the county. The Attorney General answered that the settlement revenues should be
distributed in proportion to the mills levied for the fiscal year in which the proceeds
are payable under the agreement.

Montana statutes are silent with respect to the proper allocation within the county budget
of income like the present settlement proceeds. Nonetheless, because Butte-Silver Bow
County's portion of the settlement derives from alleged liability under the mines net and
gross proceeds taxes, such amounts should logically be allocated among the various
county taxing jurisdictions proportionately on the basis of mill levies for the fiscal year
during which they are payable under the agreement or any subsequent amendment thereto.
This result comports with the County's presumed intent in resolving the disputed tax
claims, which was to benefit each taxing jurisdiction through an expeditious and certain
settlement. [Emphasis supplied.]

41 Att'y Gen. Op. No. 67, at page 281.

¶15. In the present case, the District Court concluded that § 15-1-211, MCA,
supersedes the above Attorney General Opinion. But because § 15-1-211, MCA,
concerns only the first step of the tax process, the determination of a taxpayer's
liability, the District Court's conclusion is incorrect. The issue presented in this case,
and the Attorney General's opinion, concern one of the next steps in the tax process:
how settlement revenues are to be distributed by the county following receipt of the
revenues from the taxpayer. Nothing in § 15-1-211, MCA, governs how taxes are to
be distributed once they are collected.

¶16. Since 1978, a statewide levy of up to six property tax mills has been
appropriated to the state general fund for the Montana university system. Section 20-
25-423, MCA. Furthermore, under the statutory scheme of equalization aid enacted
to render the system of public school funding in this state constitutional pursuant to
this Court's opinion in Helena Elementary School Dist. v. State (1989), 236 Mont. 44,
769 P.2d 684 amended 236 Mont. 44, 784 P.2d 412, counties are also required to levy
and distribute property tax mills county wide and to remit certain mills levied to the


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State for public elementary and high school funding.

¶17. Madison County asserts that application of school funding equalization taxes to
Cyprus's settlement for taxes for the years 1980 through 1987 represents improper
retroactive taxation. As Madison County points out, not all of the equalization laws
were in effect in 1980 through 1987.

¶18. The State did not, however, attempt to levy 1992 mills retroactively against
Cyprus. The property tax for years 1980 through 1987 was paid, without allocation
by mill or by year, in 1992. No retroactivity issue is present. The issue in dispute is
how to distribute the $4.4 million that Cyprus paid in August 1992.

¶19. There is no dispute that Cyprus has taxable property in Madison County and
that it now has paid taxes on that property to the Madison County Treasurer.
However, Madison County has refused to levy and remit the statutory tax for
education. Nothing in the record, the settlement, case law or statute supports a
finding or conclusion that the $4.4 million paid to Madison County lost its nature as
property tax revenue and became Madison County's funds. This would completely
ignore Madison County's obligation to levy the basic education taxes on taxable
property in the county and to remit the tax revenues to the State of Montana as set
forth in the statutes.

¶20. We hold that the settlement paid by Cyprus to Madison County was property
tax revenue which must be distributed according to the mills levied in the year the
settlement was paid. We therefore reverse the decision of the District Court. This
case is remanded so that the court may dismiss the action and enter a judgment
directing the Madison County Treasurer to distribute the $4,432,584 it received from
Cyprus, and the accrued interest on that amount, according to the 1992 mills in effect
when Madison County received the payment from Cyprus.

/S/ JAMES C. NELSON

We Concur:

/S/ WILLIAM E. HUNT, SR.

/S/ W. WILLIAM LEAPHART


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/S/ JIM REGNIER

Justice Terry N. Trieweiler concurring in part and dissenting in part.

¶21. I concur with the majority's conclusion that the District Court erred when it
awarded summary judgment to Madison County and the other plaintiffs. I dissent
from the majority's conclusion that the defendant State of Montana is entitled to
judgment as a matter of law.

¶22. Pursuant to § 15-1-211(8), MCA, the director of the Department of Revenue is
designated by law as the agent of the State of Montana authorized to settle claims
against any taxpayer for taxes due pursuant to state law. That section provides in
part that:

(a) The director of revenue or the director's designee is authorized to enter into an
agreement with any taxpayer relating to the taxpayer's liability with respect to a tax
administered by the department for any taxable period.

(b) An agreement under the provisions of subsection (8)(a) is final and conclusive, and,
except upon a showing of fraud, malfeasance, or misrepresentation of a material fact:

(i) the agreement may not be reopened as to matters agreed upon or be modified by any
officer, employee, or agent of this state . . . .

¶23. Implicit from § 15-1-211(8), MCA, is the director's authority to settle tax claims
on any terms he or she deems appropriate.

¶24. Pursuant to that statutory authority, the Director for the Department of
Revenue executed a three-party settlement agreement to which Cyprus Mines
Corporation, the taxpayer, and Madison County, the primary beneficiary of the
claimed taxes, were parties. That agreement provided in relevant part that:

Within ten (10) working days from the date Cyprus receives a fully executed copy of this Agreement,
Cyprus shall deliver two checks, one to Madison County, Montana, in the amount of $4,432,584.00, and one to
the State Treasurer of the State of Montana in the amount of $67,416.00.

The payments above described shall be in consideration for the full release, acquittal and discharge of all
deficiency assessments and claims of any kind including interest by the Department against Cyprus for RITT,


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and net proceeds taxes for calendar/production years 1980 through 1987 inclusive, subject to the provisions of §
15-1-211(8), MCA.

¶25. Why Madison County was a party to the settlement agreement is not clear from
the face of the agreement. Furthermore, the agreement does not, on its face, as noted
by the majority, explain why the settlement proceeds were divided and to be
delivered as indicated. I conclude, therefore, that Madison County's involvement
with the agreement, together with the terms of the agreement which provide for the
distribution of the settlement proceeds, create an intrinsic ambiguity and that the
intent of the parties could only have been determined by evidence in addition to the
contract itself. The need for extrinsic evidence to explain the intent of the parties in
circumstances such as these is plainly anticipated by § 28-2-905(2), MCA, which
makes an exception to the rule prohibiting parol evidence when such is necessary to
explain an intrinsic ambiguity.

¶26. I would therefore remand this case to the District Court for evidentiary
proceedings at which the intent of the parties can be determined.

¶27. I also disagree in two significant respects with the majority's rationale for its
conclusion.

¶28. First, I disagree with the majority's conclusion that the state has any right to
collect equalization aid payments pursuant to § 20-9-360, MCA. The majority
correctly notes that the settlement among the parties pertained to Cyprus Mine
Corporation's tax liabilities for the years 1980 through 1987. Section 20-9-360, MCA,
which pertains to state equalization aid to the public schools of Montana, was not
enacted until 1989 and made no provision for retroactive application. Section 1-2-
109, MCA, provides that "[n]o law contained in any of the statutes of Montana is
retroactive unless expressly so declared."

¶29. The State has argued, and the majority has agreed, that the settlement proceeds
are tax revenue because paid in satisfaction of a claim by the State for taxes due. On
that basis, the majority has concluded that the revenue must be disbursed as all other
tax revenue. However, the State's and the majority's willingness to trace the source
and nature of the settlement proceeds inconsistently ends there. The proceeds could
only be revenue for the years during which the State claimed it was entitled to
payment from Cyprus. That was the years 1980 through 1987, and during those
years the State was not entitled to payment for state school equalization aid

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payments pursuant to § 20-9-360, MCA.

¶30. I furthermore disagree that there is any significance to the fact that "[t]he
question of how to distribute a property tax settlement which states a dollar amount
without allocation based on value or years had been addressed, as OPI argued below,
in 41 Att'y Gen. Op. No. 67."

¶31. Legal issues are not answered for courts by the opinions of attorneys general.
Those opinions are completely irrelevant in courts of law. As we noted in
O'Shaughnessy v. Wolfe, (1984), 212 Mont. 12, 16-17, 685 P.2d 361, 363, an attorney
general's opinion may bind other government attorneys pursuant to § 2-15-501(7),
MCA, however, it has no binding effect on the courts. We gave the following
explanation:

Courts never look to administrative interpretation when the language [of a statute] is clear
beyond cavil. To hold otherwise would be to say that administrators and executive
officials, interpreting the effect of statutes, could undermine the enactments by official
action and nullify otherwise validly adopted laws. Thus, the legislative, and even the
judicial power would pass to the executive, at least in the negative or vetoing sense.

O'Shaughnessy, 212 Mont. at 17, 685 P.2d at 364.

¶32. In summary, I conclude that whatever the county treasurer's normal obligations
for collection and disbursement of property tax revenue, those obligations can be
altered by an agreement entered into among the obligated taxpayer, the county, and
the director for the department of revenue. Whether those obligations were altered
based on the settlement agreement which is the subject of this litigation is not clear.
Therefore, I would vacate the District Court's order of summary judgment in favor
of the plaintiffs and remand to the District Court for an evidentiary hearing at which
extrinsic evidence could be presented, following which the District Court could
resolve the issue regarding the parties' intent.

¶33. I dissent from the majority's conclusion that the State of Montana is entitled to
judgment as a matter of law.

/S/ TERRY N. TRIEWEILER



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