                            No.    92-510
          IN THE SUPREME COURT OF THE STATE OF HONTANA
                                  1993



CLAYTON E. DeVOE,
          Petitioner and Respondent,
    V.
                                                            EC
DEPARTMENT OF REVENUE OF THE STATE OF                        1     "   *
MONTANA, MISSOULA COUNTY, and FERN HART,                  -- ~ ..V>[
                                                  C L L , ~ rt ~
                                                          GF    .,>id
as MISSOULA COUNTY TREASURER,                                 S j p ~ cBCiFbi
                                                                       ~ ~ r
                                                      S r A r OF M O N ~ ~
                                                              ~                 ~
          Respondents and Appellants.



APPEAL FROM:   District Court of the Fourth Judicial District,
               In and for the County of Missoula,
               The Honorable Ed McLean, Judge presiding.


COUNSEL OF RECORD:
          For Appellant:
               David L. Nielsen (argued), Tax Counsel,
               Montana Department of Revenue, Office
               of Legal Affairs, Helena, Montana
               Michael W. Sehestedt, Deputy Missoula
               County Attorney, Missoula, Montana
          For Respondent:
               George C. DeVoe (argued), Attorney at Law,
               Missoula, Montana


                                            Submitted:     July 29, 1993
                                              Decided:      December 28, 1993
Filed:
Justice Terry N. Trieweiler delivered the opinion of the Court.
     Petitioner Clayton E. DeVoe petitioned the District Court for
the Fourth Judicial District of the State of Montana in Missoula
County pursuant to     §   15-2-303, MCA, for review of an adverse
decision by the State Tax Appeal Board (STAB).    After considering
written and oral arguments of the parties and the record from the
STAB, the District Court concluded that the STAB'S decision was not
supported by substantial credible evidence, and therefore, was
clearly erroneous.    The court reinstated the State Department of
Revenue's ( W R ) prior appraisals of petitioner's properties, and
ordered the DOR to pay petitioner's attorney fees. The DOR appeals
from the judgment of the District Court.     We affirm in part and
reverse in part.
     On appeal, the W R raises the following issues:
     1.     Did the District Court err when it ordered the DOR to
assess the value of DeVoe's property for the appraisal cycle
beginning in 1986 based on its assessed value prior to that date?
     2.     Did the District Court err when it ordered the DOR to
apply the assessed value of DeVoelsproperty for 1986 to subsequent
years during the same appraisal cycle?
     3.     Did the District Court err when it ordered the Missoula
County Treasurer to provide DeVoe with a refund for 1986 and
subsequent years during the same appraisal cycle?
    4.      Did the District Court err when it awarded attorney fees
to DeVoe?
                  FACTUAL AND PROCEDURAL BACKGROUND
     Clayton DeVoe owned two pieces of property located in Missoula
County.     Property No. 1 included a duplex and a 28 unit apartment
complex. For the appraisal cycle ending on December 31, 1985, the
land and improvements had been appraised at a ~~IIIbined
                                                       value of
$255,360.     For the appraisal cycle beginning January 1, 1986, the
assessed value was increased by the DOR to $529,800.
     Property No. 2 included a 67 unit apartment complex.           The
DORIS appraised value for that property for the cycle ending on
December 31, 1985, was $645,550. However, for the cycle beginning
January 1, 1986, the appraised value was increased by the DOR to
$1,340,200.
     DeVoe appealed these changes in the valuation of his real
property to the Missoula County Tax Appeal Board on the grounds
that the newly assessed values did not reflect the actual market
value of either property as required by   T,   15-8-111, MCA.   He asked
that the appraised value be reduced to an amount no greater than
the previous appraisals.
     In a one-sentence decision, his appeals pertaining to both
Property No. 1 and Property No. 2 were denied.        The County Board
stated that:
    Based on testimony and evidence, the Missoula County Tax
    Appeal Board finds that your taxable valuation has been
    reduced and your presentation indicates that your
    complaint has been fairly and equitably addressed and
    therefore, your appeal is denied. [Emphasis added].
     While the County Board referred to the "taxable valuation" of
DeVoe's property, no reference was made in its decision to the
"assessed valuation" which was the subject of his appeal.
     On July 1, 1986, DeVoe timely appealed the County Board's
decision to the STAB pursuant to 5 15-2-301, MCA.     Among other
things, he contended on appeal that the County Board had not
addressed the issue that he raised, which was whether the DOR's
increase in the appraised value of his property was correct.
     At the first hearing before the STAB, which was held on
August 5, 1986, DeVoe testified on his own behalf, and Jim
Fairbanks, who is employed by the DOR as an appraisal assessment
administrator in Missoula County, testified on behalf of the DOR.
No other witnesses were called.
     DeVoe contended through his testimony that the 1986 appraisal
did not reflect true market value of his property, based on
testimony given by witnesses from the DOR during appeals that
resulted from his previous appraisals.
     Fairbanks testified that for the appraisal cycle beginning in
1986, the DOR used a target year of 1982 for the class of property
to which DeVoe's property belonged.      He did not specifically
discuss the method of appraisal that he employed.     However, he
offered two exhibits (one pertaining to each property) which he
said supported the values he had arrived at.
     Exhibit A, which pertained to Property No. 1, compared the
cost per square foot that Fairbanks had arrived at for DeVoe1s
property with appraised values that he or the DOR had arrived at
for four other properties which he contended were similar. It also
listed four additional properties which he contended were similar,
and the cost per square foot at which those properties had sold.
For Property No. 2, Fairbanks submitted an exhibit which listed
appraisals of three properties he considered similar, and sales of
12 other properties.

     On cross-examination by DeVoe, Fairbanks was asked whether he
had any records which would document the sale prices of any of the
pieces of property listed on the two exhibits he had offered.
Fairbanks answered that he had nothing to document the comparable
sale values he had relied on, other than his own list of values
included in the exhibits.        He explained that he had gotten the
information about       the   sales   from   appraisers, realtors, and
principals involved in the sales, but that he had no written
documentation of those values.
     Based on further questioning, Fairbanks then explained that a
lot of the information pertaining to sales was available on realty
transfer certificates (RTCs) but that those could neither be
disclosed to the STAB nor to DeVoe because they were confidential
pursuant to   §   15-7-308,   MCA.    Realty transfer certificates are
documents which indicate the consideration paid when real estate is
transferred and which must be filed with the county clerk and
recorder, along with any instrument or deed evidencing the transfer
of real estate. The form of the RTC is established by the DOR, and
after filing, the clerk and recorder is required by statute to
provide each certificate to the DOR.         Section   15-7-305,   MCA.   They
have been required since 1975.    Their purpose is to provide sales
data to the DOR to further its interest in uniformity of real
estate assessments and give a reliable indication of market value.
Section 15-7-302, MCA.
       DeVoe objected to Fairbanks1 testimony about the value for
which other properties had been sold on the grounds that it was
hearsay and that without production of the RTCs pertaining to each
of those properties, DeVoe could not confirm the accuracy of
Fairbanks1 testimony.
       At the conclusion of his testimony at the first STAB hearing,
when    addressing the reliability of his     statements regarding
comparable sales, Fairbanks testified that:
       The sales are authenticated much the same way any
       appraiser goes out and determines that the sales did,
       indeed, take place.     We know, of course, from deed
       transfers that the date is accurate and the principals
                    .
       are accurate . . and through realty transfers about the
       value that they put on the property....   Often that is
       not always the same and we must confirm before any of
       that is before this board.
Fairbanks left no doubt that, not only did the DOR depend on RTCs
to document the value for which comparable properties had exchanged
hands, but that the RTCs were absolutely necessary for that purpose
in order to avoid inaccuracy.
       On October 15, 1986, the STAB issued its opinion and order in
which it concluded that DeVoe had failed to prove that the County
Board's decision was erroneous, and therefore, had failed to
sustain his burden on appeal.      For that reason, his appeal was
denied.   No other findings or conclusions were provided.
        DeVoe petitioned the District Court in Missoula County to
review the STAB'S decision pursuant to            C, 15-2-303,      MCA. On appeal,
DeVoe contended that the STAB decision was clearly erroneous and
that he was denied a fair hearing when he was not permitted to
confirm the accuracy of the DOR's comparable sales evidence by
examining the RTCs which pertained to those sales.                     In this first
appeal, the DOR responded that it had relied on the cost of
construction method of appraisal which, in itself, was sufficient
evidence to sustain the STAB decision, and that DeVoe did not have
a right to examine the RTCs because they were not, in fact, relied
on by the DOR to arrive at the consideration paid for comparable
sales.
        On July   22,   1988,   the District Court held that DeVoe was not
entitled to examine the RTCs pursuant to our decision in OlNeill v.

DepartmentofRevenue     (1987),   227   Mont.   226,   739   P.2d   456,   because in

that case the DOR had actually relied on RTCs to establish the
value of comparable sales, whereas in this case, they had not.
Since the District Court concluded that the DOR could rely on
evidence of comparable sales without producing copies of the RTCs
pertaining to those sales, it concluded that there was sufficient
evidence to support the decision of the STAB.
        Subsequent to the District Court's decision, on August                        9,

1988,    we decided DeVoev. DepartmentofRet~et?ue 1 9 8 8 ) ,
                                                 (               233   Mont.   190, 7 5 9

P.2d    991,   involving the same parties now before the Court.                 In that
case, we held that the DOR did have an obligation to produce the
RTC information pertaining to the comparable sales on which it
relied when it appraised DeVoetsproperty. Based on that decision,
DeVoe moved the District Court, with John S. Henson presiding, to
alter or amend its previous order.         The District Court granted
DeVoe's motion pursuant to Rule 59(g), M.R.Civ.P., and held that
without    production   of   the   RTCs   in   question   there was   not
substantial evidence sufficient to sustain the decision of the
STAB.   The District Court ordered the DOR to disclose to DeVoe the
relevant RTCs and remanded this case to the STAB for consideration
of whatever RTCs were produced, and to consider whether they formed
an appropriate basis for the valuation of DeVoe's property.           The
District Court also ordered the STAB to make specific findings of
fact regarding the applicability of each RTC which it considered,
and to make other specific findings of fact and conclusions of law
which were necessary to support its decision.
     The second hearing was held before the STAB on July 22, 1991.
At that hearing, DeVoe pointed out that nine RTCs were produced by
the DOR and that only one of them actually pertained to those
properties listed by the DOR as comparable sales.
     At the second hearing, DeVoe also called Robert Lovegrove, a
licensed real estate broker in Missoula, as a witness.                He
testified that for 13 years he had conducted appraisals of
commercial properties in Missoula.         He also taught real estate
courses offered through the Business School at the University of
Montana.
     Lovegrove reviewed the RTCs provided by the DOR and agreed
that six out of the nine dealt with four- or eight-plex apartment
units.   He testified that those were not a valid basis for
appraising large apartment complexes like the properties which were
the subject of DeVoefs appeal,     He also testified that he had
reviewed all of the properties listed on the RTCs, except for one
transaction which involved the sale of three four-plexes. Based on
his review, it was his opinion that they did not provide a basis
for comparison to DeVoels property.
     Lovegrove also testified that in 1982 (the year in which
DeVoefsproperty was appraised for the 1986 cycle) Missoula was in
a significant recession and property values were not increasing
from what they had been in the 1970s.   He testified that they had
leveled off and begun to decline. Specifically, he testified that
the market for large multi-family complexes (like those owned by
DeVoe), as opposed to four unit or eight unit buildings, was
nonexistent, that no transfers had even occurred during the time
frame of the DORfsappraisal, and that was why no comparable sales
had been relied on.
     Jim Fairbanks was again called as the DOR's only witness at
the second STAB hearing. He testified that the previous appraisal
cycle for DeVoe's property began in 1978 and ended in 1986, and
that the current cycle, which was the subject of DeVoefs appeal,
began in 1986 and would end in 1993. The base year for appraising
the property for the cycle beginning in 1978 was 1972,    The base
year for the cycle beginning in 1986 was 1982.
     Fairbanks described three approaches to valuation of real
estate. They included the cost approach, the market data approach,
and the income approach. He testified, for the first time, that in
appraising DeVoelsproperty he used the cost approach and then used
the market data approach to check the validity of his appraisal.
He explained that the cost approach measures the cost of replacing
the property and then allows a deduction from that value for wear,
tear, and depreciation.
     Fairbanks testified that he had been unable to find RTCs for
all of the properties he had originally listed as comparable sales.
However, he then explained that he had not relied on RTCs when he
put together the list of comparable sales in the first place.    He
testified that he came by that information from others during the
normal course of his appraisal activities.    He also acknowledged
that there were no sales of larger multi-family units, such as
those owned by DeVoe, during the early 1980s when he prepared his
appraisal of DeVoe's property.
     The second STAB decision was entered on August 7, 1991.     The
extent sf its findings and conclusions entered pursuant to the
District Court's order on remand were as follows:
                          FINDINGS OF FACT
          1.   RTCs identified as 1-4, 2-10, 3-11, 4-12, 5-13,
     6-21, 7-24, 8-24, and 9-28A were received in evidence.
          2.   The taxpayer presented evidence to show that
     the RTCs in question were not sufficiently similar
     properties to use as a comparable basis for valuing the
     taxpayer's property.
          3.   The W R presented evidence to show that the
     RTCs were used only as a cross-check of the values it had
     already placed on the subject property and were not used
     in any way to form a basis for valuing the subject
     property.
          4.   The RTCs referred to above were not used to
     form a basis for valuation of the taxpayer's property and
     for that reason are irrelevant to the issue of valuation.
                        CONCLUSIONS OF LAW
          I.   The Board will not rely on any of the RTCs
     referred to above as evidence of the valuation of the
     subject property.
          2.   The previous determination of the Board as to
     the value of the subject property remains unchanged.
     On October 7, 1991, DeVoe filed a second petitior? for review
in the District Court for Missoula County. This time his petition
was assigned to the Honorable Ed McLean.   He alleged that the STAB
had rendered a final decision denying his appeal of the appraised
valuation of his properties, and that therefore, he had exhausted
his administrative remedy for all of the years included in the
appraisal cycle to which those valuations applied. He also alleged
that the appraised valuation had not changed during any year since
his original appeal, which was brought in 1986.
     In his petition for review, DeVoe also alleged that he had
filed appeals to the Missoula County Board and the STAB from the
appraised values of these same properties for the years subsequent
to 1986, but that both boards refused to render a decision
following those appeals based on administrative rules which provide
that final decisions of the STAB are binding on subsequent years
during which the same valuations are applicable unless altered by
judicial review, change in use of the property, or reevaluation by
the DOR.
     Finally, DeVoe contended on appeal that because the first STAB
decision was reversed and remanded based on insufficiency of the
DOR's evidence, and because no additional relevant evidence was
offered by the DOR, that neither is the second STAB decision based
on credible evidence. He contended that the DOR value was contrary
to the requirements of 5 15-8-111, MCA, and asked the District
Court to reverse the STAB'S     final decision and reinstate an
appraised value for his properties equal to the value prior to the
DOR1s 1986 reappraisal.   He also asked, pursuant to 5 15-1-402,
MCA, for an order directing the county treasurer to refund those
excess taxes which he had paid under protest.
     The DOR filed a motion to dismiss DeVoels petition on the
grounds that it was untimely, but did not otherwise respond by
pleading to the allegations of his petition.
     On June 25, 1992, the District Court entered its opinion,
order, and judgment reversing the second decision of the STAB,
granting the relief sought by the petitioner, and in addition,
awarding DeVoe his attorney fees incurred through this extended
appeal process.
     The District Court observed that even though the STAB
concluded that the RTCs which were ultimately produced were
irrelevant to the issue of valuation and could not be relied on as
evidence, it did not hear any additional credible evidence to
support its original decision, but instead summarily concluded that
its original October 15, 1986, decision was correct.
     The District Court concluded that Judge Henson's original
order correctly concluded that the STAB'S original decision was not
supported by substantial credible evidence, and that sine@ no
additional evidence was provided during the remand hearing, the
STAB'S   decision    was   clearly   erroneous   pursuant    to     2-4-
704(2) (a) (v) and (vi), MCA.   The court concluded that no evidence
of multi-family apartment complexes similar to              DeVoels were
produced during the relevant time period, and that the comparable
sales evidence which was offered involved properties which were not
really comparable.
     In light of the testimony by Robert Lovegrove that large
multi-family apartment complexes had not increased in value from
the late 1970s to the early 1980s when this appraisal was done, and
in the absence of credible evidence to the contrary, the District
Court concluded that DeVoe had met his burden of proving that the
increased valuation of his property was not based on substantial
evidence.
     Based on these findings and conclusions, the District Court
reversed the decision of the STAB and ordered that the valuation of
DeVoeVsproperty which was in effect prior to 1986 be continued to
the present date.
     The District Court further held that this result was justified
by the STAB'S   failure to issue specific findings of fact and
conclusions of law which it had been directed to issue by Judge
Henson's original order.
        Finally, the District Court expressed concern over the DORIS
inconsistent positions regarding the use of RTCs.          It cited the
DOR's    original argument that they were confidential and not
available; its subsequent production of nine RTCs, most of which
were irrelevant; and its final position that RTCs are a nonissue
because they were not relied on when the property was originally
valued.    Based on what the court perceived to be the inconsistency
of the DORIS conduct and the protracted nature of these proceedings
which it concluded resulted from that conduct, the court concluded
that DeVoe was entitled to an award of costs and attorney fees.
        In summary, the DOR's reappraisal was reversed; it was ordered
to reinstate the value of DeVoe8s property as it had been prior to
1986; the Missoula County Treasurer was ordered to refund taxes

paid by DeVoe for all years included in that appraisal cycle to the
present time; and the DOR was ordered to pay costs and attorney
fees to DeVoe which were incurred during the series of appeals from
the DORIS appraisal.
                                   I.
     Did the District Court err when it ordered the DOR to assess
the value of DeVoe's property for the appraisal cycle beginning in
1986 based on its assessed value prior to that date?

     The DOR's first contention on appeal is actually two-fold.
First, it contends that the District Court's scope of review of the
STAB decision was limited pursuant to 5         2-4-704,    MCA, to a
determination of whether the STAB'S decision was clearly erroneous,
and that the District Court may not substitute its judgment for
that of the STAB. Second, the DOR contends that even if the STAB'S
decision was clearly erroneous, the District Court erred by
independently   determining the    correct va2uakion     for   De'croe8s
properties because according to our prior decisions, the STAB is
uniquely qualified to perform that fact-finding function.
     In support of its contention that the District Court exceeded
its proper scope of review when it reversed the decision of the
STAB, the DOR contends that it offered substantial credible
evidence of the value of DeVoe8s property pursuant to the cost of
replacement method, and that since that method sf appraisal is
specifically authorized by    5   1 5 - 8 - ( 2 ) ( b ) MCA, the STAB'S
decision based on that evidence was not clearly erroneous.
     Before we discuss the merits of the DOR's argument, we make
the following observation regarding the District Court's scope of
review pursuant to 5    2-4-704, MCA.     That section provides in
relevant part that:
          (2)   . . .  The court may reverse or modify the
     decision if substantial rights of the appellant have been
     prejudiced because:


          (b) findings of fact, upon issues essential to the
     decision, were not made although requested.
     In this case, the District Court's reversal of the STAB was
justified on the basis of this provision alone.        When he first
remanded this case to the STAB, Judge Henson instructed the STAB to
make specific findings of fact which supported its decision.
However, other than those findings which related to realty transfer
certificates, the STAR made no findings which supported its
decision. After six and one-half years of litigation and still no
satisfactory explanation for the STAB'S decision, the District
Court was fully justified when it concluded that substantial rights
of the taxpayer were prejudiced because of the STAB'S refusal to
support its decision factually.
      With regard to the DOR's argument that evidence of cost alone
was   sufficient       to   support     its   appraisal,   we    note     that
5 15-8-111(1), MCA, establishes the basis upon which all property
must be assessed in Montana.          It provides that:

      (1) All taxable property must be assessed at 100% of its
      market value except as otherwise provided.
           (2) (a) Market value is the value at which p : e t
                                                       rpry
      would change hands between a willing buyer and a willing
      seller, neither being under any compulsion to buy or to
      sell and both having reasonable knowledge of relevant
      facts.
      It   is   true    that   the     very   next   paragraph    found    at
5 15-8-111(2) (b), MCA, states that the DOR may use "construction
costs as one approximation of market value." However, we hold that
evidence of construction costs alone, without consideration of any
market factors, does not satisfy the requirement of 5 15-8-111(1),
MCA, that the assessed value equal market value.            To the extent
that this holding is inconsistent with our decision in NonizwestLud

v. State Tax Appeal Board (1983), 203 Mont. 313, 661 P.2d 44, that
decision is overruled.
     Market value depends on the price that a willing buyer would
pay a willing seller, taking into consideration relevant facts.
Presumably, relevant facts would include the market and economic
conditions prevailing at the time of sale.
     Logic tells us that there may not be a buyer willing to
purchase every 30-unit apartment complex that contractors in
Missoula can build at the cost for which they are constructed.   If
there was, there would be no reason to ever end construction of new
apartment houses.
     We further hold that when market data is relied on by the DOR
to establish assessed value of real property in Montana, and when
the taxpayer whose property     is being     assessed appeals that
assessment and requests copies of the RTCs pertaining to the
properties that are being compared, they must be produced according
to the procedures set forth in our decision in O'Neill, whether or

not they were the source from which the DOR arrived at the values
of comparable sales.   These documents were created by statute to
provide sales price data which would promote uniformity of real
estate assessments in an efficient, economic, and reliable manner.
The DOR is required by statute to retain the RTCs as records.
Because they are the most uniform and efficient way for the DOR to
establish market value, they are also the most effective and
efficient way for the taxpayer to verify the values relied on by
the DOR.   There is no other practical way for the taxpayer to
verify information informally gathered by the appraiser during the
normal course of his duties. Therefore, we conclude that fairness
                                17
and procedural due process require that where market value is
established by the DOR based on sales of comparable property, and
because the DOR is required by statute to keep a specific record of
the consideration for which real property changes hands in Montana,
this information should be provided to a taxpayer who appeals the
appraised value of his or her property.
     In this case, the STAB concluded that the RTCs provided by the
DOR to DeVoe were irrelevant to his appraisal, and for the most
part, did not pertain to those comparable sales on which it relied
to corroborate the appraisal it arrived at through the cost
approach.      Furthermore, no other evidence of market value was
offered by the DOR to rebut the testimony offered by DeVoe to the
effect that his property had not increased in value, but had
probably declined in value since the previous appraisal cycle.
Therefore, we affirm the District Court's conclusion that there was
not substantial evidence to support the STAB'S decision and that it
was, therefore, clearly erroneous.
     As the second part of its first argument, the DOR contends,
relying on our prior decisions in Depaament of Revenue v. Pnxvorz (1983),

2 05 Mont   . 194, 666 P.2d   768, and Departmerzt of Revenue v. Grouse Mountain

Development (1985), 218 Mont. 353, 707 P.2d 1x13, that the District

Court exceeded      its authority when        it arrived at the proper
valuation of DeVoe's properties, instead of remanding his appeal to
the STAB for that purpose.         However, the facts in this case are
distinguishable from the facts in the cases relied on by the DOR.
In both P m o n and GrouseMountaifz. we found fault with district courts

which assumed the fact-finding function by resolving factual issues
related to taxable valuation. In this case, the District Court did
not impose its own opinion regarding taxable valuation.             The
District Court held that, as a matter of law, the DOR presented no
credible evidence to justify increasing the appraised value of
DeVoe's property by an amount in excess of 100 percent from one
appraisal cycle to the next.      The District Court held that neither
did the DOR offer evidence that the appraised value of DeVoe's
property should be increased at any other rate, and therefore, that
the appraised value      should    remain at the amount previously
established by the DOR based on its own appraisal.
     The approach taken by the District Court is similar to the
approach adopted by this Court in Depumenr of Revenue v. Burron (1990),

245 Mont. 100, 115, 799 P.2d 533, 542, where we held that:
          (3) The valuation for tax year 1990 of the
     residential property of Patricia C. Barron in Area 2.1
     established by STAB should be and is hereby reversed, and
     STAB and all agents of the DOR shall fix the appraised
     value of said residential property of Patricia C. Barron
     at the valuation which was obtained in the tax year 1989.
     We conclude that the District Court did not err when it
ordered the DOR to establish the appraised value of DeVoe's
property in the amount at which it had been appraised by the DOR
prior to 1986.
                                   11.

     Did the District Court err when it ordered the DOR to apply
the assessed value of DeVoelsproperty for 1986 to subsequent years
during the same appraisal cycle?
     The BOR contends that because this appeal, which began in 1986
and was finally resolved in 1991, dealt only with the appraised
value of DeVoets property for that year, that the District Court
should not have considered subsequent years during the same
appraisal cycle     because    DeVoe     had   not    fully   exhausted   his
administrative remedies by appeals to the County Board, then to the
STAB, then to the District Court for each subsequent year. The W R
relies on our decision in DeVoe ti. Missouiu &u?zly        (1987), 226 Mont.

372, 735 P.2d 1115, for the principle that administrative remedies
had to be exhausted for each year during which taxes were paid
under protest.
     DeVoe, however, in the petition which gave rise to the second
District Court decision, alleged that he had attempted to appeal
assessments for years subsequent to 1986 to the County Board and to
the STAB, but that those boards would not consider his appeals
because of an administrative rule which made the STAB'S decision
affirming the DOR1s appraisal binding for the remaining years of
the appraisal cycle.     The W R did not deny this allegation.
     We conclude that the prior decision relied on by the DOR is
distinguishable on      its   facts, and       that based     on the DOR1s
administrative   rule    2.51.403(2),      ARM,      the   District   Court's
conclusion was correct as a matter of law.
                                   20
        In the earlier DeVoe decision, the taxpayer had filed a

complaint in the District Court challenging the appraisal of his
real property     for the year       1985, even   though he    had   not
administratively appealed the appraisal of his property for that
year.    We held that because the complaint did not allege that he
had   exhausted his administrative appeals, the complaint was
inadequate on its face. However, in this case, DeVoe alleged that
he had paid taxes under protest for 1986 and each year subsequent
thereto, and that his taxes during each year were based on the same
appraised valuation    which   was    the   subject of   his   original
administrative appeal begun in 1986.
      He also alleged that he had filed appeals during subsequent
years, but that subsequent to their original decisions, both the
County Board and the STAB refused to render a decision in those
appeals pursuant to the DOR's administrative rules which provide
that final decisions of the STAB are binding on all interested
parties for subsequent years during which the same valuations are
applicable.
      The administrative rule referred to in DeVoe1s petition for
review is 2.51.403(2), ARM, which provides as follows:
           With respect to taxable real property and
      improvements thereon, the decision of the state tax
      appeal board shall be final and binding unless reversed
      or modified by the district court upon judicial review.
      If the decision of the state tax appeal board is not
      reviewed by a district court, it is final and binding for
      subsequent tax years unless there is a change in the
      property itself or other circumstances surrounding the
      property which affect its value. Statutory reappraisal
      by the department of revenue pursuant to 15-7-111, MCA,
      is a circumstance affecting the value of real property
      and improvements thereon.
      In this case, the District Court reversed the STAB'S decision
and ordered the DOR to reinstate the appraised value that it had
arrived at prior to the appraisal cycle which began in 1986. That,
then, became the appraised value of DeVoePs properties for 1986,
and according to the DOR's own administrative rules, was binding on
subsequent years during the same appraisal cycle.                    The only
exceptions were for a change in the property itself which affected
its value, or reappraisal by the DOR.               However, there was no
indication in the record that anything changed about the nature of
the property which would have affected its value.            The DOR did not
deny that the same appraised values applied for each year in
question    subsequent to       1986, and     the   DOR's    appraiser, Jim
Fairbanks, t e s t i f i e d t h a t t h e r e would be no reappraisal of DeVoeis
property until 1993.
      Therefore, in this case, DeVoe attempted to exhaust his
administrative appeals but was unable to do so based upon the DORIS
administrative rule which precluded appeals during the same
appraisal cycle.       Furthermore, pursuant to that same rule, the
appraised value which the M)R was ordered to reinstate by the
District Court was applicable to the subsequent years in question,
and therefore, applied as a matter of law as a result of the
District Court's decision which we have affirmed. To require DeVoe
to exhaust more       administrative remedies than he has already
exhausted would be a useless act, and neither law nor equity
require useless acts.
     We affirm the District Court's        application of the 1986
appraisals of DeVoe's property to subsequent years during the same
appraisal cycle.
                                  111.
     Did the District Court err when it ordered the Missoula County
Treasurer to provide DeVoe with a refund for 1986 and subsequent
years during the same appraisal cycle?
     The DOR contends that neither the County Treasurer nor the
County was served with a copy of DeVoe's second petition, and
therefore, pursuant to   §   15-1-402, MCA, the District Court had no

authority to order the County to refund taxes to DeVoe.
     DeVoe contends that the County was given notice of his
petition for review when it was served with his first petition and
that the ultimate decision of the District Court ordering repayment
of taxes paid under protest was simply a result of the same appeal
process begun in 1986.         DeVoe contends that if there was a
requirement of notice to the County, it was satisfied when the
County was served with his first petition.
     Section 15-1-402, MCA, does not require notice to the county
or the county treasurer when an appeal is filed pursuant to
5 15-2-303, MCA.   It requires that a taxpayer who pays taxes under
protest must specify to the county treasurer the specific grounds
for the protest when the taxes are paid and before the taxes are
due.     That statute then provides, at 5 15-1-402(6) (b), MCA, as
follows:
            If the action is finally determined adversely to the
       department of revenue, a county, a municipality, or the
       treasurer of the county or a municipality, then the
       treasurer shall, upon receiving a certified copy of the
       final judgment in the action from the state tax appeal
       board or from the district or supreme court, as
       appropriate, if the final action of the state tax appeal
       board is appealed in the time prescribed, refund to the
       person in whose favor the judgment is rendered the amount
       of the protested portions of the property tax or fee
       deposited in the protest fund, and not released pursuant
       to subsection (5), as the person holding the judgment is
       entitled to recover, together with interest from the date
       of payment under protest . , =  .
       The only reference in the appeal statutes to notice to the
treasurer or the county is found at 5 15-2-303 (3), MCA, which
provides as follows:
            If the judicial review involves a taxpayer who is
       seeking a refund of taxes paid under protest, the
       appealing party shall provide a copy cf the petition to
       the treasurer of the county in which the taxable property
       or some portion of it is located, but failure to do so
       has no effect on the judicial review.
       The plain language of the only statute which required DeVoe to
provide the County or its Treasurer with notice, provides that lack
of notice is not fatal to the relief sought on review.
       Therefore, we conclude that even if a second notice to the
County was required, DeVoe's failure to provide that notice did not
legally deprive him of the right to a refund of those taxes he paid
under protest pursuant to fi 15-1-402, MCA.
                                 IV.
       Did the District Court err when it awarded attorney fees to
DeVoe?
      As part of its decision, the District Court concluded that the
DOR had acted in bad faith by taking inconsistent positions with
regard to the relevance of RTCs, and therefore, that DeVoe was
entitled to recover his attorney fees pursuant to 5 25-10-711, MCA.
That section allows the court to award attorney          fees to a
successful person in any action against the State if he or she
prevails and the court finds that the State's defense or claim was
frivolous or pursued in bad faith.
      The W R contends that by awarding attorney fees the District
Court exceeded the issues framed by the parties because DeVoe
neither requested attorney fees in his petition nor in any of the
written briefs filed with the District Court. Furthermore, the DOR
argues that its position could not have been in bad faith when it
was upheld by the Missoula County Tax Appeal Board, by the STAB on
two separate occasions, and on one occasion by the District Court.
The District Court, acting through Judge Henson, only changed its
position based upon this Court's decision in DeVoe v. Department of

Revenue,   759 P.2d at 991, which was decided subsequent to the

District Court's original decision.
      DeVoe responds that attorney fees under the circumstances in
this case are specifically authorized by 5 25-10-711, MCA, and were
appropriate based upon the DOR's inconsistent legal and factual
arguments. He also contends that the District Court was authorized
to impose an award of attorney fees under its equitable power when
justice so requires.
     We have reviewed the record on appeal and understand the
District Court's frustration with the DOR over what appear to be
inconsistent positions at various stages of this appeal, and the
incredible delay which has occurred as a result of these seemingly
contradictory positions. We also agree that when attorney fees are
sought in tax appeals, and the necessary facts are established,
they may be awarded pursuant to 5 25-10-711, MCA.     However, we
conclude that when relief that is as substantial as the attorney
fees which are at issue in this case is sought by a party to
litigation, the other party is entitled to prior notice that such
relief is being sought and an opportunity to address the merits of
granting such relief.    Therefore, based on DeVoeis failure to
notify the DOR that he, in fact, sought an award of attorney fees
in either his petition or his arguments to the District Court, and
based upon the DOR's lack of opportunity to address the issue of
attorney fees prior to the time they were awarded, we reverse that
part of the District Court's judgment.
     We reverse the District Court's award of attorney fees, and
otherwise affirm the order, findings, and judgment of the District
Court in all respects. This case is remanded to the District Court
for entry of judgment consistent with this opinion.
we concur:




                 . A.   Turnage
             i
Justice Karla M. Gray, specially concurring.

       I specially concur in the result reached by the Court on issue
one.
       I would affirm the District Court on that issue based on      !
                                                                     j   2-
4-504(2) (b), MCA, which allows the reviewing court to reverse a
decision of STAB if substantial rights of an appellant have been
prejudiced because findings of fact, on issues essential to the
decision, were not made, although requested.          Here, two hearings
were held by STAB. On judicial review after the first hearing, the
District    Court   directed   STAB    to   hold   another hearing   and,
thereafter, to make specific findings of fact and conclusions of
law in support of its decision. STAB totally failed to comply with
the directive from the court to make specific findings.              As a
result, DeVoe has been in litigation for more than six years over
one tax cnallenge.
       It would be unfair and inequitable to DeVoe to permit this
case to drag on any longer because of STAB'S neglect of its duty.
Nor should this Court countenance such responses---or failures to
respond---to district court orders by any agency or arm of state
government, particularly when the adverse impacts would fall on
individual Montana taxpayers. Indeed, the conduct of hoth STAB and
the DOR in this case falls far short of the performance Montanans
are entitled to expect from their government.           I conclude that
DeVoets substantial rights have been prejudiced because of STAB'S
failure to follow the court's order and would affirm the District
Court on that basis.
                                      28
      I also agree with the Court that the District Court correctly
determined that the DOR did not produce substantial credible
evidence in support of its appraisal, even though I disagree with
the Court's rationale in reaching that conclusion.   Here, the DOR
contends that it assessed DeVoe's property using the cost approach
outlined in g 15-8-1(2)(b),     MCA.    Its assessment included a
physical depreciation factor, although no testimony explained or
supported the amount of physical depreciation included in that
assessment. More importantly, the record does not contain evidence
that the DOR considered functional and economic obsolescence in
assessing the property    at   issue, much    less that   it   "fully
           those factors as required by 5 15-8-111(2)(b), MCA.
consideredrr                                                       I
conclude that the failure to present evidence that those factors
were fully considered requires affirming the District Court on the
basis that substantial credible evidence does not support the DOR's
assessment or STAB'S decision upholding that assessment against
DeVoers challenge.     Because the DOR did not comply with the
requirements of   5   15-8-1(2)(b),    MCA,   in assessing DeVoers
property, I do not believe it is necessary to reach the question of
whether the cost approach can be utilized without regard to "market
factors.
       Because the Court does so, however, I must          state my
disagreement with its conclusion that the cost approach---even
assuming all statutory requirements are met---is an insufficient
method of assessing property. It is my view that 5 15-8-111(2)(b),
MCA, does authorize the DOR to use the cost approach on a stand-
alone basis in assessing property.      To me, enactment of that
subsection reflects legislative recognition and approval of the
DOR's long-standing use of the cost approach to market value, while
requiring the purely cost approach to be "softenedw by reductions
in value caused by physical depreciation and        functional and
economic obsolescence.
     Moreover, I am concerned with the Court's departure from the
wisdom of Northwest Land, where we stated that "lilt is not a
judicial function to act as an authority on taxation matters.     We
will not evaluate the advantages and disadvantages of a particular
assessment method as applied to a taxpayer."    661 P.2d at 45.   The
court concludes that the cost approach as defined by 5        15-8-

SSl(2) (b), MCA, does not provide a sufficient basis for property

assessments by the DOR. It does not, however, provide any guidance
as to how the DOR can properly assess property when faced with
circumstances like those in the present case.
     As the record before us reflects, the other common valuation
methods for properties of the kind at issue here are the income
approach and the comparable sales approach.        Here, no income
approach information is of record; indeed, DeVoe's own "expert" did
not have the information necessary to make an assessment on that
basis.   Such information generally would be in the hands of the
taxpayer and unavailable to the DOR absent voluntary submission of
that data by the taxpayer.    In addition, the "comparable salesw
evidence offered by the DOR in this case was properly rejected as
dissimilar and irrelevant by both STAB and the District Court; the
record is clear that no truly comparable sales occurred during the
applicable time period.       I am at a loss to understand how, under
these circumstances, the DOR is to meet its duties in periodically
assessing property if it cannot rely solely on the cost approach
which is, in my view, specifically sanctioned by statute.
     Notwithstanding my differences with the Court, however, I do
agree that the District Court did not err in reversing STAB on the
basis of   § 2-4-704(2)   (b), MCA, and the lack of substantial credible
evidence to support the DORIS assessment.       Thus, I would affirm on
those bases.




Justice Fred J. Weber joins in the foregoing special concurrence of
Justice Karla M. Gray.
                                   December 28, 1993

                             CERTIFICATE OF SERVICE

I hereby certify that the following order was sent by United States mail, prepaid, to the
following named:


DAVID L. NIELSEN, Tax Counsel
Montana Department of Revenue
Office of Legal Affairs
Mitchell Bfdg.
Helena, MT 59620-

Michael W. Sehestedt
Deputy County Attorney
Missoula County Courthouse
Missoula, MT 59802

GEORGE C. DeVOE
Aiiurrlcy ai L a w
310 Higgins Ave.
Missoula, MT 59802


                                               ED SMITH
                                               CLERK OF THE SUPREME COURT
                                               STATE OF MONTANA
