Case Title: DEPT OF REVENUE v DAVIDSON CATTLE

Citation: 

Docket Number: 80-292

State: montana

Court: Montana Supreme Court

Date: 1980-12-30T00:00:00Z

Document:
No. 8 0 - 2 9 2 I N THE SUPRE1F;E COURT OF THE STATE OF MONTANA 1 9 8 0 THE DEPARTMENT OF REVENUE OF THE STATE OF MONTANA, P e t i t i o n e r and A p p e l l a n t , DAVIDSON CATTLE COMPANY, R e s p o n d e n t and R e s p o n d e n t . a1 f r o m : D i s t r i c t C o u r t of T h e T h i r t e e n t h J u d i c i a l D i s t r i c t , I n and for t h e C o u n t y of B i g H o r n , T h e H o n o r a b l e D i a n e G. B a r z , Judge presiding. C o u n s e l of R e c o r d : F o r A p p e l l a n t : T h o m a s A. P o u l i o t , T a x C o u n s e l , D e p t . of R e v e n u e , H e l e n a , Montana F o r R e s p o n d e n t : D a v i d s o n , V e e d e r , B a u g h , B r o e d e r & P o p p l e r , B i l l i n g s , Montana S u b m i t t e d on B r i e f s : O c t o b e r 2 3 , 1 9 8 0 D e c i d e d : D E ~ 3 Y & ' C l e r k M r . Chief J u s t i c e Frank I. H a s w e l l d e l i v e r e d t h e Opinion of t h e C o u r t . The Big Horn County District Court e n t e r e d a d e f a u l t judgment a g a i n s t t h e S t a t e Tax Appeal Board (STAB) and sub- s e q u e n t l y denied t h e Montana S t a t e Department of Revenue ' s (Department) motion to set t h e d e f a u l t a s i d e . The Department a p p e a l s . T h i s c o n t r o v e r s y commenced i n 1978 when t h e Department's C o r p o r a t e Tax D i v i s i o n conducted an a u d i t of Davidson Cattle Company's state c o r p o r a t e l i c e n s e t a x r e t u r n s f o r t h e y e a r s 1972 t h r o u g h 1976. Following t h e a u d i t , t h e Department a s s e s s e d t h e t a x p a y e r an a d d i t i o n a l $10,525.00 i n t a x e s and i n t e r e s t . The t a x p a y e r p r o t e s t e d t h e a d d i t i o n a l a s s e s s m e n t b e f o r e t h e Department. The Department denied t h e p r o t e s t on September 1 3 , 1978. An a p p e a l was t i m e l y f i l e d w i t h STAB. Following a h e a r i n g , STAB e n t e r e d its f i n d i n g s of f a c t , c o n c l u s i o n s of l a w and f i n a l o r d e r a f f i r m i n g t h e Department's d e c i s i o n on O c t o b e r 3, 1979. On October 22, 1979, t h e t a x p a y e r f i l e d a p e t i t i o n f o r j u d i c i a l review of t h e STAB d e c i s i o n i n t h e Big Horn County District C o u r t . On O c t o b e r 23, 1979, t h e t a x p a y e r mailed a copy o f t h e summons and p e t i t i o n to t h e a t t o r n e y who r e p r e s e n t e d t h e Department a t t h e STAB h e a r i n g ; on O c t o b e r 29, 1979, a copy of t h e summons and p e t i t i o n was served upon STAB. Taxpayer asserts i n its b r i e f t h a t its a t t o r n e y c o n t a c t e d a STAB member i n e a r l y December on s e v e r a l o c c a s i o n s to inform STAB t h a t an answer to its p e t i t i o n had been due on November 19, 1979. The STAB m e m b e r w a s r e q u e s t e d t o d i s c u s s t h e matter w i t h Helen P e t e r s o n , c h a i r p e r s o n of STAB, and w i t h t h e a t t o r n e y repre- s e n t i n g t h e Department. The Department's memorandum f i l e d w i t h t h e D i s t r i c t Court on its motion to set a s i d e t h e d e f a u l t judgment a d m i t s t h a t t h e Department had knowledge of t h e t a x p a y e r ' s i n t e n t to t a k e a d e f a u l t . I t a p p e a r s t h a t t h e Department ' s a t t o r n e y c o n t a c t e d t a x p a y e r ' s counsel p r i o r to a d e f a u l t being t a k e n and s t a t e d t h a t " n o t i c e and s e r v i c e n upon t h e Department were r e q u i r e d . On December 21, 1979, t h e t a x p a y e r mailed a motion f o r d e f a u l t to t h e C l e r k of t h e D i s t r i c t Court, t h e Department's a t t o r n e y and to t h e c h a i r p e r s o n of STAB. On December 24, 1979, t h e C l e r k of Big Horn County District Court e n t e r e d t h e d e f a u l t o f STAB. On J a n u a r y 30, 1980, t h e District Court e n t e r e d a d e f a u l t judgment a g a i n s t STAB f o r its f a i l u r e to answer or a p p e a r . The judgment f u r t h e r s t a t e d t h a t STAB'S f i n a l o r d e r w a s r e v e r s e d and t h a t t h e t a x p a y e r owed no a d d i t i o n a l c o r p o r a t i o n l i c e n s e t a x to t h e S t a t e f o r t h e y e a r s i n q u e s t i o n . The C l e r k of t h e D i s t r i c t Court mailed n o t i c e of e n t r y of t h e d e f a u l t judgment t o STAB and t h e Department on J a n u a r y 31, 1980. On A p r i l 14, 1980, t h e Department f i l e d a motion to set a s i d e t h e d e f a u l t judgment based on l a c k of j u r i s d i c t i o n . The District Court e n t e r e d its o r d e r denying t h e Department's motion on J u n e 24, 1980. The Department a p p e a l s . The f i r s t i s s u e p r e s e n t e d is whether Davidson Cattle Co. complied w i t h p r o c e d u r a l r e q u i r e m e n t s i n s e e k i n g j u d i c i a l review. The Department c o n t e n d s t h a t Davidson Cattle Co. f a i l e d t o comply w i t h s e c t i o n 2-4-702, MCA, and t h e r e b y f a i l e d t o o b t a i n j u r i s d i c - t i o n o v e r t h e Department. The t a x p a y e r a s s e r t s t h a t s e c t i o n 15-2-303, MCA, is t h e a p p l i c a b l e s t a t u t e . S e c t i o n 2-4-702, MCA, is c o n t a i n e d i n Montana's A d m i n i s t r a t i v e Procedure A c t and p r o v i d e s p r o c e d u r e s f o r i n i - t i a t i n g j u d i c i a l review of agency d e t e r m i n a t i o n s i n c o n t e s t e d cases. S e c t i o n 15-2-303, MCA, on t h e o t h e r hand, p r o v i d e s a p p e a l p r o c e d u r e s f o r i n i t i a t i n g j u d i c i a l review of d e c i s i o n s of STAB. These s t a t u t e s p r o v i d e i n p e r t i n e n t p a r t , as f o l l o w s : "2-4-702. I n i t i a t i n g j u d i c i a l r e v i e w o f con- t e s t e d cases. (1) ( a ) A p e r s o n who h a s e x h a u s t e d a l l a d m i n i s t r a t i v e remedies a v a i l a b l e w i t h i n t h e agency and who is aggrieved by a f i n a l d e c i s i o n i n a c o n t e s t e d case is e n t i t l e d to j u d i c i a l r e v i e w under t h i s c h a p t e r . T h i s s e c t i o n d o e s n o t l i m i t u t i l i z a t i o n o f o r t h e scope of i u d i - -- L cia1 review a v a i l a b l e u n d e r o t h e r means - o f review, r e d r e s s , r e l i e f , o r t r i a l de novo - pro- vided by s t a t u t e . - " ( b ) A p a r t y who p r o c e e d s b e f o r e an agency under t h e terms of a p a r t i c u l a r s t a t u t e s h a l l n o t be p r e c l u d e d from q u e s t i o n i n g t h e v a l i d i t y o f t h a t s t a t u t e on j u d i c i a l review, b u t such p a r t y may n o t raise any o t h e r q u e s t i o n n o t r a i s e d b e f o r e t h e agency u n l e s s it is shown to t h e s a t i s f a c t i o n of t h e c o u r t t h a t t h e r e was good c a u s e f o r f a i l u r e t o raise t h e q u e s t i o n b e f o r e t h e agency. " ( 2 ) ( a ) P r o c e e d i n g s f o r review s h a l l be i n s t i t u t e d by f i l i n g a p e t i t i o n i n d i s t r i c t c o u r t w i t h i n 30 d a y s af t e r s e r v i c e of t h e f i n a l d e c i s i o n of t h e agency or, i f a r e h e a r i n g is r e q u e s t e d , w i t h i n 30 d a y s af ter t h e d e c i s i o n t h e r e o n . Except as o t h e r w i s e provided by s t a t u t e , t h e p e t i t i o n s h a l l be f i l e d i n t h e d i s t r i c t c o u r t f o r t h e county where t h e p e t i - t i o n e r r e s i d e s o r h a s h i s p r i n c i p a l p l a c e of b u s i n e s s o r where t h e agency m a i n t a i n s its p r i n - c i p a l o f f i c e . Copies -- o f t h e p e t i t i o n s h a l l be promptly s e r v e d -- upon t h e agency -- and a l l p a r t i e s o f r e c o r d . 'I (Emphasis added. ) - "15-2-303. J u d i c i a l r e v i e w o f c o n t e s t e d c a s e s . (1) Any p a r t y to an appeal b e f o r e t h e state t a x a p p e a l board who is aggrieved by a f i n a l d e c i - s i o n i n a c o n t e s t e d case is e n t i t l e d to j u d i c i a l r e v i e w under -- t h i s p a r t . " ( 2 ) P r o c e e d i n g s f o r review s h a l l be i n s t i t u t e d by f i l i n g a p e t i t i o n i n d i s t r i c t c o u r t i n t h e c o u n t y wherein t h e t a x a b l e p r o p e r t y or some por- t i o n t h e r e o f is l o c a t e d ( e x c e p t t h e t a x p a y e r may, a t h i s o p t i o n , f i l e i n t h e d i s t r i c t c o u r t o f t h e f i r s t j u d i c i a l d i s t r i c t ) and serving a copy o f t h e p e t i t i o n o n t h e s t a t e t a x appeal- -- -- -- board w i t h i n 30 d a y s af ter s e r v l c e of t h e f i n a l d e c i s i o n of t h e state t a x a p p e a l board or, i f a r e h e a r i n g is r e q u e s t e d , w i t h i n 30 d a y s af t e r t h e d e c i s i o n t h e r e o n . A l l p a r t i e s t o t h e a p p e a l s h a l l c a u s e -- t o b e s e r v e d -- on t h e state t a x a p p e a l board a copy o f a l l p l e a d i n g s -- and documents t h e y -- s h a l l File i n s u c h p r o c e d i n g s . " (Emphasis added . ) - - W e n o t e t h a t s e c t i o n 15-2-303, MCA, is a s p e c i f i c s t a t u t e g o v e r n i n g a p p e a l s from STAB d e c i s i o n s and does not r e q u i r e ser- v i c e of summons or a copy of t h e p e t i t i o n on t h e Department. On t h e o t h e r hand, s e c t i o n 2-4-702, MCA, is a g e n e r a l s t a t u t e c o v e r i n g j u d i c i a l review of d e t e r m i n a t i o n s of any agency which is s u b j e c t to t h e p r o v i s i o n s of t h e Montana A d m i n i s t r a t i v e P r o c e d u r e A c t . I t r e q u i r e s s e r v i c e on t h e agency involved, h e r e t h e Department. A s p e c i f i c s t a t u t e c o n t r o l s o v e r a g e n e r a l s t a t u t e to t h e e x t e n t of a n y i n c o n s i s t e n c y . B r y a n t v. H a l l ( 1 9 7 1 ) , 157 Mont. 28, 33, 482 P.2d 147, 149-150; F i c k e s v. Missoula County ( 1 9 7 0 ) , 1 5 5 Mont. 258, 272, 470 P.2d 287, 294; Monarch Lumber Company v. Haggard ( 1 9 6 1 ) , 139 Mont. 105, 114, 360 P.2d 794, 798; I n re S t e v e n s o n ' s E s t a t e ( 1 9 3 0 ) , 87 Mont. 486, 498, 289 P. 566, 570. Of more s i g n i f i c a n c e i n t h e p r e s e n t case is t h e District C o u r t ' s scope of j u d i c i a l review. The g u i d e l i n e s i n t h i s r e g a r d are provided by s e c t i o n 2-4-704, MCA, which p r o v i d e s as f o l l o w s : 2-4-704. S t a n d a r d s o f review. (1) The review , h a l l be conducted b y T h e c o u r t w i t h o u t a j u r y .nd s h a l l be confined to t h e r e c o r d . I n c a s e s o f a l l e g e d i r r e g u l a r i t i e s i n p r o c e d u r e b e f o r e t h e agency n o t shown i n t h e r e c o r d , proof t h e r e o f may be t a k e n i n t h e c o u r t . The c o u r t , upon r e q u e s t , s h a l l h e a r o r a l argument and r e c e i v e w r i t t e n b r i e f s . " ( 2 ) The c o u r t may n o t s u b s t i t u t e its judgment f o r t h a t of t h e agency as to t h e weight of t h e e v i d e n c e on q u e s t i o n s of f a c t . The c o u r t may a f f i r m t h e d e c i s i o n of t h e agency or remand t h e case f o r f u r t h e r proceedings: he c o u r t may r e v e r s e or modify t h e d e c i s i o n i f s u b s t a n t i a l r i g h t s -- o f t h e a p p e l l a n t -- have b e e n p r e j u d i c e d b e c a u s e t h e a d m i n i s t r a t i v e f i n d i n g s , i n f e r e n c e s , c o n c l u s i o n s , - or d e c i s i o n s are: " ( a ) i n v i o l a t i o n of c o n s t i t u t i o n a l or s t a t u - t o r y p r o v i s i o n s ; " ( b ) i n e x c e s s of t h e s t a t u t o r y a u t h o r i t y of t h e agency; ( c ) made upon u n l a w f u l procedure; " ( d ) a f f e c t e d by o t h e r error of law; " ( e ) c l e a r l y e r r o n e o u s i n view of t h e r e l i a b l e , p r o b a t i v e , and s u b s t a n t i a l e v i d e n c e on t h e whole r e c o r d ; " ( f ) a r b i t r a r y or c a p r i c i o u s or c h a r a c t e r i z e d by abuse of d i s c r e t i o n or c l e a r l y unwarranted e x e r c i s e of d i s c r e t i o n ; or " ( g ) because f i n d i n g s of f a c t , upon i s s u e s e s s e n t i a l t o t h e d e c i s i o n , were n o t made a1 though r e q u e s t e d . I' S e p a r a t e s t a n d a r d s of review f o r STAB d e c i s i o n s are n o t p r o v i d e d w i t h t h e e x c e p t i o n of s e c t i o n 15-2-303 ( 4 ) which states t h a t t h e District Court may p e r m i t a d d i t i o n a l e v i d e n c e not- w i t h s t a n d i n g s e c t i o n 2-4-704(1), MCA. Turning t o t h e d e f a u l t judgment e n t e r e d i n t h e p r e s e n t case, t h e District Court r e v e r s e d STAB'S d e t e r m i n a t i o n and g r a n t e d t h e r e l i e f r e q u e s t e d by t h e t a x p a y e r based on t h e Department's f a i l u r e to answer or a p p e a r . There is no b a s i s f o r t h i s judgment i n t h e r e c o r d , o t h e r t h a n t h e Department's f a i l u r e to a p p e a r . However, t h e f a i l u r e to a p p e a r does not suspend t h e s t a n d a r d s of review. I n s h o r t , t h e District Court was n o t e n t i t l e d t o e n t e r a d e f a u l t judgment r e v e r s i n g STAB w i t h o u t r e v i e w i n g t h e r e c o r d and complying w i t h t h e s t a n d a r d s of review c o n t a i n e d i n s e c t i o n 2-4-704, MCA. The d e f a u l t judgment e n t e r e d by t h e D i s t r i c t Court is v a c a t e d and t h i s case is remanded f o r f u r t h e r p r o c e e d i n g s con- s i s t e n t w i t h s e c t i o n 2-4-704, MCA, and t h i s o p i n i o n . Chief J u s t i c e