Case Title: STENSVAD v MUSSELSHELL COUNTY

Citation: 

Docket Number: 

State: montana

Court: Montana Supreme Court

Date: 1979-03-01T00:00:00Z

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No. 13492 IN THE SUPREME COURT OF THE STATE OF MONTANA 1978 LARRY D. STENSVAD and MARGARET STENSVAD, M-V ENTERPRISES, INC., a Montana corporation, and FAUNCO, INC., a Montana corporation, Plaintiffs and Appellants, MUSSELSHELL COUNTY, GENO MINNIE, O.S. ELLIS and R . JORGENSON, County Commissioners, ROBERT L. HAGSTROM, County Assessor, and MARGARET A. REIGHARD, County Treasurer, Defendants and Respondents. Appeal from: District Court of the Fourteenth Judicial District, Honorable Nat Allen, Judge presiding. Counsel of Record: For Appellants: Moses, Tolliver and Wright, Billings, Montana Towe, Ball, Enright and Mackey, Billings, Montana Thomas Towe argued, Billings, Montana For Respondents: John L. Pratt, County Attorney, argued, Roundup, Montana Submitted: November 27, 1978 Decided: lVlAj? - ; q 7 o M r . J u s t i c e John Conway Harrison delivered t h e Opinion of t h e Court. P l a i n t i f f s appeal from a judgment of t h e D i s t r i c t Court, Musselshell County, denying t h e i r prayer f o r an order permanently enjoining defendants from i s s u i n g a t a x deed t o c e r t a i n r e a l property f o r f a i l u r e t o pay a portion of a 1971 assessment representing taxes on c a t t l e under the c o n t r o l and i n t h e possession of M-V Enterprises. The c o u r t entered i t s amended findings of f a c t , conclusions of law, judgment and order on June 30, 1976, d i r e c t i n g defendants t o proceed forthwith t o take t a x deed t o t h e r e a l property, now owned by p l a i n t i f f Faunco, Inc. P l a i n t i f f s contend t h a t c e r t a i n of t h e c o u r t ' s findings of f a c t and conclusions of law a r e erroneous and unsupported by t h e evidence, and t h a t , there- f o r e , t h e judgment should be reversed. I n 1971, Larry D. Stensvad w a s a stockholder i n and/or manager of c e r t a i n corporations involved i n various aspects of t h e livestock industry. One of those corporations, M-V Enterprises, among whose p r i n c i p l e shareholders w a s Stens- vad, owned r e a l property i n Musselshell County upon which t h e corporation operated a feedlot. Pursuant t o an agree- ment between M-V Enterprises and t h e L. D. Stensvad C a t t l e Company, c a t t l e belonging t o other individuals w e r e l e f t i n t h e possession and c o n t r o l of M-V Enterprises t o be fed and cared f o r i n preparation f o r marketing. These c a t t l e had been purchased by a separate Stensvad corporation, t h e L. D. Stensvad C a t t l e Company, whose only shareholders w e r e Stens- vad and h i s wife, Margaret. The arrangement was such t h a t L. D. Stensvad C a t t l e Company would buy c a t t l e f o r i n d i v i - dual out-of-state i n v e s t o r s who had contracted with t h e company t o make t h e purchases f o r them. The c a t t l e s o purchased were delivered t o t h e f e e d l o t s of M-V Enterprises f o r c a r e and feeding; t h e L. D. Stensvad C a t t l e Company b i l l e d t h e individual investors f o r t h e i r respective shares of the expenses incurred. Each of t h e cattle involved i n t h i s arrangement c a r r i e d on i t s r i g h t h i p a pitchfork o r "turkey track" brand owned by and r e g i s t e r e d t o t h e L. D. Stensvad C a t t l e Company; on i t s r i g h t shoulder, each bore an unregistered brand, a number, designating i t s individual owner. I n May, 1971, t h e Musselshell County assessor, i n t h e process of compiling d a t a f o r the upcoming t a x assessment, supplied M-V Enterprises with a form which, when completed, i s a record of t h e number of c a t t l e which have been fed during each month of t h e preceding year. The form i s pro- vided i n compliance with s e c t i o n 84-409, R.C.M. 1947, i n e f f e c t a t t h e t i m e of t h e events, which r e q u i r e s t h e county assessor t o obtain from each person a w r i t t e n statement, made under oath, which sets f o r t h a l l t h e taxable property owned by t h a t person o r i n h i s possession o r under h i s c o n t r o l as of a s p e c i f i c t i m e . Each such form contains an a f f i d a v i t which d e c l a r e s t h a t the l i s t i s a f u l l and c o r r e c t statement of t h e property subject t o t a x a t i o n which i s owned, claimed, possessed o r controlled by t h e individual o r business e n t i t y . See s e c t i o n 84-410, R.C.M. 1947. M-V Enterprises returned t o t h e county assessor t h e completed form, which had been signed by Dona McCleary, a s e c r e t a r y employed by t h e corporation. The form showed nothing a s t o t h e ownership of t h e c a t t l e . The assessor, following s t a t u t o r y mandate, s e c t i o n 84- 406(1) and (3), R.C.M. 1947 (Supp. 1971), assessed taxes on 1 / 1 2 of t h e t o t a l number of c a t t l e a g a i n s t M-V Enterprises, t h e p a r t y i n whose possession and under whose c o n t r o l t h e c a t t l e w e r e . The corporation, maintaining t h a t it could n o t be taxed f o r c a t t l e which it d i d n o t own, refused t o pay. either t h e personal property taxes nor t h e r e a l property taxes assessed f o r 1971 a g a i n s t M-V Enterprises w e r e paid, and t h e county, i n 1976, f i n a l l y i n s t i t u t e d proceedings f o r a t a x deed. O n February 18, 1976, p l a i n t i f f s , a l l e g i n g t h a t no s t a t u t o r y a u t h o r i t y e x i s t e d under which t h e county le- g a l l y could assess a g a i n s t them taxes on c a t t l e owned by o t h e r individuals, petitioned the D i s t r i c t Court f o r an order enjoining t h e defendants from taking t a x deed unless t h e t o t a l amount, $27,990.39, w a s paid by March 10, 1976. Faunco, Inc. has joined a s a p a r t y p l a i n t i f f , because it i s t h e present owner of t h e r e a l property s u b j e c t of t h i s a c t i o n , I n November, 1971, M-V Enterprises, by v i r t u e of an unrecorded assignment from L. D. and Margaret Stensvad, owned t h e r e a l property s u b j e c t of these t a x deed proceed- ings. A t t h a t t i m e , a Roundup bank declared L. D. Stensvad and M-V Enterprises i n d e f a u l t on c e r t a i n o b l i g a t i o n s and foreclosed on t h e property. Roundup C a t t l e Feeders, a corporation uninvolved i n t h i s l i t i g a t i o n and i n which none of t h e p a r t i e s hereto appears t o have an i n t e r e s t , bought t h e property a t a foreclosure s a l e . Subsequently, i n June, 1975, Faunco, Inc., purchased t h e property from Roundup C a t t l e Feeders. Although apparently n o t a shareholder i n Faunco, Inc., L. D. Stensvad i s i t s general manager and i t s r e g i s t e r e d agent. Faunco, Inc,, has tendered payment of t h e outstanding taxes owed on t h e r e a l property, exclusive of t h e amounts levied f o r t h e c a t t l e owned by t h e individual investors; t h e county twice r e j e c t e d t h e o f f e r of t h a t payment. Faunco r e q u e s t s t h a t t h e county be ordered t o make an assessment which does not include taxes on t h e c a t t l e , s o t h a t t h e corporation may pay t h a t amount and thereby c l e a r i t s t i t l e of t h e t a x l i e n . O n A p r i l 16, 1976, t h e Honorable Nat Allen presided over a hearing on t h e m e r i t s of t h e case. I n its amended f i n d i n g s of f a c t , conclusions of law, and judgment, t h e c o u r t concluded t h a t t h e t a x e s w e r e lawfully assessed and denied p l a i n t i f f s any r e l i e f . Notice of appeal w a s timely f i l e d and o r a l argument heard by t h i s Court. Although t h e D i s t r i c t Court properly decided t h a t t h e county a s s e s s o r c o r r e c t l y assessed t h e taxes due on t h e c a t t l e t o M-V Enter- p r i s e s , i n whose possession and c o n t r o l t h e c a t t l e w e r e a t t h e t i m e of assessment, w e r e v e r s e t h a t p o r t i o n of t h e determination which, i n e f f e c t , precludes Faunco from paying a l l taxes and p e n a l t i e s due, exclusive of those assessed a g a i n s t t h e c a t t l e . P l a i n t i f f s a l l e g e t h a t numerous e r r o r s a r e t o be found i n t h e c o u r t ' s f i n d i n g s and conclusions, b u t only one of those, whether t h e county a s s e s s o r acted properly, i n con- formity with s e c t i o n 84-406, R.C.M. 1947 (Supp. 1971), i n assessing t h e t a x e s due on t h e cattle t o M-V E n t e r p r i s e s , m e r i t s consideration. Section 84-406, R.C.M. 1947 (Supp. 1971), c o n t r o l l i n g a t t h e time of t h e events complained of by p l a i n t i f f s , reads i n p e r t i n e n t p a r t : " (1) The assessor must, between t h e f i r s t Monday of March and t h e second Monday of J u l y i n each year, a s c e r t a i n t h e names of a l l t a x a b l e inhabi- t a n t s , and a s s e s s a l l property i n h i s county sub- j e c t t o taxation, except such a s i s required t o be assessed by t h e s t a t e board of e q u a l i z a t i o n , and must a s s e s s such property t o t h e persons by whom it was owned o r claimed, o r i n whose posses- s i o n o r c o n t r o l it w a s a t 12 midnight of t h e f i r s t Monday of March next preceding. . . The procedure provided by t h i s s e c t i o n s h a l l not apply to: " (b) Livestock being -- fed i n feeding pens o r -- enclosures which may -- by subdivision (3) of t h i s --- s e c t i o n be assessed on -- an average inventory basis. C r e d i t s =st be assessed a s provided i n s e c t i o n 84-101, subdivision 6." Subdivision ( 3 ) s t a t e s how such livestock s h a l l be assessed: " ( 3 ) The assessed value of livestock being fed i n feeding pens o r enclosures on t h e f i r s t Monday i n March may be computed by adding t h e value of l i v e s t o c k more than s i x (6) months of age being fed on t h e l a s t day of each month s i n c e t h e l a s t assessment d a t e and dividing t h e s u m by twelve ( 1 2 ) ." The s t a t u t e i s w r i t t e n i n t h e d i s j u n c t i v e , mandating t h e assessor t o assess a l l taxable property i n h i s county e i t h e r t o t h e persons by whom it w a s owned o r claimed -- o r i n whose possession - o r c o n t r o l -- it was a s of midnight of t h e f i r s t Monday of March. It i s c l e a r t h a t t h e assessor acted prop- e r l y i n assessing t o M-V Enterprises, i n whose possession and c o n t r o l t h e cattle w e r e , taxes on t h e c a t t l e . P l a i n t i f f s have sought an injunction pursuant t o s e c t i o n 84-4505, R.C.M. 1947, now s e c t i o n 15-1-405 MCA. That s t a t - u t e s t a t e s : "No injunction must be granted by any c o u r t o r judge t o r e s t r a i n t h e c o l l e c t i o n of any t a x o r any p a r t thereof, nor t o r e s t r a i n t h e s a l e of any property f o r t h e nonpayment of taxes, except: "1. Where t h e t a x , o r t h e p a r t thereof sought t o be enjoined, i s i l l e g a l , o r i s n o t authorized by law. I f t h e payment of a p a r t of a t a x i s sought t o be enjoined, t h e o t h e r p a r t must be paid be- f o r e an a c t i o n can be commenced. "2. Where t h e property i s exempt from taxation." Although they a l l e g e a t various t i m e s t h a t t h e tax assess- ment here i s both i l l e g a l and not authorized by law, plain- t i f f s o f f e r no l e g a l arguments i n support of t h a t position. Obviously t h e tax i s authorized by l a w . The s t a t u t e , sec- t i o n 84-406, R.C.M. 1947 (Supp. 1971), speaks f o r itself. W e p o i n t o u t i n passing t h a t such s t a t u t e s have long s i n c e passed c o n s t i t u t i o n a l muster. A s a leading a u t h o r i t y observed over f i f t y years ago: " S t a t u t e s sometimes provide t h a t t a n g i b l e per- sonal property s h a l l be assessed wherever i n t h e s t a t e it may be, e i t h e r t o t h e owner himself o r t o t h e agent o r o t h e r person having it i n charge; and t h e r e i s no doubt of t h e r i g h t t o do t h i s , whether t h e owner i s r e s i d e n t i n t h e s t a t e o r not. [ C l a t t l e and sheep may be required by t h e s t a t u t e t o be assessed where they a r e kept o r where they have been taken t o graze o r t o be fed . . ." 3 T. Cooley, --- The Law of Taxation §lo71 (4th ed. 1924). I t has been the general r u l e since t h e t u r n of t h e century t h a t t h e l e g i s l a t u r e has t h e power t o adopt a mode of assessment such t h a t property may be assessed t o t h e p a r t y i n possession of it. The North Dakota Supreme Court declared: "Indeed, t h e necessity f o r speedy and c e r t a i n methods of producing revenue f o r governmental support i s s o g r e a t t h a t t h e l e g i s l a t u r e s of many s t a t e s have declined t o e n t e r i n t o an inves- t i g a t i o n of t i t l e s f o r t h e purpose of taxation, p a r t i c u l a r l y i n reference t o property of a s h i f t - ing nature, and have, accordingly, provided f o r assessments a g a i n s t t h e p a r t y having t h e posses- s i o n and c o n t r o l upon some s p e c i f i e d date. Such enactments have been repeatedly before t h e c o u r t s , and have been uniformly upheld. Indeed, we a r e c i t e d t o no case which has denied t h e r i g h t of a s t a t e t o enforce t h i s method of assessment." Minneapolis & Northern Elevator Co. v. T r a i l 1 County (1900), 9 N.D. 213, , 82 N.W. 727, 728, and cases subsequently c i t e d . W e , too, have been c i t e d t o no case which has denied t h e r i g h t of a state t o enforce t h e method of assessment which our l e g i s l a t u r e has seen f i t t o adopt. We, too, a r e of t h e opinion t h a t "'"possessory c o n t r o l of property i s s u f f i c i e n t t o a u t h o r i z e i t s assessment t o t h e possessor o r keeper of i t . " ' " Minneapolis & Northern Elevator Co. v. ~ r a i l l County, 82 N.W. a t 729. Furthermore, "[wle a r e convinced t h a t t h e l e g i s l a t u r e had t h e r i g h t t o a c t upon evidence of ownership afforded by possession, and f o r t h e purposes of t a x a t i o n t o make t h e presumption a r i s i n g there- from conclusive, and t o provide, t h e r e f o r e , f o r t h e assess- ment and t a x a t i o n of [ c a t t l e ] t o t h e p a r t y i n possession i n t h e manner and form a s provided by t h e a c t i n question." 82 N.W. a t 731. Because t h e t a x i s both authorized and l e g a l , injunc- t i o n w i l l n o t lie. The D i s t r i c t Court properly refused t o g r a n t an i n j u n c t i o n on t h a t b a s i s . I n passing, w e note t h a t i n a previous year, M-V Enter- p r i s e s gave t h e county a s s e s s o r ' s o f f i c e a list of t h e i n d i v i d u a l s who owned t h e c a t t l e . The assessments i n t h a t year apparently were made t o t h e i n d i v i d u a l s and n o t t o M-V Enterprises. There i s c o n f l i c t i n g testimony a s t o whether t h a t information was provided i n 1971. The county o f f i c i a l s claim t h a t t h e corporation d i d n o t f u r n i s h t h e information, s o t h e a s s e s s o r , a c t i n g i n a reasonable and l e g a l manner, assessed t h e t a x a g a i n s t M-V ~ n t e r p r i s e s , i n whose posses- s i o n and c o n t r o l t h e c a t t l e w e r e . The assessment was n o t made t o t h e L. D. Stensvad C a t t l e Company, whose r e g i s t e r e d brand was worn by each of t h e c a t t l e , even though it is prima f a c i e evidence t h a t t h e person o r corporation, i n whose name a brand i s of record, i s t h e owner of a l l animals bearing t h e brand i n t h e p o s i t i o n and on t h e species s t a t e d i n the c e r t i f i c a t e of record. Section 46-606, R.C.M. 1947, now s e c t i o n 81-3-105 MCA. The a s s e s s o r , of course, could n o t r e l y on t h e numerical brand, which was n o t r e g i s t e r e d . N o o b l i g a t i o n i s imposed on t h e a s s e s s o r t o t r a c k down t h e "true" owner of t h e c a t t l e . The o b l i g a t i o n of s e c t i o n 84- 406, R.C.M. 1947 (Supp. 1971), t o a s s e s s t o t h e person i n whose possession o r c o n t r o l t h e property was, had been f u l f i l l e d . Having cracked t h e s h e l l , w e t u r n now t o t h e n u t of t h e problem, determination of whether Faunco, I n c . , i s obliged t o pay t a x e s assessed on t h e c a t t l e . C e r t a i n s t a t u t e s which a r e determinative of t h i s i s s u e , have been overlooked. Those s t a t u t e s a r e s e c t i o n s 84-3807 and 84-3808(a), R.C.M. 1947, now r e s p e c t i v e l y s e c t i o n s 15-16-401 and 15-16-402(1) MCA: "84-3807. Tax o p e r a t e s a s judgment -- o r l i e n . Every t a x has t h e e f f e c t o f a judgment a g a i n s t t h e person, and every l i e n c r e a t e d by t h i s t i t l e -- has t h e f o r c e and e f f e c t of an execution duly -- -- l e v i e d a g a i n s t a l l personal property -- i n t h e possession of -- t h e person assessed -- from and a f t e r t h e d a t e t h e assessment i s made. . ." --- -- "84-3808. -- Tax on personal property -- l i e n on r e a l t y --separate assessment. (a) Every --- t a x due upon personal property - - i s a p r i o r l i e n upon any o r a l l ----- of -- such property, which l i e n s h a l l have precedence over any o t h e r l i e n , claim o r demand upon such property, and except a s h e r e i n a f t e r provided, every t a x upon personal property i s a l s o 5 l i e n -- upon t h e real property of t h e owner t h e r e o f , from -- --- and a f t e r 1 2 m. of t h e f i r s t Monday i n March i n each year." Thus, t h e t a x due on t h e personal property, t h e c a t t l e , i s a l i e n on t h a t property, s e c t i o n 84-3807, R.C.M. 1947, and t h e t a x upon t h a t personal property i s a l i e n upon t h e real property of t h e owner t h e r e o f , s e c t i o n 84-3808, R.C.M. 1947. Because t h e c a t t l e have long s i n c e gone t o t h a t g r e a t roundup i n t h e sky, t h e l i e n on t h e c a t t l e per - se has evap- orated. I t has n o t evaporated a s a g a i n s t t h e r e a l property of t h e owners of t h e c a t t l e , however. I t does not appear of record t h a t Faunco, Inc., w a s owner of any of t h e c a t t l e . Therefore, a t a x upon t h e c a t t l e would n o t o p e r a t e a s a l i e n on t h e r e a l property of Faunco, and Faunco i s n o t o b l i g a t e d t o pay t h e personal property t a x e s assessed a g a i n s t t h e c a t t l e . Faunco's demand t h a t t h e county accept payment of t h e t a x e s and p e n a l t i e s due, exclusive only of those assessed a g a i n s t t h e cattle, i s a p p r o p r i a t e l y made. The county may n o t look t o Faunco, Inc., f o r payment of t h e taxes and p e n a l t i e s due on t h e cattle, b u t must seek payment, under t h e t e r m s of t h e s t a t u t e , from those who w e r e owners of t h e c a t t l e . To t h a t e x t e n t t h e judgment i s reversed and t h e county enjoined from taking t a x deed t o t h e real property owned now by Faunco, Inc., upon i t s payment of a l l moneys, exclusive of t h e t a x e s on t h e c a t t l e , due t h e county. W e concur: