Case Title: IN THE MATTER OF THE REFUND APPLICATION OF RICHARD B. BLACK v. TETON COUNTY BOARD OF COUNTY COMMISSIONERS

Citation: 

Docket Number: 88-257

State: wyoming

Court: Wyoming Supreme Court

Date: 1989-06-02T00:00:00Z

Document:
IN THE MATTER OF THE REFUND APPLICATION OF RICHARD B. BLACK v. TETON COUNTY BOARD OF COUNTY COMMISSIONERS1989 WY 127775 P.2d 484Case Number: 88-257Decided: 06/02/1989Supreme Court of Wyoming
IN THE MATTER OF THE 
REFUND APPLICATION OF RICHARD B. BLACK. RICHARD B. BLACK, APPELLANT 
(PETITIONER),

v.

TETON COUNTYBOARD 
OF COUNTYCOMMISSIONERS, APPELLEE 
(RESPONDENT).

Appeal from the District 
Court, TetonCounty, Robert B. Ranck, J. 

David R. Hansen, 
Jackson, for appellant.

Paul O. Vaughn, 
Teton Deputy Co. Atty., Jackson, for 
appellee.

Before CARDINE, C.J., and THOMAS, URBIGKIT, MACY 
and GOLDEN, JJ.

CARDINE, Chief 
Justice.

[¶1.]     Appellee, Teton County 
Board of County Commissioners (County), sitting as the Teton County Board of 
Equalization, granted appellant, Richard B. Black, a refund on excess property 
taxes paid from 1982-1987, but denied him interest on that sum. Appellant 
petitioned the district court for review of the County's decision and now 
appeals from the district court's affirmance.

[¶2.]     We affirm the order of 
the district court.

[¶3.]     During 1981, Mr. Black 
had a home built in TetonCounty. Because the structure had not been 
substantially completed by the beginning of the 1981 tax year, the County, 
consistent with its usual procedure for including such structures on its tax 
rolls, assigned an arbitrary value to the home in its uncompleted state. In the 
late fall of 1981, upon substantial completion of the home, Mr. Black complained 
that this estimated valuation was too high. The County agreed to reassess the 
property. To that end, the County engaged the services of Robert Williams, 
Supervisor of Local Assessments, Ad Valorem Tax Division, Wyoming Department of 
Revenue and Taxation. Mr. Williams determined the value of the home according to 
the procedures and methods set forth in the Wyoming Cost Manual. This 
determination resulted in an assessed value of $39,497 and a tax of 
approximately $2800.

[¶4.]     Asserting that the cost 
manual provided no means to value the many unique and costly features of Mr. 
Black's home, the County objected to Williams' assessment as not representing 
the true value of the home. The value as determined, the County contended, 
improperly relieved Mr. Black of his fair share of the tax burden borne by other 
property owners. To correct that deficiency, the County reassessed the Black 
home based on construction costs. After the preliminary evaluation had been 
completed and adjusted pursuant to a submittal by Mr. Black, the County finally 
assessed the home at a value of $138,201.

[¶5.]     The County's objections 
to Williams' assessment are bolstered by his later deposition testimony, wherein 
he described the difficulties encountered in making that assessment. Although 
the cost manual employs a classification system by which one can value most 
structures, ranging from costly custom homes to the most humble dwelling, the 
classification system contemplates throughout that range the use of average, 
normal, and commonly occurring construction features and materials. Williams 
found the Black home, however, to contain many unique and uncommon features. 
Additionally, he found the materials and workmanship involved in the interior 
finish of the home to be more expensive and of higher quality than that 
contemplated by the highest classification contained in the cost manual. Thus, 
the classification system of the cost manual failed to provide a means for 
adequately evaluating that structure. In such instances, Williams asserted, 
assessors commonly "tacked on" the cost of unusual features to the value as 
assessed according to the manual. He explained that his failure to do so with 
respect to the Black home was due solely to his inability to obtain price 
information on the many unusual features at the time of the assessment. He 
further indicated that the valuation of the Black residence based on 
construction costs of the entire home, as opposed to the mere addition of 
construction costs relating to extraordinary features, was a unique procedure in 
both TetonCounty and the 
state.

[¶6.]     Although this procedure 
nearly tripled his property tax, as compared to Williams' original assessment, 
Mr. Black had been led to believe that his home had been assessed in the same 
manner as all other homes in TetonCounty. Accordingly, he took no further 
action regarding that assessment until 1988, when he initiated proceedings to 
recover the excess property taxes paid from 1982-1987. The Teton County Board of 
Equalization determined in those proceedings that the assessment on Black's home 
and the resulting tax violated state constitutional provisions requiring 
uniformity of assessment and taxation.1 Black was granted a refund of 
$40,524.92 for the excess tax paid but denied interest on that sum. He 
reasserted his claim to interest by way of a petition to the district court for 
review of the County's decision and now appeals from the district court's order 
affirming the denial of interest.

[¶7.]     The district court's 
review of the County's decision was limited by the provisions of W.S. 
16-3-114(c), which provide in pertinent part:

"The reviewing court 
shall:

"(i) Compel agency action 
unlawfully withheld or unreasonably delayed; and

"(ii) Hold unlawful and 
set aside agency action, findings and conclusions found to 
be:

"(A) Arbitrary, 
capricious, an abuse of discretion or otherwise not in accordance with 
law;

"(B) Contrary to 
constitutional right, power, privilege or immunity;

"(C) In excess of 
statutory jurisdiction, authority or limitations or lacking statutory 
right;

"(D) Without observance 
of procedure required by law; or

"(E) Unsupported by 
substantial evidence in a case reviewed on the record of an agency hearing 
provided by statute."

Appellant 
asserts no cogent claim of a constitutional, procedural, or evidentiary 
infirmity in the County's decision. Neither does he cite any statutory or common 
law limitations on the County's authority to deny interest on the refunded tax. 
In fact, he recognizes that Wyoming's property tax statutes are silent 
with respect to the award of interest on tax refunds, and that they do not 
expressly grant the County the power to make such award. We therefore perceive 
appellant's argument to be that the County's denial of interest was arbitrary, 
capricious or an abuse of its discretionary authority to grant him interest. 
More particularly, appellant argues that it is arbitrarily and abusively unfair 
to deny interest to a taxpayer under a statutory scheme which permits the taxing 
authority to collect interest on delinquent tax payments. The following 
quotations from authorities cited by appellant are representative of his 
argument:

"It is presumed that the 
sovereign state, in dealing with its citizens, intends to apply the same rules 
of abstract justice as it applies in actions between citizens." State Tax 
Commission v. United Verde Extension Mining Co., 39 Ariz. 136, 146, 4 P.2d 395, 398, reh. denied [39 Ariz. 331] 6 P.2d 889 
(1931).

"[It] would be 
inequitable to create a special status for the state or its subdivisions whereby 
the county could avoid the payment of interest, but where private parties would 
be required to make such payments." County of Ada 
v. Red Steer Drive-Ins of Nevada, Inc., 101 Idaho 94, 100, 609 P.2d 161, 167 
(1980).

Thus, 
appellant's argument is simply that fairness should be measured by the standard 
of justice which grants ordinary civil litigants equal access to remedies, and 
that it is therefore unfair for the County to receive interest on delinquent 
taxes while denying appellant interest on wrongfully collected 
taxes.

[¶8.]     We have held, however, 
that tax refunds are a matter of legislative grace, and the right to such a 
refund does not exist in the absence of statutory authorization. Atlantic 
Richfield Co. v. Board of CountyCommissioners, 569 P.2d 1267, 1271 
(Wyo. 1977). 
It is readily apparent that the right to interest on such a refund is no less a 
creature of statute. As we have noted in a slightly different but analogous 
context, the award of interest on judgments contravenes the common law, and 
statutes alleged to be in derogation of the common law must be strictly 
construed. Hot Springs County School District # 1 v. Strube Construction Co., 
715 P.2d 540, 548-49 (Wyo. 1986); Pure Gas and Chemical Co. v. Cook, 526 P.2d 986, 993 (Wyo. 1974). We find no reason to depart from these principles in 
appellant's case and will, therefore, strictly construe those statutes which 
provide for the refund of excess property tax payments. Since, as appellant 
concedes, those statutes do not authorize the award of interest on such refunds, 
we hold that appellant has no enforceable right to the interest he seeks. 
Appellant admits that the result reached in this case is consistent with 
decisions from a great many other jurisdictions. The County's denial of that 
interest was not arbitrary, capricious, nor an abuse of its 
discretion.

[¶9.]     Appellant contends, 
nevertheless, that we should, in fairness, adopt a rule allowing taxpayer 
recovery of interest. Were we inclined in that direction, this case would not be 
an appropriate vehicle for that result. Appellant cites much authority which is 
critical of the denial of interest claiming that such result is in derogation of 
principles of fairness and parity which provide ordinary civil litigants with 
equal access to remedies. The facts of this case do not demonstrate unfairness 
or unequal treatment.

[¶10.]  The government's right to interest on its 
tax claims is dependent on the liquidation of its claims. This is consistent 
with the general rule for civil litigants that prejudgment interest is only 
available on liquidated claims. Unlike the case of such litigants, however, the 
government's claims do not become sufficiently liquidated as to accrue interest 
until the taxpayer receives the opportunity for a hearing. Noting the federal 
court's decision in Morrison-Knudsen Co., Inc. v. State Board of Equalization, 
35 F. Supp. 553 (D.Wyo. 1940), this court, in a related case, held that it would 
be inequitable to charge a taxpayer with interest unless he had been afforded 
the opportunity to contest the amount of his tax. Morrison-Knudson Co., Inc. v. 
State Board of Equalization, 58 Wyo. 500, 135 P.2d 927, 936-39 (1943). Because 
the tax in that case was based on the government's valuation of the taxpayer's 
property, a quasi-judicial and discretionary process, we determined that due 
process required a hearing to "fix" the amount of the tax owed. Until the amount 
of his tax was fixed, there was no fair notice of the obligation and no fair 
opportunity to pay the tax and avoid the interest charge. Id. Thus, unlike the 
notice required in a dispute involving only private litigants, the notice a 
citizen receives regarding a government's claim is insufficient to warrant an 
award of interest unless he is given an opportunity for some hearing on the 
matter which fixes or liquidates that claim.

[¶11.]  That is also the case with respect to a 
citizen's claim against the government. In Carton v. Board of Commissioners, 10 
Wyo. 416, 69 P. 1013 (1902), we discussed the statutory duty of the Board of Commissioners to 
direct the state treasurer to refund taxes erroneously or illegally collected. 
We held that the statute in question2 impliedly required the taxpayer to 
apply to the Board for a refund before the government could be held in default 
of its statutory obligation. Id. 69 P.  at 1018. That is, unless the 
taxpayer notifies the government of his claim, no obligation arises to refund an 
erroneously collected tax. It is clear that where the government's obligation 
has not become due it has had no opportunity to avoid either default or the 
accrual of interest through the timely payment of that obligation. Lacking such 
opportunity, the government, like any other litigant, cannot fairly be required 
to compensate the claimant with interest. Indeed, the federal district court in 
Morrison-Knudsen indicated that, even where the government is later obliged to 
refund erroneously collected taxes, it may properly deny the taxpayer interest 
which has accrued on such taxes prior to its receiving notice of the taxpayer's 
claim. That court noted that the denial of interest may invade the taxpayer's 
rights in the sums wrongfully collected. However, the court also indicated that 
such a denial would not offend due process where the taxpayer was provided an 
early opportunity to restrain the collection of those sums. Morrison-Knudsen, 35 F. Supp.  at 557. Such a result is consistent with the notion of fairness to the 
alleged obligor, as that notion is expressed by our discussion in Rissler & 
McMurry Co. v. Atlantic Richfield Co., 559 P.2d 25, 31-34 (Wyo. 1977), and 
Laramie Rivers Co. v. Pioneer Canal Co., 565 P.2d 1241, 1245 (Wyo. 1977). That 
is, prejudgment interest is inappropriate if the party from whom interest is 
sought has been given no opportunity to determine and pay the amount owed and 
thereby avoid the accrual of interest.

[¶12.]  In the present case, appellant had a 
number of procedural alternatives by which he could both challenge the imposed 
tax and determine the amount, if any, of the County's obligation. He could have 
challenged the increase in his assessment for 1982, or any subsequent year, 
under the provisions of W.S. 39-2-302(c), which provides in pertinent 
part:

"The county assessor 
shall notify any person whose property assessment has been increased by the 
county board of equalization of the increase. Any person wishing to contest an 
assessment of his property shall file a statement under oath with the county 
board of equalization specifying the reasons why the assessment is incorrect and 
may appear at either meeting of the board in support of the claim. A county 
board of equalization may receive evidence relative to any assessment and may 
require the person assessed or his agent or attorney to appear before it, be 
examined and produce any documents relating to the assessment. No adjustment in 
an assessment shall be granted to or on behalf of any person who willfully 
neglects or refuses to attend a meeting of a county board of equalization and be 
examined or answer any material question upon the board's 
request."

Additionally, 
appellant could have availed himself of W.S. 39-3-203, which 
provides:

"Within one (1) year 
following an illegal assessment, levy or collection of taxes an action may be 
filed in district court to enjoin the illegal assessment, levy or collection. 
The action shall be against the county assessor in the case of an illegal 
assessment, the governmental entity which levies an illegal levy, the county 
treasurer if the levy is entered on the tax list, or against the governmental 
entity if the taxes were collected and paid to the 
entity."

Appellant failed 
to give the County notice of his claim, thereby depriving the County of the 
opportunity to pay the claim until 1988.

[¶13.]  Appellant contends that, since the County 
has a right to interest, it would be arbitrary and unfair to deny him access to 
that remedy. While interest is indeed available to the County on delinquent 
taxes, the availability of that remedy is contingent upon three factors: the 
amount of that delinquency must be liquidated; the taxpayer must receive notice 
of the claimed delinquency; and the taxpayer must be given an opportunity to 
contest that claim. Appellant's entitlement to interest on his refund should be 
subject to similar conditions. Appellant here does not seek parity with the 
County; he seeks an advantage. The County's denial of that advantage was not 
arbitrary, capricious, nor an abuse of its discretion.

[¶14.]  The order of the district court is 
affirmed.

FOOTNOTES

1 Wyo.Const., Art. 1, § 28 
provides in part that "[a]ll taxation shall be equal and uniform." Wyo.Const., 
Art. 15, § 11 provides in part that all property "shall be uniformly assessed 
for taxation * * *." See Rocky Mountain Oil and Gas Association v. State Board 
of Equalization, 749 P.2d 221 (Wyo. 1987).

2 The statute discussed in 
Carton was the predecessor to W.S. 39-4-101(b), pursuant to which appellant 
initiated his claim for an administrative refund. W.S. 39-4-101(b) provides in 
pertinent part:

"If any person pays any 
tax, or portion thereof, found to have been erroneous or illegal, the board of 
county commissioners shall direct the county treasurer to refund the erroneous 
or illegal payment to the taxpayer."