Title: FIRST NAT BANK v DEPT OF REVENUE

State: montana

Issuer: Montana Supreme Court

Document:

No. 13170 I N THE SUPREME COURT O F THE STATE OF M O N T A N A 1975 FIRST NATIONAL BANK OF LEWISTOWN, M O N T A N A et a l . , P e t i t i o n e r s , -vs - D E P A R T M E N T OF REVENUE O F THE STATE O F M O N T A N A , Respondent. OKIGINAL PROCEEDING: Counsel of Record : For P e t i t i o n e r s : Gough, Booth, Shanahan and Johnson, Helena, Montana Ronald F. Waterman argued, Helena, Montana Luxan, Murf itt and Davis, Helena, Montana Howard J o Luxan Jr. argued, Helena, Montana For Respondent: Joseph R o Massman argued, Helena, Montana Submitted : October 1 7 , 1975 + C 1 , . Decided : : ' 1 F i l e d : M r . J u s t i c e Castles delivered the Opinion of the Court. This i s an action brought under the Uniform Declaratory Judgments Act, section 93-8901, e t seq., R.C.M. 1947, and requests t h i s Court t o assume o r i g i n a l jurisdiction. Both sides agree there a r e no f a c t s i n dispute. This Court agreed t o accept j u r i s - diction. This action a r i s e s out of a dispute between the various banks involved i n t h i s l i t i g a t i o n and t h e Department of Revenue a s t o the interpretation of one s t a t u t e , section 84-308, R,C.M, 1947. Each year banks doing business i n the s t a t e of Montana a r e required t o complete a " ~ a n k Statement f o r Assessment" showing a l l the resources and l i a b i l i t i e s of t h a t bank a s disclosed by i t s books, a t twelve o'clock noon on t h e f i r s t Monday of March. Each of the banks involved i n t h i s action complied with t h a t requirement. Each entered on the Bank Statement f o r Assessment, t h e d o l l a r amount of t h e c a p i t a l stock a s shown on the books of the bank and inserted a s surplus t h e d o l l a r amount of the surplus a s shown on the books of the bank. Further, each bank s e t f o r t h on the statement t h e amount of undivided p r o f i t s and other reserves a s shown on t h e books of the bank. I n each instance, each of the figures supplied t o the Department of Revenue by the individual banks was the figure shown on the books of each bank, a s required by s t a t u t e and regulation. Also, pursuant t o the Department's regulation MAC 42-2.22 (20) - S22410, each bank had i t s bond p o r t f o l i o valued within t h e time designated by regulation. The banks and the Department do not disagree a s t o the amounts entered on each of the banks' Bank Statement f o r Assessment. Nor i s there a question a s t o any other issue involved i n reaching the valuation of stock t o be assessed t o the stockholders of each bank. From the assessment statement f i l e d by each bank, t h e Department made various calculations apportioning the value of stock assessed t o t h e stockholders a s shown on each bank assess- ment statement, between the 7% and 30% categories a s required by section 84-308. The calculations were based upon adjustments made by the Department t o the amount of surplus a s shown on the books of each bank. The Department took the depreciated o r appreciated value of the bond portfolio, applied t h a t . f i g u r e against the amount of undivided p r o f i t as shown on the books of the bank; i f the r e s u l t of those calculations was a negative undivided p r o f i t figure, the Department then adjusted the surplus of each bank by deducting from the surplus figure a s shown on the books of the bank, the negative undivided p r o f i t figure and used t h i s adjusted surplus figure, r a t h e r than the amount of surplus a s shown on the books of each bank. The Department then determined what proportion of t h e value of stock assessed t o the stockholder was t o be c l a s s i f i e d within the 7% c l a s s i f i c a t i o n and what propor- t i o n was t o be c l a s s i f i e d within the 30% c l a s s i f i c a t i o n . The banks involved i n t h i s l i t i g a t i o n a l l e g e t h a t t h e above adjustment of the amount of surplus a s shown on the books of each bank by neglative undivided p r o f i t s f o r use i n apportioning the value of stock t o be assessed t o the stockholder between the 7% and 30% c l a s s i f i c a t i o n was incorrect, i l l e g a l and contrary t o s t a t u t e and i l l e g a l l y increased the taxable value of each bank. Each bank appealed t h e c l a s s i f i c a t i o n and taxable value a s determined by the Department t o the appropriate county t a x appeal board i n each of the counties where the individual banks transact business. The decisions of t h e county t a x appeal boards were then appealed t o the S t a t e Tax Appeal Board where they were pending upon t h i s Court's acceptance of jurisdiction. The sole i s s u e i s whether o r not the Department may make adjustment i n the figures shown on t h e books of the various banks involved i n t h i s l i t i g a t i o n i n determining what proportion of the value of stock assessed t o the stockholder is t o be c l a s s i f i e d within the 7% c l a s s i f i c a t i o n and what proportion i s t o be c l a s s i f i e d within the 30% c l a s s i f i c a t i o n . The pertinent portion of section 84-308, R.C.M. 1947, which t h i s Court finds t o be controlling provides: "Moneyed c a p i t a l and shares of banks, both national and s t a t e , t h i r t y per centum (30%) of t r u e and f u l l value on t h a t portion of t h e true and f u l l value not represented by surplus, a s shown on t h e books of the bank^ seven per centurn (7%) on t h a t c or ti on of the t r u e and f u l l . . value represented byL surplus a s shown on the books of the bank; provided t h a t on t h a t portion of any such s u r ~ l u s which i s over and above the amount represenked by s t a t e d c a p i t a l of a bank, the excess s h a l l be subject t o t h i r t y per centum (30%) of t r u e and f u l l value. " (Emphasis added. ) W e find the quoted s t a t u t e ' s meaning t o be c l e a r and unambiguous. There a r e no technical words and a common under- standing of the s t a t u t e i s c l e a r from i t s reading. The d r a f t e r s of the l e g i s l a t i o n obviously intended there should be no accounting adjustments made t o the f i g u r e shown on the books of the bank when apportioning t h e amounts between the 7% and 30% c l a s s i f i c a t i o n s . In Morrison v. Farmers & ~ r a d e r s ' S t a t e Bank, 70 Mont. 146, 150, 225 P. 123, t h i s Court recognized: "* + : * The intention of the l e g i s l a t u r e i n enacting the s t a t u t e i s the consideration which must control i n i t s construction * * * and t o ascertain t h a t in- tention recourse must be had, f i r s t , t o the language employed 9 : 9~ * indulging the presumption t h a t the terms used were intended t o be understood i n t h e i r ordinary sense, unless i t i s made apparent from the context t h a t t h e y i n t e n d e d t o be given a d i f f e r e n t meaning. * f; *I' (Emphasis added.) W e therefore find the Department cannot take the depreciated or appreciated value of t h e bond portfolio, and apply those figures against the amount of undivided p r o f i t a s shown on the books of the bank, and adjust the surplus figure a s shown on the books of the bank, t o a r r i v e a t the bank's assessed value. It must use only those figures shown on the books of the bank, a s required by s t a t u t e . The Department argues that it does not know what t o do with the newly created bond assessment that i s required by MAC 42-2.22(20)-S22410. That regulation was adopted by the Department when it was determined by the Department t h a t the present assessment system did not accurately portray the true picture of the bank's property. This Court can sympathize with the ~ e ~ a r t m e n t ' s position; however, we must point out that the solution t o that problem l i e s with the legislature, and cannot be solved by drafting assessment regulations and using them f o r classification purposes. This Opinion s h a l l constitute a declaratory judgment.