No. 1.3221 INTHE SUPREME COURT OF THE STATE OF MONTANA

SLCURIcIY BANK 

### AND TRUST COMPANY etal., Plaintiff and Respondent, -vs

## - HOLLIS G. CONNORS, as Montana State Treasurer, dnd 

### KEITH L. COLBO, as Director of Montana Uepartment of Revenue, Defendants and Appellants,



## ...................... FIRST NATIONAL BANK AND TRUST COMPANY OF HELENA etal., Intervenor, -vs

# - SbCUKLTY BANK AND TRUST COMPANY, a Montana banking Corporation, Hollis G. Connors, asMontana StateTreasurer, (3nd Keith L. Colbo as Director of Montana Department of Revenue, Defendants.

&Ippealfrom: District Court of the First Judicial District, Honorable Gordon R. Bennett, Judge presiding. Courlsel of Record: For Appellants: Hon. Robert L. Woodahl, Attorney General, Helena,

Montana Joseph R. Massman argued, Helena, Montana

cor Respondent: Cough, Booth, Shanahan and Johnson, Helena, Montana Ronald F. Waterman argued and Ward A. Shanahan

appeared, Helena, Montana Morrow, Nash and Sedivy, Bozeman, Montana Rdmund P. Sedivy argued, Bozeman, Montana 'rowe, Neely and Ball, Billings, Montana

Submitted: April 21, 1976 Decided

### ?" Filed:Mr. Justice Frank I. Haswell delivered the Opinion of the Court.

Defendants appeal through the Department of Revenue from

a summary judgment in the district court ordering the state treasurer torefund to plaintiff Security Bank and Trust Company the corporation license tax for the year 1972 paid by plaintiff under protest. Appeal is also taken from the district court's decree on behalf of intervenor First National Bank and Trust Company of Helena, that the Department may not levy and collect a corporation license tax against intervenor, a federallycharterednational bank, for the year 1972. The controversy arisesas a result of the passage by the United States Congress in 1969 and later, of amendments to the state taxation of national banks provision, United StatesRevised Statutes $5219, 12 U.S.C. $548, and certainMontana legislative enactments pursuant thereto. The only issue 

### iswhether the stateof Montana 

### is permitted to levy and collect a corporation license tax from either statechartered or federallycharteredbanks doing business inMontana for the taxyear beginning January 

### 1, 1972. The factsupon which the district court based 

### its summary judgment were stipulated in two separate documents between the parties, and are summarized herein. SecurityBank isa Montana banking corporation duly authorized and licensed under Montana law to engage in commercial banking, with 

### its principal officeinBozeman, Montana. Defendant and appellant Connors was the treasurer of Montana; defendant and appellant Colbo was the director of the Department of Revenue. SecurityBank paid itscorporation license tax for the year 1972, under protest, to defendant state treasurer in the sum of $31,752.38; the payment was received by the Department and deposited with defendant treasurer. Security Bank filed a complaint torecover the payment in the district courtwithin the time prescribed by law.In the immediate bank trade territory of Bozeman, there

were atthe time of suit threenamed and several other nationalbanks with banking charters from the United States government under the National Banking Act; allthese banks were in competition with SecurityBank. The taxpaid by SecurityBank was a tax levied by the stateof Montana on allnonexempt corporations licensed todo business inMontana under section 84-1501 et,seq., R.C.M. 1947; and for the year 1972 the stateof Montana did not require any national bank topay a taxbased upon 

### itsnet income asrequired by section 84- 1501 et-seq., R.C.M. 1947, or any similar statute, and no such tax

was paid by any national bank. The tax paid by SecurityBank was computed on the basis of 

### itsnet income and imposed on SecurityBank under penalty of law. The power of the stateof Montana totaxnational banks 

# - located inMontana 

### is set forth in 12 U.8.C. $548, as amended by Public Law 91-156. For the year 1972, the stateof Montana did authorize the levy and assessment of a tax on national banks by assessing shares of stock of national banks under section 84-4601 et seq., R,C. M. 1947. In the same year the state taxed statecharteredbanks by assessing shares of stock of statebanks under the same statutory authority. The method of assessment of shares of stock and the rate of taxwas identical fornational and statebanks. The national banks in the trade area of Bozeman provided substantially the same commercial banking services and functions as provided by SecurityBank and other statebanks inthe Bozeman trade

area. However, national banks areregulated by federal law while state banks areregulated by state law. The different sources of their charters do not affect their classification. Intervenor First National is a nationalbanking association in commercial banking, located inHelena, Montana. First National paid a tax on shares of stock for the years 1971and 1972 asrequired by Montana law; but First National was not required by the Departmentto, nor did it pay, any corporation license tax to the treasurer of Montana for the same years, asnone had been levied. Before detailing the proceedings in the district court,

a review of the sequence and substance of the pertinent statutory enactments 

### is in order. Prior to 1969, 12U.S.C. 5548, provided in pertinent part to this appeal: "5548. StateTaxation 

### h he legislature of each Statemay determine and direct, subject tothe provisions of this section, the manner and place of taxing allthe shares of the national banking associations located within its limits. The several Statesmay (1) tax said shares, or (2) include iividends derived therefrom in the taxable income of an owner orholder thereof, or 

### (3) tax such associations on theirnet income, or (4) according to ormeasured by their net income, provided the following conditions are complied with: "1.(a) The imposition

# @'i any Stateof any one of the above four forms of taxation shallbe in lieuof the others

# *

# **." This section willhereinafter be referred to as the "old 5548". Prior to 1969 the state of Montana elected the alternative of taxing the shares of national banks inMontana. The statealso taxed the shares of statebanks and, until 1967, additionally imposed the corporation license tax on statebanks only. Uniformity of taxation between stateand national banks

was established in 1967 by the enactment of section 84-1501.4, 

### R.C.M. '

"State banks organized under the Montana Bank Act shall not be required topay the Montana corporation license tax provided forunder chapter 15 of title 84 of the Revised Codes of Montana, 1947, until and unless the.said tax isrequired tobe paid by national banks organized under the laws of the United states."

I' In 1969 Congress undertook the abolition of national bank statetax immunity. Public Law 91-156 added this section toold - $548, as a temporary amendment: 5 (a) In addition to the other methods of taxation authorized by the foregoing provisions of this section and subject tothe limitations and restrictions specifically set forth in such provisions, a State or politicalsubdivision thereof may impose any taxwhich 

### is imposed generally on a non-discriminatory basis throughout the jurisdiction of such State or political subdivision (other than a tax on intangible personal property) on a national bank Mngitsprincipal officewithin such Statein the same .manner and to the same extent as such tax 

### is imposed on a bank organized and existingunder the laws of such State." This provision 

### ishereinafter referred to

### as the "temporary amendment

### !':' Public Law 91-156 alsocontained a "permanent amendment" to take effect January 1, 1972, .- atwhich time the entireold $548and the temporary amendment were repealed automatically. The permanent amendment in effect and hereinafter referred toas the "new $548", states in its entirety: "For the purpose of any tax law enacted under authority of the United States or any State, a. national bank shallbe treateil asa bank organized and existingunder the laws of the Stateor other jurisdiction within which 

### its principal office is located.II Pursuant tothisnew taxing authority granted by Congress tothe statesunder the temporary amendment and new $548, the Montana legislature in 1971, enacted sections 84-1501.6 and 84.1501.7, R.C.M.

"84-1501.6. Stateand nationalbanks--. subject to tax. 

### -- Effective

### with taxable years beginning on or after January 

### 1, 1971, everybank organized under the laws of the stateof Montana or of any other state and every national bank organized under the laws of the United States are subject to theMontana corporation license tax provided forunder Title 84, chapter 15, R.C.M. 1947. 11 "84-1501.7. Effective da

### tes. For the taxable year beginning on and after January 1, 1971, section 1

[84-1501.61 of this act 

### is effecive inaccordance with Public Law 91-156, section 1 (12 U.S.C. 548(5).) For taxable years beginning on and afterJanuary 1, 1972, section 1 [84-1501.61 of this act is effective in accordance with Public Law 91-156, section 2 (12 U.S.C. 548)." An additional section of this 1971act repealed section 84-1501.4, R.C.M. 1947, as statebank immunity from the corporation license tax

was no longer necessary when national banks were subject to the same tax.Finally, about ten months after the enactment by the Montana legislature of the above act, the Congress amended Public Law 91-156 with Public Law 92-213 which extended the lifeof the temporary amendment and old 5548, and delayed the effective date of new 5548 for one year, until January 

### 1, 1973. With the foregoing background inmind, SecurityBank sued forrefund of 

### its 1972 corporation license tax on the ground itwas
an unconstitutional deprivation of property to impose the tax on statebanks but not on nationalbanks. Originally, the only parties to this actionwere Security Bank, and the defendants represented by the Department. On the first stipulation of facts the district court entered conclusions of law on November 19, 1974, which essentially held: (1) theDepartment was authorizedby section 

### 84- 1501.6, R.C.M. 1947, and old $548, 12U,S.C. with the temporary amendment, to subject national banks to the corporation license tax in 1972, therefore the collection of a corporation license tax from statebanks was not inand of itself violative of stateor federal constitutional rights of SecurityBank; (2) however, if the Department failed toeitherrefund to SecurityBank 

### its 1972 corporation license tax or assess and collect said taxasa deficiency fromnationalbanks, then the payment of the taxby Security Bank would be a violation of 

### its due process rights under Art. 111, 

### 55 3 and 27, 1889 Montana Constitution and the Fourteenth Amendment, United States Constitution. Shortly thereafter, FirstNational was granted leave to intervene. The district court vacated 

### itsNovember 19ruling. First ~ational's intervention was precipitated by the expressed intention of the Department tocomply with the November 19ruling by collecting a deficiency corporation license tax for 1972 from national banks in Montana. The issuewas submitted on briefs, and on September 22, 1975, the district court entered summary judgment ordering defendant Montana treasurer torefund to SecurityBank the 1972 corporation licensetax paid under protest. In 

### its opinion the district court held, contrary to itsNovember 19 conclusions, the Department could not levy and collect a corporation license tax from either stateor federallychartered banks in 1972. On October 14, 1975, the district court entered judgment against defendants, ordered theMontana state treasurer torefund to SecurityBank $31,752.38, and decreed that defendants have no authority to impose upon or collect a corporation license tax from intervenor First National for any taxyear prior to January 

### 1, 1973. The issues on appeal are: 

### 1. Did the district court err inruling that the state, through the Department of Revenue, cannot levy and collect a corporation license tax from federally chartered banks doing business inMontana for the taxyear 1972? 2. Did the district court errinruling that the state, through the Department of Revenue, cannot levy and collect a corporation license tax from statecharteredbanks for the taxyear 1972? Resolution of the first issue depends upon the precise meaning of old $548as amended by the temporary amendment and Public Law 92-213. The parties properly stipulated that state taxation of national banks 

### iscontrolled by Congressional authorization, i.e., 12 U.S.C. 5548 in

### itsvarious forms. See: First Agricultural National Bank v. StateTax Commissioner, 392 U.S. 339, 88 S.Ct. 2173, 20 L ed 2d 1138. Atthe outset, we note therules of statutory construction long adhered toby this Court. In construing a statute, the intent of the legislature iscontrolling. Such intention must firstbe determined from the plain meaning of thewords used, and if interpretation of the statutecan be so determined, the courts may not go further and apply any other means of interpretation. Where the language of a statute isplain, unambiguous, direct and certain, the statute speaks for itself and there 

### isnothing left for the Court toconstrue. The function of the Court 

### is simply to ascertain and declarewhat in terms or in substance 

### iscontained in the statuteand not insert what has been omitted. Dunphy v. Anaconda Co., 151 Mont. 76, 438 P.2d 660, and cases cited therein; Sections 93-401-15 and 93-401-16, R.C.M. 1947. The firstparagraph and subparagraph l.(a) of old $548, in effect during 1972, providH for four different methods of permitted taxation of national banks by the states, and unequivocably state the 'I* 

# ** imposition by any Stateof any one of the above four forms of taxation shallbe in lieuof the others

# ***." (Emphasis supplied.) The temporary amendment reemphasized this language by stating that the temporary amendment 

### is "subject tothe limitations and restrictions specifically set forth" in the existing sections. Thus, in 1972, the states could not impose on national banks any more that one of the four enumerated methods of taxation. This position was, in fact, taken by the Department itself from 1971untilFirst National intervened in this litigation inNovember 1974. CCH State Tax Reporter

# --

# - Montana, Paragraph 200-033, p. 10,035. It 

### isundisputed that First National paid, and the Department collected, a tax upon shares of stock of First National for 1972. Such 

### is one of the four methods of taxation permitted by old $548. It 

### is alsoplain the corporation license tax 

### is a tax

on net income (section 84-1501,R.C.M. 1947), another one of the four permitted methods of taxation. It follows that having collected under one of themethods of taxation, the Department is prohibited by old 5548 from imposing a corporation license tax on national banks before 1973, when new $548became effective. Therefore, we affirm the district court on the firstissue. The districtjudge properly rejected the Department's attempt to seek statutory construction through theuse of extrinsix sources, as the words of the statuteinquestion and 

### its amendments speak for themselves. We are alsonot impressedwith the Department's strained distinctionbetween old 5548, subparagraph 

### 1.(a) asa "condition"

I l and the remaining paragraphs as limitations and restrictions".

### The second issue involves the corporation license tax paid by Security Bank under protest in 1972. It appears this dispute arises because of the fortuitous circumstance that Congress enacted Public Law 92-213 (making new 5548 effective January 1,1973) after the Montana legislature enacted sections 84-1501.6 and 84-1501.7, R.C.M. 1947, in reliance on the timetable set out in the temporary amendment, Public Law 91-156 (making new 5548 effective January 1, 1972). In 1967, section 84-1501.4 was enacted to provide that state and national banks be taxed equallywith respect to the corporation license tax. This was in recognition of the fact that state and nationalbanks in Montana perform virtually the same functions and services and that dual taxation of statebanks in the face of national bank immunity from suchdual taxationplaced state banks in an inferior competitive position. This parity provisionwas repealed by the 1971 enactment permitting corporation license taxation 

### of national banks because parity was thought to be provided by Congress. However, when Congress extended the life of the temporary amendment and old $548,the Department continued to levy the tax on shares of 

## - all banks and felt it was not authorized to impose the corporation license tax on nationalbanks. By imposing the corporation license tax on state banks only, the Departmentwas doing what section 84-1501.4 prohibited from 1967 to its repeal. The question then is: Was the corporation license taxation of state banks in 1972permissible? We hold that it was not. Security ~ank' s principal argument is that such taxation violates due process rights guaranteed under Art.111, $9 

### 3 

### and 

### 7, 1889 Montana Constitution, because the imposition of the tax on it in 1972was not uniform,was discriminatory and was based upon an arbitrary classification. SecurityBank relies on Garrett Freightlines, Inc. 

### v. The Montana ~.~.Comm'n, 161Mont. 482,507 P.2d 1040. However, the issue can be decided on nonconstitutional grounds. Taylor 

### v. Taylor, Mont

# . -- , 537 P.2d 483, 32 St.Rep.575; Montana StateUniversity v. Ransier, Mont

# . --, 536 P.2d 187, 32 St.Rep. 569, and cases cited therein. The district court held that because the Department decided in 1971that it could not enforce collection of a corporation license tax from national banks inMontana during the lifeof the temporary amendment, it had invalidated section 84-1501.6 insofar

as it applies tonational banks; and because section 84-1501.6 contains no savings clause, the invalidation of one portion destroys the whole. In light of the legislativepolicy expressed inrepealed section 84-1501.4, the basis of itsrepeal, the continued legislative policy of taxing stateand national banks equally throughout the period of 1967 tothe present, and the unavoidable confusion which resulted from the Congressional postponement of the effective date of

new $548 to 1973, we agreewith the district court that when the state, through the Department, prohibited the corporation license taxation of national banks, itwas similarly prohibited from collecting the tax from statecharteredbanks. In otherwords, it 

### is obvious from the sequence of events that the legislature did not intend to authorize the Department to exact the corporation license tax from statebanks and simultaneously return to thepolicy of national bank immunity from the same tax. We aremindful of the trend in favor of implied separability

as pointed out by the Department. Stateex rel. Evans v. Fire Department Relief Ass'n, 138 Mont. 172, 355 P.2d 670. However, the facts of thiscase compel the conclusion, in the absence of a savings clause, the Department cannot treat section 84-1501.6 as partially invalid and partiallyvalid. The statement of this Court in State

v. Holmes, 100 Mont. 256, 291, 47 P.2d 624, particularly applies:

If*

# *

# * In the absence of such a [savings] provision the presumption 

### is against the mutilation of a statute, and that the legislaturewould not have enacted it except in 

### its entirety. 

# * * +<."

### The judgment of the district court is affirmed. 

# Z&,g
- Justice

We Concur*

,.4



### -udge, itt'ng for-chiefJustice dames 

### (--Ha& son.