No. 84-438 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1985 

OEA RESEARCH, INC., a Montana Corp.; 

and ANDREW J. SCHEET and VIRGINIA 

M. SCHEET, 

Plaintiffs and Appellants, 

MARTHA B. McGEE, Treasurer of 

Lewis & Clark County; LILIA "LEE" 

WILLIAMS, Assessor of Lewis & Clark 

County; and DEPARTMENT OF REVENUE 

OF THE STATE OF MONTANA, 

Defendants and Respondents. 

APPEAL FROM: District Court of the First Judicial District, 

In and for the County of Lewis & Clark, 

The Honorable Gordon Bennett, Judge presiding. 

COUNSEL OF RECORD: 

For Appellants: 

Leaphart Law Firm, Helena, Montana 

For Respondents: 

Mike McGrath, County Attorney, Helena, Montana 

Larry G. Schuster, Dept. of Revenue, Helena, 

Montana 

Submitted on Briefs: Jan. 24, 1985 

Decided: August 15, 1985 

Filed: AUG151985 

Clerk 
Mr. Justice Fred J. Weber delivered the opinion of the Court. 

OEA Research, Inc., Andrew J. Scheet and Virginia M. 

Scheet appeal from an order of the District Court of Lewis 

and Clark County quashing a temporary writ of prohibition and 

dismissing the request for a permanent writ of prohibition. 

We affirm. 

Appellants raise two issues: 

1. In the event that annual assessments are not dispatched pursuant to 5 15-8-201, MCA, may the Department of 

Revenue subsequently assess such escaped property pursuant to 

5 15-8-601, MCA? 

2. Have appellants been denied due process and equal 

protection of the laws by an assessment of escaped property? 

OEA Research, Inc. is a Helena-based consulting firm. 

Andrew J. Scheet and Virginia M. Scheet (Taxpayers) operate 

an excavating business in Lewis and Clark County, Montana. 

The Department of Revenue (DOR) and the County Assessor 

failed to assess the personal property of the Taxpayers in 

the normal manner for each of the years 1975 through 1983. 

On December 29, 1983, OEA Research, Inc. (OEA) received 

an assessment from DOR for $6,520.05 covering the years 1975 

through 1983. OEA appealed that assessment to the County Tax 

Appeal Board. 

On March 9, 1984, OEA received a "Notice of Execution" 

from the County Treasurer's Office covering the December 29, 

1983, assessment of $6,520.05. On March 29, 1984, the County 

Assessor sent a "revised assessment" to OEA in the same 

amount, but referred to § 15-8-601, MCA. 

On March 20, 1984, the Taxpayers received an assessment 

from the County Assessor in the amount of $23,564 for the 

years 1975 through 1983. This assessment also reflected that 

DOR was relying on § 15-8-601, MCA, for authority to make the 

assessment. 
Taxpayers filed a petition for a declaratory judgment, 

writ of prohibition or other appropriate relief in the 

District Court. They alleged that the DOR, the assessor and 

the treasurer were proceeding in excess of their jurisdiction 

because the assessments in question were not timely under 

S 15-8-201, MCA. That section requires that assessments be 

completed on an annual basis before the second Monday in 

July. The District Court issued a temporary writ of 

prohibition. The District Court later determined that the 

DOR had acted properly, quashed the temporary writ of 

prohibition and dismissed the Taxpayers' petition for a 

permanent writ of prohibition. 

In the event that annual assessments are not dispatched 

pursuant to S 15-8-201, MCA, may the Department of E.evenue 

subsequently assess such escaped property pursuant to 

§ 15-8-601, MCA? 

Three statutes are pertinent. Section 15-6-101(1), MCA, 

provides : 

"All property in this state is subject to 

taxation, except as provided otherwise." 

Section 15-8-201 (I), MCA, provides in pertinent part as 

follows: 

"The department of revenue or its agent 

must, between January 1 and the second 

Monday of July in each year, ascertain 

the names of all taxable inhabitants and 

assess all properties subject to taxation 

in each county . . ." 

Section 15-8-601(1), MCA, provides in pertinent part: 

"Whenever the department of revenue discovers that 

any taxable property of any person has in any year 

escaped assessment, been erroneously assessed, or 

been omitted from taxation, the department may 

assess the same provided the property is under the 

ownership or control of the same person who owned 

or controlled it at the time it escaped assessment, 

was erroneously assessed, or was omitted from 

taxation. All such revised assessments must be 

made within 10 years after the end of the calendar 
year in which the original assessment was or should 

have been made." 

Taxpayers argue that S 15-8-201, MCA, cannot be reconciled with § 15-8-601, MCA. They argue that the requirement 

of yearly assessments by the second Monday of July in each 

year negates any possibility of assessing a tax in later 

years, even though S 15-8-601 provides that when the DOR 

"discovers" taxable property which has "escaped assessment" 

or "been omitted from taxation," the DOR may assess it. In 

view of the statutory requirement that the DOR must assess 

property by the second Monday of July and our interpretation 

of that requirement in Butte Country Club v. Dept. of Revenue 

(1980), 186 Mont. 424, 608 P.2d 111, this apparent 

contradiction in statutes must be considered. 

A review of older cases will assist in placing the issue 

in perspective. In Hill v. Lewis and Clark County (1918), 54 

Mont. 479, 171 P. 929, this Court considered § 2542, Revised 

Codes (1907), which in pertinent part provided: 

"Any property discovered by the assessor 

to have escaped assessment may be assess~d at any time, if such property is 

in the ownership or under the control of 

the same person who owned or controlled 

it at the time it should have been 

assessed." 

This section illustrates that in 1918, as in 1984, the law 

provided far assessing property which is discovered to have 

escaped assessment. In Hill, the contention was made that 

the assessment was invalid because the property has been 

assessed long after the assessment deadline. This Court 

refused to accept that theory and upheld the assessment and 

taxation of the property. 

In a similar way in Butte & Superior Mining Co. v. 

McIntyre (1924) , 71 Mont. 254, 229 P. 730, this Court held 

that the Board of Equalization could assess and tax property 

in 1923 which had been omitted from taxation in 1920. This 
Court emphasized the plenary power of taxing authorities to 

assess property which has escaped assessment. It stated: 

"In contemplation of our law it is the 

duty of every citizen to return his 

property for taxation and to pay the 

taxes levied upon it. It was the obligation of the plaintiff to return this 

property for assessment in 1920, and to 

pay taxes thereon. That was settled in 

the Bourquin Case. These taxes are just 

as much due now as they were in the year 

1920. The legal obligation to =- is 

present and - subsistinq. The duty - to 

- is - a continuinq, present obligation just 

- as imperative to-day as ----- it was in 1920." 

Butte & Superior Mining Co., 71 Mont. at 

263, r29 P. at 733 (emphasis added). 

At the time these older cases were decided, the predecessor of 5 15-8-201, MCA, required the assessment of taxable 

property by the second Monday in July of each tax year. See 

5 2510, Revised Codes (1907) & 2002, R.C.M. (1921). 

Nevertheless, this Court recognized that if property had been 

omitted from or escaped assessment, the taxing authority 

could correct the omission in order to see that all property 

liable to assessment and taxation is taxed so that burdens of 

government may fall in like proportion upon all. See Simpson 

v. Silver Bow County (1930) , 87 Mont. 83, 93, 285 P. 195, 

199. 

In Evans Products Co. v. Missoula County (Mont. 1982), 

654 P.2d 523, 39 St.Rep. 2149, this Court applied 

$S 15-8-601(1), MCA, to an erroneous assessment. In that 

case, the full value of real property was incorrectly shown 

for the 1978 tax assessment as $396,050. The correct figure 

was $990,125. On December 27, 1979, the County Assessor's 

Office informed the taxpayer of the error in the 1978 and 

1979 tax and enclosed a new tax assessment notice for 1978 

showing a tax balance of $11,507.89. The taxpayer claimed 

that the DOR was precluded from proceeding under § 15-8-601, 

MCA, because it had initially followed improper procedures. 

This Court concluded that the clerical error made in the tax 
assessment came within the plain meaning of "erroneous assessment" as used in the statute. The Court then concluded 

that because inadequate notice was given to the taxpayer 

under $3 15-8-601, MCA, the taxes had not been properly assessed and levied. Evans Products is the most recent case 

involving an interpretation of S 15-8-601(1), MCA. While not 

factually on point, it does describe the statutory right of 

the DOR to correct erroneous assessments for a period of up 

to 10 years. 

Butte Country Club v. Dept. of Revenue (19801, 186 Mont. 

424, 608 P.2d 111, is the principal case upon which the 

Taxpayers rely. It is important to consider the facts in 

that case. There the taxpayers were regularly assessed for 

real property taxes and improvement taxes for the year 1978. 

On August 31, 1978, one taxpayer received a notice of change 

in property valuation from the DOR. The assessed value of 

the land and improvements was increased from $239,570 to 

$1,490,272. In late August, the other taxpayers received 

from the DOR a notice of change in property values of land 

and improvements from $43,179 to $134,600. In September, the 

taxpayers filed notices of appeal to the local Tax Appeal 

Board. When the local Board was not able to hear all of the 

cases by October 1, 1978, the appeals were sent to the State 

Tax Appeal Board for hearings. 

The Taxpayers in the present case rely upon the following language in Butte Country Club: 

". . . The words of section 15-8-201, 

MCA, are plain, unambiguous and certain. 

This statute requires the DOR to assess 

all property subject to taxation between 

January 1 and the second Monday of July. 

The statute contains the word 'must', and 

this clearly indicates that the statutory 

commands are mandatory, and not discretionary. The DOR must assess property by 

the second Monday in July, and that was 

not complied with in the instant case.'' 

186 Mont. at 429, 608 P.2d at 114. 
Taxpayers here argue that because no annual assessment was 

made against them, it is too late for the DOR to attempt to 

proceed under S 15-8-601, MCA. We reject that 

interpretation. 

Butte Country Club involved a change in 1978 tax assessments to several taxpayers in which initial assessments 

were made, revised tax assessments were sent out in late 

August, and no local Tax Appeal Board hearing was allowed. 

It was based upon such late assessments that this Court 

concluded: 

"The assessments in the instant case were 

made after the second Monday in July, and 

are therefore invalid. A valid assessment is indispensable to the levy of a 

tax." Butte country Club, 186 ~ont. at 

430, 608 P.2d at 115. 

That is a correct conclusion based upon the facts involved in 

Butte Country Club, where an attempt was made to raise the 

assessment on various property after the second Monday of 

July, in derogation of S 15-8-201, MCA. However, that does 

not lead to a conclusion that all assessments made after the 

second Monday of July are invalid. 

Section 15-8-601, MCA, was not involved in the Butte 

Country Club case. Under that section, assessments properly 

may be made after the second Monday of July under the 

circumstances described in that section. 

We conclude that under the facts of this case, 

S 15-8-601, MCA, authorized the DOR to assess the property 

which had escaped assessment or had been omitted from 

taxation for a number of years. We therefore affirm the 

quashing of the writ of prohibition by the District Court. 

I1 

Have appellants been denied due process and equal 

protection of the laws by an assessment of escaped property? 
Here, no due process right was denied the Taxpayers. 

Notice was given to the Taxpayers, conferences were held and 

ultimately an appeal was taken to the Lewis and Clark County 

Tax Appeal Board as provided in § 15-8-601, MCA. There is no 

showing of a denial of the right to a hearing, as was the 

case in Butte Country Club. We conclude that the Taxpayers 

have not been denied due process or equal protection of the 

laws. 

We affirm the District Court's order quashing the writ 

of prohibition and dismissing the petition for a permanent 

writ of prohibition. 

We concur: / 

Justices 
Mr. Justice John C. Sheehy, dissenting: 

I dissent. 

The taxpayers contend that a valid and timely assessment 

each year as required by 5 15-8-201, MCA, is indispensable to 

the levy of a tax. They rely essentially on our decision of 

Butte Country Club v. Dept. of Revenue (1980), 186 Mont. 424, 

608 P.2d 111. In that case, the Department of Revenue 

through its agent had delivered to Butte Country Club a 1978 

assessment in August which purported to increase the 

assessment value of the Country Club's property. We said in 

that case that the word "must" in 5 1.5-8-201 was mandatory 

and that the late issuance of the assessment by the 

Department was a departure from legal requirements which 

resulted in invalidity. 

The District Court here, however, discounted the 

precedential value of the Butte Country Club case because in 

that case the Department of Revenue had made no contention 

that the property had escaped assessment or that § 15-8-601, 

was in any way applicab1.e. The District Court further relied 

as does the majority on three earlier cases from this Court 

in reaching its decision, Simpson v. Silver Bow County 

(1930), 87 Mont. 83, 285 P. 195; Butte & Superior Mining Co. 

v. McIntyre (1924), 71 Mont. 254, 229 P. 730; and Hill v. 

Lewis and Clark County (1918), 54 Mont. 479, 171 P. 929. 

In the Hill case, it appears that the executors of the 

estate of Samuel T. Hauser failed to list certain property 

belonging to the estate although the executors had a clear 

legal duty to do so. Upon discovery of the concealment, the 

county assessor assessed the property, long after the 

statutes then pertaining permitted him to do so. On appeal 
to this Court, we condemned tax avoidance in that manner, the 

purposeful concealment of taxable property until after the 

assessment roll went to the county treasurer. The cases at 

bar do not involve purposeful concealment from taxation. 

In Butte & Superior Mining Co. v. PlcIntyre, supra, the 

property in question escaped taxation due to active 

concealment by the taxpayer. In that case, the taxpayer 

filed a return deducting $2,719,000 of royalties to other 

companies as a "cost of owners purchase." As a consequence 

of the deduction, the company's books showed a loss of 

$1,500,000. The county attorney challenged the deduction 

quoted and was successful in getting the deduction declared 

unlawful. Again the case involved concealment. 

The Simpson case is not strong as authority for the 

problem involved in the case at bar. In Simpson, the Board 

of County Commissioners of Silver Bow County had hired 

Simpson, as a "tax ferret" to search out and furnish the 

Commissioners, sitting as the County Board of Equalization, 

information which would enable the Board to assess and tax 

net proceeds which had escaped taxation in 1920. Simpson had 

a 20 percent contract which entitled him to $9,069.27. The 

County refused to pay, and he received a judgment for that 

amount in the District Court. On appeal to this Court, the 

case principally turned on whether the County Board of 

Commissioners, sitting as a County Board of Equalization, had 

the authority, in the light of statutes granting like 

authority to the State Board of Equalization, to hire a tax 

ferret. The incidental comments of the Court with respect to 

the duty of assessments in Simpson are largely dicta, and 

have no precedential force in this case. 
We should come to grips in this case with the effect of 

the decision of the District Court: although the Department 

of Revenue has a mandatory duty to assess all personal 

property in each county before the second Monday of July in 

each year, under S 15-8-201, the d-ecision of the District 

Court allows the Department to neglect this duty, and up to 

ten years later, under § 15-8-601, still assess and collect 

the neglected taxes. 

The conflict in the statutes that arises in this case 

comes about because the Department did not do its duty under 

the first statute, 5 15-8-201. It did not complete its 

annual assessment of the property of the relators before the 

second Monday of January of each year. Had the Department 

performed its duty of annual assessments, there would arise 

no conflict between 5 15-8-201 and S 15-8-601., because then 

escaped property or omitted property could be assessed by the 

Department of Revenue and taxed under S 15-8-601, during the 

succeeding 10 years. The legislature must have comprehended, 

in adopting § 15-8-201 and S 15-8-601, that the Department 

would act in conformance with its mandated duties. It must 

not have comprehended the conflict that arises when the 

Department does not follow its mandated duty under S 

15-8-201, and later attempts to make amends und.er § 15-8-601. 

The duty of courts in interpreting statutes is to 

harmonize conflicting statutes, and to make them produce the 

effects intended by the legislature. The statutes here will 

harmonize when the Department follows the mandate of S 

15-8-201. The conflict in this case will persist through 

this and other cases if we condone the Department's 

nonfeasance of duties under S 15-8-201, by permitting it to 

recoup under S 15-8-601. 
The obvious design of S 15-8-601, is to allow the taxing 

authorities to assess and collect taxes on properties that 

escape or are omitted through no fault of the Department. We 

would preserve that design by holding that if the Department 

has followed its mandated duties under 5 15-8-201, it can 

thereafter proceed to assess and collect taxes which have 

escaped or been omitted for taxation under S 15-8-601. If 

the Department has failed its responsibilities under 5 

15-8-201, and because of such failure the property escapes or 

is omitted from taxation, the Department shou1.d bear the 

responsibility for the loss of tax revenues resulting. This 

holding would do no more than require the Department to act 

a.s the legislature directed. 

This decision relates to the assessment and taxation of 

personal property only and would not be considered as 

authority with respect to the assessment of real property or 

interests therein. The provisions of 5 15-8-308, MCA, 

provide that no assessment or act relating to assessment or 

collection of taxes is illegal on account of informality or 

because the same is not completed within the time required by 

law. We specifically held in Butte Country Club, above 

cited, that 5 15-8-201, prevails over the provisions of S 

15-8-308. 

I would reverse and remand with instructions to 

reinstate the petitions of the relators, and to issue a 

permanent writ of prohibition against the assessments charged 

here against the taxpayers. 

< .\ 

\ , / p/ ; 

, : . :< , /&,d3 1-- 4 LtJ. .- .. , , 

,i Justice (I