NO. 83-45 INTHE SUPFU3ME COURT OF THE STATE OF MONTANA 1983

TIIE DEPARTMENT OF REVENUE OF THE STATE OF MONTANA, Appellant,

SHIRLEY PAXSON, Respondent.

Appeai from: DistrictCourt of the Second JudicialDistrict, Inand fortheCounty of SilverBow, The Bonorable Mark P. Sullivan, Judge presiding.

Counsel of Record: For Appellant: Larry G. Schuster, Dept. of Revenue, Helena, Montana

For Respondent: James E. Purcell; Benningsen, Purcelll & Genzberger, Butte, Xoritana

Filed: Submittedon Briefs: March 31, 1983 Decided: July 211 1983



### JUL

## 2"1983

Clerk

### Mr. Justice Daniel J. Shea delivered the Opinion of the Court. TheDepartmentof Revenue (DOR)appeals from an error of the SilverBowCountyDistrict Court that setaside the order of the State Tax Appeal Board relating the taxablevaluation of 6 

### lots in Silver Bow County owned by the plaintiff, Shirley Paxon. The plaintiff had argued to the trial court that a 20 

### percent reduction in the assessed valuation of her property because the property was partly in a flood plain,



### was insufficient. The trial court agreed, and not only set aside this 20

### percent reductionasunsupportedby the record, but also set the taxby applying the taxpayer's theory of tax reduction and the exact figures she had presented to the StateTaxAppeal Board and before that, the SilverBowCounty Tax Appeal Board. We affirm that part of the order setting aside 

### the 20 

### percent reduction. Clearly, not only was there no substantial credible evidence to support this figure, there

was 

### no evidence. However,we vacate that part of the order which also determined that the tax should be based solely on the taxpayer's theory of reduction and the taxpayer's estimates of taxablevalue. We cannot say asamatter of law that the administrative bodies charged with sett-ivq the taxable valuationswerebound to accepteither the taxpayer's theory or the taxpayer's figures for the tax reduction. The trial court clearly overstepped its bounds when it usurped the function of the administrative bodies charged with the responsibility of finding the facts and arriving at the proper taxablevalu-ation. The a.ssessmentof the taxpayer's property ispart of 

### the continuing state-wide reassessment of real property in thisstate mandated by the 1972 Montana Constitution. The taxpayer's land, before the new assessment,was assessed at $10,425. However, the DOR's new assessmentwas $146,245 and taxes were to be based on this figure. The taxpayer filed a request for review with the county tax appeal board, cortending that the property was overvalued because parts of her property taxed were within a flood plain and therefore, thather property had lessvalue than comparableproperty not wlthin the floodplain. At the heari-nqbefore the county tax appeal board, the taxpayer presented evidenc~7 a contractor that it would cost $87,294.60 to haul fill onto the lots to build them up

so that they would not be within the flood plain. The "Laxpayer,therefore, argued that the $146,245 valuation set by the Department of Revenue should be reduced by $87,294 leaving a taxablevalue at $58,951. The county tax appeal board provides a form specifying the action theboard took on the taxpayer's request,and this form also provides language indicating that the board is to glve reasons for its action taken. However, with no reasons given, the county tax appealboard simply entered a one-line order stating that a 20 percent reduction of the ta::ahl-e valuation would be granted because of terrain factors. No oile knows 1~7hythe 20 percent figurewas chosen. The taxpayer then 3ppealed this decision to the State Tax Appeal Board, and this board held another hearinq. The board heard additional testimony and took judicial notice of evidence relating to other properties in the same vicinity as the taxpayer'sproperty. Inaddition, theDOR,apparently at the board's request, submitted a list of comparableproperty valuations. Althouvh the 20 percent reduction figure was

### referred to by 

### one 

### of thewitnesses,no indication appears the record why this figure was chosen as the appropriate reduction factor. The state board denied the taxpayer's appeal and affirmed the countyboard'sdecision. In its order the state board noted that a 20 percent reduction figure for terrain features was a proper figure to use in reducing the taxable valuation of the taxpayer'sproperty. This order also failed to explain how the 20 percent figure was reached. The taxpayer then appealed this order to the District Court, the scope of review being limited by the Montana Administrative Procedures Act (sections 15-2-301 through 15-2-304, MCA). After the notice of appeal was filed, the trial court apparently held a pre-trial conference, althouah what took place isnot revealed in the record. However,no hearingwas held and. the parties did not file briefs. Whether the parties expected that a hearing would be held before the decision, or at least that briefs would be filed before the decision, is 

### also not revealed by the record. In any event, the trial court simply reviewed the record on file and granted all the relief the taxpayer requested. In its order of May 13, 1982, 

### the trial court ruled that the 20 percent figurewas supportedby 

### no evidence and that no reasons were given for adoption of that figure by the tax appeal board. The court concluded this figure was arrived at in an arbitrary and capricious manner and set the board's order aside. We affirm this part of the trial court'sorder. But, the trial court went an additional step and ruled that the State Tax Appeal Board should have accepted and adopted the taxpayer's theory of reductionand the taxpayer's figures. The court, therefore, set the taxable value of thetaxpayer" property for the years 1980, 1981, and 1982, at $58,951. This ruling exceeded the powers of the trial court sittingas a reviewing court and it is reversed. The focus of the Department of Revenue's appeal is simply a contention that the trial courthad no right to set aside the 20 percent figure arrived at by both tax appeal boards, the contention being that substantial evidence supported this figureand the trial courthad no riqht to set itaside. However, substantial evidence did not support this figure;

## no evidence supported this figure. The trial court

was clearly correct in setting it aside. On the other hand,

we cannot ignore the fact that the trial court became the finder of factby determining what theproper tax should be, and that is not the function of the trial courts sitting as reviewing courts. The effect of the trial court's order is that the county and state boards were required to accept and adopt that precise theory and figures urged by the taxpayer

as to what the tax shouldbe. That isnot the law. Although, the county and state boards should have considered the theory and the figures offered by the taxpayer and given some indication of why they did not adopt this approach, it does not follow that these boards were bound to adopt the theory and figures offered by the taxpayer. Because the boards were wrong in adopting the 20 percent reduction figure without an evidentiary foundation, it does not follow that the taxpayerwas riqht in contending that the taxable valuation must be reduced by the cost required to build the land up to a level that would take it out of the flood plain. This function is initially one for the administrative agencies or boards, and not one for the courts.

### We must rerr~a.ndthis case for further hearings because the 20 

### percent reduction figure adopted by 

### th.etax appeal b0ard.s was not supported by any evidence, let alone substantial evidence. It 

### appears, however, that itwould be too time consuming to remand it to the county tax appeal board to start 

### theprocess all over again. Because the State Tax Appeal Board not only has review authority, but also can reopen the case to take additional evidence (section 15-2-301(2),

### MCA)

## , it is proper that 

### the state board again hear this case to determine the proper valuation of the taxpayer'sproperty. We 

### affirm in part and reverse in part,with directions that the District Court remand this cause t.o the State Tax Appeal Board for further proceedings

We 

### Concur: 

# kd-4 Chief~dstice