NO. 83-45 

IN THE SUPFU3ME COURT OF THE STATE OF MONTANA 

1983 

TIIE DEPARTMENT OF REVENUE OF 

THE STATE OF MONTANA, 

Appellant, 

SHIRLEY PAXSON, 

Respondent. 

Appeai from: District Court of the Second Judicial District, 

In and for the County of Silver Bow, 

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: 

Submitted on Briefs: March 31, 1983 

Decided: July 211 1983 

JUL 2 "1983 

Clerk 
Mr. Justice Daniel J. Shea delivered the Opinion of the 

Court. 

The Department of Revenue (DOR) appeals from an error of 

the Silver Bow County District Court that set aside the order 

of the State Tax Appeal Board relating the taxable valuation 

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 reduction as unsupported by the record, 

but also set the tax by applying the taxpayer's theory of tax 

reduction and the exact figures she had presented to the 

State Tax Appeal Board and before that, the Silver Bow County 

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 taxable value. We cannot say as a matter of law 

that the administrative bodies charged with sett-ivq the 

taxable valuations were bound to accept either 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 taxable valu-ation. 

The a.ssessment of the taxpayer's property is part of the 

continuing state-wide reassessment of real property in this 
state mandated by the 1972 Montana Constitution. The 

taxpayer's land, before the new assessment, was assessed at 

$10,425. However, the DOR's new assessment was $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, 

that her property had less value than comparable property not 

wlthin the flood plain. 

At the heari-nq before 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 taxable value at $58,951. 

The county tax appeal board provides a form specifying 

the action the board 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 appeal board 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 1~7hy the 20 percent figure was 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's property. In addition, the DOR, apparently at 

the board's request, submitted a list of comparable property 

valuations. Althouvh the 20 percent reduction figure was 
referred to by one of the witnesses, 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 county board's decision. 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's property. 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 is not revealed in the record. However, no hearing was 

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 

figure was supported by 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's order. 

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 reduction and the taxpayer's 

figures. The court, therefore, set the taxable value of the 
taxpayer" property for the years 1980, 1981, and 1982, at 

$58,951. This ruling exceeded the powers of the trial court 

sitting as a reviewing court and it is reversed. 

The focus of the Department of Revenue's appeal is 

simply a contention that the trial court had no right to set 

aside the 20 percent figure arrived at by both tax appeal 

boards, the contention being that substantial evidence 

supported this figure and the trial court had no riqht to set 

it aside. 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 fact by determining what the proper 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 should be. That is not 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 taxpayer was 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.nd this case for further hearings because 

the 20 percent reduction figure adopted by th.e tax appeal 

b0ard.s was not supported by any evidence, let alone 

substantial evidence. It appears, however, that it would be 

too time consuming to remand it to the county tax appeal 

board to start the process 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's property. 

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