No. 90-278 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

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THE MONTANA DEPARTMENT OF REVENUE, r? 

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Appellant and Respondent, 

-vsKAISER CEMENT CORPORATION, 4 .*- 

Respondent and Appellant. mo =D st- 23 

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APPEAL FROM: District Court of the Fifth Judicial District, 

In and for the County of Jefferson, 

The Honorable Frank M. Davis, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Michael S. Lattier, Gough, Shanahan, Johnson & 

Waterman, Helena, Montana 59624 

For Respondent: 

Geralyn Driscoll, Department of Revenue, Helena, 

Montana 59620 

Filed: 

Submitted: November 15, 1990 

Decided: December 11, 1990 9 
Justice John C. Sheehy delivered the Opinion of the Court. 

On its face, 5 15-8-601, MCA, allows the Montana Department 

of Revenue (DOR) to reassess property for taxation if originally 

the property escaped taxation, was erroneously assessed, or was 

omitted from taxation. 

The power of DOR to reassess such property appears to be 

limited under 1 15-8-601 to property still under the ownership or 

control of the same person who owned it when it escaped taxation, 

was erroneously assessed or omitted from taxation. 

Relying on that limitation, the State Tax Appeal Board (STAB) 

granted summary judgment to Kaiser Cement Corporation, in effect 

annulling the assessment revisions by DOR for the tax years 1983, 

1984 and 1985. The Department of Revenue appealed the STAB 

decision to the District Court, Fifth Judicial District, Jefferson 

County. The District Court reversed the STAB decision and remanded 

the cause to STAB for a decision on the merits, subject to the 

right of Kaiser to appeal under a Rule 54(b), M.R.Civ.P. 

certification. Kaiser has appealed to this Court, and on 

consideration we affirm the order of the District Court. 

In the years pertinent here, Kaiser operated a cement plant 

near Montana City, in Jefferson County, and mined limestone from 

a nearby quarry to make its cement. The tax in dispute in this 

case is mine net proceeds property tax on the minerals severed from 

the limestone quarry. 

Kaiser filed a return and statement of net proceeds for the 

tax years 1983, 1984 and 1985. For 1983, it reported a negative 

2 
value of its mining activity of $29,854.00; for 1984, a negative 

value of $57,563.00; and for 1985, a negative value of $75,463.00. 

The Department reviewed the returns on receipt and on or before 

July 1 in each succeeding year, transmitted to its agents in 

Jefferson County, a statement listing the assessed value of the net 

proceeds in 1983 at a zero value, for 1984 at a value of $6,539.13, 

and for 1985, again a zero value. 

The Department later audited Kaiser's returns by examining its 

books and records in its office in San Francisco, California. 

Based on its audit, the Department determined that the mine net 

proceeds value of Kaiser for 1983 was $871,844.00; for 1984, 

$822,764.00; and for 1985, $499,301.00. After the audit, but 

before the Department issued the revised assessment, Kaiser sold 

its Jefferson County operations to Ash Grove Cement West. The 

Department issued its revised assessments on January 28, 1988. 

Following the notification to Kaiser of the revised 

assessment, there was an exchange of information between the 

parties, and the Department conducted an assessment review 

conference respecting the revisions. Thereafter the Department 

issued a final determination of the mine net proceeds by a letter 

to Kaiser dated May 2, 1988. The final figures for the three years 

were those reported above. 

Kaiser appealed to STAB and moved for summary judgment, 

contending that it was no longer the owner of the cement plant and 

quarry. STAB granted summary judgment based on the motion, and the 
Department, as we said, appealed to the District Court, which 

reversed the STAB decision. 

The mine net proceeds tax in Montana has a hoary history. It 

was enacted by the territorial government in 1864, and later 

incorporated in the 1889 Constitution. Though variously amended, 

the net proceeds tax is now codified at 5 15-23-501 et seq., MCA. 

(There are a number of statutes to which we will be referring 

in this Opinion. To avoid clutter, and for ease of reference, we 

attach as an addendum to this Opinion the statutes or pertinent 

parts thereof which must be considered in this case.) 

The mine net proceeds tax arises because of the difficulty in 

arriving at a fair value of mining property. It is a tax created 

in lieu of an ad valorem property tax. (Pfizer v. Madison County 

(1973), 161 Mont. 261, 266, 505 P.2d 399.) The mine net proceeds 

tax is one of seven centrally assessed taxes; that is, the 

taxpayers' returns are sent to the state office of the Department 

of Revenue instead of to the individual county offices. 

At the outset, the mine net proceeds tax is self-assessed. 

The owner of a producer mine must on or before March 31 each year 

make out a statement of the gross yield or value of the metals and 

minerals produced by the mine in the preceding calendar year for 

which the statement is made. Section 15-23-502, MCA. Against the 

gross yield or value in dollars and cents, the mine owner (or 

lessee or operator) is allowed certain deductions set out in 55 15- 

23-502 and 15-23-503, MCA. The Department of Revenue is required 

to calculate from the returns the net proceeds in the mine yielded 
to the person engaged in mining. Section 15-23-503, MCA. The 

value so determined is then transmitted to the Department's agent 

in each county as the assessed value of the net proceeds from 

mines. section 15-23-106, MCA. The taxes and any penalties 

assessed on mine net proceeds are a lien upon the interest of the 

operator of the mine, on the machinery and equipment used in 

operating the mine, and may also be collected by a civil suit. 

Section 15-23-504, MCA. 

As a check on the returns made by mine operators for the 

purpose of net proceeds, the Department of Revenue was given the 

power at any time to examine the records of such mine owners or 

operators to verify the statements made in the returns. Section 

15-23-521, MCA. 

When the Department of Revenue assesses the mine net proceeds 

under 5 15-23-101, MCA, it must then notify the owner in writing 

of the assessed value it has determined. Section 15-23-102, MCA. 

Upon such notice, the taxpayer may demand a review of the validity 

of the assessment. Thereafter there may be an assessment review 

conference, not subject to the Montana Administrative Procedure 

Act, but including the right of discovery prior to any assessment 

revision conference. Section 15-23-102 (2) (b) , MCA. An appeal from 

the final decision may be taken to the State Tax Appeal Board. 

Section 15-23-102 (2) (c) , MCA. 

The conflict in this case arises from 5 15-8-601, MCA. It 

provides that whenever the Department of Revenue discovers that any 

taxable property of any person has escaped assessment, been 
erroneously assessed, or been omitted fromtaxation, the Department 

may assess the same, provided the property is under the ownership 

or control of the same person who owned it at the time it escaped 

assessment, was erroneously assessed, or was omitted fromtaxation. 

The same statute provides a ten year statute of limitation for such 

revised assessments. 

Section 15-8-601, MCA, is a general statute, applicable to all 

taxable property. It appears to conflict with provisions 

specifically relating to centrally assessed property in that 5 15- 

23-107, MCA, provides that "whenever the valuation of centrally 

assessed property is revised under 15-8-601, or 15-23-102(2)11 the 

Department must notify its county agent of the revised assessment. 

Moreover, if the Department determines that a taxpayer has 

incorrectly reported a value for taxes, including mine net proceeds 

taxes, the Department's county agents, after notification by the 

Department shall add interest to the tax at a certain rate. 

Section 15-23-115, MCA. Finally, with respect to centrally 

assessed properties, no deficiencies may be assessed or collected 

unless notice of the additional tax proposed is mailed within five 

years of the date the return was filed. Section 15-23-116, MCA. 

In its printed notices of revisions to Kaiser, and especially 

in its letters of January 28, 1988, and May 2, 1988, the Department 

advised Kaiser that the revised assessments were being issued under 

§ 15-8-601, MCA. Kaiser relies on these statements, and insists 

that because it is no longer the owner of the cement plant and 

quarry, and was not at the time the revisions were issued, that it 
cannot be held liable for the additional taxes. It relies 

particularly on W. R. Grace and Company v. Department of Revenue 

(1989), 238 Mont. 439, 779 P.2d 470. There this Court stated that 

for a revised or additional assessment under 5 15-8-601, MCA, the 

taxable property must have "escaped assessmentn and glmust remain 

under the ownership and control of the same person who owned or 

controlled it at the time it escaped assessment. (779 P. 2d at 

476) Kaiser also contends that in Grace, this Court distinguished 

the net proceeds tax from a self-assessing tax, and stated that the 

ten-year limitation in 5 15-8-601, MCA, is applicable. (779 P.2d 

at 476) 

With respect to the applicable statute of limitations, and the 

conflict between 55 15-283-601 and 15-23-116, MCA, the Department 

points out that the Grace opinion related to tax years 1977 and 

1978, before the enactment of 5 15-23-116, MCA. But we do not find 

any real conflict under Grace and other cases cited by Kaiser, 

because we determine that the legislative intent in view of all 

the statutes applicable allows the procedure followed by the 

Department in this case, and that to hold otherwise would lead to 

absurd results. 

By statute (5 1-2-102) and by case law, in the construction 

of statutes, those relating to particular subjects outweigh those 

related to general subjects. Department of Revenue v. Davidson 

Cattle Company (1980), 190 Mont. 326, 620 P.2d 1232. The statutes 

which relate to centrally assessed property, and particularly those 

which relate to mine net proceeds taxes, are entitled to greater 
deference here than the general provisions contained in 5 15-8- 

601, MCA. 

In searching for the legislative intent, as we must in the 

construction of statutes, if the general and particular provisions 

are inconsistent, the latter are paramount to the former. 

OtConnell v. State Board of ~qualization (1933), 95 Mont. 91, 25 

P.2d 114; and the latter will prevail over the former to the extent 

of any necessary repugnancy between them. In re Stevensonvs Estate 

(1930), 87 Mont. 486, 289 P. 566. Reasonable constructions must 

be adopted if possible, with deference shown to the interpretation 

given to the statutes by the officers or agencies charged with its 

administration. Department of Revenue v. Puget Sound Power and 

Light Company (1978), 179 Mont. 255, 587 P.2d 1282. 

The specific provisions of statutes relating to mine net 

proceeds taxes must supersede any repugnancy in the ownership 

provisions of 5 15-8-601, MCA. The DOR may audit for the purpose 

of determining the taxable value of net proceeds of mines. Section 

15-8-104, MCA. It must calculate fromthe returns the net proceeds 

of the mine yielded to the person engaged in mining, 5 15-23-503, 

MCA. It may Ivat any timevv examine the records of any person 

pertaining to the yield of ore or mineral products so as to verify 

the statements. Section 15-23-521, MCA. It may revise the 

valuation of centrally assessed property under §§ 15-8-601 or 15- 

23-102(2), MCA. (Section 15-23-107, MCA.) It may conduct an 

assessment review conference. Section 15-23-102(2)(b), MCA. The 

Department has but five years from the date the return was filed 
to assess and collect any deficiency. Section 15-23-116, MCA. The 

foregoing provisions are so specific relating to centrally assessed 

mine net proceeds taxes that the legislature could not have 

intended the ownership provision of 5 15-8-601, MCA, to apply as 

in this case. 

Especially, this case demonstrates the absurd result that 

might follow if we were to agree with Kaiser. Kaiser filed its 

1986 mine net proceeds return on March 5, 1987, and sold the mine 

on April 17, 1987. Under Kaiser's interpretation, it would be 

possible for such a mine owner to report a negative value or zero 

value for its mine net proceeds for a taxable year, sell its 

property, and be exempt from any revised taxation following an 

audit of the true result. The District Court put it fairly 

succinctly in stating: 

What the Board, in this reviewing court's view did, was 

fail to harmonize or reconcile the 5 15-8-601, MCA, with 

the Centrally Assessed Property Tax Statutes (Title 15, 

Chapter 23, MCA). Moreover, its order violates the 

statutory construction concept of the specific over the 

general, the result being that if the order stands, this 

State literally has no workable generally assessed 

property tax system, having created a number of 

meaningless acts. 

This Court cannot believe that such was the legislature's 

intent when it adopted the Centrally Assessed Property 

Statutes as an integral part of the tax structure. The 

mine net proceeds tax is a part of that structure. Darby 

Spar v. Department of Revenue, 217 Mont. 376, is one of 

a half-dozen cases confirming this principle. 

The process of reporting, auditing and assessing and 

statute of limitations, as provided for in Title 15, 

Chapter 23, is rendered meaningless by the Board adopting 

the taxpayer's literal interpretation of 5 15-8-601, MCA. 
We wish in this case to clarify, as we did in Steer v. 

Department of Revenue (deci - 1990) t - Mont . -I - P. 2d 

, the standard of review pertinent in this cause. We have 

before us a pure question of law. Kaiser suggests that in 

reviewing STAB'S decision, this Court will determine whether STAB'S 

conclusion of law constitutes an abuse of discretion. This Court 

is the final Montana arbiter of questions of law, and it is free 

to rule as its determines the law to be. Particularly this is 

applicable to administrative legal conclusions: 

That conclusion of law is a determination of a legal 

question, which when reviewed by a court is subject to 

a broader scope of review than are findings of fact made 

by an administrative agency. City of Billings v. 

Billings Firefighters (1982), 651 P.2d 627, 200 Mont. 

421. The expertise of courts in determining legal 

questions supersedes the deference owedto administrative 

determinations. 

Department of Revenue v. Gallatin Outpatient Clinic, Inc. (1988), 

234 Mont. 425, 429, 763 P.2d 1128, 1130. 

We affirm the decision of the ~istrict Court, and agree with 

its order that this cause be remanded to the State Tax Appeal Board 

for the determination of the cause on its merits. 

I Justice V 

We Concur: / 

Chief Justice 
Addendum 

15-23-101. Properties centrally assessed. The 

department of revenue shall centrally assess each year: 

(4) the net proceeds of mines and of oil and gas wells; 

15-23-102. Independent appraisal option - notice of 

assessment - opportunity for conference - appeal. . . . (2) (a) After assessing property under 15-23-101, the 

department shall notify the owner and any purchaser under 

contract for deed of such property, in writing, of the 

assessed value it has determined. 

(b) Within 20 days following notification, the taxpayer 

may demand a review of the validity of the department's 

assessment. The department shall conduct an assessment 

review conference, which is not subject to the contested 

case procedures of the Montana Administrative Procedure 

Act. However, a party has the right of discovery prior 

to any assessment revision review conference. Upon 

consideration following such conference, the department 

may revise the assessment. 

(c) Appeals from the final decision may be taken to the 

state tax appeal board. 

15-23-106. Transmission to the counties. (1) On or 

before July 1, the department shall transmit to its agent 

in each county a statement listing: 

(d) the assessed value of the net proceeds and royalties 

from mines and oil and gas wells in the county, as 
determined under 15-23-503, 15-23-505, 15-23-515, 15- 

23-603, and 15-230-605; and . . . 

15-23-107. Amended assessment - transmission to 

counties. Whenever the valuation of centrally assessed 

property is revised under 15-8-601 or 15-23-102(2), the 

department shall, within 15 days following the final 

decision or order, transmit a statement of the revised 

assessment to its agent or the county officer then having 

custody of the assessment book in the county where the 

property is located. The revision shall be immediately 

entered in the assessment book. 

15-23-116. Statute of limitations. (1) Except as 

otherwise provided in this section, no deficiency may be 

assessed or collected with respect to the year for which 

a return is filed unless the notice of additional tax 

proposed to be assessed is mailed within 5 years from the 

date the return was filed. For the purposes of this 

section, a return filed before the last day prescribed 

for filing is considered as filed on the last day. If 

the taxpayer, before the expiration of the period 

prescribed for assessment of the tax, consents in writing 

to an assessment after that time, the tax may be assessed 

at any time prior to the expiration of the period agreed 

upon. 

15-23-501. Taxation of mines. All mines and mining 

claims, both placer and rock in place, containing or 

bearing gold, silver, copper, lead, coal or other 

valuable mineral deposits, after purchase thereof from 

the United States, shall be taxed as all other land is 

taxed. All machinery used in mining and all property and 

surface improvements upon or appurtenant to mines and 

mining claims which have a value separate and independent 

of such mines or mining claims and the annual net 

proceeds of all mines and mining claims shall be taxed 

as other personal property. 

15-23-521. Examination of records by department. The 

department of revenue may at any time examine the records 

of any person specified in this part as the records may 

pertain to the yield of ore or mineral products or 

deposit in order to verify the statements made by the 

person. If from the examination or from other 

information, the department finds any statement or any 

material part of a statement willfully false or 

fraudulent, the department must assess in the same manner 

as provided for in 15-23-503 or 15-23-515. 

15-8-601. Assessment revision - conference for review. 

(1) 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 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.