### No. 80-307 INTHESUPREMECOURTOF THE STATEOF MONTANA 1981

CATERPILLAR TRACTORCOMPANY, Inc., aCorporation, Petitionerand Respondent,

THE DEPARTMENTOF REVENUEOF THE STATEOF MONTANA, Respondent andAppellant.

Appeal from: District Court of the FirstJudicialDistrict, Inand for theCountyofLewisand Clark. Honorable GordonBennett,Judgepresiding. Counselof Record: ForAppellant: TerryB. Cosgrove,Special AssistantAttorney General,

argued, Helena,Montana ForRespondent: Hughes, Bennett,Kellner & 

### Sullivan,Helena, Montana GeorgeT. Bennett argued, 

## ,Montana

Submitted: June 17,1981 Decided: 

### AUG

## 6

## -1981 Filed:

## AUG6-

## 19m

### Mr. Justice John Conway Harrison delivered the Opinion of the Court. This is an appeal from a declaratory judgment of the District Court of the First Judicial District, County of Lewis and Clark, determining that the two-year statute of limitations in section 27-2-211, MCA, applied to the assessment of corporate license tax for corporations which failed to file a return. Caterpillar Tractor Co., Inc., respondent, appealed to the State Tax Appeal Board (STAB) from a determination made by the Montana Department of Revenue, appellant, in December 1978, that respondent had been doing business in Montana for tax purposes for the years 1959 through 1971. Respondent alleged that appellant did not have statutory authority to assess any delinquent tax for a portion of the years under audit because such actionwould be barred by the applicable statute of limitations. While thematter waspending before STAB, theparties jointly petitioned the District Court for an interlocutory adjudication of the applicable statute of limitations. The District Court accepted jurisdiction for the purpose of determining that single legal issue. The court, in an original memorandum and supplemental memorandum amending opinion, held that the two-year statute of limitations contained in section 27-2-211,MCA, applies and controls the assessment of any corporation license tax. The result of that finding prohibits the assessment of any additional tax by appellant. From this judgment the Department of Revenue appeals. Respondent, an Illinois corporation, had business activities in Montana for the years 1959 through 1971.

### Appellant alleges the business activities consisted of selling equipment through independent dealers operating in Montana. Respondent contends it

### was not engaged inbusiness for the years inquestionwithin themeaning of theMontana CorporationLicense Tax Act

### and, therefore, was not subject tothe tax. InDecember 1978, appellantnotified respondent that it 

### had determined that it 

### was doing business for tax purposes in Montana for the years in question and demanded that respondent file corporation license tax returns together with tax and interest due for the corporation's calendar yearsDecember 31, 1959, through December 31, 1971. Respondent appealed that determination to STAB and later to the District Court by the interlocutory adjudication. The District Court held that appellant is 

### limited to a period of two years to assess or collect any tax against a taxpayer who has failed to filea return and is limited to a period of five years to collect a tax deficiency assessment from any corporationwhich has fileda return.The following chronology of statutory enactments, amendments, repeals and revivals, and Supreme Court decisions 

### is necessary to determine thiscase. Not all of these statutes are codified in the Montana Code Annotated; therefore, use of Revised Codes of Montana citations 

### is necessary. The

### Montana Corporation LicenseTax Act 

### (theAct) was 

### adopted in 1917. Section 5, Chapter 79, Laws of 1917, codified as section 2300, R.C.M. 

### 1921, was the sole provision which allowed the statetoassessadditional tax. It

### provided:"In cases of refusal or neglect to make such return, and in cases of erroneous, false, or fraudulent returns, the state treasurer shall, upon thediscovery thereof atany time within three years after said return 

### is due, make a return upon information obtained as provided for in this act, and the assessment made by him shallbe paid by such corporation immediately upon notification of the amount of such assessment

# . .." That portion of the Act was amended five times between 1917 and 1963: In 1923 the corporation tax statute was amended in Section 2, Chapter 146, Laws of 1923, to substitute the StateBoard of Equalization inallinstanceswhere reference had been made tothe statetreasurer. In 1933a separate and different statutewas enacted which granted to the Board of Equalization the authority at any 

### time to assert deficiency assessment of tax where no returnwas filed: "In the case of a false or fraudulent return with intent to evade tax or of a failure to file a return the tax may be assessed, or a proceeding in Court for the collection of such tax may be begun without assessment at any time." Section 9, Chapter 166, Laws of 1933, codified as section 2303.5, R.C.M. 1935. In 1945 the period for assessing the additional tax

was changed from three to five years along with some other unrelated amendments, Chapter 209, Laws of 1945, codified as section 84-1505, R.C.M. 1947: "Assessment of Tax--Payment-Lien of Tax. All assessments shall be made by the stateboard of equalization, and the seieral corporations shall be notified of the amounts for which they are respectively liable, on or before the first day of June of each successive year. Payment of the tax assessed shall be made by corporations reporting on a calendar year basis, on or before the fifteenthday of June following the assessment of the tax. Payment of said tax shall be made by corporations operatingon a fiscalyear basis

### on or before the fifteenth day of the sixth month following the close of said corporation's fiscal year. In cases of refusal or neglect to make such return, and in cases of erroneous, false, or fraudulent returns, the state board of equalization shall,upon thediscovery thereof at any time within five (5)

### years after said return is due,make a return upon information obtained as provided for in this act, and the assessment made by the state board of equalization shall be paid by such corporation immediately upon notification of the amount of such assessment

# ..

# ."

In 1960 this Court, in State v. King Colony Ranch (1960), 137 Mont. 145, 350 P.2d 841, held that the 1945 statute, section 84-1505, superseded the 1933 enactment, section 84-1513, in determining which time limitation the state board would use in assessing taxes. This Court did not expressly mention that the 1933 statutewas "repealedby implication" or any other legal rationale on that point. Not addressing theparticulars of repeal, the Court said the 1945 enactment was later and, therefore, the later statute applied. At the next legislative session, the 37th Legisla.tive Assembly in Chapter 102, Laws of 1961, reenacted section 84-1505, R.C.M. 1947, which placed a five-year limitation upon the Board's authority to assess deficiencies in all instances and repealed all actsor parts of acts in conflict therewith: "(1)Assessment of tax--payment--lien of tax. All assessments shall be made by the state board of equalization, and the several corporations shallbe notified of the amounts for which they are respectively liable,on or before the first day of June of each successive year. Payment of the tax assessed shall be made by corporations reporting on a calendar year basis, on or before the fifteenth day of June following the assessment of the tax. Payment of said tax shall be made by corporations operating on a fiscal year basis on or before thefifteenth day of the sixth month following the closeof saidcorporations's fiscalyear. In cases of refusal or neglect to make such return, and in cases of erroneous, false, or fraudulent returns, the state board of equalization shall, upon the discovery thereof at any time within five (5) years after said return 

### is due, make a returnupon information obtained asprovided for in this act, and the assessment made by the state board of equalization shall be paid by such corporation immediately upon notification of the amount of such assessment

# .

# .."

In 1963 the 38th Legislative Assembly, by Chapter 186, Laws of 1963, substantially revised the Corporation License Tax Act and made the corporation license tax selfassessing. The taxpayer was required to assess the tax in the first instance, whereas previously the state board had determined thetax in the firstinstancebased upon returns. Among the changes made by the 1963 Legislature was the revision of section 84-1505, R.C.M. 1947, providing that no longer did the Department have the authority to make deficiency assessments. In addition, Section 2, Chapter 186, Laws of 1963, codified as section 84-1508.2, R.C.M. 1947, provided that alldeficiency assessments for corporation license tax purposes were required to be made within five years from the date the return was filed "except as otherwise provided in section 84-1513," R.C.M. 1947. The partial textprovided: "(1)Except as otherwise provided in section 84-1513, no deficiency shall 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 five (5) years from the date the returnwas filed." The issuepresented here iswhether the 1963Legislature, in adopting Chapter 186, Laws of 1963, intended to place a comprehensive five-year statute of limitations ontheDepartment's initiationof deficiency actionsor whether it intended to impose a five-year 

### limitonly on those cases where a returnhad been filedand toplace no 

### limiton cases where there had been no filingatall. Appellant argues that the amendment to section 84-1505 adopted as part of the Laws of 1945 did not impliedly repeal section 84-1513; and, therefore, section 84-1513 was in full force and effect when the 1963 Legislature adopted that section by reference. Appellant argues that the original 1917 Act was amended by the 1933 Act and, therefore, the 1945 amendment to the original 1917 Act did not repeal the intermediate 1933Actor restore the repealed and superseded provisions of the 1917 Act. Any attempt torestore the 1917Actby the 1945Act was error. Appellant further argues thatthisCourt erred in

### its decision in State v. King Colony Ranch, supra, and the opinion should be reversed. The 1933Actimpliedly repealed the 1917 Act, and the attempt to amend the original (1917) Actby the 1945 amendment was contrarytothe law because of the intermediate 1933Act. Appellant argues that section 84-1513 was adopted by reference by the enactment in 1963 of section 84-1508.2. Appellant contends that section 84-1513 (arepealed act)may be reenacted by reference. Appellant argues that Great Western Sugar Co. v. Mitchell (1946), 119 Mont. 328, 174 P.2d 817, allows the legislature to adopt by reference a repealed act if there 

### is a showing of clear legislative intent. The legislature did not specifically express the intent to revive because, appellant points out, of the confusion of the Kinq ColonyRanch case. According toappellant, the "intent" was "obvious"--to have one statute for corporationswhich fileand one for corporationswhich do not file. Prior to 1963, under the provisions of the former section 84-1505, theDepartment had to actwithin fiveyears from the date the return was due to collect a deficiency. The 1963 amendment made a significant change providing for five years from the date the return was filed to collect a deficiency. Appellant contends from 1963 forward, the statute of limitations will not begin to run until a taxpayer actually filesa tax return. The period begins to

run only when the taxpayer takes the affirmative act of filingthe return. There was only one statute dealing with deficiency assessments in 1963, section 84-1508.2, R.C.M. 1947, and it applies to corporations. The statuteprovides for five years from the time the return is filed for all corporations, and until the return 

### is actually filed, the period does not begin torun. Respondent argues that this Court, in State v. King Colony Ranch, supra, held that by later enacting section 84-1505 in 1945, the legislaturehad limited the Department of Revenue in all instances including the nonfiling situation to a five-year period for assessment. Section 84-1505 controlled, and section 84-1513 was not an effective and viable provision upon which the Department could rely. This, respondent contends, is clearlya holding of repeal by implication. The holding in Kinq Colony Ranch could be based only upon a finding and holding that the later enactment was so inconsistent as to impliedly repeal the

### first. Respondent also argues that the District Court correctly held that section 84-1513 was not revived or reenacted by reference. Appellant's position 

### is that mere reference reenacted the repealed section 84-1513. However, respondent argues there 

### is a distinct difference between "incorporation by reference" and "revival by reference." What the Montana legislature did in 1963 was to assume (incorrectly) that section 84-1513 was still 

### a valid and existing provision and could thus be incorporated by reference. This 

### is far different from the legislature expressing an intent to reenact a provision, by reference, which it 

### knew had been repealed. There were in the 1963 Act 

### no express words and no languageof revival or reenactment. It

### seems clear thatthe 1963 legislatorswere oblivious tothe fact that thisCourt had concluded that the 1933 Act 

### had been repealed or superseded by the 1945 Act 

### and believed they could incorporate that Act 

### by reference. There was no visible attempt and, in allprobability, no intention to revive the 1933Act

### because thequestionapparentlynever arose. Finally, respondent contends the District Court was correct inholding that section84-1508.2 hasno application where a return 

### is filed. Thus, thiscase 

### is controlled by thegeneral statuteof limitations, section27-2-211, MCA. 

### Appellant's argument that prior to 1963 it 

### had five years in which to assess in this 

### case the nonfiling return and that the 1963 amendment removed that limitation would bring intoplay thegeneral statuteof limitations. Section 25-1-102, MCA 

### (formerly section 93-2401,R.C.M. 1947),provides that civil actions must be commenced within theperiods prescribed in the statutesof limitations after the cause of action shallhave accrued exceptwhere in special cases a different limitation 

### is prescribed by statute. This same section describes the term "action" as including "a special proceeding of a civil nature." The action of appellant in asserting liability against a taxpayer by way of deficiency assessment constitutes "a specialproceeding of a civilnature." Section27-2-211(c), MCA, provides a two-year statute of limitations for "a liability created by statute other than apenaltyor forfeiture." Section 27-2-103, MCA (formerly section 93-2615, R.C.M. 1947), provides that the statutesof limitations are applicable tothe Stateof Montana. Respondent contends the Montana corporation license tax 

### is a liability imposed by statute and, in the absence of a special grant of authority pursuant to section 25-1-102, MCA, to the Stateof Montana granting a longer period of limitation, the generic statute of limitations, which 

### is two years, would apply. Two cases of thisCourt control our decision in this

case: Statev. King Colony Ranch (1960), 137Mont. 145, 350 P.2d 841, and Great Western Sugar Co. v. Mitchell (1946), 119 Mont. 328, 174 P.2d 817. In GreatWestern Suqar Co. thisCourt considered a corporation license fee, paid under protest by the sugar company. The company filed itspapers of incorporation with the Secretary of State in 1916 and paid a fee for filing thereof as prescribed by Section 1, Chapter 37, Laws of 1915. The fee under the 1915 Act was based on theproportion of the foreign corporation's capitalstock represented by its property and business in this state. In 1923 the legislature enacted Chapter 132. Section 4 of that Act doubled the fee and repealed all conflicting acts. This Act was reenacted by a statute passed by the 1925 Legislature toprovide that the fee was to be calculated on the "authorized capital stock" instead of on the "issued capital stock." ThisCourt found thatthe Act, in basing the fee upon authorized capital stock, a largeportion of which remained unissued, offended both the

commerce and due process clauses of the United States Constitution and was invalid. The Court further found thatwhere the legislaturein enacting a new statute totake the place of the former one, related to a given subject, intended to continue the policy theretofore pursued, where the new Act would supplant the former one only in case thenew Act should become operative, and where such new Act 

### is declared unconstitutional, the repealing clause therein contained fallswith it. The new Act must be deemed as though never enacted, and the one sought to be repealed remains in full force and effect, citing Chicago, M., St. P. & P. R. Co. v. Harmon (1931), 89 Mont. 1, 295 P. 762, 764. GreatWestern Sugar Co. went on to hold that the legislature could adopt a statute by reference. Gustafson

v. Hammond Irrigation Dist. (1930), 87 Mont. 217, 287 P. 640. Considering whether the legislature could adopt a repealed act, a questionwhich was notbefore theCourt, it said: "Ifwe assume thatthismay be done (see59 C.J. 618), before it may be accomplished there must be a clear legislative intent todo so. (50Am.Jur. 574 n. 12) There

### is no language inChapter 169 [Laws of 19311 that indicates any such legislative intent." GreatWestern SugarCo., 174 P.2d at821. Appellant incorrectly relies on GreatWestern Sugar Co. 

### - for the proposition that a repealed statute may be revived by reference. That case, as noted above, did not decide that issue, as it 

### was notbefore the Court. It

### held that, if it 

### could be done, there had to be a clear leqislative intenttodo so. While appellant argues that there was a clear legislative intent to revive section 84-1513, R.C.M., 

### 1947, we hold that because of no such expression intheAct

### section84-1513 was not revived. The next case for consideration is 

### State 

### v. King Colony Ranch, supra, decided in 1960, which brought about the legislative enactment of Chapter 186, Laws of 1963. That case called for this Court to interpret what the legislaturehad done in 1933and 1945. ThisCourtheld with respect toalltaxpayers that theDepartment of Revenue had five years from the due date of the return, in which to asserta deficiencyjudgment. This was the state of the law when the 1963 legislature enacted Chapter 186, Laws of 1963, seemingly in total ignorance of the 

### state of the law it 

### had created by 

### its 1933 and 1945 enactments. The District Court comments in 

### itsmemorandum: "There were in the 1963Act

### no express words and no language of revival or reenactment. It 

### seems perfectly clear that the 1963 legislators were oblivious to the fact our Supreme Courthad concluded thatthe 1933Act had been repealed or superseded by the 1945 Act 

### and believed they could incorporate that Act 

### by reference. There was no visible attemptand, inallprobability, no intention to revive the 1933 Act 

### because thequestion

### apparentlynever arose." Inview of the fact 

### there is 

### no express intent that the legislature intended toreverse or reenact the statute inthe 1963Act, 

### we 

### hold the exceptiontherein 

### set forth is 

### unenforceable. State 

### v. King Colony Ranch, supra. We 

### further hold thatsection27-2-211, MCA, thegeneral statute of limitations on a liability created by statute, is 

### the controlling statute in this case 

### and that appellant cannot enforcethe taxstatuteanytimethereafter

# . Thejudgment 

### isaffirmed.

Justice

We concur: