No. 80-307 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1981 

CATERPILLAR TRACTOR COMPANY, 

Inc., a Corporation, 

Petitioner and Respondent, 

THE DEPARTMENT OF REVENUE OF THE 

STATE OF MONTANA, 

Respondent and Appellant. 

Appeal from: District Court of the First Judicial District, 

In and for the County of Lewis and Clark. 

Honorable Gordon Bennett, Judge presiding. 

Counsel of Record: 

For Appellant: 

Terry B. Cosgrove, Special Assistant Attorney General, 

argued, Helena, Montana 

For Respondent: 

Hughes, Bennett, Kellner & Sullivan, Helena, Montana 

George T. 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 action would be barred by the 

applicable statute of limitations. 

While the matter was pending before STAB, the parties 

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 in business 

for the years in question within the meaning of the Montana 

Corporation License Tax Act and, therefore, was not subject 

to the tax. In December 1978, appellant notified 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 years December 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 file a return and 

is limited to a period of five years to collect a tax 

deficiency assessment from any corporation which has filed a 

return. 

The following chronology of statutory enactments, 

amendments, repeals and revivals, and Supreme Court 

decisions is necessary to determine this case. 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 License Tax Act (the Act) 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 state to assess additional 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 the discovery thereof at any 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 shall be 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 

State Board of Equalization in all instances where reference 

had been made to the state treasurer. 

In 1933 a separate and different statute was enacted 

which granted to the Board of Equalization the authority at 

any time to assert deficiency assessment of tax where no 

return was 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 state board 

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 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 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 the discovery 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 statute was "repealed by 

implication" or any other legal rationale on that point. 

Not addressing the particulars 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 acts or 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 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 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 the 
fifteenth day of the sixth month following 

the close of said corporations'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 the discovery 

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 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 the tax in the first instance based 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 all deficiency 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 text provided: 

"(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 return was filed." 

The issue presented here is whether the 1963 Legislature, in adopting Chapter 186, Laws of 1963, intended to 

place a comprehensive five-year statute of limitations on 
the Department's initiation of deficiency actions or whether 

it intended to impose a five-year limit only on those cases 

where a return had been filed and to place no limit on cases 

where there had been no filing at all. 

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 1933 Act or restore the 

repealed and superseded provisions of the 1917 Act. Any 

attempt to restore the 1917 Act by the 1945 Act was error. 

Appellant further argues that this Court erred in its 

decision in State v. King Colony Ranch, supra, and the 

opinion should be reversed. The 1933 Act impliedly repealed 

the 1917 Act, and the attempt to amend the original (1917) 

Act by the 1945 amendment was contrary to the law because of 

the intermediate 1933 Act. 

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 (a repealed 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 Colony Ranch case. According to 
appellant, the "intent" was "obvious"--to have one statute 

for corporations which file and one for corporations which 

do not file. 

Prior to 1963, under the provisions of the former 

section 84-1505, the Department had to act within five years 

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 files a tax return. The period begins to 

run only when the taxpayer takes the affirmative act of 

filing the 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 statute provides 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 to run. 

Respondent argues that this Court, in State v. King 

Colony Ranch, supra, held that by later enacting section 

84-1505 in 1945, the legislature had 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 clearly a 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 

language of revival or reenactment. It seems clear that the 

1963 legislators were oblivious to the fact that this Court 

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 all probability, no intention to revive the 

1933 Act because the question apparently never arose. 

Finally, respondent contends the District Court was 

correct in holding that section 84-1508.2 has no application 

where a return is filed. Thus, this case is controlled by 

the general statute of limitations, section 27-2-211, 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 into play the general statute of limitations. 

Section 25-1-102, MCA (formerly section 93-2401, 
R.C.M. 1947), provides that civil actions must be commenced 

within the periods prescribed in the statutes of limitations 

after the cause of action shall have accrued except where 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 

special proceeding of a civil nature." 

Section 27-2-211(c), MCA, provides a two-year statute 

of limitations for "a liability created by statute other 

than a penalty or forfeiture." 

Section 27-2-103, MCA (formerly section 93-2615, 

R.C.M. 1947), provides that the statutes of limitations are 

applicable to the State of 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 State of Montana 

granting a longer period of limitation, the generic statute 

of limitations, which is two years, would apply. 

Two cases of this Court control our decision in this 

case: State v. King Colony Ranch (1960), 137 Mont. 145, 350 

P.2d 841, and Great Western Sugar Co. v. Mitchell (1946), 

119 Mont. 328, 174 P.2d 817. In Great Western Suqar Co. 

this Court considered a corporation license fee, paid under 

protest by the sugar company. The company filed its papers 

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 the proportion of the foreign corporation's capital 
stock 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 to provide that the fee was 

to be calculated on the "authorized capital stock" instead 

of on the "issued capital stock." This Court found that the 

Act, in basing the fee upon authorized capital stock, a 

large portion of which remained unissued, offended both the 

commerce and due process clauses of the United States 

Constitution and was invalid. 

The Court further found that where the legislature in 

enacting a new statute to take 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 the new Act should become operative, 

and where such new Act is declared unconstitutional, the 

repealing clause therein contained falls with 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. 

Great Western 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 question which was not before the Court, it 

said: "If we assume that this may be done (see 59 C.J. 618), 

before it may be accomplished there must be a clear 

legislative intent to do so. (50 Am.Jur. 574 n. 12) There 
is no language in Chapter 169 [Laws of 19311 that indicates 

any such legislative intent." Great Western Sugar Co., 174 

P.2d at 821. 

Appellant incorrectly relies on Great Western 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 not before the Court. It held 

that, if it could be done, there had to be a clear 

leqislative intent to do 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 in the Act section 84-1513 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 

legislature had done in 1933 and 1945. This Court held with 

respect to all taxpayers that the Department of Revenue had 

five years from the due date of the return, in which to 

assert a deficiency judgment. 

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 its memorandum: 

"There were in the 1963 Act 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 Court 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 all probability, no intention 

to revive the 1933 Act because the question 
apparently never arose." 

In view of the fact there is no express intent that 

the legislature intended to reverse or reenact the statute 

in the 1963 Act, we hold the exception therein set forth is 

unenforceable. State v. King Colony Ranch, supra. We 

further hold that section 27-2-211, MCA, the general statute 

of limitations on a liability created by statute, is the 

controlling statute in this case and that appellant cannot 

enforce the tax statute anytime thereafter . 

The judgment is affirmed. 

Justice 

We concur: