NO. 86-474 

IN THE SUPREME COURT OF THE STATE OF MONTAEA 

1987 

DAN O'NEILL, 

Petitioner and Respondent, 

-vsDEPARTMENT OF REVENUE OF THE STATE 

OF MONTANA, 

Respondent and Appellant. 

APPEAL FROM: The District Court of the Second Judicial District, 

In and for the County of Silver Bow, 

The Honorable Arnold Olsen, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Larry Schuster argued, Dept. of Revenue, Helena, 

Montana 

For Respondent: 

Dunlap & Caughlan; Deidre Caughlan argued, Butte, 

Montana 

Submitted: April 29, 1987 

~~~id~d: June 22, 1987 
Mr. Chief Justice J. A. Turnage delivered the Opinion of the 

Court. 

The Department of Revenue (DOR) appeals a July 24, 

1986, order of the Second Judicial District Court, Silver Bow 

County. The order reversed the State Tax Appeal Board's 

valuation of O'Neill's property in 1982, accepted O'Neill's 

valuation of the property, and ordered that O'Neill's taxes 

be adjusted accordingly. We vacate and remand to the District Court for further development of the record. 

DOR presented five issues for our review: 

(1) Did the District Court err by substituting its 

judgment for that of STAB, thereby exceeding its scope of 

authority under 5 2-4-704, MCA? 

(2) Did the District Court err by allowing O'Neill to 

testify at the judicial review of the STAB decision, without 

the showing of good cause required by S 15-2-303(4), MCA? 

(3) Did the District Court err by allowing O'Neill to 

supplement the administrative record with an affidavit, 

without the showing of good cause required by 5 15-2-303 (4) , 

MCA? 

(4) Did the District Court err by infusing its own 

opinion of O'Neill's property value into its decision? 

(5) Did the District Court err by allowing O'Neill to 

pay his delinquent taxes, without an accompanying payment of 

accrued penalties and interest? 

At oral argument, we also raised the following issue: 

(6) Does 5 15-7-308, MCA, prohibit DOR from revealing 

specific information about the relevant comparable sales 

which DOR used in appraising O'Neill's property? 

Daniel O'Nei11 owns two parcels of commercial real 

estate on Harrison Avenue in Butte, Montana. The first 

parcel is an unimproved acre at 3755 Harrison Avenue. The 

second parcel consists of 7.5 acres containing a motel and 
O'Neill's residence at 3655 Harrison Avenue. In 1982, the 

Department of Revenue valued the first parcel at $63,398 and 

the second parcel at $166,320, based on the realty transfer 

certificates of comparable sales in the area. 

However, O'Neill asserted that his property values were 

$18,893 and $79,600, respectively. O'Neill unsuccessfully 

appealed the DOR valuations to STAB. He then petitioned the 

District Court for judicial review under the provisions of 

S 15-2-303(1), MCA, which states: "Any party to an appeal 

before the state tax appeal board who is aggrieved by a final 

decision in a contested case is entitled to judicial review 

under this [301 et seq.] part." The District Court reversed 

the STAB decision, and DOR appeals. 

Issues 1-3 

Following its review, the District Court made these 

findings of fact: 

XII. The the use of [Lescovar Motors, 

Copper King Inn, and Wendy's Hamburgers] 

properties for comparable market values 

is --- not a true reflection of -- the market 

value -- as the sales are speculative and 

further (2) of the comparable~ are too 

far from the subject to be of 

value in establishing market value in 

close proximity. 

XIII. That such values set for purposes 

of appraisal of the Plaintiff's property 

are inconclusive as a test of true 

market value. It is 2 personal observa- 

--- tion of this Judge -- that the Plaintiff's 

property - does - not generate business 

comparable to other motels, even minor 

active motels on Harrison Avenue. One 

motel larger than Defendant's [sic] 

motel closes for the winter months 

because of lack of occupancy. The 

Butte-Silver Bow business community has 

lost, as of the date of the appraisal 
herein, at least one-third of its theretofore business. The Department of 

Revenue is clearly wrong and it should 

have to make another appraisal. [Emphasis added.] 

The District Court made the following conclusions of 

law: 

2. That the system of appraisal using 

speculative land purchases as applied is 

inconsistent with providing a general 

and uniform method of classifying lands 

in accordance with true market -- value 

fails to provide an equitable and uniform basis of assessment of the Plaintiff's property when compared with the 

market value of the property. 

3. That similar properties --- in the same 

-- area of Harrison Avenue i 

have been apI 

 raised differentlv .' as the Plaintiff 

demonstrated by comparing his property 

to that of the Hamm's Motel. 

4. That a review of the entire record 

together with the evidence presented at 

the hearing indicates that the Board's 

denial of the Plaintiff's appeal and 

retaining the appraisal value of the 

subject property on the tax rolls is 

clearly erroneous in view of the relc 

able probative and substantial evidence 

on the whole record. [Emphasis added.] 

DOR contends that the District Court exceeded its scope 

of review under § 2-4-704, MCA. DOR argues that the District 

Court has the expertise in ascertaining the law, but STAB has 

the expertise in ascertaining the facts. DOR asserts that 

STAB, as the trier of fact, was entitled to determine the 

proper appraised value of O'Neill's property. 

Issues 1, 2 and 3 are interrelated and require discussion of § 2-4-703, 5 2-4-704, and § 15-2-303 (4), MCA. Our 

ana.lysis of these issues begins with the Montana 
Administrative Procedure Act (MAPA) S 2-4-703, MCA, which 

requires prior permission of the court before any additional 

evidence can be presented to an administrative agency: 

If, before the date set for hearing, 

application is made to the court for 

leave to present additional - evidence 

- --- - . - the court - - -- -- L mav order that the -- 

additional evidence be taken before the 

agency upon conditionidetermined - the 

court. [Emwhasis added.1 

Under § 2-4-703, MCA, when the court has allowed such 

additional evidence, it may be presented to the agency, but 

not to the court. This limitation accords with the standard 

of review of contested MAPA cases under S 2-4-704, MCA, which 

confines the court's review to the record: 

(1) The review shall be conducted by the 

court without a jury and shall -- be confined -- to the record . . . The court, 

upon request, shall hear oral argument 

and receive written briefs. 

(2) - The court may not substitute its 

judgment ---- for that of the agency as -- to 

- the weight -- of the evidence on questions - 

-- of fact. The court may affirm the 

decision of the agency or remand the 

case for further proceedings. The court 

may reverse or modify the decision if 

substantial rights of the appellant have 

been prejudiced . . . [Emphasis added.] 

In contrast, the court's review of contested STAB 

decisions is - not confined to the record. Section 

S 15-2-303 (4) , MCA provides: 

Notwithstanding the provisions of 

2-7-704(1), the court may, for good 

cause shown, permit additional evidence 

to be introduced. 

In other words, judicial review of MAPA contested cases 

under § 2-7-704, MCA, is limited to the record, but judicial 
review of STAB contested cases under S 15-2-303 (4), MCA, 

allows the court to supplement the record. Dept. of Revenue 

v. Davidson Cattle Co. (Mont. 1980), 620 P.2d 1232, 1235, 37 

St.Rep. 2074, 2077. Under S 15-2-303(4), MCA, the court 

reviewing a STAB decision may, on its own initiative or upon 

motion of a party, find good cause and allow additional 

evidence to be introduced before the court. Hi-Line Radio 

Fellowship v. DOR (Mont. 1987), - P.2d , 44 St.Rep. 

955. Once the additional evidence is introduced into the 

record, the reviewing court must then make appropriate findings of fact and conclusions of law. Rule 52(a), M.R.Civ.P. 

On the day of the hearing on judicial review, O'Neill 

moved the District Court for leave to introduce additional 

evidence. The court granted O'Neillls motion, and he then 

testified about the market value of his property. O'Neill 

also introduced a Butte title officer ' s affidavit , which 

stated that two parcels near J. C. Penney's sold for approximately $2O,OOO/acre, and that one parcel north of Lydia's 

Restaurant sold for approximately $7,50O/acre at a tax sale. 

DOR contends that O'Neill failed to show good cause for 

the addition of his testimony and the affidavit, and that the 

sudden introduction of the evidence denied DOR the opportunity for effective rebuttal. DOR asserts that OINeill failed 

to show that the affiant was unavailable as a witness, and 

therefore the affidavit was hearsay. DOR further argues that 

O'Neill had ample opportunities to fully state his case 

before the Silver Bow Tax Appeal Board and STAB, and that his 

testimony was unsupported and cumulative. 

We find that the showing of good cause under 

S 15-2-303 (4) is permissive, not mandatory. Any legally 

sufficient reason meets the good cause requirement of 

S 15-2-303(4), MCA, and such sufficiency lies within the 

discretion of the reviewing court. Furthermore, the 
additional evidence is not restricted to the parties. The 

court can accept evidence from a variety of sources. In the 

instant case, O'Neillls testimony may have been cumulative, 

but it was also probative of the market value of the property 

and thus fulfilled the good cause requirement. The affidavit 

did not violate the good cause requirement because it offered 

evidence of comparable sales. The availability of the affiant 

is a question of credibility, not admissibility. We hold 

that the District Court properly exercised its discretion 

under S 15-2-303(4) when it permitted the introduction of 

O'Neill's testimony and affidavit. 

Issue 4 

Did the District Court err by infusing its own opinion 

of O'Neillls property value into its decision? 

DOR contends that the District Court, in essence, 

became a witness and advocate for O'Neill by permitting its 

personal views to become part of its decision. DOR asserts 

that a reviewing court should remain an impartial tribunal 

for all litigants. DOR argues that the court's personal 

observations are unilateral impressions which cannot be 

deemed judicially-noticed facts. 

Judicial notice of facts is governed by Rule 201 (b) of 

the Montana Rules of Evidence which states: "A fact to be 

judicially noticed must be one not subject to reasonable 

dispute in that it is either (1) generally known within the 

territorial jurisdiction of the trial court or (2) capable of 

accurate and ready determination by resort to sources whose 

accuracy cannot be reasonably questioned." 

We note that the District Court went far beyond the 

record when it observed that O'Neill's property does "not 

generate business comparable to other motels." The District 

Court's observations could only be verified by the income 
statements of other motels on Harrison Avenue, or similar 

specific data. This data would not be "generally known'br 

"capable of accurate and ready determination." To qualify 

for judicial notice, an extrinsic fact must lie within the 

judge's immediate knowledge and not require thorough 

research. 

In the instant case, the District Court's empirical 

observations pass beyond the scope of judicial notice and 

border on judicial impression. The observations were not 

supported by the record, and are not sufficiently indisputable to qualify as judicially-noticed facts. We hold that 

the District Court erred on this issue. 

Issue 5 

Did the District Court err by allowing O'Neill to pay 

delinquent taxes without an accompanying payment of accrued 

penalties and interest? 

STAB had issued an order staying the collection of all 

O'Neill's taxes, penalties and interest while O'Neill's 

appeal was pending before STAB. O'Neill later attempted to 

pay his delinquent taxes to the Butte-Silver Bow Treasurer, 

who refused to accept payment of the taxes without an accompanying payment of the accrued penalties and interest. Upon 

motion by O'Neill on January 17, 1984, the District Court 

allowed O'Neill to pay his delinquent taxes to the 

Butte-Silver Bow Treasurer. However, the District Court did 

not require O'Neill to pay the accrued penalties and 

interest. 

DOR contends that the District Court erred, because the 

taxpayer is required to pay the disputed portion of the tax 

under protest before it becomes delinquent. DOR argues that 

both STAB and the District Court acted beyond the scope of 
their lawful powers, when they stayed payment of penalties 

and interest. 

Our analysis of this issue is governed by § 15-1-402, 

MCA, which allows a taxpayer to pay his taxes under protest 

and recover the amount protested if his challenge is successful. Section 15-1-402(1), MCA, states: 

The person upon whom a tax or license 

fee is being imposed may . . . before 

the tax or license fee becomes 

delinquent, pay under written protest 

that portion of the tax or license fee 

protested. The payment must (a) be made 

to the officer designated and authorized 

to collect it; and (b) specify the 

grounds of protest. [Emphasis added. 1 

A tax becomes delinquent when the taxes are due and not paid. 

Section 15-16-102, MCA. 

We held in Eagle Communications v. Treasurer of 

Flathead County (Mont. 19841, 685 P.2d 912, 918, 41 St.Rep. 

1303, 1311, that the County Treasurer is the officer who 

collects tax funds under 5 15-1-402, MCA. The general rule 

is that a taxpayer must pay his taxes when due, as a condition precedent for preserving his right to refund of property 

taxes under § 15-1-402, MCA. Eagle Communications, 685 P.2d 

at 917. In the instant case, the Butte-Silver Bow Treasurer 

refused to accept payment of O'Neill's delinquent taxes 

without an accompanying payment of penalties and interest, 

because O'Neill failed to comply with the requirements of 

S 15-1-402, MCA. We hold that the Treasurer properly exercised his authority by refusing payment. 

However, we cannot ignore the fact that both STAB and 

the District Court stayed the payment of penalties and interest by O'Neill. Therefore, we hold that O'Neill is required 

to pay penalties and interest on his 1982 taxes only to the 

date that he tendered payment of his 1982 taxes to the 
Butte-Silver Bow Treasurer. O'Neill's failure to heretofore 

pay such penalties and interest on his 1982 taxes does not 

affect his standing to proceed with his contested case. 

Issue 6 

Does 5 15-7-308, MCA, prohibit the DOR from revealing 

specific information about the relevant comparable sales 

which DOR used in appraising O'Neill's property? 

Section 15-7-308, MCA, states that the disclosure of 

information on a realty transfer certificate (RTC) shall be 

restricted: 

The certificate required by this part 

and the information therein shall not be 

a public record and shall be held confidential by the county clerk and recorder, county assessor, and department of 

revenue. This is because the legislature 

finds that the demands of individual 

privacy outweigh the merits of public 

disclosure. 

Throughout these proceedings, DOR asserted that it 

based O'Neill's tax assessment on data from relevant "comparable sales." This data was extracted from RTCs in the 

Harrison Avenue area. DOR's case is therefore predicated on 

the validity and relevancy of those RTCs. Yet, nowhere in 

the record did DOR reveal any details of the RTCs it used. 

Without the relevant information from the RTCs, a taxpayer 

cannot effectively rebut DOR's assessments, the Tax Appeal 

Board cannot make an informed decision, and the courts cannot 

conduct an adequate judicial review. 

In oral argument before this Court, DOR contended that 

the confidentiality requirements of 5 15-7-308, MCA, precluded DOR's disclosure of RTC information to the taxpayer party, 

tax boards or reviewing courts. 
In analyzing § 15-7-308, MCA, we note that the language 

protects the confidentiality of RTCs when the demand for 

individual privacy exceeds the merits of public disclosure. 

However, we must draw a distinction between public disclosure 

and limited disclosure to the taxpayer party, tax boards and 

reviewing courts in contested proceedings. When limited 

disclosure of relevant RTC information is crucial to a fair 

and informed decision by a tax appeal board or court, such 

disclosure outweighs individual privacy. 

Therefore, in contested tax proceedings, we hold that 

relevant information from the RTCs shall be disclosed to the 

taxpayer party, tax boards, and reviewing courts. During the 

pendency of the proceedings, the RTC information shall not be 

available to the public. At the conclusion of the contested 

proceeding, any portion of the record which contains the 

disclosed RTC information shall be sealed and unavailable for 

public inspection. Such limited and transient disclosure of 

RTC information conforms to the confidentiality requirements 

of 5 15-7-308, MCA; while providing the benefits of substantive due process to the taxpayer in a contested case. 

Under this holding, a taxpayer may apply to the District Court for a subpoena to compel the DOR to release 

relevant RTC information, upon which DOR based its comparable 

sales data. In order to minimize the intrusion into the 

records, the subpoena must identify the specific information 

requested by the taxpayer with as much precision as possible. 

The issuance and scope of the subpoena shall lie within the 

discretion of the District Court. Any abuse of the subpoena 

process, or overbroad requests for RTC information, may be 

prevented by a protective order from STAB or the District 

Court. 
for 

We vacate and remand this case to the District Court 

further development of the record. 

We concur: 

n 

Langen, District Judge