No. 13418 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

19 7 6 

JOHN F. PATTERSON, JR. , as 

Trustee of the Estate of John F. Patterson, et al., 

Plaintiffs and Respondents, 

THE STATE OF MONTANA, DEPARTMENT OF REVENUE, 

and WILLIAM A.GBOFF, Acting Director Thereof, and 

DOUGLAS W. CAMPBET,T,, COUNTY ASSESSOR FOR MISSOULA 

COUNTY, 

Defendants and Appellants. 

Appeal from: District Court of the Fourth Judicial District, 

Honorable Jack L. Green, Judge presiding. 

Counsel of Record: 

For Appellants : 

Randall Swanberg argued, Great Falls, Montana 

Re Bruce McGinnis, Helena, Montana 

For Respondents: 

Turnage and McNeil, Polson, Montana 

Jean A. Turnage argued, Polson, Montana 

Boone, Karlberg and Haddon, Missoula, Montana 

Sam Haddon argued, Missoula, Montana 

For b.micus Curiae: 

Cure, Borer and Lynch, Great Falls, Montana 

Orin Cure argued, Great Falls, Montana 

Thomas Clary argued, Great Falls, Montana 

Robert P. Goff argued, Great Falls, Montana 

Richard McCann, Billings, Montana 

Submitted: September 8, 1976 

Decided : DEC 6 - Im 

Filed : DEC 6 - 1916 
Mr. Justice Frank I. Haswell delivered the Opinion of the Court. 

The Montana Department of Revenue and two tax officials 

appeal from a judgment of the district court, Missoula County, 

holding the current statewide property appraisal program 

unconstitutional and illegal and permanently enjoining its implementation and use in Missoula County. 

The background of the present controversy will furnish 

an overview of the situation on appeal and place the issues in 

perspective. Prior to the effective date of the new Montana 

Constitution on July 1, 1973, the process of appraisal, assessment and taxation of real property in Montana was largely in 

the hands of county officials subject to supervision, appeal 

and equalization by the State Board of Equalization, Although 

property valuations were by law subject to a continuous process 

of keeping valuations current, there was a considerable variation 

in performance among the 56 counties in Montana in keeping 

appraisal valuations up-to-date. Some idea of this situation 

statewide can be gleaned from these cases: Yellowstone Pipeline 

Co. v. State Board of Equalization, 138 Mont. 603, 358 P.2d 55; 

State Board of Equalization v. Vanderwood, 146 Mont. 276, 405 

P.2d 652. 

When the 1972 Montana Constitution became effective, 

the State Department of Revenue assumed jurisdiction over the 

property taxation system in Montana pursuant to Art,VIII, Section 

3, 1972 Montana Constitution and implementing legislation. 

Between July 1, 1973 and July 1, 1975 the Department of Revenue 

was engaged in information gathering, standardizing appraisal 
procedures, hiring and training appraisal staffs in the 

various counties, and similar activities as well as reappraising 

property. 

In early 1975 the Montana Legislature enacted a statute 

directing the Department of Revenue to administer and supervise 

a program for the revaluation of all taxable property in 

Montana at least every 5 years; to promulgate a comprehensive 

written plan of rotation fixing the order of revaluation in 

each county on the basis of the last revaluation of taxable 

property in each county prior to July 1, 1974 to adjust disparities between counties; and to provide that all property in each 

county be revalued at least every 5 years or that 20% thereof 

be revalued each year. Section 1, Ch. 294, Laws of 1975, 

codified as section 84-429.14, R.C.M. 1947. The legislation 

also provided that the same method of appraisal and assessment 

be used in each county so that at the end of each cyclical 

revaluation program comparable property with similar market 

values would have substantially equal taxable values. Section 2, 

Ch. 294, Laws of 1975, codified as section 84-429.15, R.C.M. 1947. 

In April 1975, this Court held the Department of Revenue's 

implementation of a county-financed reappraisal of property in 

Lewis and Clark County by a private appraisal firm was unconstitutional in violation of equal protection, due process and uniformity requirements. Larson v. State Department of Revenue, 

166 Mont. 449, 534 P.2d 854. The thrust of Larson was that the 

State Department of Revenue had no statewide plan of reappraisal 

and accordingly implementation of the county-financed plan resulted in an unconstitutional and disproportionate tax burden 

on Lewis and Clark County taxpayers as compared to taxpayers of 

other counties. 

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In early June 1975 the Department of Revenue distributed 

a document known as the "Montana Appraisal Plan" which is the 

focal point of this appeal. It purported to be a general and 

uniform statewide plan for a 5 year cyclical revaluation of 

all taxable property in Montana in compliance with Ch. 294, 

Laws of 1975 and in conformity with our decision in Larson. 

It was noticed for hearing, a hearing was held, and the plan 

as adopted as a rule of the Department of Revenue, purportedly 

pursuant to the provisions of the Montana Administrative Procedure 

Act, section 82-4201, et.seq., R.C.M. 1947. 

The instant case was filed in the district court of 

Missoula County in April 1975 by a number of individual taxpayers 

and a taxpayers' association from Missoula County against the 

Department of Revenue, its director, and the Missoula County 

assessor. In general, this action challenges the constitutionality 

and legality of the Montana Appraisal Plan, its implementing 

legislation and the property appraisal program in Missoula County. 

It seeks both declaratory and injunctive relief. At the time the 

complaint was filed, the district court issued a temporary restraining 

order preventing the use of the reappraisals on the 1975 tax rolls. 

After hearing, an injunction pendente lite was issued to the 

same end resulting in the use of 1974 assessment roll valuations 

for 1975 taxes. 

Approximately 20 similar actions were filed in the district 

courts of other Montana counties. Injunctive relief during the 

pendency of the actions was granted in some cases and denied in 

others preventing uniformity of application of the "Montana Appraisal 

Plan" and its revaluations on a statewide basis. Faced with this 
the Governor of Montana directed the Department of Revenue to 

use the same appraisals in the tax year 1975 as were used in the 

1974 tax year. 

Trial of the instant case was commenced on January 26, 1976, 

in the district court of Missoula County before the Hon. Jack L. 

Green, district judge, sitting without a jury. On May 20, 1976, 

the district court entered findings of fact, conclusions of law, 

and judgment. The gist of the judgment was that the Montana 

Appraisal Plan was never legally adopted and is void; that the 

appraisal program carried on by the Department of Revenue in 

Missoula County violated the taxpayers' rights to uniformity of 

taxation and denied them due process and equal protection of the 

laws under the Montana and United States Constitutions; and 

permanently enjoined the use of the reappraisals and implementation of the reappraisal program in Missoula County. 

The district courts of Flathead and Cascade Counties in 

similar suits have held the Montana Appraisal Plan and the 

revaluation program of the Department of Revenue thereunder 

constitutional. 

The Department of Revenue has appealed from the judgment 

of the Missoula County district court in the instant case. Various 

taxpayers and taxpayer groups have appeared as amicus curiae by 

brief and oral argument in this appeal. 

The underlying issues on appea1,as we understand them, 

can be summarized in this manner: 

1) Is the Montana Appraisal Plan and its implementing 

legislation constitutional? 

2) Was the Montana Appraisal Plan legally adopted? 

3) Is the Department of Revenue proceeding legally and 

constitutionally under the Montana Appraisal Plan? 
Directing our attention to the first issue, we note that 

the basic attack of respondent taxpayers on the constitutionality 

of the Montana Appraisal Plan and its implementing legislation 

is that it does not provide a general and uniform statewide 

plan of revaluation of all taxable property in the state, but 

on the contrary is simply 56 separate county plans, each of which 

is different from the others, resulting in an unreasonable, 

discriminatory and disproportionate tax burden upon the taxpayers 

of Missoula County and the state of Montana. The taxpayers also 

contend there is no provision for the appraisal of timberlands in 

the pbnwhich are required to be appraised at full value. Additionally, they claim the property classifications in the Plan fail 

to treat all taxable properties of similar nature and-use the same. 

As a result, the taxpayers assert that the plan and its implementing 

legislation do not conform to the legal requirement of uniformity 

of taxation and violate the due process and equal protection 

clauses of the Montana Constitution (Art. 11, Sections 4 and 17, 

1972 Montana Constitution) and the Fifth and Fourteenth Amendments 

to the United States Constitution. 

Initially, we note the provisions of Art. VIII, Section 3, 

1972 Montana Constitution: 

"The state shall appraise, assess, and equalize 

the valuation of all property which is to be taxed 

in the manner provided by law." 

The manner of appraisal of property for tax purposes is 

set out in section 84-429.12, R.C.M. 1947: 

"It is hereby made the duty of the state department 

of revenue to implement the provisions of this act by 

providing" 
"2. For a general and uniform method of appraising 

city and town lots. 

"3. For a general and uniform method of appraising 

rural and urban improvements. 

"4. For a general and uniform method of appraising 

timberlands ." 

Prior to 1975 Montana statutes required that all taxable 

property (other than agricultural lands) be assessed at full 

cash value. Section 84-401, R.C.M. 1947. The 1975 legislature 

amended this statute to provide for assessment of all property 

for tax purposes (other than agricultural lands) at 40% of full 

cash value. 

The 1975 legislature also enacted section 84-429.14, R. 

C.M. 1947, providing: 

"The department of revenue shall administer and 

supervise a program for the revaluation of all taxable 

property within the state of Montana at least every 

five (5) years. A comprehensive written plan of rotation 

shall be promulgated by the department of revenue fixing 

the order of revaluation of property in each county 

on the basis of the last revaluation of taxable property 

in each county prior to July 1, 1974, in order to adjust 

the disparities therein between the counties. The plan 

of rotation so adopted shall provide that all property 

in each county shall be revalued at least every five (5) 

years or that no less than twenty per cent (20%) of the 

property in each county shall be revalued in each year. 

The department of revenue shall furnish a copy of the 

plan and all amendments thereto to each county assessor 

and the board of county commissioners in each county." 

The 1975 legislature in the same bill enacted section 

84-429.15, providing: 

 he same method of appraisal and assessment shall 

be used in each county of the state to the end that 

comparable property with similar true market values and 

subject to taxation in Montana shall have substantially 

equal taxable values at the end of each cyclical revaluation program hereinbefore provided." 
According to the Department of Revenue, the Montana 

Appraisal Plan was promulgated pursuant to sections 84-429.14 

and 84-429.15 and in compliance to our decision in Larson. 

In general the Elan classifies property for tax purposes in 

eleven categories and provides a schedule for reappraisal of such 

and 

property in each county by year, percentage amount,/classification in each year of the 5 year cycle so that at the end of 

the cycle all property in the entire state will have been 

reappraised. The Plan provides a separate schedule and rotation 

of reappraisal in each county with property most remotely 

appraised timewise deemed the most deviant from current value and 

scheduled for reappraisal first. The Plan provides that all 

property is to be appraised by a uniform method based on a 

designated appraisal manual. 

We hold that the Montana Appraisal Plan and its implementing legislation is constitutional. Initially we recognize 

that violation of statutory uniformity requirements generally 

results in violation of constitutional equal protection and 

due process requirements. Larson v. State Department of Revenue, 

supra. However, we find no violation of statutory uniformity 

requirements in the plan. All like property is appraised by a 

uniform standard under the Plan according to uniform valuation 

procedures set forth in the same designated appraisal manual. 

The appraisal rotation is fixed by a uniform rule requiring the 

property that has gone longest since appraisal and is deemed to 

be most deviant from current values to be appraised first. All 

property in the state is required to be appraised by the end of 

the 5 year cycle. 
Respondent taxpayers apparently contend that the Plan 

is not general and uniform because it consists of 56 separate 

county plans, each different from any other, rather than one 

homogeneous statewide plan. They point out in each county there 

is a different reappraisal schedule, different classifications 

of property in different amounts are reappraised in each year 

of the 5 year cycle in each county, and the sequence of reappraisal 

varies from county to county. However, they overlook the fact 

that each county presents a different situation with respect 

to recency of the last appraisal, the type of property that has 

gone the longest since appraisal, and the amount and classification of the property most deviant from current values. Where, 

as here, a uniform rule is provided for statewide application to 

determine the reappraisal rotation, the type and amount of property 

to be reappraised in each year in each county there is no violation of uniformity requirements. 

It must be recognized that in any cyclical revaluation 

plan temporary disparities within the cycle between individual 

property valuations both within the county and between counties 

are inevitable. Nonetheless such cyclical plans have been uniformly 

upheld against uniformity and equal protection attacks under 

state and federal constitutional provisions in the absence of intentional, systematic, arbitrary or fraudulent discrimination. 

Recanzone v. Nevada Tax Commission (1976), - Nev. -9 550 P.2d 

401 and cases cited therein; Anno. 76 ALR2d 1077. 

A major contention of the taxpayers focuses on the fact 

that those properties reappraised in the first year of the 5 year 

cycle and placed on the tax rolls then will pay a higher and 

disproportionate share of taxes in comparison to those properties 

reappraised in the last year of the cycle. This is undoubtedly 
true in any cyclical reappraisal plan. However, as long as a 

taxpayer's property is not overvalued in the reappraisal process, 

he cannot secure a duction in his own appraisal on the ground that 

another taxpayer's property is underappraised. The placing of 

revaluations on the tax rolls annually and sequentially as the 

reappraisals are completed is generally held not to offend 

constitutional equal protection and uniformity requirements in 

the absence of intentional and systematic discrimination, constructive fraud, or arbitrary action. Hillock v. Bade (1974), 

22 Ariz.App. 46, 523 P.2d 97; Morrison v. Rutherford (1973), 

83 Wash. App. 153, 516 P.2d 1036; Carkonen v. Williams (1969), 

76 Wash.2d 617, 458 P.2d 280; Skinner v. .New Mexico State Tax 

Commission (1959), 66 N.M. 221, 345 P.2d 750; Rogan v. County 

Commissioners of Calvert Cdunty (1950), 194 Md. 299, 71 A.2d 47. 

Respondent taxpayers also assert that the Plan is defective 

because it contains no provision for the appraisal of timberlands. The short answer to this is that the Plan in fact contains provisions for reappraisal of "timber" and the Montana 

Administrative Code contains detailed appraisal procedures for 

timberlands according to use, accessibility, and other factors. 

MAC 42-2.22(1) - 52230 et seq. Further objection is made that 

timberlands are not assessed at full cash value, i.e. that 

timberlands are underassessed. Timberlands are assessed differently, it is true, with the land itself given a value as 

grazing land and the growing timber valued according to accessibility, logging costs, lumber prices and other factors. We 

find nothing constitutionally objectionable in this method of 

assessment. The evidence here falls far short of establishing 

an intentional and systematic discrimination, constructive fraud, 

or arbitrary action in the appraisal methods and procedures for 

valuing timberlands. 

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Finally, respondent taxpayers contend the property 

classifications in the Plan do not treat all taxable properties 

of similar nature and use the same. This is simply a part and 

parcel of their previous argument that the plan is not a general 

and uniform statewide plan in which properties of a similar 

nature and use are not treated the same. The plan contains 

various property classifications which are defined in the Plan 

and which are to be applied on a statewide basis. A uniform 

rule is applied statewide which satisfies uniformity and equal 

protection requirements and temporary inequalities within the 

cyclical period do not render the Plan unconstitutional for the 

reasons and under the authorities previously set forth. 

The second issue on appeal is whether the Montana Appraisal 

Plan was legally adopted. The district court held it was not. 

We agree. 

The district court entered two findings of fact on this 

issue: 

"17. On or about June 6, 1975, DOR [Department of 

Revenue] promulgated and distributed a document 

called the 'Montana Appraisal Plan'. The 'Montana 

Appraisal Plan' was promulgated under legislation 

enacted by the Montana Legislature in 1975 having 

an effective date of July 1, 1975. Notice of publication of a hearing on the plan to be held on July 16, 

1975, was certified to the Secretary of State on June 

13, 1975, and first published in the Montana Administrative Register on June 25, 1975. The public hearing 

was held on July 16, 1975. Oral and written protests 

to the form and substance of the proposed 'Montana 

Appraisal Plan' were submitted at the hearing. A 

specific request for a written statement'of the principal 

reasons for and against' the plan's adoption ' incorporating therein its .reasons for overruling the considerations urged against' adoption of the plan was made under 

R.C.M. 1947, Section 82-4204. 

"18. On August 14, 1975, DOR gave notice of its 

intention to adopt the plan as an administrative rule 

of the DOR in the form originally proposed. Notice of 

adoption of the plan was published in the Montana 
Administrative Register on August 25, 1975. None 

of the persons appearing and protesting the adoption 

of the plan were given a written statement for the 

rejection by DOR of its reasons for overruling the 

considerations urged for rejection of the plan. The 

only effort made by the DOR for compliance with R.C.M. 

1947, Section 82-4204, was a letter dated September 

15, 1975, from W. A. Groff, Director of Revenue, to 

the Administrative Code Cdmmittee in Helena. This 

letter fails to comply with the requirements of R.C.M. 

1947, Section 82-4204." 

On the basis of the findings of fact, the district court 

entered its Conclusion of Law No. 3: 

3 The 'Montana Appraisal Plan' has not been 

adopted according to law and under the terms of 

the Administrative Procedure Act, R.C.M. 1947, 

Sections 82-4201, et seq., and is without legal 

force and effect as a valid rule of the Department 

of Revenue. " 

This same conclusion of law was entered as paragraph number 3 

in the judgment of the district court. 

The Montana Appraisal Plan was specifically promulgated 

pursuant to an act of the legislature. The statement of intent 

contained in the plan provides: 

"The Montana Appraisal Plan is promulgated by 

the Department of Revenue in compliance with 

Chapter 294, Laws of 1975. 'AN ACT TO PROVIDE A 

CYCLICAL PROGRAM FOR THE REVALUATION OF TAXABLE 

PROPERTY . 

Once this legislation became effective the Department 

of Revenue was required to proceed under the Montana Administrative Procedure Act, section 82-4201, et seq, Under that 

act it was required to adopt the Montana Appraisal Plan as a 

rule of the Department of Revenue. Section 82-4202(2) of the 

Administrative Procedure Act defines the rules that must be 

adopted by state agencies in this language: 

"(2)'~ule' means each agency regulation, standard 

or statement of general applicability that implements, interprets, or prescribes - law or policy or 

describes the organization, procedures, or practice 

requirements of an agency. * * *." (Emphasis added). 
Under the Administrative Procedure Act prior to the 

adoption of any such rule, the agency is required to give 

notice of its intended action, publish the notice in the Montana 

Administrative Register, give notice by mail to interested 

persons, hold a public hearing, consider fully written and 

oral submissions respecting such proposed rule, and upon 

adoption of the rule to issue "a concise statement of the 

principal reasons for or against its adoption, incorporating 

therein its reasons for overruling the considerations urged against 

its adoption" to any interested person upon request. Section 

82-4204(1) (a) and (b) . Thereafter the agency must refer the 

proposed rule to the administrative code cormnittee of the legislature. Section 82-4204 (1) (c) . 

The purpose of the public hearing is to provide taxpayer 

imput to the proposed Plan; to require the Department of Revenue 

to fully consider the objections to the Plan, alternative proposals, and amendments; and to state to the interested taxpayers 

the Department's reasons for rejecting the considerations urged 

by the taxpayers. 

The vice of the situation here is that these objectives 

became subordina ted to bureaucratic justification of the Blan. 

Here, the taxpayers voiced many objections to the equities and 

fairness of the Plan as distinguished from its legality and 

constitutionality. For example, it was pointed out that by 

adopting a 3 year cycle rather than a 5 year cycle the inherent 

inequities of the Plan would be reduced; that continuation of 

the same order of reappraisal in each succeeding cycle perpetuates 

the inequities imposed upon those taxpayers whose property was 

first reappraised in the initial cycle; that-the length of the 
cycle precludes those taxpayers whose property was first reappraised from the benefits of reduced millage that might later 

flow from a substantial increase in total property valuations 

in the county; that because of certain fixed and mandatory 

statewide mill levies, the burden on those taxpayers whose 

property was first reappraised would be increased; that the 

plan is retroactive in operation because it was implemented 

prior to its adoption; that the Plan is so ambiguous and incomplete in designated respects that a taxpayer of common 

understanding cannot tell whether the -Plan is being followed 

or the law is being adhered to; that the higher reappraisals and 

increased valuations under the Plan should be delayed until 

the legislature can adjust the mill levies; and many others. 

There is no evidence that these taxpayer objections, 

alteratives and considerations were fully considered by the 

Department of Revenue prior to adoption of the Plan as required 

by section 82-4204(1)(b). Indications are to the contrary. 

The evidence shows the Plan was put in operation before compliance 

with the Administrative Procedure Act. The evidence shows the 

director of the Department characterized the taxpayer objections 

(with the exception of placing the revaluations on the tax 

rolls annually as appraised) as "of a negative nature directed 

at property tax in general and not relevant to the plan." The 

evidence shows that the #Plan as initially proposed by the agency 

was adopted in toto without amendment, alteration or modification. 

We hold therefore that the Montana Appraisal Plan was 

never legally adopted as required by the Montana Administrative 

Procedure Act and is void and without legal force and effect 

as a rule of the Department of Revenue. Accordingly, revaluations 
of property made thereunder cannot be placed on the tax rolls 

as a basis for taxation. 

Our ruling on the second issue renders consideration 

of the third issue unnecessary. 

The judgment of the district court of Missoula County 

is modified in conformity with this opinion and as so modified 

is affirmed. 

Justice 

/ ' Chief Justice