### No. 13492 IN THE SUPREME COURT OF THE STATE OF MONTANA 1978

LARRY D. STENSVAD and MARGARET STENSVAD, M-V ENTERPRISES, INC., a Montana corporation, and FAUNCO, INC., a Montana corporation, Plaintiffs and Appellants,

MUSSELSHELL COUNTY, GENO MINNIE, O.S. ELLIS and R. JORGENSON, County Commissioners,ROBERT L. HAGSTROM, County Assessor, and MARGARET A. REIGHARD, County Treasurer, Defendants and Respondents.

Appeal from: District Court of the Fourteenth Judicial District, Honorable Nat Allen, Judge presiding. Counsel of Record: For Appellants: Moses, Tolliver and Wright, Billings, Montana Towe, Ball, Enright and Mackey, Billings, Montana Thomas Towe argued, Billings, Montana For Respondents: John L. Pratt, County Attorney, argued, Roundup, Montana

Submitted: November 27, 1978 Decided:

### lVlAj?

## - ; q7oMr. Justice John Conway Harrison delivered the Opinion of the Court.

Plaintiffs appeal from a judgment of the District Court, Musselshell County, denying their prayer for an order permanently enjoining defendants from issuing a tax deed to certain realproperty for failure topay a portion of a 1971 assessment representing taxes on cattleunder the control and inthe possession of M-V Enterprises. The court entered its amended findings of fact, conclusions of law, judgment and order on June 30, 1976, directing defendants toproceed forthwith to take tax deed tothe real property, now owned by plaintiff Faunco, Inc. Plaintiffs contend that certain of the court's findings of fact and conclusions of law are

erroneous and unsupported by the evidence, and that, therefore, the judgment should be reversed. In 1971, Larry D. Stensvad 

### was a stockholder inand/or manager of certain corporations involved invarious aspects of the livestock industry. One of those corporations, M-V Enterprises, among whose principle shareholders was Stensvad, owned real property inMusselshell County upon which the corporation operated a feedlot. Pursuant to an agreement between M-V Enterprises and the L. D. Stensvad Cattle Company, cattlebelonging toother individuals 

### were leftin the possession and control of M-V Enterprises tobe fed and cared for inpreparation formarketing. These cattlehad been purchased by a separate Stensvad corporation, the L. D. Stensvad Cattle Company, whose only shareholders were Stensvad and hiswife, Margaret. The arrangement was such that L. D. Stensvad Cattle Company would buy cattle for individual out-of-state investorswho had contracted with the company tomake the purchases for them. The cattle sopurchased were delivered tothe feedlots of M-V Enterprises for care and feeding; the L. D. Stensvad Cattle Company billed the individual investors for their respective shares of the expenses incurred. Each of the 

### cattle involved in this arrangement carried on itsright hip a pitchfork or "turkey track" brand owned by and registered to the L. D. Stensvad Cattle Company; on itsright shoulder, each bore an unregistered brand, a number, designating its individual

owner. InMay, 1971, theMusselshell County assessor, inthe process of compiling data for the upcoming tax assessment, supplied M-V Enterprises with a form which, when completed, 

### is a record of the number of cattlewhich have been fed during eachmonth of the preceding year. The form isprovided incompliance with section 84-409, R.C.M. 1947, in effect atthe 

### timeof the events, which requires the county

assessor toobtain from each person 

### a written statement, made under oath, which sets forth allthe taxable property owned by thatperson or inhispossession or under his control as of a specific time. Each such form contains an affidavitwhich declares that the 

### list is a fulland correct statement of theproperty subject totaxation which 

### is owned, claimed, possessed or controlled by the individual or business entity. See section 84-410, R.C.M. 1947. M-V Enterprises returned tothe county assessor the completed form, which had been signed by Dona McCleary, a secretary employed by the corporation. The form showed nothing as to the ownership of the cattle. The assessor, following statutorymandate, section 84- 406(1) and 

### (3), 

### R.C.M. 1947 (Supp. 1971), assessed taxes on1/12 of the total number of cattleagainstM-V Enterprises, the party inwhose possession and under whose control the cattle

### were. The corporation, maintaining that it could not be taxed for cattlewhich it did not own, refused topay. either thepersonal property taxes nor the real property taxes assessed for 1971againstM-V Enterprises 

### were paid, and the county, in 1976, finally instituted proceedings for

a tax deed. On February 18, 1976, plaintiffs, alleging that

no statutory authority existed under which the county legally could 

### assess against them taxes on cattleowned by other individuals, petitioned the District Court for an order enjoining the defendants from taking tax deed unless the total amount, $27,990.39, 

### was paid by March 10, 1976. Faunco, Inc. has joined as a party plaintiff, because it 

### is the present owner of the realproperty subject of this action, InNovember, 1971, M-V Enterprises, by virtue of an unrecorded assignment from L. D. and Margaret Stensvad, owned the realproperty subject of these tax deed proceedings. Atthat time, a Roundup bank declared L. D. Stensvad and M-V Enterprises indefaulton certain obligations and foreclosed on the property. Roundup Cattle Feeders, a corporation uninvolved inthis litigation and inwhich none of the parties hereto appears tohave an interest, bought the property ata foreclosure sale. Subsequently, inJune, 1975, Faunco, Inc., purchased the property from Roundup CattleFeeders. Although apparently not a shareholder in Faunco, Inc., L. D. Stensvad is its generalmanager and its registered agent. Faunco, Inc,, has tendered payment of the outstanding taxes owed on the realproperty, exclusive of the amounts levied for the cattleowned by the individual investors; the county twice rejected the offer of thatpayment. Faunco requests that the county be ordered tomake an assessment which does not include taxes on the cattle,

so that the corporationmay pay that amount and thereby clear its title of the tax lien. On April 16, 1976, the Honorable Nat Allen presided

over a hearing on themerits of the case. In its amended findings of fact, conclusions of law, and judgment, the court concluded that the taxes 

### were lawfully assessed and denied plaintiffs any relief. Notice of appeal 

### was timely filed and oral argument heard by this Court. Although the DistrictCourt properly decided that the county assessor correctly assessed the taxes due on the cattle toM-V Enterprises, inwhose possession and control the cattlewere at the 

### timeof assessment, 

### we reverse that portion of the determinationwhich, ineffect, precludes Faunco from paying alltaxes and penalties due, exclusive of those assessed against the cattle. Plaintiffs allege that numerous errors are tobe found in the court's findings and conclusions, but only one of those, whether the county assessor acted properly, inconformity with section 84-406, R.C.M. 1947 (Supp. 1971), in assessing the taxes due on the 

### cattle toM-V Enterprises, merits consideration. Section 84-406, R.C.M. 1947 (Supp. 1971), controlling atthe time of the events complained of by plaintiffs, reads inpertinent part:

" (1)The assessor must, between the firstMonday of March and the second Monday of July ineach year, ascertain the names of alltaxable inhabitants, and assess allproperty inhis county subject to taxation, except such asisrequired to be assessed by the stateboard of equalization, and must assess such property to the persons by whom it was owned or claimed, or inwhose posses-sionor control it

### was at12midnight of the firstMonday of March next preceding. 

# .. The procedure provided by this section shall not apply to:



### "(b) Livestock being 

### -- fed infeeding pens or 

### -- enclosures which may 

### -- by subdivision (3) of this 

### --- sectionbe assessed on 

### -- an average inventory basis. Credits=st be assessed asprovided in section 84-101, subdivision 6." Subdivision (3) stateshow such livestock shallbe assessed: "(3) The assessed value of livestock being fed infeeding pens or enclosures on the firstMonday inMarch may be computed by adding the value of livestockmore than six (6) months of age being fed on the lastday of each month since the last assessment date and dividing the sum by twelve (12)

# ." The statuteiswritten inthe disjunctive, mandating the

assessor toassess alltaxable property inhis county either tothe persons by whom 

### itwas owned or claimed 

### -- or inwhose possession 

### - orcontrol 

## -- itwas as of midnight of the first Monday of March. It is clear that the assessor acted properly inassessing toM-V Enterprises, inwhose possession and control the cattle 

### were, taxes on the cattle. Plaintiffs have sought an injunction pursuant to section 84-4505, R.C.M. 1947, now section 15-1-405 MCA. That statute states: "No injunction must be granted by any court or judge torestrain the collection of any tax or any part thereof, nor torestrain the saleof any property for the nonpayment of taxes, except: "1. Where the tax, or thepart thereof sought to be enjoined, isillegal, or is not authorized by law. If thepayment of a part of a tax is sought tobe enjoined, the other partmust be paid before an action can be commenced. "2. Where theproperty isexempt from taxation."Although they allege atvarious 

### times that the tax assessment here isboth illegal and not authorized by law, plaintiffsofferno legal arguments in support of that position. Obviously the tax is authorized by 

### law. The statute, section 84-406, R.C.M. 1947 (Supp. 1971), speaks for itself. Wepoint outinpassing that such statutes have long sincepassed constitutionalmuster. As a leading authority observed over fiftyyears ago: "Statutes sometimes provide that tangible personal property shallbe assessed wherever in the state itmay be, either to the owner himself or to the agent or other person having it incharge; and there is no doubt of the right todo this, whether the owner isresident in the stateornot.

[Clattleand sheep may be required by the statute tobe assessed where they arekept orwhere they have been taken tograze or tobe fed 

# . 

# . ." 3 T. Cooley, 

### --- The Law of Taxation §lo71 (4thed. 1924). Ithas been the general rule since the turn of the century that the legislature has the power to adopt a mode of assessment such thatproperty may be assessed to the party inpossession of it. The North Dakota Supreme Court declared: "Indeed, the necessity for speedy and certain methods of producing revenue for governmental support is sogreat that the legislatures of many states have declined toenter into an investigation of titles for the purpose of taxation, particularly inreference toproperty of a shifting nature, and have, accordingly, provided for assessments against the party having the possession and control upon some specified date. Such enactments have been repeatedly before the courts, and have been uniformly upheld. Indeed, we are cited tono casewhich has denied the right of a stateto enforce thismethod of assessment." Minneapolis & Northern Elevator Co. v. Trail1 County (1900), 9 N.D. 213, 

## , 82 N.W. 727, 728, and cases subsequently cited. We, too, have been cited to no case which has denied the rightof a state to enforce themethod of assessment which our legislature has seen fittoadopt. We, too, are of the opinion that "'"possessory control of property 

### issufficient to authorize its assessment to the possessor or keeper of it."'" Minneapolis & Northern Elevator Co. v. ~raill County, 82 N.W. at729. Furthermore, "[wle are convinced that the legislature had the right to actupon evidence of ownership afforded by possession, and for the purposes of taxation tomake the presumption arising therefrom conclusive, and toprovide, therefore, for the assessment and taxation of [cattle] to the party inpossession in the manner and form asprovided by the act inquestion." 82 N.W. at731. Because the tax isboth authorized and legal, injunction

### willnot lie. The DistrictCourt properly refused to grant an injunction on thatbasis. In passing, 

### we note that in a previous year, M-V Enterprises gave the county assessor's office a list of the individuals who owned the cattle. The assessments in that year apparently were made to the individuals and not toM-V Enterprises. There 

### is conflicting testimony as towhether that information was provided in 1971. The county officials claim that the corporation did not furnish the information,

so the assessor, acting ina reasonable and legalmanner, assessed the tax againstM-V ~nterprises, inwhose possession and control the cattlewere. The assessment was not made to the L. D. Stensvad Cattle Company, whose registered brand was worn by each of the cattle, even though it is prima facieevidence that the person or corporation, in whose name a brand is of record, is the owner of allanimals bearing the brand inthe position and on the species stated in the certificate of record. Section 46-606, R.C.M. 1947,

now section 81-3-105 MCA. The assessor, of course, could not rely on the numerical brand, which was not registered.No obligation isimposed on the assessor to track down the "true" owner of the cattle. The obligation of section 84- 406, R.C.M. 1947 (Supp. 1971), to assess to the person in whose possession or control the property was, had been fulfilled. Having cracked the shell, 

### we turn now to the nut of the problem, determination of whether Faunco, Inc., is obliged topay taxes assessed on the cattle. Certain statuteswhich

aredeterminative of this issue, have been overlooked. Those statutes are sections 84-3807 and 84-3808(a), R.C.M. 1947,

now respectively sections 15-16-401 and 15-16-402(1) MCA: "84-3807. Tax operates asjudgment 

### -- or lien. Every tax has the effectof a judgment against the person, and every lien created by this title 

### -- has the force and effect of an execution duly 

### -- -- levied against allpersonal property 

### -- inthe possession of 

### -- the person assessed 

### -- from and after the date the assessment ismade. 

# . ." --- 

### -- "84-3808. 

### -- Tax on personal property 

### -- lien on realty --separate assessment. (a) Every 

### --- tax due upon personal property 

### -- is a prior lien upon any or all 

### ----- of 

### -- such property, which lien shall have precedence over any other lien, claim or demand upon such property, and except ashereinafter provided, every tax upon personal property

## is also

### 5 lien 

### -- upon the real property of the owner thereof, from 

### -- 

## --- and after 12m. of the firstMonday inMarch in each year." Thus, the tax due on the personal property, the cattle, is a lien on that property, section 84-3807, R.C.M. 1947, and the tax upon thatpersonal property is a lien upon the real property of the owner thereof, section 84-3808, R.C.M. 1947. Because the cattlehave long since gone to that great roundup in the sky, the lienon the cattle

### per 

### - se has evaporated. It has not evaporated as against the real property of the owners of the cattle, however. It does not appear of record that Faunco, Inc., 

### was

owner of any of the cattle. Therefore, a tax upon thecattlewould not operate asa lien on the real property of Faunco, and Faunco is not obligated topay the personal property taxes assessed against the cattle. Faunco's demand that the county accept payment of the taxes and penalties due, exclusive only of those assessed against the 

### cattle, 

### is appropriatelymade. The county may not look toFaunco, Inc., forpayment of the taxes and penalties due on the cattle, but must seek payment, under the terms of the statute, from those who 

### were owners of the cattle. To that extent thejudgment isreversed and the county enjoined from taking tax deed to the real property owned now by Faunco, Inc., upon itspayment of allmoneys, exclusive of the taxes on the cattle, due the county.

We concur: