No. 90-097 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1991 

MONTANA BANK OF ROUNDUP, N.A., 

Plaintiff and Appellant, 

MUSSELSHELL COUNTY BOARD OF 

COMMISSIONERS, MUSSELSHELL COUNTY, 

and DEPARTMENT OF REVENUE, STATE 

OF MONTANA, 

Defendants and Respondents. 

APPEAL FROM: District Court of the Fourteenth Judicial District, 

In and for the County of Musselshell, 

The Honorable Roy C. Rodeghiero, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Thomas E. Towe, Esq., Billings, Montana 

For Respondent: 

Eric Fehlig, Esq., Department of Revenue, 

Helena, Montana 

Vicky Krause, Esq., Musselshell County Attorney, 

Roundup, Montana 

Submitted: October 30, 1990 

Decided: April 30, 1991 

Filed: 
r I 

, 

Justice William E. Hunt, Sr., delivered the Opinion of the Court. 

The Montana Bank of Roundup appeals from an order of the 

Fourteenth Judicial District Court, granting summary judgment in 

favor of Musselshell County and the Department of Revenue and 

denying summary judgment to the Montana Bank of Roundup. 

We affirm. 

Appellant and Respondents have raised several issues in this 

appeal, but we need only resolve two of these to decide the 

questions presented by the parties. These are: 

1. Whether the Bank should have been permitted to proceed on 

a claim for a tax refund pursuant to 5 15-16-601, MCA, after having 

been denied its claim for a refund under 5 15-1-402, MCA. 

2. Whether the Department of Revenue was prohibited from 

taxing federal obligations for the years 1969 to 1973. 

For the tax years 1969 through 1973, the former State Board 

of Equalization, predecessor of the Department of Revenue (DOR), 

assessed and collected a bank shares tax from the Montana Bank of 

Roundup (Bank). In 1974, the DOR audited the Bank for tax years 

1969 through 1974 and determined that the Bank had misrepresented 

to the taxing authorities the value of the Bank's shares for tax 

years 1969 through 1973. On or about September 19, 1974, the DOR 

issued a reassessment, increasing the taxable value of the Bank's 

shares. On November 21, 1974, the Musselshell County Treasurer 

assessed a bank shares deficiency tax in the amount of $82,179. 
Just prior to the DORIS 1974 audit of the Bank, the Bank 

appealed its 1973 bank shares assessment to the Musselshell County 

Tax Appeal Board and the State Tax Appeal Board (STAB), and then 

sought judicial review of the STAB decision in District Court in 

Lewis and Clark County. The District Court judgment permitted the 

Bank to deduct reserves for bond losses and real estate. The DOR 

appealed the order of the District Court, which was affirmed in 

part and reversed in part in Montana National Bank of Roundup v. 

Department of Revenue, 167 Mont. 429, 539 P. 2d 722 (1975) . No 

judgment was entered in Lewis and Clark County on this cause. 

On May 20, 1976, the Bank paid $90,621 under protest, the 

amount representing the bank shares tax deficiency assessed in 

November of 1974, plus additional penalties and interest accrued. 

On July 2, 1976, the Bank filed a complaint in Lewis and Clark 

County seeking refund of the May 20, 1976, payment. Venue was 

subsequently transferred to Musselshell County. On May 8, 1978, 

Musselshell County District Court dismissed the cause. On appeal 

to this Court, we affirmed the decision of the District Court in 

an order, dismissing the appeal for lack of jurisdiction for 

failure to timely serve the Musselshell County Treasurer, and for 

mootness, the protested funds having already been distributed. 

That order is unreported. 

The Bank then submitted a claim dated April 14, 1980, to the 

Musselshell County Commissioners, seeking refund of the bank shares 

tax deficiency, interest and penalty paid under protest by the Bank 

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in 1976. The Commissioners denied the claim by correspondence 

dated April 21, 1980, on the grounds that the claim had already 

been litigated, and the Musselshell County District Court and the 

Montana Supreme Court had determined that the County was not 

required to make a refund. The Bank submitted an amended claim for 

refund which was denied on December 15, 1980, for the same reasons 

that the April claim had been denied. 

On January 7, 1981, the Bank filed a complaint in the present 

cause seeking refund of the bank shares tax deficiency for the 

years 1969 through 1973 and also for a refund of the original bank 

shares tax assessment collected for the years 1969 through 1973. 

The Bank stated in its briefs that it invoked the District Court's 

jurisdiction pursuant to the provisions of 5 15-16-601, MCA. The 

Bank claimed the c om missioners had erred as a matter of law when 

they denied the Bank's claim for refund on April 21, 1980, and 

again denied the amended claim on December 15, 1980. 

The District Court entered judgment against the Bank on 

December 28, 1989, holding essentially as follows: 

1. The County Commissioners did not err when they denied the 

refund claims on April 21, 1980, and on December 15, 1980, because 

the Supreme Court order (unreported) of January 17, 1979, had 

determined that the Bank's claim for refund was moot. 

2. No evidence supported the Bank's allegation that the 

assessments for tax years 1969 through 1973 or the deficiency 

assessment were either erroneously or illegally applied. 

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3. The case of Montana National Bank of Roundup v. Department 

of Revenue, 167 Mont. 429, 539 P.2d 722 (1975), was never followed 

by a judgment allowing a deduction of the value of the real 

property, so the holding of this Court on January 17, 1979, that 

the issue of the refund was moot, controlled. 

4. The transfer of the stock of the Bank's holding company, 

sixteen months prior to the bank shares tax deficiency assessment, 

did not defeat the right of the County to collect the tax deficienCY 

5. The holding in Montana Bankers Association v. Montana 

Department of Revenue, 177 Mont. 112, 580 P.2d 909 (1978), that the 

State could not tax the value of federal obligations in the 

computation of the bank shares tax was res judicata to the parties 

to that cause only and was a holding not clearly foreshadowed and 

so not entitled to retroactive application. 

There are two taxes at issue in this case. The first payment 

is the original bank shares tax for taxable years 1969 through 

1973. The original payments for years 1969 through 1972 were not 

paid under protest, and this is the first time they have been at 

issue. 

The second tax at issue is the 1974 reassessed tax paid under 

protest. The Bank action to recover those monies under the protest 

statute, 5 15-1-402, MCA, was ultimately dismissed by this Court 

in Roundup National Bank v. Dept. of Revenue, No. 14389, January 

17, 1979. The Bank then filed a claim for refund and an amended 

5 
claim for refund with the Musselshell County Board of Commissioners 

and the DOR under 5 15-16-601, MCA, the statute allowing relief for 

illegally or erroneously collected taxes. These claims were denied 

by the Commissioners on December 15, 1980, on the grounds that the 

issue had already been litigated (under 515-1-402, MCA). The Bank 

then filed its present complaint for the original and the reassessed taxes under 5 15-16-601, MCA, claiming that the remedies of 

5 15-1-402, MCA, and 5 15-16-601, MCA, may be pursued alternativeThe first issue before this Court is whether the Bank should 

have been permitted to proceed on a claim for a tax refund pursuant 

to 5 15-16-601, MCA, after having been denied its claim for a 

refund under 5 15-1-402, MCA. 

The Bank originally filed a claim for refund for the taxes 

paid under protest pursuant to 5 15-1-402, MCA (formerly 5 84- 

4502, R.C.M.). Section 15-1-402, MCA, states in pertinent part: 

(1) The person upon whom a tax or license fee is being 

imposed may proceed under 15-1-406 or may, before the tax 

or license fee becomes delinquent, pay under written 

protest that portion of the tax or license fee protested. 

(2) After having exhausted the administrative appeals 

available under Title 15, chapters 2 and 15, a person or 

his legal representative may bring an action in any court 

of competent jurisdiction against the officers to whom 

said tax or license fee was paid or against the county 

or municipality in whose behalf the same was collected 

and the department of revenue. 
After that action was dismissed, the Bank filed for refund for the 

original and the reassessed tax under 15-16-601, MCA, which 

provides in part: 

(1) (a) Any taxes, interest, penalties, or costs paid 

more than once or erroneously or illegally collected or 

any amount of tax paid for which a taxpayer is entitled 

to a refund under 15-16-612 or 15-16-613 or any part or 

portion of taxes paid which were mistakenly computed on 

government bonus or subsidy received by the taxpayer may, 

by order of the board of county commissioners, be 

refunded by the county treasurer. 

The District Court held that since the Bank had originally pursued 

a claim pursuant to S 15-1-402, MCA, which was subsequently 

dismissed, it could not file a claim for refund under 5 15-16-601, 

MCA . 

The Bank appeals from this determination based on the language 

of S 15-16-602, MCA, that provides: 

Section 15-16-601 shall not be deemed or construed to be 

in conflict with the provisions of part 4 of chapter 1, 

but 15-16-601 and the provisions of such part 4 shall 

provide and afford concurrent remedies. (Emphasis added.) 

The Bank claims that the plain language of 5 15-16-602, MCA, 

permits it to proceed under 5 15-16-601, MCA, after it lost on 

procedural grounds under S 15-1-402, MCA. The Bank relies on 

Uptegraft v. Dome Petroleum Corp., 764 P.2d 1350 (Okla. 1988), to 

assert that "the doctrine of election of remedies does not apply 

where the available remedies are concurrent or cumulative and 

consistent." 

Our reading of that case is that the remedies must be pursued 

simultaneously, and when a judgment is reached, the remedy sought 

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in the alternative is terminated by the first judgment. As the 

Oklahoma Court said in U~tesraft, 764 P.2d at 1355: 

Where the remedies are alternate or concurrent there is 

no bar until satisfaction of the judgment has been 

obtained. The plaintiff may pursue concurrent remedies 

at the same time until there is a satisfaction of the 

judgment. (Emphasis added.) 

The Bank here did not pursue its remedies at the same time. 

It received an unfavorable judgment on one theory and then tried 

another for a more favorable result. 

The issue of the relationship between the llprotestlt statute 

and the "erroneously collected1' statute was addressed by this Court 

in Department of Revenue v. Jarrett, 216 Mont. 189, 700 P.2d 985 

(1985) . In Jarrett, the value of the taxpayer's lot was erroneously assessed. The taxpayer obviously did not protest when he paid 

his taxes for the years before the mistake was detected. When the 

mistake was discovered, he was permitted to collect the overpayment 

under 5 15-16-601, MCA. This Court stated: 

Clearly, 5 15-16-601, MCA, was not meant to be used in 

lieu of the 5 15-1-402, MCA, requirements of paying under 

protest, but when the recourse of 5 15-1-402, MCA, is not 

available, a taxpayer can obtain a refund under 5 15- 

16-601, MCA. 

Jarrett, 216 Mont. at 194, 700 P.2d at 988. 

Here, the Bank tried to use 5 15-16-601, MCA, because its 

remedy under 5 15-1-402, MCA, had failed. As we stated in Jarrett, 

it is only when 5 15-1-402, MCA, is not available as a remedy that 

5 15-16-601, MCA, may be used in place of it. The Bank, having 

sought a remedy under 5 15-1-402, MCA, and having failed in that 
effort, is now prohibited from seeking such remedy under 5 15-16- 

601, MCA. 

Section 15-1-402, MCA, provides for an action in any court of 

competent jurisdiction; § 15-16-601, MCA, provides for a refund 

from the county treasurer pursuant to an order from the county 

commissioners. The concurrent remedies statute intended that 

taxpayers against whom a tax had been illegally or erroneously 

collected would not lose the option of pursuing relief through the 

county government. It also permits the taxpayer to whom various 

options are available to choose among statutory remedies. It does 

not provide for a taxpayer to consecutively try different methods 

of relief. To hold otherwise would destroy the rule of res 

judicata in tax matters. We affirm the District Court on this 

issue. 

The second issue presents us with the question of whether the 

Department of Revenue was prohibited from taxing federal obligations for the years 1969 through 1973. The Bank claims that 

pursuant to this Court's decision in Montana Bankers Association 

v. Montana Department of Revenue, 177 Mont. 112, 580 P.2d 909 

(1978), the federal obligations taxed by the State between 1969 and 

1973 were exempt from taxation and that the assessment of them was 

therefore illegal. 

Retroactive application of a judicial interpretation is guided 

by the principles enunciated in LaRoque v. State, 178 Mont. 315, 

583 P.2d 1059 (1978). That case states: 

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First, the decision to be applied nonretroactively must 

establish a new principle of law either by overruling 

established precedent on which litigants have relied or 

by deciding an issue of first impression whose resolution 

was not clearly foreshadowed . . . Finally, the inequity 

of retroactive application must be considered, for where 

substantial inequity will result by such application, a 

ruling of nonretroactivity is proper. 

LaRoque, 178 Mont. at 319, 583 P.2d at 1061. The District Court 

here held that Montana Bankers had indeed established a new 

principle of law deciding an issue of first impression whose 

resolution was not clearly foreshadowed. This decision is 

supported by the background outlined in Montana Bankers. 

The 1959 amendment to 31 U.S.C. 5 742, the federal exemption 

statute, states: 

This exemption extends to every form of taxation that 

would require that either the obligations or the interest 

thereon, or both, be considered, directly or indirectly, 

in the computation of the tax . . . . 

Montana Bankers explains that the plain language of the statute 

"provides an exemption to every form of state taxation that 

requires United States obligations or interest to be considered 

directly or indirectly in the computation of the tax." Montana 

Bankers, 177 Mont. at 117, 580 P.2d at 912. This Court further 

noted: 

We note that neither the applicable Montana statutes nor 

administrative regulations expressly authorize a deduction for the value of federal obligation in computing the 

bank shares tax. However, the Montana statute must be 

construed as permitting such deduction and administrative 

regulations to the contrary must fall. Any other 

construction would violate the federal exemption statute 
and be unconstitutional under the Supremacy Clause of the 

United States Constitution. 

Montana Bankers, 177 Mont. at 118, 580 P.2d at 913. 

While the 1978 decision does interpret a 1959 federal law, the 

language of the Court indicates that the State of Montana had not 

previously considered the effect of the law on state taxation 

formulas. It was a matter of first impression whose resolution was 

not clearly foreshadowed. 

We hold that, under the doctrine of nonretroactivity, the 

exemption for federal obligations does not apply prior to 1978. 

The parties to this appeal raise other issues concerning fines 

and penalties, bank ownership, vvescapedtt taxable property, and 

exhaustion of remedies. However, because we hold that the remedy 

of 5 15-16-601, MCA, is not available to the Bank, we need not 

reach the appropriateness of the reassessed taxes. Similarly, we 

need not reach the issue of exhaustion of administrative remedies 

as raised by the respondent DOR. 
We concur: