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 FourteenthJudicialDistrict, 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 theMontana 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 toproceed on

a claim for a tax refundpursuant to 5 15-16-601, MCA, afterhaving 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 theMusselshell 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 judgmentpermitted 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. OnJuly 2, 1976,theBank 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 CountyCommissioners,seeking refund of thebank shares tax deficiency, interestandpenalty paid underprotest by the Bank 3in 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 tomake a refund. TheBank submitted an amended claim for refund which was denied on December 15, 1980, for the same reasons that theApril claim had been denied. On January 7, 1981, the Bank filed a complaint in thepresent

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 jurisdictionpursuant 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 Commissionersdid 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. 43. The case of MontanaNational Bank ofRoundupv. Department of Revenue, 167Mont. 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 thebank 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 Departmentof Revenue, 177Mont. 112, 580P.2d 909 (1978),that the State could not tax the value of federal obligations in the computationof 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 firstpayment 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 theprotest 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 5claim forrefundwith theMusselshell CountyBoard of Commissioners and theDORunder 5 15-16-601, MCA, the statuteallowing relief for illegallyor erroneouslycollected taxes. Theseclaimsweredenied by the Commissioners on December 15, 1980, on the grounds that the issue had alreadybeen litigated (under 515-1-402,MCA). The Bank then filed its present complaint for the original and the reassessed taxesunder 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 iswhether the Bank should havebeen permitted toproceed ona claim for a tax refundpursuant 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 imposedmayproceed under 15-1-406or may,before thetax or license fee becomes delinquent, pay under written protest thatportion of thetaxor license feeprotested.

(2) After having exhausted the administrative appeals availableunder Title 15, chapters 2 and 15,a person or his legal representativemaybring an action inany 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 actionwas 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 governmentbonus or subsidyreceivedby thetaxpayermay, by order of the board of county commissioners, be refunded by the county treasurer. The District Court held that since the Bank had originallypursued

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

# . TheBank appeals fromthisdeterminationbased on the language of S 15-16-602,MCA, that provides: Section 15-16-601 shall not be deemed or construed to be in conflictwith the provisions of part 4 of chapter 1, but 15-16-601 and the provisions of such part 4 shall provideandafford concurrentremedies. (Emphasisadded.) 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 7in 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. (Emphasisadded.) 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 "erroneouslycollected1' statute was addressedby thisCourt in Department of Revenue v. Jarrett, 216 Mont. 189, 700 P.2d 985 (1985)

# . InJarrett,thevalue of thetaxpayer's lotwas erroneously assessed. The taxpayer obviously did not protest when he paid his taxes for theyearsbefore themistake was detected. When the mistakewasdiscovered,hewaspermitted to collectthe 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, requirementsofpaying under protest,but when therecourse of 5 15-1-402,MCA, isnot 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 remedyunder 5 15-1-402, MCA, had failed. Aswe stated inJarrett, it is only when 5 15-1-402,MCA, isnot 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 optionsare available to choose among statutory remedies. Itdoes 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 issuepresents uswith the question ofwhether 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 obligationstaxedby theStatebetween 1969 and 1973were exempt from taxation and that the assessment of themwas therefore illegal. Retroactiveapplication ofa judicial interpretationisguided by the principles enunciated in LaRoque v. State, 178 Mont. 315, 583 P.2d 1059 (1978). That case states: 9First, the decision to be applied nonretroactivelymust establish a new principle of law either by overruling established precedent on which litigants have relied or by decidingan issue of first impression whose resolution wasnot clearly foreshadowed

# .. . Finally,the inequity of retroactive application must be considered, forwhere 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 31U.S.C. 5 742, the federal exemption statute, states: This exemption extends to every form of taxation that would require that eitherthe obligationsor the interest thereon,orboth, 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 statutesnor administrative regulations expressly authorize a deduction forthevalue of federalobligation in computingthe bank shares tax. However, the Montana statutemust be construed as permitting such deductionandadministrative regulations to the contrary must fall. Any other construction would violate the federal exemption statuteandbeunconstitutional undertheSupremacy Clause of the United States Constitution. Montana Bankers, 177Mont. 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. Itwas 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. Theparties tothisappeal 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: