### No. 12809 IN

### THE SUPREME COURT OF THE 

### STATE OF 

### MONTANA 1975

J. 

### EINAR 

### LARSON, etal., Plaintiffs,

THE 

### STATE OF MONTANA and THE DEPARTMENT OF REVENUE, 

### eta

### 1.

# , Defendants.

Appeal from: District Court of the First Judicial District, Honorable James D. 

### Freebourn, Judge presiding. Counsel of Record:

, L 

## -4 ICLL (! ,' t--1 

### For ~lalLTitll!Zs: R. 

### Bruce McGinnis appeared, Helena, Montana Randall Swanberg argued, Great Falls, Montana

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## Ll:4/J For &fen 

### en 

### s: 

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### UIrLL~ 4~. 

### A.

### Sa~,Wcrp,fi 

### ~fud* Scribner and Huss

# ,Helena, Montana Lawrence D. 

### Huss argued, Helena, Montana 

### Thoaas Dowling, County Attorney, Helena, Montana ~ei 

### E 

### B. 

### Erickson, Deputy County Attorney appeared, hi

### Lena, Montana William Leaphart, CityAttorney, Helena, Montana

Submitted March 

### 3, 1975 Decided:APR 

## 24 

### 1975 Filed: 

## APR 24%

### ~Y'fiMr. 

### JusticeFrank I. 

### Haswell delivered the Opinion of the Court. This appeal is

### by defendants fr0m.adeclaratory judgment and injunction entered against them in the districtcourt, Lewis and Clark County. Defendants (hereinafter referred toas the state) areagencies and individuals responsible for the appraisal of property inLewis 

### and Clark County for taxation purposes. Plaintiffs (hereinafter referred toas taxpayers ) 

### are
owners of realproperty inLewis and Clark County, and Helena Property Owners Association, a corporation. Taxpayers brought this suit asa class action, representing themselves and allother

owners of realproperty in Lewis 

### and Clark County subject totaxation computed upon valuations as appraised by the state. Lewis 

### and Clark County and the City of Helena appeared asintervenors, supporting the taxpayers' position. As

### is

### the practice inmany parts of the country, Montana taxes real property and improvements by an appraisal-assessmentlevy method. This lawsuit involves the firstof these steps

## -- the appraisal. Prior to 1972, the last county-wide appraisal in Lewis and Clark County was one completed in 1962. At

### theurging of the StateBoard of Equalization (predecessortothe Department of Revenue, a defendant here), Lewis and Clark County hired a private firm, James R. 

### Laird & 

### Associates, toconduct a countywide appraisal in 1972-1973. However, before Lewis and Clark County could use that appraisal toadjust its 

### tax rolls, statutory and constitutional changes shifted responsibility for appraisals tothe state. Section 84-429.7, R.C.M. 1947; 

### Article VIII, 

### Section 3, 

### 1972 Montana Constitution. When the stateassumed these new responsibilities, it



### wasdetermined the Laird appraisalwould be used for 1974 Lewis and Clark County assessments. Notice of thisproposed action prompted the taxpayers t o f i l ethis suit, seeking a declaration~hac ~~npLsie LO oItile Laird appraisal would violate conscitutional and statutory limitations on the state'spower to tax. The statehere appeals from the districtcourt's declaration that theproposed use of the Laird appraisal would vioiate equal protection, due process, and uniformity requirements 

### of the United States and Montana Constitutions, and Montana statutes. The district court enjoined use of the appraisal on these grounds, and the state also appeals from that ruling. These issues arepresented for this Court's determin1. Would implementation of the Laird appraisal violate coristltutional and statutory limitations on the state's power to appraise and tax? 2. Must the taxpayers exhaust their administrative remedies before protesting the appraisal inthe courts? 3. Did the districtcourt 

### err ingranting injunctive relief? 4. Is thejudgment supported by substantial evidence? 5. Should taxpayers' motion to strikeportions of the state'sappellatebrief be granted? However, before considering these issues,two factual disputes must necessarily he resolved. First, the statealleges the following findings of fact

are contrary tothe evidence presented atthe trial:

"The reappraisal of property lying within Lewis and Clark County conducted,byJames R. Laird & Associates and adopted by the defendant DEPARTMENT OF REVENUE and its officers, agents and employees for the fiscalyear 1974-1975 was not conducted as a part of a uniform plan for reappraisal of all ;>ropertywithin the State of Montana. "XIV. 

### "Thedefendant DEPARTMENT OF REVENUE has not adopted or implemented a uniform plan for theiippra~sal, assessment and equalization of all l~roperty within the Stateof Montana." Nnile a factual dispute concerning the existence and impiementation of a uniform plan 

### ispresented by therecord,

we find ample evidence supporting the quoted findings. For example, the administrator of the property valuation department of the Department of Revenue was called asan adverse witness by the taxpayers. He testified that, tohisknowledge, there

was no state-wide plan for reappraisal atthe 

### timeof theLaird appraisal. He further testified that, although some plans have since been formulated, none would employ the same methods used by James R. Laird & Associates. A review of therecord finds this cestimony tobe uncontradicted, and certainly adequate to support the quoted findings of fact. Second, 

### is the comparison of appraisals between properties 

### inLewis and Clark County and other counties. The district court found:

"The appraised value of rural and urban improvements for property lying within Lewis and Clark County for the fiscalyear 1973-74 

### were ashigh or higher than the appraised value of similar properties lying incomparable counties outside of Lewis and Clark County for the same period of time." "XI. "T'he reappraisal of property lying within Lewis and Clark County conducted by James R. Laird 

### s Associates and adopted by the defendant 3EPARTMENT OF REVENUE and 

### its officers, agents and employees for implementation for the fiscal year 1974-75 has resulted inproperty within Lewis and Clark County being appraised substantiallyhigher than similar property in comparable c~unties outside of Lewis and Clark County." Again, the stateargues the quoted findings are concrary tothe evidence presented atthe trialand, again, 

### we Jisagree. Taxpayers called an expert who, after being duly qualified and, after laying theproper foundation, formed

### similar conclusions on the basis of his investigations. The state called an expert who drew different conclusions on the basis of his own investigation. This Court has held on numerous occasions--the trier of fact is best situated to determine the credibility of witnesses and weigh their testimony. For a recent discussion of the applicable principles see Holenstein v. Andrews

## , Mont

# . , 530 

### P.2d 476, 32 St.Rep. 41. The testimony of the taxpayers1expert here is sufficient to support the quoted findings of fact. Accepting as facts the absence of a state-wide appraisal plan and the disproportionate appraisal made on Lewis and Clark property,we turn to the legal questions presented. The district court concluded that the adoption of the Laird appraisal would require taxpayers to bear a disproportionate share of Montana's tax burden, in violation of the equal protection requirements of the Fourteenth Amendment to the United States Constitution and Article 11, Section 4, 1972 Montana Constitution. The use of the appraisal was also found to violate the due process requirements of the Fifth and Fourteenth Amendments to the United States Constitution and Article 11, Sections 17 and 29, 1972 Montana Constitution. Finally, the district court found the appraisal violated the provisions of Title 84, Chapter 4,R.C.M. 1947, which requires general and uniform appraisal, assessment and equalization of all taxable property in the state. In bringing this appeal, the state challenges all of these conclusions of law. We will not discuss the United States Constitutional questions in this opinion, since the appeal can be decided on the basis of Montana'sConstitution and statutes. Section 84-429.12, R.C.M. 1947,provides in pertinent part: 

### "It is hereby made the duty of the state

### department of revenue to implement theprovisions of this actby providing:

"2. 

### For a 

### general and uniform method of appraising cityand town lots. "3. 

### For a general and uniform method of appraising rural and urban improvements." A 

### "general and uniform method of appraising" necessarily requires that each appraisal orreappraisal must be part of a plan which provides that allsimilar properties

### willbe valued in a likemanner. The plain meaning of the statutory language admits of no other interpretation. The absence of such a plan,

asdiscussed earlier in this opinion, thus prevents lawful 

### implementation of the Laird appraisal. Article 11, 

### Sections 4 

### and 17, 1972 Montana Constitution compel the same result. These sectionsguarantee equal protection and due process tothe taxpayers aggrieved here. The Laird appraisal was found to increase Lewis and Clark County taxable valuations to a level inexcess of valuations of similar property in other counties. The obvious result, and that found by the districtcourt, is 

### a disproportionate shareof the tax burden placed upon Lewis 

### and Clark County taxpayers. We find the violations of the cited constitutional provisions arepatent. However, since it 

### has already been established that use of the appraisal was unlawful under the statutecited,

we 

### willnot lengthen thisopinion with a complete discussion of these constitutional violations. Authorities are inaccord, holding that violations of statutoryuniformity requirements generally result inviolations of equal protection-due process requirements. 71Am 

### Jur 2d. State and Local Taxation, S158, and

cases footnoted there. In so holding, we areaware of the abundance of authoritywhich findsno violation of constitutional or statutorymandates inthe temporary inequalities which accompanya cyclical plan of reappraisal. An excellent discussion of applicable law inthisregard is found inHillock v. Bade, 22 Ariz.App. 46, 523 P.2d 97, and inthe Annotation, 76 ALR2d 1077. Here, the fatal flaw inthe state's position is the absence of any plan. Without such a plan, there 

### is no assurance of uniformity of appraisal method or of sequential selection property for reappraisal. The state's position 

### is even weaker than that of the taxing officials in Sparks v. McCluskey, 84 Ariz. 283, 327 P.2d 295, 297, where the Arizona court held,: "We cannot subscribe tothe proposition that grossly inequal values by theuse of a specific method of assessment may be placed on a small portion of a class of property and remain subject tothe disproportionately excessive value for an indefinite number of years inthe future until the taxing officials can get around to using the same method upon the other likeprop

### erties." It is clear the state's proposed implementation of the Laird appraisal 

### isprohibited by Montana constitutional and statutory provisions. In so holding, we do not prohibit the use of cyclical plans of reappraisal, nor do we hold that such a plan could not begin with a reappraisal of theproperty inLewis and Clark County. The statehas the legal authority todetermine the order of reappraisal. We hold only that the state's determinations must be a part of a general and uniform plan for 

### reappraising alllikeproperty inthe state. The statealsocontends the taxpayers should have been required toexhaust their statutory, administrative remedies before bringing thischallenge inthe courts. The procedure suggested would require hearings before the county tax appeal board (section 84-603, R.C.M. 1947) with a subsequent appeal, if unsuccessful, before the statetax appeal board (section 84- 709, R.C.M. 1947). In an early construction of these statutes (which have

### since been amended in respects not relevant here), this Court held, in Belknap Realty Co. V. 

### Simineo, 67Mont. 359, 365, 215

"The statutes having made ample provision whereby a taxpayer may have any alleged excessive or erroneous assessment or valuation of his property reviewed by the county and state boards of equalization, this remedy is exclusive except in caseswhere fraud or the sdo2tion of a kund,amentally wrong principle of assessment is shown.

### " (Emphasissupplied.) 

### The state's use of an unconstitutional and illegal appraisal here is the type of "fundamentallywrong principle" of appraisal for which specific exception was made ir Belknap. Were it otherwise, we would have the anomalous situation of an administrative, quasi-judicial board passing on constitutionaland statutory questions presented by this appeal. Tax appeal boards are particularly suited for settling disputes over the appropriate valuation of a given piece of property or a particular improvement, and the judiciary cannot properly interfere with that function. Blair v. Potter, 132 Mont. 176, 315 P.2d 177. The instant case does not concern the value of a specific tract of land within Lewis and Clark County, but rather the constitutionaland statutory correctness of implementing a discriminatory reappraisal. That determination is

an appropriate function of the courts. In Conrad v. Managhan, 157 Mont. 335, 485 P.2d 948, 

### this Court noted that when a taxing authority lacks the statutory power to increase appraisals,an aggrieved taxpayer may seek equitable relief in the courts. Conrad speaks both to the administrative remedy issue and the injunctive relief issue raised by the state in the instant case. The state was outside its statutory authority in attempting to implement the Laird appraisal. Under these facts, taxpayersmay proceed in the courts to seek injunctive relief.However, the scate argues section 93-4203 

### (4)

## , R.C.M. 

### L947, ;+ronibitsissuance of ail injunction preventing execution af public statutesby public officers, and thatthedistrict court here ignored that limitation on 

### its equitable powers. While the cited section does prohibit enjoining the execution of statutory duties, section 84-4505, R.C.M. 1947, provides for

an injunction where the tax, or a part thereof sought tobe 2njoined, 

### is illegal orunauthorized by law. Heretofore, 

### we held implementation of theLaird appraisal would be illegal and unauthorized. The suggested distinction between the statutory

use of the word "tax" and the operative factof an "appraisaln here is without substance. The ~aird appraisalwould have been 

### used asthe basis for computation of taxes. This Court's refusal torecognize thisdistinction is admittedly contrary todicta contained inStateex rel. Keast



### v. ~riey, 145Mont. 521, 402 P.2d 405. In Keast, an injunction 2rohibiting utilization of a certainvaluation for tax purposes
was quashed. The injunction had been issued without notice, 

### and plaintiffs had shown no irreparable 

### in jury. 'Those grounds,

il-i themselves, 

### were sufficient to support quashing the injunction, and tile Court expressly recognized that fact. Nonetheless, 

### it went on to find the injunction was also banned by section 93-4203, 

### H.Z.M. 1947. For reasons heretofore stated, that holding 

### is expressly overruled. The preferable law 

### is enunciated inHames v. City of Polson, 123Mont. 469, 479, 215 P.2d 950, where it was held: 

### " 

## * 

## * * public bodies and public officers may be restrained by injunction from proceeding in violation of the law, to theprejudice of the public, or tothe injury of individual rights 

## * 

## * * .I' The propriety of injunctive relief 

### is alsorecognized by Montana's skatute governing payment of taxes under protest. Section 84-4504,"The remedy hereby provided shall supersede the remedy of injunction znd allother remedies which might be invoked toprevent the collection of taxes 

### or licenses alleqed tobe irreaularlv levied or demanded, except inunusual 

### cases A where the remedy provided 

### is deemed by the court tobe inadequate.

### " (Emphasis supplied.) The intent of the Legislature toprovide for the retention of equitable remedies intaxation cases where statutoryremedies prove inadequate 

### is evident. To hold that equitable remedies

arenot available for halting unconstitutional and illegal appraisalswould produce the strangeresultof prohibiting enjoining utilizationof an illegal appraisal while allowing the enjoining of levies computed upon that appraisal. Section 84- 

### 4505, R.C.M. 1947. We 

### willnot so hold. The factsdiscussed throughout thisopinion sufficiently

answer the state's contention that the evidence does not support the districtcourt'sjudgment. The implementation of the Laird appraisal failsbecause there is substantial evidence that 

### it

was not a part of a general and uniform, state-wide plan. We cannot approve use of an appraisal which would result ina discriminatory, disproportionate tax burden on Lewis and Clark County taxpayers, when the appraisal suffers the deficiencies already noted. Finally, the taxpayers' motion that portions of the state'sappellate brief should be stricken willnot be considered. Since our decision holds infavor of the taxpayers, they have not been prejudiced by thematerials inthe state's brief--whether properly included therein or not. The judgment of thedistrict court 

### is affirmed.

Justice

### We 

### concur: