927 N.W.2d 894
S.D.2019Background
- Hunt Companies held a 40-year lease (ended 2011) to develop housing (Antelope Ridge) on 235 acres owned by the United States in Meade County; Hunt managed the property after 2011.
- Meade County assessed and taxed Hunt’s interest for tax years 2012–2014 by using fee-simple valuation and assessed ~$35.7M; Hunt paid the taxes but did not use SDCL 10-27-2 pay-and-protest when paying.
- Hunt appealed valuation to the circuit (Valuation) court, arguing fee-simple valuation was improper; the Valuation court reduced assessments to leasehold values and ruled the County unconstitutionally valued the fee simple; that judgment became final (no appeals).
- Hunt then applied to the County under SDCL 10-18-1 for abatement/refund of overpaid taxes; the County denied the application, relying on statutory limits and its discretion.
- Circuit court affirmed the County: (1) res judicata precluded relitigation of valuation; (2) SDCL 10-18-1’s enumerated grounds (subsections (1), (3), (4), (5)) did not apply as Hunt had a taxable leasehold interest and subsections mostly address clerical errors or full exemptions; (3) SDCL 10-18-1 must be narrowly construed relative to pay-and-protest remedy.
- Supreme Court affirmed the circuit court’s decision; Justice Jensen dissented, arguing subsection (3) covers partial invalid assessments and the County erred by denying relief and not calculating the exempt portion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether County’s assessment of Hunt’s leasehold violated state/federal constitutions | County could not constitutionally tax the leasehold (property exempt under Art. XI, §5) | Issue not preserved in this action; Valuation court already resolved valuation to leasehold and its judgment is final | Not reached as a live issue: valuation final; appeal concerns only abatement/refund under SDCL 10-18-1 |
| Whether SDCL 10-18-1 required abatement/refund of overpaid taxes | Hunt: SDCL 10-18-1 subsections (1),(3),(4),(5) permit refund for overvaluation/partially exempt property; County should refund amount attributable to exempt fee interest | County: subsections are limited (clerical errors, full exemptions, no taxable interest, mistaken payments); Hunt failed to use pay-and-protest; statute must be narrowly construed | Affirmed: subsections (1) and (5) address clerical mistakes; (3) and (4) require full exemption or no taxable interest; SDCL 10-18-1 is narrow and Hunt cannot expand it after declining pay-and-protest; County denial upheld |
Key Cases Cited
- Twinde v. (unreported name), 52 S.D. 352, 217 N.W. 542 (1928) (statutory predecessor interpreted to limit refunds to clerical errors)
- Casey v. Butte County, 52 S.D. 334, 217 N.W. 508 (1927) (abatement/refund statutes are a separate remedy from pay-and-protest)
- Riverview Properties, Ltd. v. South Dakota, 439 N.W.2d 820 (S.D. 1989) (pay-and-protest limited window protects assessment stability)
- Chicago, Milwaukee, St. Paul & Pacific R.R. Co. v. Bd. of Comm’rs, 248 N.W.2d 386 (S.D. 1976) (recognizing refund/abatement statutes as exception to pay-and-protest exclusivity)
- Shevling v. Butte County Bd. of Comm’rs, 596 N.W.2d 728 (S.D. 1999) (res judicata effect of unappealed judgments in tax assessment context)
- Petition of C M Corp., 334 N.W.2d 675 (S.D. 1983) (tax exemption/assessment principles)
- In re Black Hills Indus. Freeport, Inc., 268 N.W.2d 489 (S.D. 1978) (tax exemption/assessment principles)