ARNOLD F. KRUSE and Patricia Kruse, Plaintiffs and Appellant, v. CASCADE COUNTY, A municipal Corporation of the State of Montana, Dick Michelotti, Treasurer, Cascade County and the Department of Revenue, State of Montana, Defendants and Respondents.
No. 90-152.
Supreme Court of Montana
Decided Aug. 7, 1990.
Submitted on Briefs June 14, 1990.
796 P.2d 568
Larry G. Schuster, Dept. of Revenue, Property Assessment Div., Helena, for defendants and respondents.
JUSTICE HARRISON delivered the Opinion of the Court.
Arnold and Patricia Kruse appeal the judgment of the Eighth Judicial District Court of Cascade County holding that the Montana Department of Revenue and Cascade County had legal authority to impose back taxes on real property owned by the Kruses. Because they did not prevail in their case, the District Court also denied the Kruses’ request for attorney‘s fees and costs pursuant to
Appellants raise two issues for review:
- Did the District Court err in finding that the Montana Department of Revenue and Cascade County had the legal authority to correct erroneous assessments upon the Kruses’ real property for the tax years 1986 and 1987 pursuant to
§ 15-8-601, MCA ? - Did the District Court err in finding that the appellants were not entitled to an award of attorney‘s fees and costs pursuant to
§ 25-10-711, MCA ?
Arnold and Patricia Kruse own seven parcels of real property which form a contiguous, irregularly shaped block in Great Falls, Montana. Three of the parcels front 10th Avenue South and four front 11th Avenue South. The property was unimproved and not within the city limits of Great Falls during the tax years at issue.
On January 1, 1986, erroneous values were assigned to the Kruses’ seven parcels of rear property. The three parcels fronting 10th Avenue South as well as the four parcels fronting 11th Avenue South were assigned values of $2,500 per acre rather than the previously determined appraised values as set out above. The erroneous values were carried forward for the 1987 tax year. The Kruses paid their 1986 and 1987 real property taxes based on those erroneous values on time and without protest.
In the spring of 1988, a DOR appraiser discovered that the Kruse property had been erroneously assessed. The Cascade County Appraisal Office then reviewed all properties on 10th Avenue South and found that 42 parcels of property fronting 10th Avenue South had been erroneously assessed. As a result, the DOR and Cascade County set out to correct the erroneous assessments of 10th and 11th Avenues South properties for the tax years 1986 and 1987. To correct the erroneous assessments the Cascade County Treasurer sent supplemental tax bills to the property owners involved. The Kruses received their supplemental tax bill in the amount of $5,316.84 on August 29, 1988 and paid the additional taxes under protest to the Cascade County Treasurer on September 27, 1988.
In their letter of protest the Kruses stated that they had already paid their 1986 and 1987 property taxes in full. They further stated that Cascade County was imposing additional, retroactive taxes unlawfully. The Kruses then brought this suit for return of the taxes paid under protest and for their attorney‘s fees and costs.
The appellants contend that the actions of the DOR and Cascade County in 1988 amounted to a reappraisal of the properties in question and resulted in an illegal and unlawful imposition of additional retroactive taxes for 1986 and 1987. The DOR and Cascade County maintain that no new appraisal occurred, but the property
The trial court entered judgment in favor of Cascade County and DOR, stating that the erroneous assessment was simply a clerical error, and ordered the Cascade County Treasurer to disburse the $5,316.84 of taxes which had been paid under protest for the 1986 and 1987 tax years. The Kruses now appeal that judgment.
Issue 1: Authority to Correct Erroneous Assessments
The controlling statute is
“(1) Whenever the department of revenue discovers that any taxable property of any person has in any year escaped assessment, been erroneously assessed, or been omitted from taxation, the department may assess the same provided the property is under the ownership or control of the same person who owned or controlled it at the time it escaped assessment, was erroneously assessed, or was omitted from taxation. All such revised assessments must be made within 10 years after the end of the calendar year in which the original assessment was or should have been made.” (Emphasis added.)
The situation presented by this case is subject to
Erroneous assessments may be corrected if property has been undervalued due to a clerical or appraisal error. Evans Products Co. v. Missoula County (1982), 201 Mont. 337, 654 P.2d 523. Property which has not been fully taxed according to appropriate tax procedures may be properly reassessed pursuant to
We agree with the trial court that the Kruses’ seven parcels of real property were erroneously assessed for the tax years 1986 and
Issue 2: Attorney‘s Fees and Costs
The Kruses contend that the DOR‘s actions amounted to an illegal imposition of back taxes and its defense of the case was frivolous and conducted in bad faith. The Kruses allege they are therefore entitled to their attorney‘s fees and costs pursuant to
“(1) In any civil action brought by or against the state, a political subdivision, or an agency of the state or a political subdivision, the opposing party, whether plaintiff or defendant, is entitled to the costs enumerated in 25-10-201 and reasonable attorney‘s fees as determined by the court if:
“(a) he prevails against the state, political subdivision, or agency; and
“(b) the court finds that the claim or defense of the state, political subdivision, or agency that brought or defended the action was frivolous or pursued in bad faith.”
The appellant failed to meet both requirements of
Additionally,
We hold that the trial court correctly found that the respondents were not liable for attorney‘s fees and costs under
Affirmed.
CHIEF JUSTICE TURNAGE and JUSTICES SHEEHY, BARZ and WEBER concur.