BROWN v HART
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No. 84-265 IN THE SUPREME COURT OF THE STATE OF MONTANA 1984 MATHEW BROWN, Plaintiff and Appellant, FERN HART, Missoula County Clerk and Recorder, County Treasurer; ROBERT PALMER and BARBARA EVANS, Missoula County Commissioners; et al. Defendants and Respondents. APPEAL FROM: District Court of the Fourth Judicial District, In and For the County of Plissoula, The Honorable Joseph B. Gary, Judge presiding. COTJPJSEL OF RECORD : For Appellant: Tipp, Hoven, Skjelset & Frizzell, Missoula, Montana For Respondent: Robert L. Deschamps, 111, County Attorney, J!lissoula, Montana Ililodragovich, Dale & Dye, Missoula, Montana Submitted on briefs: Sept. 20, 1984 Decided: December 6, 1384 Clerk Mr. Chief Justice Frank T. Haswell delivered the Opinion of the Court. This is an appeal by plaintiff from the Missoula County District Court's denial of his claim for rescission of a tax deed issued by the County to defendant Bruce Rlotkamp. The sole question on appeal is whether Montana's tax collection laws governing real estate apply to improvements located on tax-exempt lands. In 1976, Mathew Brown purchased a log cabin located on Forest Service land. Ee did not report the change of owner- ship to the Department of Revenue, and tax bills continued to be sent to Brown's predecessor in interest, Don Reardon. erown apparently paid the 1977 taxes and the first installment of the 1978 taxes. He made no further tax payments. Notices of the delinquencies were mailed to Reardon, as owner of record, hut returned to the County as undeliverable. County eventually took a tax sale certificate and conveyed the cabin to Blotkamp by tax deed. The later In 1983, a week after the Countv had issued the tax deed, Brown tendered payment of all past due taxes. the payment. Brown then brought suit seeking rescission of the tax deed. lile The County refused to accept The District Court found for the defendants. affirm. Appellant does not challenge the sufficiency of the process employed by the County in taking or conveying real. property. He contends, instead, that a separately owned improvement is personal property and, so, not subject to the real property recording requirements and not subject to tax sale as real estate. Brown argues that, although the cabin--as a building situated upon land--may come within the section 15-1-101(1)(e), MCA, definition of "improvements" for purposes of r e a l property assessment, t h e ca.bin i s n o t an. improvement a f f i x e d t o l a n d f o r p u r p o s e s of t h e r e p o r t i n g a c t and n o t "rea.1 e s t a t e 1 ' f o r p u r p o s e s o f sions. The c o n t e n t i o n s a r i s e from a p p e l l a n t ' s misapprehen- t h e t a x s a l e provi- s i o n o r m i s a p p l i c a t i o n of t h e laws of p r o p e r t y a.nd t a x a t i o n . The c a b i n i s r e a l p r o p e r t y and an i n t e r e s t i n t h e c a b i n i s an e s t a t e i n r e a l p r o p e r t y s u b j e c t t o t h e T i t l e 1 5 , C h a p t e r 17 t a x s a l e provisions. MCA S e c t i o n s 15-17-101 t h r o u g h 15-1.7-903, . I The R e a l t y T r a n s f e r Act i s i n c l u d e d w i t h i n t h e T i t l e 1 5 s t a t u t o r y scheme g o v e r n i n g t a x a t i o n o f p r o p e r t y . t i o n s 15-7-301 the Act's t h r o u g h -311, definitions, the MCA. See s e c - Where n o t s u p e r s e d e d by s e c t i o n 15-1-101, MCA, taxation The t a x a t i o n d e f i n i t i o n s a r e , i n turn, supplemented by t h e T i t l e 70 p r o p e r t y d e f i n i t i o n s . Section definitions 1-2-107, apply. The T r a n s f e r Act r e q u i r e s t h a t " [ a l l 1 t r a n s - MCA. f e r s of r e a l property ment of revenue." supplied.) ically "rea.1 e s t a t e " the t e r m s Section 15-7-304 (1), MCA. (Emphasis "real property." t o include [The T r a n s f e r Act defines improvements a f f i x e d t o l a n d , but " r e a l p r o p e r t y " and " r e a l e s t a t e " a r e n o t i n t e r - changeable. Real p r o p e r t y d e s c r i b e s t h e t h i n g , i t s e l f ; r e a l describes 70-1-101, s h a l l b e r e p o r t e d t o t h e depa.rt- N e i t h e r t h e Act n o r t h e t a x a t i o n s t a t u t e s s p e c i f - define estate ... -106, an interest in real property. Sections -301, MCA.] While t h e " r e a l p r o p e r t v " o f s e c t i o n 15-7-304, MCA, is n o t s p e c i f i c a l l y d e f i n e d f o r p u r p o s e s o f r e c o r d i n g and t a x a tion, t h e d e f i n i t i o n can be a r r i v e d a t , either directly or indirectl-y, through a p a i r i n g of the 1.a.ws of property and ta.xatj.on. The c a b i n i n q u e s t i o n i.s l o c a t e d on F o r e s t S e r v i c e l a n d on S e e l e y Lake. I t was b u i l t more t h a n t w e n t y y e a . r s a g o a n d , a l t h o u g h it l a - c k s a f o u n d a t i . o n , i.s " a . f f i x e d W t o t h e l a n d by means o f w a t e r and s e w e r T i n e s . tions are, however, required. No h a i r - s p l i t t i n g The property c o n s i s t s of S e c t i o n s 70-1-106, ... it " R e a l o r irnrnova.ble t h a t which i s a f f i x e d t o l a n d . " 70-15-101, "A t h i n g i s deemed t o b e MCA. . . . permanently a f f i x e d t o t h e l a n d when it i s it, a s i n t h e c a s e of s o 1-01-19 a s cabin, r e m a i n s upon t h e l a n d , i s r e a l p r o p e r t y . distinc- buildings." r e s t i n g upon S e c t i o n 70-15-103, MCA. Where p r o p e r t y i s a f f i x e d t o t h e l a n d o f a n o t h e r , " p e r m a n e n t l y " norma1l.y becomes a q u e s t i o n o f the parties' intent, but " [ n l e i t h e r t h e r u l e s o f t h e common l a w g o v e r n i n g t h e r e l a t i o n s h i p between t h e owner o f t h e l a n d a n d t h e lessee, n o r t h e i n t e n t i o n of t h e p a r t i e s a s expressed i n t h e i r c o n t r a c t a r e c o n t r o l l i n g i n t h e f i e l d of taxation." . Northwestern St.F.ep. 1301, authority Bank 1305. need o n l y (Mont. 1983), 667 P a c i f i c M e t a l Co. P.2d 958, An o b j e c t i v e t e s t a p p l i e s : observe the structure; 40 the taxing the present future intentions of t h e p a r t i e s a r e irrelevant. i s a b u i l d i n g r e s t i n q upon t h e ].and. 962, or The c a b i n The f a c t t h a t it may b e moved o r may h a v e t o b e removed i n t h e f u t u r e d o e s n o t , for t a x and. r e c o r d i n g p u r p o s e s , change t h e n a t u r e o f t h e c a b i n a s real property. A less d i r e c t a n a l y s i s y i e l d s t h e same r e s u l t . t y must e i t h e r b e r e a l o r p e r s o n a l . Proper- S e c t i o n 70-1-105, MCA. P e r s o n a l p r o p e r t y , when u s e d i n c o n n e c t i o n w i t h t a x a t i o n , is d e f i n e d a s e v e r y t h i n g t h a t i s n o t i n c l u d e d . w i t h i n t h e meaning of the terms "real estate" and "j.mprovements." Section 15-1-101 (1) h , MCA. Taxable real property must, then, as the so1.e remaining category, include all improvements. is, cabin 15-1- 1 1 ) e by , definition, MCA an (defining buildings situated upon land). "improvement." improvement to The Section include all The cabin is real property for purposes of recording as well as taxation. Section 15-7-302, IICA (tying recording to taxation by stating that the purpose of the Act is to facilitate tax assessment). Brown was required to give notice to the County of the transfer of cabin ownership. Section 15-7-304, MCA. Whi1.e all property owners are held to a knowledge of the taxation and recording laws, there may appear to be a certain injustice in imposing upon the property owner a duty to follow the legislature" of taxable real property. circuitous route to a definition No claim of undue burden or ineq- uitable result can be made in the present instance. Brown was a licensed real estate broker when he purchase6 the cabin. He knew or should have known that such hills of sale are routinely recorded. He, in fact--and, perhaps, most importantly--paid at least three installments of real property tax on the cabin. Erown may not shift to the taxing authority the burden of discovering his interest in the cabin or of keeping informed of his predecessor's current address. Madden v. Zimmerman (1975), 1 6 6 Mont. 285, 290, 532 P.2d 414, 417. Brown was required, by statute, to report his purchase of the cabin to the department of revenue. His faj-lure to receive notice of the delinquencies and tax sale is a direct result of his knowing violation of the reporting requirements. He may not, now, claim that a grave injustice has been done. Section 1-3-208, MCA. 11 In addition to questioning the applicability of the reporting laws, Rrown challenges the authority of the County to sell- the cabin as real estate. He argues that the real property sale and redemption provisions apply only to real estate and land, not improvements. Rrown contends that, while the cabin may be defined as real property for purposes of assessment, it is, nevertheless, personal property and must be sold under the statutory provisions covering tax sales of personal property. Appellantls contentions are without merit. Although Brown is correct in concluding that the tax collection statutes do not specifically address the instance of separately owned improvements, his conclusion that the cabin should have been sold as personal property--a cateqory from which it is expressly excluded--is incorrect. One of the only two sig- nificant results of his interpretation would be to rob like owners of improvements of their statutory right of redemption. Logic and fairness require like treatment of all owners of real property. in to Section 15-24-1104, MCA, provides that, - addition all other remedies available - - collection - taxes, a for the of county may bring action for the collection of taxes due on private interests held in federal tax exempt lands. Contrary to appellant's contentions, the County was not required to bring action. It had the option to proceed, as it did, under the general tax collection provisions. The provisions relied on by the County refer to land and real estate rather than to real property. MCA. See, sections 15-16-101 through 15-18-404, The County was not required to bring the section 15-24-1104, MCA, suit for collection or to proceed in the manner of sales of personal property. The tax statutes define real estate to include the possession of, claim to, ownership of, or right to the possession of land. Section 15-1-101(1) (k), MCA. Brown's, and, now, Rlotkamp's possessory interest in the leased land is, by definition, real estate and estate sales provisions. is not, however, an clearly subject to the real An ownership interest in the cabin interest in land. The section 15-1-101 ( I ) (k), MCA, definition does not expressly apply but neither does it expressly limit the interests to be included within the meaning of "real estate." [Compare the section 15-1-101, MCA, definitions employing the words "means" or "shall mean" in place of the subsection "includes."1 (k) nonexclusive We have already concluded that the cabin is real property for purposes of taxation. Any interest in real property is, by tradition and statute, denominated an estate. Section 70-1-301, MCA. We hold that an interest in improve- ments situated upon tax-exempt land is real estate for purposes of tax sale and is required to be treated by the taxing authority in like manner as all other real estate. The present tax sale conformed to this requirement. Our holding 1-egislature's express intent that is in accord with separately owned the improvements be regarded as real estate. See, sections 15-8-701(2)(g), MCA (requiring that improve- ments located on tax-exempt land be assessed in the same manner as other real estate); 15-18-309, MCA (providing that, where land is owned by the United States, a tax deed issued to an individual possession). is prima facie evidence of a right of The cabin was subject to tax sale as real estate. order of the trial court is affirmed. 7 & d l Chief @ t @ M L c Justike lr concur: ie Justices Mr. Justice Fred J. Weber: I concur in the result. The
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