Montana Attorney General Opinion 15-556

Opinion No. 556 Taxation-Delinquent Ta.xes--Sta.te Lands -Abatement of Ta."\:es on Sta,te Lancls-Cancellation of Taxes on Stat~ Lands. HIiJLD: Section !l4 of Chapter 60, La ws of 1927. which ea ncels taxes due or delinquent on all lands which rc- ,'ert to the State for fa illlre of the purchaser from the Sta te to meet in- ~tallments, is constitutional. June 21, 1934. Your reqnest for opinion is as fol- lows: "The Department of State Lands and Investments of the State of Montana at Helena mailed a notice to the Coun- ty Assessor and the County Treasurer of Pondera County, notifying sa.id pa I·ties that on .Tune 21, 1933, the State Board of Land Commissioners cancelled Certificate of Purchase of State Lands No. C-44, standing in the name of the First National Bank of Valier, and embracing the following lands: EY:!NE~ Sec. 20, NW~ NW~ 386 OPINIONS OF THE ATTORNEY GENERAL NIDl.4 Sec. 21, Twp. 28 N., Rge. 6 W .. containing 280 acres, said notice stat~ ing that as this land has now re- verted to the State, you will please cancel any assessment against the land for the present year and all un- paid taxes against the land for this and all prior years, as provided in Section 94 of Chapter 60 of the Laws of 1927, which section reads as fol- lows: "'In case any lands sold under the provisions of this act shall reyert to the State, for any cause whatsoever, the commissioner of state lands shall notify the assessor and the county treasnrer of the county in which the land is situated, and upon the receipt of such notice it shall he the duty of the assessor to cancel any assessment of said land for that year, and of the county treasurer to cancel all taxes remaining unpaid against the land for that and all previous years.' "At the time they mailed the ahove notice, they also sent perhaps fifteen other notices for abatement of taxes. This raises the question of the author- it~, of the State Land Board to abate taxes. I understand that the title. of course, remained in the State Land Board until the contract of purchase was consummated and upon failure of the purchaser to complete it the Land Board had the right to cancel the contract. However, during the period of the contract the Land Board received certain sums of money as consicleration for making said con- tract and for the continuance of same. The county could only tax the equity of the purchaser therein but upon the cancellation of the contract the coun- ty would have no lien for their taxes and would be absolutely without any means of collecting same. "Therefore, it seems to me as though the act must be unconstitutional, as it deprives the county of the right. of security for the taxes due. The pro- cedure of cancelling the taxes is es- pecially bad in the outlying school di~tricts where the bulk of the land is State Land and the taxes are com- puted on the purchaser's equities. which if cancelled, would mean that where the school districts are in debt that the parties owning the property in the school district would then have to pay the entire amount of the in- debtedness. It has also happened in this county that parties ha \'e had their contract forfeited and then re- purchased from the Land Board after ha\"ing had their taxes abated, and thus saved considerable sums of money. "I would appreciate it very much if you would advise me if, in the opinion of your office, this section is constitutional, as in my opinion it can't be constitutional where the Land Board can remO\'e the security of the county for the taxes due. In thi~ particular case the removal of the security means the can cella tion of the entire amount due from the individual taxpayer." Chapter 60, Laws of 1927, is a code which created the Department of State Lands and Inyestments. It contains 123 sections, including section 94 quot- ed above. Section H2 thereof provides: "The interest of the purchaser in state lands shall be subject to taxation to the full extent of such interest. The assessor shall assess the purchaser for such percentage of the full and true yalue of the land as the initial pay- ment on the land and all installments of prinCipal due on the certificate of purchase prior to the first Monday of March of the year for which the land is assessed is of the full purchase price of the land." Section 9il thereof pro- vides that in case of a sale of such in- terest for taxes the purchaser at. thc sale shall succeed to all the rights of the purchaser from the state. It may be safely assumed, we take it, that no interest in the lands ill question was sold for taxes but that they reverted to the state for failure on the part of the purchaser to pay installments of the purchase price as they fell due. In other words, the pur- chaser forfeited whatever rights it. had in or to the lands and the state be- came the absolute owner thereof once more. Section 2, Article XII. of the Consti- tution pro\'ides that "the property of the United States, the state, countie~. Cities, towns, school districts, municipal corporations and public libraries shall be exempt from taxation." Section 1998. Revised Codes, 1921, is to the same effect. There cannot be any doubt that by reason of this constitutional proviSion the lands were freed and absolved from further liability for taxes pre· OPIKIO);S 0]<' THE ATTORKEY GE);ERAL 387 viously assessed against the infere~t therein of the purchaser the moment the state again became the absolute owner thereof. Section 94 but carries out the intent of the framers of the Constitution in that regard. (State Y. Galyon. 7 Pac. (2d) 484: State v. Locke. 219 PlIC. 700; State v. Reed. 272 Pac. 1008: State Y. Frost. 64 Pac. 902. See lIlso .. State v. Lewis and Clllrk Count~'. 84 ~Iont. 200, and State y. Lewis and Clark County, 84 :\Iont. 204.) Section 4, Article 7, of the Constitu· tion of Idaho is like our Section 2. Tn the case of State \'. :\linidoka County. 298 PlIC. 366. the Supreme Court of Idaho said: "·When the state obtains complete unconditional title to lands pursullnt to the foreclosure of school fund mortgllges, the title is freed. hy article 7, § 4 of the Constitution, from all Pllst taxes and liens therefor. lIml all such liens on the tax records be- come nil and should be cllnceled." The State Board of Land Commis- sioners has not assumed the power to abate taxes on stllte lands. The Com- missioner of State Lands merely obeys the command of section 94 and the as- sessor and county treasurer do the rest. We know of no constitutional pro- vision with which section 94 conflicts. 'Ve know that section 2, Article XII of the Constitution, justifies it. That the statute may at times seem to work a hardship on owners of private prop- erty or ma~' be subject to ahuse is no argument lIgainst its validity.