STATE OF SOUTH DAKOTA
OFFICE OF
THE ATTORNEY GENERAL

April 4, 1969

C. W. Renz
State's Attorney, Campbell County
Herreid, South Dakota 57632

OFFICIAL OPINION NO. 69-31

Compromise of delinquent taxes on real estate now owned by municipal corporation. SDC 57.0802(2)

Dear Mr. Renz:

You have requested my opinion based upon the following factual situation:

"The Town of Pollock, Campbell County, South Dakota, through certain unspecified means, is the present owner of certain unimproved vacant lots within such town. The prior owner, the Pollock Land Company, a corporation, failed and neglected to pay the taxes levied and assessed against such property. At this time Campbell County holds tax sales certificates on such lots.

"Officials of such Pollock Land Company have conferred with the County Commissioners of Campbell County and have offered to pay the county the amount of the levied and assessed taxes, without interest and penalty.

"The County Commissioners have considered such offer, together with the prevailing land prices for vacant lots in Pollock and have determined that the acceptance of such tender would result in more money to the county treasury than could be realized if the county tax sale certificates were reduced to tax deeds and the property disposed of by tax resale proceedings."

In this situation you have presented this question:

"Would the acceptance of such offer of payment of the levied, assessed and unpaid taxes, without penalty or interest, be proper under SDC 57.0802(2)?"

SDC 57.0802(2) provides as follows:

"The Board of County Commissioners shall have authority to make compromises, abatements or rebates of taxes in the following special cases:

"(2) Whenever it shall appear to the Board of County Commissioners that the full amount of any tax extended and charged against any real property platted into lots and blocks cannot be realized by a sale of the property or otherwise, such board shall have power to make such settlement or compromise of any taxes for any year or years as in its judgment shall be for the best interests of the county."

This provision, together with SDC 57.0802(1), has never been directly interpreted by our Supreme Court. By opinions of this office issued in 1930032 AGR 774 and 1935-36 AGR 504, my predecessors held that such statutes were unconstitutional as violative of Section 24, Article III of the South Dakota Constitution. These earlier opinions are specifically overruled in 1941-42 AGR 78, and finding such statutes were constitutional was approved in 1945-46 AGR 243, and 1951-52 AGR 396.

It is my opinion that these later opinions are proper and I affirm the constitutionality of SDC 57.0802(2), I would also add that in the situation you have presented, where the full amount of taxes due and unpaid is tendered, that in view of Read v. Jerauld County (1945) 70 SD 298, 17 NW 2d 269, the waiver of interest and penalties on unpaid taxes, if accepted, is not violative of Sec. 24, Article III of our Constitution.

In considering the problem presented, the County Commissioners should heed the admonitions of my predecessors when discussing the propriety of so compromising past due taxes. Reference is made to the opinions reported in 1944-45 AGR 243; 1951-52 AGR 396 and 1955-56 AGR 69. Primarily the sole question presented to the Board of County Commissioners is: WHAT IS FOR THE BEST INTEREST OF THE COUNTY? The purpose of this statute is not to give relief to a taxpayer who has failed to pay his taxes. It is to get the best possible bargain for the county. It would be improper and the County Commissioners would have no authority to accept an offer if such were less than could be realized by taking a tax deed and reselling such property at a tax sale, even if such sale would not realize the full amount of the taxes, penalties and interest assessed against such property.

As was stated in 1945-46 AGR 243, on page 244:

"It would obviously not be for the best interest of the county if the board should allow a compromise or abatement of taxes where obviously the full amount of such taxes could readily be recovered and collected by restoring to the ordinary processes provided by law for the collection of taxes."

In 1951-52 AGR 396, on page 398 my predecessor stated:

"It is my opinion that your board of county commissioners should either deny the application of the taxpayer for a settlement or compromise or have a careful appraisement made as to the present market value of the lots and exercise every reasonable precaution to obtain the maximum amount that can be realized, otherwise the members of the board might subject themselves and the sureties on their official bonds to liability for damages."

Your County Commissioners would do well to consider these suggestions of my predecessors. Likewise, in the situation presented, where the property is presently owned by a municipal corporation, which does not pay taxes upon its holdings, the County Commissioners should consider the whole purpose of tax sale or resale proceedings is to get real property in the hands of a taxpayer who will pay his taxes for the support of the several governmental entities within a county. The Commissioners must balance the public interest in receiving more money by virtue of the compromise, than a tax resale proceedings resulting in less money, but with the person taking title to such property paying the taxes levied and assessed against the land. You can appreciate that because of the peculiar factual situation presented, and the obvious fact that the decision must be made by the County Commissioners themselves, that I can give no definite YES or NO answer to your question. I can advise that SDC 57.0802(2) is constitutional, and seemingly is applicable to the factual situation in question. Therefore, if the County Commissioners, after a full consideration of the matter, conclude that the best interest of the county requires the acceptance of such tender of taxes due and unpaid, and not prompted by the spirit to assist a nonpaying taxpayer, or to assist the town of Pollock, it is my opinion the provisions of SDC 57.0802(2) would be satisfied and the County Commissioners could not be charged with having perpetrated an illegal act.

Respectfully submitted,

Gordon Mydland
Attorney General