Is a County entitled to execute against the “auction proceeds” to satisfy delinquent personal property tax obligation

In Inman v. Farmers Nat. Co., 240 Mont. 182, 783 P.2d 1328, 1329-31 (1989), the action arose out of efforts by Blaine County to collect delinquent personal property taxes from the respondents, the Schwarz Group.
 
John Schwarz, one of the respondents sold his farm equipment and machinery by public auction. At the time of auction sale, he was delinquent in the personal property taxes assessed against the subjective machinery and equipment. The personal property taxes constituted a lien against this property and Farmer's National Company, receiver named in a foreclosure action brought by Aetna, was notified that John Schwarz had directed Inman to distribute the auction proceeds to Schwarz's creditors without paying the taxes. The taxes are also a lien on the real property involved in the foreclosure suit. Farmer's National filed for injunctive relief to prevent the distribution of auction sale proceeds to the creditors. On hearing Blaine County appeared with a writ of execution, prepared to levy upon the auction proceeds.
 
“The District Court interpreted the tax collection provisions stated in § 15–16–113, § 15–16–401 and § 15–17–911, MCA (1987), to require a county to seize and sell at public auction the personal property against which the taxes were assessed. Under those statutes, the District Court stated that if a sale is not for the intention of accumulating delinquent property taxes, then the law does not allow a tax lien on the proceeds. Thus, the Court held that Blaine County's legislative remedies for collection of personal property taxes did not include the right to claim a prior lien on the auction proceeds.” Inman v. Farmers Nat. Co., 240 Mont. 182, 185, 783 P.2d 1328, 1330 (1989).
 
On appeal, the major issue for review in the case was whether the District Court erred in ruling that Blaine County was not entitled to execute against the “auction proceeds” to satisfy respondents' delinquent personal property tax obligation.
 
The Supreme Court discussed the statutes that particularly defined and related to taxes as judgments or liens and tax lien priority 15–16–401 and 15–16–402.
 
The court stated that, “[t]he language of these statutes establishes that the county has a right to a tax lien on all personal property of the taxpayer. This lien is inchoate and must be perfected by a levy and seizure of a specific item. The statutes do not restrict tax liens to the specific property against which the tax is assessed. The Supreme Court has previously so held in O'Brien v. Ross (1964), 144 Mont. 115, 394 P.2d 1013. By definition the term personal property includes money. See, § 15–1–101(1)(k)–(m), MCA. Thus tax liens can attach to money.” Id. at 185.
 
Discussing § 15–16–401, MCA (1987), the court held that “[i]n other words, the statute accords the tax lien the same status as a court judgment and gives to the county the same execution remedies as a judgment creditor.” Id.
 
The court made the observation interpreting Section 25–13–501 MCA, stating that, “[b]ecause the county possesses the same execution remedies as a judgment creditor, the county has the right to execute on the auction proceeds (moneys) to collect delinquent personal property taxes.” Id.  
 
In addition, the contention of the district court that the statutes (§§ 15–16–113(2), 15–17–911, and 15–16–401, MCA (1987)) generally provide for the seizure and sale of personal property as a means of discharging a statutory tax lien was held as meritless and illogical. “When the property seized to satisfy the tax is money, no sale is required.” Id.
 
Moreover, “[c]ontrary to respondents' assertion, as outlined above, § 15–16–401, MCA (1987), squarely provides a mechanism for the county to perfect the tax lien by levy of execution and seizure just as a judgment creditor has a similar right of execution against a judgment debtor. Those remedies authorized in § 15–16–401, MCA (1987), include executing on cash funds such as the auction proceeds.” Id.  
 
Supreme Court concluded stating that Blaine County has a right to a tax lien on the auction proceeds and can levy the auction proceeds and use those moneys to satisfy the respondent’s delinquent personal property taxes.