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CHAPTER 10-27

ACTIONS FOR REFUND AND INVALIDATION OF TAXES

10-27-1      Injunction against tax collection prohibited--Form of remedy.
10-27-2      Tax payment under protest and action for recovery--Judgment for taxpayer--Apportionment of refund to taxing districts--Right of appeal.
10-27-3      Tender of conceded tax in action to recover property sold for taxes--Acceptance and deposit of tender.
10-27-4      Dismissal of action on failure by plaintiff to deposit amount tendered.
10-27-5      Tender not required if invalidity of tax asserted--Preliminary determination by court--Deposit ordered by court.
10-27-6      Waiver of deposit of interest due to irregularity in proceedings--Deposit on order of court--Admission not implied from deposit.
10-27-7      Judgment directing disposition of deposit--Payments by county directed.
10-27-8      Costs in action for recovery of property sold for taxes.
10-27-9      Appeals to Supreme Court in action to recover property sold for taxes.


     10-27-1.   Injunction against tax collection prohibited--Form of remedy. No injunction to restrain or delay the collection of any tax claimed to be due may be issued by any court. However, in any case in which, for any reason, it is claimed that any tax about to be collected is wrongful or illegal, in whole or in part, the remedy, except as otherwise expressly provided by this code, is by payment under protest and action to recover, as provided in § 10-27-2.

Source: SL 1915, ch 289, § 1; RC 1919, § 6826; SDC 1939, § 57.0901; SL 2008, ch 37, § 88.


     10-27-2.   Tax payment under protest and action for recovery--Judgment for taxpayer--Apportionment of refund to taxing districts--Right of appeal. Any person against whom any tax is levied or who may be required to pay the tax, who pays the tax prior to the tax becoming delinquent and under protest to the treasurer authorized to collect the tax, giving notice at the time of payment of the reasons for such protest may, at any time within thirty days thereafter, commence an action against such treasurer for the recovery of the tax in any court of competent jurisdiction. If the court determines that the tax was wrongfully collected, in whole or in part, for any reason going to the merits of the tax, the court shall enter judgment accordingly, and such judgment shall be paid in preference to any other claim against the county, upon the final determination of the action. A pro rata share of the money so refunded shall be charged to the state and each taxing district which may have received any part of the tax. The right of appeal shall exist for both parties as in other civil actions.

Source: SL 1915, ch 289, § 1; RC 1919, § 6826; SDC 1939, § 57.0901; SL 1994, ch 83, § 4.


     10-27-3.   Tender of conceded tax in action to recover property sold for taxes--Acceptance and deposit of tender. In any action or proceeding to recover real property sold for taxes, or to invalidate or cancel any tax sale certificate, tax deed, or other tax sale proceeding, the party seeking such relief shall specify and tender in the party's pleading the amount of the tax, if any, that the party concedes to be due. If any opposing party who claims an interest in the tax or property serves and files a pleading accepting the amount so tendered, the party seeking relief shall within ten days thereafter deposit the sum tendered with the county treasurer of the county or counties involved, and take and file with the clerk of the court the receipt provided by the treasurer for the deposit.

Source: SL 1897, ch 28, § 133; SL 1901, ch 56, § 1; RPolC 1903, § 2214; SL 1903, ch 70; RC 1919, § 6825; SDC 1939, § 57.0902; SL 1992, ch 80, § 204; SL 2008, ch 37, § 89.


     10-27-4.   Dismissal of action on failure by plaintiff to deposit amount tendered. If such deposit is not made by the party seeking the relief within ten days after service and filing an acceptance of the same by any party, the action shall be dismissed upon the merits with costs to the party seeking relief.

Source: SL 1901, ch 56, § 1; RPolC 1903, § 2214; SL 1903, ch 70; RC 1919, § 6825; SDC 1939, § 57.0902.


     10-27-5.   Tender not required if invalidity of tax asserted--Preliminary determination by court--Deposit ordered by court. If the party seeking relief asserts the invalidity of the tax, its application or its legal existence as a lien or claim against the property involved, as distinguished from irregularities in procedure no tender may be required as to any portion properly asserted to be invalid or void as a tax for any reason going to its base or legal existence. In all such cases, the court in the action or proceeding shall first determine the question of the legality or existence of any tax and, if necessary, to make proper assessment, calculation, and order as to the amount, if any, which should have been legally paid. All of this shall be determined as of the date when the assessment and levy was or should have been made, except that the due date of the tax shall be established as the first day of January next following the date when an assessment originally was or should have been made. The court shall enter its order directing the party seeking relief to deposit a sum with interest at the Category G rate of interest as established in § 54-3-16 from the date when the tax originally became or should have become due.

Source: SDC 1939, § 57.0902; SL 1983, ch 28, § 27; SL 1984, ch 319, § 11; SL 1999, ch 53, § 7; SL 2000, ch 226, § 7.


     10-27-6.   Waiver of deposit of interest due to irregularity in proceedings--Deposit on order of court--Admission not implied from deposit. If the court finds that the party seeking relief was prevented from paying the tax because of lack of any original legal assessment, equalization, levy, or listing of the tax and that the party or the party's predecessors in interest in good faith failed or neglected to pay the tax on that account, the court may waive the requirement of deposit of interest. However, this provision does not relieve the county and taxing districts involved from payment of interest to the person who may originally have paid the tax or any part of the tax to or for them if the county has been made a party to the action. The court's order may direct the deposit to be made within such time as the court deems just but not less than ten days nor more than ninety days may be allowed for the deposit. Unless the party seeking such relief makes the deposit within such time as ordered, or stays the order by appeal to the Supreme Court, the action shall be dismissed upon the merits upon motion of any party to the action. If the party seeking relief makes the deposit as directed by the court, the action or proceeding shall then proceed to final determination, upon all issues involved. The making of the deposit is not an admission, estoppel, or other legal conclusion for or against any party. The making of the deposit may be considered only as a security for the purposes contemplated by this chapter.

Source: SDC 1939, § 57.0902; SL 2008, ch 37, § 90.


     10-27-7.   Judgment directing disposition of deposit--Payments by county directed. The fund when deposited shall be held by the county treasurer subject to the final judgment of the court in the action or proceeding. In the judgment the court may direct payment from the fund sums it finds to be due to any of the parties involved. If the county involved has been made a party, the court may direct the retention of a sum by the county and also adjudge that the county pay to the parties entitled thereto a sum as the court finds to be due, which sum may not exceed the amount which the county would have originally received from the tax collection or proceeding and at the Category A rate of interest as established in § 54-3-16 thereon from that date. In these cases the amount adjudged to be paid by the county shall be paid immediately unless stayed by appeal and the sum paid shall be charged proportionately to the taxing districts involved.

Source: SDC 1939, § 57.0902; SL 1983, ch 28, § 28; SL 1984, ch 319, § 12.


     10-27-8.   Costs in action for recovery of property sold for taxes. Costs in such action or proceeding shall be allowed according to determination of the issues as litigated and in the amounts prescribed by statute relating to costs generally in circuit and Supreme Courts.

Source: SL 1893, ch 160, § 1; RPolC 1903, § 2225; RC 1919, § 6824; SDC 1939, § 57.0902.


     10-27-9.   Appeals to Supreme Court in action to recover property sold for taxes. From any order directing a deposit to be made under this chapter, or from the final judgment of the court, any party may appeal to the Supreme Court under the same terms and conditions as other appeals may be taken from the circuit court to the Supreme Court.

Source: SDC 1939, § 57.0902.


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