Can a South Dakota board of county commissioners agree to settle a real-estate tax delinquency by accepting the full amount of back taxes from the former owner, without interest or penalty, when the property has since been taken over by a town?
Plain-English summary
Pollock, a town in Campbell County, had ended up holding several vacant lots through whatever municipal process had transferred them out of private hands. The prior owner, the Pollock Land Company, had let the taxes go unpaid, and Campbell County held tax sale certificates against the property. Officers of the Pollock Land Company then offered to pay the county the principal amount of the back taxes, without interest or penalty. The county commissioners had run the numbers and decided that the offer would net the county more than reducing the certificates to tax deeds and reselling the lots at a tax-resale auction.
Mr. Renz asked AG Gordon Mydland whether SDC 57.0802(2) authorized the county to accept that kind of deal. The AG said yes, with strong caveats.
The statute gave the board of county commissioners authority to "make compromises, abatements or rebates of taxes" when "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." Earlier AG opinions had bounced back and forth on whether this statute was constitutional under Article III, § 24 of the South Dakota Constitution (the bar on giving away public property). Two pre-1941 opinions said it was unconstitutional. Three later opinions (1941-42, 1945-46, 1951-52) said it was constitutional. Mydland affirmed the later view. Read v. Jerauld County (1945) had backed the constitutional reading and specifically allowed waiver of interest and penalties.
But Mydland used most of the opinion to warn the commissioners about the standard. The statute did not exist to give relief to delinquent taxpayers. It existed to get the county the best possible recovery. Earlier AG opinions had urged commissioners to deny compromises unless they could show that the deal beat the alternative. The board needed to either deny the application or have a careful appraisal of present market value done, and use every reasonable precaution to extract the maximum, "otherwise the members of the board might subject themselves and the sureties on their official bonds to liability for damages."
In the Pollock case, the AG said the law is satisfied if the commissioners reasonably conclude the offered tender exceeds the likely tax-resale recovery, and the decision is not motivated by a wish to do the prior owner or the town a favor.
Currency note
This opinion was issued during AG Gordon Mydland's tenure in the early 1970s. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. SDC 57.0802 has long since been recodified into SDCL Title 10 (taxation). Modern tax-compromise questions should be analyzed under the current statutes and SD Department of Revenue regulations.
What the opinion meant at the time
For Campbell County commissioners, the immediate answer was workable: accept the deal if it actually beat the alternative. They needed to document the comparison, do an appraisal, and make a paper record that demonstrated the math.
For other counties facing similar offers, the opinion provided a template. The compromise statute had real teeth and could be used. But the board's liability for damages was a real risk if they took a deal that fell short of what tax-deed proceedings would have produced. The commissioners' own bonds were at stake.
For municipalities that ended up owning tax-delinquent property, the opinion noted a structural problem: a town does not pay property tax on its own holdings. So a town acquiring tax-delinquent land removed the property from the tax rolls entirely. That was a partial reason to encourage compromise: better to put the property back in private hands paying ongoing taxes than leave it sitting in municipal ownership and producing nothing.
Common questions
Q: What was Article III, § 24 of the SD Constitution about?
A: It prohibited the legislature from authorizing the giving away of public property without consideration. Two early AG opinions read SDC 57.0802 as such a giveaway. Later opinions and Read v. Jerauld County (1945) read the statute differently, holding that a thoughtful compromise of taxes that could not otherwise be collected does not violate the constitutional bar.
Q: Was a public hearing required for the compromise?
A: The opinion did not address procedural requirements. The statute itself spoke only of the board's authority. Modern public-meeting and sunshine-law rules likely apply now, but did not figure in the 1970s analysis.
Q: Could the commissioners take a partial-payment offer (less than full back taxes)?
A: The statute did not limit compromises to full-payment offers. It authorized "compromises, abatements or rebates." But the board would need a strong appraisal showing the lesser amount was still better than tax resale would yield.
Q: What about interest and penalties specifically?
A: Read v. Jerauld County held that waiver of interest and penalties on unpaid taxes was permissible under Article III, § 24. That removed one specific constitutional concern.
Q: Were the commissioners personally at risk?
A: Yes. Multiple earlier AG opinions warned that commissioners who accepted an inadequate compromise could subject themselves and the sureties on their official bonds to damages. That liability framework deterred sweetheart deals.
Background and statutory framework
South Dakota's property-tax delinquency framework historically used the tax-sale certificate plus tax-deed process. A delinquent taxpayer's property would be sold at tax sale, producing a certificate held by the county or a private buyer. If unredeemed, the certificate ripened into a tax deed transferring title. If still unsold or unredeemed, the county could resell at a tax-resale sale.
SDC 57.0802(2) was the escape valve for cases where the certificate-to-deed pipeline would not yield full taxes. Compromise allowed the county to take what it could get from a willing payer rather than chase a recovery that might fall short.
The constitutional question (Article III, § 24) was a periodic source of trouble. Early 20th-century AG opinions worried that any waiver of fully-charged tax obligations was a giveaway of public funds. The 1945 Read v. Jerauld County decision settled the constitutional issue at the SD Supreme Court level: a well-reasoned compromise is not a giveaway.
The board's fiduciary duty (and personal exposure on official bonds) was the practical guardrail. Commissioners could not just accept any offered settlement; they had to compare it to the alternative and document the choice.
Citations and references
Statutes:
- SDC 57.0802(1) (general tax compromise authority)
- SDC 57.0802(2) (compromise on platted real property)
- Article III, § 24, South Dakota Constitution
Cases:
- Read v. Jerauld County, 70 S.D. 298, 17 N.W.2d 269 (1945)
Prior AG opinions:
- 1930-32 AGR 774 (held SDC 57.0802 unconstitutional, later overruled)
- 1935-36 AGR 504 (same)
- 1941-42 AGR 78 (overruled the earlier unconstitutionality holdings)
- 1944-45 AGR 243 (approved the constitutional reading)
- 1945-46 AGR 243
- 1951-52 AGR 396
- 1955-56 AGR 69
Source
Original opinion text
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 1930-32 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