GIERKE, Justice.
Ladish Malting Company, Stutsman County, and the State of North Dakota appeal from a district court judgment modifying a decision by the Stutsman County Board of Commissioners [Board] classifying real and personal property at the Lad[32]*32ish malting plant for the 1981 tax year. We remand to the Board for modification.
The relevant facts underlying this appeal are set forth in a prior appeal involving the same tax year, Ladish Malting Co. v. Stutsman County, 351 N.W.2d 712 (N.D.1984) [Ladish I], and will not be repeated here. In Ladish I we interpreted N.D.C.C. § 57-02-04, and concluded that personal property exempt from taxation1 included items:
“(1) [WJhich pertain to the use of structures and buildings (such as machinery or equipment used for trade or manufacture), and (2) which are not constructed as an integral part of and are not essential for the support of such structures or buildings, and (3) which are removable without materially limiting or restricting the use of such structures or buildings. Thus, an item which pertains to the use of structures and buildings should be classified as personal property only if it is not constructed as an integral part of and is not essential for the support of structures or buildings and is removable without materially limiting or restricting the use of structures or buildings.” [Emphasis in original.] Ladish I, supra, 351 N.W.2d at 721.
Because the record was inadequate to review the classification of the property in the Ladish plant as either real or personal property, we remanded to the Board for a new hearing in light of our construction of the statute. On remand the Board determined that the Ladish plant consisted of real property valued at $46,651,440. Both the State and Ladish appealed to the district court which modified the Board’s determination and concluded that the malting plant consisted of real property valued at $29,689,502.2
[33]*33The State contends that the Board erred in classifying certain property at the malting plant as personal property. The State argues that, except for the Related Facilities (pollution control devices) having a value of $4,370,440, (see fn. 2) the entire malting facility was real property with an assessed value of $57 million. Ladish argues that the Board erred in classifying certain property at the malting plant as taxable real property and asserts that the malting plant consisted of real property with an assessed value of $14,483,052.3
None of the parties dispute the values assigned to the items of property. Rather, they dispute the characterization of the items of property as either real or personal property. We must initially determine our standard of review for this appeal from a district court decision which modified a decision by the Board involving the classification of certain items of property as either real or personal property.
While we do not substitute our judgment for that of the Board, we determine whether or not the Board’s action comports with a correct interpretation of the law and whether or not the Board has acted in an arbitrary, capricious, or unreasonable manner. Conway v. Board of County Commissioners, 349 N.W.2d 398 (N.D.1984); Shaw v. Burleigh County, 286 N.W.2d 792 (N.D.1979). In Slope County v. Consolidation Coal Co., 277 N.W.2d 124, 127 (N.D.1979), we quoted with approval from Henzel v. Cameron, 228 Or. 452, 365 P.2d 498 (1961):
“ ‘Whether a finding is a “finding of fact” or a “conclusion of law” depends upon whether it is reached by natural reasoning or by fixed rules of law. Where the ultimate conclusion can be arrived at only by applying rules of law the result is a “conclusion of law.” ... A “finding of fact” is a conclusion drawn by way of reasonable inference from the evidence.’ ” [Citation omitted.]
This case involves the classification of property as either real or personal and does not involve the valuation of that property. Compare Appeal of Johnson, 173 N.W.2d 475 (N.D.1970). The applicable law, N.D.C.C. Ch. 57-02, is set forth for the Board and the classification of property as either real or personal requires the correct interpretation and application of that law to the items of property. The application of that law is not a policy-making function [34]*34like in Shaw v. Burleigh County, supra, but is instead a quasi-judicial function. The classification depends, in part, on prior judicial decisions and the legislative history of the statute which can be arrived at only by applying rules of law. That decision thus involves a question of law which is subject to full review by a court. Consequently, we will review the Board’s decision to determine whether its classifications comport with a correct interpretation of the law.
On remand there was evidence presented to establish that many of the items in the Ladish plant could be periodically replaced. However, we specifically did not adopt that expansive a test in Ladish I and construed the movability aspect to encompass both economic as well as physical considerations. Jack Kiffe, an engineering expert, testified about the cost of removing certain items of property from the malthouse and malt elevator.4 In effect he submitted a bid of about $1.4 million to remove those items. Peter Patchin testified that the salvage value of the items in Kiffe’s bid was approximately $9.5 million, and after removal, the remaining value of the structure was approximately $7.6 million. Patchin testified that after removal of the disputed items, the remaining structures would be usable; however, he further testified that removing the disputed items would diminish the value of the plant by $24 million which, according to him, would be economically catastrophic and would render the remaining structure non-functional. Patch-in thus concluded that that property should be taxable real property.
The State contends that Ladish has not met its burden to establish the exempt status of the items in dispute and that Patch-in’s testimony supports its position that the Ladish plant consists of real property having an assessed value of $57 million. The State argues that, in classifying the entire plant as real property, it is not contrary to Ladish I to refer to the plant as a special-purpose facility and to consider plant location in determining possible alternative uses of the facility. Ladish responds that Kiffe’s testimony supports its position that all items in the plant were physically removable and that Patchin’s testimony supports its position that those items in dispute were economically removable. Ladish argues that the State has improperly interjected special use and location into the con[35]*35sideration of alternative uses of the remaining structure.
In
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GIERKE, Justice.
Ladish Malting Company, Stutsman County, and the State of North Dakota appeal from a district court judgment modifying a decision by the Stutsman County Board of Commissioners [Board] classifying real and personal property at the Lad[32]*32ish malting plant for the 1981 tax year. We remand to the Board for modification.
The relevant facts underlying this appeal are set forth in a prior appeal involving the same tax year, Ladish Malting Co. v. Stutsman County, 351 N.W.2d 712 (N.D.1984) [Ladish I], and will not be repeated here. In Ladish I we interpreted N.D.C.C. § 57-02-04, and concluded that personal property exempt from taxation1 included items:
“(1) [WJhich pertain to the use of structures and buildings (such as machinery or equipment used for trade or manufacture), and (2) which are not constructed as an integral part of and are not essential for the support of such structures or buildings, and (3) which are removable without materially limiting or restricting the use of such structures or buildings. Thus, an item which pertains to the use of structures and buildings should be classified as personal property only if it is not constructed as an integral part of and is not essential for the support of structures or buildings and is removable without materially limiting or restricting the use of structures or buildings.” [Emphasis in original.] Ladish I, supra, 351 N.W.2d at 721.
Because the record was inadequate to review the classification of the property in the Ladish plant as either real or personal property, we remanded to the Board for a new hearing in light of our construction of the statute. On remand the Board determined that the Ladish plant consisted of real property valued at $46,651,440. Both the State and Ladish appealed to the district court which modified the Board’s determination and concluded that the malting plant consisted of real property valued at $29,689,502.2
[33]*33The State contends that the Board erred in classifying certain property at the malting plant as personal property. The State argues that, except for the Related Facilities (pollution control devices) having a value of $4,370,440, (see fn. 2) the entire malting facility was real property with an assessed value of $57 million. Ladish argues that the Board erred in classifying certain property at the malting plant as taxable real property and asserts that the malting plant consisted of real property with an assessed value of $14,483,052.3
None of the parties dispute the values assigned to the items of property. Rather, they dispute the characterization of the items of property as either real or personal property. We must initially determine our standard of review for this appeal from a district court decision which modified a decision by the Board involving the classification of certain items of property as either real or personal property.
While we do not substitute our judgment for that of the Board, we determine whether or not the Board’s action comports with a correct interpretation of the law and whether or not the Board has acted in an arbitrary, capricious, or unreasonable manner. Conway v. Board of County Commissioners, 349 N.W.2d 398 (N.D.1984); Shaw v. Burleigh County, 286 N.W.2d 792 (N.D.1979). In Slope County v. Consolidation Coal Co., 277 N.W.2d 124, 127 (N.D.1979), we quoted with approval from Henzel v. Cameron, 228 Or. 452, 365 P.2d 498 (1961):
“ ‘Whether a finding is a “finding of fact” or a “conclusion of law” depends upon whether it is reached by natural reasoning or by fixed rules of law. Where the ultimate conclusion can be arrived at only by applying rules of law the result is a “conclusion of law.” ... A “finding of fact” is a conclusion drawn by way of reasonable inference from the evidence.’ ” [Citation omitted.]
This case involves the classification of property as either real or personal and does not involve the valuation of that property. Compare Appeal of Johnson, 173 N.W.2d 475 (N.D.1970). The applicable law, N.D.C.C. Ch. 57-02, is set forth for the Board and the classification of property as either real or personal requires the correct interpretation and application of that law to the items of property. The application of that law is not a policy-making function [34]*34like in Shaw v. Burleigh County, supra, but is instead a quasi-judicial function. The classification depends, in part, on prior judicial decisions and the legislative history of the statute which can be arrived at only by applying rules of law. That decision thus involves a question of law which is subject to full review by a court. Consequently, we will review the Board’s decision to determine whether its classifications comport with a correct interpretation of the law.
On remand there was evidence presented to establish that many of the items in the Ladish plant could be periodically replaced. However, we specifically did not adopt that expansive a test in Ladish I and construed the movability aspect to encompass both economic as well as physical considerations. Jack Kiffe, an engineering expert, testified about the cost of removing certain items of property from the malthouse and malt elevator.4 In effect he submitted a bid of about $1.4 million to remove those items. Peter Patchin testified that the salvage value of the items in Kiffe’s bid was approximately $9.5 million, and after removal, the remaining value of the structure was approximately $7.6 million. Patchin testified that after removal of the disputed items, the remaining structures would be usable; however, he further testified that removing the disputed items would diminish the value of the plant by $24 million which, according to him, would be economically catastrophic and would render the remaining structure non-functional. Patch-in thus concluded that that property should be taxable real property.
The State contends that Ladish has not met its burden to establish the exempt status of the items in dispute and that Patch-in’s testimony supports its position that the Ladish plant consists of real property having an assessed value of $57 million. The State argues that, in classifying the entire plant as real property, it is not contrary to Ladish I to refer to the plant as a special-purpose facility and to consider plant location in determining possible alternative uses of the facility. Ladish responds that Kiffe’s testimony supports its position that all items in the plant were physically removable and that Patchin’s testimony supports its position that those items in dispute were economically removable. Ladish argues that the State has improperly interjected special use and location into the con[35]*35sideration of alternative uses of the remaining structure.
In Ladish I, supra, 351 N.W.2d at 719-720, we quoted the following from the Report of the Legislative Council:
“ ‘Following extensive review and discussion of classification problems, the committee recommends a bill which would redefine real property to include, basically, only the land itself and buildings _ The definition of buildings ... would not include items which pertain to the use of such buildings, such as machinery or equipment used for trade or manufacture, which are not constructed as an integral part of and are not essential for the support of the buildings, and which are removable without materially limiting or restricting the use of such buildings.
“ ‘The committee recognizes that the bill which it recommends would remove most items of property from the tax rolls which fall into that questionable area between real and personal property, such as industrial machinery and equipment. However, the view was expressed that this had been the intention of the last legislature in repealing personal property taxes, and that anything short of removing all items of property which come under the two clear classifications would result in continuing inequities in taxation. The committee is also aware that some political subdivisions rely heavily upon certain large industries the machinery and equipment of which supply a large portion of the tax base. The solution to these problems, it was concluded, lies in alternative methods of taxing certain industries, such as sugar beet plants and oil refineries, rather than continuing to assess suck property as real estate.’ Report of the Legislative Council 1971, at 55.” [Emphasis in original.]
That legislative intent formed the basis for our rejection of the State’s argument about special-use in Ladish I:
“To construe the word ‘use’ as that particular use to which a taxpayer has employed its structures or buildings would not accommodate the legislative intent to exempt those items of property which fall into the questionable area between real and personal property, i.e., items such as industrial machinery and equipment. If items are used directly in and solely for effectuating that particular purpose to which the taxpayer has employed its structures and buildings, the removal of the items would naturally, in most instances, restrict or limit that particular use. Illustrative is testimony elicited at trial wherein the view was expressed that removal of disputed items from the Ladish plant would certainly prohibit the malting of barley. We construe the statute in a less restrictive manner. Items which are removable without materially limiting or restricting that quality of a structure or building that makes it useful or suitable for any purpose constitutes a construction more conducive to the legislative intent expressed. In other words, items which can be removed without rendering the structure or building nonfunctional, without extensive repair or redesign of the structure or building, and without replacement of removed items satisfy the requirement that personal property be ‘removable without materially limiting or restricting the use of such structures or buildings.’
“The word ‘removable’ requires that the movability of property also be considered in determining whether an item is real or personal property for tax purposes. We realize that from a theoretical standpoint any structure or building ever built might conceivably be moved. As William Meyer succinctly stated at trial: ‘If you build it you can unbuild it.’ Without adopting that expansive a test, we construe this movability aspect of Section 57-02-04(2) to encompass both economic as well as physical considerations.... Where physical or economic considerations so negate movement as a matter of practicability, the property should be found to be real property. Here a reasonableness test [36]*36must be applied.” [Citation omitted.] Ladish I, supra, 351 N.W.2d at 722.
The statement of legislative intent not only reflects a less restrictive test regarding alternative uses for the remaining structure or building but also tempers the economic and physical considerations involved in classifying property. While location is a function of market value which in turn is related to economic considerations, we do not believe that location, by itself, requires a particular classification of property. An interpretation classifying property as either real or personal based on location would be inconsistent with uniformity of taxation. We believe the State’s argument on special-purpose and location overlooks that statement of legislative intent. With that in mind, we thus turn to an analysis of the classifications of the items of property.
The Board should have disclosed the reasons for its decision. Shaw v. Burleigh County, supra, 286 N.W.2d at 800. Nevertheless, we believe the record contains sufficient evidence for our review. Additionally, the analysis of the district court is before us and is entitled to respect because the legislatively mandated review by the district court cannot be ineffectual. Medcenter One, Inc. v. Job Service, 410 N.W.2d 521 (N.D.1987).
Ladish specifically contends that the district court erred in classifying as real property the miscellaneous machinery and equipment worth $1,979,153 located in the barley elevators. (See fn. 2.) In its memorandum opinion, the district court stated:
“In my original decision during the first appeal, I found the miscellaneous machinery and equipment to be personal property but I have since examined the record more thoroughly and I cannot find any evidence sufficient to justify my previous analysis. No evidence exists regarding the economic feasibility of removal of these items. There is insufficient evidence to make a classification that these are personal property. The burden is clearly upon the taxpayer to show that these particular items are tax exempt and there is nothing in the record to support that exemption.”
Ladish asserts that when this court rejected “special-use” as a basis for classification, Ladish deemed it unnecessary to separately address those items because the record clearly established that the only basis for taxation of those miscellaneous items was under the special-use argument. During oral argument, counsel for the State essentially conceded that those items were personal property under the guidelines issued by the Office of the State Tax Commissioner in 1971 for the classification of property for tax purposes and that property’s classification as real property was based on special use. We agree that those items are personal property, and we conclude that the district court erred as to that property.
We further conclude that the district court’s analysis of the remaining items of property correctly applied the three-part test set out in Ladish I and the Board’s classifications were erroneous to the extent that they differed from the district court’s conclusions. Neither party, as an appellant, has carried its burden to convince us otherwise. Accordingly, we remand to the Board to affix the appropriate values to the items of real property based on the undisputed values used throughout this proceeding. We further conclude that Ladish is entitled to an appropriate refund.
Ladish next asserts that it is entitled to interest on its refund. In January 1982, Ladish sought a temporary injunction enjoining Stutsman County from refusing to place the portion of the 1981 tax payments that were paid under protest5 into an interest-bearing account with a local financial institution pending resolution and final determination of the 1981 tax assessment. Thereafter, the district court ordered that that part of the taxes be placed in an interest-bearing account.
[37]*37The State argues that Ladish is not entitled to interest because no statutory provision authorizes interest. It contends that the State is not obligated to pay interest on its debts, including the refund of taxes erroneously or illegally imposed, unless bound by act of the Legislature or by lawful contract of its executive officers, citing Ford Motor Co. v. State, 65 N.D. 316, 258 N.W. 596 (1935).
In Ford Motor Co. v. State, supra, 258 N.W. at 606, we said:
“It is well settled, ‘both on principle and authority, that a state cannot be held to the payment of interest on its debts unless bound by act of the legislature or by a lawful contract of its executive officers made within the scope of their duly constituted authority.’ ...
“This principle is applicable to claims for the refund of taxes and actions for the recovery of taxes erroneously paid, or illegally imposed and collected.”
This language is also applicable to counties. Richland County v. State, 180 N.W.2d 649 (N.D.1970).
Ladish contends that it should be allowed interest based upon the “interest of fairness and equity,” citing cases from Minnesota. See General Mills, Inc. v. State, 303 Minn. 66, 226 N.W.2d 296 (1975).
There is a decided split in authority as to whether, in the absence of a specific statutory provision, a taxpayer is entitled to interest on taxes illegally assessed or charged. General Mills, Inc. v. State; supra; see generally, Annot., 88 A.L.R.2d 823; 72 Am.Jur.2d, State and Local Taxation, § 1068. We recognize there are equities involved in Ladish’s argument. We believe that the rule in Ford Motor Co. v. State, supra, is based upon equities and we decline to overrule it. Nevertheless, w.e believe it is a logical corollary of that equitable rule to hold that interest is payable for a refund when funds paid under protest to a governmental body are set aside in an interest bearing account, thus making specific funds available for payment of interest without resort to taxpayer funds. This would encourage payments under protest while protecting other tax funds when there is an honest dispute. Refusals to pay would otherwise be encouraged. Accordingly, under the facts of this case, we hold that Ladish is entitled to the interest earned on their refund while it was invested pursuant to court order.
We remand to the Board for proceedings consistent with this opinion.
ERICKSTAD, C.J., GIERKE and MESCHKE, JJ., and PEDERSON, Surrogate Justice, concur.
PEDERSON, Surrogate Justice, sitting in place of LEVINE, J., disqualified.