Independent Linen Service Co. v. Stone ( 1942 )

We are all in agreement that appellant was not originally liable for the 2 percent taxes; but I am unable to concur in the majority opinion that appellant is entitled to recover from the state the $8,451.47, with interest, which it has heretofore paid into the hands of the Tax Commission. Not a dollar of this money is or ever was the money of appellant. It is admitted that appellant collected it, and every cent of it, from its customers, by adding to its bills for its ordinary and regular charges, a distinct and separate amount of 2 percent with the distinct statement that it was demanded as a sales tax.

In such a case the principles set forth in Shannon v. Hughes Co., 270 Ky. 530, 109 S.W.2d 1174, wherein there is an elaborate review of the authorities, should be upheld here, which, in brief, is that a party who has paid no money of his own into the state treasury but solely of money wrongfully or mistakenly collected by him from another under the guise or color of taxes, is not entitled to recover it from the state. The doctrine of unjust enrichment is one which applies in such cases against individuals and not against the state; and it is not only a just rule but is one of salutary effect.

The majority opinion seeks to distinguish that case from that now before us on three grounds: First, that in that case the party who collected the taxes from its customers was required by the statute to make the collection, while in a case, such as here in hand, there was no such requirement. But the entire statute in that case was declared to be unconstitutional, wholly void, wherefore it was as if so much waste paper, no law at all, and hence nothing could be required to be done under it. No law there required the collection and none here. But there, as in the present case, it was collected under the guise or pretense or color of a right so to do; the customers paid it without protest in response to the demand, and this is what constitutes the substance which forms the foundation of the rule. What difference can it make that the collector had no actual right when he collected under the guise or pretense or color of such a right? At least it was not his money which he collected, and having no right to collect it, he has no right to get it back from the state for whom it was collected from, and paid at the time by, the contributors of the fund.

As a second ground for the alleged distinction, it is said that in the Shannon case it was not shown that the tax was collected as a distinct and separate charge as such, while in the present case it was collected as a separate and distinct charge and specifically as state taxes charged against the customer as such. Instead of this furnishing a basis for a distinction, it strengthens the present case in favor of the state as compared with the Shannon case.

The addition to the bills of the customers in the present case distinctly stated that it was a 2 percent tax for the state; the customers paid it with that understanding and that appellant to whom it was paid would be a mere conduit or trustee through whom it would reach the state treasury. They were under no sort of compulsion; they were subject to no return to, or demand therefor by, the Tax Commissioner and to no penalties for refusal of payment. So far as they were concerned, every legal remedy, without restriction or qualification, was open to them. And although they paid it under a mistake of law that they were liable therefor, nevertheless, so far as they were concerned, this did not alter the character thereof as voluntary payments, 61 C.J., p. 991, sec. 1270, they paid the tax, they were the actual taxpayers, and as held in Mississippi Cent. R. Co. v. City of Hattiesburg, 163 Miss. 311, 316, 141 So. 897, when so voluntarily paid by them it is analogous to a gift, whereby their title therein became extinguished and that of the state thereto became complete. Had they themselves voluntarily delivered or paid it to some fund in the state treasury, being under no compulsion or penalty, they could not have recovered it back; and the party into whose hands it was paid by them as a conduit for transmittal to the state can be in no better position.

And as a third ground reference is made to cases in which the claimant kept an accurate account of each customer's tax payments, and with the design and definitely disclosed purpose to refund the collections to the customers. Nothing of this sort is shown or is even intimated in the present record. Not a word has been said in the record or even in claimant's brief that it entertains any such purpose, and so far as we know there is none such.

The pith of the majority opinion is embraced in its concluding sentence: "If for no other reason, the possible liability of appellant to make refund to the contributors of the money confers upon appellant a better right thereto than that of appellee, who has no right to it whatever." This same comprehensive statement could be made in every case involving the doctrine of unjust enrichment, and by it, if adhered to in future cases, the entire rule is thrown out of the window, so far as this state is concerned. In every such case there would be the possibility of a demand by the contributors; but nothing is said or intimated in this case that, were the contributors to complain, they would not be met at the threshold by appellant with the answer that their contributions were voluntarily made and were, therefore, not recoverable, as to which see such cases as Union Land, etc., Co. v. Pearl River County, 141 Miss. 131, 106 So. 277; Schmittler v. Sunflower County, 156 Miss. 227, 125 So. 534, 126 So. 39; Mississippi Cent. R. Co. v. City of Hattiesburg, supra, to mention only a few to that effect.

In my judgment the majority holding is not only unsound, but is capable of being put to mischievous uses to their own great profit by those who, under color of right, make and will continue to make illegitimate demands upon others with whom they deal in the ever-increasing complications of new tax fields and new revenue devices.

Anderson, J., concurs in this dissent.