Coleman, Auditor v. Inland Gas Corporation

At an early day the courts were so imbued with the theory that the common law was the perfection of reason that it was difficult to get them to give any effect to a statute enacted for the sole purpose of changing the common law. Animated by this spirit of reluctance, the court gave two constructions to what is now section 162, Kentucky Statutes — one to the effect that it did not apply to taxes voluntarily paid, and the other that it applied only to public officers and not to taxpayers. It is true that after the two constructions the Legislature re-enacted the statute, but its action cannot be regarded as adopting one of these constructions rather than the other. Being confronted by this situation the court reconsidered the question in Greene v. Taylor, Jr., Sons, 184 Ky. 739,212 S.W. 925; Craig, Auditor, v. Security Producing and Refining Co., 189 Ky. 565, 225 S.W. 729; Craig, Auditor, v. Frankfort Distilling Co., 189 Ky. 616, 225 S.W. 731, and Craig, Auditor, v. Renaker, 201 Ky. 576, 257 S.W. 1018, and decided to construe the statute as written. In the case of Craig v. Frankfort Distilling Co., supra, the court, after overruling all opinions to the contrary, announced its conclusion in the following language: "On a more mature consideration of the question, the whole court sitting and concurring, we have reached the conclusion herein expressed, and hold that the auditor should in every case where it appears to him that money has been paid into the treasury as taxes when none were due, either through mistake, inadvertence, misapprehension of the law or under a void or unenforceable statute, issue his warrant upon the treasury in favor of the payor of the money, reimbursing him in the full sum thus paid in."

The reason for this conclusion is to be found in the statute, which reads as follows: "Sec. 162. When it shall appear to the auditor that money has been paid into the treasury for taxes when no such taxes were in fact due, he shall issue his warrant on the treasury for such money so improperly paid, in behalf of the person who paid the same. Nothing herein contained shall authorize the issuing of any such warrant in favor of any person who may have made payment of the revenue tax due on any tract of land, unless it is manifest that the whole of the tax due the commonwealth on such land has been paid, independent of the mistaken payment, and ought to be reimbursed."

The statute plainly provides for the refunding of taxes"when no such taxes were in fact due." There is not a proviso, or a sentence, or a clause, or a phrase, or a word, or a syllable, or even a punctuation mark that in any way qualifies or limits the effect of the language used. Instances may arise where a statute is so unintelligible that words must be inserted to give it effect, but that rule does not apply where there is no doubt as to the meaning of the statute. Here the language is direct, certain, clear, explicit, unequivocal, and unmistakable in meaning. I doubt if there can be found among the statutes of Kentucky, or the statutes of any other state, or the statutes of the United States, a statute whose meaning is as clear as the one under consideration. The majority opinion does not attempt to show that its language is susceptible of any construction other than that given in Craig, Auditor, v. Security Producing Refining Co., supra. It rests entirely on the erroneous construction therefore placed on the statute, and contents itself with saying that the contrary opinions are unsound and work a hardship on the commonwealth. How an opinion construing a statute can be unsound when it gives to its language the only meaning of which it is susceptible is not explained and cannot be explained. The alleged hardship is wholly chimerical and without foundation in fact. It is a matter of common knowledge that taxes paid involuntarily or under protest are never set aside in a special fund to await the decision of their legality. On the contrary, they are distributed by the state just as taxes paid voluntarily and without protest. Hence the situation of the state is precisely the same, whether the taxes are protested or not. That being true, there is no ground for the distinction, and therefore no reason for disregarding the statute.

Other courts, though recognizing the common-law rule, give effect to statutes intended to work a change. In Indiana, New York, and Iowa it is held under statutes no more emphatic than ours that the taxpayer may recover taxes erroneously or illegally exacted or paid, although paid voluntarily and without protest. Indianapolis v. Morris, 25 Ind. App. 409,58 N.E. 510; People v. Madison County, 51 N.Y. 442; Slimmer v. Chickasaw County, 140 Iowa, 448, 118 N.W. 779, 17 Ann. Cas. 1028. Indeed, the Supreme Court of Errors of Connecticut, where there is no statute on the subject, in announcing the rule that taxes are recoverable, if paid under mistake of law or fact, in case the payor is under no legal obligation to make payment and payee in good conscience has no right to retain it, said: "It has long been the law of this state that, 'where a person pays taxes that are illegally imposed upon him whether paid by compulsory process or not, he may recover back the money.' " Bridgeport Hydraulic Co. v. Bridgeport, 103 Conn. 249,130 A. 164, 168.

Further, in dealing with the ground which in part is relied on in the majority opinion as the reason for ignoring the statute and reaffirming the earlier decisions on the subject, that court said: "The defendant says that because it has not the identical money it received from the plaintiff it should not be required to return it. It claims as a principle of law that, because it has spent the money, received no matter how wrongfully or unconscionably from the plaintiff, it cannot now be recovered back. The mere statement of such a proposition seems to be a sufficient refutation of it. Where it party receives money from another which in equity and good conscience it ought not to keep, it cannot, by spending it, escape the liability to repay it. The law reaches further than to the identical coins and bills which are received. The defendant city is not the agent of the taxpayers. It is the inhabitants, including the taxpayers, acting under a charter as a municipal corporation with perpetual existence. As such corporation it has acted, levied the tax, and received the money. It has no shadow of right in good conscience to retain the money so paid. The plaintiff brought the action as soon as it discovered the error. Neither the mistake of the plaintiff in paying, nor the good faith of the defendant in receiving, nor the fact that the money has been spent, gives the defendant any equitable right to retain the money."

A gentleman will not retain money that does not belong to him. The statute was enacted to enable the commonwealth to be a gentleman. Because of the great number of constitutional and legal restrictions, it is not often that such an opportunity comes to the commonwealth, and the statute should not be construed so as to drag it down from that high estate. Feeling that he should contribute his share to the support of the government, and believing that the government will do the fair and honorable thing in case the taxes are declared to be illegal, a good citizen usually pays his taxes promptly and voluntarily. For this he is penalized by a construction that does violence to the statute, while the taxpayer whose voice of protest rings loudest in the corridors of the courthouse or state capitol is made the sole object of the law's tender solicitude.

But, were the construction of the statute less doubtful, we should hesitate now to change the rule. Uncertainty is the bane of the law. We should not have one rule for one case and a different rule for another case, where the facts in each are precisely the same. The law should not change with the personnel of the court. It should be fixed and certain, to the end that the citizens may regulate their affairs accordingly. As will be seen from the quoted language, the whole court in the case of Craig v. Frankfort Distilling Co., supra, which was decided in the year 1920, solemnly declared that, in every case where it appeared to the auditor that money had been paid in the treasury under a void or unenforceable statute, he should issue his warrant upon the treasury in favor of the payor of the money, and overruled all prior cases holding that taxes could not be recovered, unless paid involuntarily or under protest. Appellee and other taxpayers similarly situated had the right to rely on that opinion, and to govern their actions accordingly. This appellee did, and now it finds itself deprived of a recovery because it failed to take steps which that opinion declared to be unnecessary. Clearly, the necessity for changing so fair and just a rule is not so great as to justify the resultant hardship which appellee and others will be called on to bear.

In addition to this it seems to me that the taxpayer's remedy, prescribed in the concluding paragraph of the opinion, is worse than the disease. It says in substance that, if appellee desired to test the matter, it could have done so by seeking a mandatory injunction requiring the county clerk to record the mortgage without the payment of the tax, and, if denied relief, it thereafter could not be said that the payment was voluntary. Even if that be true, the other consequences would have been equally, if not more, serious than the voluntary payment of the tax. Such an action would have involved the constitutionality of the statute and the legality of the tax, and, it being conceded that our courts would have denied relief, the judgment would have been conclusive, and have precluded appellee from relitigating these questions and recovering the tax, although the United States Supreme Court thereafter held the statute unconstitutional and the tax invalid in an action brought by another taxpayer.

For these reasons I am impelled to dissent from the majority opinion.

I am authorized to say that JUDGE WILLIS concurs in this dissent.