State ex rel. St. Louis Shipbuilding & Steel Co. v. Smith

• Decision Date: 10 March 1947
• Docket Number: 39981
• Citation: 201 S.W.2d 153,356 Mo. 25
• Parties: State of Missouri, at the Relation of St. Louis Shipbuilding and Steel Company, a Corporation, Appellant, v. Forrest Smith, as State Auditor of the State of Missouri
• Court: Missouri Supreme Court

201 S.W.2d 153

356 Mo. 25

State of Missouri, at the Relation of St. Louis Shipbuilding and Steel Company, a Corporation, Appellant, v. Forrest Smith, as State Auditor of the State of Missouri

No. 39981

Supreme Court of Missouri

March 10, 1947

Rehearing Denied April 21, 1947.

Appeal from Circuit Court of City of St. Louis; Hon. William H Killoren, Judge.

Affirmed.

Chas Morsey and Paul Plummer for appellant.

(1) The court erred in entering an order quashing the writ. Sec. 11445, R.S. 1939, as amended in 1941; State ex rel. v. Neaf, 139 S.W.2d 958, 346 Mo. 86; State ex rel. v. State Board of Health, 65 S.W.2d 943, 334 Mo. 220; State ex rel. v. Clark, 9 S.W.2d 635, 320 Mo. 119. (2) It was the duty of the court to decide whether or not the State Auditor was correct in denying appellant's claim for refund. The court shirked its duty by quashing the writ. See authorities under Point (1). (3) The State Auditor arbitrarily refused to grant appellant a hearing on the question of whether or not the sales were transactions in interstate commerce. The trial court likewise refused to grant appellant a hearing on this question, and this arbitrary and capricious action amounts to a denial of due process of law. (4) The settlement of an illegal, unjust and undue tax does not prevent a taxpayer from obtaining a refund thereof by the method prescribed by statute, and the court erred in failing to decide the issue before it. State ex rel. Matteson v. Luecke, 99 A.L.R. 1053; 15 C.J.S., p. 760; State ex rel. v. Trimble, 335 Mo. 213; Atlantic Co. v. Broughton, 146 F.2d 480; Guess v. Montague, 140 F.2d 500. (5) On the record made the transactions were clearly sales transactions in interstate commerce and were exempt from taxation. Appellant was, therefore, entitled to have its claim for refund allowed. Mita v. Bonham, 25 F.2d 11; 2 C.J.S., p. 987; United States v. Schlotfeldt, 106 F.2d 928; Neal v. Delaware, 103 U.S. 370.

J. E. Taylor, Attorney General, and Tyre W. Burton and David Donnelly, Assistant Attorneys General, for respondent.

(1) The court did not err in entering the order quashing the writ of certiorari. Sec. 11445, R.S. 1939, as amended in 1941; State ex rel. v. Neaf, 139 S.W.2d 958; Superior Coal Co. v. O'Brien, 383 Ill. 394, 50 N.E.2d 453; Dept. of Revenue v. Gold, 369 Ill. 497, 17 N.E.2d 13; Mechem Public Officers, sec. 579, p. 379; Smith v. Pettis County, 136 S.W.2d 285. (2) The court, in quashing the writ of certiorari, decided the question of whether or not the State Auditor was correct in denying appellant's claim for refund. (3) The State Auditor did not act arbitrarily in denying appellant's claim for refund. (4) The appellant and respondent having settled the tax and interest by agreement, the respondent was correct in denying appellant's claim. State ex rel. Kansas City P. & L. Co. v. Smith, 342 Mo. 75, 111 S.W.2d 513; Sec. 11408, Laws 1943, p. 1016; Sub-section (g), Sec. 11407, Laws 1943, p. 1015; Sec. 11411, Laws 1943, p. 1018; Kansas City P. & L. Co. v. Smith, 342 Mo. 75, 111 S.W.2d 513; State ex rel. v. Lesser, 237 Mo. 310, 141 S.W. 888; Secs. 11426-11430, Laws 1943, pp. 1022-1023; State ex rel. Crutcher v. Koeln, 61 S.W.2d 750, 332 Mo. 1229; 11 Am. Jur., p. 248, sec. 3; 11 Am. Jur., p. 249, sec. 4; St. Louis, I.M. & S. Ry. Co. v. Anthony, 73 Mo. 431; Harlin & Griffin v. Missouri State Highway Comm., 51 S.W.2d 553; Sheppard v. Travelers Protective Assn. of America, 124 S.W.2d 538; 12 C.J., pp. 314, 336, sec. 32; Wood v. Telephone Co., 223 Mo. 537, 123 S.W. 6; 12 Am. Jur., sec. 661.

OPINION

Tipton, J.

In the circuit court of the city of St. Louis appellant filed a petition for a writ of certiorari to compel respondent to certify the record of his proceedings in the matter of denying appellant's application for a refund of sales tax. Return to the writ was made by respondent and the case was submitted to the trial court on the record. The court found for respondent and quashed the writ. Appellant has duly appealed to this court.

This action is controlled by the Sales Tax Act of 1943, and all sections referred to in this opinion will be found in the Laws of 1943.

Section 11408 provides that "there shall be and is hereby levied and imposed and shall be collected and paid:

"(a) Upon every retail sale in this State of tangible personal property a tax equivalent to two (2%) per cent of the purchase price paid . . . at the time and place" of the sale.

Section 11409 exempts from the provisions of this act all sales transactions in interstate commerce.

Section 11411 requires the seller to collect the tax and to make a return to the state auditor of all taxes collected for the preceding month and remit the taxes so collected to the auditor on or before the 15th of each month.

Section 11413 gives the state auditor the power to administer the provisions of the act, and vests him with authority to promulgate reasonable rules and regulations in the administration of it.

Section 11426 provides that if any person neglects or refuses to make a return and payment as required by this act the auditor shall make an estimate based upon any information in his possession, and upon the basis of the estimated amount compute and assess the tax payable by the delinquent, and add thereto ten per cent (10%) penalty. It requires that the auditor give to the delinquent written notice of such estimate, tax and penalty.

Section 11427 requires payment from the delinquent within fifteen days after service of notice.

Section 11428 permits the taxpayer to petition the auditor for reassessment within thirty days after the service of notice. It also provides that "if no petition for reassessment is filed with the (State) Auditor the person may nevertheless appear at the hearing and present his objections orally."

Section 11430 provides that if the tax is not paid when due the same shall bear interest at the rate of three per cent per calendar month.

Section 11432 provides in part that "if any tax, penalty or interest has been paid more than once, or has been erroneously or illegally collected, or has been erroneously or illegally computed, such sum shall be credited on any taxes then due from the person under this article, and the balance shall be refunded to the person [taxpayer] . . ."

Section 11441 provides for the General Assembly to appropriate sufficient funds for the auditor to make any refund of taxes as required by this article or by final judgment of court.

Under Section 11445 the circuit court of the county where the taxpayer resides has the "power to review all questions of law and fact determined by the Auditor in administering the provisions of this article by writ of certiorari to the Auditor."

The record as certified to the circuit court shows that appellant had filed no sales tax returns with respondent for the reason that it contended that its sales were transactions in interstate commerce, and were exempt from the tax by the statutes. On July 10, 1942, respondent made an estimate of the sales tax due for the period from January 1, 1940, to June 30, 1942, and he found taxable sales receipts amounting to $ 3,250,685.54, with a delinquent tax of $ 65,013.71, and interest of $ 24,375.18, a total of $ 89,388.89 due. After this original estimate of tax was made, appellant and respondent had several conferences concerning the tax liability of appellant and evidently appellant convinced respondent that the total sales subject to tax amounted to $ 1,887,037.03. The tax due on this amount was $ 37,740.74.

On March 3, 1943, appellant's attorney wrote respondent that he believed that practically all of appellant's sales were interstate commerce transactions but to avoid litigation he thought a settlement could be worked out which would be fair and equitable to all concerned. The letter made an offer to pay a tax in the sum of $ 37,296.38, provided there would be no interest or penalties. The letter closed with the following paragraph:

"If you will check against your work sheets the total sales on which we are to pay the tax for each of the above periods, you will find, I believe, that we have included all sales excepting those items on which we were able to satisfy you that the sales were made to non-residents of this State for use outside the state and where deliveries were made to the purchasers at points outside of Missouri."

This offer was not accepted and on March 23, 1943, appellant's attorney wrote respondent the following letter:

"Under date of March 3, 1943, we submitted to you a proposition for the settlement of the liability of the above named company under the Missouri Sales Tax Law. This settlement was not accepted by your Department for the reasons explained to me over the telephone, and I have now procured and am submitting herewith a revised offer of settlement on the following terms:

"St Louis Shipbuilding & Steel Company will pay to the State of Missouri the two per cent (2%) sales tax on:

"Sales made from January to September, 1940, inclusive, in the total amount of $ 22,218.00 and sales made during the months of October, November and December, 1940, in the total amount of $ 197,349.12, or total sales for the year 1940 amounting to $ 219,567.12.

"Sales for the year 1941 in the total amount of $ 938,098.00.

"Sales for the first six months of the year 1942 in the total amount of $ 729,371.91, and

"Six per cent (6%) interest on the tax due on account of the above sales.

"According to our calculation, the tax on the above sales amounts to a total of $ 37,740.74 and the interest to the sum of $ 2,264.44, or a grand total of $ 40,005.18, for which amount we are attaching draft payable to the order of Forrest Smith, State Auditor.

"There shall be no interest or penalties other...