323 U.S. 459 (1945), 75, Ford Motor Co. v. Department of Treasury of Indiana
|Docket Nº:||No. 75|
|Citation:||323 U.S. 459, 65 S.Ct. 347, 89 L.Ed. 389|
|Party Name:||Ford Motor Co. v. Department of Treasury of Indiana|
|Case Date:||January 08, 1945|
|Court:||United States Supreme Court|
Argued December 7, 1944
CERTIORARI TO THE CIRCUIT COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
1. A suit against the Department of Treasury of the Indiana and individuals constituting the "Board of the Department of Treasury," brought pursuant to § 64-2614 of Burns' Indiana Statutes Annotated (1943 Replacement) for a refund of taxes alleged to have been illegally collected, held a suit against the State, in respect of which the State had not consented to the jurisdiction of the federal district court. P. 463.
2. Where a suit is, in essence, one for the recovery of money from the State, the State is the real party in interest, and is entitled to invoke its sovereign immunity from suit even though individual officials are nominal defendants. P. 464.
3. The Eleventh Amendment denies to the federal courts authority to entertain a suit brought by private parties against a State without the State's consent. P. 464.
4. Interpretation of § 64-2614 as authorizing suits for refunds of taxes only in state court accords with the legislative policy of the State. P. 466.
5. The contention that the suit is against the State and in contravention of the Eleventh Amendment is considered by this Court though urged here for the first time in this proceeding. P. 467.
6. Neither the attorney general nor any other administrative or executive officer of the State was authorized by state law to waive the State's immunity in this proceeding. P. 468.
141 F.2d 24, vacated.
Certiorari 322 U.S. 721, to review the affirmance of a judgment denying recovery in a suit for a refund of state taxes alleged to have been illegally collected.
REED, J., lead opinion
[65 S.Ct. 349] MR. JUSTICE REED delivered the opinion of the Court.
This writ brings here for review an action by petitioner, a nonresident foreign manufacturing corporation, against the respondents, the Department of Treasury of the State of Indiana and M. Clifford Townsend, Joseph M. Robertson, and Frank G. Thompson, the Governor, Treasurer, and Auditor, respectively, of the State of Indiana, who "together" constituted the board of the department of treasury.1 Petitioner seeks a refund of gross income taxes paid to the department and measured by sales claimed by the state to have occurred in Indiana.2 Jurisdiction of the United States District Court is founded on allegations of the violation of Article I, Section 8, the Commerce Clause, and
the Fourteenth Amendment of the Constitution. The state statutory procedure for obtaining a refund which petitioner followed is set forth in Section 64-2614(a) of the Indiana statutes.3
The District Court denied recovery. The Circuit Court of Appeals affirmed.4 Certiorari was granted5 on petitioner's
assertion of error in that the Circuit Court of Appeals decided an important question of local law probably in conflict with an applicable decision of the Supreme Court of Indiana. Department of Treasury v. International Harvester Co., 221 Ind. 416, 47 N.E.2d 150. As we conclude that petitioner's action could not be maintained in the federal court, we do not decide the merits of the issue.
Petitioner's right to maintain this action in a federal court depends first upon whether the action is against the Indiana or against an individual. Secondly, if the action is against the state, whether the state has consented to be sued in the federal courts. Recently these questions were discussed in Great Northern Life Insurance Co. v. Read, 322 U.S. 47.
In that case, this Court held that, as the suit was against a state official as such, through proceedings which were authorized by statute to compel him to carry [65 S.Ct. 350] out with state funds the state's agreement to reimburse moneys illegally exacted under color of the tax power, the suit was one against the state. We said that such a suit was clearly distinguishable from actions against a tax collector to recover a personal judgment for money wrongfully collected under color of state law. 322 U.S. 47, 50-51. Where relief is sought under general law from wrongful acts of state officials, the sovereign's immunity under the Eleventh Amendment does not extend to wrongful individual action, and the citizen is allowed a remedy against the wrongdoer personally. Atchison, T. & S.F. R. Co. v. O'Connor, 223 U.S. 280; cf. Matthews v. Rodgers, 284 U.S. 521, 528. Where, however, an action is authorized by statute against a state officer in his official capacity and constituting an action against the state, the Eleventh Amendment operates to bar suit except insofar as the statute waives state immunity from suit. Smith v.
We are of the opinion that petitioner's suit in the instant case against the department and the individuals as the board constitutes an action against the Indiana. A state statute prescribed the procedure for obtaining refund of taxes illegally exacted, providing that a taxpayer first file a timely application for a refund with the state department of treasury.6 Upon denial of such claim, the taxpayer is authorized to recover the illegal exaction in an action against the "department." Judgment obtained in such action is to be satisfied by payment "out of any funds in the state treasury."7 This section clearly provides for a action against the state, as opposed to one against the collecting official individually. No state court decision has been called to our attention which would indicate that a different interpretation of this statute has been adopted by state courts.
Petitioner's suit in the federal District Court is based on § 64-2614(a) of the Indiana statutes, and therefore constitutes an action against the state, not against the collecting official as an individual. Petitioner brought its action in strict accord with § 64-2614(a). The action is against the state's department of treasury. The complaint carefully details compliance with the provisions of § 64-2614(a), which require a timely application for refund to the department as a prerequisite to a court action authorized in the section. It is true the petitioner in the present proceeding joined the Governor, Treasurer, and Auditor of the state as defendants, who "together constitute the Board of Department of Treasury of the Indiana." But, they were joined as the collective representatives
of the state, not as individuals against whom a personal judgment is sought. The petitioner did not assert any claim to a personal judgment against these individuals for the contested tax payments. The petitioner's claim is for a "refund," not for the imposition of personal liability on individual defendants for sums illegally exacted. We have previously held that the nature of a suit as one against the state is to be determined by the essential nature and effect of the proceeding. Ex parte Ayers, 123 U.S. 443, 490, 499; Ex parte New York, 256 U.S. 490, 500; Worcester County Trust Co. v. Riley, 302 U.S. 292, 296, 298. And when the action is, in essence, one for the recovery of money from the state, the state is the real, substantial party in interest, and is entitled to invoke its sovereign immunity from suit even though individual officials are nominal defendants. Smith v. Reeves, supra; Great Northern Life Insurance Co. v. Read, supra. We are of the opinion, therefore, that the present proceedings was brought in reliance on § 64-2614(a), and is a suit against the state.
It remains to be considered whether the Indiana has consented to this action against it in the federal court.
The Eleventh Amendment provides that:
The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State or by Citizens or Subjects of any Foreign [65 S.Ct. 351] State.
This express constitutional limitation denies to the federal courts authority to entertain a suit brought by private parties against a state without its consent. Hans v. Louisiana, 134 U.S. 1, 10; Ex parte New York, 256 U.S. 490, 497; Missouri v. Fiske, 290 U.S. 18, 25; United States v. United States Fidelity & Guaranty Co., 309 U.S. 506, 512; Great Northern Life Insurance Co. v. Read, supra; State v. Mutual Life Ins. Co., 175 Ind. 59, 71, 93 S.E. 213; Hogston
v. Bell, 185 Ind. 536, 548, 112 N.E. 883. While the state's immunity from suit may be waived, Clark v. Barnard, 108 U.S. 436, 447; Gunter v. Atlantic Coast Line, 200 U.S. 273; Missouri v. Fiske, 290 U.S. 18, 24, there is nothing to indicate authorization of such waiver by Indiana in the present proceeding.
Section 64-2614(a) authorizes
action or suit against the department in any court of competent jurisdiction, and the circuit or superior court of the county in which the taxpayer resides or is located shall have original jurisdiction of action to recover any amount improperly collected.
In the Read case, we construed a similar provision of an Oklahoma tax refund statute as a waiver of state immunity from suit in state courts only. 322 U.S. 47, 54. As was said in that case,
When a state authorizes a suit against itself to do justice to taxpayers who deem themselves injured by any exaction, it is not consonant with our dual system for the Federal courts to be astute to read the consent to embrace Federal as well as state courts. . . . [W]hen we are dealing with the sovereign exemption from judicial interference in the vital field of financial administration, a clear declaration of the state's intention to submit its fiscal problems to other courts than those of its own creation must be found.
Cf. United States v. Shaw, 309 U.S. 495, 501. Section 64-2614 does not...
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