61 A.2d 89 (Conn. 1948), Spector Motor Service, Inc. v. Walsh

Citation:61 A.2d 89, 135 Conn. 37
Opinion Judge:MALTBIE, Chief Justice.
Attorney:Frank J. DiSesa, Asst. Atty. Gen. (William L. Hadden, Atty. Gen., on the brief), for appellant. Cyril Coleman, of Hartford, for appellee.
Judge Panel:In this opinion the other Judges concurred. Before MALTBIE, C.J., and BROWN, JENNINGS, ELLS, and DICKENSON, JJ.
Case Date:July 21, 1948
Court:Supreme Court of Connecticut

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61 A.2d 89 (Conn. 1948)

135 Conn. 37




Supreme Court of Errors of Connecticut.

July 21, 1948

Page 90

Appeal from Superior Court, Hartford County; Comley, Judge.

Action by Spector Motor Service, Inc., against Walter W. Walsh, tax commissioner, for a declaratory judgment as to whether assessments made against plaintiff under the Corporation Business Act of 1935 were illegal and void. The case was tried by the court. From a judgment determining the issues, defendant appeals.

Error in part, and case remanded with direction.

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[135 Conn. 39] Frank J. DiSesa, Asst. Atty. Gen. (William L. Hadden, Atty. Gen., on the brief), for appellant.

Cyril Coleman, of Hartford, for appellee.


MALTBIE, Chief Justice.

This action presents questions as to the validity and construction of the Corporation Business Tax Act of 1935, Cum.Sup.1935, Chap. 66b, § 416c et seq., as amended, with reference to a corporation engaged in interstate motor freight service. The action sought a declaratory judgment, and the trial court held that the plaintiff was within the terms of the act, that the act did not as applied to it violate the constitution of this state and that the assessments were not illegal because computed on an improper basis, but that the act as applied to the plaintiff was unconstitutional under the constitution of the United States. The defendant has appealed.

The controversy between the parties has been the subject of protracted litigation in the federal courts. The plaintiff brought an action in the United States District Court for the District of Connecticut in which it asked a judgment declaring that the act as applied to it was unconstitutional under both the federal and our own constitutions, that the computations by which the amount of the tax was determined by the defendant, the state tax commissioner, were not authorized by the applicable statutes and that they were inaccurate; and the plaintiff also prayed that the commissioner be enjoined from proceeding against it to enforce [135 Conn. 40] the tax. The District Court held that the plaintiff was not subject to the tax and directed that an injunction be issued. Spector Motor Service, Inc., v. McLaughlin, D.C., 47 F.Supp. 671. The case was appealed to the Circuit Court of Appeals for the Second Circuit, which, by a divided court, reversed the judgment of the District Court and directed judgment for the defendant. Spector Motor Service, Inc., v. Walsh, 139 F.2d 809. The action was then brought by certiorari to the United States Supreme Court, where it was held that until certain questions as to the interpretation and application of the statute were first determined by the courts of Connecticut the issue as to the constitutionality of the act could not properly be decided in the federal courts; Spector Motor Service, Inc., v. McLaughlin, 323 U.S. 101, page 106,65 S.Ct. 152, 155, 89 L.Ed. 101; and the rescript in that case was: ‘ We therefore vacate the judgment of the Circuit Court of Appeals and remand the cause to the District Court with directions to retain the bill pending the determination of proceedings to be brought with reasonable promptitude in the state court in conformity with this opinion.’

The opinion of the Supreme Court was handed down on December 4, 1944; the action Before us evidently brought to the Superior Court in compliance with that mandate, was begun by writ dated December 21, 1944. Why the trial did not take place until April, 1947, we do not know. At any rate, we assume that the requirement in the mandate of the United States Supreme Court that proceedings be brought in the courts of this state with reasonable promptness will be found to have been complied with. On that basis,

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the function we are to perform is limited in its scope. The case brought in the District Court, with its basic issues concerning the constitutionality of the tax as applied to [135 Conn. 41] the plaintiff, is still pending there; and it is not for us to trench upon its right to decide those issues. Nor is it for us to quarrel with the decision of the Circuit Court of Appeals, affirmed by the Supreme Court, that our courts are lacking in any means of plain, speedy and efficient remedy for a settlement of the controversy between the parties which, if present, would debar the federal courts from taking jurisdiction. However, we do point out that our declaratory judgment act is broader than those in most, if not all, other jurisdictions; Connecticut Savings Bank v. First National Bank & Trust Co., 133 Conn. 403, 409, 51 A.2d 907; and, in a case where an important constitutional question needed speedy determination, this court decided on April 10, 1947, an action brought to the Superior Court by writ dated March 14, 1947, and reserved to us. Lyman v. Adorno, 133 Conn. 511, 52 A.2d 702. Should we determine in an action for a declaratory judgment that the application of the statute to the plaintiff was unconstitutional, the tax commissioner would, of course, accede to that decision; and an injunction to restrain him from any attempt to collect the tax would be supererogatory. Nor are we willing to let pass unnoticed the statement that under our law there is serious doubt whether an injunction such as that sought in the District Court would issue in our courts. We have held that, to the general rule that our courts are reluctant to grant injunctions against the collection of taxes, there is a well-recognized exception where property against which an assessment is made is exempt by law from taxation; City of New London v. Perkins, 87 Conn. 229, 235, 87 A. 724; Wilcox v. Town of Madison, 106 Conn. 223, 227, 137 A. 742; certainly there is no reason to doubt that our courts would enjoin the collection of a tax found due from a single person where it has been adjudged to be unconstitutional; and [135 Conn. 42] this is particularly so where a state tax is involved and, hence, if paid, could not be recovered by an action in the courts. The plaintiff might have secured in the courts of this state the very relief which it sought in the District Court; and we refrain from comment upon the long delay which must ensue Before a final settlement of the controversy can be reached, due to its invocation of the jurisdiction of the federal courts.1

[135 Conn. 43] As we interpret the decision of the United States Supreme Court, it states three questions which we are to answer: Was it the intention of the General Assembly, as evidenced in the statute, to impose

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the tax upon persons engaged in interstate commerce in pursuit of the type of business in which the plaintiff was engaged? If so, what aspect of its business was intended to be made the subject of the tax? Finally, upon what basis was it intended that the tax should be computed? Spector Motor Service, Inc., v. McLaughlin, 323, U.S. 101, 104, 65 S.Ct. 152, 89 L.Ed. 101. We assume also that it is proper for us to determine whether the tax violated in any respect the constitution of this state, for the question of the meaning and effect of a state constitution, we understand, is as much a matter for the determination of the courts of the state as is the meaning and effect of one of its statutes; Glenn v. Field Packing Co., 290 U.S. 177, 178, 54 S.Ct. 138, 78 L.Ed. 252; and it is also well within our proper function to determine whether the amount of the tax has been properly determined under our statute.

The complaint in this action alleges that the defendant tax commissioner assessed a certain tax against the plaintiff for the years ending May 31, 1936, and May 31, 1937, under the Corporation Business Tax Act of 1935, and also, under an amendment to that act made in 1937, certain taxes for the year ending May 31, 1938, the seven months ending December 31, 1938, and the years ending December 31, 1939, and December 31, 1940. The act of 1935 took effect on July 1, 1935; Cum.Sup.1935, § 441c; the 1937 amendment took effect upon its passage; Public Acts 1937, Chap. 422, § 6; that meant when it was signed by the governor; Town of Old Saybrook v. Public Utilities Commission, 100 Conn. 322, 325, 124 A. 33; and he signed it on June 11, [135 Conn. 44] 1937. We regard the allegations of the complaint as a concession that the validity of the first two assessments is to be determined under the law as it stood in 1935 and of the others under the law as amended in 1937; Cum.Sup.1939, § 354e; nor have the parties claimed otherwise either in the trial court or Before us.

The finding of the trial court and the exhibits made a part of it present the following situation. The plaintiff is a Missouri corporation. It originally had its principal place of business in St. Louis but later moved to Chicago. Its business, during the period involved in this action, was exclusively the transportation of freight in interstate commerce as a common carrier. Originally, it carried freight only from St. Louis to New York, but, in order to secure the advantages of a two-way haul, it set up facilities to obtain goods for shipment from the east to the west and, in particular, shipment of less than full truck loads. In addition to its terminals in St. Louis and New York, it set up terminals in Chicago, in New Britain and Bridgeport, Connecticut, and in cities in Massachusetts, Rhode Island and New Jersey. Where a full truck load is to be shipped to or from any customer in Connecticut, trucks making the long haul go directly to the customer's place of business. In case of smaller shipments, the freight is taken from the customer's place of business by pickup trucks to the terminal, where it is transshipped to the long-haul trucks. The pickup trucks merely act as a part of the...

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