Bailey v. State, No. 105PA91
| Decision Date | 06 December 1991 |
| Docket Number | No. 105PA91 |
| Citation | 330 N.C. 227,412 S.E.2d 295 |
| Court | North Carolina Supreme Court |
| Parties | James H. Pou BAILEY, A. Pilston Godwin, Harry L. Underwood, Melvin T. Munn, Fred Benson, James H. Kleu, Joseph Gilmer Binkley, Eula G. Bullard, Mildred C. Seawell, Emily B. Jones, Samuel T. Arrington, John W. Cartwright, David L. Britt, Mattie E. Lassiter, Paul Lee Salisbury, Jr., Charles S. Manooch, Jr., Roy E. Thompson, and Clyde R. Shook, John H. Allen, Jesse M. Almon, Edwin C. Guy, George Smith, Ernest P. Cain, Thomas Dale Johnson, Billy A. Baker, and Rosalie T. Adams, Victor Aldridge, Sr., Clifton A. Anderson, Helen L. Andrews, Charles E. Arrington, Lillian B. Arrington, William K. Aubry, Jr., W. Preston Barber, Jr., Parker N. Bare, Margaret H. Barkley, Jackie D. Barrett, James B. Barrett, Arthur C. Beamon, Frank M. Bender, William D. Berg, Thomas W. Berrier, Pauline J. Blackburn, Brenda W. Blanchfield, Robert L. Blevins, Elizabeth F. Bolich, Junious L. Bost, Ellie L. Boyles, Henry L. Bridges, Lawrence R. Bridges, Carey H. Broadwell, Chancel T. Brown, Joan W. Brown, Margaret M. Brown, John W. Buchan, Eunice W. Bullard, Dewey L. Butler, McCauley C. Byrum, Gertrude G. Cahoon, Joseph H. Calder, Catherine N. Cann, Dorothy T. Carmichael, Maurice O. Caton, Robert A. Caudle, Margaret H. Chapman, Odell Childress, Carl L. Clarke, Edward L. Clay, Sr., Shari T. Cline, Selma C. Clodfelter, Harold D. Coley, Mataline Collette, Roberta M. Cook, Anna L. Cooper, Bertie R. Cooper, Charlie C. Cooper, Carlyle C. Craven, N. Christel C. Crews, Donald E. Curtis, Violet H. Daniel, Mildred K. Davis, Howard Dickey, John B. Dillard, Esther P. Duncan, T.J. Duncan, Helen M. Dupree, Joseph E. Dupree, Jesse W. Edwards, Charles B. Elks, Dan R. Emory, Charles F. English, Martin W. Ericson, James M. Eubanks, Jr., Ruth U. Farthing, Nellie D. Fountain, J. Warren Franklin, Zenna H. Franklin, Emma Lee Furches, Alfred H. Garner, Evelyn C. Garrison, Fred W. Gentry, Catherine M. Gilbert, Meredith H. Gilbert, Ivey B. Gordon, Izoria S. Gordon, Louis N. Gosselin, Gladys P. Green, Consuella Greenwood, Joh |
of Justice Mitchell Dec. 6, 1991.
Womble, Carlyle, Sandridge & Rice by G. Eugene Boyce, and Donald L. Smith, Raleigh, Wallace R. Young, Charles H. Taylor, Winston-Salem, and J. Frank Huskins, Raleigh, for plaintiffs-appellees.
Lacy H. Thornburg, Atty. Gen. by Edwin M. Speas, Jr., Sr. Deputy Atty. Gen., George W. Boylan, Norma S. Harrell, Sp. Deputy Attys. Gen., and Douglas A. Johnston, Asst. Atty. Gen., Raleigh, for defendants-appellants.
Robinson, Bradshaw, & Hinson, P.A. by John R. Wester and David C. Wright, III, Charlotte, for defendant-appellant Helen A. Powers.
In this appeal class plaintiffs challenge the validity under the North Carolina Constitution of a repealed tax exemption for vested participants in state and local government retirement plans. We do not reach the constitutional issue because plaintiffs failed to comply with N.C.G.S. § 105-267, under which an arguably invalid tax can be challenged and remedial action taken. We therefore hold plaintiffs' claims for a refund of taxes collected because of the repealed exemption and for an injunction prohibiting the collection of such taxes should have been dismissed.
Like Swanson v. State of North Carolina, 329 N.C. 576, 407 S.E.2d 791 (1991), this case arose in the wake of Davis v. Dept. of Treasury, 489 U.S. 803, 109 S.Ct. 1500, 103 L.Ed.2d 891 (1989). In Davis the Supreme Court held a state statute exempting state employees' retirement benefits from taxation but not granting the same exemption to their federal counterparts violated the constitutional doctrine of intergovernmental tax immunity and 4 U.S.C. § 111. Under that statute the federal government "consents to the taxation of pay or compensation for personal service as an officer or employee of the United States ... if the taxation does not discriminate against the officer or employee because of the source of the pay or compensation." 4 U.S.C. § 111.
In response to Davis, the General Assembly repealed the income tax exemption for state and local retirement plans, 1989 Sess.Laws ch. 792, § 3.9 (hereinafter Chapter 792), and substituted a $4,000 annual exclusion for federal, state, and local government retirees. N.C.G.S. § 105-134.6 (1989). In Swanson this Court held that Davis did not apply retroactively to Chapter 792. Because the repealed statute was held to have been applicable until 28 March 1989, when Davis was decided, appellants--two classes of federal employees--were not entitled to refunds on taxes paid for tax years 1985 through 1989.
Class plaintiffs in this case are North Carolina state and local government employees whose retirement benefits vested on or before 12 August 1989, the ratification date of Chapter 792. Plaintiffs' complaint, filed 26 February 1990, named as defendants the State of North Carolina; the North Carolina Department of Revenue and the North Carolina Department of State Treasurer; Helen A. Powers, Secretary of the North Carolina Department of Revenue, in her individual and official capacities; Harlan E. Boyles, Treasurer of the State of North Carolina, in his individual and official capacities; and numerous state and local government retirement plans.
Plaintiffs allege their action is maintainable as a class action under N.C.G.S. § 1A-1, Rule 23: the class consists of "tens of thousands of people" whose identities are readily ascertainable from defendants' records, questions of law and fact critical to the action are common to all members of the class, representatives' claims typify those of unnamed class members, and the relief sought would be effective and appropriate for all class members. The gravamen alleged is that under color of law defendant state officials engaged in a pattern, practice, or policy of unlawfully and unconstitutionally taxing plaintiffs' pension benefits and that defendant retirement plans violated assurances that plaintiffs' benefits would be exempt from North Carolina income tax. Plaintiffs' claims for relief rest on a number of legal theories, 1 and they seek two...
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