Cole v. State By and Through Oregon Dept. of Revenue

• Decision Date: 15 December 1982
• Docket Number: 1779,Nos. 1778,1780,s. 1778
• Citation: 294 Or. 188,655 P.2d 171
• Parties: Daniel and Carolyn COLE, Norman P. and Phyllis Lind, and Agnes L. Hicks, Appellants, v. The STATE of Oregon, By and Through the OREGON DEPARTMENT OF REVENUE, Respondent. TC; SC 28687.
• Court: Oregon Supreme Court

Page 171

655 P.2d 171

294 Or. 188

Daniel and Carolyn COLE, Norman P. and Phyllis Lind, and Agnes L. Hicks, Appellants, v. The STATE of Oregon, By and Through the OREGON DEPARTMENT OF REVENUE, Respondent.

TC Nos. 1778, 1779, 1780; SC 28687.

Supreme Court of Oregon In Banc.

Argued and Submitted Nov. 1, 1982.

Decided Dec. 15, 1982.

Barbara A. Rose, Portland, argued and filed brief for appellants.

Walter J. Apley, Asst. Atty. Gen., Salem, argued and filed brief for respondent. With him on the brief was Dave Frohnmayer, Atty. Gen., Salem.

LINDE, Justice.

The Oregon Tax Court dismissed taxpayers' appeal of orders of the Department of Revenue assessing personal income taxes because taxpayers failed to allege that they had paid the assessed taxes and interest as required by 1982 Or.Laws ch. 29. ¹ Taxpayers appeal the dismissal on the grounds that the prepayment requirement enacted by that statute is unconstitutional.

Specifically, taxpayers contend that to require payment of a tax as a precondition of judicial review deprives them of property without due process of law, and that they are denied equal protection of the laws because the requirement of payment before appeal applies to income taxes but not to certain other taxes. They also contend that their arguments under these clauses of the federal 14th amendment "apply with as much vigor to Article I, sections 10 and 20 of the Oregon State Constitution."

As this court has repeatedly stated, issues of Oregon law, including issues under the Oregon Constitution, must be resolved before it can be decided whether the state's law fails to preserve a right that the national charter obliges every state to protect. Hewitt v. SAIF, 294 Or. 33, 653 P.2d 970, (1982); State v. Caraher, 293 Or. 741, 748-52, 653 P.2d 942 (1982); Sterling v. Cupp, 290 Or. 611, 614 and n. 2, 625 P.2d 123 (1981). In this case they are easily resolved. Article I, section 10 of the Oregon Constitution, which guarantees that "every man shall have remedy by due course of law for injury done him in his person, property, or reputation," is neither in text nor in historical function the equivalent of a due process clause, though briefs persist in citing it as such. It concerns remedies for "injuries done" of the stated kind. State v. Burrow, 293 Or. 691 n. 5, 653 P.2d 226 (1982); Maddox v. Clackamas County School Dist. No. 25, 293 Or. 27, 34 n. 7, 643 P.2d 1253 (1982). Even assuming that a quasijudicial administrative process were not "due course of law," ² and that article I, section 10 overcame the immunity of the state implicit in article IV, section 24, ³ a procedural requirement that one pay assessed taxes before suing to have them refunded is not the kind of "injury done him" contemplated in that guarantee.

Article I, section 20 provides that "[n]o law shall be passed granting to any citizen or class of citizens privileges, or immunities, which, upon the same terms, shall not equally belong to all citizens." The stay of collection of some taxes without requiring payment pending an appeal doubtless is a privilege within the meaning of this guarantee; but nothing suggests that it does not "upon the same terms ... equally belong to all citizens." Every citizen must pay his assessed income tax before appealing the assessment to the tax court, and every citizen may obtain a stay pending appeal of the other taxes covered by ORS 305.565(1). Persons appealing income tax assessments are not a different "class of citizens" from persons appealing, for instance, inheritance tax assessments, when any person may sometime find himself in a position to appeal one or the other on equal terms with all other taxpayers. At least they are not "classes" absent some showing that the laws are directed at classes of persons identifiable by characteristics other than their status of appellants. See Norwest v. Presbyterian Intercommunity Hospital, 293 Or. 543, 567-68, 652 P.2d 318 (1982); State v. Clark, 291 Or. 231, 237-41, 630 P.2d 810 (1981). Taxpayers cite no relevant decisions to suggest that the analysis would be different under the equal protection clause of the 14th amendment, unless they have a "fundamental right" to appeal without prepayment by virtue of that amendment's due process clause. We therefore turn to that claim.

The Department of Revenue relies on Bull v. United States, 295 U.S. 247, 259-60, 55 S.Ct. 695, 699, 79 L.Ed. 1421 (1935), and Phillips v. Commissioner, 283 U.S. 589, 595-99, 51 S.Ct. 608, 611-12, 75 L.Ed. 1289 (1931), for the principle that collection of a tax in advance of litigating the taxpayer's liability for it is not a deprivation of property without due process of law. Taxpayers point out that due process has come a long way since 1935, and they claim to find intimations of new due process constraints on tax collection in two recent decisions of the United States Supreme Court, Laing v. United States, 423 U.S. 161, 96 S.Ct. 473, 46 L.Ed.2d 416 (1976) and Commissioner v. Shapiro, 424 U.S. 614, 96 S.Ct. 1062, 47 L.Ed.2d 278 (1976).

Like Phillips, these recent cases involved summary procedures under which the Internal Revenue Service, in certain circumstances may assess a tax and seize the taxpayer's assets before the taxpayer has had an opportunity to contest the asserted tax liability. In each case the Supreme Court ruled for the taxpayer under the applicable statutes without deciding any constitutional issue. A footnote in Laing reserved the question, not raised by taxpayers, whether "due process demands that the taxpayer in a jeopardy assessment situation be afforded a prompt post-assessment hearing at which the Government must make some preliminary showing in support of the assessment." 423 U.S. at 184 n. 26, 96 S.Ct. at 485 n. 26. In Shapiro, the Court suggested that "to permit the Government to seize and hold property on the mere good-faith allegation of an unpaid tax would raise serious constitutional problems" if seizure of assets is alleged to cause irreparable injury, and that "the Due Process Clause requires that the party whose property is taken to be given an opportunity for some kind of predeprivation or prompt postdeprivation hearing at which some showing of the probable validity of the deprivation must be made." 424 U.S. at 629, 96 S.Ct. at 1071-1072. ⁴

The present case, however, does not involve a jeopardy assessment or any other summary procedure. These taxpayers had opportunities for both an informal administrative hearing and a formal quasijudicial hearing to challenge the assessment. ORS 305.265, 305.275, OAR 150-305.115. These procedural opportunities more than satisfy the kind of due process requirements suggested by the Supreme Court in Shapiro, supra, apart from the fact that no "irreparable harm" from delaying a hearing until after payment is shown here. The taxpayers' only criticism of the administrative hearing is that the Director of the Department of Revenue need not accept the hearing officer's recommended decision but may make a contrary decision upon a summary of the evidence prepared by the hearing officer. If the director proposes to modify the recommended decision, however, he must...