Daily Gazette Co., Inc. v. Caryl

• Decision Date: 18 April 1989
• Docket Number: No. 18798,18798
• Citation: 380 S.E.2d 209,181 W.Va. 42
• Court: West Virginia Supreme Court
• Parties: , 16 Media L. Rep. 1908 The DAILY GAZETTE COMPANY, INC. v. Michael E. CARYL, State Tax Commissioner.

Page 209

380 S.E.2d 209

181 W.Va. 42, 16 Media L. Rep. 1908

The DAILY GAZETTE COMPANY, INC. v. Michael E. CARYL, State Tax Commissioner.

No. 18798.

Supreme Court of Appeals of West Virginia.

April 18, 1989.

Syllabus by the Court

1. "The disclosure provisions of this State's Freedom of Information Act, W.Va.Code, 29B-1-1 et seq., as amended, are to be liberally construed, and the exemptions to such Act are to be strictly construed. W.Va.Code, 29B-1-1 [1977]." Syl. pt. 4, Hechler v. Casey, 175 W.Va. 434, 333 S.E.2d 799 (1985).

2. Tax compromise information made and maintained pursuant to W.Va.Code § 11-10-1 et seq. (1987) is exempt from disclosure under the provisions of the West Virginia Freedom of Information Act and W.Va.Code § 11-10-5q (1987).

Dale W. Steager, Sp. Asst. Atty. Gen., Charleston, for Michael E. Caryl.

Rebecca A. Baitty, Lonnie C. Simmons, Ditrapano & Jackson, Charleston, for Daily Gazette Co.

BROTHERTON, Chief Justice.

This case involves an appeal by the State Tax Commissioner from the order of the Kanawha County Circuit Court ruling that the tax compromise records sought by the Daily Gazette Company are subject to disclosure. We agree with the State Tax Commissioner's contention that the information sought is confidential pursuant to W.Va.Code § 29B-1-4(5) (1986) and § 11-10-5d(a) (1987), and therefore reverse the decision of the Kanawha County Circuit Court.

Prior to this appeal, CSX brought suit against the State Tax Commissioner in federal district court in a case styled Chesapeake & Ohio Railway Co. v. Rose, 651 F.Supp. 1463 (S.D.W.Va.1985), affirmed without written opinion, 809 F.2d 785 (4th Cir.1987). Along with two other railroad companies, CSX requested declaratory and injunctive relief in federal court, contending that the West Virginia carrier income tax was discriminatory as imposed upon railroads and other common carriers in violation of the Railroad Revitalization and Regulatory Reform Act of 1976. ¹ As evidence of discrimination, the railroads introduced unsigned copies of certain state tax returns from their records. On April 7, 1983, the federal district court enjoined the Commissioner from imposing additional liability against the railroad pending the decision in Rose. The federal district court then ruled that the tax imposed did not discriminate against the railroads and denied the declaratory and injunctive relief requested. Id. at 1481. The plaintiffs appealed to the Fourth Circuit; however, the Fourth Circuit affirmed the district court's order without opinion. Thereafter, CSX and the Tax Commissioner reached a compromise of CSX's tax liability. The terms of the compromise were not fully disclosed and are the object of this litigation.

On March 19, 1987, the Gazette requested from the State Tax Commissioner "any and all documents related to [the] settlement between the State Tax Department and the CSX Corporation" pursuant to the State Freedom of Information Act. On March 30, 1987, the Commissioner denied the request on the basis that the tax compromise records were confidential under W.Va.Code §§ 11-10-5d & 5q (1987) and thus, specifically excepted from disclosure under the West Virginia Freedom of Information Act. ² After a second request was made by the Gazette to the Attorney General, Charles G. Brown, III, the Gazette filed suit against Attorney General Brown.

The Gazette instituted a declaratory judgment proceeding under W.Va.Code § 29B-1-5 (1986) in the Circuit Court of Kanawha County on May 29, 1987. The Tax Commissioner moved for summary judgment under Rule 56, stating that tax compromise records were exempt from disclosure under W.Va.Code § 29B-1-4(5) because of the confidentiality requirement of W.Va.Code § 11-10-5d & 5q. On September 28, 1988, the circuit court ruled that:

the newspaper is entitled to information concerning all settlements entered into under W.Va.Code § 11-10-5q where there has been prior court litigation between the State Tax Commissioner and the taxpayer, including any amended tax returns filed for the years in controversy as well as tax returns filed by the taxpayer for subsequent years regardless of the tax involved; and that, if documents or records do not exist which disclose in detail the events and circumstances surrounding the negotiations in settlement of such cases, the State Tax Commissioner "shall provide, in addition to available records and documents, narrative statements by every employee or agent of the defendant (State Tax Commissioner) or the agent of the State of West Virginia who participated directly or indirectly in such compromise."

In the companion case to this appeal, State ex rel. Michael Caryl v. The Honorable Andrew J. MacQueen, No. 18803, Commissioner Caryl sought a writ of prohibition from this Court seeking to prevent disclosure of the compromise information in the pending case of The Daily Gazette Co. v. Brown. That writ was granted, pending our decision in this case.

Thus, the task before this Court is to determine whether the tax compromise records are exempt from disclosure under the Freedom of Information Act. For the reasons stated below, we find that the records relating to tax liability compromises made pursuant to the Tax Commissioner's authority under W.Va.Code § 11-10-5q (1987) are exempt from disclosure.

This Court has consistently held that the disclosure provisions of the West Virginia Freedom of Information Act shall be liberally construed. Hechler v. Casey, 175 W.Va. 434, 333 S.E.2d 799 (1985). West Virginia Code § 29B-1-1, et seq. (1986), provides for the release of all public records to any person, unless otherwise expressly prohibited in section four of the Act. ³ A specific exception to the general rule, however, is information otherwise "exempted from disclosure by statute." ⁴ W.Va.Code § 29B-1-4(5) (1986). Consequently, the Freedom of Information Act directs us to W.Va.Code § 11-10-1 et seq. (1987), the West Virginia Tax Procedure and Administration Act, to determine whether there are specific statutory provisions which classify tax compromise records as confidential.

In Spencer v. Yerace, 155 W.Va. 54, 180 S.E.2d 868 (1971), this Court addressed the issue of legislative intent and statutory construction:

In the construction of statutes, it is the legislative intent manifested in the statute that is important and such intent must be determined primarily from the language of the statute.... In ascertaining the legislative intent, effect must be given to each part of the statute and to the statute as a whole so as to accomplish the general purpose of the legislation.

Id. 155 W.Va. at 59-60, 180 S.E.2d at 871-72. Therefore, we must examine W.Va.Code § 11-10-1 et seq. in its entirety in order to determine the purpose of the Legislature in enacting this statute.

West Virginia Code § 11-10-5d(a) (1987) reflects both the general rule providing for the confidentiality of tax information and the exception from that general rule:

Except when required in an official investigation by the tax commissioner into the amount of tax due under any article administered under this article or in any proceeding in which the tax commissioner is a party before a court of competent jurisdiction to collect or ascertain the amount of such tax and except as provided in subsections (d) through (m), it shall be unlawful for any officer or employee of this state to divulge or make known in any manner the tax return, or any part thereof, of any person or disclose information concerning the personal affairs of any individual or the business of any single firm or corporation, or disclose the amount of income, or any particulars set forth or disclosed in any report, declaration or return required to be filed with the tax commissioner....

(Emphasis added.) ⁵ The Gazette argues that the CSX tax compromise was a settlement of the prior litigation in Rose and thus, any information relating to that compromise is disclosable under the exception to confidentiality found in W.Va.Code § 11-10-5d(a).

We disagree with the Gazette's argument and hold that records relating to tax compromises are exempt from disclosure under the Freedom of Information Act. Our conclusion is supported by a careful reading of W.Va.Code § 11-10-5q(d) and (e), which authorizes the compromise of tax liability. ⁶ In part, the statute provides:

(d) Record of compromise --Whenever a compromise is made by the tax commissioner under subsection (c), there shall be placed on file in the tax commissioner's office the opinion of the tax commissioner's legal counsel (with his reasons therefor) and any written recommendation of the attorney general received pursuant to subsection (c) above together with a statement of:

(1) The amount of tax assessed,

(2) The amount of interest, additional amount, addition to the tax, or assessable penalty imposed by law on the person against whom the tax is assessed, and

(3) The amount actually paid in accordance with the terms of compromise.

* * * * * *

(e) Report to Legislature --The tax commissioner shall submit to the Speaker of the House of Delegates, the President of the Senate and the legislative auditor a quarterly report summarizing the issues and amounts of liabilities contained in the agreements and compromises into which he has entered pursuant to this section. Such report shall be in a form which preserves the confidentiality of the identity of the taxpayers involved in such agreements and compromises. Notwithstanding any other provision of law to the contrary, the agreements and compromises entered into pursuant to this section shall be subject to audit, in their entirety, by the legislative auditor.

(Emphasis added.) ⁷

While we acknowledge that confidentiality is not specifically addressed in W.Va.Code § 11-10-5q(d), section (e) directs that the report to the Legislature be made in such a manner so as to preserve the confidentiality of the taxpayer involved in the compromise. ⁸ For the...