Davis v. Barr, 42791

• Decision Date: 18 November 1963
• Docket Number: No. 42791,42791
• Citation: 250 Miss. 54,157 So.2d 505
• Parties: Ike J. DAVIS et ux. v. Dexter BARR, Chairman, Mississippi State Tax Commission, et al.
• Court: Mississippi Supreme Court

Page 505

157 So.2d 505

250 Miss. 54

Ike J. DAVIS et ux. v. Dexter BARR, Chairman, Mississippi State Tax Commission, et al.

No. 42791.

Supreme Court of Mississippi.

Nov. 18, 1963.

deQuincy V. Sutton, Lyle V. Corey, Meridian, for appellants.

John E. Stone, Jackson, for appellees.

RODGERS, Justice.

This is an action brought by appellants for the alleged purpose of suppressing an assessment for state income taxes for the taxable years of 1945 through 1954.

Appellants filed an original bill in the Chancery Court of Lauderdale County, Mississippi, on October 16, 1961, alleging that Noel Monaghan, then Tax Commissioner was Chairman of the Mississippi State Tax Commission, and that H. N. Eason was Chief of Division of Income Tax, and that they had an established office in Lauderdale County, Mississippi. It was further alleged that the complainants filed income tax returns for the taxable years 1945-1954, and paid taxes shown therein to be due. It is alleged that these returns were destroyed by the Tax Commissioner without notice to complainant, and thereafter at a time, more than three years, after the tax returns were filed, the Commissioner, Noel Monaghan, and H. N. Eason, demanded of the complainants the sum of $13,693.16, with interest. This amount was alleged to be more than the amount due as shown by the tax returns filed. It is alleged the assessment was not made on the basis of an examination of the tax returns, and was therefore not made in a manner contemplated by law.

It is said in the bill that the complainants are unable to show that the returns were correct because they have been destroyed, but that the returns were correct. It is alleged that the demand and assessment of the Commission is a lien on complainants' home in Lauderdale County, and unless the demand is paid before the 20th day of October 1961, their property will be seized for the satisfaction of the assessment. Complainants insist that the foregoing facts prevent them from obtaining 'due process of law', and that such facts violate their constitutional rights under the Constitution of the United States and the Constitution of the State of Mississippi. Appellants claim that Sec. 9220-27(9), Code 1942, Rec., does not apply to this action, and that the named individuals are liable for attorney's fees required to be paid by complainants in defending the excessive and unauthorized acts, an invasion of complainants' constitutional rights by defendants.

The case was transferred to the Chancery Court of Hinds County (First, District) on motion of defendants, where a general demurrer to the original bill was overruled. The defendants filed their answer admitting the assessment but denying that it was unlawfully made in violation of complainants' constitutional rights, nor without due process of law. The defendants incorporated in their answer, by way of a plea, a denial of the jurisdiction of the chancery court in tax matters under the circumstances set out in the bill of complaint, for the reason that the tax laws provided an administrative remedy in cases where an additional income tax assessment was made. It is alleged that the taxpayers, appellants here, refused to post the required bond and proceed in the manner provided. Defendants further alleged that Sec. 9220-27(9), Code 1942, Rec., prohibits the chancery court from enjoining the collection of income taxes.

On motion of defendants, the cause was set for hearing on the special plea above set forth. The plea to the jurisdiction was first overruled. The complainants then presented a motion requesting the court to strike the answer of defendants to the original bill. When this argument was heard on the motion, the chancellor entered a final decree holding complainants refused to avail themselves of the statutory administrative procedure, and that complainants have no standing in the chancery court since it is without jurisdiction. The bill of complaint was dismissed, and from that decree this case is now on appeal to this Court. Dexter Barr was substituted as party-defendant instead of Noel Monaghan.

Appellants argue that there is 'really one question in this case' and that 'the question is whether or not appellees have authority to destroy returns of taxpayers and then force those same taxpayers to appear before them administratively to prove those returns were correct.'

There are several statutes involved in the question presented here, and the Code sections, and parts of Code sections, applicable to this case, are annexed hereto as Notes.

We are confronted at the threshold of this appeal with the question raised by the plea, namely, whether or not the taxpayer- appellants, as a prerequisite to the invoking of judicial aid, should have exhausted their administrative remedies before the Tax Commission as provided by the foregoing Code section.

It has been said: 'The last century has witnessed the rise of a new instrument of government, the administrative tribunal. In its mature form, it is difficult to find its parallel in our earlier political history; its development seems indigenous. The rapidity of its growth, the significance of its power, and the implications of its being, are such as to require notice of the extent to which this new 'administrative law' is weaving itself more and more into our governmental fabric.' The Administrative Process by Landis, p. 1.

The hallowed ideal of separation of powers in government as a political maxim is ancient and its worth has been proven. Our tripartite form of government has, nevertheless, readily adopted and smoothly adjusted the old rules of law to this new tool. Its importance has been magnified until it is sometimes called 'fourth estate.' It is said that: 'In recent years there has been a pronounced movement toward the enactment of general statutes containing codes of procedure to be followed by regulatory agencies. A model or uniform act has been drafted, and a dozen or so states have adopted administrative procedure acts. * * * In 1946 Congress enacted the Administrative Procedure Act, which provides a new, basic, and comprehensive regulation of procedures in most federal agencies.' 2 Am.Jur.2d, Administrative Law, Sec. 201, p. 32. To say the least, administrative law has become a very effective tool in the administration of a modern, complicated government. Lawbook writers are taking notice of rapidly developing field of Administrative Law, as will be seen by the correlated subjects of public administration under 2 Am.Jur.2d, p. 20.

One of the new rules growing out of administrative law is that known as exhaustion of administrative remedies. The above-mentioned textwriter points out in Sec. 595, p. 426, as follows: 'The doctrine of exhaustion of administrative remedies requires that where a remedy before an administrative agency is provided, relief must be sought by exhausting this remedy before the courts will act. This doctrine is well established, is a cardinal principle of practically universal application, and must be borne in mind by the courts inconstruing a statute providing for review of administrative action. Thus, frequent reference is made to the long-settled rule of judicial administration that no one is entitled to judicial relief for a supposed or threatened injury until the prescribed administrative remedy has been exhausted. Basically the doctrine of exhaustion of administrative remedies is a product of judicial self-limitation, but in certain instances the doctrine, or principles involved therein, are directly related to express statutory provisions. * * * The doctrine of exhaustion of administrative remedies is sometimes said to rest upon the presumption that the administrative agency, if given a complete chance to pass upon the matter, will decide correctly * * *.'

It is also pointed out under Sec. 596, p. 429: 'The doctrine of exhaustion of administrative remedies is merely one aspect of the broader doctrine which requires final administrative action as a prerequisite of judicial review.

'Since the doctrine of exhaustion of remedies is most frequently invoked in equity proceedings, it should be noted that the doctrine under which no equitable relief is available where there is an adequate remedy at law has been extended to embrace administrative remedies, moreover, this equitable doctrine, while resembling the doctrine of exhaustion of administrative remedies, is far broader than the exhaustion doctrine because it also applies where there is available a remedy at law outside of the administrative process. * * *'

There are many cases cited on tax and assessment authorities, Note 1, p. 426 of the foregoing text.

Mississippi has followed the great weight of authorities requiring persons to exhaust their administrative remedies before resorting to court. In the case of Scott v. Lowe, 223 Miss. 312, 78 So.2d 452, cited under Note 2 of Sec. 596, p. 429, of the above-mentioned text, this Court said: 'This case raises for the first time the question of whether a civil service employee of a city can obtain a judicial review by injunction in chancery of an action of municipal officers allegedly affecting his job, or whether the statutory method of appeal provided for in such cases is his exclusive remedy.' In answer to that question, this Court held: '* * * we think that appellee has a plain, speedy, adequate and complete remedy at law and accordingly he must pursue the statutory method of appeal.'

In the case of Morehead v. Mississippi Safety-Responsibility Bureau, 232 Miss. 412, 99 So.2d 446, it is said: 'The law is well-settled that where an administrative remedy is provided by statute relief must be sought by exhausting this remedy before the courts will act. Many of the decisions lay stress upon the fact that any other rule would overcrowd the dockets of the courts. 42 Am.Jur., Public Administrative Law, Section 197, p. 580.'

This rule has been universally followed. See the following case...