District of Columbia v. Keyes

• Decision Date: 23 July 1976
• Docket Number: No. 8790.,8790.
• Citation: 362 A.2d 729
• Parties: The DISTRICT OF COLUMBIA, a Municipal Corporation, et al., Appellants, v. Arthur H. KEYES, Jr., and Lucille Keyes, on behalf of themselves and others similarly situated, Appellees.
• Court: D.C. Court of Appeals

362 A.2d 729

The DISTRICT OF COLUMBIA, a Municipal Corporation, et al., Appellants, v. Arthur H. KEYES, Jr., and Lucille Keyes, on behalf of themselves and others similarly situated, Appellees.

No. 8790.

District of Columbia Court of Appeals.

Argued December 5, 1974.^*

Decided July 23, 1976.

COPYRIGHT MATERIAL OMITTED

Louis P. Robbins, Principal Asst. Corp. Counsel, Washington, D.C., with whom C. Francis Murphy, Corp. Counsel at the time the brief was filed, Henry E. Wixon, Richard L. Aguglia, and Kenneth A. Pels, Asst. Corp. Counsels, Washington, D.C., were on the brief, for appellants.

Gilbert Hahn, Jr., Washington, D.C., with whom Jack C. Sando, Bethesda, Md., was on the brief, for appellees.

Before KELLY and GALLAGHER, Associate Judges, and PAIR, Associate Judge, Retired.

GALLAGHER, Associate judge:

This is an appeal from the Tax Division of the Superior Court of the District of Columbia. The appellees, Arthur H. Keyes, Jr. and Lucille Kayes, filed suit, on behalf of themselves and others similarly situated, against the District of Columbia, Mayor Walter E. Washington, and the Director of the Department of Finance and Revenue, Kenneth Back, appellants, for partial refunds of taxes paid in fiscal year 1973 on all single-family residential properties in the District of Columbia which were assessed at 60% of estimated market value. The trial court held that the appellees are entitled to the relief sought. We reverse.

During calendar year 1971, the level of assessment¹ on approximately one-third of the single-family residential properties² in the District of Columbia was raised from 55% to 60% of estimated market value for fiscal year 1973.³ This change in the level of assessment was part of a plan by the Department of Finance and Revenue of the District of Columbia to achieve a phased increase in the debasement factor (level of assessment) for all single-family residential properties in the District of Columbia. Appellants seek to have their refunds measured by the difference between their actual tax bills which they paid for fiscal year 1973 (for which a 60% debasement factor was applied) and the lower tax bills which they would have received if a 55% debasement factor had been applied, plus 6% interest per annum.

In May 1973, an earlier class action was brought by several single-family residential property taxpayers to enjoin the District of Columbia from using unequal levels of assessment in taxing single-family residential properties for fiscal year 1974. This court, in District of Columbia v. Green, D.C.App., 310 A.2d 848 (1973) (hereinafter Green), affirmed the trial court and held that the District of Columbia's "stairstep" approach to achieve an increased debasement factor for all single-family residential properties was unconstitutional as it resulted in different debasement factors being applied to the same class of property in the same year.⁴ Injunctive relief was granted for fiscal year 1974, and the "stairstep" plan was prohibited.

The present suit was brought as an uncertified⁵ class action to recover that portion of fiscal year 1973 residential property taxes paid which was attributable to the increase of 5% in the level of assessment.⁶ The District of Columbia appeals the decision of the trial court granting refunds to the taxpayers on the grounds that (1) under traditional principles of equity and tax reform litigation only prospective relief should have been granted; (2) refunds should not have been granted without proof that appellees bore a substantially disproportionate share of the real property tax burden; (3) the trial judge erred in not permitting the District of Columbia to prove that appellees did not bear a substantially disproportionate share of the real property tax burden; and (4) the trial court erred in permitting appellees to proceed as a class for refunds without certification and individual notice. We hold that appellees are not entitled to refunds either under the statutes of this jurisdiction or by virtue of equitable principles.

The trial court held, insofar as pertinent here, (1) that under the doctrine of collateral estoppel the legal and factual issues as they relate to the conduct of appellants are controlled by the result in Green, and (2) that under principles of equity it would be inappropriate to deny refunds in this case. We believe that, even if the first holding were assumed to be correct, the second is not.

Preliminarily, we observe that this suit was brought in equity and was decided solely on equitable grounds. No statutory remedy was sought or granted and one of the premises of appellees' approach to this litigation is that their potential legal remedies, if any, were inadequate. The rationale of the trial court is essentially that because appellees were held to be entitled to injunctive relief in Green, they are ipso facto entitled to tax refunds in this case.

Recovery of taxes illegally or erroneously assessed and voluntarily paid was not permitted at common law and is a matter within the purview of the legislative branch. Therefore, refunds of taxes so assessed and paid will not be made absent an authorizing statute. District of Columbia v. McFall, 88 U.S.App.D.C. 217, 188 F.2d 991 (1951); Lindner v. District of Columbia, D.C.Mun.App., 32 A.2d 540 (1943).⁷ Under the statutory procedure applicable to this case, the recovery of refunds through appeal to the Superior Court requires, as a first step, a complaint to the Board of Equalization and Review.⁸ Subject matter jurisdiction of the Superior Court does not attach until that prerequisite has been satisfied,⁹ and a refund based on a final determination of the Superior Court presupposes that the taxpayer has complied with the procedure mandated by the legislature. If "aggrieved" for any reason, the taxpayer must appeal within the permitted time to the Board of Equalization and Review. D.C.Code 1973 § 47-709. This was not done in this case. The taxpayers failed to follow their administrative remedies for fiscal year 1973.

Appellees contend that the administrative remedies could not have been pursued by any of the taxpayers for fiscal year 1973 because of prior concealment of the "stair-step" plan by District officials. In Green, however, we noted that three petitioners "ascertained the existence of, and raised as an issue, the increased level of assessment of their properties" before the Board of Equalization and Review for fiscal year 1974. District of Columbia v. Green, supra at 851. These taxpayers not only pursued their administrative remedies but in the process also discovered the now prohibited practice of applying different debasement factors to similarly situated taxpayers. Consequently, we cannot assume, as the trial court did in the case now before us, that a timely administrative challenge to the 1973 taxes for the purpose of obtaining refunds was unavailable or would have been fruitless. The 1973 taxpayers were just as aware as the 1974 taxpayers that their tax bills had been increased.

In Green, we agreed with the trial court that the circumstances there were extraordinary and, further, that it would be inequitable to allow those who had bypassed the Board to proceed immediately with the action for injunction while requiring those who had gone to the Board to wait until the expiration of the statutory period before proceeding. Our conclusion was: "The evidence of record supports the findings of the trial court and, as a consequence, it was not error to entertain the [complaint] for injunction." District of Columbia v. Green, supra at 853. Thus, we specifically limited our analysis to the context of the relief sought.¹⁰ That is to say, we held only that the circumstances before the court were so extraordinary as to warrant a prohibitive writ restraining the practice for fiscal year 1974 and subsequent years. Appellees argue that we should extend this holding to the instant refund case for the prior fiscal year of 1973. We disagree and hold that equitable intervention is not justified in this case.¹¹

Moreover, even assuming it were appropriate to apply the principles of equity to the facts before us, we do not believe that appellees would be entitled to refunds. Regardless of the specific context involved, the distinguishing feature of equity jurisdiction is ". . . the power of the Chancellor to do equity and to mould each decree to the necessities of the particular case." Hecht Co. v. Bowles, 321 U.S. 321, 329, 64 S.Ct. 587, 592, 88 L.Ed. 754 (1944). Thus, it is characteristic of a court of equity that it must take a comprehensive view of the issues before it; and as a result its extraordinary remedies are to be meted out with care. Where the public interest is involved,

[c]ourts of equity may, and frequently do, go much farther both to give and withhold relief in furtherance of the public interest than they are accustomed to go when only private interests are involved. Pennsylvania v. Williams, 294 U.S. 176, 185, 55 S.Ct. 380, 385, 79 L.Ed. 841; Central Kentucky Gas Co. v. Railroad Commission, 290 U.S. 264, 270-273, 54 S.Ct. 154, 156, 157, 78 L.Ed. 307; Harrisonville v. W. S. Dickey Clay Co., 289 U.S. 334, 338, 53 S.Ct. 602, 603, 77 L.Ed. 1208; Beasley v. Texas & Pacific Ry. Co., 191 U.S. 492, 497, 24 S.Ct. 164, 48 L.Ed. 274; Joy v. St. Louis, 138 U.S. 1, 47, 11 S.Ct. 243, 34 L.Ed. 843; Texas & Pacific Ry. Co. v. Marshall, 136 U.S. 393, 405-406, 10 S.Ct. 846, 34 L.Ed. 385; Conger v. New York, W. S. & B. R. Co., 120 N.Y. 29, 32, 33, 23 N.E. 983. [Virginian Ry. v. System Federation 40, 300 U.S. 515, 552, 57 S.Ct. 592, 601, 81 L. Ed. 789 (1937) (emphasis added). See also United States v. First National City Bank, 379 U.S. 378, 85 S.Ct. 528, 13 L. Ed.2d 365 (1965) and cases cited therein at 383, 85 S.Ct. 528.]

This principle was applied in Blair v. Freeman, 125 U.S.App.D.C. 207, 370 F. 2d 229 (1966) which involved a marketing regulation of the Secretary of Agriculture who...