Duke v. State ex rel. Shaw, 455

• Decision Date: 26 November 1957
• Docket Number: No. 455,455
• Citation: 247 N.C. 236,100 S.E.2d 506
• Parties: HHaywood DUKE, doing business as Hotel King Cotton v. STATE of North Carolina ex rel. Eugene G. SHAW, Commissioner of Revenue.
• Court: North Carolina Supreme Court

Page 506

100 S.E.2d 506

247 N.C. 236

HHaywood DUKE, doing business as Hotel King Cotton v. STATE of North Carolina ex rel. Eugene G. SHAW, Commissioner of Revenue.

No. 455

Supreme Court of North Carolina.

Nov. 26, 1957

Ehringhaus & Ellis, Raleigh, for petitioner appellant.

Atty. Gen. George B. Patton, Asst. Attys. Gen. Samuel Behrends, Jr., and Peyton B. Abbott, and Kenneth Wooten, Jr., of Staff, Raleigh, for respondent appellee.

RODMAN, Justice.

The monies to maintain and operate our public school system, nine State colleges, a University, Departments of Health, Public Welfare, mental and correctional institutions, a retirement system for State employees, to pay principal and interest on monies borrowed, as well as the many other general functions of State government are provided by taxes of the kind and character specified in c. 105 of the General Statutes, as amended by c. 1340, S.L. of 1957. Appropriations for these General Fund purposes exceed for the current fiscal year $200,000,000.

Since 1933 the sales tax, supplemented in 1937 by the use tax, has been a vital factor in providing General Fund revenues. The sales-use tax is counted upon to produce approximately one-third of the current year's General Fund revenues. This simple factual statement demonstrates the wisdom of our rule that one who would challenge the validity of a tax or the interpretation of the tax laws by those charged with the responsibility of collecting must follow the method prescribed by the Legislature. Gill v. Smith, 233 N.C. 50, 62 S.E.2d 544; State ex rel. Employment Security Comm. v. Kermon, 232 N.C. 342, 60 S.E.2d 580; Unemployment Comp. Comm. v. J. M. Willis Barber & Beauty Shop, 219 N.C. 709, 15 S.E.2d 4; Prudential Insurance Co. of America v. Powell (Unemployment Comp. Comm.) 217 N.C. 495, 8 S.E.2d 619; Caldwell County v. Doughton, 195 N.C. 62, 141 S.E. 289; Hart v. Board of Commissioners of Burke County, 192 N.C. 161, 134 S.E. 403; Marion Mfg. Co. v. Board of Com'rs, 189 N.C. 99, 126 S.E. 114.

The power of the Legislature to levy taxes of the character provided in Articles 5 and 8 of c. 105 of the General Statutes has long been settled. Stedman v. City of Winston-Salem, 204 N.C. 203, 167 S.E. 813; Powell v. Maxwell, 210 N.C. 211, 186 S.E. 326; Hinson v. Lott, 8 Wall. 148, 19 L.Ed. 387; Ward v. State of Maryland, 12 Wall. 418, 20 L.Ed. 449.

The prompt collection of taxes legally owing is facilitated by administrative interpretations thoughtfully made and widely publicized. Recognizing this fact, the Legislature of 1955 imposed on the Commissioner of Revenue the duty of initiating such regulations as might be necessary and useful in assessing and collecting revenues. These regulations could not be promulgated until submitted to and approved by the Tax Review Board. When so approved, the Commissioner is required to publish the regulations. C. 1350, S.L. 1955. G.S. § 105-262.

Any interested citizen may procure copy of these regulations and apply the administrator's interpretation of the law to the citizen's tax situation. If, under the regulations, tax liability seems likely, he may present the matter to the Commissioner of Revenue for examination and determination. G.S. § 105-241.2. If the Commissioner assesses a tax the party who deems himself aggrieved may, as provided by statute, protect himself against an illegal assessment. An intolerable situation would be presented if the person charged with the duty of collecting could be prohibited from making an assessment, leaving the person charged with liability the privilege of determining when and how the question should be settled.

Two methods are prescribed for the taxpayer's protection. The first requires the taxpayer to pay the amount asserted to be owing under protest; and when so paid, he may then maintain an action against the State to recover. G.S. § 105-267. Historically this method has been available to taxpayers for more than half a century. Rev. 1905, sec. 2855.

The remedy afforded by G.S. § 105-267 may at times place an undue burden on the taxpayer. The Legislature of 1955 took recognition of that fact and broadened the provisions by which the taxpayer might have his liability determined.

It found ready at hand an appropriate instrument fashioned by the Legislature of 1953, now incorporated as Article 33 of c. 143 of the General Statutes. The 1953 statute permits judicial review of any decision rendered by an administrative agency in a proceeding in which the legal rights of specific parties are determined after an agency hearing. G.S. § 143-306 et seq.

Manifestly this statute contemplated a quasi-judicial hearing in which the parties were permitted an opportunity to offer evidence and a decision rendered applicable to a specific factual situation. In re Berman, 245 N.C. 612, 97 S.E.2d 232.

It does not...