George W. Davis & Sons, Inc. v. Askew

Decision Date30 March 1977
Docket NumberNos. AA--186,AA--208,s. AA--186
Citation343 So.2d 1329
CourtFlorida District Court of Appeals
PartiesGEORGE W. DAVIS & SONS, INC., a Florida Corporation, Appellant (Flaintiff), v. Reubin O'D. ASKEW, etc., et al., as and constituting the head of the Department of Revenue of the State of Florida, Appellees (Defendants).

E. C. Deeno Kitchen and Brian S. Duffy, Ervin, Varn, Jacobs & Odom, Tallahassee, for appellants in AA--186, for appellees in AA--208.

Robert L. Shevin, Atty. Gen., and E. Wilson Crump, II, Asst. Atty. Gen., for appellees in AA--186, for appellants in AA--208.

Julian Bennett, Hilton, Bennett, Logue, Paulk & Burke, Panama City, for appellees. in AA--208.

McCORD, Judge.

These are two consolidated appeals from the same final judgment. Each party is both appellant and appellee, but George W. Davis & Sons, Inc., (hereinafter sometimes called Davis) having filed notice of appeal first, will be treated as appellant and the Department of Revenue of the State of Florida (hereinafter sometimes called the Department) will be treated as appellee and cross-appellant.

The final judgment enjoined the Department (defendant below) from collecting from Davis (plaintiff below) taxes on admissions for transactions (individual admission fees for sport fishing on party boats in the Gulf of Mexico) between July 1, 1970, and the filing in the Circuit Court of Leon County of the mandate of this court in Department of Revenue v. Pelican Ship Corporation, 257 So.2d 56 (Fla. 1 DCA 1972). Davis contends the trial court erred in not encompassing within the injunction a period extending beyond the filing of the aforesaid mandate. The Department contends the trial court erred in enjoining it from collecting any of the taxes. We agree with the ruling of the trial judge and therefore disagree with the contentions of both parties.

The trial court in its final judgment made a well-reasoned analysis of this case as follows:

'Plaintiff operates deep-sea fishing boats which sail from Panama City out to the high seas, where paying customers, for a charge made when they board the ship in Panama City, fish, relax and, in due time, return to Panama City. For many years, plaintiff collected from its customers and remitted to the state the admissions tax imposed by Chapter 212, Florida Statutes. In 1966, plaintiff became aware of an injunction against the collection of this tax secured by a competitor operating out of Destin 1. This injunction, of course, applied only with reference to the taxes of the competitor, but was based upon a holding that the tax was invalid as applied to operations which, for all practical purposes, were identical with those of plaintiff.

Plaintiff was informed that this case was being appealed, and it continued to collect from its customers and remit to the state the 'admission' taxes on its charges to its customer.

In April 1968, the District Court of Appeal, First Distirct, decided the Kelly case and held, in quite explicit language, that the admission tax laws did not apply to operations such as those of Kelly Boat Service, Inc. which, as above stated, were, for all practical purposes identical with those of plaintiff. Plaintiff was informed by a representative of the Florida Revenue Commission that the case would be appealed further and so, for a time, it continued to collect and remit to the state admission taxes on the amounts it charged its customers.

Thereafter, numerous conferences were had between plaintiff's president and representatives of the Revenue Commission. The parties are not in agreement as to exactly what transpired at these conferences, but the court is convinced that the Revenue Commission felt bound by the Kelly decision insofar as operations within the First Appellate District were concerned, but was not satisfied with that decision, and continued to collect the tax in the remainder of the state. The Revenue Commission made it plain to plaintiff that it would not, so long as Kelly was in effect, attempt to enforce collection of any admissions tax upon plaintiff's operations, although its officers disclaimed any abandonment of their views that Kelly was wrong.

In the spring of 1969, plaintiff ceased to collect admission taxes from its customers but, as an anchor to windward, it at that time increased its charges so that it could absorb the tax if it were later collected.

Finally, in the fall of 1969, after further indications that the Department of Revenue would not enforce collection of admission taxes upon its operations, plaintiff abandoned any plans to collect or absorb the tax, and thereafter operated on the theory that the tax would never be enforced. This status was unchanged until the decision of the District Court of Appeal in Pelican 2, which held the admission tax on admissions legally indistinguishable from those of plaintiff to be taxable.

After Pelican, the Department of Revenue demanded, and plaintiff paid, the tax beginning in the fall of 1972.

A most careful examination of Kelly and Pelican leads this court to the conclusion that any legal scholar, including the circuit judge who decided Pelican (and whose decision was reversed) would find it most difficult, if not impossible, to anticipate the distinction from Kelly drawn by the Court in Pelican.

It is not the function of this court to say that either decision was rong. It is the function of this court to protect the legal rights of citizens who try earnestly to pay their just taxes 3.

After the decision in Kelly, plaintiff found itself in this position: A court of final appellate jurisdiction had held the admissions tax inapplicable to a factual situation which any reasonable man, including a learned lawyer, would find to be legally indistinguishable from that of plaintiff. The Department of Revenue recognized this by advising plaintiff that it would not, at least for the time being, attempt to enforce collection of the tax upon plaintiff's operations. At least one major competitor was protected by a court order from the duty to collect the tax. Under these circumstances, the plaintiff was justified in ceasing to collect the tax from its customers. Had plaintiff continued to collect the tax, and had Kelly not been 'distinguished' by Pelican, plaintiff would have been collecting money which, under Kelly, did not belong to the state, and which plaintiff would have been legally and morally obligated to return to its customers upon demand. In the last analysis, the law is what the courts say it is. It is the duty of all citizens to obey the law as announced by the courts.

When plaintiff, following the language of Kelly, ceased to collect the admission tax from its customers, it was guided by the highest authority available to it at the time. It should not be penalized for so doing.

The appellate court of this state has long applied the principles of estoppel to the state and its agencies, sometimes going further than this court and reversing this court for refusing to hold the state estopped by the acts of its officers.

Ordinarily, where a tax legally owing by a citizen is not collected due to the error of the taxing officials, the state should not be estopped from back assessing and collecting that tax. The citizen is merely paying at a later date that which he should have paid in the beginning.

But when the state makes a private business, in effect, its agent for the collection of taxes from others, and makes the business liable for the tax it fails to collect as a means of enforcing the collection, a different situation is presented. While Kelly was in effect, plaintiff was confronted with what any reasonable man would consider an authoritative holding that the tax was not legal and sould not be collected by plaintiff from its customers.

It would be most unconscionable to now say that plaintiff should have anticipated Pelican and, notwithstanding Kelly, should have exacted the tax from its customers.

However, when the mandate came down in Pelican, the law as (apparently) determined in Kelly was superseded by the law as announced in Pelican, and plaintiff should have then immediately begun collecting the tax from its customers. Plaintiff was then no longer protected by Kelly or any representative of any of the staff of the Department of Revenue.'

The Florida Supreme Court has held that in certain circumstances, estoppel will lie against the state. Daniell v. Sherrill, 48 So.2d 736 (Fla.1950), 23 A.L.R.2d 1410; Trustees of the Internal Improvement Fund v. Bass, 67 So.2d 433 (Fla.1953). The courts of Florida have also, in certain instances, upheld estoppel against assessment of back taxes by a municipality. City of Naples v. Conboy, 182 So.2d 412 (Fla.1965); and Coppock v. Blount, 145 So.2d 279 (Fla. 3 DCA 1962). Also other jurisdictions have upheld estoppel against the collection of taxes. See U.S. v. Bureau of Revenue, 87 N.M. 164, 531 P.2d 212 (Ct.App.N.M.1975); In re Estate of Kruse, 36 Cal.App.3d 909, 112 Cal.Rptr. 50 (1974); Pilgrim Turkey Packers, Inc. v. Dept. Rev., 261 Or. 305, 493 P.2d 1372 (1972). It is apparent that, although the instances thereof are not numerous, estoppel will lie against the government and a taxing agency may be estopped from collecting back taxes if the circumstances of the particular case are sufficiently strong to warrant an estoppel. This case involves exceptional circumstances under which justice and right require that estoppel be invoked.

In Straughn v. Kelly Boat Service, Inc., supra, hereafter referred to as Kelly I, this court held admission taxes such as those involved in this suit to be void. There the court said:

'The basic question presented for our determination in this appeal is whether the plaintiff's said operations were subject to the sales, use, and Admission tax laws of the State of Florida (Chapter 212, Florida Statutes, F.S.A.).

In view of our above holding that The taxes involved in this appeal are void, there is no necessity here for us...

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