Gott v. Norberg

Decision Date08 July 1980
Docket NumberNo. 77-436-M,77-436-M
PartiesFred A. GOTT, Jr. and Rhode Island Hospital Trust Co., Executors of the Estate of Rathbun Willard v. John H. NORBERG, Tax Administrator. P.
CourtRhode Island Supreme Court

MURRAY, Justice.

The defendant Tax Administrator (administrator) filed a petition for certiorari pursuant to G.L. 1956 (1977 Reenactment) § 42-35-16, seeking review of a Superior Court judgment ordering him to pay 8-percent annual interest on estate tax overpayments refunded to the plaintiffs (taxpayers). We issued the writ and have the pertinent records before us.

This controversy arose after an assessor for the state Division of Taxation assessed $55,000 in taxes and interest on the residuary legacy contained in Rathbun Willard's will. The assessor, acting pursuant to G.L. 1956 (1970 Reenactment) § 44-22-1(a), levied a 2-percent deferred enjoyment tax on the legacy because a will contest postponed its transfer to the Watch Tower Bible and Tract Society of Pennsylvania, Inc., the legatee. The assessor did not impose a 1-percent estate tax under § 44-22-1(a) or a transfer tax under § 44-22-7 because he determined the legatee was a religious organization exempted from those taxes by §§ 44-22-1(b) and 44-22-11(1), respectively.

The taxpayers, as executors of Mr. Willard's estate, contested the assessment in an administrative hearing. They maintained that, if §§ 44-22-1(b) and 44-22-11(1) exempted the legacy from the estate and transfer taxes, it also exempted the legacy from the 2-percent tax imposed by the assessor. After the hearing, the administrator reversed the assessor's action in part. He agreed with the taxpayers that entities exempt from transfer taxes are also exempt from the 2-percent tax. However, he then determined that the legatee was not an exempt organization for purposes of §§ 44-22-1(b) and 44-22-11(1). In his "Final Decision," the administrator therefore levied an additional $200,000 as estate and transfer taxes under §§ 44-22-1(a) and 44-22-7. The taxpayers paid all sums under protest.

They then sought judicial review of the administrator's decision in Superior Court under § 42-35-15. 1 Prior to hearing, however, the administrator stipulated to a judgment that the legatee was an exempt organization and refunded all the taxes collected without interest. The taxpayers pursued the question of interest in their appeal to the Superior Court. The reviewing justice agreed with the taxpayers and awarded them 8-percent annual interest accruing from the date of collection to the date of refund.

The Superior Court justice based his award on two independent statutory grounds. He relied on what he termed "fundamental fairness" to award interest, although the applicable refund statutes are silent concerning interest. He also determined that the appeal constituted a civil action within the meaning of G.L. 1956 (1969 Reenactment) § 9-21-10, as amended by P.L. 1977, ch. 10, § 1, 2 and that the taxpayers were therefore entitled to interest in accordance with § 9-21-10.


Title 44 of the General Laws of 1956 (1970 Reenactment) constitutes a comprehensive scheme of taxation. It is the intention of the Legislature to have all statutes that relate to taxation construed consistently with one another and to effectuate the policy of the law. The Herald Press, Inc. v. Norberg, R.I., 405 A.2d 1171, 1176 (1979); Estate of Wickes v. Stein, 107 R.I. 260, 267, 266 A.2d 911, 915 (1970).

Our survey of title 44 reveals numerous provisions for refunding taxes. Those statutes reflect considered legislative judgment on the subject of interest. A number of statutes provide for interest at specified rates to be paid on refunded taxes. 3 Several provisions are silent on the matter of interest. 4 Still others provide for interest without naming a specific rate. 5 The taxpayers sought redress under statutes providing for refunds of estate and transfer taxes. Those statutes are silent on the payment of interest on tax refunds.

We must give effect to ascertainable legislative intent whenever it is within legislative competence. Vaudreuil v. Nelson Engineering and Construction Co., R.I., 399 A.2d 1220 (1979). In Daniels Tobacco Co. v. Norberg, 114 R.I. 502, 335 A.2d 636 (1975), we determined that the Legislature intended to deny interest on cigarette-tax refunds in the absence of an express provision. The Daniels plaintiff received a refund of taxes paid on cigarettes. It argued that a repealed statute, allowing interest on tobacco-product tax refunds, was the direct predecessor of the statute under which the plaintiff had received the refund of cigarette taxes. The plaintiff reasoned that the cigarette-tax-refund statute implicitly incorporated the interest provision of the repealed statute. We rejected the plaintiffs' contention, finding that the repealed statute applied "only to taxes assessed on tobacco products and not on cigarettes, and that consequently no legislative intent (had) ever been evidenced to award interest on refunds of a cigarette tax * * *." Id. at 507, 335 A.2d at 639. We determined that the Legislature's failure to provide for interest specifically on cigarette-tax refunds evidenced intent to deny interest on such refunds. Id. We perceive a similar legislative intent with respect to estate- and transfer-tax refunds.

Thus, the Superior Court justice erred to the extent that he relied on "fundamental fairness" to justify the statutory interest award. In effect, the justice inferred an interest provision to achieve a just result in this controversy. However, the judiciary cannot broaden a statute through interpretation unless the clear purpose of the legislation would fail without the implication. Coastal Finance Corp. v Coastal Finance Corp. of North Providence, R.I., 387 A.2d 1373, 1378 (1978); New England Die Co. v. General Products Co., 92 R.I. 292, 298, 168 A.2d 150, 154 (1961). Finding no failure of the evident legislative purpose to authorize refunds, we determine that the statutory inequity perceived by the reviewing justice must be redressed by the Legislature, not by the judiciary.


The Superior Court justice also construed § 9-21-10 to supply statutory authority to award interest in this case. We disagree because the words "civil action" in § 9-21-10 do not encompass appeals to the Superior Court from decisions of the administrator.

Prior to 1976 § 9-21-10 provided for interest only "(i)n causes of action and actions for damages to the person or to real and personal estate in which verdict is rendered or a decision made for pecuniary damages * * *." Section 9-21-10, as amended by P.L. 1966, ch. 1, § 10. We interpreted that language to exclude from the operation of § 9-21-10, contract actions, Rhode Island Dairy Queen, Inc. v. Burke, 101 R.I. 644, 226 A.2d 420 (1967), condemnation actions, Isserlis v. Director of Public Works, 111 R.I. 164, 300 A.2d 273 (1973), actions for breach of implied warranty, Casavant v. Campopiano, 114 R.I. 24, 327 A.2d 831 (1974), and actions for alienation of affection and criminal conversation, Bailey v. Huling, R.I., 377 A.2d 220 (1977).

The taxpayers in support of the interest award rely on the 1976 amendment to § 9-21-10 substituting the words "any civil action" 6 for the phrases "causes of action" and "actions for damages to the person or to real and personal estate." Section 9-21-10, as amended by P.L. 1976, ch. 146, § 1. They contend that the Legislature intended thereby to expand the scope of § 9-21-10.

We construe statutes that award interest on judgments strictly. Atlantic Refining Co. v. Director of Public Works, 104 R.I. 436, 244 A.2d 853 (1968). Applying the rule of strict construction, we discern legislative intent to effect a more limited change. In Casavant v. Campopiano, and Rhode Island Dairy Queen, Inc. v. Burke, both supra, we denied recovery of interest because § 9-21-10 did not encompass actions sounding in contract. The Legislature responded with the addition of the words "civil action" in 1976. In light of the litigated history of § 9-21-10, we find that the Legislature intended to equalize the right of tort and contract litigants to collect interest on judgments. We conclude, therefore, that the Legislature did not intend to provide for interest on tax refunds awarded upon review of administrative proceedings when it amended § 9-21-10 in 1976.


In the absence of statutory authorization, the taxpayers point to the Rhode Island Constitution to support the award of interest. 7 They characterize the collection of estate and transfer taxes on decedent's legacy to the Watch Tower Bible and Tract Society of Pennsylvania as a taking within the meaning of art. I, sec. 16 of the Rhode Island Constitution. 8 The taxpayers contend that the administrator arbitrarily levied the tax on property specifically exempted from taxation by the Legislature. They characterize his action as an appropriation of private property requiring "just compensation." They then reason that the just compensation clause of art. I, sec. 16 mandates the interest award.


The majority of our cases arising under art. I, sec. 16 concern condemnation of real property. Condemnation of land involves public appropriation of real property that exceeds the owner's fair share of the state's needs. The state must therefore provide just compensation to the individual for the appropriated property. Opinion of the Justices of the Supreme Court to the Governor in the Matter of the Metropolitan Park Loan, 34 R.I. 191, 83 A. 3 (1912).

We have stated, however, that art. I, sec. 16 protects taxpayers from illegal exercise of the taxing authority. " 'The clause of the constitution requiring compensation to...

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