James B. Beam Distilling Co. v. State

• Decision Date: 02 December 1993
• Docket Number: S93A1218,Nos. S93A1217,s. S93A1217
• Citation: 263 Ga. 609,437 S.E.2d 782
• Parties: JAMES B. BEAM DISTILLING CO. v. STATE of Georgia et al. (Two Cases)
• Court: Georgia Supreme Court

Page 782

437 S.E.2d 782

263 Ga. 609

JAMES B. BEAM DISTILLING CO. v. STATE of Georgia et al. (Two Cases)

Nos. S93A1217, S93A1218.

Supreme Court of Georgia.

Dec. 2, 1993.

John L. Taylor, Jr., Celeste McCollough, Vincent, Chorey, Taylor & Feil, P.C., Atlanta, Morton Siegel, Richard Schoenstadt, Siegel, Moses, Schoenstadt & Webster, Chicago, IL, for James B. Beam Distilling Co.

David A. Runnion, Sr. Asst. Atty. Gen., Atlanta, for State.

Michael J. Bowers, Atty. Gen., Daniel M. Formby, Sr. Asst. Atty. Gen., Atlanta.

BENHAM, Justice.

Appellant James B. Beam Distilling Company (Beam) brought this action seeking a refund for taxes paid pursuant to OCGA § 3-4- 60 ¹ in 1982-1984. See OCGA § 48-2-35. The trial court's decision that OCGA § 3-4-60 violated the Commerce Clause of the United States Constitution was affirmed by this court, as was the trial court's determination that the ruling was to be applied prospectively only. James B. Beam Distilling Co. v. State of Georgia, 259 Ga. 363, 382 S.E.2d 95 (1989) ("Beam I"). After granting Beam's application for certiorari, the Supreme Court of the United States ruled that its decision in Bacchus Imports, Ltd. v. Dias, 468 U.S. 263, 104 S.Ct. 3049, 82 L.Ed.2d 200 (1984), was applicable retroactively to Beam's claims that arose on facts antedating the Bacchus decision, and remanded the case for determination of remedial issues. James B. Beam Distilling Co. v. Georgia, 501 U.S. 529, 111 S.Ct. 2439, 115 L.Ed.2d 481 (1991). We, in turn, remanded the case to the trial court which granted summary judgment to appellee after concluding, based on three independent grounds, that appellant was not entitled to a refund of the 1982-1984 taxes. The appeal in S93A1217 is from the trial court's denial of summary judgment to Beam and the grant of summary judgment to the State on Beam's original complaint. The appeal in S93A1218 is from the trial court's denial of summary judgment to Beam on the allegations raised in the first and second amendments to its complaint, and the grant of summary judgment to the State on the amendments.

1. After our remand to the trial court, appellant amended its complaint to seek a judicial determination that OCGA § 48-2-35 (the refund statute) was applicable to appellant and that the 1992 amendment to OCGA § 3-2-14(a) was unconstitutional as applied to Beam; and to assert a claim under 42 USC § 1983 and a concomitant claim for attorney fees under 42 USC § 1988. The State amended its answer to assert several additional defenses, including the assertion that appellant did not have standing to seek a refund under OCGA § 48-2-35. ² We entertain the State's standing argument because the consideration of a remedy "may well be ... obviated by issues of state law." Bacchus Imports, Ltd. v. Dias, 468 U.S. 263, 277, 104 S.Ct. 3049, 3058, 82 L.Ed.2d 200 (1984). ³

2. "[A] particular remedy is not available to a party who has no entitlement to the right sought to be secured." Ragsdale v. New England Land etc. Corp., 250 Ga. 233 (1), 297 S.E.2d 31 (1982). In cases involving the Georgia sales and use tax (OCGA § 48-8-30 et seq.), the appellate courts of this State have repeatedly held that the payer of taxes to the State, while technically a "taxpayer" under § 48-2-35, does not have standing to file a claim for refund of taxes illegally collected or erroneously paid if the party remitting the taxes passed the tax on to its customers. Eimco BSP Services Co. v. Chilivis, 241 Ga. 263, 244 S.E.2d 829 (1978); Atlanta Americana Motor Hotel Corp. v. Undercofler, 222 Ga. 295(1), 149 S.E.2d 691 (1966); Blackmon v. Ga. Ind. Oilmen's Assn., 129 Ga.App. 171(3), 198 S.E.2d 896 (1973); Blackmon v. Premium Oil Stations, Inc., 129 Ga.App. 169(2), 198 S.E.2d 900 (1973). If the remitting party did not bear the burden of the tax, it is not entitled to bring a suit to recover a refund of any overpayment.

In the case at bar, the applicable version of OCGA § 3-4-60(1) levied and imposed an excise tax on alcohol and distilled spirits imported into Georgia. By requiring the stamps denoting payment of the tax to be affixed by the manufacturer or the wholesaler to each bottle or container of distilled spirits before shipment to any retailer (OCGA § 3-4-61(a)(2) (1982)), the General Assembly expressed its intent that the excise tax be paid before the product was made available for purchase by the consuming public. ⁴ Where a wholesaler is a link in the chain of delivery of the product to the retailer, it is essential that the excise tax be paid by the time the product leaves the wholesaler. ⁵ Where, as here, the manufacturer remits tax payment to the revenue commissioner and subsequently, in an itemized billing statement, requires the wholesaler to remit payment for "state stamps" or "state tax," it is the wholesaler which is the taxpayer for purposes of OCGA § 48-2-35. ⁶ Due to its lack of standing, appellant is procedurally barred from pursuing an action for refund under OCGA § 48-2-35.

3. Even assuming that appellant was not procedurally barred from seeking a refund under OCGA § 48-2-35, federal due process, as interpreted by the Supreme Court in McKesson Corp. v. Division of Alcoholic Beverages and Tobacco, 496 U.S. 18, 110 S.Ct. 2238, 110 L.Ed.2d 17 (1990), and elaborated upon in Harper v. Virginia Dept of Taxation, 509 U.S. 86, 113 S.Ct. 2510, 125 L.Ed.2d 74 (1993), does not require that the State of Georgia refund to appellant the discriminatory portion of the excise taxes appellant remitted in 1982-1984 pursuant to OCGA § 3-4-60. ⁷

A governmental requirement that one pay a tax deprives the payor of property, and such a deprivation mandates compliance with the Due Process Clause of the Constitution of the United States. Due process requires a government to have procedural means by which the taxpayer may safeguard against unlawful exactions. McKesson, 496 U.S. 18, at 36-37, 110 S.Ct. 2238, supra, at 2250. "The fundamental requirement of due process is the opportunity to be heard 'at a meaningful time and in a meaningful manner.' [Cits.]" Mathews v. Eldridge, 424 U.S. 319, 333, 96 S.Ct. 893, 902, 47 L.Ed.2d 18 (1976). While due process generally requires that the hearing be held prior to the deprivation, the Court, recognizing that the exaction of taxes is the lifeblood of a governmental entity, has permitted governments to exact taxes and require the taxpayer to voice objections to the tax thereafter. Should the governmental entity so procedurally limit itself, it must provide "meaningful, backward-looking relief to rectify any unconstitutional deprivation." McKesson, supra, 496 U.S. at 31, 110 S.Ct. at 2247. However, should the government provide a procedure through which the taxpayer may challenge the validity of the taking prior to the deprivation, the Due Process Clause is satisfied. Id., 496 U.S. at 39, n. 21, 110 S.Ct. at 2251, n. 21. Thus, before attempting to fashion a post-deprivation, meaningful, backward-looking remedy, ⁸ we must determine the state law question of whether Georgia law "provides an adequate form of predeprivation process...." Harper v. Va. Dept. of Taxation, --- U.S. ----, at ----, 113 S.Ct. 2510, supra, at 2520.

4. In its discussions on the topic, the U.S. Supreme Court illustrates "predeprivation process" as that which authorizes taxpayers to bring suit to enjoin imposition of a tax prior to its payment, or that which permits taxpayers to withhold contested tax assessments and challenge their validity in a predeprivation hearing. McKesson, supra, 496 U.S. at 36-37 and 39, n. 21, 110 S.Ct. at 2250 and 2251, n. 21. In Georgia, a taxpayer who fails to pay taxes due is subject to being named a defendant in an action brought by the revenue commissioner to collect the amount due. OCGA § 48-2-54. In such an action, the taxpayer would have the opportunity to challenge the validity of the imposition of the contested taxation prior to paying the tax. That the Commissioner is statutorily authorized to seek penalties is not a financial sanction tantamount to an attempt to secure payment of taxes under duress (see McKesson, supra, 496 U.S. at 39, n. 21, 110 S.Ct. at 2251, n. 21, and Harper, supra, 509 U.S. at ----, n. 10, 113 S.Ct. at 2519, n. 10) since the penalties are subject to waiver by the revenue commissioner upon a determination that the taxpayer's default was the result of reasonable cause and was not due to gross or willful neglect or disregard of the law or regulations. OCGA § 3-2-12.

5. In addition, Georgia statutes make declaratory judgment relief available prior to payment of disputed taxes "to settle and afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations ..." (OCGA § 9-4-1), and such relief is available even if the party has other adequate legal or equitable remedies. OCGA § 9-4-2(c). [T]he Declaratory Judgment Act ... is an alternative or additional remedy to facilitate the administration of justice more readily ... [and is] intended ... to give additional protection to persons who may become involved in an actual justiciable controversy.... [Shippen v. Folsom, 200 Ga. 58, 68, 35 S.E.2d 915 (1945) ].

Another intended purpose of declaratory judgment is "to afford a speedy and inexpensive method of adjudicating legal disputes." Clein v. Kaplan, 201 Ga. 396, 404, 40 S.E.2d 133 (1946). In furtherance of this goal, the Declaratory Judgment Act empowers the superior court in which a petition for declaratory judgment is filed to grant injunctive or other interlocutory extraordinary relief in connection with the petition. OCGA § 9-4-3(b); see also OCGA § 9-11-65(b). Thus, a petition may be filed seeking a judgment declaring a statute or ordinance unconstitutional and praying for an injunction against the enforcement of the questioned law. See, e.g., Gravely v. Bacon, 263 Ga. 203, 429 S.E.2d 663 (1993); State of Georgia v. Private Truck Council, etc., 258 Ga. 531, 371 S.E.2d 378 (1988); City of...