Lindner v. Dist. Of D.C..

• Decision Date: 29 March 1943
• Docket Number: No. 50.,50.
• Citation: 32 A.2d 540
• Parties: LINDNER et al. v. DISTRICT OF COLUMBIA.
• Court: D.C. Court of Appeals

32 A.2d 540

LINDNER et al.

v.DISTRICT OF COLUMBIA.

No. 50.

Municipal Court of Appeals for the District of Columbia.

March 29, 1943.

Appeal from the Municipal Court for the District of Columbia, Civil Division.

Action by Edward T. Lindner and another against the District of Columbia to recover back money seized by defendant under a tax assessment. From a judgment for defendant, plaintiffs appeal.

Reversed and remanded.

Mark P. Friedlander, of Washington, D. C., for appellants.

Glenn Simmon Asst. Corp. Counsel, of Washington, D. C. (Richmond B. Keech, Corp. Counsel, of Washington, D. C., on the brief), for appellee.

Before RICHARDSON, Chief Judge, and CAYTON and HOOD, Associate Judges.

HOOD, Associate Judge.

During the fiscal years beginning July 1, 1937 and July 1, 1938 appellants were engaged in the business of constructing and selling houses in the District of Columbia, and thus were subject to the business privilege tax imposed by the District of Columbia Revenue Act of 1937, amended by the Act of May 16, 1938. Appellants filed returns as required by law; assessments were made on the basis of such returns; and the taxes so assessed were paid by appellants. Early in 1940 additional assessments of taxes for each of the years were made and bills therefor presented to appellants. They refused to make payment and on the 23d day of January, 1942 the District seized by distraint the sum of $896.81, on deposit in a local bank in the name of appellants, in payment of the additional assessments penalties and interest. Appellants brought action to recover back the sum so seized, contending that the additional assessments were invalid. Judgment was entered in favor of the District.

Two questions are presented by this appeal: (1) Did the trial court have jurisdiction to entertain the action; and (2) were the additional assessments valid?

I.

Appellee contends the Municipal Court was without jurisdiction because of appellants' failure to exhaust their administrative remedy by an appeal to the Board of Tax Appeals for the District of Columbia, insisting such remedy must be exhausted before challenging the tax in the Municipal Court or any court. Appellants say the tax was void and for that reason contend it was not necessary that they first pursue their administrative remedy.

We think the question involves more than the necessity of pursuing an administrative remedy. The real question is whether the remedy before the Board of Tax Appeals is an exclusive one.

The Board of Tax Appeals was created by Title IX of the Act of May 16, 1938, D.C.Code 1940, § 47-2401 et seq. Section 3 of that title, as amended by the District of Columbia Revenue Act of 1939, D.C.Code (1940) 47-2403, provides: ‘Any person aggrieved by any assessment by the District against him of any personal-property, inheritance, estate, business-privilege, gross-receipts, gross-earnings, insurance-premiums, or motor-vehicle-fuel tax or taxes, or penalties thereon, may, within ninety days after notice of such assessment, appeal from such assessment to the board, provided such person shall first pay such tax, together with penalties and interest due thereon, to the collector of taxes of the District of Columbis under protest in writing. The mailing to the taxpayer of a statement of taxes due shall be considered notice of assessment with respect of such taxes. The board shall hear and determine all questions arising on said appeal and shall make separate findings of fact and conclusions of law, and shall render its decision thereon in writing. The board may affirm, cancel, reduce, or increase such assessment.’

Section 4 of Title IX, D.C.Code (1940) 47-2404, authorizes review of the decisions of the Board by the United States Court of Appeals for the District of Columbia, and provides: ‘Upon such review the court shall have the power to affirm, or if the decision of the board is not in accordance with law, to modify or reverse the decision of the board, with or without remanding the case for hearing, as justice may require. The court shall have the exclusive jurisdiction to review the decisions of the board, and the judgment of the court shall be final, except that it shall be subject to review by the Supreme Court of the United States upon certiorari in the manner provided in section 240 of the Judicial Code, as amended [section 347, Title 28, U.S. Code].’

Appellants could have paid the taxes here in question and by appeal to the Board of Tax Appeals raised the same question of the validity of the assessment here raised. If decided adversely to them, they could have by appeal to the United States Court of Appeals presented the question to that court. Had appellants appealed to the Board, the Board would have acquired exclusive jurisdiction, subject to review only by the United States Court of Appeals. Hence, appellee's argument that appellants should have gone to the Board before coming to the Municipal Court is not convincing, because going to the Board would have effectively closed the door to the court. For that reason, we must first consider the question whether the remedy before the Board is an exclusive one. It has not heretofore been decided, though it was raised by the United States Court of Appeals. ¹

The Board of Tax Appeals is an administrative agency established to furnish a more efficient, speedy and less expensive method of determining the validity of assessments. ² It is quasi-judicial in nature, but it is not a court. ³

However, the Act establishing the Board did more than creat an administrative remedy. It created new rights for the taxpayers. Prior to the Act, the taxpayer was subject to the common law rule prohibiting him from challenging the validity of a tax unless he had paid the same involuntarily. ⁴ And the rule is that a mere statement the tax is being paid under protest is not sufficient to make it an involuntary payment. ⁵ The payment must have been made under compulsion, as, for example, to prevent immediate seizure of goods or arrest of person. ⁶ Having made involuntary payment, the taxpayer's remedy was by an action at law. ⁷

Since passage of the Act creating the Board of Tax Appeals the taxpayer, desiring to contest the validity of an assessment, is not compelled to withhold payment until the collector threatens dire results and then make payment with the possibility the court may still hold the payment voluntary and deny a recovery on that ground. ⁸ He may now pay his tax under protest and appeal to the Board within ninety days after notice of assessment. Thus a taxpayer making a voluntary payment is now given the right to contest the validity of the tax. This is a new right created by the Act and the remedy provided by the Act is the only remedy for such right. ⁹

But, as previously said, a taxpayer who paid involuntarily had a common law right to sue for the recovery of the tax paid. Does the Act take that right away and limit his right to the statutory proceeding before the Board? The Act does not in express terms do so. Had Congress intended the remedy before the Board to be exclusive it could have made that intention clear. Congress may provide an exclusive administrative remedy for recovery of illegally collected taxes, ¹⁰ or abolish a common law right of action and substitute in its place a new statutory right, as it did in the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C.A. § 901 et seq. ¹¹ But unless so declare in express terms or by necessary implication, a statutory remedy is merely cumulative and does not abolish an existing common law remedy.

In Texas & Pacific Ry. Co. v. Abilene Cotton Oil Co., 204 U.S. 426, 437, 27 S.Ct. 350, 354, 51 L.Ed. 553, 9 Ann.Cas. 1075, the Supreme Court said: ‘We concede that we must be guided by the principle that repeals by implication are not favored, and, indeed, that a statute will not be construed as taking away a common-law right existing at the date of its enactment, unless that result is imperatively required; that is to say, unless it be found that the pre-existing right is so repugnant to the statute that the survival of such right would in effect deprive the subsequent statute of its efficacy; in other words, render its provisions nugatory.’

The principle was stated in Rosin v. Lidgerwood Mfg. Co., 89 App.Div. 245, 86 N.Y.S. 49, 51, thus: ‘To the extent that this statute creates a new right and regulates or creates a remedy for such new right, there is no doubt that the remedy or its regulation is exclusive. * * * So, where a remedy existed at the common law for a wrong or injury against which a remedial statute is directed, if such statute provides a more enlarged or summary or more efficient remedy for the party aggrieved, but does not in terms or by necessary implication deprive him of the remedy which existing at common law, the statutory remedy is considered as merely cumulative, and the party injured may resort to either at his election.’

The foregoing principle has been applied in a variety of situations. ¹²

The express words are absent from the statute and we find no necessary implication. We have found nothing in the legislative history of the Act indicating an intent by Congress that the remedy before the Board is exclusive of the common law remedy. ¹³

A rule of construction often applied in cases of this nature is that the statutory remedy is but cumulative unless it is entirely adequate for protection of existing rights. The remedy before the Board, if exclusive, would have the effect of limiting the common law right of one who has paid the tax involuntarily. A condition precedent to appeal to the Board is payment within ninety days after receipt of notice of assessment. ¹⁴ If one is unable to pay within the time limited, his right of appeal is lost. Thus, one unable to pay within the ninety day period and who is thereafter compelled to make an involuntary payment would be deprived of his common law right of an action at...