M & B Drilling and Const. Co., Inc. v. State Bd. of Equalization

• Decision Date: 30 August 1985
• Docket Number: Nos. 84-36,84-37,s. 84-36
• Citation: 706 P.2d 243
• Parties: M & B DRILLING AND CONSTRUCTION COMPANY, INC., Appellant (Plaintiff/Petitioner), v. STATE BOARD OF EQUALIZATION; R.A. Hakala, Rudolph Anselmi, and Doran Lummis, in their official capacities as members of the State Board of Equalization, Appellees (Defendants/Respondents). STATE BOARD OF EQUALIZATION; R.A. Hakala, Rudolph Anselmi, and Doran A. Lummis, in their official capacities as members of the State Board of Equalization, Appellants (Defendants/Respondents), v. M & B DRILLING AND CONSTRUCTION COMPANY, INC., Appellee (Plaintiff/Petitioner).
• Court: Wyoming Supreme Court

Page 243

706 P.2d 243

M & B DRILLING AND CONSTRUCTION COMPANY, INC., Appellant (Plaintiff/Petitioner), v. STATE BOARD OF EQUALIZATION; R.A. Hakala, Rudolph Anselmi, and Doran Lummis, in their official capacities as members of the State Board of Equalization, Appellees (Defendants/Respondents).

STATE BOARD OF EQUALIZATION; R.A. Hakala, Rudolph Anselmi, and Doran A. Lummis, in their official capacities as members of the State Board of Equalization, Appellants (Defendants/Respondents), v. M & B DRILLING AND CONSTRUCTION COMPANY, INC., Appellee (Plaintiff/Petitioner).

Nos. 84-36, 84-37.

Supreme Court of Wyoming.

Aug. 30, 1985.

Blair J. Trautwein, Hathaway, Speight and Kunz, Cheyenne, for appellant (plaintiff/petitioner) in Case No. 84-36 and appellee (plaintiff/petitioner) in Case No. 84-37.

A.G. McClintock, Atty. Gen., and Ron Arnold, Sr. Asst. Atty. Gen., for appellees (defendants/respondents) in Case No. 84-36 and appellants (defendants/respondents) in Case No. 84-37.

Before THOMAS, ^* C.J., and ROSE, ROONEY, ^** BROWN and CARDINE, JJ.

ROONEY, ^*** Justice.

M & B Drilling and Construction Company, Inc. (hereinafter referred to as "M & B") petitioned the district court to review an administrative action by the State Board of Equalization and by the three individual members of such Board (hereinafter referred to as "Board"); and additionally M & B filed an action for declaratory judgment

"primarily because the State was not providing a credit to M & B Drilling for the sales tax erroneously paid against its use tax assessment. As previously argued, this failure constitutes a violation of W.S. § 39-6-409(a) ¹ and ARTICLE I, § 33 OF THE WYOMING CONSTITUTION². Declaratory Judgment Action lies where the issues involve interpretation of a statute or concerns the constitutionality of the statute."

The district court ruled that it did not have jurisdiction to act on the petition for review of administration action because it was not timely; that the declaratory judgment action was proper; and that the Board properly refused to provide a credit to M & B for erroneously paid sales tax against its tax assessment. M & B appealed from the resulting order, wording the issues on appeal:

"I. IS M & B DRILLING ENTITLED TO A CREDIT OF THE SALES TAX IT ERRONEOUSLY COLLECTED AND PAID AS A VENDOR TO THE STATE OF WYOMING'S LATER ASSESSMENT AGAINST IT OF SALES AND USE TAX FOR THE SAME TIME PERIOD.

"II. IF W.S. § 39-6-409(a) IS NOT CONSTRUED TO ALLOW A CREDIT OF THE ERRONEOUS PAYMENT OF SALES TAX TO LATER ASSESSMENT AGAINST M & B DRILLING OF SALES AND USE TAX, THEN HAS DOUBLE TAXATION OCCURRED IN VIOLATION OF ARTICLE I, SECTION 33 AND ARTICLE I, SECTION 35 OF THE WYOMING CONSTITUTION.

"III. IS A DECLARATORY JUDGMENT ACTION PROPER IN THIS CASE.

"IV. DID THE DISTRICT ERR IN RULING THAT M & B DRILLING DID NOT PROPERLY APPEAL THIS ACTION FROM THE BOARD OF EQUALIZATION."

In turn, the Board appealed from the resulting order, wording the issue:

"THE LOWER COURT ERRED IN NOT DISMISSING THE DECLARATORY JUDGMENT ACTION,"

even though the court found against M & B on the merits of the action.

We affirm the dismissal of the petition for administrative review for lack of jurisdiction; we reverse the holding that the declaratory judgment action was an available remedy in this case; and we affirm the result, however, since the trial court found against appellant on the merits of

the declaratory judgment action. Accordingly, the first two issues presented on appeal by M & B need not be addressed.

PETITION FOR REVIEW OF ADMINISTRATIVE ACTION

M & B is in the business of drilling and constructing water wells, water systems and sewer systems. Pumps, engines, pipes and other materials are used and sold by M & B in the course of its business. On April 2, 1982, the Board sent a use and sales tax assessment notice to M & B reflecting an assessment of $30,143.69. He was assessed as a contractor. ³ The audit resulting in the assessment revealed that M & B owed sales and use tax on materials consumed by it as a contractor and that it erroneously collected sales tax from customers. Vendors as distinguished from contractors are required to collect sales tax from purchasers and remit the same to the state. M & B does not deny the accuracy of the audit.

On April 4, 1982, M & B requested a hearing and an informal hearing was held on June 23, 1982. On August 23, 1982, a revised assessment notice was sent to M & B followed by a letter dated August 26, 1982, which reflected the informal decision to approve the assessment. No payment was made on the assessment and interest. Payment of the penalty was waived by the Board. In March 1983, M & B filed an amended notice of appeal to the Board from the Board's informal decision. On March 17, 1983, the Board denied the amended notice of appeal as not having been timely made under Chapter XXI, §§ 3 and 5 of the Rules and Regulations of the Department of Revenue and Taxation which provide that an informal decision is appealable back to the Board within fifteen days of the decision.

In its decision letter, the district court recited that relief was precluded by the

" * * * provisions of Sec. 39-6-410(e) and 39-6-510(f) W.S. which each provide that no person who feels aggrieved by the payment of the taxes, penalty and interest imposed may appeal a decision of the board until all taxes, penalty and interest have been paid. Thus, payment of sales or use tax appears to be a condition to appeal from a decision of the board."

We agree. Accordingly the fact of an untimely appeal under internal procedures of the administrative agency as affecting the jurisdiction of the district court or as failing to exhaust administrative remedies is academic as far as this case is concerned.

However, one facet of this case concerning the requirement that taxes must be paid before appeal must be noted. Can it be said that M & B did pay the taxes? In its first issue on appeal, supra, M & B contends that it should receive credit against the assessment of the "sales tax it erroneously collected and paid as a vendor." M & B does not contest the audit figures and, as set out in its statement of the issues on appeal, it acknowledges the fact that the taxes were "erroneously collected." ⁴ Since the money in question is unquestionably that of third parties, logic dictates that M & B cannot use it to pay a debt of M & B. The district court quoted the following pertinent language from Walgreen Company v. State Board of Equalization, 62 Wyo. 288, 166 P.2d 960, 964, reh. denied 62 Wyo. 336, 169 P.2d 76 (1946).

" 'The vendor should, we think, not be permitted--unless the statute in clear and positive language so says, and this it is far from doing--to use the money of a vendee who for one reason or another has overpaid the sales tax on a purchased We also said in the Walgreen case:

article to offset the failure of such vendor to collect the proper amount from another taxpayer.' "

"There is no clause in the law which, either by express terms or even by reasonable implication, indicates that the over-collections such as are shown in the case at bar should become the property of the vendor. * * *" Id., 166 P.2d at 964.

Section 39-6-417(a), W.S.1977, makes it a crime for:

"(a) Any vendor who under the pretense of collecting the taxes [sales tax] imposed by this article collects and retains an excessive amount or who intentionally fails to remit to the board the full amount of taxes when due * * *."

Inasmuch as the money in question belongs to third parties and should be returned to them, ⁵ it cannot qualify as payment of M & B's taxes for the purpose of giving subject matter jurisdiction to the district court on appeal as required by § 39-6-410(e), (see quotation from district court opinion letter, supra).

DECLARATORY JUDGMENT

The availability of a declaratory judgment in relation to a petition for review was discussed in detail in Rocky Mountain Oil and Gas Association v. State, Wyo., 645 P.2d 1163, 1168-1169 (1982), where we said:

"Ordinarily, a declaratory judgment action is not a substitute for an appeal. School Districts Nos. 2, 3, 6, 9, and 10, Campbell County v. Cook, Wyo., 424 P.2d 751 (1967); Stahl v. Wilson, Fla.App., 121 So.2d 662 (1960); Sparks v. Brock & Blevins, Inc., 274 Ala. 147, 145 So.2d 844 (1962); and Bryarly v. State, 232 Ind. 47, 111 N.E.2d 277 (1953)....