Monarch Mills v. South Carolina Tax Com'n

• Decision Date: 26 February 1929
• Docket Number: 12604.
• Parties: MONARCH MILLS v. SOUTH CAROLINA TAX COMMISSION et al.
• Court: South Carolina Supreme Court

146 S.E. 870

149 S.C. 219

MONARCH MILLS v. SOUTH CAROLINA TAX COMMISSION et al.

No. 12604.

Supreme Court of South Carolina

February 26, 1929

Controversy without action on the petition of Monarch Mills against the South Carolina Tax Commission and others. Petition dismissed.

Following is the agreed statement of facts directed to be reported:

1. That Monarch Mills is a corporation created by and under the laws of the state of South Carolina. That respondents, W. G. Query, J. Fraser Lyon and J. P. Derham, constitute the South Carolina Tax Commission.

2. That during the months of October and November, 1924, South Carolina Tax Commission audited the books of Monarch Mills for the purpose of ascertaining the amount of income taxes due the state for the years 1921, 1922, and 1923; from which audit an additional tax to that theretofore paid was assessed against the Mills and was required to pay the same and did pay the same on November 30, 1924.

3. Thereafter the federal government made an audit of the books of Monarch Mills and revised the return of the said Mills, and in accordance with the final return as fixed by the federal government the said Monarch Mills had overpaid the state of South Carolina the sum of $13,518.31.

4. On November 5, 1928, on the order of the commission, the state paid back to Monarch Mills the said sum of $13,518.31, the overpayment made on November 30, 1924, on income tax for the years 1921, 1922, and 1923, without interest.

5. Under the Tax Act of 1922, § 2 (32 St. at Large, p. 897), the South Carolina Tax Commission is bound by the tax as fixed by the federal government, and for that reason it ordered the state treasurer to refund Monarch Mills the sum of $13,518.31, the amount of the overpayment, without interest.

6. The taxpayer claims that the tax commission should have ordered the state treasurer to pay interest on the sum of $13,518.31 from November 30, 1924, the date of the payment of the additional tax assessed by the South Carolina Tax Commission to November 5, 1928, the date on which the treasurer refunded the amount incorrectly ordered to be paid and collected.

7. The tax commission claims that it is without authority to order the treasurer to make interest payments and that no rate of interest is fixed by law in a case like this.

8. The remedy desired by petitioner in this controversy is that the South Carolina Tax Commission be required to pass an order directing the state treasurer to pay to Monarch Mills the interest on $13,518.31 from November 30, 1924, to November 5, 1928, at such rate as may be determined to be proper, and that a writ of mandamus do issue against the respondent requiring it to issue its order upon the state treasurer for the payment of the same.

Grier Park & McDonald, of Greenwood, for petitioner.

Jno. M Daniel, Atty. Gen., and J. Fraser Lyon, both of Columbia, for respondents.

BLEASE J.

This is a controversy without action, under the provisions of section 675 of volume 1 of the Code of 1922. The agreed statement of facts will be reported.

The questions for decision by this Court are: Is the petitioner entitled to interest on the amount of taxes refunded to it by the order of the South Carolina tax commission, and has the tax commission authority to draw on the state treasurer for such refund?

The argument of the attorneys for the respondents sets forth sufficiently, and to the entire satisfaction of this court, what we consider to be the proper answers to the questions. Accordingly, we have adopted it as our opinion.

Notwithstanding the recent case of Paris Mountain Water Co. v. Woodside, 133 S.C. 383, 131 S.E. 37, the following authorities show sufficient reason for our refusing to hold the petitioner entitled to the order it seeks:

In reading the authorities, it should be kept in mind that there is no statute by which this state engages to pay interest in this case and there is no statutory authority authorizing its officers to engage to do so.

"Interest, when not stipulated for by contract or authorized by statute, is allowed by the courts as damages for the detention of money or of property, or of compensation, to which the plaintiff is entitled, and, as has been settled on grounds of public convenience, is not to be awarded against a sovereign government unless its consent to pay interest has been manifested by an Act of its Legislature, or by a lawful contract of its executive officers. U.S. v. Sherman, 98 U.S. 565 ; U.S. v. Bayard, 127 U.S. 251, 260, 8 S.Ct. 1156 , and authorities there collected; In re Gosman, L. R. 17 Ch. Div. 771. In Gossman's Case, just cited, where the personal property of a deceased person had been taken possession of by the crown for want of known next of kin, and was afterwards recovered by petition of right by persons proved to be the next of kin, who claimed interest for the time the crown held the property, Sir George Jessel, M. R., speaking for the Court of Appeal, summed up the law of England in this short judgment: ' There is no ground for charging the crown with interest. Interest is only payable by statute or by contract.' In U.S. v. Sherman, the Circuit Court of the United States for the district of South Carolina had certified that there was probable cause for an act done by an officer of the United States, for which judgment had been recovered against him in that court; and consequently, by express acts of Congress, 'the amount so recovered' was to 'be provided for and paid out of the proper appropriation from the treasury.' Acts March 3, 1863, c. 76, § 12 (12 St. 741); July 28, 1866, c. 298, § 8 (14 St. 329). This court held that the judgment creditor was entitled to receive from the United States the amount of the judgment only, without interest; and Mr. Justice Strong, in delivering the opinion, said: 'When the certificate is given, the claim of the plaintiff in the suit is practically converted into a claim against the government, but not until then. Before that time the government is under no obligation, and the Secretary of the Treasury is not at liberty, to pay. When the obligation arises, it is an obligation to pay the amount recovered; that is, the amount for which judgment has been given. The act of Congress says not a word about interest. Judgments, it is true, are by the law of South Carolina, as well as by Federal legislation, declared to bear interest. Such legislation, however, has no application to the government, and the interest is no part of the amount recovered. It accrues only after the recovery has been had. Moreover, whenever interest is allowed, either by statute or by common law, except in cases where there has been a contract to pay interest, it is allowed for delay or default of the debtor. But delay or default cannot be attributed to the government. It is presumed to be always ready to pay what it owes.' 98 U.S. 567, 568 , *** and for which interest there were no coupons to be surrendered, it cannot be allowed such an effect, because the state of North Carolina has never authorized its officers to incur any such obligation in its behalf." United States v. State of North Carolina, 136 U.S. 211, 10 S.Ct. 920, 34 L.Ed. 336. See, also, United States v. North American Transportation & Trading Co., 253 U.S. 330, 40 S.Ct. 521, 64 L.Ed. 935; United States v. Rogers, 255 U.S. 163, 41 S.Ct. 281, 65 L.Ed. 566; United States v. Brown, 263 U.S. 78, 44 S.Ct. 92, 68 L.Ed. 171; Tillson v. U. S., 100 U.S. 43, 25 L.Ed. 543.

"The rule is that, in the absence of a stipulation to pay interest or a statute allowing it, none can be recovered against the United States upon unpaid accounts or claims." Seaboard Railroad Co. v. U. S., 261 U.S. 299, 304, 43 S.Ct. 354, 355 (67 L.Ed. 664).

"The contract of a state with respect to the payment of interest is governed by a different rule from that which prevails in cases of contracts of citizens, for where there is no promise to pay interest a state is exempt. And so in the absence of legislative authorization a state is not liable for interest on state bonds, after maturity. Even though a state permits itself to be sued it is not liable for interest upon the demand set up, unless the statute specifically so provides. If a claim against the state does not bear interest when it accrues, a statute subsequently passed cannot impose a liability upon the...