Pacific Motor Transport Co. v. State Bd. of Equalization

• Decision Date: 24 October 1972
• Citation: 28 Cal.App.3d 230,104 Cal.Rptr. 558
• Court: California Court of Appeals Court of Appeals
• Parties: PACIFIC MOTOR TRANSPORT COMPANY, a corporation, and Pacific Motor Trucking Company, a corporation, Plaintiffs and Appellants, v. STATE BOARD OF EQUALIZATION, an agency of the State of California, Defendant and Respondent. Civ. 29775.

Page 558

104 Cal.Rptr. 558

28 Cal.App.3d 230

PACIFIC MOTOR TRANSPORT COMPANY, a corporation, and Pacific Motor Trucking Company, a corporation, Plaintiffs and Appellants, v. STATE BOARD OF EQUALIZATION, an agency of the State of California, Defendant and Respondent.

Civ. 29775.

Court of Appeal, First District, Division 1, California.

Oct. 24, 1972.

As Modified on Denial of Rehearing Nov. 21, 1972.

Hearing Denied Dec. 20, 1972.

Arnold I. Weber, San Francisco, for plaintiffs and appellants.

Evelle J. Younger, Atty. Gen., Ernest P. Goodman, Asst. Atty. Gen., Edward P. Hollingshead, Philip M. Plant, Deputy Attys. Gen., for defendant and respondent.

ELKINGTON, Associate Justice.

Plaintiffs Pacific Motor Transport Company and Pacific Motor Trucking Company commenced an action to determine the validity of, and for a declaration of their rights and duties under, an administrative regulation of defendant State Board of Equalization. The trial court sustained the Board's general demurrer on the ground that it lacked jurisdiction over the subject matter of the action. Plaintiffs' appeal is taken from the judgment of dismissal which was thereafter entered.

The regulation in dispute is Regulation 1432. It is designed to interpret and implement the 'Motor Vehicle Transportation Tax Law' which is codified as sections 9601--10505 of the Revenue and Taxation Code; it particularly refers to sections 9603, 9606 and 9653. The regulation is lengthy and need not here be set forth in full. It is to be found in title 18, California Administrative Code, section 1432. Statutory references, unless stated otherwise, will hereafter be to the Revenue and Taxation Code.

Plaintiffs' action was brought under the purported authority of Government Code section 11440, which provides that: 'Any interested person may obtain a judicial declaration as to the validity of any regulation by bringing an action for declaratory relief in the superior court in accordance with the provisions of the Code of Civil Procedure . . ..' ¹

The relief prayed for included:

'1. That the court declare the respective rights and duties of plaintiffs and defendant under said regulation in question and that by said declaration and judgment it be declared that said regulation has no application to plaintiffs in this matter and that said regulation is invalid and void;

'2. In the alternative, that this court declare that plaintiffs can by suitable modification of their operations come within the ambit of section 1432(b)(3), and the tax liability which would result thereunder to each plaintiff; . . .'

It will be observed that by their action plaintiffs sought declarations (1) that Regulation 1432 was invalid and void, (2) that it had no application to them, (3) that they might come within some favorable 'ambit' of the regulation, and (4) of their resulting tax liability thereunder.

In support of its demurrer in the superior court the Board relied on section 10276. This section provides:

'No injunction or writ of mandate or other legal or equitable process shall issue in any suit, action, or proceeding in any court against this State or against any officer of the State to prevent or enjoin the collection under this part of any license tax or other amounts sought to be collected by the board.'

Basing its decision on section 10276, and as we have indicated, the trial court concluded that it lacked jurisdiction over the action since it was brought 'with respect to determination of or payment of a tax.'

The first question presented to us accordingly concerns the application to this case of two pertinent, but seemingly conflicting, statutes, Government Code section 11440 and section 10276.

Section 10276 expresses a basic policy of tax law--that assessment and collection of taxes by governmental agencies charged with that duty shall not be judicially prevented, hampered, or enjoined. In an early case, Dows v. City of Chicago, 78 U.S. 108, 110, 20 L.Ed. 65 the United States Supreme Court stated: 'Any delay in the proceedings of the officers, upon whom the duty is devolved of collecting the taxes, may derange the operations of government, and thereby cause serious detriment to the public. No court of equity will, therefore, allow its injunction to issue to restrain their action, except where it may be necessary to protect the rights of the citizen whose property is taxed, and he has no adequate remedy by the ordinary processes of the law . . .'

In Modern Barber Col. v. Cal. Emp. Stab. Com., 31 Cal.2d 720, 725--726, 192 P.2d 916, 919, California's Supreme Court

elaborated on this policy. It was said: 'The due process clause does not guarantee the right to judicial review of tax liability before payment. . . . 'The prompt payment of taxes is always important to the public welfare. It may be vital to the existence of a government. The idea that every tax-payer is entitled to the delays of litigation is unreasonable. . . . " (See also Aronoff v. Franchise Tax Board, 60 Cal.2d 177, 179, 32 Cal.Rptr. 1, 383 P.2d 409.) The taxpayers' remedy, at least ordinarily, is to pay the assessed tax and then commence an action for its refund. As stated in Modern Barber College, at page 726, 192 P. at page 919, and Aronoff, at page 179, 32 Cal.Rptr. at page 3, 383 P.2d at page 410, 'The power of a state to provide the remedy of suit to recover alleged overpayments as the exclusive means of judicial review of tax proceedings has long been unquestioned. . . .'

On the other hand, Government Code section 11440 allows any interested person to 'obtain a judicial declaration as to the validity of any regulation. . . .' No exception appears as to regulations covering tax collection procedures, such as Regulation 1432. The section appears to be a legislative response to the obvious need for prompt judicial determination of the validity of questioned administrative regulations which have the binding force and effect of law. (2 Cal.Jur.2d, Adm.Law, § 82, p. 164.)

When such apparent conflicts or inconsistencies appear in separate codes it is the "well-recognized rule that for the purposes of statutory construction the codes are to be regarded as blending into each other and constituting but a single statute.' . . .' (Pesce v. Dept. Alcoholic Bev. Control, 51 Cal.2d 310, 312, 333 P.2d 15, 17.) In such a case 'the courts are bound to maintain the integrity of both statutes if they may stand together. . . .' (Warne v. Harkness, 60 Cal.2d 579, 588, 35 Cal.Rptr. 601, 606, 387 P.2d 377, 382.)

We observe that Government Code section 11440 provides for a 'judicial declaration as to the validity of Any regulation.' (Emphasis added.) As we have noted, regulations covering tax collection procedures are not excepted. And there would seem to be no logical reason for such an exception, for the need of certainty as to the validity of tax regulations is equally strong.

Courts may not read into a statute an exception not incorporated therein by the legislature (Estate of Appenfelder, 99 Cal.App. 300, 332, 278 P. 473), unless such an exception must reasonably and necessarily be implied in order not to 'disregard or overturn a sound rule of public policy. . . .' (Interinsurance Exchange v. Ohio Cas. Ins. Co., 58 Cal.2d 142, 152, 23 Cal.Rptr. 592, 597, 373 P.2d 640, 645.)

The immediate issue narrows to the question whether the public policy inherent in section 10276 demands that tax regulations be removed from the ambit of Government Code section 11440. Or, expressed differently, is it reasonably possible to give effect to, and 'maintain the integrity' of, both statutes.

We conclude that both statutes may reasonably be given effect without doing violence to either. Our reasons follow.

We note that Government Code section 11440, by its express terms, does no more than permit judicial determination As to the validity of a regulation. The policy behind Revenue and Taxation Code section 10276 proscribes Judicial interference in the tax collection process. No sound reason appears why an interested party should not have the question of a tax regulation's validity determined, so long as the tax collector is not hindered in his duties thereby. State and federal courts are frequently, in one way or another, passing upon the validity of tax regulations after payment of the required tax. These determinations then affect taxpayers and tax collections in other pending and future cases. Rather than an impediment, such decisions must be considered as in aid of tax collection, for they tend to add certainty and conclusive legality to the process. They do no harm to the public policy expressed by section 10276.

Care must be taken in judicial proceedings under Government Code section 11440 as they relate to such tax regulations, that the relief be limited in the statute's language to ' a judicial declaration as to the Validity of' the questioned regulation. (Emphasis added.) The relief afforded may not 'prevent or enjoin' or otherwise hamper present or future tax assessment or collection effort against the plaintiff or anyone, as proscribed by section 10276. It will be presumed that the governmental agency will respect a judicial declaration concerning a regulation's validity. If it does not the taxpayer's remedy lies in paying the assessed taxes and then commencing action based upon such invalidity for their refund.

We accordingly hold that the validity of an administrative tax regulation such as Regulation 1432 may be determined by a declaratory relief action commenced under Government Code section 11440.

We now apply this holding to the case before us. As we have pointed out, plaintiffs' complaint sought not only an adjudication of the regulation's validity, but also other relief. This other relief, having the obvious tendency to interfere with the Board's assessment and collection of taxes, because of section 10276 was not available to plaintiffs by their action or otherwise.

It becomes apparent that the...