Putnam v. Ford

• Decision Date: 13 November 1930
• Citation: 155 S.E. 823
• Court: Virginia Supreme Court
• Parties: PUTNAM, Commonwealth's Atty., et al. v. FORD.

155 S.E. 823

PUTNAM, Commonwealth's Atty., et al.

v.FORD.

Supreme Court of Appeals of Virginia.

Nov. 13, 1930.

Tax Code, § 411 (Code Supp. 1928, p. 368), gives to the commonwealth the right either to appeal from a judgment on original petition or right to appeal from a judgment on its petition to rehear, and state officials, whose particular duty it is to protect public interests, should be given an opportunity to be heard, not only on appeal, but in the trial court, if a rehearing upon reflection is deemed advisable, particularly where procedure injures no one.

Although Tax Code, § 411 (Code Supp. 1928, p. 368), makes it mandatory upon and absolutely requires the lower court to grant a rehearing, the taxpayer has adequate remedy under section 410 (Code Supp. 1928, p. 367) for correction of erroneous assessments and also general right of appeal accorded to litigants at large, and the state and taxpayers are in widely different classes, so that their separation into them in such case is neither arbitrary nor unreasonable.

Error to Circuit Court of City of Clifton Forge.

Petition by A. C. Ford for refund of certain taxes. Judgment requiring refund, and M. J. Putnam, Commonwealth's Attorney, and others bring error.

Judgment set aside, and proceeding dismissed.

W. W. Martin and Henry R. Miller, Jr., both of Richmond, for plaintiffs in error.

J. W. C. Johnson, of Clifton Forge, for defendant in error.

HOLT, J.

On August 31, 1928, A. C. Ford, a citizen of Clifton Forge, filed in the circuit court there his petition praying that the state of Virginia refund certain taxes collected by It under an erroneous assessment for the year 1927. In due course and on February 4, 1929, an order was entered which sustained his claim and which directed that there be paid back to him by the state the sum of $1,485.48.

On May 31, 1929, the state tax commissioner, Mr. C. H. Morrissett, appeared on behalf of the commonwealth and asked that a rehearing be granted in accordance with the provisions of section 411 of the Tax Code of Virginia (Code Supp. 1928, p. 368).

This rehearing was granted, but on November 9, 1929, the trial court reaffirmed its order of February 4, 1929, and again gave judgment for Ford in said sum of $1,485.48, which judgment the state, through its proper officers, was ordered to pay. This last judgment is now before us on a writ of error.

From Ford's petition it appears that he had purchased through the Hot Springs office of Logan and Bryan, brokers, whose principal place of business was in New York city, certain stock on margin, the fair market value of which was $458,735. On account of these purchases he had paid $161,639, so that there was still due from him, by reason thereof, $297,096.

On its merits, the trial court was of opinion that Mr. Ford should have been required to pay taxes on his interest in this stock only, or on $161,639, and that he should not have been required to pay taxes on $297,096, that being the difference between the amount actu-ally paid and its fair market value. In other words, it was of opinion that Ford had no interest in this stock beyond what he had paid by way of margins and was not its owner. The contention of the commonwealth is that Ford had bought it and should be taxed with its fair market value; that is to say, it contends that he who purchases stock on margin is its owner, just as he would be the owner of any other property purchased and paid for in part only, and should pay taxes on its full value.

Before we come to consider the merits of this controversy, certain preliminary objections must be met.

It is said that there is no proper bill or certificate of exceptions identifying the testimony in this case. Rule XXIV of the rules of this court (prior to the amendment effective June 16, 1930) provided that evidence must be authenticated or verified by the trial court, or judge thereof, within 60 days (now 70 days) after final order, and, while this rule is remedial in character and should be liberally construed, this authentication or verification is still necessary. Whether or not it has been complied with in the instant case, we are not called upon to decide, for all facts necessary to a decision on its merits already appear in the record, and are set out in the petition, the petition for rehearing, and in the orders thereon. They make the issue entirely clear. If Ford is the owner of this stock, the judgment must be reversed; if he has no interest in it beyond his actual payments on account, then it must stand. There is no question as to amount He is either entitled to be paid in full the sum which it evidences, or to receive nothing on his claim. All of this appears independent of the testimony of any witness, and so it is not necessary that this evidence be incorporated into any bill or certificate of exceptions. It will not be considered.

It is next said that the plaintiff in error is not entitled to appeal from the final order on rehearing, and was not entitled to be heard on a rehearing. Judgment on the original petition was entered as of February 4, 1929. The court in its order said: "And the said State Tax Commissioner having intimated his intention to apply to the Supreme Court of Appeals of Virginia for a writ of error and supersedeas, it is ordered that this order be suspended for a period of three mouths from this day."

Petitioner claims that section 411 of the Tax Code, on its face, gives to the commonwealth the right either to appeal from a judgment on his original petition or the right to appeal from a judgment on its petition to rehear, but not both; and that in the instant case the commonwealth, having made its election as indicated in the suspending order, was estopped afterwards to change its posi tion, and could not afterwards file any petition to rehear.

The intention here expressed was not carried out. The state tax commissioner, upon reflection, concluded to file a petition for rehearing rather than to prosecute an appeal from the first order. He might have done either, and in either event he had six months from the date of final judgment in which to apply for a writ of error. Section 411 of the Tax Code provides in part as follows: "And should the order of the court, either upon the original hearing or upon the rehearing, be against the Commonwealth, the State tax commissioner may take an appeal to the supreme court of appeals, and a supersedeas may be granted in each case in the same manner as now provided by law in cases other than cases of appeals of right."

This, in substance, has long been the law. Code 1919, § 2391; Commonwealth v. Schmelz, 114 Va. 364, 76 S. E. 905.

Judgment at the rehearing was entered on November 9, 1929. To it a writ of error was allowed as of April 7, 1930, and in ample time.

We have here two consistent remedies. The state, in the first instance, seems to have intended to apply immediately for a writ of error, but afterwards, for reasons satisfactory to itself, abandoned that purpose and tendered its petition to rehear. There is nothing in the record to show that Mr. Ford was in the slightest degree injured by this shift of position, and as Judge Keith observed, in Smith's Ex'r v. Powell, 98 Va. 431, 36 S. E. 522, 524: "It is of the essence of estoppel that the act relied upon as such should have been injurious, and to the prejudice of him who relies upon it as estoppel."

"In that class of cases in which the remedies are not inconsistent but are alternative and concurrent, there is no election until one of them has been prosecuted to judgment, unless the plaintiff has gained an advantage, or the defendant has suffered a disadvantage. In some of the cases in this class it has been determined that there is no estoppel until satisfaction has been obtained." 9 R. C. L. 961.

The statute itself is entirely reasonable. Motions for the correction of erroneous assessments sometimes touch upon matters of wide importance. In such cases, state officials whose particular duty it is to protect public interests should be given an opportunity to be heard, not only on appeal, but in the trial court, if a rehearing, upon reflection, is deemed advisable. Certainly, here this procedure has injured no one.

It is also contended that section 411 of the Tax Code "is discriminatory, in that It accords to the Commonwealth as a matter of right the absolute right to have such a case reheard, leaving in the judge of the lowercourt no discretion as to granting or refusing the prayer of such a petition, but making it mandatory upon and absolutely requiring the lower court to grant the rehearing. Thus giving to the State Tax Commissioner an absolute right which is denied to all of its citizens, and thereby according to the said Tax Commissioner, instead of what is usually termed as his day in court, not only a first but also a second day in court, a second bite at his cherry, a proceeding heretofore unheard of and denied to the applicant, the defendant in error."

The contention is that section 411 of the Tax Code contravenes amendment 14, § 1, of the Federal Constitution, which provides that "no State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws."

Section 410 of the Tax Code (Code Supp. 1928, p. 367), makes adequate provision for the correction of erroneous assessments, and that is all that the taxpayer can demand. He has also that general right of appeal which is accorded to litigants at large. Section 411 provides that the state may ask a rehearing as a matter of right and may appeal as a matter of right. The reasons for this distinction have already been adverted to. One hearing is all that the taxpayer can, in any event, demand.

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