Putnam v. Ford

• Decision Date: 13 November 1930
• Court: Virginia Supreme Court
• Parties: M. J. PUTNAM, COMMONWEALTH'S ATTORNEY, ET ALS. v. A. C. FORD.

Page 625

155 Va. 625

M. J. PUTNAM, COMMONWEALTH'S ATTORNEY, ET ALS. v. A. C. FORD.

Supreme Court of Virginia, Staunton.

November 13, 1930.

Present, Campbell, Holt, Epes, Hudgins and Gregory, JJ.

1. EXCEPTIONS, BILL OF — Petition for Refund of Taxes — Where all Facts Appear in Record — Case at Bar. — In the instant case, a tax refund case, it was contended that there was no proper bill or certificate of exceptions filed, as required by Rule XXIV of the Supreme Court of Appeals. Whether or not this rule was complied with in the instant case the Supreme Court of Appeals was not called upon to decide, as all facts necessary to a decision on its merits appeared in the record, and were set out in the petition, the petition for rehearing and in the orders thereon. They made the issue entirely clear, and the facts appeared independent of the testimony of any witness, so that it was not necessary that this evidence be incorporated into any bill or certificate of exceptions.

2. TAXATION — Petition for Refund of Taxes — Commonwealth's Right to Petition for Rehearing — Commonwealth's Estoppel from Petitioning for a Rehearing by its Appeal from the Original Judgment — Case at Bar. — In the instant case, a petition for a refund of taxes, it was claimed by petitioner that the Tax Code, section 411, on its face, gave to the Commonwealth the right either to appeal from a judgment on his original petition or to appeal from a judgment on the Commonwealth's petition to rehear, but not both; and the Commonwealth, having made its election to appeal from the original judgment, was estopped to change its position, and could not afterwards file any petition to rehear. The intention of the Commonwealth to appeal from the original judgment was not carried out, the State Tax Commissioner concluding to file a petition for rehearing rather than to prosecute an appeal from the first order. He might have done either and in any event he had six months from the date of final judgment in which to apply for a writ of error.

Held: That the Commonwealth was not estopped from filing its petition to rehear.

3. TAXATION — Petition for Refund of Taxes — Remedies of State where Decision in Trial Court is Against it — Case at Bar. — The instant case was a petition for a refund of taxes. The judgment of the trial court was against the State. In this situation, under section 411 of the Tax Code, the State had two consistent remedies. In the first instance, the State seems to have intended to apply immediately for a writ of error, but afterwards abandoned that purpose and tendered its petition to rehear. There was nothing in the record to show that the appellee was in the slightest degree injured by this shift of position, therefore it could not complain of the Commonwealth's action.

4. ESTOPPEL — Act must have been Injurious to Party Claiming Estoppel — It is of the essence of estoppel that the act relied upon an such should have been injurious and to the prejudice of him who relies upon it as estoppel.

5. TAXATION — Refund of Taxes — Section 411 of the Tax Code — Reasonableness of Provision. — Section 411 of the Tax Code provides that where upon a petition for a refund of taxes the judgment is against the Commonwealth, the Commonwealth may appeal from the judgment or file a petition for rehearing. The statute 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. And in the instant case, where the Commonwealth seems to have intended to apply immediately for a writ of error, no one was injured when the Commonwealth abandoned that purpose and tendered its petition to rehear.

6. TAXATION — Refund of Taxes — Section 411 of the Tax Code — Rehearing — Discrimination against Citizens — Case at Bar. — In the instant case it was contended that section 411 of the Tax Code was discriminatory, in that it accorded to the Commonwealth as a matter of right a rehearing, where in a tax refund case the decision of the trial court was against the Commonwealth, thus giving to the State an absolute right which was denied to all of its citizens. But section 410 of the Tax Code makes adequate provision for the correction of erroneous assessments, and the applicant has the general right of appeal accorded to all litigants. Section 411 provides that the State may ask a rehearing as a matter of right and may appeal as a matter of right.

Held: That the act is not discriminatory but merely a reasonable classification, as the State and the taxpayers are in widely different classes. One hearing is all that the taxpayer can demand.

7. TAXATION — Refund of Taxes — Section 411 of the Tax Code — Equal Protection of the Laws — Due Process of Law. — Section 411 of the Tax Code in giving to the State in refund cases the right of appeal from the judgment of the trial court and also the right to demand a rehearing, does not contravene Article XIV, section 1, of the Federal Constitution.

8. TAXATION — Recovery of Taxes Voluntarily Paid — Conditions upon Right to Recover. — A taxpayer has no right to recover taxes paid voluntarily unless he is given that right by statute. However grievously wrong, he cannot be heard to complain at all — not against officials for his payments were voluntary, and not against the State because it cannot be sued at all. Where the taxpayer has been granted the privilege of recovering taxes voluntarily paid, he cannot complain because the State has hedged the privilege about with reasonable provisions designed for the State's protection.

9. TAXATION — Bonds — Purchaser of Bond who has not Paid for it in Full. — The purchaser of a bond who has not paid for it in full must still be taxed as its owner with its market value.

10. BROKERS — Stock and Stockholders — Title to Stock Bought on Margin. — A customer buying on margin becomes owner of the stock, although the broker who has purchased it for him can hold it as a pledge for advances made in obtaining it.

11. BROKERS — Stock and Stockholders — Title to Stock Bought on Margin — Certificate not Issued to Purchaser. — Although where one buys stock upon margin the certificate is not issued directly to the purchaser, nevertheless the purchaser is the owner of the stock. The certificate is only prima facie evidence of title. One who buys stock owns it, though no certificate is ever issued.

12. TAXATION — Stock Bought on Margin — Taxable to Purchaser — Case at Bar. — The instant case was a tax refund case. The petitioner for refund had purchased the stock in question upon margin. The Commonwealth contended that petitioner should be taxed with its fair market value, whereas the petitioner contended that he should be taxed only on his interest in the stock; that is, upon what he had paid by way of margin.

Held: That petitioner owned the stock and should be taxed thereon and that the only interest which his brokers had therein as agent for him was a lien for advancement.

Error to a judgment of the Circuit Court of the city of Clifton Forge, upon a petition for a refund of taxes. Judgment for petitioner. Defendants assign error.

The opinion states the case.

W. W. Martin and Henry R. Miller, Jr., for the plaintiffs in error.

J. W. C. Johnson, for the defendant in error.

HOLT, J., delivered the opinion of the court.

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, page 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 actually 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 of 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...