Roberts v. Gunter

• Court: Georgia Supreme Court
• Writing for the Court: GREGORY
• Citation: Roberts v. Gunter, 251 Ga. 276, 304 S.E.2d 369 (Ga. 1983)
• Decision Date: 28 June 1983
• Docket Number: 39618,Nos. 39617,s. 39617
• Parties: William Lee ROBERTS, et al. v. William L. GUNTER, et al. William L. GUNTER, et al. v. William Lee ROBERTS.

Page 369

304 S.E.2d 369

251 Ga. 276

William Lee ROBERTS, et al. v. William L. GUNTER, et al.

William L. GUNTER, et al. v. William Lee ROBERTS.

Nos. 39617, 39618.

Supreme Court of Georgia.

June 28, 1983.

Rehearing Denied July 21, 1983.

Harold T. Daniel, Jr., Webb, Daniel & Betts, Michael J. Bowers, Atty. Gen., James C. Pratt, Asst. Atty. Gen., John E. Bumgartner, Asst. Atty. Gen., Atlanta, for William Lee Roberts et al.

Harold L. Russell, Thomas W. Rhodes, Fredrick G. Boyton, Gambrell & Russell, Atlanta, for William L. Gunter et al.

GREGORY, Justice.

This appeal and cross-appeal raise questions regarding Georgia's bank share tax statute, OCGA § 48-6-90 (Code Ann. § 91A-3301).

In 1974 the Gunters purchased approximately 60% of the stock of the Hamilton Bank and Trust Company from a bank holding company. In February 1975, Hamilton Bank filed with the Fulton County taxing authorities (appellants here) a document which the Bank claimed was its 1975 bank share tax return. In May 1975, the County Board of Tax Assessors furnished the Bank with a notice of assessment which assessed the Bank's shares at a higher value than the Bank's return ($1,584,724). The 1975 bank share tax bill was sent to and received by the Bank, but it was not sent to the Gunters personally. On December 31, 1975, Hamilton issued a check for $396.18 for the purpose of paying the entire bank share tax on Hamilton's shares for 1975 (the 1975 tax bill sent by the county was in excess of $100,000).

In March 1976, Hamilton Bank requested an extension, which was granted, until April to file the bank's 1976 bank share tax return. Hamilton Bank filed what it argued was its 1976 bank share tax return in April (value of shares returned at $958,426). In March 1976, Hamilton also established a special reserve account for payment of the bank share tax.

Hamilton Bank ceased banking operations and was placed in receivership in October 8, 1976, with the Federal Deposit Insurance Corporation taking over the bank operations. The National Bank of Georgia purchased certain assets and assumed certain liabilities of Hamilton (including the bank shares tax special reserve account, which then contained $136,512, and corresponding tax liability), which it held for eight months before transferring them to the FDIC. The taxing authorities never sought to recover those funds from NBG. On October 11, 1976, the Tax Commissioner sent his notices of assessment to the now defunct Hamilton Bank (the 1976 county assessment was at $1,627,410).

National Bank of Georgia transferred the accounts of the former Hamilton Bank to the FDIC in June 1977. The Tax Commissioner filed a claim for the unpaid 1975 and 1976 bank shares taxes in the receivership proceedings, which claim the FDIC disallowed.

In January 1977, attorneys for Fulton County sent notices of fi. fa. to the Gunters along with a letter explaining that the fi. fa. writs established a lien enforceable against any property owned by Mr. and Mrs. Gunter to satisfy taxes owed based upon their stock ownership in the Hamilton Bank and Trust Company. The Gunters filed an Affidavit of Illegality, challenging the imposition of the tax, which they were allowed to amend later, and posted $150,000 cash bond.

The Gunters sought summary judgment on their original Affidavit, which was denied, summary judgment being instead granted to the Fulton County tax authorities. A jury trial was held in June 1982, and a general verdict in favor of the Gunters was returned. In its judgment, the trial court cancelled the fi. fa. writs which had been issued against the Gunters and returned their cash bond.

The Tax Commissioner appeals from that jury verdict and judgment while the Gunters' cross-appeal from the denial of summary judgment on their original Affidavit and amended Affidavit. For reasons which appear below, we reverse as to the main appeal and remand for further proceedings not inconsistent with this opinion, and affirm as to the issues raised in the cross-appeal.

1. Appellants initially argue that the jury verdict was based upon an erroneous stipulation of counsel, which the court would not permit counsel for the Tax Commissioner to withdraw. We have examined this argument and find the court properly refused to permit counsel to withdraw from the stipulation.

In September 1979, associate counsel for the Tax Commissioner entered into an oral stipulation in open court that Hamilton Bank had filed bank share tax returns for 1975 and 1976. When trial of the case began, approximately three years later in June 1982, lead counsel for the Tax Commissioner asked that they be allowed to withdraw from the stipulation on grounds of mistake. The trial court held that the stipulation must be honored.

OCGA § 23-2-21(c) (Code Ann. §§ 37-202) explains when mistakes are relievable in equity: "The power to relieve mistakes shall be exercised with caution, to justify it, the evidence shall be clear, unequivocal and decisive as to the mistake." In this case, the evidence was in conflict as to whether or not the documents filed in 1975 and 1976 were in fact bank share tax returns for those years. Absent "clear, unequivocal and decisive" evidence as to the mistake, relief on grounds of mistake will not be granted. See Parker v. Fisher, 207 Ga. 3, 59 S.E.2d 715 (1950); Yablon v. Metropolitan Life Ins. Co., 200 Ga. 693, 38 S.E.2d 534 (1946).

There is evidence in the record to support the correctness of the stipulation. Having agreed to it in open court at the outset of the litigation, appellants remain bound by the stipulation. The trial court did not err in refusing to allow appellants to withdraw from it.

2. Appellants contend that the following portion of the trial court's charge was erroneous:

"I charge you that, as a matter of law, the bank is not the agent of a shareholder for tax purposes. Therefore, if you find that the notices required by law were served only on the bank and not on Mr. and Mrs. Gunter, then your verdict should be for Mr. and Mrs. Gunter." We agree with appellants that this charge was harmful error.

In an earlier analysis of our bank share tax statute, we explained that, "... the [bank share] tax is upon the bank's shareholders rather than the bank itself, although the value of those shares is based upon the capital (net worth) of the bank." Bartow County Bank v. Board of Tax Assessors, 248 Ga. 703, 704, 285 S.E.2d 920 (1982). This is true, even though the bank is required in the first instance to pay the tax. In analyzing another earlier bank share statute, the United States Supreme Court explained: "While the bank is required primarily to pay the tax on the shares, the statute shows that the payment is to be on behalf of the stockholders... It is on the stockholders that the burden ultimately rests." Des Moines National Bank v. Fairweather, 263 U.S. 103, 44 S.Ct. 23, 68 L.Ed. 191 (1923).

Our statute requires the bank to file the returns on the shares and pay the taxes on those shares for the shareholders. OCGA § 48-6-90(b) (Code Ann. § 91A-3301). It is clear that under our statutory scheme, the bank serves as the agent for the shareholder for purposes of paying the bank share tax. See Cooley on Taxation, Vol. 3, 4th Ed., § 1269; 71 Am.Jur.2d, State and Local Taxation § 262.

Since the bank is statutorily required to act as agent for the shareholder, it is proper that notice of assessment be forwarded to the bank. It is not essential, however, that personal notice be sent to the individual shareholder. ¹ See Corry v. Baltimore, 196 U.S. 466, 25 S.Ct. 297, 49 L.Ed. 556. Because the bank prepares the returns and is required in the first instance to pay the tax as the shareholder's agent, notice to the bank is deemed to be notice to the shareholders. ² Smith, et al v. Burton, 283 Ala. 391, 217 So.2d 540, 545 (Ala., 1968); Clark v. First National Bank, 130 Misc. 352, 224 N.Y.S. 10 (1927); Odland v. Findley, 38 F.Supp. 563 (D.C.Ohio 1941) (reversed on other grounds, 127 F.2d 948, 6th Cir.1942).

Consequently, the charge of the trial court was erroneous with respect to notice of the 1975 bank share tax. During all applicable periods dealing with the 1975 tax, it appears that the bank was the agent of the Gunters for bank share tax purposes. The charge was, therefore, harmful error with respect to the 1975 taxes. It does not appear that the same is true for the 1976 taxes, however.

The facts show that the 1976 bank share tax assessment on Hamilton Bank shares was not forwarded by appellants until October 11, 1976, some three days after Hamilton Bank had ceased banking operations and was placed in receivership with the FDIC. At this point, Hamilton Bank was no longer the agent of the shareholders, since it had ceased operations. See Odland v. Findley, 38 F.Supp. 563, (D.C.Ohio 1941), reversed on other grounds, 127 F.2d 948, 6th Cir.1942 (noting that the agency relationship between bank and shareholders terminates upon the bank's insolvency). See also Boardman v. Taylor, 66 Ga. 638 (1881).

Under these facts, neither would notice of the 1976 assessment to the receiver, the FDIC, be notice to the shareholders. The Second Restatement of Agency, § 14F provides: "A person appointed by a court to manage the affairs of others is not an agent of the others." Comment "a" explains:

"a. A receiver is a fiduciary and has power to bind the organization of which he is the receiver to contract and tort liability. He is not, however, appointed by the organization or, necessarily, with its consent. He is essentially a representative of the court which appointed him, to whom he is primarily responsible, and under whose direction he can properly act contrary to the direction of those on whose account he acts." We agree with this provision of the Restatement and hold that under these facts the receiver would not have been the agent of Hamilton Bank's shareholders for receiving notice of the 1976 bank share tax assessment.

Because no...