State ex rel. Battle v. Demkovich

• Decision Date: 23 June 1964
• Docket Number: No. 12303,12303
• Parties: STATE ex rel. G. Thomas BATTLE, State Tax Commissioner, v. Frank J. DEMKOVICH et al., d/b/a Midstate Equipment and Erectors.
• Court: West Virginia Supreme Court

Page 895

136 S.E.2d 895

148 W.Va. 618

STATE ex rel. G. Thomas BATTLE, State Tax Commissioner, v. Frank J. DEMKOVICH et al., d/b/a Midstate Equipment and Erectors.

No. 12303.

Supreme Court of Appeals of West Virginia.

Submitted May 26, 1964.

Decided June 23, 1964.

Syllabus by the Court

1. The running of the statute of limitations on a debt does not extinguish the debt but merely bars the recovery thereof. Where a new promise to pay is made in writing or a written acknowledgment from which a promise to pay may be implied is made, a new period of limitation begins, its effective date being that of the subsequent promise or acknowledgment.

2. Where a taxpayer brings himself within the provisions of Code, 1931, 55-2-8, a new period of limitation is created and the State Tax Commissioner, within that period, may maintain an action against such taxpayer to recover taxes owing the State of West Virginia.

3. A party who is not served with notice of a hearing on a motion made by an opposing party, as provided in R.C.P., Rule 6(d), and does not appear at the hearing, is denied a substantial right and is entitled to a reversal of the judgment entered pursuant to the hearing on the motion.

C. Donald Robertson, Atty. Gen., J. Patrick Bower, Asst. Atty. Gen., Charleston, for appellant.

James W. Pyles, New Martinsville, for appellees.

CAPLAN, Judge:

This is a civil action instituted on February 6, 1962, in the Circuit Court of Tyler County by the State of West Virginia at the relation of G. Thomas Battle, State Tax Commissioner, plaintiff, against Frank J. Demkovich and Jerome A. Carroll, doing business as Midstate Equipment and Erectors, defendants, wherein the plaintiff seeks to recover from the defendants the sum of $4,498.91, which represents business and occupation tax and penalties owing to the state for the years 1954, 1955 and 1956.

Upon the failure of the defendants to pay their business and occupation tax for the years 1954 and 1955, the State Tax Commissioner, on February 19, 1957, issued an assessment in the amount of $5,389.81. A dispute arose as to the amount of the assessment and after an agreement had been reached between the parties a new assessment was issued in a reduced amount. The new assessment was contained in a letter dated June 28, 1957, from the State Tax Commissioner to the defendants, wherein it was stated, in accordance with the agreement, that the tax for 1956 was to be paid immediately and that the tax for 1954 and 1955 was to be paid in full in twelve equal monthly installments.

By a letter dated July 1, 1957, addressed to the State Tex Commissioner, counsel for one of the defendants acknowledged that the tax commissioner's letter of June 28, 1957, correctly stated the agreement concerning the payment of the aforesaid taxes and further related that one of the partners, Mr. Carroll, had accepted all the provisions of the agreement.

Defendant Carroll replied to the tax commissioner's letter on July 12, 1957. In this letter Mr. Carroll set forth the details of the settlement and stated that the partnership would pay the 1954 and 1955 taxes during the next year, in accordance with the agreement. The business and occupation tax return for the year ending December 31, 1956, was received on July 16, 1957. The returns for 1954 and 1955 were submitted but it is not clear from the record the exact date on which they were received in the tax commissioner's office. It is agreed that such returns were filed prior to the institution of this action.

Subsequent to the institution of this action, and after certain pleadings were filed, the plaintiff was served with a notice of motion for summary judgment, pursuant to Rule 56 of the West Virginia Rules of Civil Procedure. After a hearing on November 20, 1962, the defendants' motion for a summary judgment was overruled. At this hearing it was determined that no genuine issue of fact existed between the parties and it was agreed that no further need existed for a pre-trial conference or for a trial. Thereafter, on March 15, 1963, judgment was entered for the plaintiff in the amount claimed.

On March 22, 1963, the plaintiff was served with a motion to set aside the judgment and a motion for summary judgment. No notice as to the time or place of any hearing on said motions was received by the plaintiff. However, on May 29, 1963, the trial court entered an order setting aside the judgment previously awarded the plaintiff.

The plaintiff claims that the court below erred in holding that the business and occupation tax for the years 1954, 1955 and 1956 had been barred by the statute of limitations. The plaintiff further says that it was error for the court to enter the final order of May 29, 1963, which set aside the judgment for the plaintiff, as the plaintiff was given no opportunity to be heard on the defendants' motion.

It is the position of the defendants that the statute of limitations, and the manner for the extension thereof, as contained in Code, 1931, 55-2-19a, as amended, preclude the collection of the subject tax for the years 1954, 1955 and 1956. The pertinent provisions of Code, 1931, 55-2-19a, as amended, read:

'Every action * * * to collect any tax (other than ad valorem tax on real or personal property), interest and penalty due the state * * * shall be brought * * * within five years next after the date on which the taxpayer is required by the statute * * * imposing the tax, interest and penalty to file a return and pay the tax due thereunder, unless a different limitation is specifically prescribed * * *.

'The official of the state * * * who is charged with the duty of collecting any tax, interest and penalty the collection of which is affected by the limitation hereinbefore provided may, before the running of the five-year period of such limitation has been completed, enter into a written agreement with the taxpayer consenting to an extension of such period for an additional period of not to exceed two years, and any action * * * may be brought * * * to collect such tax, interest and penalty at any time prior to the expiration of the period so agreed upon. * * *'

The defendants assert that since the action to collect these taxes was not brought within five years from the date they were due and there having been no extension of the limitation in accordance with the provisions of the above quoted statute, this action can not be maintained.

On the other hand, the plaintiff relies, not on Code, 1931, 55-2-19a, as amended, but on Code, 1931, 55-2-8, which provides:

'If any person against whom the right shall have so accrued on an award, or on any such contract, shall by writing signed by him or his agent promise payment of money on such award or contract, the person to whom the right shall have so accrued may maintain an action or suit for the moneys so promised within such number of years after such promise as it might originally have been maintained within upon the award or contract, and the plaintiff may either sue on such a promise, or on the original cause of action, and in the latter case, in answer to a plea under the sixth section, may, by way of replication, state such promise, and that such action was brought within such number of years thereafter; but no promise, except by writing as aforesaid, shall take any case out of the operation of the said sixth section, or deprive any party of the benefit thereof. An acknowledgment in writing as aforesaid, from which a promise of payment may be implied, shall be deemed to be...