State ex rel. Cleveland Concession Co. v. Peck, 33757

• Citation: 52 O.O. 476,117 N.E.2d 429,161 Ohio St. 31
• Decision Date: 17 February 1954
• Docket Number: No. 33757,33757
• Parties: , 52 O.O. 476 STATE et rel. CLEVELAND CONCESSION CO. v. PECK.
• Court: United States State Supreme Court of Ohio

Page 31

161 Ohio St. 31

117 N.E.2d 429, 52 O.O. 476

STATE et rel. CLEVELAND CONCESSION CO. v. PECK.

No. 33757.

Supreme Court of Ohio.

Feb. 17, 1954.

Syllabus by the Court.

Where, as a result of a proceeding under Section 5546-8, General Code (Section 5739.07, Revised Code), a party recovers a refund of sales taxes illegally or erroneously paid by him, he is not entitled to recover interest on the amount of such refund.

This is an action in mandamus instituted in this court by relator, The Cleveland Concession Company, against respondent, John W. Peck, Tax Commissioner.

In its petition relator states that it is a duly organized Ohio corporation; that respondent is the Tax Commissioner of Ohio; that on September 20, 1948, relator filed a claim with the Department of Taxation demanding a refund of $25,855.37 by reason of the illegal assessment and erroneous payment of sales taxes, which claim was subsequently reduced by relator to $21,669.13; that on May 20, 1953, in the case of Cleveland Concession Co. v. Peck, 159 Ohio St. 480, 112 N.E.2d 529, this court reversed a decision of the Board of Tax Appeals denying relator's refund claim; that on August 20, 1953, pursuant to the order of this court, the Department of Taxation mailed a remittance in the sum of $21,669.13 to relator; that upon receipt of such remittance on August 21, 1953, relator made a written demand on respondent for the allowance and payment of interest on such amount from September 20, 1948, to August 20, 1953; that in such written demand it was stated that the $21,669.13 was accepted under protest for the reason that interest was not paid on such refund; that on August 28, 1953, respondent wrote to relator acknowledging receipt of the letter and demand of August 21, 1953; and that since August 21, 1953, respondent has failed and refused to allow and pay such interest.

Relator prays for a writ of mandamus requiring respondent to allow and pay relator interest at the rate of six per cent per annum on $21,669.13 from September 20, 1948, to August 20, 1953, and for all further relief to which relator is entitled.

Respondent demurred to the petition, on the grounds that it does not state facts sufficient to constitute a cause of action, and that the action was not brought within the time limited for the commencement of such actions.

It is agreed that the judgment of this court on the demurrer will be dispositive of the case.

Morton M. Stotter, Cleveland, for relator.

C. William O'Neill, Atty. Gen., W. E. Herron, Columbus, and Ralph N. Mahaffey, Ashville, for respondent.

STEWART, Judge.

Respondent maintains that there are four questions involved in the consideration of the present case:

1. Whether mandamus is a proper remedy for a taxpayer who seeks the payment of interest on a refund of sales taxes illegally or erroneously paid.

2. Whether a taxpayer is entitled to the payment of interest on a refund of sales taxes illegally or erroneously paid.

3. Whether a taxpayer may seek the payment of interest on a refund of sales taxes illegally or erroneously paid in an independant action after the refund has been paid to the taxpayer.

4. Whether the 90-day period of time within which an application for refund of sales taxes illegally or erroneously paid must be filed is applicable to a claim for interest on such refund.

In view of the conclusion to which we have come on the second question, it will be unnecessary for us to consider the others.

The petition in this case does not allege that the sales taxes paid by relator, which were determined by this court to have been illegally or erroneously paid, were paid by relator under protest, or otherwise than purely voluntarily.

Relator recovered the illegal or erroneous payments by a proceeding under Section 5546-8, General Code (Section 5739.07, Revised Code), which reads in part as follows:

'The treasurer of state shall redeem and pay for any unused or spoiled tax receipts at the net value thereof, and he shall refund to vendors the amount of taxes illegally or erroneously paid or paid on any illegal or erroneous assessment where the vendor has not reimbursed himself from the consumer. * * * In all cases an application shall be filed with the commission [commissioner] on the form prescribed by it and must be filed within a period of minety days from the date the tax receipts are spoiled, or from the date it is ascertained that the assessment or payment was illegal or erroneous.'

In this statute there is no provision for the payment of any interest on the refund of sales taxes illegally or erroneously assessed and paid, and the petition herein does not show that any claim or demand for interest was made by relator in its proceeding to recover its refund until after the check for such refund had been received by it.

The courts of the country are divided on the proposition that on general principles interest may not be allowed on tax refunds, in the absence of any statute authorizing such an allowance.

In 57 A.L.R. 357, it is stated:

'While there has been much confusion as to this point, and the cases cannot always be reconciled, the weight of authority appears to be that interest may be allowed upon tax refunds on general principles, even in the absence of any statute authorizing such an allowance.'

However, in the case of Schlesinger v. State, 195 Wis. 366, 218 N.W. 440, 441, 57 A.L.R. 352, the Supreme Court of Wisconsin stated:

'While the overwhelming weight of authority sustains the rule that interest cannot be allowed upon taxes that were illegally collected, in the absence of a statute providing for interest, there are few jurisdictions where the contrary rule has been adopted.'

It is stated also in that...