State of Or. ex rel. Ellis v. Krause, 39090

• Decision Date: 02 May 1968
• Docket Number: No. 39090,39090
• Citation: 73 Wn.2d 688,440 P.2d 468
• Court: Washington Supreme Court
• Parties: STATE OF OREGON ex rel. Dean ELLIS, C. H. Mack and F. H. W. Hoefke, constituting the State Tax Commission of Oregon, Appellant, v. Charles L. KRAUSE, Respondent.

Page 688

73 Wn.2d 688

440 P.2d 468

STATE OF OREGON ex rel. Dean ELLIS, C. H. Mack and F. H. W Hoefke, constituting the State Tax Commission of Oregon, Appellant, v. Charles L. KRAUSE, Respondent.

No. 39090.

Supreme Court of Washington, En Banc.

May 2, 1968.

Robert Y. Thornton, Atty. Gen., State of Oregon, Walter J. Appley, Asst. Atty. Gen., Salem, Reed & Gallup, Charles E. Gallup, Vancouver, for appellant.

Garver & Garver, Robert W. Garver, Camas, for respondent.

HILL, Judge.

The state of Oregon through its tax commission brought this action, pursuant to the reciprocal tax enforcement statutes (ORS 305.250 (now 305.610) and RCW 4.24.140; 4.24.141 ¹) existing between the states of Washington and Oregon, to enforce Oregon income tax claims for 5 years (1953 to 1957 inclusive) together with penalties and interest.

The complaint was filed in Skamania County August 14, 1962; the defendant having been served personally on May 15, 1961.

The answer raised the issue of the statute of limitations.

The case was tried June 17, 1963, and on October 11, 1963, the trial judge filed a memorandum opinion directing the attorneys for the defendant to prepare a judgment of dismissal. However, the attorneys did nothing for almost 3 years. On June 9, 1966, Findings of Fact, Conclusions of Law, and a Decree of Dismissal were entered, based on the trial court's conclusion that the 2-year statute of limitations was applicable (RCW 4.16.130), i.e., that it was 'An action for relief not hereinbefore provided for.' The last taxable year claimed in the complaint was 1957, and the trial court concluded that the statute of limitations commenced to run on the taxes for that year on April 15, 1958, when the Oregon law required a return on the 1957 income to be filed and the tax to be paid, if one was due.

The complaint by the state of Oregon in the present action not having been served on the defendant until May 15, 1961, the trial court concluded there could be no recovery. The decree provided:

That the cause or causes of action set forth in the plaintiff's complaint are barred by the statute of limitations of the State of Washington and that the above-entitled action is hereby dismissed * * * From this judgment of dismissal the state of Oregon has appealed.

Briefly stated, the appellant's position is that the state of Oregon does not have any time limitations on its right to collect income taxes, including penalty and interest, where there has been, as in the present case, a timely assessment of the taxes due. ²

It is, seemingly, the almost universal rule that statutes limiting the time for action by the government in collecting its taxes are to be strictly construed in favor of the government. Warm Springs Lumber Co. v. State Tax Commission, 217 Or. 219, 342 P.2d 143 (1959).

This court, in State v. Vinther, 176 Wash. 391, 393, 29 P.2d 693 (1934), declared:

That the sovereign state can neither be sued nor debarred from suing in its own courts without its consent is an accepted principle of law needing no citation of authorities for its support. ³

The respondent has not favored us with an appearance or a brief on this appeal. ⁴

We have two cases construing our reciprocal tax collection statute: State of Alaska v. Baker, 64 Wash.2d 207, 390 P.2d 1009 (1964), and State of Alaska v. Petronia, 69 Wash.2d 460, 418 P.2d 755 (October 6, 1966), each affirming the right of the state of Alaska to collect its taxes from Washington residents in our courts. The latter case involved the collection of income taxes.

Our reciprocal tax collection statute states that the term 'taxes' includes 'Any and all penalties lawfully imposed pursuant to a tax statute,' and 'Interest charges lawfully added to the tax liability which constitutes the subject of the action.' (RCW 4.24.141; see footnote 1.)

Unless the trial court correctly applied some statute of limitations, the judgment of dismissal must be reversed. Any applicable statute of limitations would be Oregon's. Our reciprocal tax collection statute clearly contemplates that this is intended since it provides:

That the time limitations upon the bringing of such actions which may be imposed by the laws of such other state shall not be tolled by the absence from such state of the person from whom the taxes are sought. * * * (RCW 4.24.140)

The state of Oregon asserts that there are no statutes of limitation in that state barring it from the collection of the income taxes due it, and the penalties and interest assessed for the failure to make returns and pay such taxes. None is pleaded; and, as we have indicated, the respondent taxpayer suggests none. We will search no further.

This disposes of the case. Inasmuch as we made a distinction between the defendant's liability for the tax and his liability for the penalties and interest in State of Alaska v. Baker, supra, and make no such distinction in this case, some further explanation would seem to be necessary. In State of Alaska v. Baker, supra, an Alaska statute of limitations (similar to our RCW 4.16.100 ⁵) was deemed to be applicable to an action to collect penalties and interest on a tax liability. Oregon has no statute of limitations applicable to penalties and interest imposed on a tax liability. We are here concerned only with whether there is an applicable Oregon statute of limitations.

The trial court erred in concluding that the state of Oregon's action to recover its income taxes, penalties and interest was barred by the Washington statut...