State Revenue Comm'n v. Edgar Bros. Co

• Citation: 55 Ga.App. 505,190 S.E. 623
• Decision Date: 17 March 1937
• Docket Number: No. 25821.,25821.
• Parties: STATE REVENUE COMMISSION et al. v. EDGAR BROS. CO.
• Court: United States Court of Appeals (Georgia)

55 Ga.App. 505

190 S.E. 623

STATE REVENUE COMMISSION et al.

v.EDGAR BROS. CO.

No. 25821.

Court of Appeals of Georgia,

Division No. 1.

March 17, 1937.

Syllabus by the Court.

The court did not err in sustaining the affidavit of illegality and dismissing the levy.

Error from Superior Court, Wilkinson County; James B. Park, Judge.

Proceedings on execution by the State Revenue Commission and others against the Edgar Brothers Company. Judgment sustaining affidavit of illegality, and the Revenue Commission and others bring error.

Affirmed.

M. J. Yeomans, Atty. Gen., and B. D. Murphy, Asst. Atty. Gen., for plaintiffs in error.

Park & Strozier and Orville A. Park, Jr., all of Macon, for defendant in error.

BROYLES, Chief Judge.

On August 28, 1935, the State Revenue Commission issued an execution against Edgar Brothers Company for income taxes alleged to be due the state for the year ending December 31, 1929. The defendant in fi. fa. filed an affidavit of illegality averring, in part, that the claim and reassessment is barred by the statute of limitations; and that it is not subject to income tax, under the act of 1929, on business done in Georgia. The State Revenue Commission filed a traverse to the affidavit of illegality. The case was submitted to the judge without the intervention of a jury. The court held: First, that "the assessment and execution issued thereon by the plaintiff against the defendant is barred by the statute of limitations" and second, that under the "act of the legislature of 1929, the plaintiff is not authorized to assess the income tax against the defendant, for the reason that the facts in this case show that the income derived from the operation of the defendant's plant, as described in the pleadings, depended on the sale of the manufactured products after they arrived in other States"; and that the act of 1929 did not contain sufficient provisions for reaching incomes derived from such source. On this judgment the plaintiff in fi. fa. assigns error.

The income tax act of 1929 (Ga. Laws 1929, p. 92), made no provision as to the time for issuing executions for failure to return or pay income taxes. The provision in that act that the state may levy and collect "an income tax similar to that of the United States, " (section 1, p. 93) does not mean that the period of limitation as to an execution is similar to that of the United States; but even if the limitation period prescribed by the federal act did apply to the act of 1929, the execution in the instant case would nevertheless be barred by the statute of limitations.

The act of 1929 was incomplete in some respects, and since the Supreme Court sustained the constitutionality of an income tax law (Featherstone v. Norman, 170 Ga. 370, 153 S.E. 58, 70 A.L.R. 449), the Legislature, in order to rectify the defects of the 1929 law, one of which was the lack of a statute of limitations as to an assessment and execution, enacted a new income tax law (Ga.Laws 1931, Extra.Sess., p. 24), which expressly repealed the act of 1929 (section 62, p. 59), except "for the assessment and collection of all taxes which have accrued or may accrue under the income-tax Act of 1929 and for the collection of all penalties which have accrued or may accrue in relation to said Act." Section 63, p. 59 of the act of 1931. This simply means that the state is reserving the right to collect any taxes or penalties already accrued under the 1929 act, and has no reference to a limitation period for the assessment and collection of such taxes, as the act of 1929 contained none.

The act of 1931, section 35, p. 50, provides that the commissioner may determine if "there is deficiency in respect of the tax imposed by this Act [of 1931] or any prior act;" and section 35(f), page 51, provides that "as used in this Act, the word 'deficiency' means--the amount by which the taximposed by this Act or any prior Act exceeds the amount shown as the tax by the taxpayer upon his return, or if no amount is shown as the tax by the taxpayer upon his return, or if no return is made by the taxpayer, the amount determined by the commissioner to be the correct amount of the tax." (Italics ours.) Since the 1931 act, in dealing with the deficiency, provides for the collection of amounts due under "any prior act, " and the act of 1929 was the only prior act dealing with an income tax, and since the 1929 act failed to provide a time for issuing executions on account of deficiencies, it is clear that deficiencies under the prior act of 1929, are intended to be collected through the machinery of the 1931 act. The 1931 act (section 36(a), p. 51) stipulates that "Except as provided in subsection (b) of this section, the amount of income taxes imposed by this Act shall be assessed within three years after the return was filed, and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period." Subsection (b), above referred to, relates to collection without assessment in case of a fraudulent return, and has no bearing on the instant case. In the instant case, the assessment was not made within the three years' limitation period above set out. The 1929 income taxes of the defendant were actually paid on June 15, 1930, and the State Revenue Commission did not issue the execution until August 28, 1935. It thus appears that the action was barred by the statute of limitations.

That portion of the act of 1931 fixing the three-year period of limitation as to a deficiency due under "any prior act" is remedial and not retroactive. It makes no change in the vested rights under the 1929 act. It makes no change in what is or is not subject to income tax under the 1929 act. It applies merely to the remedy of the state in collecting that tax which had accrued under the 1929 act In Cox v. Berry, 13 Ga. 306, at page 310, it is said: "Acts which relate to remedies only, have been ruled by the highest authority in this Union, not to be violative of the Constitution, and it has also been over and over again ruled that Acts which relate to limitation terms, belong to that class." See, also, Atlanta, K. & N. Ry. Co. v. Wilson, 119 Ga. 781, 47 S.E. 366; Lamb v. Howard, 150 Ga. 12, 16, 102 S.E. 436; Guest v. Atlantic Coast Line R. Co., 37 Ga.App. 102, 139 S.E. 97. Counsel for the Revenue Commission insist that the limitation period prescribed by the 1931 act does not apply to the 1929 act, and that there is no limitation period applicable to the 1929 act, or else the limitation period is seven years. If this contention were correct, the state would be in the anomalous position of having the three-year statute of limitations bar the younger claim sooner than the older one. It would bar the collection of income taxes due for the year 1931, while collection of income taxes for 1929, due two years sooner, would not be barred by the statute of limitations. Seeking the true intent of the lawmaking body, and putting a reasonable construction _ton the act of 1931, we are forced to the conclusion that it was not the intention or purpose of the Legislature to make the statute of limitations run against the younger claim sooner than against the older one. The maxim "nullum tempus occurrit regi", cited by counsel for plaintiff in error, applies only in the absence of a legislative provision to the contrary, and such provision was made by the Legislature in the act of 1931.

The record fails to disclose when the assessment for the 1929 income taxes in the instant case was made; but the tax fi. fa., dated August 28, 1935, states that the "amounts have been assessed." It might be presumed that the assessment was made ten days before the date of the execution, as section 39 of the act of 1931 (page 53), provides that "If any tax imposed by this Act or any prior act is not paid within ten days after notice and demand from the commissioner, the commissioner shall issue a fi. fa." (Italics ours.) However, we consider it unnecessary to call for a diminution of the record, as there is no contention that the assessment of 1929 taxes was made during the three-year limitation period, the contention of the Revenue Commission being that the three-year statute of limitation period does not apply to taxes which accrued under the 1929 act, and counsel for the Commission concede, in their brief, that the assignment was made "more than five years after the time for filing the return."

Since the 1929 act (with the exception of the assessment and collection of taxes accrued thereunder prior to the effective date of the 1931 act) was expressly repealed by the act of 1931, thus leaving the 1931 act as the only state income law in force, and the repealing of the 1929 act and passage of the 1931 act showing that the former act was defective, incomplete, or for some reasonunsatisfactory to the Legislature, and since the 1929 act failed to provide for any period of limitation, and the 1931 act corrected this defect and provided a period of limitation, and also provided for the assessment and collection of a "deficiency" in the tax imposed by "any prior act, " and defined the word "deficiency" as meaning the amount by which the tax imposed by this act "or any prior act" exceeds the amount shown as the tax by the taxpayer upon his return, and this provision of the act of 1931 being remedial, and the execution of the plaintiff in fi. fa. issued August 28, 1935, being issued after the three-year period of limitation prescribed in the act of 1931, the execution is barred by the statute of limitations.

The second issue raised by the affidavit of illegality, and passed on by the judge in the order on which error is assigned, is whether the income tax act of 1929 imposes a tax on the income of the defendant company derived from its business as shown to be conducted. Though we have hereinbefore held that the execution of the Revenue Commission was barred by the statute of limitations, we deem it proper, under the...