State v. Humble Oil & Refining Co.

• Decision Date: 10 March 1943
• Docket Number: No. 8034.,8034.
• Parties: STATE v. HUMBLE OIL & REFINING CO.
• Court: Texas Supreme Court

Page 707

169 S.W.2d 707

STATE v. HUMBLE OIL & REFINING CO.

No. 8034.

Supreme Court of Texas.

March 10, 1943.

Rehearing Denied April 14, 1943.

Error to Court of Civil Appeals of Eighth Supreme Judicial District.

Action by the State against the Humble Oil & Refining Company to recover an amount alleged to be due as gross production taxes with interest and penalties thereon. Judgment for defendant was affirmed by the Court of Appeals, and the State brings error.

Judgments of Court of Civil Appeals and of District Court reversed, and judgment rendered for State.

Gerald C. Mann, Atty. Gen., and Geo. W. Barcus, Ocie Speer, Cecil C. Rotsch, and Billy Goldberg, Asst. Attys. Gen., for appellant.

Small, Arney & Small, of Austin, amici curiae.

T. H. McGregor, of Austin, and Nelson Jones, Lee Hill, D. H. Gregg, J. Q. Weatherly, E. E. Townes, and R. E. Seagler, all of Houston, for appellee.

CRITZ, Justice.

This suit was filed in the District Court of Travis County, Texas, by the State of Texas, through the Attorney General, against Humble Oil & Refining Company, hereinafter called Humble, to recover $10,791.42, plus interest and penalties, claimed by the State to be due it by Humble as gross production taxes, as levied by Articles 7057a and 6032, Vernon's Texas Civil Statutes. Trial in the district court resulted in a judgment for Humble. This judgment was affirmed by the El Paso Court of Civil Appeals, to which this case was transferred by this Court. The case is before us on writ of error granted on application of the State.

For the purposes of this opinion. it may be stated that Humble owed the State, as gross production taxes on oil for the month of January, 1936, the sum of $119,973.96. Prior to May 30, 1935, Humble had paid the State, as gross production taxes on oil, the sum of $10,791.42 that it did not owe. We assume that the sum last mentioned was paid under duress and under such circumstances that Humble has a just and valid claim against the State for its recovery. Humble in due time paid the State $109,182.54 on the above claim of $119,973.96. At the time of making such payment Humble contended that the sum paid balanced the State's gross production tax claim against it for July, 1936, because it was then entitled to offset its claim for overpayment against the State's claim against it.

At this point we deem it pertinent to quote Subdivision 13 of Section 1 of Article 7057a, Vernon's Texas Statutes. This is Subdivision 13 of Section 1 of H. B. 89, Chap. 358, p. 900, Acts 44th Leg., 1935. Such subdivision reads as follows: "(13). When it shall appear that a taxpayer to whom the provisions of this Act shall apply has erroneously paid more taxes than were due during any tax paying period either on the account of a mistake of fact or law, it shall be the duty of the State Comptroller to credit the total amount of taxes due by such taxpayer for the current period with the total amount of taxes so erroneously paid."

An examination of the above-quoted statute will disclose that it is a part of the law which levies a gross production tax on oil. The statute quoted became effective May 30, 1935, which was after Humble paid the $10,791.42 wrongfully demanded of it.

Humble contends that the above-quoted statute authorizes it to offset the gross production oil taxes due by it for the month of January, 1936, by the sum of $10,791.42, illegally demanded of and paid by it as gross production oil taxes prior to the effective date of such statute. The State contends that such statute cannot operate to authorize such offset, because it speaks prospectively, and not retrospectively. It is evident that a decision of this question determines whether the above-quoted statute operates to confer any right of offset in this case.

It is the settled law of this State, as well as the law generally grounded on public policy, that, in the absence of a statute authorizing it, in an action by the State or any municipality for taxes, off-setting of an indebtedness due by the State or municipality to the tax debtor will not be allowed. Bates v. Republic of Texas, 2 Tex. 616; Dallas Joint Stock Land Bank v. Ellis County Levee Improvement District No. 3, Tex.Civ.App., 55 S.W.2d 227; 57 C.J., 381; 24 R.C.L., 817; Cooley on Taxation, 4th Ed., § 1249; Village of Charlotte v. Keon, 207 N.Y. 346, 100 N.E. 1116, 46 L.R.A., N.S., 135, Ann.Cas. 1914C, 338; Camden v. Allen, 26 N.J.L. 398; Hedge v. City of Des Moines, 141 Iowa 4, 119 N.W. 276; Shelton v. Blount County, 202 Ala. 620, 81 So. 562; State v. Board of Equalization, 67 Mont. 340, 215 P. 667; Darby v. City of Vidalia, 168 Ga. 842, 149 S.E. 223.

An examination of the above-quoted statute will disclose that it very plainly allows offsets such as is here claimed by Humble, if it speaks retrospectively; that is to say, if it operates to allow taxes paid on account of a mistake of fact or law before its effective date to be offset against taxes due after its effective date.

After a very careful examination of the authorities, we have reached the conclusion that the above-quoted statute cannot be applied retrospectively. It is the law of this State, and the law generally, that, in the absence of any special indication or reason, a statute will not be applied retrospectively, even when there is no constitutional impediment against it. Stated in another way, it is the rule that statutes will not be applied retrospectively unless it appears by fair implication from the language used that it was the intention of the Legislature to make it applicable to both past and future transactions. Rockwall County v. Kaufman County, 69 Tex. 172, 6 S.W. 431; Purser v. Pool, Tex.Civ. App., 145 S.W.2d 942, and many authorities there cited; Mississippi, C. R. Co. v. City of Hattiesburg, 163 Miss. 311, 141 So. 897; Ford Motor Co. v. State, 59 N.D. 792, 231 N.W. 833; State v. Ward, 189 Okl. 532, 118 P.2d 216; Freeman v. Terrell, 115 Tex. 530, 284 S.W. 946. When we apply this rule to this statute, we find no words contained therein which indicate a legislative intent to apply its provisions to past transactions.

In Mississippi, C. R. Co. v. City of Hattiesburg, supra, the opinion shows that the Legislature of Mississippi passsed a law authorizing the refund of taxes erroneously paid, whether paid under protest or not. A taxpayer contended that it was entitled to a refund under this statute for taxes paid prior to its enactment. The opinion holds that the act had no application except prospectively.

In Ford Motor Co. v. State, supra, the opinion shows that in 1923 the Legislature of North Dakota enacted an income tax law. The law itself was an amendment to the income tax laws of North Dakota theretofore existing. The 1923 act provided that a taxpayer could apply to the tax commissioner for a revision of the tax assessed against him at any time within two years from the filing of the return or from the date of the notice of the assessment of any additional tax. The law also provided that the tax commissioner could grant a hearing thereon, and if upon such hearing he should determine that the tax was excessive or incorrect, he could resettle the same according to the law and the facts, and adjust the computation of the tax accordingly. The Supreme Court of North Dakota, in passing on the above statute, held that the 1923 act was not applicable to excessive or illegal income tax payments exacted under the prior law.

In State v. Ward, supra, the Supreme Court of Oklahoma had before it a statute providing a remedy or method by which gross production taxes...