Tyler Pipe Industries, Inc. v. State, Dept. of Revenue

• Decision Date: 14 January 1982
• Docket Number: No. 47806-6,47806-6
• Citation: 96 Wn.2d 785,638 P.2d 1213
• Parties: TYLER PIPE INDUSTRIES, INC., a Texas corporation, Respondent, v. STATE of Washington, DEPARTMENT OF REVENUE, Petitioners.
• Court: Washington Supreme Court

Page 785

96 Wn.2d 785

638 P.2d 1213

TYLER PIPE INDUSTRIES, INC., a Texas corporation, Respondent, v. STATE of Washington, DEPARTMENT OF REVENUE, Petitioners.

No. 47806-6.

Supreme Court of Washington, En Banc.

Jan. 14, 1982.

Kenneth O. Eikenberry, Atty. Gen., William B. Collins, Asst. Atty. Gen., Olympia, for petitioners.

Cartano, Botzer, Larson & Birkholz, Thomas C. McKinnon, Seattle, for respondent.

DIMMICK, Justice.

The Superior Court issued a preliminary injunction against the Department of Revenue preventing the Department from taking any further action against Tyler Pipe with reference to the collection of business and occupation taxes pending the outcome of a trial on the merits. We reverse the trial court and dissolve the injunction.

The Department audited Tyler Pipe for the period January 1, 1976, through September 30, 1980. The audit resulted in an assessment of business and occupation taxes in the amount of $123,159, including interest. Tyler Pipe petitioned the Department for a correction of this assessment. The Department denied the petition and sustained the imposition of the tax establishing May 20, 1981, as the due date for payment of the assessment or a 10 percent penalty would be imposed. Tyler Pipe could have prepaid the assessment and litigated its claims in a refund action, however, the interest which a taxpayer may recover if successful in a refund suit is only 3 percent. Rather than prepaying the tax, Tyler Pipe filed its Complaint for Declaration of Invalidity of Tax Assessment, Injunction and Other Relief along with a Motion for Temporary Restraining Order. The motion was supported by two affidavits signed by an attorney for Tyler Pipe. A hearing was held on the motion and the court issued a temporary restraining order. When Tyler Pipe's request for a preliminary injunction was heard, the court considered an additional affidavit from the Department along with briefs of the parties. The trial court granted Tyler Pipe's motion and entered its findings of fact, conclusions of law and order granting preliminary injunction. The conclusions of law relevant to this appeal are:

3.2 Plaintiff is entitled to an injunction under RCW 82.32.150 and a substantial constitutional question not definitely resolved by prior authorities is clearly presented in this case.

3.3 Plaintiff will suffer immediate and irreparable injury and harm without an injunction due to the substantial penalty which would be imposed without prepayment and the minimal (3%) interest allowed on tax refunds in the event plaintiff is successful on the merits compared to the amount of interest that would have to be paid by plaintiff to secure the amount of prepayment.

There are three major issues before this court. First, does RCW 82.32.150 require the court to grant injunctive relief without reference to equitable criteria? Second, if not, what are the proper criteria in determining whether to grant or deny a preliminary injunction? Third, does Tyler Pipe meet such criteria? We conclude that a court must refer to equitable criteria under RCW 82.32.150; and after clarifying the proper criteria, we determine that Tyler Pipe did not meet the requirement.

I

The Department contends that conclusion of law No. 3.2 indicates that the trial court erroneously interpreted RCW 82.32.150 to require an injunction whenever a substantial constitutional question is presented. Tyler Pipe argues that such interpretation is proper.

RCW 82.32.150 provides:

All taxes, penalties, and interest shall be paid in full before any action may be instituted in any court to contest all or any part of such taxes, penalties, or interest. No restraining order or injunction shall be granted or issued by any court or judge to restrain or enjoin the collection of any tax or penalty or any part thereof, except upon the ground that the assessment thereof was in violation of the Constitution of the United States or that of the state.

The statute has three basic parts. The third part, at issue herein, provides an exception to the declaration that injunctions shall not be granted. It is a well established principle of statutory construction that provisos and exceptions remove something from the enacting clause that would otherwise be contained therein. This proposition was well stated by this court in McKenzie v. Mukilteo Water Dist., 4 Wash.2d 103, 114, 102 P.2d 251 (1940) as follows:

"It has not been an unfrequent mode of legislation to frame an act with general language in the enacting clause, and to restrict its operation by a proviso.... Provisos and exceptions are similar; intended to restrain the enacting clause; to except something which would otherwise be within it, or in some manner to modify it.... The exception of a particular thing from the operation of the general words of a statute shows that in the opinion of the law-maker the thing excepted would be within the general words had not the exception been made."

Pursuant to this principle, the exception to the anti-injunction portion of RCW 82.32.150 cannot be read as independently requiring injunctions. Rather, it merely removes constitutional cases from the ban on injunctions allowing a court to exercise its equitable powers in those cases. We have held the legislature can never totally deprive the courts of their constitutional equity power. See O'Brien v. Johnson, 32 Wash.2d 404, 202 P.2d 248 (1949). However, courts will respect this ban on injunctions if the legislature provides an adequate legal remedy. In Roon v. King County, 24 Wash.2d 519, 166 P.2d 165 (1946), the court dealt with a similar anti-injunction statute coupled with a statutory refund remedy in the property tax area. In discussing this combination the court stated:

We do not construe the 1931 act as an encroachment upon the constitutional power of the court in the exercise of its inherent equity functions, nor would we accede to such attempt if it were so intended. We accept it simply and solely as a legislative undertaking to provide an adequate legal remedy in cases wherein, if a legal remedy existed before, it was a doubtful or inadequate one. Provision for a speedy, adequate remedy having thus been specifically made, the courts, while retaining to the full all of the equitable powers inherent in them, have only lessened occasion for the exercise of such powers.

24 Wash.2d at 526, 166 P.2d 165.

Tyler Pipe makes two arguments to support its contention that RCW 82.32.150 requires the issuance of an injunction in constitutional cases. First, that RCW 82.32.150 must be read in conjunction with 28 U.S.C. § 1341. 28 U.S.C. § 1341 prohibits federal district courts from enjoining the collection of taxes under state law "where a plain, speedy and efficient remedy may be had in the courts of such State." Tyler contends that when the two statutes are read together, RCW 82.32.150 must be construed as recognizing that a refund suit is an inadequate legal remedy in constitutional cases and that an injunction is required.

Tyler cites no authority for its contention that RCW 82.32.150 and 28 U.S.C. § 1341 must be read together in this manner. Nothing in 28 U.S.C. § 1341 indicates that it requires different remedies for constitutional and nonconstitutional cases. In addition, the exception for constitutional cases in RCW 82.32.150 was not a response to 28 U.S.C. § 1341. Indeed, the predecessor to RCW 82.32.150 was enacted in 1933. See Laws of 1933, ch. 191, § 13. 28 U.S.C. § 1341 was not enacted until 1937. See Act of Aug. 21, 1937, ch. 726, § 1, 50 Stat. 738.

Even if Washington must offer injunctive relief to have a plain, speedy and efficient remedy under 28 U.S.C. § 1341, there is no requirement that an injunction be granted. The injunctive remedy must simply be available. The United States Supreme Court spoke to this matter in Tully v. Griffin, Inc., 429 U.S. 68, 97 S.Ct. 219, 50 L.Ed.2d 227 (1976). In Tully the taxpayer sought an injunction under 28 U.S.C. § 1341. New York had a judicial remedy which required payment of the tax prior to resolution and the court noted that the taxpayer lacked the means to make payment. The court ruled that the remedies provided by the State were plain, speedy and efficient. One of the remedies discussed was the possibility that the taxpayer could obtain a preliminary injunction. While the court noted the availability of this remedy it specifically stated:

Although acknowledging a New York court's power to issue a preliminary injunction in these circumstances, the Attorney General remains free, of course, to oppose the granting of such relief in any particular case.

429 U.S. at 76, 97 S.Ct. at 224 n.7.

Tyler argues that 28 U.S.C. § 1341 requires the issuance of an injunction. Tully establishes that it is the opportunity to obtain an injunction that is required. Under the exception to RCW 82.32.150 Tyler has the opportunity to obtain an injunction in a constitutional case if it meets the equitable criteria governing injunctive relief.

Tyler Pipe relies upon Pacific Tel. & Tel. Co. v. State Tax Comm'n, 180 Wash. 673, 676, 42 P.2d 420 (1935), as support for its position. In Pacific Telephone, this court affirmed an injunction restraining collection of taxes, and stated that the predecessor statute to RCW 82.32.150 "appears to recognize the right to injunctive relief" when a constitutional objection is made. Reliance on this statement is misplaced, however, because the court did not require an injunction but in fact looked to all the equities.

RCW 82.32.150 provides a legal remedy and limits the court's equitable powers. The exception for constitutional cases simply means that the legislature has chosen not to limit the court's equitable powers with regard to those cases even though it has provided a legal remedy. Thus, while one is not barred from seeking an injunction in a constitutional case, one must meet the equitable criterion governing its issuance.

II

The rule in this state is...