Williams v. Tawes

• Decision Date: 03 January 1941
• Docket Number: 70,71.
• Parties: WILLIAMS v. TAWES, Comptroller et al. TAWES, Comptroller, v. WILLIAMS.
• Court: Maryland Court of Appeals

17 A.2d 137

179 Md. 224

WILLIAMS v. TAWES, Comptroller et al.

TAWES, Comptroller, v. WILLIAMS.

Nos. 70, 71.

Court of Appeals of Maryland

January 3, 1941

Appeals from Circuit Court, Anne Arundel County; Ridgely P. Melvin Judge.

Action for declaratory judgment by Clara S. Williams against J Millard Tawes, Comptroller of the Treasury of the State of Maryland, and others. From the decree, plaintiff and defendant appeal.

Reversed and bill of complaint dismissed.

A suit would not lie under the Declaratory Judgments Act to have tax status of taxpayer determined, and to have provision of income tax statutes declared unconstitutional, and to have income from foreign fiduciary trustee treated as "ordinary" and to enjoin collection of income tax on such income, since under the Income Tax Statute, specific provisions are set up for the trial of issues arising under the Income Tax Statute, and if a taxpayer is dissatisfied he may appeal from the comptroller's assessment to the State Tax Commission, and if dissatisfied with its decision, to the circuit court and from that court to the Supreme Court. Code 1939, art. 81, §§ 240-253; art. 31A, § 1 et seq.

T Hughlett Henry, of Easton, and W. Thomas Kemp, Jr., of Baltimore (Piper, Watkins & Avirett, of Baltimore, on the brief), for Clara S. Williams.

William L. Henderson, Deputy Atty. Gen., and Norwood B. Orrick, Asst. Atty. Gen. (William C. Walsh, Atty. Gen., on the brief), for J. Millard Tawes and others.

Argued before BOND, C.J., and PARKE, SLOAN, MITCHELL JOHNSON, and DELAPLAINE, JJ.

JOHNSON, Judge.

Clara S. Williams, a resident of Talbot County, is a widow with two minor children. During the calendar year 1939 she received income (a) from the operation of a dairy, (b) from intangible property owned by her, and (c) from a trust created by the will of her late husband, of which a trust company of Pittsburgh, Pennsylvania, was trustee, and as to which she is a life beneficiary in a one-half interest thereof. In determining the income tax payable by her for the year mentioned under the provisions of Chapter 277 of the Acts of 1939 (Code, Art. 81, §§ 240-253), she contended (1) that Section 244(a) thereof did not apply to her income from the foreign fiduciary trustee; (2) that said section as applied thereto was unconstitutional and void, and (3) that even though such income were taxable under the Act, it should be treated as 'ordinary' income, as to which she was not taxable at more than 2 1/2%.

Accordingly, under the provisions of Chapter 294 of the Acts of 1939, Code, Art. 31A, known as the Uniform Declaratory Judgments Act, she filed her bill of complaint in the Circuit Court for Anne Arundel County, seeking to have her tax status determined and declared and to have Section 244(a) declared unconstitutional as to her foreign fiduciary income. She further sought a declaration, were such income declared to be taxable, to have it treated as 'ordinary' income and to enjoin the Comptroller of the State of Maryland, the Attorney General of the State, the State Treasurer, and the County Commissioners of Talbot County, named as defendants in the bill, from levying and collecting a tax thereon exceeding 2 1/2%, and from levying or collecting any tax on 'any income from such fiduciary estate not received by or distributable to' her, and further to enjoin them from compelling her to file a return with respect thereto, or imposing any penalty or interest with respect thereto, pending final determination of the case.

The state officials, as well as the Commissioners for Talbot County filed separate demurrers to the bill of complaint, principally upon the ground that it stated no facts entitling the plaintiff to relief under the Uniform Declaratory Judgments Act, Code, Art. 31A. Those demurrers were overruled by the Chancellor, whereupon answers were filed by the state officials, as well as the County Commissioners, and upon stipulation of the facts by the parties the Chancellor passed a declaratory decree, (1) that Section 244(a) of Chapter 277 of the Acts of 1939 was valid and constitutional as applied to plaintiff's foreign fiduciary income; (2) that such income was to be classified as 'investment' income and taxed accordingly, and (3) that plaintiff's income tax under the Act referred to was to be computed upon the actual income she received from the non-resident trustee.

The plaintiff has appealed from the two declarations first mentioned while the Comptroller of the State, the remaining state officials having been dismissed, has appealed from the declaration to the effect that her tax was to be based upon the actual income received from the trustee.

The first question for consideration relates to the Chancellor's action in overruling the demurrers filed by the defendants; while, if that action is found to have been correct, other questions for consideration relate to the correctness of the provisions of the declaratory decree to which reference has been made.

We will first consider the Chancellor's action in overruling defendants' demurrers.

In Porcelain Enamel & Mfg. Co. v. Jeffrey Mfg. Co., 177 Md. 677, 11 A.2d 451, we were dealing with a situation in which a plaintiff under its provisions sought a declaration as to whether one or both of two sub-contractors caused the delay in the completion of certain work. We held the Declaratory Judgments Act inapplicable and that the proceeding was not to be used to determine occurrences in the progress of completed contract work; that the Act did not take the place of an ordinary action for damages for a breach of contract, even though information was lacking to the plaintiff as to which of the two contractors caused the delay.

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