Bayer v. Johnson
400 N.W.2d 884
S.D.
1987
Check Treatment

*1 King’s indicated blood alcohol content was

0.18%, report no test but arrest shows King’s response, “All I

was even taken. percent.

know is I over ten But I drunk,”

really wasn’t that raises a factual satisfying instead of a factual ba-

sis. sidestep

I would not these clear statu-

tory violations matter when this was within especially issues before the trial

when that claim was not raised fact, part

State. a substantial

State’s brief is to its claim that the devoted supports plea.

record a factual basis for the

Accordingly, I would reverse. BAYER,

Barry E. Petitioner Appellant, JOHNSON, Secretary

R. Van of Revenue Dakota,

for the State of South

Respondent Appellee.

No. 15224. Hagen Wilka, Thomas K. Wilka of & Supreme Court South Dakota. Falls, petitioner Sioux appellant; May Considered on Briefs 1986. Wilka, E. Hagen Karen Schreier of & Sioux Falls, on brief. Decided Feb. 1987. 18, 1987. Denied March Dewell,

Review Gen., Atty. Pierre, John Asst.

respondent appellee; Mark V. Meier- henry, Gen., Pierre, Atty. on brief. WUEST, (On Chief reassign- Justice ment).

Appellant Barry Bayer (Bayer) ap- E. peals the decision of the trial court in which he was denied a refund of certain sales protest. We affirm. Bayer applied for and received a retail occupational sales tax license in July, 1981. This license was issued for a service busi- ness in the area of amusements. Included in this category amusements are the servic- *2 “bookmakers, Department es “bookies” and race.” failed to issue an order con- license, Bayer paid Pursuant to this various cerning Bayer’s petition for refund. From November, 1981, amounts of sales tax from the Department failure of to enter an or- through April protest. of 1982 under That der, Bayer appealed. court, The trial how- dispute concerned much money how of the ever, Bayer’s dismissed appeal. It ruled: by Bayer received in his bookmaking busi provide has refused to adequate “gross receipts.” ness was to be considered information to assist either Secretary the 10-46-1(2). SDCL claimed State the entire in making this court a full and com- wage paid by amount of a lost a bettor to a plete determination portions as to what gross receipts bookmaker is included in the of the tax funds were constitutionally any without offset for the losses of the portions collected and what were uncon- contended, bookmaker. stitutional collections.... It continues only “vigorish” that his or his service fee speculative to be so far as the evidence is subject was to sales tax. That issue was concerned whether or money paid not the appealed court, to this court. This how Department came gambling. from ever, declined to consider that issue and Bayer, through counsel, argues his all games instead noted that since of chance point around the and makes assertions prohibited by are the South Dakota Consti However, that this the tution case. under article as this the State § power thus implicitly previously noted, has no court has specula- authorize such bookmaking by taxing activities them. supposition tion or cannot be the basis Johnson, (S.D. 349 N.W.2d 447 ordering for a tax refund. 1984) I). (Bayer See also SDCL 10-45-9. In the hearing most recent before the (S.D.1985) In Bayer, State v. 378 N.W.2d 223 Revenue, Secretary of following this (B II), ayer Bayer sought to recover court’s reversal in Bayer supra, Bayer $46,000 in previously paid back taxes produce refused to documents substantiat- through court for Minne- ing his involvement in and in- County, Circuit, haha Second Judicial as right against voked his Fifth Amendment part of plea bargain a felony three questions self-incrimination when asked in- charges of failure to file sales and service volving bookmaking. Through his testimo- tax returns on his receipts. did, however, ny, Bayer claim that the sales II, we affirmed the circuit court tax protest made under were judgment reversing magistrate’s at paid a under license obtained for the area tempt to order a refund of the money paid of amusements. provides SDCL 10-45-5.2 part plea as bargain. Writing major that the services enumerated under Fosheim, then Chief Justice after group (amusement and recreation servic- rejecting magistrate’s authority to re es) in the Standard Industrial Classification money guise fund the of correct subject Manual 1972 are to the retail sales ing sentence under SDCL 23A- and service tax levied SDCL ch. 10-45. 31-1, legislature stated: provided “Our major Bookmakers are included within recovery an exclusive means for of sales group hearing 79. At the Depart- before paid requires jurisdiction taxes that ment, procedure questioned if regarding absent was established is not strictly II, followed.” Bayer separate 378 N.W.2d each category major listed under at 224. group 79. He testified that each of the categories listed were not the basis decision, Following this hearing paid taxes, except which he the sales Department held before the of Revenue categories enumerated “bookies” (Department) concerning Bayer’s request “bookmakers, He race.” declined to an- paid. By stipula- for refund of sales taxes inquiries regarding swer parties, hearing tion of both whether or not also in- periods paid cluded additional return April from were for these activities based through April, hearing, 1984. After privileges. his Fifth Amendment Bayer initially principle contends that the tri ‘It is a fundamental jurispru- questions dence that material facts or finding that there al court erred action, which were issue in a former insufficient to show that evidence judicially and were there admitted or de- on an uncon the taxes termined, conclusively settled being bookmaking. stitutional therein, judgment rendered and that such above, Bayer Fifth As noted invoked his *3 questions judicata facts or become res against privilege Amendment self-incrimi may again litigated and not be in a sub- paid he sales nation when asked whether sequent action.’ upon bookmaking. This he could val Prewitt, 787, Callahan v. 143 13 Neb. idly do. 660, (1944)(quoting N.W.2d 662 30 Am.Jur. may Although taxpayer validly in- 178, 920). Thus, at we hold that this § privilege the Fifth Amendment voke I, disposition in Bayer supra, court’s set- self-incrimination, against may he not be regarding tled the of fact judge the sole of whether .certain materi- Bayer’s paid sales taxes incriminating. A al is court must deter- were based his business as a book- taxpayer justified mine in whether maker. Since the were made remaining danger silent. Where the of upon an unconstitutional we hold readily apparent, self-incrimination not Bayer cannot recover. privilege the claimant of the has the bur- upon public base our policy We decision proving danger Any exists. den holding Bayer is denied access to the danger of incrimination must be real and courts to recover these taxes to en- merely not substantial and remote or gage in possibly an unconstitutional and speculative. activity. criminal Our rationale is stated in States, 975, v. Baskin United 738 F.2d 977 Rossman, Jasper v. 222, 226, 73 S.D. 41 (8th Cir.1984)(citations omitted). (1950), 310, N.W.2d 312 wherein we said: Yunt, Ferguson the case of 13 completely it is clear While not whether 120, 509, 510, 82 N.W. S.D. court bookmaking would be a criminal offense said: ‘Courts do not lend their aid to Code, under the South Dakota see SDCL parties engaged in in transactions viola- 22-25-1, given, import of our law, betting gambling tion of and and I, supra, Bayer in un- decision uniformly contracts are held to be con- danger der a “real and substantial of in- law, trary policy illegal.’ to the Baskin, supra. Thus, See crimination.” it plain- ‘The test to determine whether the appropriate for him to Fifth invoke his recover’, tiff is entitled to said the court privilege during hearing Amendment case, ability in that ‘is his to establish his petition on his for a sales tax refund. any illegal case without aid from the I, In supra, this court stated: If right transaction. his claim or to re- “Appellant candidly engaged he is in states depends cover a transaction which business and the facts se, prohibited legisla- by is malum essentially undisputed.” seem 349 N.W.2d enactment, tive and that transaction Thus, purposes appeal, at 448. of that necessarily proved must be to make out case, this court determined that was in- recovery.’ can no his there be The general in the business. rule that the law will not aid volved party applied either been The law of the case doctrine is E.P. gambling. transactions other than finality it provide used to to an issue once Wilbur Trust Co.v. 64 S.D. Fahrendorf determined a court of record. has been 124, 1; Codington Bartron v. 265 N.W. decided, litigated it Once an issue is County, 68 S.D. 337, 2 N.W.2d 140 throughout subsequent any remains settled 550; Beverage Co. v. Villa Marie A.L.R. around that issue. See litigation revolving Co., 13 69 S.D. N.W.2d 670. The List-Mayer, American State Bank v. illegality prevails, defense not as a (S.D.1984). defendant, protection to the N.W.2d but as a for Article section 25 of the Dakota The reasons South disability plaintiff. precluded and the state was the court become Constitution refusing the aid of applying licensing require- from sales tax property is liable stronger even when gambling pro- activities which are a ments to by the state to enforce proceedings I, hibited the constitution. forfeiture. N.W.2d at 450. than Although rationale is different our our decision in As a result of judgment. affirm its the trial sought money paid to recover the FOSHEIM, J„ SABERS, Retired magistrate the mandate of the court Justice, concur. proceedings first noted in the criminal attempted to order above. HENDERSON, JJ., MORGAN returned, but the circuit court the sums dissent. appeal, reversed the order on based J., MILLER, a member not have been pay pro- the tax under Bayer’s failure to *4 at the time this action was of the Court in appeal to this court State v. test. On Court, did not to the submitted (S.D.1985) (Bayer Bayer, 378 N.W.2d participate. II) affirmed the circuit court’s decision (1) grounds: legislature That our MORGAN, (dissenting). on two Justice provided an exclusive means for recov- I dissent. pro- paid (payment under ery of sales tax Bayer’s travails chapter first of Mr. The jurisdiction is test and suit to recover and actually began in 1981 involving sales tax procedure if established is not absent the magistrate court he hailed into when followed); (2) Bayer failed that strictly felony charged with three in Falls Sioux probation im- appeal conditions of to the of failure to file sales and service violations posed by the court. bookmaking relating to his tax returns action, Bayer seeks to recover In this He entered SDCL 10-45-49.1. business. in payments made certain tax adopted by plea bargain agreement, into a magistrate’s deci- the the interim between court, whereby given probation he was the in I in Bayer our decision sion in 1981 and $62,- (1) pay he upon the conditions: That Department application to 1984. He made interest; taxes, penalties and in back 10-45-53, upon Depart- under SDCL (2) adopt appropriate sales tax he that petition, the adminis- ment’s denial of his (3) procedures; and that he record-keeping The appeal route was followed. trative ch. violations of SDCL have no further proceedings to expanded the circuit court apparently complied with the Bayer 10-45. originally incor- payments not include some applied for to the extent that he conditions refund. The porated application in the tax license. He also and received a sales Department and court affirmed circuit $62,500 $46,000 deter- the some of followed. appeal to our court taxes, penalties and interest. as mined back Depart- grounds I the which view Secretary the dispute A arose with shabby, at Bayer’s claim to be ment denied (Department) as to Department of Revenue opinion ably so majority best. As the computed on the the tax was to be whether in out, Bay- of our decision points because or, Bayer urged, upon as total sums bet under a real and substan- Bayer er charged fee only “vigorish” the or service Further, Bay- danger of incrimination. tial Department’s Bayer appealed the better. Bay- of fact that I the er settled it came before this court determination on his busi- payments tax were based er’s in appeals route administrative via the pretense The ness as bookmaker. (S.D. Johnson, 349 N.W.2d 447 Bayer v. court Department and the circuit which 1984). majority has denominated that The be reversed. acted should I, although is the sec it decision as that the otherwise point saga. major The It is at this chapter in the ond majority opinion logical in I determined that well-written ity decision majority states: The completely. loses me activity prohibited was an recovery the made illegal “Since were an an transaction for the equipment by unconstitutional we hold sale of saloon a beer distribu- cannot recover.” What unconstitutional tor to a retail outlet. The transaction in- talking agree I activity are we about? that volved in the payment case before us is the Bayer’s bookmaking activity taxes, payment falls within of taxes. The of burden- games sometimes, the classification of of chance may which some as it seem hardly is legislature approve illegal True, is to un- forbidden transaction. we said in der Article section 25 of the South I that it was unconstitutional for the point I legislature impose Dakota Constitution. out that the to a sales tax on book- making. of a tax on say, exaction sales ac- We did not that it activity tivities the unconstitutional we was either unconstitutional to “If struck down in I: it be the will pay tax. license, people of tax and thus autho- Finally, language I Jasper, note some chance, privately operated games rize supra: illegality prevails, “The defense of requires further likewise amendment. defendant, protection not as a to the but as legislature.” It cannot be done disability plaintiff. The reasons for N.W.2d at 450. constitution does not refusing the aid of the court become even bookmaking illegal declare or unconstitu- stronger property when the liable prohibits legislature

tional. It from proceedings by the state to enforce a for- authorizing activity. such That is what feiture.” 73 S.D. at 41 N.W.2d at 312. They grants constitutions are for. of Again, point I payment out that legislature authority to the or limitations illegal, money taxes is not nor is the tax *5 rings piously thereon. It a little hollow to liable to forfeiture. say deny access to the courts to Bayer for his so-called unconstitutional ac- I am authorized to state that Justice tivity, thereby protect but the unconstitu- joins in this HENDERSON dissent. activity collecting tional of the State illegal taxes with the aid and assistance of

our lower court. supporting cases cited as rationale majority opinion clearly distinguish- They from this case.

able all involve trans- actions that were in and themselves of AMERT, Henry Appellant, Plaintiff and Rossman, illegal. Jasper v. 73 S.D. v. 222, (1950), 41 310 N.W.2d the suit was for ZIEBARTH CONSTRUCTION COMPA- gambling on balance due a sale of NY, Compa- Madison Insulation d/b/a equipment (punchboards). In Ferguson v. ny, Corporation, and U.S. Fiber De- Yunt, 120, (1900), 13 S.D. 82 N.W. 509 Party fendants and Third Plaintiffs and suit was to recover on the bond of a stake- Appellees, horse-racing holder of E.P. bet. Wilbur 124, Trust Co. v. 64 S.D. 265 Fakrendorf (1936), a suit to recover on N.W. involved COMPANY, AMERT CONSTRUCTION the inducement of a note executed under Corporation, Party Third Defendant agreement prosecute alleged not to Appellee. Codington In Bartron v. embezzlement. No. 15299. 309, (1942), County, 68 S.D. N.W.2d Supreme Court South Dakota. recovery for the suit was for services and supplies indigents under a con- furnished 17, Considered Briefs Nov. 1986. county profession- tract between the and a Decided Feb. 1987. corporation physicians al when it was physicians incorporate. And finally, Co., Beverage Marie Co. v. Villa (1944),

S.D. 13 N.W.2d 670 was for