Charles v. SpradlingCharles v. Spradling
Lead Opinion
The question is whether the statutes of Missouri permit class action procedure to be employed to claim refunds of erroneously or illegally collected sales taxes.
This action was a consolidation of two separate claims for refund of sales tax. The claims arose when the federal government repealed as of August 16, 1971, the federal excise tax on the sale of new automobiles, which tax constituted part of the base upon which Missouri levied its sales tax on the sale of new automobiles, § 144.-070, RSMo 1969, V.A.M.S.
On January 28, 1972, pursuant to
J. D. Brierly also filed a verified written claim pursuant to
On July 5, 1972, J. D. Brierly joined with Peter C. Charles in a petition for review of the denial of their claims “on behalf of themselves and all other taxpayers in the State of Missouri, who have purchased new motor vehicles from and after August 16, 1971, on which State Sales Tax and Use Tax has been collected on that portion of the purchase price attributed to the Federal Excise Tax which was repealed as of August 16, 1971 * * Plaintiffs prayed on behalf of themselves and all other taxpayers similarly situated for judgment reversing the Director’s denial of the refunds in question, and commanding the Director to pay refunds to plaintiffs and all members of the class they represent.
On July 13, 1973, defendant Director of Revenue moved for summary judgment on grounds (1) that as a matter of law, plaintiffs are not entitled to a refund of the sales tax in question because Chapter 144, Revised Statutes of Missouri, contains no authority for such refunds, and (2) that as a matter of law, plaintiffs may not main
On July 18, 1973, plaintiffs moved for summary judgment on grounds (1) that as a matter of law, plaintiffs individually and as a class are entitled to a sales tax refund; and (2) that as a matter of law plaintiffs are proper persons to represent the class of persons denied a refund of sales tax and there are no prohibitions preventing utilization of a class action in a sales tax refund proceeding.
On December 14, 1973, the court ruled the action on the motions for summary judgment. Plaintiffs’ motion for summary judgment was sustained as to plaintiffs Charles and Brierly to award them judgments for sales tax refunds of $7.63 and $7.39. Plaintiffs’ motion was overruled as to all other parties for whom the named plaintiffs would sue in class action. Defendant’s motion for summary judgment was overruled as to the named plaintiffs and sustained as to all others for whom named plaintiffs would sue. Judgment was entered accordingly.
There is no doubt that where taxes have been erroneously or illegally collected and retained and the legislature has authorized refund of such taxes, then the taxpayer may maintain an action to recover a refund of such taxes. International Business Machines Corp. v. State Tax Commission,
The trial court, in ordering the refunds of sales taxes to plaintiffs Charles and Brierly, recognized that sales taxes in the amounts ordered refunded to them had been erroneously collected and illegally retained. Defendant Director of Revenue did not appeal from such a judgment and it is now conclusive and binding. Thus, the sole question is whether the statutes of Missouri permit the named plaintiffs to employ class action procedures to obtain refunds of such sales taxes on behalf of persons similarly situated. Appellants contend (I) that they are entitled to so proceed under the Sales Tax Law, Chapter 144, RSMo 1969; and (II) that they are so entitled under the class action procedure, Rule 52.08, V.A.M.R.
Under (I), appellants argue that they are entitled to their class action to recover sales tax refunds because Chapter 144, supra, “at no place prohibits use of a class action,” and that they as a class fall within the definition of persons entitled to make a claim for a sales tax refund.
Under (,II), appellants assert that they meet all the prerequisites necessary to a class action under Rule 52.08(a), i. e., a class so numerous joinder of all members is impracticable, common questions of law or fact, claims and defenses of the representative parties are typical of the claims and defenses of the class, the representative parties will fairly and adequately protect the interests of the class, and that, as required by Rule 52.08(b)(3), their common questions of law and fact “predominate over any questions affecting only individual members,” and “that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.” In making this assertion, appellants concede that the amount of refund is a question of fact not identical to all parties.
Appellants also argue that if their class action is not permitted, individual members of the class will be without a remedy or relief because Chapter 144 sets a limitation of one year after such tax is paid to make claim for refund, and that the one-year period has lapsed in every case but their own. They excuse the failure of members of the class to make claims within the statutory period to preserve a right to judicial relief on the ground that the claim, if pursued through appeal in the circuit court, would cost more than it is worth.
Section 144.010, subd. 1(5), RSMo 1969, provides that “person” includes, among other entities, “any other group or combination acting as a unit, and the plural as well as the singular number.” This definition does not permit the term “person” to refer to a class of unrelated individuals as to permit them to make a claim for refunds under
Note also that public statements made by the Director of Revenue that refunds of sales tax would not be allowed in these circumstances, if so, did not prevent members of the class, claimants Charles and Brierly, for example, from filing claims, and did not estop the State. Henderson v. Carter, supra, 195 S.E.2d l. c. 6 [3, 4].
Miller v. Ste. Genevieve County,
Rule 52.08 is procedural rather than substantive; and despite the desirability of actions under the rule in certain circumstances, e. g., annexation cases under the Sawyers Act, it may not be interpreted to permit a procedure for suing the state not provided within the limited waiver of sovereign immunity of
Judgment affirmed.
PER CURIAM:
Division One opinion by HIGGINS, C., is adopted as the opinion of the Court en Banc.
Dissenting Opinion
(dissenting).
As I understand the principal opinion, we start with the fact that the state has by Sec. 144.190 consented to be sued for sales tax refunds, but we then proceed to the court-made doctrine that such statutes are to be strictly construed and since Sec. 144.190 contains “no provision for refunds of sales tax to be claimed on behalf of a class of taxpayers”, it follows that “The legislature has not waived the State’s sovereign immunity to the extent of permitting such procedure.”
This approach is consistent with the general reluctance of the courts to encourage claims for tax refunds, but I do not believe it is justified in the situation before us. It is equally important that the taxpayer know that under a just government the tax collector will not be permitted to take advantage of him.
The state now admits the tax refunds are due plaintiffs Charles and Brierly. Yet the state did all it could to keep from having to make refunds to the thousands of other Missouri taxpayers who were in the same situation. We can all recall the wide publicity which accompanied the repeal of the federal manufacturers’ excise tax on new automobiles, occurring December 10, 1971, retroactive to August 15, 1971. We were told in oral argument, not challenged or denied by the state, that the Missouri Department of Revenue stated publicly that it would make no refunds of the amount of state tax paid on account of any dealer refunds of the federal tax. The Department of Revenue treated all taxpayers as a class to which it would make no refunds. It refused to give any information as to the
Sometimes sales tax refunds, if allowed, would produce a windfall for the claimant, as in International Business Machines Corp. v. State Tax Commission,
The matter is uniquely suitable for a class action, as it involves a class of Missouri citizens who paid sales tax on the federal excise tax on purchases of new automobiles during the August 15 — December 10, 1971 period, far too numerous for practical joinder as individual plaintiffs. In every instance the tax is subject to refund for the same reason, the amounts involved are small as to each individual (too small to warrant cluttering the courts with individual claims and too small for the individual taxpayer to afford to hire counsel),
In these instances where public authorities are remiss, as seems to be true of the conduct of the Department of Revenue in this case, and the taxpayer comes to the courts as his last resort, the credibility of our judicial system is involved and “[t]he class action is one of the few legal remedies the small claimant has against those who command the status quo. I would strengthen his hand with the view of creating a system of law that dispenses justice to the lowly as well as to those liberally endowed with power . . . ” Eisen v. Carlisle & Jacquelin,
Notes
. Gas Service Co. v. Morris,
. Por example, in the present cases, plaintiff Charles was awarded $7.63 and plaintiff Brierly $7.39, with costs taxed against them of $38.00, resulting in a net loss of $22.98 after payment of costs.