58 Cal. 2d 252 | Cal. | 1962
Defendant appeals from a judgment awarding plaintiff a refund of sales taxes. (Rev. & Tax. Code, § 6933.) The facts were stipulated. Since April 1, 1955, plaintiff has sold carpeting at retail and has also furnished and installed carpeting. The tax with respect to sales of carpeting only was properly computed and paid. The tax with respect to sales and installations of carpeting, however, was overpaid. In each such transaction plaintiff collected a separately stated amount to cover the sales tax imposed upon it. (Rev. & Tax. Code, § 6052.)
Plaintiff computed the amount to cover the sales tax on the total price charged the customer for carpeting, material, and labor in about 60 per cent of the transactions involved.
At the trial plaintiff’s president testified that the refund sought included excessive reimbursements for sales tax from 882 customers and that plaintiff had invoices showing their names and addresses. Plaintiff stipulated, however, that it is seeking the refund for itself only and does not intend to pass it on to these customers.
The trial court held that plaintiff was entitled to the refund on the ground that the retailer is the taxpayer (Rev. & Tax. Code, § 6051; De Aryan v. Akers, 12 Cal.2d 781, 785 [87 P.2d 695]) and the state has no interest in any liability the retailer may have to its customers for collecting excessive tax reimbursements from them under a mistake of law. (123 East Fifty-Fourth Street, Inc. v. United States (2d Cir. 1946) 157 F.2d 68-70.) Defendant contends that plaintiff would be unjustly enriched were it permitted to recover the excess tax without paying it over to its customers.
Civil Code section 2224 provides: ‘ ‘ One who gains a thing by fraud, accident, mistake, ... is, unless he has some other and better right thereto, an involuntary trustee of the thing gained, for the benefit of the person who would otherwise have had it.” A mistake of law that causes the erroneous computation of tax reimbursements and payments, as in this case, gives rise to an involuntary trust. (Donovan v. Stevens, 179 Cal. 32, 38 [175 P. 400] ; First Nat. Bank v. Wakefield, 148 Cal. 558, 561 [83 P. 1076].) “ [I]f the plaintiff collected the money under what the guests must have understood to be a statement that it was obliged to pay it as a tax, and that it meant to do so, the money was charged with a constructive trust certainly so long as it remained in the plaintiff’s hands. ...” (Learned Hand, J., dissenting in 123 East Fifty-Fourth Street, Inc. v. United States, supra, p. 71.)
Parties to an action frequently have responsibilities to persons who are not parties. In Mallon v. City of Long Beach, 44 Cal.2d 199, 212-213 [282 P.2d 481], this court held that the City of Long Beach held funds derived from the sale of oil and gas from tidelands upon a resulting trust for the state, which was not a party to the action. In Lindheimer v. Illinois Bell Telephone Co., 292 U.S. 151, 175-176 [54 S.Ct. 658, 78 L.Ed. 1182], the United States Supreme Court approved a district court order requiring the telephone company to refund to its customers, who were not parties, service charges collected in excess of lawful rates. (See Illinois Bell Telephone Co. v. Slattery (7th Cir. 1939) 102 F.2d 58, 60, 63, 68.) The district court devised a plan for accomplishment of the refund and compelled the telephone company to follow the plan.
Ordering the return of the funds in question to the customers from whom they were derived is consonant with legislative policy. In 1961 the Legislature enacted Eevenue and Taxation Code section 6054.5, which provides: “When an amount represented by a person to a customer as constituting reimbursement for taxes due under this part is computed upon an amount that is not taxable or is in excess of the taxable amount and is actually paid by the customer to the person, the amount so paid shall be returned by the person to the customer upon notification by the Board of
The judgment is reversed and the cause remanded to the trial court with directions to enter judgment for plaintiff only if it submits proof satisfactory to the court that the refund will be returned to plaintiff’s customers from whom the excess payments were erroneously collected.
Gibson, C. J., Peters, J., and White, J., concurred.
In my view the opinion prepared by Mr. Justice Ford for the District Court of Appeal when this case was before that court (Decorative Carpets, Inc. v. State Board of Equalization (Cal.App.) 16 Cal.Rptr. 531) adequately discusses and correctly resolves the issues presented. For the reasons stated by Justice Ford I would affirm the judgment of the trial court.
McComb, J., concurred.