*1 1300 U.C.C., design
“The the oversight, partnership my opin- account. has Since omitted any specific (or section granting recrediting equivalent) a ion such a is right customer the to required, demand that his the of the allowance counterclaim bank account result, recredit his for items im should be affirmed. Given such a properly paid. The existence of such a the bank to permitted should be seek resti- however, right, strongly urged by is tution of the of these drafts from amount negative implications 4-401(1). . . ." of section payee. turn, to avoid unjustly In en-
riching
partnership, any legitimate
claims
payee
may
of the
creditor that
have
G R Corp.,
&
see
supra;
also J. White & R.
discharged
been
result of
as a
the bank’s
17-3,
Summers
supra.
improper payment
be
must
restored as
Furthermore,
general
common law
against
words,
partnership.
In other
rule required a
to
bank
recredit its custom
be
partnership should
entitled to view
er’s account
improperly
for
item
paid.
nullity,
effect of
as a
these drafts
Engineering
Stone & Webster
Corp. v. First
parties
restored to the
should be
status
Nat.
Greenfield,
Bank & Trust Co. of
Electric,
quo ante.
supra.
See Denver
(1962);
Mass.
Stone & Webster Engineering, supra; Wi
ley, supra; Grimshaw, W. R. supra; Cincin Co.,
nati Ins. supra; see also §
C.R.S.1973,and Official Comment 1. there to. Nor is a interpretation contrary of that CORPORATION, warranted, for, KRAFTCO a section Delaware Judge as Tamm has Corporation, noted, Plaintiff-Appellant, no overriding policy considerations tempt banks, one to supply in cases such this, as protection a not specifically provid CHARNES, Alan as N. the Executive ed drafters of U.C.C. See G & R Director of Corp., supra. Thus, the bank in the instant Revenue, Defendant-Appellee. case should required be part recredit the nership No. 79CA0867. account in the amount of the drafts here question. G R Corp., supra; See & Appeals, Colorado Court Stone & Webster Engineering, supra; W. I.Div. Grimshaw, R. supra; Co., Cincinnati Ins. supra; J. 17-3, White & R. Summers July 1981.
supra.2 Aug. Rehearing 1981. Denied Because the counterclaim the trial court Nov. Denied Certiorari was, notes, allowed majority as the in exact amount of the four drafts here in-
volved, the allowance counterclaim is
equivalent in recrediting this case Leasing Corp. 2. But cf. Middle States (1978); v. Manu- McIsaac v. Bank of New N.Y.S.2d 846 York, facturers Hanover Trust Co. v. Federal Reserve App.Div. 425 N.Y.S.2d 678 York, Bank of App.Div.2d 273, New
Kraftco is the owner of stock in a number foreign subsidiary corporations who man- ufacture, dairy and obtain or and other sell products foreign countries. Differ- dairy products ent and food are sold in areas, depending different market on local *3 preference. exports There are limited imports between Kraftco and its subsidi- aries.
Kraftco interest principally receives from earnings investments of accumulated in commercial paper, deposits, certificates of and loans. royalties prin- Kraftco receives cipally foreign from its subsidiaries for the trademarks, name, use of its trade and pat- ents. princi- Kraftco receives rental income pally from leasing surplus of idle and property leasing and from ice cream cabi- nets. capital gains Kraftco receives the sale of idle surplus property. and Kraftco resulting princi- receives dividends pally from ownership its in shares for- eign subsidiaries.
In its Colorado income tax returns for the years issue, 1969, 1970, 1971, tax at income, Kraftco stated its federal taxable but receipts, royalties, capi- subtracted rent interest, gains, tal and dividends to arrive at what it appor- considered to be its total tionable purposes, income for Colorado tax pursuant Compact Multistate Tax Eckerman, C. E. Gorsuch, Kirgis, (Compact) IV, Art. C.R.S. Campbell, Grover, Walker & James H. Turner, Denver, for plaintiff-appellant. 4, 1975, J. On November MacFarlane, Gen., department D. Atty. Mary J. Gen., Mullarkey, appointed Sol. Chris the Multistate Tax Eliopulos, J. Commission Gen., Asst. Atty. Denver, (MTC) for defendant-ap- agent plaintiff its to audit for all pellee. years open to audit and assessment. Plain- tiff requested that begin the examination COYTE, Judge. April after and the agreed. MTC (Kraftco) Plaintiff appeals However, judgment plaintiff requested was to exe- of the trial upholding court validity of a cute waivers of the statute of limitations by assessment issued Depart- against assessment of the additional taxes ment of Revenue (Department). We affirm years for the plain- and 1970. When part part. reverse in waivers, tiff did not execute the the depart- threatened suit. No waivers were Kraftco is a Delaware corporation en- gaged February in the executed and on manufacture and sale of dairy products. other food issued order dairy asserting These a to- products are throughout $44,- sold tal Unit- amount of tax and interest due of States, ed including Colorado. 160.97 years for the and 1971.
13Q3 “(1) The tax If the executive director of the de- plain- assessment served on the tiff the defendant was determined by partment of revenue finds that collection adding back to computation Kraftco’s jeopardized delay, will of the tax be income, apportionable percent- discretion, may he his declare taxable age receipts, of rent royalties, capital gains, terminated, period immediately deter- interest, and dividends. tax, mine the and issue notice and de- thereof; and, payment having
mand for so, payable the tax shall be due and done I forthwith, and the executive director may Plaintiff contends that the trial proceed immediately to collect such tax in concluding erred that Kraftco did provided as in section 39-21-114. not cooperate department. with the We “(2) appears wherein it In other case disagree. jeopardy, that the revenue is in exec- *4 The trial court concluded that: department utive director of the of reve- “It would be difficult imagine any may immediately nue issue demand for flagrant more example of ‘conduct calcu- and, payment; regardless provi- of the lated to inhibit the collection of taxes 39-21- sions of sections 39-21-103 and the Department’ than that of plain- 105, payable the tax shall be due tiff in this case. Requests appoint- for discretion, and, the exec- forthwith in his ments with plaintiff by MTC for the immediately may proceed utive director purpose of selecting a time to conduct the provided in section to collect said tax as audit question were not answered 39-21-114.” squarely. The tenor of the correspon- deciding plaintiff that Assuming without dence between plaintiff MTC and the be- statute, we reading of this is correct in its 7, tween 10, October 1975 and December 1975 was here since we con- one of find no reversible error delay part on the of the plaintiff. And reached. the correct there is no clude the trial court way other interpret result, the acts of plaintiff wrong reason. Met- ignor- even if for the ing separate three pleas from MTC to Western ropolitan Bank v. Great Industrial execute waivers for the years 1969 P.2d 944 Corp., Products 158 405 Colo. 1970than intentional delay part on the Neill, (1965), Colo.App. 494 Klipfei v. 30 the plaintiff to a time when the statute court, on P.2d 115 the trial Since of limitations had run on these two evidence, properly termed the supporting years.” plaintiff “non-cooperative corpora- to be a tion,” collec- placed whose conduct had There is evidence in the support record to either sec- jeopardy, tion of taxes in under the findings and conclusions of the trial statute, (1) (2) proper it was court tion of this relative to the lack cooperation plaintiff, jeopardy to issue a for they binding are appeal. on Furthermore, Linley Hanson, against plaintiff. 173 assessment Colo. 447 P.2d facts, plain- merit to these there is no under “jeopardy” the word is tiff’s contention that unconstitutionally vague. II Plaintiff contends that the trial
court Ill erred basing its decision on 39- 21-111(1), C.R.S.1973,which relates to the the trial court Plaintiff that contends closing of the period “taxable” rather than limita- statute of finding erred in that the on 39-21-111(2), C.R.S.1973, which relates tax Colorado assessing tions for additional period in which the may assessment expired have on for 1969 and 1970 would be made. agree as to the 1969 February 1976. We
These statutory provide: subsections taxes. resulting taxes updated revenue agent’s report that the additional Colo- had been a federal audit of There rado taxes arising jeopardy from the assess- 1970 and 1971 tax years and a tax liability adjust- ment were not based on the federal had been determined for 1970 and 1971. ment. For the IRS had determined that plaintiff had an excess of foreign tax credit Thus, the trial court erroneously upheld which could not be used in 1971. This cred department’s jeopardy assessment for it was carried back to 1969. This 1969 Accordingly, part this order of credit was adjustment then offset by an the court must be reversed and the matter relating depreciation to a 1969 error. deleting remanded for a new order the 1969 year tax from the 39-21-107(2), C.R.S.1973,
Section pro- against plaintiff. vides that the assessment of tax shall be made within year one after the time for
assessing a deficiency in federal income tax. assume, Even if we deciding, without undisputed It is that Kraftco’s fed this adjustment was in effect an as- gave eral waiver until De sessment of a deficiency, the assessment 31, 1976, adjustments cember to make for date in the agent’s IRS revenue report purposes. 39-22- Section (RAR) was January 1975. There is no 601(6)(e), Thus, C.R.S.1973. the trial evidence of waiver agree- or extension finding erred in that the statute of limita beyond this date. Since the Colorado tions for *5 year the taxable 1970 would run notice jeopardy of assessment was issued 25, However, February on 1976. since the 10, 1976, February this assessment was not issuance of the on jeopardy assessment Feb made within year one of the time for as- 1976, ruary 10, for 1970 was not by barred sessing a federal deficiency, and thus was limitations, the statute of the trial court did barred by the statute. considering open not err in an year. 1970as In determining that the statute of limita- 25, tions would end on February one IV year from the date depart- Kraftco sent the throughout Plaintiff contends that 1969,1970, the RAR for trial, court made numerous errors trial court was in basing effect its determi- rulings its regarding admissibility of 39-22-601(6)(c), nation on C.R.S.1973, require evidence which that a new trial be which provides: granted. disagree. We “If, from such report or return or from Even if rulings there was of error in the investigation, it appears that the tax with the trial court in the admission of certain respect to imposed income by this article evidence, nothing findings there is in its assessed, has not fully been the executive conclusions trial suggest which that shall, director within year one after the erroneously relied on the admitted receipt of such report year or within one evidence. evi being competent There other of discovery determination, of such final findings, dence to sustain the court’s trial if unreported, deficiency assess the with is admission of this evidence not interest at prescribed the rate in section grounds Corp. for reversal. Vanadium See 39-22-621.” Co., v. Wesco 308 P.2d Stores 135 Colo. However, this section is not an exception Downs, (1957); Colo.App. Short general limitations, statute of 39- 21-107(2). merely This section allows the director to deficiency assess a only to the V extent of the information contained in the RAR. There is uncontradicted evidence in Plaintiff contends that the trial the record that Kraftco had been assessed upholding court erred in the jeopardy as paid had the deficiency in its Colorado sessment by when the manage- also evident that the loans. is computed incorrectly. It was disagree. We this income were disposition ment and business. integral parts of Kraftco’s First, Kraftco contends that the trial finding court erred in that it was an inte-
grated company tangi- whose income from activities, un- of these business Because intangible properties ble and was business in the conduct dertaken Kraftco apportionable subject to to income business, profits gener- are entirety of its Compact. disagree. We are, turn, used Kraftco ated which Compact, income from inter- Under maintain, its expand administer est, rents, royalties, capital gains, and divi- operation.” total business subject are if apportionment dends it is subsidiary of different Kraftco’s evidence income. business control, and “almost daily local products, 24-60-1301, 1(a), Section Art. IV C.R.S. between itself no” business transactions 1973, defines business income as: subsidiaries, insufficient is foreign arising “income from transactions and ac- activity on prove business unrelated tivity regular in the course of the taxpay- light of the in the part of its subsidiaries er’s trade or business and includes income world-wide underlying reality of Kraftco’s tangible intangible if property Mobil above. See enterprise discussed acquisition, management, and disposi- Taxes, 445 Corp. v. Commissioner Oil property integral tion of the constitute L.Ed.2d 510 100 S.Ct. U.S. parts regular of the taxpayer’s trade or added) operations, (emphasis business the de also contends Kraftco All other income is non-business income. liabil its tax arbitrarily computed 1(e), partment Section Art. IV C.R.S. did not which a sales ratio ity based on the ratio of Colorado’s accurately reflect “The integrated test of an business is of the United population population to whether or not the operation portion of a disagree. We States. the business within the is dependent state *6 upon contributory operation to the share of Compact, Colorado’s Under the business Dry outside the state.” Joslin income is deter- business apportionable Dolan, Colo., Goods Co. v. company’s a Colora- the ratio that by mined applica- The test of business income sales payroll, and property, share of do ble here is whether the income results from pay- property, total company’s bears to the a transaction in regular the course of the 24-60-1301, Art. IV roll, and sales. Section company’s business. Atlantic Richfield Co. sales ratio is The through C.R.S.1973. State, v. P.2d Colo. the which is fraction, of the numerator a Under these tests and the evidence before and in Colorado taxpayer the sales of total it, the trial properly concluded that: the sales of is the total denominator the income, apportionable “Kraftco’s total in- period. the tax during everywhere taxpayer interest, rents, cluding roy- income from IV C.R.S.1973. Art. Section alties, dividends, capital gains, arose and contained tax returns Although Kraftco’s regular from the busi- course of Kraftco’s were its Colo- had concluded what Kraftco manufacture, including ness the distribu- of a field audit sales, of in the absence rado tion, marketing dairy of and food return, deter- department the Kraftco’s products; development from the sales were Colorado mined that Kraftco’s names, trademarks, marketing of trade sales. total 1.2%of Kraftco’s patents; renting or sale of from the that this sales testimony was There surplus property or idle used in the busi- accurately reflect ratio,
ness; which did not and, from the investment of sur- ratio of Colorado population plus in commer- actual funds in subsidiaries or ratio States, reliable was a deposits cial certificates of entire United paper, however, not prod- ty, tested in the of other insists that this section is cases consumer companies, 39-21-107(2). ucts including products, To exception to arrive an accurately which more higher reflected the ignore overlook or they at this conclusion consumption products in of consumer food a statutory interpre- canons of fundamental tourist findings state like Colorado. The of tation. the trial court that the ratio was reasonable C.R.S.1973, 39-22-601(6), pro- Section under the supported by circumstances is pertinent part: vides in in evidence the record and will not be dis- (a) Any final of federal in- determination Hanson, turbed on appeal. Linley supra. pursuant provisions come made of Kraftco depart- also contends that federal law under which federal taxable ment failed in to include sales and Kraftco’s income is found to from the taxa- differ property returns the values of the transac- reported ble income to the fed- originally tions and property generating the income government reported be eral shall department that the jeop- considered in taxpayer to the executive director [of ardy to be assessment business income. In of within Revenue] determining assessment, jeopardy Kraftco’s thirty days of such final determination used the avail- information with a statement the reasons for the of able to it at time which the infor- was difference, as the in such detail executive mation contained Kraftco’s tax returns. may require. director Kraftco trial failed at evidence introduce regarding prop- these transactions and this If, (c) or return or report from such from erty and thus failed to sustain as its burden investigation, appears it that the tax with to this 39-21-105(2)(b), issue. §See C.R.S. this respect imposed income article assessed, fully not been the executive has Our examination reveals record shall, one year within after the director plaintiff’s other contentions are with- receipt ... report of such assess the defi- out merit. ciency prescribed with in section interest The judgment jeop- is reversed as to the added) (emphasis 39-22-621. ardy assessment for but is affirmed as C.R.S.1973, 39-21-107(2), upon Section to the jeopardy years assessments for the as majority “general which stat- relies 1970 and and the cause is remanded to pertinent provides ute limitations” the trial court with directions to delete part: 1969tax year imposed by In the case of tax income against plaintiff. title, ... article 22 of this the assessment J., STERNBERG, concurs. tax, penalties, interest shall be *7 after year expira- made within one the BERMAN, J., concurs part in and dis- of for a provided assessing tion the time sents part. in deficiency in federal income tax .... BERMAN, Judge, concurring part in and meaning of It is fundamental that dissenting in part. gathered must be one section of a statute I agree with the in all majority opinion legisla- consideration the entire from a of respects except part as to that of portion Haase, scheme, Comm’n v. Hwy. tive State III dealing with 1969 of assessment (1975), 189 537 300 and that Colo. P.2d taxes. In my view the 1969assessment was subject the same concerning two statutes properly pursuant made to the law. together, People must be matter read The A., trial correctly upon of Colo. 511 P.2d relied Interest M. K. 182 39-22-601(6)(c), C.R.S.1973, (1973). § of determin- 477 Another fundamental rule ing that the every statute of to make word give limitations construction is to effect an v. for 1969 taxes did not enactment if Johnston possible. of an expire February 25,1976. Council, until majori- City The 177 Colo.
1307 words, should not other courts In assembly used presume general Archuleta, REEVE, Jan Ken Dan idly and with no language in a statute Sanders, Ray Les Norris and given to its meaning should be intent that Clark, Plaintiffs-Appellants, v. Defense Comm. language. Blue River Silverthorne, Colo.App. 516 Town of P.2d BOARD OF the The CAREER SERVICE of its so- majority’s interpretation The DENVER, OF and CITY AND COUNTY reads “general statute of limitations” called Cardenas, Wood, Francis Leo Alfred portions underlined of out of existence the Hartman, Marilyn Salter, Richard shall, phrase “the executive director Rossmiller, Health of The receipt year of such after the within one County City Hospitals of of ” It also does violence .... report Kauvar, Denver, Mana Abraham J. Dr. 205, C.R.S.1973, provides: which § 2-4 — City ger Hospitals of the with general provision If a conflicts a City Denver, County and the of special provision, or it shall be con- local Denver, corpora Municipal County of strued, given effect is possible, if so that tion, Defendants-Appellees. pro- to both. If the conflict between the irreconcilable, special visions is No. 80CA1144. provision prevails exception local as an Appeals, Colorado Court general provision, general unless the Div. II. provision and the adoption is the later general provi- manifest intent is that the 23, 1981. July prevail. sion Sept. Rehearing Denied disagree majority’s I also with the state- C.R.S.1973, 39-21-107(2), ment that §
“merely allows the director to assess a defi-
ciency only to the extent of the information
contained in the RAR.” It creates a limita- 39-21-107(2)
tion on for which there is no
justification ignores and it the 1977 amend- (6)(g) which added subsection which permits
seemingly very thing the ma-
jority contends is in the section before the Laws amendment. See Session
p. (now contained in the 1980 Indeed, reading
Cum.Supp.). a literal (6)(c) just contrary
subsection reveals majority’s statement. It seems clear appears report
that if it “from such or from ” investigation paid, the tax has not been director shall assess the defi- executive
ciency. *8 I affirm foregoing
For the reasons would judgment
this of the trial court in its en-
tirety.