Title: Lyle v. Luna

State: new-mexico

Issuer: New Mexico Supreme Court

Document:

338 P.2d 1060 (1959) 65 N.M. 429 C. B. LYLE and Lee Kious d/b/a The Lyle Adjustment Company, Appellants, v. Tony LUNA, as Commissioner of Revenue of the State of New Mexico, and George M. Case, as Director of the Emergency School Tax Division of the Bureau of Revenue of the State of New Mexico, Appellees. No. 6455. Supreme Court of New Mexico. May 11, 1959. Gilbert, White & Gilbert, M. W. Hamilton, Santa Fe, for appellants. Frank B. Zinn, Atty. Gen., Robert F. Pyatt, Asst. Atty. Gen., for appellees. Bean & Snead, Roswell, Harold A. Roberts, Santa Fe, amici curiae. SADLER, Justice. This is an appeal by the plaintiffs (appellants) associated, presumptively, as partners under the firm name of The Lyle *1061 Adjustment Company, in a declaratory judgment action against Tony Luna as Commissioner of Revenue of New Mexico and, as such, Director of Bureau of Revenue of said State and George M. Case, Director of Emergency School Tax Division, for whom by stipulation E.S. Walker, as Commissioner aforesaid, and, likewise, Carl Folkner, as Director, aforesaid, have been substituted, respectively, as parties appellee herein, due to a change of administration. The object of the action is succinctly stated by the trial judge in the initial paragraphs of a supplemental opinion filed by him in the cause preliminary to entry of the final decree. It reads: The defendants answered and admitted they had made demand on the plaintiffs for the amount alleged in the complaint under assessments for the period between April 1, 1953, through March 31, 1956, in the total amount of $8,099.67, and had issued a notice of claim of tax lien, filing same in the office of county clerk of Bernalillo County. They also agreed that, as alleged in the complaint, the plaintiffs would be required, but not unlawfully, to continue payment of the taxes due the State of New Mexico by virtue of the business in which they were engaged. The remainder of the allegations of the answer consisted of general denials. The Seventh Legislature of the State of New Mexico enacted as Chapter 135, L. 1925 (1953 Comp., § 58-5-1) reading as follows: In 1935 the Twelfth Legislature of the State of New Mexico enacted Chapter 73, L.1935, being 1953 Comp., §§ 72-16-1 to 72-16-47, inclusive, commonly referred to as the Emergency School Tax, under the provisions whereof a sales tax at the rate *1062 therein prescribed was levied upon persons, firms and corporations transacting business within the State of New Mexico. It was the contention of the plaintiffs before the lower court, that insurance adjusters of the state were exempt from the payment of the sales tax by reason of the provisions of 1953 Comp., § 58-5-1, heretofore quoted. Indeed, prior to the month of June, 1956, not only had no effort theretofore been made by the defendants or their predecessors in office to collect the Emergency School Tax from the plaintiffs or other insurance adjusters but, actually, the office of defendants administering said Emergency School Tax had construed the law up to that time, as exempting adjusters from the payment of the sales tax. For instance, the director of the Emergency School Tax Division, a predecessor of one of the defendants, on or about May 15, 1956, wrote the Hulsman Claim Service of Albuquerque, New Mexico, a letter advising such service that insurance adjusters were not subject to the sales tax. A directive from the office of the then Director of Emergency School Tax Division, Bureau of Revenue, was issued on or about May 15, 1956, to all district supervisors of the State of New Mexico, advising them the insurance adjusters were not subject to the sales tax act. Nevertheless, on or about the 21st day of June, 1956, the same Director, a predecessor of one of these defendants, wrote the Hulsman Claim Service advising it that insurance adjusters were subject to the sales tax. This was the first intimation of any kind received by plaintiffs of a change in policy by the office or offices of the defendants. Accordingly, during the latter part of 1956 the office of the Emergency School Tax Division of the Bureau of Revenue of the State of New Mexico, through its then Director, made demand upon plaintiffs herein for payment of sales tax as provided under the provisions of 1953 Comp., §§ 72-16-1 to 72-16-47, covering the period from the first day of April, 1953, to March 31, 1956, in the total amount of $8,099.67, issuing a notice of claim of tax lien for said amount and filing same in the office of the county clerk of Bernalillo County. Although the complaint in this cause refers to taxes assessed for a specific period and the debit voucher and notice of tax lien issued in connection therewith were made a part of the complaint, all parties agreed that the primary question involved and argued before the court by the parties herein was whether insurance adjusters doing business within the State were or were not subject to the sales tax. As said by counsel for the plaintiffs: "The question of the specific tax involved was purely incidental and was at all times so treated by the parties." An agreed statement of facts was filed by the parties to the cause and after a hearing upon it the trial court entered a judgment following the filing by the trial judge of a memorandum opinion upholding the contention of the defendants and against the position taken by the plaintiffs. It was at this point and after the court's memorandum opinion had been filed, but prior to the entry of judgment thereon, that the parties entered into what the attorneys on both sides considered a fair and equitable settlement of the issues involved. The stipulation of settlement was entered into by the Attorney General of the State of New Mexico on behalf of the plaintiffs under the authority of the provisions of 1953 Comp., § 17-1-15. Notwithstanding the absence of any indication that the stipulation was tainted by fraud, misrepresentation, mistake or improper motives on the part of anyone, insofar as anything said, done or found by the trial judge was concerned, he declined to approve the stipulation and entered a judgment denying all relief to the plaintiffs. It is from that judgment this appeal is prosecuted for a review and correction thereof. The trial court was obviously of the opinion that the Attorney General lacked the constitutional power to bind the State by the stipulation submitted. *1063 As an introduction to their argument counsel for the plaintiff set out the statute under which it is said the Attorney General acted in signing the Stipulation of Settlement he did. It reads: The considerations, six in number, which it is said were persuasive factors in inducing the signing of the stipulation by the Attorney General and the attorneys for the Bureau of Revenue, are set out in the brief in chief, as follows: Counsel for the plaintiff urge upon us, strongly, that the Attorney General and the attorney for the Bureau of Revenue, were acting squarely within the power conferred by the foregoing statute and that the trial court could not properly withhold its approval of the stipulation. While agreeing the trial court is duty bound to scrutinize, carefully, judgments submitted to it for entry, they assert, nevertheless, that it was neither within its power, nor was it the duty of the court, to substitute its judgment for that of the parties, acting through their counsel, on matters compromised under the circumstances here present. It was agreed by the settlement embodied in the written stipulation that the liability or non-liability of the plaintiffs for payment of the sales tax demanded, as well as all prior taxes accruing since the enactment of 1953 Comp., §§ 72-16-1 to 72-16-47, presented a justiciable controversy, the plaintiffs claiming non-liability and the defendants asserting their liability. The pleadings thus present a case where, if plaintiffs be correct, they owe nothing under the Emergency School Tax Act and, if defendants be correct, the plaintiffs owe it all. It was in such circumstances that the parties acting through their respective *1064 counsel were moved to compromise the claim by the written stipulation, whereby it was agreed: Strangely, though not altogether unusual, the same case is relied upon by both the plaintiffs and by the trial court in support of the settlement agreed upon by the parties. The case mentioned is that of State v. State Investment Company, 30 N.M. 491, 239 P. 741, 746. The trial judge quoted a portion of the opinion in that case relating to both the power and the duty of the court to investigate carefully all settlements made by the Attorney General under the statute quoted, supra, to-wit, 1953 Comp., § 17-1-15, as follows: The dissenting opinion of the late Justice Hudspeth in Board of County Com'rs of Quay County v. Wasson, 37 N.M. 503, 24 P.2d 1098, in which he also quoted the same language from our opinion in State v. State Investment Co., supra, was referred to by the trial judge in his supplemental opinion filed, though it was agreed the Wasson case did not involve the statute with which we are here concerned on powers of the Attorney General. This Court in State v. State Investment Company, cited above, was dealing with the identical statute, 1953 Comp., § 17-1-15, already quoted, in a tax suit, as here, involving the power of the Attorney General and District Attorney to sign a written stipulation compromising a claim for ad valorem taxes. The power was challenged by virtue of Const., Art. 4, § 32, reading: First, the court dealt with power of the Attorney General and District Attorney under 1953 Comp., § 17-1-15, supra. The court said: After holding the statute did apply to tax suits, the court went on to meet the claim that the Attorney General was debarred by Const., Art. 4, § 32, from agreeing to a compromise of the tax claim in the suits involved, and held against the contention, saying of the proviso: This Court used other language in State v. State Investment Co., supra, pertinent to the present situation. It said: Speaking of the powers of the Attorney General, at large, the author of the text on the subject in 6 C.J. 814, said: See, also, the cases of State ex rel. Wilson v. Young, 44 Wyo. 6, 7 P.2d 216, 81 A.L.R. 114, State v. Finch, 128 Kan. 665, 280 P. 910, 66 A.L.R. 1369, and State ex rel. Carmichael v. Jones, 252 Ala. 479, 41 So. 2d 280, 282, for typical cases dealing with the general powers of the Attorney General, many of which are in states having a constitutional proviso similar to our Art. 4, § 32, cited above. *1066 In State ex rel. Carmichael v. Jones, supra, the Supreme Court of Alabama, among other things, said: It is, of course, to be presumed that in lending his approval to a settlement such as this, the trial judge will observe the words of caution to be found in our own case of State v. State Investment Co., supra, to make sure there is a complete absence in the evidence of any factor touching the integrity of the motives inducing the settlement. Certainly, there is an entire absence of any such implication in the case at bar. In like manner, it is apt to remark, as reflected in the persuasive comment of the trial judge, found in the original and supplemental opinions filed in the cause, that he questioned both the power of the Attorney General to enter into the settlement proposed, and its wisdom, as well; and above all, his own power to approve it, but never the good faith of the parties making the settlement. It was entitled to his approval which he mistakenly withheld. The conclusion reached on the question just decided, namely, power of the Attorney General to make a binding stipulation such as was subscribed by him, renders it unnecessary to determine the controversy as to which of the opposing counsel were right on the critical issue of liability or non-liability of the plaintiffs for payment of the sales tax imposed by 1953 Comp., §§ 72-16-1 to 72-16-47 in spite of the exemption claimed by plaintiffs under 1953 Comp., § 58-5-1. We might very well end our opinion at this point but for this fact. It was suggested in the trial judge's supplemental opinion that he was justified in declining to enter a judgment on the stipulation filed because (1) it was outside the scope of the pleadings and, (2) it was not based upon a petition for further relief, as prescribed by the declaratory judgment act. 1953 Comp., §§ 22-6-1 to 22-6-3, incl. The second section provides: We think this contention ignores the fact that, as shown by the trial court's statement of the issues, set out at the beginning of this opinion, the complaint in the case sought (1) a permanent injunction against enforcement; (2) a declaration that 1953 Comp., § 58-5-1, exempts the plaintiffs from the tax involved, and (3) all other just and proper relief. And, further, it is to be observed that a consent judgment based upon the stipulation was asked therein. We think an order of confirmation *1067 of the stipulation of settlement was proper under the allegations of the complaint, as amplified by the stipulation itself and the consent therein to entry of judgment approving same. For authorities illuminating the subject and supporting the conclusion we reach on this question, see Simmons v. Reynolds, 179 Kan. 785, 298 P.2d 345; Gray v. Defa, 103 Utah 339, 135 P.2d 251, 155 A.L.R. 495; Washington-Detroit Theatre Company v. Moore, 249 Mich. 673, 229 N.W. 618, 68 A.L.R. 105 (109). In 1 Anderson on Declaratory Judgments 706, § 304, the author states: In closing we desire to express our appreciation to attorneys Richard G. Bean and Edward P. Snead, Jr., of the firm of Bean and Snead of Roswell, New Mexico, and Harold A. Roberts of Santa Fe, New Mexico, for rendering valuable service to us as amici curiae in this case under appointment of the Court. It follows from what has been said that the trial court erred in declining to lend its approval to the stipulation filed by the parties. Accordingly, the judgment and decree entered by the trial court will be and the same is hereby vacated and we ourselves shall and do hereby approve said stipulation and declare the same entitled to enforcement according to its terms and provisions. It is so ordered. LUJAN, C. J., and McGHEE, COMPTON and CARMODY, JJ., concur.