Title: Bd. of Supervisors v. FCS Bldg. Association

State: virginia

Issuer: Virginia Supreme Court

Document:

Present:  Carrico, C.J., Compton, Lacy, Hassell, Keenan, and 
Kinser, JJ., and Whiting, Senior Justice 
 
BOARD OF SUPERVISORS OF 
FAIRFAX COUNTY 
 
v.  Record No. 962533 
OPINION BY JUSTICE BARBARA MILANO KEENAN 
                                                 October 31, 1997 
FCS BUILDING ASSOCIATION 
 
 
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY 
 
M. Langhorne Keith, Judge 
 
 
In this appeal, we consider whether the trial court erred in 
awarding interest on a refund of erroneously assessed real estate 
taxes when the local ordinance authorizing the payment of such 
interest was repealed prior to entry of the final judgment order. 
 
In December 1995, FCS Building Association (FCS) filed a 
second amended motion for judgment and application for correction 
of assessments against the Board of Supervisors of Fairfax County 
(Board) for the 1990-1995 tax years regarding two parcels of land 
owned by FCS.  In a bench trial, the court modified the 
assessments for tax years 1990, 1991, 1993, 1994, and 1995, and 
ordered the Board to refund FCS the principal amount of 
$129,353.18.  The trial court also ordered interest on the refund 
for tax years 1990 and 1991 from the dates the taxes were paid.  
The Board appealed the trial court's judgment solely with respect 
to the award of interest.  
 
The Board argues that interest cannot be awarded against a 
local government on a refund of erroneously assessed taxes 
without its consent.  The Board notes that the ordinance 
authorizing such interest was repealed in 1992, more than four 
years before entry of the final order in this case.  Prior to its 
repeal in April 1992, former Fairfax County Code § 4-4-4 provided 
that 
 
[f]or tax year 1980 and subsequent years, all 
erroneously assessed taxes and any penalty and interest 
paid thereon . . . shall be repaid with interest at the 
same rate imposed for delinquent taxes.  Such interest 
shall run from the date such taxes were due or were 
paid, whichever is later. 
 
 
The ordinance repealing this provision
* specified that the 
repeal was effective immediately, and it did not contain a 
"savings clause" authorizing the payment of interest on any tax 
refunds ordered after the effective date of the repeal.  Thus, 
the Board argues that the trial court lacked authority to award 
interest to FCS, although FCS paid the erroneously assessed taxes 
for 1990 and 1991 before the ordinance was repealed. 
 
In response, FCS asserts that, since former Fairfax County 
Code § 4-4-4 was effective when the erroneously assessed taxes 
were paid, FCS acquired a substantive right to interest on its 
excess payments at the time the payments were made.  FCS alleges 
that this substantive right could not be disturbed by retroactive 
application of the repeal of former Fairfax County Code § 4-4-4. 
 Thus, FCS contends that it is entitled to interest provided by 
the former ordinance despite its repeal.  We disagree with FCS. 
 
Interest may be awarded against a sovereign only by its 
consent.  Railway Express Agency, Inc. v. Commonwealth, 196 Va. 
1059, 1066, 87 S.E.2d 183, 187 (1955); Commonwealth v. Safe 
Deposit & Trust Co., 155 Va. 458, 460, 155 S.E. 897, 898 (1930). 
 A trial court may order interest on a refund of erroneously 
                     
     
*See Fairfax County Code § 22-92.4 
assessed local taxes only if the payment of interest is 
authorized by an ordinance enacted pursuant to Code § 58.1-3991. 
 City of Winchester v. American Woodmark Corp., 250 Va. 451, 460, 
464 S.E.2d 148, 153 (1995); see Code § 58.1-3987. 
 
Code § 58.1-3991 permits the governing body of any county, 
city, or town to enact an ordinance requiring the payment of 
interest on refunds of erroneously assessed local taxes.  The 
statute requires that any such ordinance provide that interest 
shall run from the date the taxes were due or were paid, 
whichever is later.  Absent such an ordinance, the local 
government has not furnished the consent required under the 
common law for the payment of interest by a sovereign.  See 
American Woodmark, 250 Va. at 460, 464 S.E.2d at 153; Railway 
Express Agency, Inc. v. Commonwealth, 196 Va. 1069, 1072, 87 
S.E.2d 188, 190 (1955); Safe Deposit & Trust, 155 Va. at 460, 155 
S.E. at 898. 
 
An ordinance enacted pursuant to Code § 58.1-3991 does not 
create a substantive right but is purely remedial in nature.  
Substantive rights are included in that part of the law 
addressing the creation of duties, rights, and obligations.  
Commonwealth v. Rafferty, 241 Va. 319, 323, 402 S.E.2d 17, 20 
(1991); Rotonda Condominium Unit Owners Ass'n v. Rotonda Assoc., 
238 Va. 85, 89, 380 S.E.2d 876, 879 (1989); Shiflet v. Eller, 228 
Va. 115, 120, 319 S.E.2d 750, 754 (1984).  In contrast, remedial 
or procedural laws prescribe methods of obtaining redress or 
enforcement of substantive rights.  Rafferty, 241 Va. at 323, 402 
S.E.2d at 20; Shiflet, 228 Va. at 120, 319 S.E.2d at 754.  Thus, 
remedial laws do not create rights but merely operate in 
furtherance of already existing rights.  See Walke v. Dallas, 
Inc., 209 Va. 32, 35, 161 S.E.2d 722, 724 (1968). 
 
Former Fairfax County Code § 4-4-4 was a purely remedial law 
because it provided a taxpayer a means of redress that was 
available only after the taxpayer established a substantive right 
to a refund under Code § 58.1-3984.  Once a trial court 
determined that taxes were erroneously assessed against a 
taxpayer and ordered a refund, the former ordinance provided a 
means of redress in furtherance of the taxpayer's already 
existing right to the refund. 
 
As a remedial provision, this section was subject to repeal 
at the will of the Board as long as reasonable opportunity and 
time were allowed for the enforcement of substantive or vested 
rights.  See Harris v. DiMattina, 250 Va. 306, 312, 462 S.E.2d 
338, 340 (1995); Creteau v. Phoenix Assurance Co., 202 Va. 641, 
645, 119 S.E.2d 336, 340 (1961); Phipps v. Sutherland, 201 Va. 
448, 452, 111 S.E.2d 422, 425 (1959); Duffy v. Hartsock, 187 Va. 
406, 416, 46 S.E.2d 570, 574 (1948).  In repealing the ordinance, 
the Board exercised its authority to withdraw consent to pay 
interest on refunds of erroneously assessed taxes.  See Railway 
Express, 196 Va. at 1073, 87 S.E.2d at 190.  Since the repeal 
provision contained no "savings clause" authorizing interest on 
taxes erroneously paid prior to the repeal, the trial court erred 
in awarding FCS interest pursuant to a repealed ordinance.  See 
Terry v. McClung, 104 Va. 599, 601, 52 S.E. 355, 356 (1905).   
 
For these reasons, we will reverse the trial court's award 
of interest to FCS, modify the judgment accordingly, and enter 
final judgment in favor of FCS. 
                                              Reversed in part,
                                              modified,
                                              and final judgment.