Source: https://casetext.com/case/great-northern-ins-co-v-read
Timestamp: 2019-12-13 11:39:37
Document Index: 90830690

Matched Legal Cases: ['§ 10478', '§ 41', '§ 12665', '§ 5', '§ 12665', '§ 12665', '§ 12665', '§ 3669', '§ 6', '§ 12665', '§ 7', '§ 2', '§ 7', '§ 12665', '§ 12665', '§ 2', '§ 644', '§ 12665', '§ 12665']

Great Northern Ins. Co. v. Read, 322 U.S. 47 | Casetext
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Great Northern Ins. Co.v.Read
Section 80-11-11, Utah Code Anno. 1943, authorizing any taxpayer who has paid taxes under protest to bring…
The theory and reasoning of our earlier cases suggest the States do retain a constitutional immunity from…
holding that a damages suit against a state officer in his official capacity was barred because it was functionally a suit against the State
Summary of this case from Shieldalloy Metallurgical Corporation v. State
emphasizing that courts should not read into a state's waiver of the sovereign immunity it possesses in state court an intent to waive Eleventh Amendment immunity in federal court, as that “is not consonant with our dual system” of government
Summary of this case from Grajales v. P.R. Ports Auth.
analyzing suits against both federal and State officials
Argued January 31, 1944. Decided April 24, 1944.
1. On review by certiorari of a judgment of the Circuit Court of Appeals, the respondent may urge in support of the judgment a contention which was sustained by the District Court. P. 49. 2. A foreign insurance company brought suit in the federal district court of Oklahoma against the Insurance Commissioner of Oklahoma, to recover payments made to him pursuant to a state statute which levied a tax of four per cent on premiums received by foreign insurance companies in the State. Section 12665, Oklahoma Statutes of 1931, prescribed a judicial procedure for recovery of money wrongfully collected as taxes. Held: (1) The suit was a suit against the State, and not maintainable without its consent. Eleventh Amendment; Smith v. Reeves, 178 U.S. 436. P. 53. (2) The State had consented to its being sued only in its own courts, and the suit was therefore not maintainable in the federal court. P. 55. 3. A State may limit to its own courts suits against it to recover taxes; and its intent in respect of such suits to submit to the jurisdiction of courts other than those of its own creation must clearly appear. P. 54. 4. Smyth v. Ames, 169 U.S. 466; Reagan v. Farmers' Loan Trust Co., 154 U.S. 362; and Gunter v. Atlantic Coast Line, 200 U.S. 273, distinguished. P. 55. 136 F.2d 44, vacated.
Messrs. Charles R. Holton and John A. Johnson, with whom Mr. Herbert R. Tews was on the brief, for petitioner. Mr. Fred Hansen, First Assistant Attorney General of Oklahoma, with whom Mr. Randell S. Cobb, Attorney General, was on the brief, for respondent.
This writ brings here for review the action of petitioner, a foreign insurance company, to recover taxes paid to respondent, the Insurance Commissioner of Oklahoma, which were levied by § 10478, Oklahoma Statutes 1931, as amended by Chapter 1(a), Title 36, Session Laws of Oklahoma 1941. This was an annual four per cent tax on premiums received by foreign insurance companies in Oklahoma, and it, together with certain specified fees, was in lieu of all other taxes and fees in Oklahoma. Petitioner paid the tax under protest and, alleging diversity of citizenship, 28 U.S.C. § 41, brought suit against the Insurance Commissioner in the District Court of the United States. The procedure for recovery is laid down by § 12665, Oklahoma Statutes 1931.
"12665. Payment Under Protest Where Relief by Appeal Not Provided — Action to Recover.
Respondent challenged the right of petitioner to seek relief in the District Court by the defense in its answer that the complaint fails to state a claim upon which relief can be granted. R.C.P. 12(b) and (e). This challenge, on the ground that the state had not consented to be sued, was sustained by the District Court. The contention is available here to sustain the judgment on appeal. LeTulle v. Scofield, 308 U.S. 415.
There is here no want of jurisdiction of the parties or subject matter. We are not passing upon a certification of an issue as to jurisdiction such as arose under the Act of March 3, 1891, § 5, 26 Stat. 827, in Illinois Central R. Co. v. Adams, 180 U.S. 28, 37. If this is a suit against the state, a failure to show the state's consent to be sued in the face of this answer would be fatal. Cf. Berryessa Cattle Co. v. Sunset Pacific Oil Co., 87 F.2d 972, 974.
As the suit was against a state official as such, through proceedings which were authorized by statute, to compel him to carry out with the state's funds the state's agreement to reimburse moneys illegally exacted under color of the tax power, this Court held, p. 439, it was a suit against the state. The state would be required to pay. The case therefore is plainly distinguishable from those to recover personally from a tax collector money wrongfully exacted by him under color of state law, Atchison, T. S.F. Ry. Co. v. O'Connor, 223 U.S. 280; cf. Matthews v. Rodgers, 284 U.S. 521, 528; to recover under general law possession of specific property likewise wrongfully obtained or held, Tindal v. Wesley, 167 U.S. 204, 221; Virginia Coupon Cases, 114 U.S. 269, 285; United States v. Lee, 106 U.S. 196; to perform a plain ministerial duty, Board of Liquidation v. McComb, 92 U.S. 531, 541; Rolston v. Missouri Fund Comm'rs, 120 U.S. 390, 411; or to enjoin an affirmative act to the injury of plaintiff, Sterling v. Constantin, 287 U.S. 378, 393; Tomlinson v. Branch, 15 Wall. 460; Davis v. Gray, 16 Wall. 203, 220; In re Tyler, 149 U.S. 164, 190. Only in Smith v. Reeves was the action authorized by statute against the officer in his official capacity. In the other instances relief was sought under general law from wrongful acts of officials. In such cases the immunity of the sovereign does not extend to wrongful individual action and the citizen is allowed a remedy against the wrongdoer personally.
Pennoyer v. McConnaughy, 140 U.S. 1, 10. Compare Louisiana v. Jumel, 107 U.S. 711, 726.
A suit against a state official under § 12665 to recover taxes is held to be a suit against the state by Oklahoma and the remedy exclusive of other state remedies. Antrim Lumber Co. v. Sneed, supra, 175 Okla. at 51, 52 P.2d at 1045. This interpretation of an Oklahoma statute by the Supreme Court of the state accords with our view, as set out above, of the meaning of a suit against a state. Petitioner brought this action against the collector, the Insurance Commissioner, in strict accord with the requirements of § 12665. It alleged that there was no appeal provided by Oklahoma laws from defendant's action in collecting and gave notice of protest and suit to defendant at the time of payment in the language of the section. By so doing petitioner was relieved of the necessity of establishing that the payment was not voluntary and obtained the advantage of a statutory lien lis pendens on the tax payment.
Board of Commissioners v. Ward, 68 Okla. 287, 288, 173 P. 1050; Broadwell v. Board of Commissioners, 71 Okla. 162, 163, 175 P. 828; cf. Ward v. Love County, 253 U.S. 17, 22; Broadwell v. Carter County, 253 U.S. 25; Carpenter v. Shaw, 280 U.S. 363, 369; Railroad Co. v. Commissioners, 98 U.S. 541, 544; Stratton v. St. Louis S.W. Ry. Co., 284 U.S. 530, 532.
By § 12665, Oklahoma creates a judicial procedure for the prompt recovery by the citizen of money wrongfully collected as taxes. It is the sovereign's method of tax administration. Oklahoma designates the official to be sued, orders him to hold the tax, empowers its courts to do complete justice by determining the amount properly due and directs its collector to pay back any excess received to the taxpayer. The state provides this procedure in lieu of the common law right to claim reimbursement from the collector. The issue of coercion and duress was eliminated at the pre-trial conference without objection by the petitioner. The section makes sure the taxpayer's recovery of illegal payments. The section is like the California statute involved in Smith v. Reeves, supra, except for the immaterial difference that the money collected is directed to be held separate and apart by the collector instead of being held in the general funds of the State Treasurer. See § 3669, California Political Code, as amended by California Statutes (1891) 442. In the Reeves case, as here, the suit was against the official, not the individual. The Oklahoma section differs from the Colorado law, § 6, Chapter 211, Session Laws of Colorado 1907, considered in Atchison, T. S.F. Ry. Co. v. O'Connor, supra, in that the Colorado statute left the taxpayer to his remedy against the collector and merely directed the refund of the tax by the Treasurer in accordance with any judgment or decree which might be obtained. In the O'Connor case, in accordance with the statute, the suit, as this Court's opinion shows, was against the individual, not the official. We are of the view that the present proceeding under § 12665 is like Smith v. Reeves, a suit against the state.
But it is urged that if this is a suit against the state, Oklahoma has consented to this action in the federal court. Cf. Reagan v. Farmers' Loan Trust Co., 154 U.S. 362, 391.
The principle of immunity from litigation assures the states and the nation from unanticipated intervention in the processes of government, while its rigors are mitigated by a sense of justice which has continually expanded by consent the suability of the sovereign. The history of sovereign immunity and the practical necessity of unfettered freedom for government from crippling interferences require a restriction of suability to the terms of the consent, as to persons, courts and procedures. Antrim Lumber Co. v. Sneed, 175 Okla. 47, 52 P.2d 1040; Patterson v. City of Checotah, 187 Okla. 587, 103 P.2d 97; Beers v. Arkansas, 20 How. 527; Kawananakoa v. Polyblank, 205 U.S. 349; Minnesota v. United States, 305 U.S. 382, 388; United States v. U.S. Fidelity Guaranty Co., 309 U.S. 506, 512. The immunity may, of course, be waived. Clark v. Barnard, 108 U.S. 436, 447. When a state authorizes a suit against itself to do justice to taxpayers who deem themselves injured by any exaction, it is not consonant with our dual system for the federal courts to be astute to read the consent to embrace federal as well as state courts. Federal courts, sitting within states, are for many purposes courts of that state, Madisonville Traction Co. v. Mining Co., 196 U.S. 239, 255, but when we are dealing with the sovereign exemption from judicial interference in the vital field of financial administration a clear declaration of the state's intention to submit its fiscal problems to other courts than those of its own creation must be found.
Keifer Keifer v. R.F.C., 306 U.S. 381, is not to the contrary. When authority to sue is given, that authority is liberally construed to accomplish its purpose. United States v. Shaw, 309 U.S. 495, 501.
Cf. Matthews v. Rodgers, 284 U.S. 521, 525. The Federal Government's consent to suit against itself, without more, in a field of federal power does not authorize a suit in a state court. Stanley v. Schwalby, 162 U.S. 255, 270; Minnesota v. United States, 305 U.S. 382, 384, 389.
The Oklahoma section in question, 12665, was enacted in 1915 as a part of a general amendment to then existing tax laws. Session Laws 1915, p. 149, Chap. 107, Art. One, subdivision B, § 7. This subdivision of the act of 1915 is concerned with administrative review of boards of equalization and provides a complete procedure including review by the district and Supreme Court of Oklahoma, as the case may be, which are given authority to affirm, modify or annul the action of the boards. §§ 2 and 3. Section 6 requires the payment of the taxes which fall due, pending administrative review, and provides for recovery of such taxes in accordance with the ultimate finding on review in language practically identical with that of § 7 (§ 12665) here involved. Furthermore, § 12665 gives directions to the Oklahoma officer as to his obligations, requires the court to give precedence to these cases and directs the kind of judgment to be returned, see note 1, supra, which is quite different in language, if not in effect, from the judgment a federal court would render. It is clear to us that the legislature of Oklahoma was consenting to suit in its own courts only. Chandler v. Dix, 194 U.S. 590.
Smith v. Reeves, supra, p. 445, holds that an act of a state is valid which limits to its own courts suits against it to recover taxes. There California's intention to so limit was made manifest by authorizing the state officer to demand trial in the Superior Court of Sacramento County. Atchison, T. S.F. Ry. Co. v. O'Connor, considered above at p. 53, is not applicable since it was not a suit against the state.
Petitioner urges that Smyth v. Ames, 169 U.S. 466, 517, and Reagan v. Farmers' Loan Trust Co., 154 U.S. 362, 391, 392, are precedents which lead to a contrary conclusion on this issue of the suability of Oklahoma in the District Court of the United States. The former is clearly inapposite. That case involved proceedings to enjoin enforcement of an allegedly unconstitutional state statute providing for intrastate railroad rates. Since the state act provided a remedy, the state took the position that federal equity jurisdiction was ousted. This Court held the federal equity jurisdiction continued to restrain unconstitutional acts by state officers which threatened irreparable damage. pp. 474, 477, 515-19.
To repeat, this is a simple suit to get back money from a collector who for present purposes had no right to demand it. So far as the federal fiscal system is concerned, this common law remedy has been enforced throughout our history, barring only a brief interruption. See United States v. Nunnally Investment Co., 316 U.S. 258. And if, instead of avoiding the serious consequences of not paying this state tax, the plaintiff had resisted payment and sought an injunction against the tax collector for seeking to enforce the unconstitutional tax, under appropriate circumstances the federal courts would not have been without jurisdiction. See, e.g., Western Union Telegraph Co. v. Trapp, 186 F. 114; Ward v. Love County, 253 U.S. 17; Carpenter v. Shaw, 280 U.S. 363. Finally, as I read the opinion of the Court, even a suit of this very nature for the recovery of money paid for a disputed tax will lie against the collector in what is called his individual capacity; that is, a suit against the same person on the same cause of action for the same remedy can be brought, if only differently entitled. In view of the history of such a suit as this and of the incongruous consequences of disallowing it in the form in which it was a case in the federal court in Oklahoma, the claims of sovereignty which are sought to be respected must surely be attenuated and capricious.
The Swartwout scandal led to the Act of March 3, 1839 (§ 2, 5 Stat. 339, 348), which this Court construed as a withdrawal of the suability of the collector. Cary v. Curtis, 3 How. 236. That decision was rendered on January 21, 1845, and Congress promptly restored the old liability. Act of Feb. 26, 1845, c. XXII, 5 Stat. 727. See Brown, A Dissenting Opinion of Mr. Justice Story (1940) 26 Va. L. Rev. 759. Again, in view of the complicated administrative problems raised by the invalidation of the Agricultural Adjustment Act, Congress devised a special scheme for the recovery of the illegal exactions made under the Act. 49 Stat. 1747, 7 U.S.C. § 644 et seq.; Anniston Mfg. Co. v. Davis, 301 U.S. 337.
The Eleventh Amendment has put state immunity from suit into the Constitution. Therefore, it is not in the power of individuals to bring any State into court — the State's or that of the United States — except with its consent. But consent does not depend on some ritualistic formula. Nor are any words needed to indicate submission to the law of the land. The readiness or reluctance with which courts find such consent has naturally been influenced by prevailing views regarding the moral sanction to be attributed to a State's freedom from suability. Whether this immunity is an absolute survival of the monarchial privilege, or is a manifestation merely of power, or rests on abstract logical grounds, see Kawananakoa v. Polyblank, 205 U.S. 349, it undoubtedly runs counter to modern democratic notions of the moral responsibility of the State. Accordingly, courts reflect a strong legislative momentum in their tendency to extend the legal responsibility of Government and to confirm Maitland's belief, expressed nearly fifty years ago, that "it is a wholesome sight to see `the Crown' sued and answering for its torts." 3 Maitland, Collected Papers, 263.
"With us every official, from the Prime Minister down to a constable or a collector of taxes, is under the same responsibility for every act done without legal justification as any other citizen." Doubtless this statement of Dicey's, Law of the Constitution, 8th ed., at p. 189, 9th ed. at p. 193, was an idealization of actuality. But in the perspective of our time its validity as an ideal has gained and not lost.
Assuming that the proceeding in this case to recover from the individual moneys demanded by him in defiance of the Constitution is a suit against the State, compare Ex parte Young, 209 U.S. 123, 155; Atchison, T. S.F. Ry. Co. v. O'Connor, 223 U.S. 280, Oklahoma has consented that he be sued. The only question therefore is as to the scope of the consent. Has she confined the right to sue to her own courts and excluded the federal courts within her boundaries? She has not said so. Is such restriction indicated by practical considerations in the administration of state affairs? If it makes any difference to Oklahoma whether this suit against a tax collector is pressed in an Oklahoma state court rather than in a federal court sitting in Oklahoma, the difference has not been revealed. There is here an entire absence of the considerations that led to the decision in Burford v. Sun Oil Co., 319 U.S. 315. There it was deemed desirable, as a matter of discretion, that a federal equity court should step aside and leave a specialized system of state administration to function. Here the suit in a federal court would not supplant a specially adaptable state scheme of administration nor bring into play the expert knowledge of a state court regarding local conditions. The subject matter and the course of the litigation in the federal court would be precisely the same as in the state court. The case would merely be argued in a different building and before a different judge. Language restrictive of suit in a federal court is lacking, and intrinsic policy does not suggest restrictive interpretation to withdraw from a federal court questions of federal constitutional law.
Legislation giving consent to sue is not to be treated in the spirit in which seventeenth century criminal pleading was construed. Only by such overstrained rendering of the Oklahoma statute does the Court finally achieve exclusion of the right of the plaintiff to go to a federal court. To the language of that statute I now turn. By § 12665 Oklahoma Statutes, 1931, the State authorized an action to recover moneys illegally exacted as a tax, in a situation like the present, where the exaction is one "from which the laws provide no appeal." The relevant jurisdictional provision is as follows: "All such suits shall be brought in the court having jurisdiction thereof, and they shall have precedence therein. . . ." The part that the federal courts play in the grant of such jurisdiction by the States is not a new problem. With his customary hard-headedness Chief Justice Waite, for this Court, stated the guiding consideration in ascertaining the relation of the federal court within a State to the judicial process recognized by that State: "While the Circuit Court may not be technically a court of the Commonwealth, it is a court within it; and that, as we think, is all the legislature intended to provide for." Ex parte Schollenberger, 96 U.S. 369, 377. This conception of a federal court as a court within the State of its location has ever since dominated our decisions. See, e.g., Madisonville Traction Co. v. Mining Co., 196 U.S. 239, 255-56; Neirbo Co. v. Bethlehem Corp., 308 U.S. 165, 171. It is a conception which has been acted upon by state legislatures. For jurisdictional purposes federal courts have been assimilated to the courts of the States in which they may sit. When we are dealing with jurisdictional matters legislation should be interpreted in the light of such professional history. Even if an ambiguity could be squeezed out of a grant of jurisdiction which applies so aptly to a federal court in Oklahoma as to an Oklahoma state court — "suits shall be brought in the court having jurisdiction thereof" — neither logic nor history nor reason counsels an interpretation that attributes to the State hostility against a suit in a federal court on an exclusively federal right as to which the last say in any event belongs to a federal court.
Of course the State can at any time withdraw its consent to be sued. See Beers v. Arkansas, 20 How. 527. But statutes have steadily enlarged the range of a State's suability and rarely has there been a recession. See, generally, Borchard, State and Municipal Liability in Tort — Proposed Statutory Reform (1934) 20 A.B.A.J. 747; Borchard, Governmental Responsibility in Tort (1926) 36 Yale L.J. 1, 17, (1927) 36 Yale L.J. 757, 1039, (1928) 28 Col. L. Rev. 577, 735.
The situation thus presented by the Oklahoma legislation is very different from that which was here in Chandler v. Dix, 194 U.S. 590. There a suit was brought against state officials to remove a cloud on title to lands claimed by the State. The relief that was sought and the procedure for pursuing it plainly indicated "that the legislature had in mind only proceedings in the courts of the State. A copy of the complaint is to be served upon the prosecuting attorney, who is to send a copy thereof within five days to the Auditor General, and this is to be in lieu of service of process. It then is left to the discretion of the Auditor General to cause the Attorney General to represent him, and it is provided that in such suits no costs shall be taxed. These provisions with regard to procedure and costs show that the statute is dealing with a matter supposed to remain under state control. . . . [The] statute does not warrant the beginning of a suit in the federal court to set aside the title of the State." 194 U.S. at 591-592. The marked difference between the Michigan statute and this Oklahoma statute is further evidenced by the fact that § 12665 gives an action to recover not merely illegal state taxes but also taxes of the "county or sub-division of the county" that have been illegally collected. But counties or their subdivisions do not enjoy immunity from suit. Lincoln County v. Luning, 133 U.S. 529; Seattle v. Oregon Washington R. Co., 255 U.S. 56, 71. If the other jurisdictional requirements are present, they can be sued in a federal court without the leave of Oklahoma. It is not, I submit, a rational way to construe the Oklahoma statute, dealing with a particular type of illegal exaction raising the same kind of issue and involving the same procedure, so as to recognize jurisdiction of federal courts over suits against the county and its sub-division but to find a purpose to exclude suits as to illegal state exactions.