Case Name: Associated Hospital Service, Inc., Respondent, v. City of Milwaukee, Appellant. [Two cases.]
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1962-11-27
Citations: 18 Wis. 2d 183
Docket Number: 
Parties: Associated Hospital Service, Inc., Respondent, v. City of Milwaukee, Appellant. [Two cases.]
Judges: 
Reporter: Wisconsin Reports Second
Volume: 18
Pages: 183–197

Head Matter:
Associated Hospital Service, Inc., Respondent, v. City of Milwaukee, Appellant. [Two cases.]
October 31
November 27, 1962.
For the appellant there was a brief by John J. Fleming, city attorney, and Ewald L. Moerke, Jr., and Harvey G. Odenbrett, assistant city attorneys, and oral argument by Mr. Moerke and Mr. Odenbrett.
For the respondent there was a brief by Foley, Capwell, Duersten & Foley of Racine, attorneys, and Walter H. Bender of Milwaukee of counsel, and oral argument by Mr. Rex Capwell and Mr. Bender.

Opinion:
Brown, C. J.
The issue raised on appeal is whether a municipality must pay interest on a refund of real and personal-property taxes which were illegally assessed and were paid under protest.
The legislature, by enacting sec. 62.11 (5), Stats., empowered municipalities to levy taxes. The city of Milwaukee adopted this statutory grant in 1934 by enacting sec. 6.04 of the Milwaukee city charter. The legislature has also provided for the refunding of taxes illegally assessed by municipalities by its enactment of sec. 74.73:
" (1) Any person aggrieved by the levy and collection of any unlawful tax assessed against him may file a claim therefor against the town, city, or village, whether incorporated under general law or special charter, which collected such tax in the manner prescribed by law for filing claims in other cases, and if it shall appear that the tax for which such claim was filed or any part thereof is unlawful and that all conditions prescribed by law for the recovery of illegal taxes have been complied with, the proper town board, village board, or common council of any city, whether incorporated under general law or special charter, may allow and the proper town, city, or village treasurer shall pay such person the amount of such claim found to be illegal and excessive. If any town, city, or village shall fail or refuse to allow such claim, the claimant may have and maintain an action against the same for the recovery of all money so unlawfully levied and collected of him. Every such claim shall be filed; and every action to recover any money so paid shall be brought within one year after such payment and not thereafter."
This statute, however, is silent as to the granting of interest on taxes illegally assessed. In Schlesinger v. State (1928), 195 Wis. 366, 369, 218 N. W. 440, we held that;
"When a tax-refund statute is silent as to interest, it does not imply that interest should be paid. 'On the contrary, the intention thereby disclosed is in denial of interest under it.' Kaemmerling v. State, 81 N. H. 405, 406, 128 Atl. 6, 7. Such a statute 'plainly indicates that interest is not recoverable.' Antero Reservoir Co. v. Board of Comm'rs, 75 Colo. 131, 225 Pac. 269, 271. 'If the legislature had intended to provide for the payment of interest on taxes illegally collected, when refund was made, it would have said so in unequivocal language.' Home Savings Bank v. Morris, 141 Iowa 560, 562, 120 N. W. 100, 101."
The application of the rule enunciated in that case to the facts of the present case leaves little room for doubt that the interest on the refund cannot be given.
The circuit court held that this court has made a distinction between the right to obtain interest on a refund of taxes involuntarily paid and of those voluntarily paid. By the circuit court's interpretation of this distinction, taxes involuntarily paid if illegally assessed must be refunded with interest, whereas in the latter situation no right to interest exists. In support of this theory the circuit court quotes certain portions of Schlesinger v. State (1929), 198 Wis. 381, 387, 223 N. W. 856, which is a companion case to the above-cited Schlesinger Case:
"It does not seem necessary to consider the case further. We can see no ground upon which the plaintiffs are entitled to interest. In the first place, the payment of the tax was a voluntary payment. They paid it voluntarily under and pursuant to a law which provided an exclusive remedy in case they paid more than the amount of the tax actually due. They knew what their rights would be in case they made an overpayment. They knew that the overpayment would be refunded to them by the state treasurer, or the county treasurer, as the case might be. They knew that the amount which would be refunded would be the amount of such excess without interest. As no element of coercion in duced the payment, there was no taking of property on the part of the state or county."
The voluntary payments so discussed refer to a statute which provides for the payment of inheritance taxes before they are judicially determined. After the tax is ascertained by the court, and if there has been an excess payment, the statute commands the county treasurer to refund the excess. By this statute no action has to be commenced by the taxpayer for him to obtain his refund. This procedure for refund of taxes voluntarily paid is contrasted to an action for refund brought by the taxpayer. The action for refund is in the nature of the action for money had and received which existed before the passage of sec. 74.73, Stats. A. H. Stange Co. v. Merrill (1908), 134 Wis. 514, 115 N. W. 115; Matheson v. Town of Mazomanie (1865), 20 Wis. 201 (*191). Sec. 74.73, Stats., incorporated the common-law action for money had and received. A. H. Stange Co. v. Merrill, supra. "The universal remedy accorded to the taxpayer from whom excessive or illegal taxes have been exacted is an action in the nature of money had and received, and so eminent an authority on the subject as Judge Cooley says that in such an action interest is recoverable only when expressly allowed by statute." Schlesinger v. State (1929), 198 Wis. 381, 384, 223 N. W. 856. The basic reason the taxpayer in the Schlesinger Case did not recover interest on the refund is because the statutes did not provide for any ihterest, and because he knew the overpayment would be refunded without any interest. Had he paid the taxes involuntarily and had he sought a refund by the commencement of an action, he still would not have been able to obtain any interest for such an action does not carry with it the right to interest without any express statutory provision. The circumstances in the Schlesinger Case differ from the action for refund, but the conclusion in both instances is the same; interest is not granted.
Also in support of the distinction between taxes involuntarily paid and voluntarily paid, the circuit court reasoned, and the respondent contends, that the case of Yawkey-Bissell Corp. v. Langlade (1952), 261 Wis. 524, 53 N. W. (2d) 174, is determinative of the issue in the case at bar. In that case this court granted interest on a refund of taxes involuntarily paid. However, no issue was raised in that case with respect to the interest on refunds; it was granted ingidentally to the refund.
Respondent argues that appellant is now precluded from raising the issue of whether interest should be granted because in the companion case of Associated Hospital Service v. Milwaukee (1961), 13 Wis. (2d) 447, 109 N. W. (2d) 271, in which the action was for a refund on real and personal-property taxes for 1956, 1957, and 1958, we ordered the trial court to enter judgment on the three complaints. The complaints prayed for the refund together with interest from the date of payment.
We have re-examined the briefs submitted in the 1961 Associated Hospital Service appeal, and in them no issue was raised nor was argument made upon the liability of the city for payment of interest on the illegal tax collection. Neither did this court's opinion touch upon it. The trial court had denied plaintiff-appellant's motion for summary judgment, and our mandate appearing in 13 Wis. (2d) 447, 474, 109 N. W. (2d) 271, reversed and directed judgment to be entered as prayed for in the plaintiff's complaint.
When the present two actions were commenced, the 1961 case was still pending. After the decision in that case was announced by this court, present appellant and respondent entered into stipulations in the trial court whereby appellant would refund the taxes illegally assessed in 1959 and 1960. However, they agreed that the only issue remaining to be tried was whether interest on the refunds of 1959 and 1960 should be granted.
We have held that if actions are pending between the same parties, and the issues involved are the same, a determination of such issues in one action will be res judicata in the other. Baker v. Becker (1913), 153 Wis. 369, 383, 141 N. W. 304. The issues raised in the earlier case were whether the hospital-service corporation qualified for tax exemption and whether the refund could be granted; the interest prayed for in the complaint was only incidental to the refund. The sole issue raised in the present case was whether interest on the refund should be given. The stipulations entered into by appellant and respondent indicate that it was not the intention of the parties to litigate the issue of granting interest in the previous actions, and neither party was estopped from raising the issue in the trial court or on appeal. Baker v. Becker, supra.
We have held also that a judgment is conclusive in a subsequent action between the same parties as to all matters which were litigated or which might have been litigated in the former proceedings. Werner v. Riemer (1949), 255 Wis. 386, 403, 39 N. W. (2d) 457, 39 N. W. (2d) 917. However, this rule does not apply to the instant case for the cause of action involved here arose out of a subject matter, a later assessment, different from that of the earlier case.
"Where a question of law essential to the judgment is actually litigated and determined by a valid and final personal judgment, the determination is not conclusive between the parties in a subsequent action on a different cause of action, except where both causes of action arose out of the same subject matter or transaction; . . ." Restatement, Judgments, pp. 318, 321, sec. 70.
Comment c to this section is instructive:
"Questions of law not litigated. A judgment on one cause of action is not conclusive in a subsequent action on a different cause of action as to questions of law not litigat ed in the first action. This is true even though both actions involve the same subject matter."
We are particularly unwilling to allow the law concerning interest on tax refunds presently to be determined by the mandate allowing interest in the 1961 case when that feature of the action received no attention by either counsel or this court. Therefore, we determine that the interest allowance in the prior action is not res judicata when applied to the two appeals now before us.
Respondent contends it has been deprived of the right to invest the funds paid as taxes during the time the city illegally withheld the refund; that the city has had the use of such funds during this period, and under the modern attitude toward municipal liability as explained in Holytz v. Milwaukee (1962), 17 Wis. (2d) 26, 115 N. W. (2d) 618, granting interest on refunds would simply put the parties in a true status quo.
Although the facts in this case occurred prior to the decision in the Holytz Case, we will consider this question on its merits. The abolition of municipal immunity applies to torts. The present actions for refunds are in the nature of actions for money had and received. The theory of recovery in this type of action is based on quasi-contract law. Arjay Investment Co. v. Kohlmetz (1960), 9 Wis. (2d) 535, 539, 101 N. W. (2d) 700. Therefore, recovery of interest cannot be based on abrogation of the doctrine of municipal immunity in tort actions.
Respondent adopts the reasoning of the circuit court in its contention that to disallow interest on an illegally assessed tax, where the tax is paid under protest, might tend to encourage laxity in assessments if the consequence is merely the refunding of the actual tax. No showing has been made by the respondent that the appellant was irresponsible in its assessment or that municipalities are or have been lax in their tax assessments. The legislature intrusted municipalities with the power to tax and to grant refunds. Therefore, it is properly within the legislative sphere to determine whether the municipalities are lax in this regard and whether the situation would be corrected by providing for interest on refunds.
Our preference would be to affirm the judgments of the learned trial court, recognizing that the city ought not to profit by the uncompensated use of respondent's money illegally exacted and withheld and the respondent correspondingly injured. If we could see our way clear to affirm the learned trial court without doing violence to what seems to us to be the law as laid down by the statute, sec. 74.73, in which no interest is provided upon a refund, we would gladly do so. For lack of such a way we conclude the judgments must be reversed.
By the Court. — Judgments reversed, and cause remanded with directions to dismiss the complaints.