Title: Marx v. Broom
Citation: 632 So. 2d 1315
Docket Number: 91-CC-00422, 91-CC-00474, 91-CC-00475, 91-CC-00476
State: Mississippi
Issuer: Mississippi Supreme Court
Date: February 24, 1994

632 So. 2d 1315 (1994) Charles A. MARX, Ph.D., Chairman, Mississippi State Tax Commission and Commissioner of Revenue, and the State of Mississippi v. Gordon BROOM and Moncile Broom; George H. Homich; Thomas G. Abernethy and Estate of Alice L. Abernethy and Thomas G. Abernethy, Executor; David Randal Burns, Executor of the Estate of Erit L. Burns; Hosea M. Ray and Merle B. Ray. C.A. Marx, Ph.D., Chairman, Mississippi State Tax Commission and Commissioner of Revenue, State of Mississippi and the State of Mississippi v. John E. and Iris MONTGOMERY, James A. and Virginia Ables, and James N. and Sue H. Airhart, John D. and Frankine B. Albritton, Charles A. and Beverly L. Angel, William L. and Ruby Appleby, Samuel E. and Darline J. Baker, Charles H. and Gloria C. Bassett, Harry E. and Charlotte S. Bennett, Jr., Warren K. and Mary F. Berner, Carl and Ellen H. Berry, Clair F. and Gladys C. Berry, Clarence B. and Alma E. Blocker, Henry W. and Rosamond N. Boardman, Galen D. Bonebreak, Emmett B. and Martha L. Bonewitz, Robert N. and Mabelle S. Bowers, Margaret E. Brand, Edward M. and Gladys S. Brennan, George L. and Nancy B. Brewer, Stanley M. and Ruth A. Brewer, James H. and Deirdre N. Bridewell, Francis O. and Alma T. Brown, Jerrold C. and Julia A. Brown, Robert C. and Shirley A. Brown, Robert W. and Vera E. Brown, William E. and Olive N. Bryan, Jr., Cornelius E. and Lucille E. Buckley, Ralph T. and Vera E. Bunten, Jr., Frank W. and Myrtle S. Burgess, Jr., Claude L. and Nikki L. Byrd, et al. C.A. MARX, Ph.D., Chairman, Mississippi State Tax Commission and the State of Mississippi v. Arthur WINSTEAD, Thomas B. Abernathy, Arthur F. Adams, Roderick Adams, Jackson H. Ables, Jr., Charles C. Ainsworth and 494 other Appellees. MISSISSIPPI STATE TAX COMMISSION v. John Thomas TODD and Philips T. Cooley. Nos. 91-CC-00476, 91-CC-00474, 91-CC-00475 and 91-CC-00422. Supreme Court of Mississippi. February 24, 1994. *1316 Michael Stribling, Bobby R. Long, MS State Tax Com'n, Jackson, for appellant. Samuel L. Begley, John L. Maxey, II, Maxey Pigott Wann &amp; Begley, Jackson, John Sharbrough, Ezell &amp; Sharbrough, Mobile, AL, Mark Ezell, Ezell &amp; Sharbrough, Butler, AL, J. Doyle Fuller, Montgomery, AL, for appellees John Todd and Philips Cooley. James B. Persons, Hopkins Dodson Wyatt &amp; Crawley, Gulfport, for appellees John and Iris Montgomery et al. J. Brad Pigott, Maxey Pigott Wann &amp; Begley, Jackson, Michael Kator, Washington, DC, for appellees Arthur Winstead et al. Harris H. Barnes, III, Dossett Goode Barnes &amp; Broom, Jackson, for appellees Gordon Broom et al. Before PRATHER, P.J., and PITTMAN and SMITH, JJ. SMITH, Justice, for the Court: The Mississippi State Tax Commission appeals from the decision of the Chancery Court of Hinds County, which found that state residents who were also federal retirees were entitled to a refund of state income taxes paid under the state's unconstitutional tax scheme which taxed federal retirees while exempting the state's own retired employees. These cases, consolidated for consideration, have their origins in Davis v. Michigan Dept. of Treasury, 489 U.S. 803, 109 S. Ct. 1500, 103 L. Ed. 2d 891 (1989), in which *1317 the U.S. Supreme Court declared unconstitutional Michigan's taxation scheme, one similar to Mississippi's and numerous other states. The discriminatory treatment of taxpayers based on the source of compensation or pay was found to violate 4 U.S.C. § 111 when the source of the pay or compensation is the federal government. Appellees in this case are all federal retirees who sought refund of state income taxes paid under the unconstitutional tax scheme as found in Davis. After being denied relief by the Tax Commission, appellees sought declaratory relief from the Hinds County Chancery Court. Based on Davis, the court found that the Mississippi tax scheme was unconstitutional and that the Davis decision was to be applied retroactively. That court further found that state law provides for refunds pursuant to Miss. Code Ann. § 27-7-313 (Supp. 1989) to the parties for the years 1985 to 1989. After Davis and the filing of the appellees' actions for declaratory relief in 1989, the state legislature during the 1990 session amended the statute in an attempt to exclude the appellees and others similarly situated from the refund provisions of the statute. The chancery court found the 1990 amendment to be unconstitutional. Some of the issues initially raised by the Tax Commission in bringing this appeal have since been resolved by U.S. Supreme Court. The question of whether the decision in Davis was to be applied prospectively or retroactively was decided in Harper v. Virginia Department of Taxation, 509 U.S. ___, 113 S. Ct. 2510, 125 L. Ed. 2d 74 (1993), which held that Davis was to be applied retroactively. In Barker v. Kansas, 503 U.S. ___, 112 S. Ct. 1619, 118 L. Ed. 2d 243 (1992), the Supreme Court held that the principles of Davis also apply to federal military retirement benefits. There is no need to further discuss these questions. The remaining issues concern the question of what relief, if any, the appellees are entitled to under the refund statute, § 27-7-313, and the consequences of the amendment of that statute. The Todd group of appellees have cross appealed on the denial of their motion for certification of a class action. Miss. Code Ann. § 27-7-313 (Supp. 1993) (Refund to taxpayer) provides as follows: The lower court found that "[w]hen plaintiffs filed their action in this Court as aforestated, Mississippi via legislative enactment does [sic] provide for a refund." It is the contention of the Commission that under Miss. Code Ann. § 27-7-313 refunds are not to be given for a constitutional challenge but only for other errors or excessive withholding. The statute clearly says that refunds shall be given in the case of "any overpayment of any tax ... whether by reason of excessive withholding, error on the part of the taxpayer, erroneous assessment of tax, or otherwise, the excess shall be refunded to the taxpayer." (emphasis added). The plain words of the statute say that any overpayment of Mississippi taxes for any reason shall be refunded to the taxpayer. Other courts have construed similar language to include unconstitutional taxes. Liberty Glass Co. v. United States, 332 U.S. 524, 68 S. Ct. 229, 92 L. Ed. 142 (1947) (construing "overpayment" in the Internal Revenue Code to include unconstitutional taxes); Chesapeake &amp; Potomac Tel. Co. v. City of Newport News, 194 Va. 409, 73 S.E.2d 394 (1952) (construing "erroneous or improper" assessment under the Virginia Code to include unconstitutional taxes); Community F.S.L. Ass'n v. Director of Revenue, 752 S.W.2d 794, 798 (Mo. banc 1988) (construing "overpayment" for purposes of the Missouri Code to include "illegally collected taxes."); Hackman v. Missouri Director of Revenue, 771 S.W.2d 77, 81 (Mo. 1989) (construing "overpayment" as including payment of a tax wholly unauthorized by law). When the language used by the legislature is plain and unambiguous, such as the language here, and where the statute conveys a clear and definite meaning, as here, the Court will have no occasion to resort to the rules of statutory interpretation. State v. Heard, 246 Miss. 774, 151 So. 2d 417 (1963). The courts cannot restrict or enlarge the meaning of an unambiguous statute. City of Hazlehurst v. Mayes, 96 Miss. 656, 51 So. 890 (1910); Hamner v. Yazoo Delta Lumber Co., 100 Miss. 349, 56 So. 466 (1911); and State v. Traylor, 100 Miss. 544, 56 So. 521 (1911). Courts have a duty to give statutes a practical application consistent with their wording, unless such application is inconsistent with the obvious intent of the legislature. Thornhill v. Ford, 213 Miss. 49, 56 So. 2d 23 (1952). Moreover, Lambert v. Mississippi Limestone Corp., 405 So. 2d 131, 132 (Miss. 1981), quoting State Tax Commission v. Overstreet Investment Co., 194 So. 2d 236 (Miss. 1967). We find that the statute provides for refunds and affirm the decision of the lower court. Miss. Code Ann. § 27-7-313 was amended by the 1990 legislature to be effective from and after January 1, 1990. The controverted provisions are italicized. The statute, as amended, reads as follows: In her ruling the Chancellor held that the legislature could not amend the statute after the fact to allow the State to give federal retirees tax credits as opposed to tax refunds. The court specifically found that "a legislative enactment that deprives the citizen, as the taxpayers here, of such constitutionally protected rights without the opportunity to be heard violates both the Federal and State Constitutions. Therefore the amendment of the refund statute during the pendency of this action and post Davis does not accord with basic due process requirements. This Court therefore finds that Plaintiffs herein are entitled to a refund as provided by state law." The Supreme Court in Brinkerhoff-Faris Trust &amp; Savings Co. Hill, 281 U.S. 673, 682, 50 S. Ct. 451, 454-55, 74 L. Ed. 1107 (1930), a case on judicial extinction of a preexisting refund right, held: By stripping the federal retirees of the right to file for a refund under § 27-7-313, without providing them any means of protecting those rights, the amended statute violated the retirees' Fourteenth Amendment right to due process. There is further critical flaw in the amendment. Under the express language of the amended statute the only persons affected would be those making "claims pursuant to the United States Supreme Court decision of Davis v. Michigan Department of Treasury ..." or, in other words, former federal employees. By seeking to again discriminate against federal employees, as opposed to state or private sector employees, it appears that the drafters of this legislation and the Commission have missed a major component of Davis. If the tax scheme was unconstitutional because it discriminated against federal employees based on the source of their retirement income, the legislature could not remedy what it perceived as a problem by enacting a second equally discriminatory piece of legislation. If Mississippi cannot permissibly discriminate in the imposition of taxes on the basis of the source of the taxpayers' income, it should not discriminate in the allowance of refunds on the same basis. The amendment merely perpetuates the discrimination found unconstitutional in Davis. The amended statute denies refunds but attempts to provide credit against future income tax liabilities as a remedy for the illegal taxation of the federal retirees. This proposed policy makes no provision for federal retirees who will have no future state tax liability whether as a result of death, moving outside the state, or having insufficient taxable income to warrant taxes. The income taxes paid to the state will probably exceed their future tax liabilities and will result in a loss of unused credits under the 1990 amendment. The result is that the legislature's plan is clearly deficient in providing a "clear and certain" remedy to federal retirees paying the unconstitutional income taxes. The chancellor correctly found that the 1990 amendment was unconstitutional. The Commission argues that because the retirees' payments were "voluntary" they are precluded from recovery. Mississippi follows the majority view that taxes voluntarily paid can be recovered without protest and duress prior to payment unless there is a statutory exception. As this Court wrote in Morco Industries, Inc. v. City of Long Beach, 530 So. 2d 141, 145 (Miss. 1988): This rule only comes into play "in the absence of a statute providing otherwise." The Commission's argument is premised on the lack of a remedy under § 27-7-313, which plainly does provide such a remedy. As this Court noted in Morco Industries immediately after the above quoted material: Id. (emphasis added). *1321 In Morco Industries there was no statutory authority for the refund of erroneous assessed municipal separate school district taxes. In Schmittler the taxes were for a privilege license for seining and netting fish in Sunflower County. City of Grenada involved a city privilege tax to operate a taxicab. The distinguishing factor is the nature of the tax involved. Section 27-7-313 provides a remedy for the wrongfully assessed income taxes which does not require for payment under protest. Nothing in the applicable statute requires that the payment must be under protest in order to get a refund. There is no merit to this assignment of error. In McKesson Corp. v. Div'n of Alcoholic Beverages and Tobacco, 496 U.S. 18, 110 S. Ct. 2238, 110 L. Ed. 2d 17 (1990), the Supreme Court stated: 496 U.S. at 35-38, 110 S. Ct. at 2249-51, 110 L. Ed. 2d at 35-36. Subsequently, in Harper v. Virginia Department of Taxation, the Court noted: 509 U.S. at ___, 125 L. Ed. 2d at 87, 113 S. Ct. at 2519. In Strelecki v. Oklahoma Tax Commission, No. 77,615, 1993 WL 379008 (Okla. Sept. 28, 1993) that court looked at the due process teaching of Harper and stated: Slip op. at 20. The Tax Commission argues that because this State has adequate predeprivation process to satisfy the requirements of federal due process, the State may under federal guidelines deny the retirees a refund. Clearly, such a result is not required by federal or state constitutional considerations. Once having accepted that Mississippi meets the minimum requirements of due process, this Court must then look to what state law requires. The State, through legislative enactment may provide for more than minimum requirements of due process. Under the statutory scheme enacted in this State, there is a clear procedural remedy provided in Miss Code Ann. § 27-7-313 for unlawfully exacted taxes. Where as here, there is an additional post deprivation remedy under state law there is no need to resort to any further questions of the minimum requirements under federal law. All that federal law requires is that the relief provided under state law be consistent with federal due process principles. McKesson, 496 U.S. at 51, 110 S. Ct. at 2258, 110 L. Ed. 2d at 45. The lower court correctly held that due process was satisfied and that refunds were called for. In the lower court, the Todd appellees sought to have the court find that a class action existed and to extend the ruling of the court to include all other persons similarly situated but not named in any of the consolidated cases. The lower court correctly found that there was no class action available in this case. In enacting the Rules of Civil Procedure, this Court intentionally omitted Rule 23, which would have covered class actions. The comments to the Rules clearly state: "Class action practice is not being introduced into Mississippi trial courts at this time." This has not changed. Prior to the enactment of the Rules of Civil Procedure, this Court recognized the possibility of class action suits as a matter of general equity jurisdiction in chancery court under limited circumstances. Barrett v. Coullet, 263 So. 2d 764 (Miss. 1972). Even if this basis was available, the lower court made specific, supportable findings that the requirements for a class action were not met. The decision of the lower court is affirmed. We note that the refund provisions of Miss. Code Ann. § 27-7-313 are open to all those taxpayers who pursue or pursued the claims procedure within the time limit provided by that statute regardless of whether they participated in this appeal. Claims for refunds must be made within three years of the date the tax return was due or from the date of an extension period granted as set forth in the statute. These federal retirees are entitled to the same benefits under state law as any other taxpayer, including the tax refund provisions of Miss. Code Ann. § 27-7-313 as it existed when they sought its application. Nothing in this statute or other law requires that the tax be paid under protest to receive a refund. The subsequent attempt to exclude only these taxpayers from the benefits of this state law remedy did not comport with state and federal constitutional guarantees and was properly found to be unconstitutional by the lower court. Since the prior Mississippi law provides a clear remedy to those who have erroneously paid taxes, this Court is compelled to affirm the decision of the lower *1323 court and hold that refunds are required as a matter of state law. AFFIRMED ON DIRECT APPEALS AND CROSS-APPEAL OF JOHN THOMAS TODD AND PHILIPS T. COOLEY. HAWKINS, C.J., DAN M. LEE and PRATHER, P.JJ., and SULLIVAN, PITTMAN, BANKS, McRAE and JAMES L. ROBERTS, Jr., JJ., concur.