Opinion ID: 1293123
Heading Depth: 1
Heading Rank: 4

Heading: the doctrine of equitable estoppel

Text: In oral argument, as on brief, WGL relied principally upon the doctrine of equitable estoppel. However, counsel for the Commission disavowed the doctrine. The Commonwealth argued that the issue is not before the Court because the Commission's Opinion reveals that it made no decision with respect thereto. In our view, the only fair import of the opinion is otherwise, and we will address the issue.
WGL argues that the Commonwealth is estopped to withdraw retroactively a revenue ruling given to a specific taxpayer. We have said that the doctrine of estoppel does not apply to the rights of a State when acting in its sovereign or governmental capacity. This is so because the legislature alone has the authority to dispose of or dispense with such rights. Main v. Department of Highways, 206 Va. 143, 150, 142 S.E.2d 524, 529 (1965). See also, McMahon v. City of Virginia Beach, 221 Va. ___, ___ 267 S.E.2d 130, 134 (1980); Segaloff v. City of Newport News, 209 Va. 259, 261, 163 S.E.2d 135, 137 (1968). Main was not a tax case, and we recognize that ours may be a minority view and that the recent trend appears to be to the contrary. [4] But cf. Automobile Club v. Commissioner, 353 U.S. 180, 183, 77 S.Ct. 707, 709, 1 L.Ed.2d 746 (1957) (The doctrine of equitable estoppel is not a bar to the correction by the Commissioner [of Internal Revenue] of a mistake of law.) Without trenching upon precedent and, for purposes of this opinion only, we assume that the doctrine may be applied to the State Corporation Commission in a case such as this. When, as here, the Commission sits as a court, it is required to observe and administer the common and statute law rules of evidence as observed and administered by the courts. Code § 12.1-30. The rule applicable in this case was stated and the evidentiary standard defined in Utica Mutual v. National Indemnity, 210 Va. 769, 773, 173 S.E.2d 855, 858 (1970): It is elementary that the burden rests on the party relying on a waiver or estoppel to prove the essentials of such waiver or estoppel by clear, precise and unequivocal evidence. The evidence must not leave the matter to mere inference or conjecture but must be certain in every particular. To establish its claim of estoppel, WGL had the burden of proving by clear, precise and unequivocal evidence that the contract prices on the five spot sales were fixed in reliance upon the Commission's representations that the sales would not be taxable and that, consequently, WGL suffered a detriment. See T . . . v. T . . ., 216 Va. 867, 873, 224 S.E.2d 148, 152 (1976). The Commission's findings will not be disturbed when they are based upon the application of correct principles of law. Bralley-Willet v. Holtzman Oil, 216 Va. 888, 891, 223 S.E.2d 892, 895 (1976). The ultimate question, then, is whether the Commission, in making the findings basic to its tacit conclusion that it was estopped to make the assessment on receipts from prior sales, correctly applied the principles of law prescribed in Utica Mutual.
In the Commission's opinion, WGL made the sales relying on representations made by members of our staff. The telephone call advising WGL that emergency spot sales would not be taxed was made on November 18, 1975, the date of the written contract for the first spot sale. Hughitt testified that I can't tell you exactly what negotiations went on prior to the time we entered that agreement but that there is generally a lapse of a few days before a contract is signed. Hughitt agreed that the same was true of the sale memorialized by the November 19, 1975 contract. Hence, while it may be true, as Hughitt said, that all five spot sales were made in compliance with the functional scheme of the Plan, it is clear that the first two sales were initially negotiated without reliance upon the promise of a tax exemption. And no evidence shows that the negotiated price was renegotiated before the contract documents were signed.
Hughitt further testified that, but for the Commission's advice, the contract prices on all five sales would have been increased by an amount equal to the gross receipts tax. The Commission accepted that testimony as not contradicted. It is true that the Commonwealth introduced no evidence to negate Hughitt's assertion. But the burden rested upon WGL to establish the affirmative by evidence certain in every particular, leaving nothing to mere inference or conjecture. The only evidence arguably supportive of Hughitt's assertion were statements in affidavits filed by two purchasing distributors. Those affidavits show merely that gross receipts taxes were not discussed during negotiations; they do not show that WGL reduced its asking price by an amount equal to the gross receipts tax. Other facts tend to discredit Hughitt's assertion. WGL made two spot sales in 1977 after the date of the Rogers letter and an unspecified number of spot sales in 1974 preceding adoption of the Plan and the Commission's telephone call. WGL introduced no evidence to show how the prices on these sales, all of which apparently were made under written contracts containing no gross receipts tax clause, [5] compared with prices on the five sales in issue. Other than Hughitt's assertion, nothing before us indicates that the prices received on the assessed sales were lower than those prevailing in the market or that the buyers would have paid more if WGL had asked more. Applying the appropriate evidentiary rules, we are of opinion WGL failed to carry its burden of proving by clear, precise, and unequivocal evidence that it relied to its detriment upon the Commission's representations. To the extent the Commission's opinion was based upon WGL's claim of equitable estoppel, we hold that the Commission either failed to apply correct principles of law or misapplied those principles.