Court Opinion

ID: 6914750
Source: CourtListenerOpinion
Date Created: 2022-07-23 22:37:05.01733+00
Date Added: 2024-06-11T16:06:37.531131
License: Public Domain

ROBERTS, J.,
dissenting.
I dissent from the majority opinion because I disagree with its conclusion that this taxing procedure involved two transactions. I would hold that it constituted one transaction and that recoupment, therefore, applies.
It is true that ORS 308.115(2)1 provides that improvements owned separately from the land are to be assessed and taxed in the name of the owner of the improvements. It is also true that the assessment roll must separate the owner of improvements from the owner of the land. ORS 308.215(1).2 However, the fact of separate assessment for purposes of the assessment records does not resolve whether the taxation of land and improvements is one or two transactions for purposes of equitable recoupment.
The majority relies on the facts that because the Port and plaintiff were owners of separate species of real property, the Port should have been sent a tax statement for the land and plaintiff should have been sent a tax statement for the improvements. In fact, the Tax Court found that had the assessment been done properly the single statement to plaintiff would have contained the assessment for both land and improvements.3 Indeed, when the assessor discovered his error, he sent the notice of omitted property pertaining to assessment of the land to plaintiff, the lessee, not to the Port, the owner of the land. I suspect that had the statement properly included both assessments, the overcharge on improvements would doubtless have been apparent to plaintiff immediately. On these facts, I would conclude that the assessment of the improvements and the land was one transaction for the purposes of this case.
I would also hold that recoupment should apply. We have recognized recoupment in a number of actions including fraud in the sale of land, Hanna v. Hope, 86 Or 303, 308-09, 168 *421P 618 (1917); contract, Wright v. Hage, 214 Or 400, 330 P2d 342 (1958), and an action by an assignee of a debt, Rogue River Management Co. v. Shaw, 243 Or 54, 411 P2d 440 (1966). In Welch Holding Co. v. Galloway, 161 Or 515, 89 P2d 559 (1939), we recognized that recoupment may be used to offset tax obligations. In that case the tax commissioner was obliged to refund corporate excise taxes but sought to recoup that amount for an intangibles income tax claimed due. We disallowed recoupment because we found that the state’s right to the intangibles tax was unrelated to the plaintiffs cause of action. 161 Or at 537.
Other jurisdictions have applied recoupment in tax cases. The doctrine of recoupment has been applied in cases involving federal estate tax, Bull v. United States, 295 US 247, 55 S Ct 695, 79 LEd 1421 (1935); Stone v. White, 301 US 532, 57 S Ct 851, 81 LEd 1265 (1937), and in a case involving the assessment of a sales tax deficiency, National Cash Register Co. v. Joseph, 299 NY 200, 86 NE2d 561 (1949). In Smith v. United States, 373 F2d 419 (4th Cir 1966), the court did not permit the government to invoke the doctrine of recoupment because of its effect on a life beneficiary who was not a party and upon remaindermen who were not known. The court said, however,
“The doctrine itself is a judge-made exception to the legislative policy of barring claims for and against the Government in tax matters by statutes of limitations, which in final analysis are themselves based upon an equitable principle.” 373 F2d at 422.
I agree with the Tax Court that it would be “unconscionable that a taxing agency, through its negligence, could be permitted to tax the same property twice in the same tax year.”
I respectfully dissent.
Peterson, C. J., joins in this dissent.

 296 Or 412 at 415, note 4.

 296 Or 412 at 416, note 5.

 In its opinion the Tax Court stated:
“In the usual and normal course of assessment, both aspects of the property (land and improvements) would have gone out on a single tax statement each year. * * * What is asserted by the department to be two transactions should have been one transaction and would have been in the normal course.”