Court Opinion

ID: 3842555
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:11:46.270508+00
Date Added: 2024-06-11T13:51:13.999718
License: Public Domain

OPINION ON COST BILL
Defendant objected to plaintiff's cost bill on grounds that there is no statutory authority for corporate taxpayers to recover "reasonable expenses" and no provision for the recovery of expert witness fees.
Court held "individual taxpayer" in ORS 305.490(2) referred to natural persons, not corporations. Court also found that ORCP 68A.(2) does not provide for recovery of expert witness fees as part of costs and disbursements. *Page 89 
Opinion rendered November 23, 1988.
This matter is before the court on defendant's objection to plaintiff's cost bill. Plaintiff prevailed in its suit for a refund of corporate income taxes1 and the court in its Opinion held that plaintiff is entitled to recover its costs and disbursements. Plaintiff duly submitted a cost bill in the amount of $44,799.15. Most of the costs incurred were attributable to plaintiff's use of three experts in preparing for the trial, two of whom testified as expert witnesses at trial.
Defendant objects to plaintiff's cost bill on several grounds: (1) corporate taxpayers are not entitled to recover "reasonable expenses," (2) costs and disbursements do not *Page 90 
include attorney fees or expert witness fees, (3) the claimed expenses are not reasonable or necessary, and (4) the services rendered were really in the nature of legal services and, therefore, should not be recoverable. At the hearing, plaintiff put on evidence as to the reasonableness of the experts' fees, contending that the amount is not unreasonable when compared to the refund of approximately $1.2 million anticipated as a result of prevailing in the suit.
8. Although the Tax Court has the same powers as a circuit court and can exercise the same remedies (ORS 305.405(2)), the legislature has provided a specific statute for cases before the Tax Court. ORS 305.490(1) requires taxpayers filing cases in the Tax Court to pay specified filing fees. The latter portion of that subsection provides:
  "The party entitled to costs and disbursements on such appeal shall recover from the opponent of the party the amount so paid upon order of the court, as in equity suits in the circuit court."
The court interprets this to mean that Tax Court filing fees are recoverable as part of a party's costs and disbursements just as in the circuit courts. The statute does not limit costs and disbursements to filing fees only.
9. Addressing the larger issue is ORS 305.490(2) which provides:
    "If, in any proceeding under this section involving taxes upon or measured by net income in which an individual taxpayer is a party, * * * the court may allow the taxpayer, in addition to costs and disbursements:
"* * * * *
    "(b) Reasonable expenses as determined by the court. Expenses include accountant fees and fees of other experts incurred by the executor or individual taxpayer in preparing for and conducting the proceeding under this section and the prior proceeding in the matter, if any, before the department."
Plaintiff's arguments for recovery of its expenses reduce down to two basic contentions, the first of which is that plaintiff is entitled to recover its "reasonable expenses" under ORS 305.490(2)(b). Defendant objects on the grounds that plaintiff is a corporation and not an "individual taxpayer" as required by the statute. In answer, plaintiff argues that the *Page 91 
term "individual taxpayer" is not defined in ORS chapter 305. Plaintiff points out that although ORS 316.022 defines "individual" as a natural person, that section limits the definition to "[a]s used in this chapter." Plaintiff further cites cases where the courts have used the term "individual taxpayers" in referring to corporate taxpayers.
10. Despite plaintiff's arguments, the court is persuaded that the term "individual taxpayer" as found in ORS 305.490(2) is intended to mean only natural persons as defined in ORS316.022. ORS 316.022 does not indicate that the definitions contained therein are limited solely to ORS chapter 316. Moreover, the common, ordinary meaning of "individual taxpayer" would be a natural person. If the term "individual" is not so intended, then its insertion in the statute is meaningless surplusage. If a single corporate taxpayer is an individual taxpayer, as plaintiff contends, then the legislature would have simply said "taxpayer." It is unreasonable to believe that the legislature was attempting to limit the recovery to cases where there was only one taxpayer as opposed to two or more taxpayers. Moreover, if plaintiff, as a corporate taxpayer, qualifies under ORS 305.490(2)(b) to recover reasonable expenses it would also qualify for the recovery of its reasonable attorney fees. Plaintiff has made no claim or contention for such amounts.
Plaintiff argues that this court previously allowed recovery of attorney fees under ORS 305.490 in cases involving a corporate taxpayer, citing Martin v. Dept. of Rev., 9 OTR 100
(1981), rev'd 294 Or. 180, 655 P.2d 168 (1982). That case involved a suit for refund of excess paid withholding taxes. The plaintiffs in that case were Martin's Foodliner, Inc., an Oregon corporation, and Marvin Martin, the sole owner of the corporation. In awarding plaintiffs their attorney's fees in addition to their costs and disbursements, the court commented in footnote 34:
    "ORS 305.447(1) provides for attorney fees when plaintiff prevails in certain income tax cases. This suit is a case "involving taxes upon or measured by net income in which an individual taxpayer is a party" (as required by ORS 307.447's first paragraph). Mr. Martin is a necessary party to this suit because, as officer and bookkeeper, he was personally liable for state withholding taxes under ORS 316.162(3)(b)." Martin v. Dept. of Rev., 9 OTR 100, 111 (1981). *Page 92
Except for the fact that the individual taxpayer was a party plaintiff, the court would not have allowed attorney's fees under that statute.
Plaintiff's second basic contention is that the claimed expenses are recoverable under ORCP 68, adopted by the Tax Court as part of its rules "to the extent applicable." The relevant portions of that rule are as follows:
"A. Definitions. As used in this rule:
    "A.(1) Attorney Fees. 'Attorney fees' are the reasonable value of legal services related to the prosecution or defense of an action.
    "A.(2) Costs and Disbursements. 'Costs and disbursements' are reasonable and necessary expenses incurred in the prosecution or defense of an action other than for legal services, and include the fees of officers and witnesses; the expense of publication of summonses or notices, and the postage where the same are served by mail; the compensation of referees; the necessary expense of copying of any public record, book, or document used as evidence on the trial; a reasonable sum paid a person for executing any bond, recognizance, undertaking, stipulation, or other obligation therein; and any other expense specifically allowed by agreement, by these rules, or by other rule or statute. The expense of taking depositions shall not be allowed, even though the depositions are used at trial, except as otherwise provided by rule or statute.
    "B. Allowance of Costs and Disbursements. In any action, costs and disbursements shall be allowed to the prevailing party, unless these rules or other rule or statute direct that in the particular case costs and disbursements shall not be allowed to the prevailing party or shall be allowed to some other party, or unless the court otherwise directs. If, under a special provision of these rules or any other rule or statute, a party has a right to recover costs, such party shall also have a right to recover disbursements."
In examining the above language, the reader should be aware that there are limitations as to the expenses recoverable which may not be apparent. It should be noted that the terms "costs" and "disbursements" were once clearly distinguished.
  "Costs are certain sums to be allowed to the prevailing party in the judgment or decree, by way of indemnity for his attorney's fees in maintaining the action or suit or defense thereto: *Page 93
  Or. L., § 561. Disbursements, on the other hand, are the necessary expenses connected with the prosecution or defense of the litigation: Or. L., § 566. * * * [T]he distinction between 'costs' and 'disbursements' has not always been observed, but the fact is, that the two are entirely distinct, * * *." In Re Will of Pittock, 102 Or. 159, 199, 199 P 633 (1921).
11. It has long been the rule that the recovery of costs and disbursements is allowed only by virtue of statutory authority, there being no right to such recovery at common law. Wood v.Fitzgerald, 3 Or. 568 (1870). Moreover, a party was not allowed to recover disbursements unless he was allowed to recover costs. Probably it was this relationship which resulted in the use of the terms jointly. See footnote in Gowin v. Heider,237 Or. 266, 321, 386 P.2d 1, 391 P.2d 630 (1964). A quick review of the current sections contained in ORS chapter 20 readily discloses that the terms are now used as one concept.
12. The point of all this is that ORCP 68 "does not change the 'items recoverable as disbursements' under the former statutes." Hancock v. Suzanne Properties, Inc., 63 Or. App. 809,814, 666 P.2d 857 (1983). In that case the Court points out that:
    "The definition of recoverable 'costs and disbursements' contained in ORCP 68A(2) does not include expert witness fees. It allows 'fees for officers and witnesses,' as did former ORS 20.020. Unless otherwise expressly allowed by statute,  see e.g., ORS 20.098; Welch v. U.S. Bancorp, supra,
witness fees are limited to $5 per day. ORS  44.410." Id., at 815.
Likewise, the prevailing party is not allowed to recover mileage for travel outside Oregon. Stoll v. Curl, 275 Or. 487,551 P.2d 1058 (1976).
Plaintiff argues that reasonable expenses paid for expert witnesses are allowable when necessary to the case, citingAmerican Timber v. Niedermeyer, 276 Or. 1135, 558 P.2d 1211
(1977). The opinion in that case does not clearly indicate the basis for the court's award. However, it appears that the issue on appeal was not the awarding of such fees but the amount allocated in that particular suit. If so, it would be reasonable to conclude that the court, in an equity suit, allowed recovery of the amounts in order to accomplish the *Page 94 
ends of justice. While that case is not clear, there is subsequent authority which is clear. In Welch v. U.S. Bancorp,286 Or. 673, 709-10, 596 P.2d 947 (1979), the trial judge refused to allow disbursements for depositions not read at the trial and for expert witness fees, both of which the Supreme Court indicated were:
  "[N]ecessary in every sense of the word to prepare the case for trial * * * and to present it at trial. The statutes do not permit recovery of such disbursements. Until the legislature acts to allow such disbursements the courts are powerless to compensate parties for such items."
The Tax Court statute specifically addresses the type of accountant and consultant fees plaintiff incurred in this case. ORS 305.490(2). The problem is plaintiff does not qualify under that statute. If this court were to construe ORCP 68 to allow recovery of expert witness fees, it would not be limited to income tax cases. To permit the recovery of expert witness fees in property tax cases where expert witnesses abound would be a major change. Also, to construe ORCP 68 so liberally would, in effect, override the limitations of ORS 305.490. None of these consequences can be viewed as reasonably intended or expected by the legislature.
13. Even if the major expenses claimed by plaintiff were within ORCP 68, the court would not allow plaintiff to recover them as part of its costs and disbursements. The award of costs and disbursements is entirely discretionary with the court. Ruth etux v. Hickman, 214 Or. 490, 330 P.2d 722 (1958). Defendant argues, and the court agrees, that the only issues of significance in this case were legal issues. The experts used by plaintiff and called as witnesses were not necessary or of assistance in resolving those major issues. Specifically, the testimony of Corrick and Carlson were directed at plaintiff's theories regarding nontaxability of tax benefits, discrimination and burdens on interstate commerce. The dispute was not resolved in plaintiff's favor on those issues and, most importantly, it was resolved on legal principles, not facts.
After examining plaintiff's cost bill, and in accordance with the above, the court finds that the following costs and disbursements are allowable: *Page 95 
    Filing Fee                              $  10.00 Oregon Dept. of Revenue, copying of cassettes from legislative hearings                    141.00 Copies of legislative history              23.40 Copies of Senate and House cassette tapes for 1983 legislative session                      65.77 Copies of Senate and House cassette tapes for 1983 legislative session                      16.24 Copies of legislative history from state archives                      18.15 Trial Fee                                 100.00 Prevailing Fee                             60.00 ___________ Total:     $  434.56
The clerk will enter the total amount in the judgment.
1 The taxes in dispute and to be refunded also include Multnomah County Business income taxes. *Page 96