Court Opinion

ID: 6475733
Source: CourtListenerOpinion
Date Created: 2022-06-26 22:38:37.723372+00
Date Added: 2024-06-11T15:53:58.164846
License: Public Domain

BERNSTEIN, Vice Chief Justice
(dissenting) .
I regret that I must dissent. I respectfully submit the majority opinion proceeds upon the erroneous premise that the Board of Equalization acted judicially in carrying out its tax power and therefore cannot be attacked in the absence of showing that it acted in bad faith or so arbitrarily as to amount to constructive fraud. The majority states the issue to be whether the Board has abused its discretion. The correct issue is whether the Board has any discretion.
The majority opinion holds that a public official can violate the mandatory provisions of a statute if he acts in good faith and the results of his disobedience are not sufficiently excessive to constitute constructive fraud. ' The opinion simultaneously emasculátes A.R.S. § 42-204, subsec. C which allows, after payment under protest, an action to recover any tax illegally collected, “and if the tax due is determined to be less than the amount paid, the excess shall be refunded * * * The majority does not think a tax is collected “illegally” though the formula by which it is determined is contrary to an express statutory mandate.
Sections 42-301, subsec. B and 15-1211, subsecs. A, B require the Board of Equalization to levy an amount to defray necessary education expense for the current year. The amount required for education is determined by multiplying $170 times the average daily attendance (ADA). The $170 figure was set by the legislature, § 15-1211, subsec. A. The ADA is the actual attendance figures shown by the records of the Superintendent of Public Instruction, § 15-1212, subsec. E. In 1959 the Superintendent reported a figure to the Board of Equalization based upon enrollment rather than actual attendance. The enrollment figure was over 3,000 greater than the attendance figure. The Board multiplied the high figure times $170 and, as a consequence, levied and collected over a half million dollars more taxes than permitted. That is, a half million more than would have been collected had the ADA figure been used as required by the statute, Long v. Dick, supra. Plaintiff’s share of the illegally collected excess was approximately $25,000 which it paid under pro*395test. An action to recover the money was instituted pursuant to A.R.S. § 42-204, and we took the case after the appellate division reversed the trial court’s summary judgment for plaintiff. Cochise County v. Southern Pacific Company, 1 Ariz.App. 199, 401 P.2d 153.
Before stating my analysis of the case, I think it is necessary to answer the express and implicit reasoning of the majority opinion. When the Superintendent submitted the enrollment figure to the Board he acted upon the attorney general’s advice who erroneously construed the applicable statute. The Board relied upon the Superintendent’s figure. Hence, no one acted fraudulently or in bad faith. I agree. The majority next states the general principle that the Board, in carrying out its tax-setting power, acts “judicially” and its decision will not be overturned in the absence of bad faith or fraud. The statement is true but has no application to the case at bar. In this case the Board and the Superintendent were obliged to perform ministerial duties clearly defined and circumscribed by the statute. The word “judicially” contemplates an act resulting from the exercise of judgment or discretion. Magma Copper Co. v. Arizona State Tax Commission, 67 Ariz. 77, 191 P. 2d 169. There was no room for discretion here. The Superintendent either submitted a figure based upon actual daily attendance or he did not. The Board either calculated the accurate school expense figure or it did not. There was only one correct figure authorized by the statute. Concerning the nature of such a ministerial act, we have said:
“ * * * ‘An act is ministerial where the law requiring it to be performed, prescribes the time, manner, and occasion of its performance with such certainty that nothing remains for judgment or discretion.’ ” State v. Airesearch Mfg. Co., Inc., 68 Ariz. 342, 350, 206 P.2d 562, 568.
The United Globe case primarily relied upon by the majority, is inapplicable. First, it is factually distinguishable because the Board was not compelled by statute to consider the assessment rolls which the plaintiff though it should consider. This difference between the cases is vital. Furthermore, the particular act challenged in the United Globe case was clearly within the Board’s ambit of discretionary power granted by statute. Secondly, in that case the court recognized the distinction between attacking the Board because it acted in violation of the statute and attacking its decision as an abuse of discretion. The sentence immediately following the underlined portion of the quote used by the majority states:
“If the method adopted by the board be that which the statute directs, and it does not appear that the board acted thus arbitrarily or fraudulently, * (Emphasis added)
*396The court further stated:
"Had the complaint shown as a matter of fact that the board did not fix and determine some certain scale of valuation in some one of the modes pointed out by us in Territory v. Board of Supervisors, and apply this scale of valuation to the various counties — * * * it would have made out a case of want of jurisdiction or authority on the part of the board to make the order complained of; * * 12 Ariz. at 222-224, 100 P. at 776. (Emphasis added).
In other words, the court said that if the Board had violated its statutory directives, plaintiff’s relief would have been granted. That is precisely the situation before us. All of the decisions cited by the majority opinion assumed the existence of the administrator’s discretionary power to act and dealt solely with the question of whether the discretion was abused. They are irrelevant to the issue in this case. In that connection, the act will not be overturned in the absence of bad faith, fraud or arbitrariness. But the question before us is whether there has been a statutory grant of discretion in the first place. Put another way, the distinction is between “legality” and “propriety”. Legality imports conformity to law and the legality of an act depends upon its observance of applicable law. Propriety connotes conformity to a norm of conduct and signifies appropriateness, suitability, fitness or correctness. A judicial inquiry of the legality of an act requires examination of the law upon which it is predicated. Judicial inquiry as to the propriety of an act involves judgment upon the discretion and wisdom exercised in the circumstances. In re Whit-ford’s Liquor License, 166 Pa.Super. 48, 70 A.2d 708. In the case before us, the issue is legality, not propriety.
The majority opinion suggests that everything is all right because the Superintendent acted upon the advice of the attorney general in submitting the enrollment figure to the Board rather than the ADA figure. Perhaps the majority thinks there was discretion to interpret the statute, prior to our decision in Long v. Dick, and the good faith acts based upon that interpretation should not be overturned. Apart from the fact that the decisions cited by the majority do not deal with that type of power .or discretion, I note the fact that performance of administrative duties may necessitate construction of a statute imposing those duties, but that does not necessarily make performance a matter of judgment and discretion. Wilbur v. United States ex rel. Kadrie, 281 U.S. 206, 50 S.Ct. 320, 74 L.Ed. 809. The performance may still be ministerial, as it is in this case. Hence, the issue is still “legality” not “propriety”.
The specific problem of the effect of an act based upon a statutory interpretation later changed came before the United States Supreme Court in Montana Nat. Bank v. Yellowstone County, 276 U.S. 499, 48 S.Ct. 331, 72 L.Ed. 673 where the plaintiff bank *397was taxed on the assessed value of shares of stock and paid under protest. The suit to recover alleged that the assessment, levy and Montana statutes were invalid as contrary to a federal statute which required that the tax rate on national bank stock not be greater than the assessment upon other moneyed capital in the state. The assessment was made in conformity with state statutes as construed by the state supreme court in an earlier case which decision the tax officials were legally bound to follow. The court said:
“It is true that the state Supreme Court in the present case expressly repudiated the construction theretofore put by it upon the state statutes * * and, as already stated, adopted one to the exact contrary. But that does not cure the mischief which had been done under the earlier construction. That construction had already been acted upon by the taxing officials and the application thus made of the statutes had given rise to the present cause of action and an undoubted right to recover thereon. * * * Plaintiff in error cannot be deprived of its legal right to recover the amount of the tax unlawfully exacted of it by the later decision which, while repudiating the construction under which the unlawful exaction was made, leaves the monies thus exacted in the public treasury.” 276 U.S. 504-505, 48 S.Ct. 333.
In another context, this court has said:
“It is fundamental that the respondent (Motor Vehicle Superintendent) could not enact a regulation nor make an order that would conflict with the proper interpretation of the statute.” McCarrell v. Lane, 76 Ariz. 67, 70, 258 P.2d 988, 989.
The case before us was triggered by a decision which is a clear example of the above principle. In Long v. Dick, supra, the Superintendent of Public Instruction attempted to submit a pupil count based upon an erroneous interpretation of the applicable statute. We issued a peremptory writ of mandamus ordering him to act pursuant to the correct interpretation of the statute. The majority opinion in this case states that in Long v. Dick “we recognized the duty of the superintendent of public instruction to compute the average daily attendance for high school students and to certify that number to the state board of equalization”. (Emphasis added) In the Long case we did not say the Superintendent’s good faith insulated his act from corrective measures. Good faith bears upon discretion and the issue was duty, not discretion. In the case before tts I think it perfectly clear that the Board and Superintendent had no power or discretion to interpret the statute, but if they did their erroneous construction does not deprive plaintiff of its right to recover. Long v. Dick, supra; Wilbur v. United States ex rel. Kadrie, supra.
*398The majority opinion states that the illegally collected tax created a surplus which was carried over to the next year. This lowered the tax rate which “necessarily resulted in a reduction of the property taxes to all taxpayers, including plaintiff.” I can only assume the majority thinks the reduced tax rate for the following year has already compensated plaintiff for the amount of tax illegally collected from it. Perhaps they assume plaintiff will receive a windfall if we find in its favor. Such reasoning is erroneous. In the first place, it is against the policy of the law to raise more taxes than is needed and the intentional accumulation of surplus is illegal; a tax cannot he levied in excess of the amount required for the purpose for which it is levied. Rogge v. Petroleum County, 107 Mont. 36, 80 P.2d 380; Bowman v. County of Lake, 29 I11.2d 268, 193 N.E.2d 833. The State concedes in its brief that our law prohibits the accumulation of a surplus. In the second place, any particular taxpayer may not own the same amount or type of property or its value may be greatly depreciated in the year when the tax advantage occurs as he owned when the excessive tax was collected. Hence, it is impossible to assume the particular taxpayer benefited by the following year’s lowered tax rate. We cannot assume plaintiff benefited by the lowered tax rate because there is no evidence comparing its 1959 and 1960 property holdings. In the third place, the idea of a windfall smacks of equitable considerations which this court may not entertain. Plaintiff is pursuing a clearly legal remedy to recover upon a debt. Equity must follow the law.
I must also disagree with the majority opinion that the suit should be dismissed because the state treasurer was not made a party defendant. See Maricopa County v. Arizona Citrus Land Co., 55 Ariz. 234, 100 P.2d 587 and Southern Pacific Company v. Cochise County, 92 Ariz. 395, 377 P.2d 770.
In Southern Pacific Company v. Cochise County supra, I joined with the court in denying the relief requested by plaintiff in counts one and two of the complaint of which the case before us was count three. My concurrence with the majority in that opinion obligates me to explain my dissent here. In that case we were concerned with the economic security of our taxing units which would have been seriously jeopardized had we allowed plaintiff to recover. Counts one and two of the complaint dealt with the assessment rate applied to plaintiff’s property which was many times greater than the rate applied to other property in the state. This discriminatory practice had existed for over sixty years. Plaintiff sought to recover 77% of the first half of the 1959 taxes assessed on property valued at over sixty-five million dollars. We took judicial notice of the fact that the taxing subdivisions of Arizona had long predicated their fiscal affairs upon the allegedly discriminatory practices which had gone un*399challenged. Refund of taxes is a matter of governmental grace expressed through the refunding statute. We said the refund sought by plaintiff threatened the financial solvency of many state taxing units and held as a matter of public policy that the situation was clearly beyond the contemplation of the legislature in the enactment of the refunding statute.
In the case before us, I think the refunding statute must apply. The $25,000 sought by plaintiff will not shake the state’s economic stability. The precedent of a decision in plaintiff’s favor will not precipitate a flood of litigation because claims for refunds are available to those taxpayers who paid under protest.
My analysis of this case and the reasons for my opinion are quite simple. A.R.S. § 42-204, subsec. C entitles a taxpayer to recover any excess tax illegally collected. I contend the taxing authority acts illegally when it violates the express, mandatory provisions of an applicable statute. The statute compels the Superintendent to submit the ADA figure to the Board. He did not. The statute compels the Board to multiply the ADA figure times $170 to arrive at the necessary expense for education. The Board did not. The jurisdiction, powers and duties of the Board are strictly limited by statute. State v. Board of Supervisors 14 Ariz. 222, 127 P. 727; Magma Copper Co. v. Arizona State Tax Commission, 67 Ariz. 77, 191 P.2d 169. Acts of administrative officers or agencies which go beyond the purview of the statute granting their powers are not merely erroneous but are void. Flavell v. Department of Welfare, C. & C. of Denver, 144 Colo. 203, 355 P.2d 941; State v. Airesearch Mfg. Co., 68 Ariz. 342, 206 P.2d 562; Kincannon v. Irwin, 64 Ariz. 307, 169 P.2d 861. Every taxpayer has the right to insist that every board or officer having any authority connected with the levy and assessment of taxes shall, in the exercise of his duties, pursue the methods required by the statute. Orr v. State Board of Equalization, 3 Idaho 190, 28 P. 416. Courts will grant relief where a taxpayer has been injured because tax officials adopt the wrong principle or method of levying taxes. Lubbock Hotel Co. v. Lubbock Independent School Dist. (Tex.Civ. App.) 85 S.W.2d 776. The taxing power must be exercised in strict conformity with the statutory terms. Idaho Power Co. v. Three Creek Good Roads Dist., 87 Idaho 109, 390 P.2d 960. The plaintiff is entitled to recover. Judgment of the trial court should be affirmed.
LOCKWOOD, J., concurring.