
    (No. 579
    RALEIGH COUNTY BANK, Claimant, v. STATE TAX COMMISSIONER, Respondent.
    
      Opinion filed April 28, 1947
    
    
      Opinion upon rehearing filed September 15, 1947
    
    Appearances:
    
      Ashworth & Sanders (Carl Sanders), for the claimant.
    
      W. Bryan Spillers, Assistant Attorney General, for the state.
   MERRIMAN S. SMITH, Judge.

The Raleigh County Bank of Beckley, Raleigh county, West Virginia, owns the bank and cilice building in which it operates the business of banking. During the years 1939 to 1943 inclusive it reported and paid tax to the tax commissioner of the State of West Virginia as follows:

should
BANK OTHER HAVE REFUND
RENT RENT TOTAL PAID PAID DUE
1939 $ 8,831.05 $ 5,021.12 $ 13,852.17 $ 123.96 $ 35.65 $ 88.31
1940 17,673.90 10,573.20 28,247.10 257.47 80.73 176.74
1941 15,648.75 11,723.73 27,372.48 248.72 92.24 156.48
1942 14,389.89 11,562.19 25,952.08 234.52 90.62 143.90
7,715.83 6,482.12 14,197.95 129.48 52.32
1943 10,587.75 4,572.03 15,159.78 113.94 18.65 172.45
$74,847717 $49,934.45 $124,781.62 $1,108.09 $370121 $737.88'

It is provided under Michie’s code section 961 (p. 395), official code chapter 11, article 13, section 3, Exemptions; Non-Exempt Business. — “ ... (b) Persons engaged in the business of banking: Provided, however, That such exemption shall not extend to that part of the gross income of such persons which is received for the use of real property owned, other than the banking house or building in which the business of the bank is transacted, whether such income be in the form of rentals or royalties; . . .”

It is apparent from the statute that the claimant is exempted from paying business and occupation tax on rentals accruing from the banking house or building in which the business of the bank is transacted.

It is our opinion that since the claimant made these payments voluntarily and without filing any protest, but through ignorance solely, and since our statute of limitations would only include the years 1942 and 1943 and the payments for 1939 to 1941 inclusive would be barred by this statute, that this is a moral obligation and either all of the payments should be refunded or none, notwithstanding that the claimant did pay mistakenly this specifically exempted tax from 1939 to 1943 inclusive, voluntarily and without being required, which taxes were accepted by the state tax commissioner. Therefore it is the opinion of the majority of this court that this is a moral obligation on the part of the state of West Virginia and refund should be made of the amount paid for the respective years as follows :

1939 Refund $ 88.31
1940 Refund 176.74
1941 Refund 156.48
1942 Refund 143.90
1943 Refund 172.45

making a total refund for the five-year period of seven hundred thirty-seven dollars and eighty-eight cents ($737.88), which amount is hereby awarded to the claimant, The Raleigh County Bank, Beckley, West Virginia.

ROBERT L. BLAND, Judge,

dissenting.

It is regrettable that I find myself at variance with my colleagues in respect to the award which they have made in this case. Such award, in my judgment, cannot be sustained or" upheld on the ground of a moral obligation on the part of the state to pay it, since it is in direct conflict with and in total disregard of two express statutory enactments.

Claimant, the Raleigh County Bank, owns its banking house in the city of Beckley, West Virginia and also other real estate. From 1939 to 1943, inclusive, it received rents from said banking house building, aggregating $74,847.17. For said years it made regular reports of the receipt of such rentals to the state tax commissioner, and voluntarily paid what is generally known as gross sales tax on account of said rental receipts.

By virtue of chapter 11, article 13, section 3 of the code of West Virginia, the banking house or buildieg in which claimants business is conducted' is exempt from the payment of business or occupational tax. Apparently claimant was not aware of this fact until the latter part of the year of 1946.

In this proceeding claimant seeks an award covering what it conceives to have been erroneous gross sales taxes, paid by it to the state tax commissioner; not only on account of the banking building itself but also on other real estate owned by the institution.

By virtue of chapter II, article 1, section 2(a) of the code of West Virginia, it is provided as follows:

“On and after the effective date of this section, any taxpayer claiming to be aggrieved through being required to pay any tax into the treasury of this state, may, within two years from the date of such payment, and not after, file with the official or department through which the tax was paid, a petition in writing to have refunded to him any such tax, or any part thereof, the payment whereof is claimed by him to have been required unlawfully ; and if, on such petition, and the proofs filed in support thereof, the official collecting the same shall be of the opinion that the payment of the tax collected, or any part thereof was improperly required, he shall refund the same to the taxpayer by the issuance of his or its requisition on the treasurer; and the auditor shall issue his warrant on the treasurer therefor, payable to the taxpayer entitled to the refund, and the treasurer shall pay such warrant out of the fund into which the amount so refunded was originally paid: Provided, however, That no refund shall be made, at any time, on any claim involving the assessed valuation or appraisement of property which was fixed at the time the tax was originally paid.”

It will thus be observed that unless application is made to the state tax commissioner within two years from the date of the payment of the gross sales tax to him, he is precluded from making any refund for such taxes.

Upon the hearing of the claim it was made to appear that proper application for a refund for the years 1944-1945-3 94G has been made to the state tax commissioner, and it is shown that checks covering refunds for such period of three years will be released to claimant on the twenty-fifth day of May, 1947.

Claimant is now seeking to recover refunds for the years 1939 to 1943 inclusive, anil the award above made embraces said periods.

Chapter 14, article 2, section 21, being the act creating the court of claims, provides as follows:

“The court shall not take jurisdiction over a claim unless the claim is filed within five years after the claim might have been presented to such court. If, however, the claimant was for any reason disabled from maintaining the claim, the jurisdiction of the court shall continue for two years after the removal of the disability. With respect to a claim arising prior to the adoption of this article, the limitation of this section shall run from the effective date of this article: Provided, however, That no such claim as shall have arisen prior to the effective date of this article shall be barred by any limitation of time imposed by any other statutory provision if the claimant shall prove to the satisfaction of the court that he has been prevented or restricted from presenting or prosecuting such claim for good cause, or by any other statutory restriction or limitation.”

The award made by majority members of the court includes refunds for the years 3939, 1940, 1941, 1942 and 1943.

In claim No. 542, Gons v. Board of Control, we held the effective date of the court to be July 14, 1941.

The Legislature itself has seen fit to fix a time beyond which this-court is without power or jurisdiction to make an award.

By virtue of Lhe two-year period of the statute of limitations, first above cited, and by virtue of the statute of limitations contained in the court act, a refund could not, in my judgment, be lawfully made, either by the state tax commissioner or this court, to claimant for the years for which the award in this case has been made, it having been clearly shown that no application was made to the state tax commissioner for refund until December, 1946.

How, therefore, can it be said that there is a moral obligation on the part of the state to make refund to the claimant for the periods excluded by the two statutes of limitations? It may be said in passing, that it is generally understood that voluntary payments of taxes may not be recovered back; however, in view of the purpose of the court act, in a proper case where the claim is shown to be meritorious, I should say that this court would recommend such payment.

In my judgment the above award creates a dangerous precedent. It cannot be helpful to the state tax commissioner, and it is in excess of our jurisdiction.

MERRIMAN S. SMITH, Judge, upon petition for rehearing.

Where a gross sales tax is paid voluntarily and without filing any protest since there was no question as to the validity of the exemption and such tax was improperly accepted by the state tax commissioner there is a moral obligation imposed upon the state to refund the amount not barred by the state court of claims statute of limitations.

Ashworth & Sanders (Carl G. Sanders) for the claimant.

W. Bryan Spillers, Assistant Attorney General, for the state.

MERRIMAN S. SMITH, Judge.

At the April 1947 term of the court of claims the above styled claim was heard and an award was made in the sum of $737.88 for the refund of gross sales tax for the years 1939 to 1943 inclusive. Upon motion by the state a rehearing was granted by the court.

It is provided under Michie’s code section 961 (p. 395), Offiicial code chapter 11, article 13, section 3, Exemptions; Non-Exempt Business. — “. . . (b) Persons engaged in the business of banking: Provided, however, That such exemption shall not extend to that part of the gross income of such persons which is received for the use of real property owned, other than the banking house or building in which the business of the bank is transacted, whether such income be in the form of rentals or royalties; . . .”

For the years 1939 to 1943 inclusive the claimant paid to the state tax commissioner gross sales tax on all rents derived from its bank building and all other property and is now seeking a refund on the taxes paid upon the rents from the banking building.

It is the opinion of the majority of the court that since the claimant made these payments voluntarily and without filing any protest and without an audit being made by the state tax department, and since the statute of limitations imposed upon the court of claims would only include the years 1941, 1942 and 1943 and the payments for 1939 and 1940 would be barred by the statute of limitations, that this is a moral obligation and that refund should be made of the amount paid for the respective years as follows:

1941 $156.48
1942 143.90
1943 172.45

making a total refund for the three year period of four hundred seventy-two dollars and eighty-three cents ($472.83), which amount is hereby awarded to claimant The Raleigh County Bank, Beckley, West Virginia.

ROBERT L. BLAND, Judge,

dissenting.

The claim involved in this case was filed in the court of

claims on January 1, 1947.

Refund of business and occupation taxes paid for the years 1939, 1940, 1941, 1942, and 1943 is sought in the proceeding.

Any remedy which claimant may ever have had to obtain a refund of the taxes v'hich it contends it paid through mistake into the treasury of this state has been exhausted by reason of its lachen in making application for such refund within the period prescribed by statute in such case made and provided.

Chapter 11, article 1, section 2(a) of the code of West Virginia provides that any taxpayer claiming to be aggrieved through being required to pay any tax into the treasury of this state may, within two years from the date of such payment, and not after, file with the offuciai or department through which the tax was paid, a petition in writing to have refunded to him any such tax, or any part thereof, the payment whereof is claimed by him to have been required unlawfully. The refund authorized by the statute is to be paid by the treasurer out of the fund into which the amount so refunded was originally paid. Such remedy to obtain any such refund is exclusive. State v. Penn Oak Oil & Gas, Inc., 128 W. Va. 212; 36 SE (2nd) 595.

“An award will not be made to a person failing to file application for refund of taxes paid on gasoline within sixty days after date of purchase or delivery of gasoline as prescribed by general law, when it appears from the general law that it is the policy of the Legislature to deny payment of such refunds unless such application is filed as prescribed by the statute permitting refunds on gasoline used for certain specific purposes.” Del Balso v. State Tax Commissioner, 1 Ct. Claims (W. Va.) 15.
“A claim which has been barred by a statute of limitations for a period of more than five years prior to the reenactment of chapter 14, article 2 of the 1931 code, creating the court of claims which was of such nature that it could have and should have been presented to the circuit court of Ka-nawha county for auditing and adjusting and its action reported by the auditor to the Legislature under a proceeding then provided for by statute, held not revived, and an award denied, when petitioner has not been prevented or restricted from prosecuting such claim under the procedure provided prior to the time such claim became barred under the statute.” Consolidated Coal Company v. State Auditor, 2 Ct. Claims (W. Va.) 10.
“An award will not be made to a person failing to file application for refund of taxes paid on gasoline within sixty days after date of purchase or delivery of gasoline as provided by general law when it appears from the general law that it is the policy of the Legislature to deny payment of such refunds unless such application is filed as prescribed by the statute permitting refunds on gasoline used for certain specific purposes.” State Construction Company v. State Tax Commissioner, 8 Ct. Claims (W. Va.) 85.
“The Court of Claims is without jurisdiction to extend the time fixed by statute to make application for refund of excess income tax paid. Such income taxpayer is obliged to avail himself of the remedy provided by law for relief.” Long v. State Tax Commissioner, 3 Ct. Claims (W. Va.) 25.

Code 11-13-3 exempts persons engaged in the business of banking from the payment of a business or occupation (commonly known as gross sales) tax on a banking house or building. The Legislature has thus been very generous toward persons engaged in the banking business. Notwithstanding the statute in question, claimant, which had received rentals on leased portions of its banking house from 1939 to 1943, inclusive, of $74,847.17, and also rentals from other property which it owned for the same period, of $49,934.45, paid to the state-tax commissioner business or occupation taxes on the combined rentals which it had collected from its demised premises. It did not segregate or separate the rental collected from the banking house from the rental received from other real estate, but made its own computation of gross sales tax due on the entire rental, and made return accordingly to the state tax commissioner with checks for the amount which it conceived to be in proper settlement of such taxes. These payments were purely voluntary. The state tax commissioner did not require claimant to pay taxes on the rentals received from its banking house. Claimant made such payments without duress or compulsion of any kind. It made its own determination of the amount due the state on account of its supposed liability to pay business or occupation taxes on rentals collected by it. The money paid to the tax commissioner by claimant was not unlawfully received by the tax commissioner. The tax commissioner had no way of knowing that the return made by claimant of liability to pay the taxes was not a correct computation and finding by claimant. The tax commissioner could not be expected to act as a bookkeeper or accountant for the bank. The payment made was a purely voluntary payment of taxes which claimant felt it should account for and pay to the state. The money paid to the tax commissioner was paid as taxes.

“Money paid voluntarily with full knowledge of the facts under a mistake of law cannot be recovered.” Beard v. Beard, 25 W. Va. 486.

In the opinion in the above case, on page 489 it is said:

. . It is too well settled in Virginia and in this State to now be controverted, that when one voluntarily pays money to another with full knowledge of all the facts but under a mistake of law he cannot recover it. (Mayor of Richmond v. Judah, 5 Leigh 305; Haigh v. Building Association, 19 W. Va. 792; Transportation Company v. Sweetzer, supra, p. 434.)”

The Supreme Court of the State of Illinois, in American Can Company v. Gill, County Collector, 364 Ill. 254, held that taxes voluntarily paid cannot be recovered or refunded unless the statute expressly authorized such recovery or refunding. And the same court, in LeFevre v. County of Lee, 353 Ill. 30, held that taxes paid voluntarily and not under duress cannot be recovered by the taxpayer, even though the tax be illegal.

Claimant concedes that if the state were suable its claim would have no standing in a court of law or equity, but argues that the court of claims was created for the very purpose of doing what a majority of the court did upon the original hearing of this case and, in effect, attempts to invoke the equity and good conscience provision of the court act. The language used in the court act, in relation to equity and good conscience, defines the jurisdiction of the court and does not create a new liability against the state, nor increase or enlarge any existing liability. I prefer to adopt the view of the court of claims of the state of Illinois, where the court act is very similar to the act creating the court of claims of West Virginia. The court of claims of that state has held that the jurisdiction of the court is limited to claims in respect to which the claimant would be entitled to redress against the state, either at law or in equity, if the state were suable, and that unless the claimant can bring himself within the provisions of a law giving him the right to an award he cannot invoke the principles of equity and good conscience to secure such an award. It seems to me that this is substantially the view expressed by the Supreme Court of West Virginia in the recent case of Cashman v. State Board of Control. Such view also finds support in the language used by Judge Fox in the opinion in the Penn Oak case, supra:

‘Where a statute imposing a tax provides the taxpayer with a specific remedy against injustices arising thereunder and the taxpayer fails to avail himself of the remedy so provided, he cannot go outside the statute for other and different remedies,”

Claimant freely admits that the state tax commissioner made no demand upon it to pay taxes on the rentals received from its banking house, and agrees that such payments were not required by him, but were voluntarily paid by it without separating such rentals from the rentals which it received from other properties. Subsequently it made proper application to the state tax commissioner to obtain refunds of such payment so made for the years 1944, 1945 and 1946, and refunds for such years were made by the tax commissioner, but because applications had not been made for refunds for the preceding years no such refunds were made by him. Claimant pursued the remedy afforded it by statute to obtain refunds for the three years for which refunds were made. It seeks an award for refunds for the preceding years from this court. I respectfully maintain that this court is without jurisdiction to make such refunds, since the only remedy afforded claimant by statute is the remedy it pursued when refunds were made to it by the tax commissioner for the years 1944, 1945 and 1946. Claimant paid its money to the said tax commissioner as taxes. Such payments must be treated as taxes paid.

For reasons set forth in my dissenting statement upon the first hearing and additional reasons herein announced I would deny an award to claimant and dismiss its claim.  