Opinion
4-30-1956
UNITED STATES FIDELITY and GUARANTY COMPANY, a corporation, Plaintiff and Respondent, v. STATE BOARD OF EQUALIZATION et al., Defendants and Appellants. NORTHWEST CASUALTY COMPANY, a corporation, Plaintiff and Respondent, v. STATE BOARD OF EQUALIZATION et al., Defendants and Appellants. NATIONAL AUTOMOBILE & CASUALTY INSURANCE CO., a corporation, Plaintiff and Respondent, v. STATE BOARD OF EQUALIZATION et al., Defendants and Appellants. Civ. 21030-21032.
Edmund G. Brown, Atty. Gen., Harold B. Haas, Deputy Atty. Gen., for appellants. Latham & Watkins, Dana Latham, Charles E. Horning, Jr., Los Angeles, for respondents.
UNITED STATES FIDELITY and GUARANTY COMPANY, a corporation, Plaintiff and Respondent,
v.
STATE BOARD OF EQUALIZATION et al., Defendants and Appellants.
NORTHWEST CASUALTY COMPANY, a corporation, Plaintiff and Respondent,
v.
STATE BOARD OF EQUALIZATION et al., Defendants and Appellants.
NATIONAL AUTOMOBILE & CASUALTY INSURANCE CO., a corporation, Plaintiff and Respondent,
v.
STATE BOARD OF EQUALIZATION et al., Defendants and Appellants.
Edmund G. Brown, Atty. Gen., Harold B. Haas, Deputy Atty. Gen., for appellants.
Latham & Watkins, Dana Latham, Charles E. Horning, Jr., Los Angeles, for respondents.
DORAN, Justice.
The appeals are from judgments for recovery of taxes on premiums received in the year 1947, in favor of three plaintiff insurance companies, respectively, in the amounts of the taxes alleged to have been illegally assessed. The trial of the three cases was consolidated. The controversy relates to the premiums on bail bonds and the authority of the insurance commissioner to assess the taxes on the premiums in the circumstances.
As recited in appellants' brief, 'During the year 1947, plaintiffs were engaged in the insurance business and at the close of the year, as required by law, submitted to the Insurance Commissioner of this State a report on gross premiums received from insurance transactions in the State in that year. Thereafter, in the usual course, the Board of Equalization assessed gross premium taxes against the plaintiffs on business done during the year 1947 and the tax was duly paid in 1948.
'Thereafter, in the summer of 1951, the Honorable John G. Clark, judge of the Superior Court, in deciding the case of Groves v. City of Los Angeles (above referred to) filed a memorandum opinion pointing out that fees and other considerations withheld by bail agents were premiums for insurance. This directed the Attorney General's attention to the fact that such premium had not theretofore been reported for assessment as taxable premium, he accordingly so advised the Insurance Commissioner and in consequence, under date of July 17, 1951, the Insurance Commissioner wrote each plaintiff informing him that an additional assessment (which is the subject of this litigation) was being made against plaintiff as part of the 1951 assessment. Plaintiffs have paid these additional assessments under protest, and the judgments herein appealed from awarded them the amounts of such assessments with interest from time of their payment thereof.'
Appellant sets forth the issues as follows: '1. Can the State be estopped from collecting taxes assessed pursuant to a statute expressly permitting such assessment to correct a previous under-assessment or credit a previous over-assessment, for a limited period after normal assessment time? '2. If such an estoppel is permissible, is the evidence sufficient to establish the facts necessary to such an estoppel? '3. A subsidiary issue, which comes in only if the above issues are not decided in favor of appellants, is whether interest from time of payment of the tax to time of judgment is payable upon judgments for recovery of taxes under sections 13101-13113, Revenue and Taxation Code.'
In this connection, it is argued by appellant that, 'I. There being no conflict in the evidence, the Appellate Court is not bound by the Superior Court's construction of the evidence.' 'II. The theory of estoppel by erroneous administrative construction is not available to forbid retention of the principal amount of a tax directly imposed by statute upon the taxpayer without statutory provision for offset or reimbursement by other parties.' 'III. The nature of the statute, under which was made the assessment of the taxes here involved, is such as to negate any assertion of equities arising out of the prior assessment or reliance on prior administrative construction.' 'IV. The facts here in themselves preclude application of any estoppel theory.' 'V. Even if the judgments were to stand, they should be modified to exclude interest from date of payment under protest to date of judgment.'
Respondent sets forth the issues as follows: '1. May the doctrine of equitable estoppel be applied in this jurisdiction against the State and its agencies? '2. Upon the facts, should the State here be held estopped to assert retroactively the additional tax liabilities here in question? '3. Does Article XIII, Section 15 of the Constitution of the State of California require that interest be allowed respondents upon the amounts recovered, from the date of payment to the date of judgment?'
Respondent argues that, 'Under the law of this jurisdiction, the State may be subjected to an equitable estoppel in the same manner as an individual.'; 'The State of California should be held estopped to assert against respondents a liability for additional taxes for the year 1947.'; 'The right to recover interest upon a refund of gross premiums taxes is fixed by the Constitution of the State of California.'
As to whether respondents are entitled to interest on the amounts recovered, that question appears to be settled by Article XIII, § 15 of the State Constitution which provides as follows: 'No injunction or writ of mandate or other legal or equitable process shall ever issue in any suit, action or proceeding in any court against this State, or any officer thereof, to prevent or enjoin the collection of any tax levied under the provisions of this article; but after payment thereof action may be maintained to recover, with interest, in such manner as may be provided by law, any tax claimed to have been illegally collected.' (Emphasis added.)
The only other issue relates to question of estoppel as above noted.
The complaint alleges that, 'During the year 1947 plaintiff was engaged in the insurance business in the State of California. Taxes upon all gross premiums which plaintiff received or was entitled to receive in the course of said insurance business in the year 1947 were duly assessed and paid in full in 1948, pursuant to the provisions of Part 7 of Division 2 of the Revenue and Taxation Code of California. 'V
'Defendant Board, by Statement of Assessment transmitted to plaintiff on or about August 10, 1951, assessed additional gross premiums tax against plaintiff for the year 1947 in the amount of $693.61. The assessment of said additional tax was based upon the assertion by defendant Board that plaintiff, during the year 1947, had received and failed to report additional bail bond premiums in the amount of $29,515.12. Plaintiff neither received nor had any right to receive said amount or any part thereof, and neither directly nor indirectly authorized the charge or collection of said amount or any part thereof. * * * * * * 'VIII
'On or about November 15, 1951, plaintiff paid to the State of California, among other amounts, the amount of $693.61, representing the aforesaid additional assessment of gross premiums tax on bail bonds. Said payment was accompanied by a protest in writing, a copy of which is attached hereto as Exhibit 'A', and by reference made a part hereof, in accordance with the provisions of Section 13104 of the Revenue and Taxation Code of California. A copy of said protest was filed with defendant Board. The amount paid under protest has not been refunded and is now due and owing to plaintiff.' It is alleged that defendant board's action in assessing said additional gross premiums tax was illegal.
The findings by the trial court are comprehensive. Quoting therefrom, the court found that, 'The actions and conduct of the Insurance Commissioner and of the State of California during 1941 and continuing throughout 1947 constituted continuing representations that the amounts charged and retained by plaintiffs' bail bondsmen as compensation for their services in securing the release of prisoners on bail were not a part of the gross premiums received by plaintiffs for becoming surety on bail bonds.' The court found, as a conclusion of law, that, '(1) By reason of the facts found as aforesaid, in this cause, defendant Board, acting as the agent of the State of California, is bound by the representations of the Insurance Commissioner, acting as the agent of the State of California. '(2) By reason of the facts found as aforesaid, the State of California, acting through defendant Board, or otherwise, is now estopped to assert any liability on the part of plaintiffs or any of them for gross premiums taxes for the year 1947 on account of any amounts charged and retained by plaintiffs' bail bondsmen as compensation for their services in securing the release of prisoners on bail.'
In the case of Goodwill Industries, Inc., v. County of Los Angeles, 117 Cal.App.2d 19, 254 P.2d 877, 882, it was held that the doctrine of estoppel did not apply. The opinion noted however, that, 'Estoppel, may, of course, be invoked against a government entity in 'exceptional cases' where 'justice and right require it.' Farrell v. County of Placer, 23 Cal.2d 624, 627-628, 145 P.2d 570, 153 A.L.R. 323. But it may not be invoked where its application would tend to thwart public policy. County of San Diego v. California Water & Tel. Co., 30 Cal.2d 817, 826, 186 P.2d 124, 175 A.L.R. 747.'
That the doctrine of estoppel applies against the state and public officials in proper cases, there is no question. Garrison v. State of California, 64 Cal.App.2d 820, 149 P.2d 711; La Societe Francaise v. California Emp. Comm., 56 Cal.App.2d 534, 133 P.2d 47; Farrell v. County of Placer, 23 Cal.2d 624, 145 P.2d 570, 153 A.L.R. 323.
The trial judge's conclusions are supported by the law and the evidence and the judgment is therefore affirmed.
WHITE, P. J., and FOURT, J., concur.