Oklahoma Tax Com'n v. Ricks

Oklahoma Tax Com'n v. Ricks
1994 OK 115
885 P.2d 1336
65 OBJ 3672
Case Number: 83531
Decided: 10/25/1994
Modified: 10/27/1994
Supreme Court of Oklahoma

OKLAHOMA TAX COMMISSION, PETITIONER,
v.
THE HONORABLE CAROLYN R. RICKS, DISTRICT JUDGE, RESPONDENT.

Original Proceeding for a Prerogative Writ to Prohibit Respondent-Judge from Proceeding Further in a District Court Suit.

¶0 Oklahoma Tax Commission seeks to arrest a district court

ORIGINAL JURISDICTION ASSUMED; WRIT GRANTED.

David Hudson, Gen. Counsel, Stanley P. Johnston, Deputy Gen. Counsel, Robert B. Struble, Asst. Gen. Counsel, Okl. Tax Com'n, Oklahoma City, for petitioner.

James A. Jennings, III, Elizabeth J. Bradford, Holloway, Dobson, Hudson, Bachman, Alden, Jennings, Robertson & Holloway, Oklahoma City, for real parties in interest.

OPALA, Justice.

[885 P.2d 1337]

¶1 The dispositive issues tendered by this original proceeding are (1) whether a "common fund" was created in Strelecki v. Oklahoma Tax Commission

I
THE ANATOMY OF LITIGATION

¶2 In Strelecki this court retroactively applied a new rule of federal law first announced in Davis v. Michigan Dept. of Treasury.

¶3 The Strelecki plaintiffs [or taxpayers] (who were successful in their refund quest on appeal) brought an action in the district court for declaratory and injunctive relief. The suit presses for recognition their right to an attorney's fee from a common fund (which they urge was created through their efforts before the OTC and later on appeal in Strelecki) as benefactors of a large class of nonparty federal retiree-taxpayers.

¶4 In this original action the OTC seeks to prohibit the respondent-judge from proceeding further in the taxpayers' declaratory judgment suit. The taxing authority argues its cognizance to determine all matters relating to the taxpayers' refund claims (including the interest on the refunds) is exclusive. A declaratory judgment will not lie, the OTC adds, to construe its administrative orders or to declare rights in these agency decisions. Any claim the taxpayers may have had to attorney's fees, the OTC urges, should have been pressed in the agency proceedings or on direct appeal. According to the OTC, there [885 P.2d 1339] can be no "common fund" where the "benefits" of the proceeding are not to be shared in common, but must go directly to each individual.

¶5 The taxpayers counter that because only a court having equity cognizance is authorized to determine the legal existence of a common fund, no quest for an attorney's fee could have been made in agency proceedings or on appeal. Moreover, until Strelecki became final, the taxpayers explain, no common fund had in fact been created. A declaratory judgment action, they urge, is appropriate to determine the existence of a common fund and the amount of their claim to an attorney's fee due from that fund. By order issued earlier in the instant case this court declared unenforceable the respondent-judge's temporary restraining order (by which she directed that the OTC withhold certain amounts from refund checks to be issued), holding that order facially void for want of notice to the individual taxpayer-claimants (non-party federal retirees) whose refunds were sought to be adversely affected. Based on the reasons stated in Parts III and IV, infra, we now assume original jurisdiction to prohibit the respondent-judge from proceeding further in the action below.

II
THE COMMON-FUND DOCTRINE

¶6 As a general rule attorney's fees are not recoverable absent some statutory authority or an enforceable contract.

III
EQUITY JURISPRUDENCE CANNOT EXTEND ITS COMMON-FUND DOCTRINE
TO THIS CASE

¶7 The majority rule in state and federal courts is that, before a money pool may be subjected to a common-fund attorney's-fee [885 P.2d 1340] assessment, the created or preserved fund

¶8 The conceptual underpinnings for the chancery common-fund doctrine teach us that an equitable charge may be impressed in favor of its creator

¶9 The real impact of taxpayers' quest for declaratory judgment would divert monies from the ordinary course of the OTC's disbursement process. We are aware of no authority that would allow the district court to interrupt a lawful OTC tax collection/disbursement procedure to rechannel state money by applying it towards the satisfaction of attorney's fees.

¶10 Moreover, if the respondent-judge were to entertain the taxpayers' action below, she would be called upon to declare rights in a large number of OTC refund claims - separate and distinct from those of the Strelecki plaintiffs - which are not before the district court. Such action by her clearly would constitute an unauthorized use of judicial force over non-parties' refund claims by charging money, immediately to be disbursed [885 P.2d 1342] to absent owner-recipients, with adverse counsel-fee assessment.

IV
THE TERMS OF 12 O.S. 1991 § 1657

¶11 While the district court has broad declaratory powers,

¶12 The OTC refund procedure - which the plaintiffs below seek to modify - was implemented by administrative orders issued upon remand in Strelecki. The district court stands legislatively divested, of remedial power to affect any Commission order by judicature that would create added or different rights for either refund claimants or for strangers to that agency's administrative process.

CONCLUSION

¶13 Prohibition is a prerogative writ to be granted in the exercise of this court's supervisory control over inferior courts.

¶14 ORIGINAL JURISDICTION ASSUMED; WRIT GRANTED.

¶15 All JUSTICES concur.

Footnotes:

1 Okl., 872 P.2d 910 (1993).

2 489 U.S. 803, 109 S. Ct. 1500, 103 L. Ed. 2d 891 (1989).

3 Strelecki, supra note 1 at 912.

4 On rehearing the OTC sought clarification of whether Strelecki determined "the rights and remedies of the parties to the appeal or of all taxpayers who, on or before April 15, 1989, filed claims for refund of income taxes voluntarily paid on their civil service or military income for the 1985 and/or subsequent tax years." Id. at 923. The pertinent portions of the clarification order, Strelecki, supra note 1 at 924, are:

"* * * [T]he refund provisions of [68 O.S. 1991] § 2373 provide a remedy for the six taxpayers who are parties hereto and to any other taxpayer who reported and paid income taxes on federal civil service and military retirement income for the 1985 tax year and gave notice of the overpayment and claim for refund before the expiration of three years from the report date for the 1985 tax year or three years from April 15, 1986; for the 1986 tax year if the notice of claim was submitted on or before April 15, 1990; and for the 1987 tax year if the notice of claim was submitted on or before April 15, 1991. * * * Because we have determined that the refund remedy provided in § 2373 is available to all similarly situated taxpayers, the OTC is directed to proceed to process the refund claims submitted by similarly situated taxpayers and determine the timeliness of the notices of claim and mathematical correctness of the claimed overpayments. * * *" (Emphasis added.)

5 In the case below the taxpayers seek a judgment declaring that (a) a common fund was created, which consists of the entire amount of all tax refunds (and interest) to which federal-retiree taxpayers were or would be entitled; (b) the Strelecki plaintiffs are entitled to be paid an attorney's fee of 15% of the total amount of the common fund; and (c) the OTC should be enjoined from paying out all of the yet unpaid interest due federal retiree-taxpayers on their refund claims.

6 State ex rel. Poulos v. State Bd. of Equal., Okl., 646 P.2d 1269, 1274-1275 (1982); City Nat. Bank & Trust Co. v. Owens, Okl., 565 P.2d 4, 7 (1977).

7 Warren v. Century Bankcorporation, Inc., Okl., 741 P.2d 846, 853 (1987); Burk v. Oklahoma City, Okl., 522 P.2d 612, 622 (1974).

8 For scholarly discussions of the common fund doctrine see JOHN P. DAWSON, Lawyers and Involuntary Clients: Attorney Fees from Funds, 87 HARV.L.REV. 1597 (1974); JOHN P. DAWSON, Lawyers and Involuntary Clients in Public Interest Litigation, 88 HARV. L.REV. 849 (1975).

9 See Trustees v. Greenough, 105 U.S. 527, 536, 26 L. Ed. 1157, 1162 (1881); Central Railroad & Banking Co. v. Pettus, 113 U.S. 116, 124-125, 5 S. Ct. 387, 391, 28 L. Ed. 915, 918 (1885); Harrison v. Perea, 168 U.S., 311, 325, 18 S. Ct. 129, 134-135, 42 L. Ed. 478, 483 (1897); United States v. Equitable Trust Co. of New York, 283 U.S. 738, 744, 51 S. Ct. 639, 641, 75 L. Ed. 1379, 1384 (1931); Sprague v. Ticonic Nat. Bank, 307 U.S. 161, 167, 59 S. Ct. 777, 780, 83 L. Ed. 1184, 1187 (1939); Mills v. Electric Auto-Lite Company, 396 U.S. 375, 392, 90 S. Ct. 616, 625-626, 24 L. Ed. 2d 593, 606 (1970); Hall v. Cole, 412 U.S. 1, 8, 93 S. Ct. 1943, 1948, 36 L. Ed. 2d 702, 709 (1973); cf. Hobbs v. McLean, 117 U.S. 567, 582, 6 S. Ct. 870, 877, 29 L. Ed. 940, 946 (1886); Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 257, 269, 95 S. Ct. 1612, 1621-1622, 1627, 44 L. Ed. 2d 141, 153-159 (1975).

10 Warren, supra note 7 at 853; Burk, supra note 7 at 622; Fisher v. Superior Oil Co. of California, Okl., 390 P.2d 521, 523 (1964); Kellough v. Taylor, 189 Okl. 675, 119 P.2d 556, 557-558 (1941); Fitzgerald v. Bass, 122 Okl. 140, 252, P. 54, 55 (1927); Colley v. Sapp, 44 Okl. 16, 142 P. 1193, 1194 (1914); cf. Poulos, supra note 6 at 1274-75; State v. Oklahoma Tax Commission, 194 Okl. 359, 151 P.2d 797, 798 (1944).

11 Poulos, supra note 6 at 1275; Kellough, supra note 10 at 557-58; Baksinski v. Northwestern University, 231 Ill. App.3d 7, 172 Ill.Dec. 436, 441, 595 N.E.2d 1106, 1111 (1992); Private Truck Council of America v. State, 128 N.H. 466, 517 A.2d 1150, 1157 (1986); Fitzgerald v. City of Philadelphia, 87 Pa.Cmwlth. 482, 487 A.2d 485, 489 (1985); Akron-Canton v. Ohio Dept. of Admin. Serv., 21 Ohio App.3d 6, 486 N.E.2d 116, 118-119 (1984); Van Emmerick v. Montana Dakota Utilities Co., 332 N.W.2d 279, 282-283 (S.D. 1983); Penn Mutual Life Insurance Company v. Finkel, 428 Pa. 11, 235 A.2d 396, 401 (1967); Ayman v. Teachers' Retirement Board of City of N.Y., 30 Misc.2d 828, 215 N.Y.S.2d 933, 936 (1961). See also DAN B. DOBBS. REMEDIES 200 (1973).

12 Dennis v. State, 234 Neb. 427, 451 N.W.2d 676, 687 (1990) (overruled on other grounds, Dennis v. Higgins, 498 U.S. 439, 447-451, 111 S. Ct. 865, 870-872, 112 L. Ed. 2d 969, 978-980 (1991); Hamer v. Kirk, 64 Ill. 2d 434, 1 Ill.Dec. 336, 339, 356 N.E.2d 524, 527 (1976); Von Holt v. Izumo Taisha Kyo Mission of Hawaii, 44 Ha. 147, 355 P.2d 40, 43 (1960), aff'd on rehearing, 44 Ha. 365, 355 P.2d 44 (1960); Grandle v. Rhodes, 107 Ohio App. 558, 154 N.E.2d 172, 173 (1958); Eckford v. Borough of Atlanta, 173 Ga. 650, 160 S.E. 773, 775 (1931); Milster v. City Council, 68 S.C. 243, 47 S.E. 141, 142 (1904); see also Underwood v. Pierce, 547 F. Supp. 256, 259 (C.D.Cal. 1982); Townsend v. Edelman, 518 F.2d 116, 123 (7th Cir. 1975); Satoskar v. Indiana Real Estate Commission, 517 F.2d 696, 698 (7th Cir. 1975), cert. denied, 423 U.S. 928, 96 S. Ct. 276, 46 L. Ed. 2d 256 (1975); cf. Poulos, supra note 6 at 1274-75 (in an original proceeding to challenge the constitutionality of an ad valorem property taxation scheme, we denied the petitioner's request for a counsel-fee award, stating that there was "no creation of a common fund as a result of the litigation" and none was present "under the control of this Court out of which we could order attorney's fees to be paid"). (Emphasis added.)

13 Sprague, supra note 9, 307 U.S. at 162, 59 S. Ct. at 778 (private trust estate); Equitable Trust, supra note 9, 283 U.S. at 739, 51 S. Ct. at 640 (trust estate of an incompetent); Harrison, supra note 9, 168 U.S. at 312, 18 S. Ct. at 129 (action to compel accounting of estate administrator); Greenough, supra note 9, 105 U.S. at 527, 26 L. Ed. at 1157 (administration of a public trust).

14 City of Ozark v. Trawick, 604 So. 2d 360, 364 (Ala. 1992).

15 Raleigh-Durham Airport Auth. v. Howard, 88 N.C. App. 207, 363 S.E.2d 184, 187 (1987).

16 Flynn v. Kucharski, 16 Ill. App.3d 624, 306 N.E.2d 726, 731 (1973).

17 Hamer, supra note 12, 1 Ill.Dec. at 339, 356 N.E.2d at 527.

18 Underwood, supra note 12 at 259.

19 Flynn, supra note 16, 306 N.E.2d at 731; Von Holt, supra note 12, 355 P.2d at 43; Milster, supra note 12, 47 S.E. at 141-142.

20 Southeast Legal Defense Group v. Adams, 657 F.2d 1118, 1123 (9th Cir. 1981); District of Columbia v. Green, 381 A.2d 578, 582 (D.C.App. 1977); City of East Peoria v. Tazewell County, 17 Ill. App.3d 943, 308 N.E.2d 824, 826 (1974); Rosemont Bldg Sup., Inc. v. Illinois Hwy. Trust Auth., 51 Ill. 2d 126, 281 N.E.2d 338, 340 (1972); Hoffman v. Lehnhausen, 48 Ill. 2d 323, 269 N.E.2d 465, 469 (1971).

21 Townsend, supra note 12 at 123.

22 Pettus, supra note 9, 113 U.S. at 124-125, 5 S. Ct. at 391 (citing Greenough, supra note 9).

23 The requirement calling for the court's present control over the fund to be charged serves a function somewhat similar to that performed by possession when the lien right is dependent on that element. A lien is a charge upon specific property. 42 O.S. 1991 § 1 ; Williamson v. Winningham, 199 Okl. 393, 186 P.2d 644, 650 (1947). If the lien depends on possession, the claimant's lack of, or voluntary relinquishment of, possession will either prevent the lien from attaching or result in its destruction. 42 O.S. 1991 § 25 ; Williamson, supra, 186 P.2d at 650.

24 Fitzgerald, supra note 11 at 489. By "preexisting" is meant that the fund is in esse when the plea for counsel-fee award is heard.

25 Dennis, supra note 12 at 687; United Nursing Homes v. McNutt, 35 Wash. App. 632, 669 P.2d 476, 483 (1983); Seattle Sch. Dist. 1 of King City. v. State, 90 Wash. 2d 476, 585 P.2d 71, 1108 (1978).

26 Alyeska, supra note 9, 421 U.S. at 265 n. 39, 95 S. Ct. at 1625; Satoskar, supra note 12 at 698.

27 Southern v. Beeler, 183 Tenn. 272, 195 S.W.2d 857, 872 (1946).

28 Seven Hills v. Cleveland, 47 Ohio App.3d 159, 547 N.E.2d 1024, 1029 (1988); Seattle Sch. Dist., supra note 25, 585 P.2d at 108.

29 Ayman, supra note 11, 215 N.Y.S.2d at 936.

30 Hamer, supra note 12 at 527.

31 See in this connection the principles explained in Passtou v. Spring Valley Center, 501 A.2d 8, 14 (D.C.App. 1985); DAWSON, supra note 8, 88 HARV. L.REV. at 919, where it is stated that to enlarge personal jurisdiction in the context of a common fund "would enable the successful lawyers not merely to solicit but to conscript clients."

32 Powell v. Henry, 267 Ark. 484, 592 S.W.2d 107, 109 (1980); Horner v. Chamber of Commerce, 236 N.C. 96, 72 S.E.2d 21, 24 (1952); Shillito v. City of Spartanburg, 214 S.C. 11, 51 S.E.2d 95, 104 (1948); Fox v. Lantrip, 169 Ky. 759, 185 S.W. 136, 139 (1916).

33 East Peoria, supra, note 20, 308 N.E.2d at 826; Hoffman, supra, note 20, 269 N.E.2d at 469.

34 Ayman, supra note 11, 215 N.Y.S.2d at 934.

35 Rosemont, supra note 20 281 N.E.2d at 340; Green, supra note 20 at 582; Hoffman, supra note 20 269 N.E.2d at 469.

36 Passtou, supra note 31 at 14.

37 The terms of 12 O.S. 1991 § 1657 are:

"This act shall not be applicable to orders, judgments, or decrees made by the State Industrial Court, the Corporation Commission, or any other administrative agency, board or commission of the State of Oklahoma." (Emphasis added.)

38 The terms of 12 O.S. 1991 § 1651 provide in pertinent part:

"District courts may, in cases of actual controversy, determine rights, status, or other legal relations . . . whether or not other legal relief is or could be claimed. . . ." (Emphasis added.)

39 For the pertinent terms of 12 O.S. 1991 § 1657 , see supra note 37.

40 Lincoln Bank and Trust Company v. Oklahoma Tax Commission, Okl., 827 P.2d 1314, 1318 (1992); Walters v. Oklahoma Ethics Commission, Okl., 746 P.2d 172, 178 (1987); Tulsa Tribune Co. v. Oklahoma Horse Racing Com'n, Okl., 735 P.2d 548, 553 (1986); Chancellor v. Tenneco Oil Co., Okl., 653 P.2d 204, 207 (1982); Board of County Commissioners v. City of Norman, Okl., 472 P.2d 910, 914 (1970).

41 As we view the § 1657 bar, it charts a remedial boundary line for the outer reach of the district court's declaratory relief. See, e.g., Board of Law Library Trustees v. State, Okl., 825 P.2d 1285, 1288 n. 11 (1992); see Wilson v. Kane, Okl., 852 P.2d 717, 721 (1993), for an analysis of interdocket remedial boundaries' impact on probate procedure.

42 Art 7, § 4, Okl., Const; Marsh v. District Court In and For Muskogee, Okl., 579 P.2d 832, 834 (1978); Rey v. Means, In and For Tulsa City., Okl., 575 P.2d 116, 118 (1978).

43 Prohibition will lie to arrest unauthorized or excessive use of judicial force. See Lee v. Hester, Okl., 642 P.2d 243, 246, (1983); Moses v. Hoebel, Okl., 646 P.2d 601, 603 (1982); State v. Evans, Okl., 319 P.2d 112, 1116 (1957).