Kirkpatrick v. Currie

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108 S.E.2d 209 (1959)

250 N.C. 213

Marie S. KIRKPATRICK, Margaret S. Hayes, and J. H. Pearson, Co-Administrators of Estate of N. B. Smithey, Deceased v. James S. CURRIE, Commissioner of Revenue of North Carolina.

No. 378.

Supreme Court of North Carolina.

April 29, 1959.

*210 Hayes & Hayes, North Wilkesboro, for plaintiff appellants.

Atty. Gen. Malcolm B. Seawell and Asst. Atty. Gen. Peyton Abbott, for defendant appellee.

RODMAN, Justice.

We must determine plaintiffs' right to maintain the action before looking at the evidence to ascertain if any was offered to show the deeds of 1941 were based on valuable consideration.

The constitutional provisions guaranteeing due process (N.C.Const. Art. I, sec. 17, U.S.Const., 14th Amend.) are mandatory and require an opportunity to be heard with respect to asserted tax liability. Bowie v. Town of West Jefferson, 231 N.C. 408, 57 S.E.2d 369.

The taxpayer asserting nonliability may be afforded constitutional protection by either administrative or judicial review. Where not prohibited by statute, judicial action may be sought in equity to enjoin the levy, Worth v. Commissioners, 60 N.C. 617; or at law to recover taxes paid under protest, Huggins v. Hinson, 61 N.C. 126.

The Legislature in 1887, by section 84, C. 137, provided that no court should enjoin the collection of a tax unless assessed for an illegal or unlawful purpose. This statute authorized payment of the tax under protest with the right to sue to recover the amount paid, if upon demand made within thirty days the tax was not refunded.

This statutory provision has in substance been brought forward in all subsequent codifications of our statute laws. Rev. §§ 821 and 2855, C.S. §§ 858 and 7979, G.S. §§ 105-267 and 105-406.

This statute permitting payment to be made under protest with a right to bring an action to recover the monies so paid is constitutional and accords the taxpayer due process. Raleigh & G. R. Co. v. Lewis, 99 N.C. 62, 5 S.E. 82; Mace v. *211 Commissioners, 99 N.C. 65, 5 S.E. 740; Henrietta Mills v. Rutherford County, 281 U.S. 121, 50 S. Ct. 270, 74 L. Ed. 737.

The right to sue to recover is a conditional right. The terms prescribed are conditions precedent to the institution of the action. Plaintiffs must allege and prove demand for refund made within thirty days after payment. A failure to make such demand forfeits the right. Railroad Co. v. Reidsville, 109 N.C. 494, 13 S.E. 865; Uzzle v. Vinson, 111 N.C. 138, 16 S.E. 6; Hatwood v. Town of Fayetteville, 121 N.C. 207, 28 S.E. 299; Bristol v. Com'rs of Town of Morganton, 125 N.C. 365, 34 S.E. 512; Teeter v. Wallace, 138 N.C. 264, 50 S.E. 701; Blackwell v. City of Gastonia, 181 N.C. 378, 107 S.E. 218; Nantahala Power & Light Co. v. Clay County, 213 N.C. 698, 197 S.E. 603; Williamson v. Spivey, 224 N.C. 311, 30 S.E.2d 46.

Plaintiffs elected to pay on 19 July 1955 without requiring notice and assessment, but under protest. They made no demand for refund until February 1957.

Manifestly this action cannot be maintained under G.S. § 105-267, nor can it, we think, be maintained, as plaintiffs argue, under the provisions of G.S. § 105-266.1. That statute, by express language, relates to proceedings begun by request for administrative review. It was enacted in 1957 and is a part of section 10, C. 1340, S.L.1957. It is an extension and enlargement of the policy declared by the Legislature in 1949, C. 392, S.L.1949 (G.S. § 105-241.1). This policy is predicated on the theory that an administrative hearing may be preferred by the taxpayer to an action at law to determine liability for the tax. In 1955 this idea was expanded to permit an appeal from the Commissioner's decision to a Tax Review Board. Chapter 1350, S.L.1955. Proceedings so initiated may ultimately find their way to the courts. Here no hearing was requested or held. The action originated in the Superior Court.

The taxpayer was not compelled to seek administrative hearings or review. He was accorded the right provided by G.S. § 105-267 to pay under protest and sue to recover if his demand for refund was not complied with.

Section 10, C. 1340, S.L.1957, amending art. 9, schedule J of the Revenue Act (C. 105 of the General Statutes), not only added what is now G.S. § 105-266.1, but amended G.S. § 105-267. Significantly, it did not change the requirement that demand for refund be made in thirty days if the taxpayer intended forthwith to seek judicial review rather than a hearing by the Commissioner as permitted by G.S. § 105-266.1.

Plaintiffs had a right to choose which course they would pursue. Having chosen, they are bound by the limitations fixed for that route. Not having made the demand within the time fixed by the statute, they have failed to establish a right to recover. The judgment of nonsuit is


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