OCCIDENTAL LIFE V. STATE, 1979-NMSC-007,
92 N.M. 433, 589 P.2d 673 (S. Ct. 1979)
OCCIDENTAL LIFE OF CALIFORNIA,
Plaintiff-Appellee,
vs.
STATE of New Mexico, Defendant-Appellant.
SUPREME COURT OF NEW MEXICO
1979-NMSC-007, 92 N.M. 433, 589 P.2d 673
Toney Anaya, Atty. Gen., Andrea R.
Buzzard, Asst. Atty. Gen., Santa Fe, for defendant-appellant.
Rodey, Dickason, Sloan, Akin & Robb,
Rex D. Throckmorton, Jonathan W. Hewes, Albuquerque, for plaintiff-appellee.
PAYNE, J., wrote the opinion. McMANUS,
Senior Justice, and FEDERICI, J., concur.
{1} Occidental Life of
California brought suit against the State of New Mexico to recover an
overpayment of premium taxes. The taxes were paid on premiums received on an
insurance policy issued by Occidental to an Albuquerque-based retail clerk's
union for the purpose of furnishing insurance benefits to members of the union
in El Paso, Texas. The trial court held that Occidental was entitled to a full
refund of the overpayment. The State appealed. We reverse.
{2} The overpayment of taxes
arose as a result of an error by an employee of Occidental. Occidental's usual
business practice was to assign a code to an insurance policy which identified
the state where the greater number of the insured persons resided. All premiums
received under the policy were identified by this code and attributed for tax
purposes to the state represented by that code. An Occidental employee assigned
a New Mexico code number to the policy, although virtually all the insured
parties lived in Texas. As a result of this error, all premium taxes on the
policy from 1967 through 1973 were erroneously paid to New Mexico instead of
Texas.
{3} The trial court held that
since the erroneous coding of the policy was an innocent mistake of which
Occidental had no knowledge or notice until 1974, it was entitled to a full
refund.
{4} It is well established
that in the absence of a statute permitting a recovery, taxes paid voluntarily
and without compulsion cannot be recovered.
Jaynes v. Heron,
46 N.M.
431,
130 P.2d 29 (1942);
Johnson v. Greiner,
44 N.M. 230,
101 P.2d 183
(1940). Occidental does not dispute that this is an accurate statement of the
law, nor is it disputed that at the time these taxes were paid there was no
statute which permitted a refund.
{5} Occidental's argument is
based on the theory that taxes paid pursuant to an innocent
{*434}
mistake of fact are not paid voluntarily. It contends that the cases of
Rabbit
Ear Cattle Company v. Frieze,
80 N.M. 203,
453 P.2d 373 (1969) and
Elgin
v. Gross-Kelly Co.,
20 N.M. 450,
150 P. 922 (1915) establish the rule that
payments made as a result of a mistake of fact are regarded as involuntary and
are recoverable. Neither of these cases, however, involve the payment of taxes;
both are consistent with the rule of
Jaynes, supra, and
Johnson,
supra, that the recovery of taxes is governed by statute in the absence of
duress.
{6} The trial court found
that Occidental did not pay these taxes under duress. Occidental does not
challenge that finding on appeal. Had the taxes been paid under duress they
would have been recoverable, even in the absence of a statute permitting their
recovery.
Jaynes, supra. The mere fact that Occidental placed the wrong
code on the policy in 1966, and perpetuated the error until 1974, does not
render the payment of taxes pursuant to this error "involuntary." The
payment of taxes may be voluntary, and hence unrecoverable, even though it is made
as a result of a mistake on the part of the taxpayer.
City of Phoenix v.
Phoenix Newspapers, Inc., 100 Ariz. 189, 412 P.2d 693 (1966);
Sierra
Investment Corporation v. County of Sacramento, 252 Cal. App.2d 339, 60
Cal. Rptr. 519 (1967);
E. A. Stephens & Co. v. Board of Equalization,
104 Colo. 556, 92 P.2d 732 (1939);
Scoa Industries, Inc. v. Howlett, 33
Ill. App.3d 90, 337 N.E.2d 305 (1975);
Bateson v. City of Detroit, 143
Mich. 582, 106 N.W. 1104 (1906). This is especially the case where, as here, it
is within the ability of the taxpayer to ascertain the actual facts.
{7} Occidental contends that
the passage of § 59-3-7 B, N.M.S.A. 1978 (formerly § 58-3-7 B, N.M.S.A. 1953
(Inter. Supp.1976-77)) is an expression of a legislative intent that taxes paid
by mistake should be recoverable. If this Court were to judicially adopt the
proposition advocated by Occidental, the statute permitting recovery would be
rendered meaningless. The effect of such a holding would be to permit a
recovery of taxes erroneously paid notwithstanding the absence of a statute
permitting recovery. We believe that whether a recovery should be allowed is
properly a question for the Legislature. The Legislature did not give § 59-3-7
B retroactive effect.
{8} We hold that the district
court erred in permitting the recovery of the premium taxes Occidental
erroneously paid. In light of this conclusion, it is unnecessary to consider
the other issues raised by the State.
{9} The judgment of the
district court is reversed and the cause remanded with instructions to enter
judgment in favor of the State.
McMANUS, Senior Justice, and FEDERICI, J., concur.