Burlington Northern Railroad v. Board of Supervisors of Adair County

CARTER, Justice

(dissenting).

I dissent.

It is manifestly inappropriate to try the issues of the present controversy in a mandamus action. I submit that the majority’s failure to recognize this stems, at least in part, from a mistaken belief that we are dealing with liquidated amounts for which the various boards of supervisors could have ordered warrants. This was clearly not the case.

The United States district court which granted plaintiff relief made it clear that this was only prospective declaratory and injunctive relief. See Burlington N.R.R. v. Bair, 584 F.Supp. 1229, 1242 (S.D.Iowa 1984). The limitations which inhere in the eleventh amendment precluded the federal court from making any determination concerning plaintiff’s entitlement to a refund of taxes previously collected. Nothing in the federal court’s decree serves to excuse the plaintiff from establishing its entitlement to a refund in accordance with the statutes and administrative regulations imposed by state law. Consequently, the state is free to urge that plaintiff’s claims are untimely or that administrative remedies have not been exhausted. See, e.g., Randall v. Lukhard, 709 F.2d 257, 269-70 (4th Cir.1983).

The boards of supervisors of the various counties were in no position to answer these legal questions at the time of plaintiff’s demands. Indeed, there is no such legal authority conferred on the supervisors. Nor had the supervisors been parties to the federal court litigation. The theory of a mandamus action is that a public official, enjoined by law to perform an act, has illegally failed to do so. Birusingh v. Knox, 409 N.W.2d 189, 191 (Iowa 1987). There is simply no basis for making such a claim on the present facts.

The majority reads far too much into the sketchy provisions of Iowa Code section 445.60 (1983). That statute provides as follows:

The board of supervisors shall direct the treasurer to refund to the taxpayer any tax or portion thereof found to have been erronously or illegally exacted or *76paid, with all interest and costs actually paid thereon.

In applying this statute, it is more important to note what it does not provide than what it does. It does not in any way deal with how or by whom the requisite finding that a tax has been “erroneously or illegally exacted or paid” is to be made.

As the majority indicates, there are cases such as Crown Concrete Co. v. Conkling, 247 Iowa 609, 75 N.W.2d 351 (1956), and Morrison-Knudsen Co. v. State Tax Commission, 242 Iowa 33, 44 N.W.2d 449 (1950), where we affirmed judgments of courts which accepted evidence of the illegality of a tax as part of the proof in a mandamus action based on section 445.60. Those cases, however, involved pure issues of law which could be decided on more-or-less undisputed factual situations and which did not encroach upon the administrative responsibilities of an agency designated by law to administer a particular statutory scheme.

The majority is incorrect in contending that the state may not impose a time bar on the assertion of claims for refund of property taxes collected, appropriated and expended in payment of the cost of government. Government does have a legitimate interest in assuring within reasonable limits that, when it acts on an expenditure, the necessary funds are available and not subject to loss through tax refunds. Some reasonable time limit on the filing of claims is a salutory devise in affecting this legitimate public interest.

It is no answer to say that more than seventy years ago in Commercial National Bank v. Board of Supervisors, 168 Iowa 501, 150 N.W. 704 (1915), we found no legal impediment which precluded retroactive relief to the taxpayer. The issue must be decided on the basis of the law in effect at the time that plaintiff made its claims for refund. If, at that time, there was in force a controlling statute or administrative regulation which requires denial of the claims as untimely, there is no legal cause for not applying it. See Randall, 709 F.2d at 269-70. The various county boards of supervisors were in no position to make that determination, because the consideration of refund claims or protests is the province of another agency.

Even if it is assumed that plaintiff’s claims for refund are not barred by some specific time limitation, there are issues of fact remaining to be resolved before such claims can ripen into liquidated amounts. The federal court decree in Burlington N.R.R. v. Bair only establishes that Iowa may not tax the personal property of railroads under a method which is substantially different and more detrimental than that applied to the personal property of other commercial taxpayers. Although valuation findings were involved in the federal court action, these are not controlling for according plaintiff retroactive relief under state law. The responsibility for making the required reevaluation of plaintiffs property on a basis comparable to other commercial taxpayers for the years 1979, 1980 and 1981 should be undertaken by the agency entrusted by law with the valuation of railroad assets.

Our statutes and administrative regulations provide for centralized collection of the taxes levied on railroad property. The responsibility for administering this scheme is conferred upon the Iowa Department of Revenue and Finance. See Iowa Code § 434.11 (1983); 701 Iowa Admin. Code 76.1-.9. The rules governing practice and procedure before the Iowa Department of Revenue and Finance specifically provide that their scope includes administration and enforcement of the property tax on railroads under Iowa Code chapter 434. 701 Iowa Admin.Code 7.2(9). These rules provide both informal and formal procedures under which the plaintiff could have presented its refund claims to the agency entrusted by law with a centralized collection of railroad property tax revenues.

Permitting plaintiff to avoid the established administrative machinery for determining its refund claims not only permits necessary valuation decisions to be made de novo by agencies other than those which are assigned that responsibility by law, it also has resulted in the wrong entities defending against the claims in this litigation. *77Although counties are recipients of the resulting revenues, they have no responsibility in the collection process. Local boards of supervisors, although subject to possible adverse fiscal consequences from the refund claims, are clearly not the proper bodies to make policy decisions on how litigation involving centralized state taxation should be handled.

For all of the reasons discussed, I believe the district court was correct in its determination that at the time demand for refund was made upon the various boards of supervisors there were no liquidated sums to which plaintiff was entitled. This relieved the boards of supervisors from any necessity for acting on plaintiffs demands. The mandamus action was therefore properly dismissed. I would affirm the district court’s order.

SCHULTZ and NEUMAN, JJ., join this dissent.