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Ford Co. v. Dept. of Treasury, 323 U.S. 459 (1945)




Special Collections

Ford Co. v. Dept. of Treasury, 323 U.S. 459 (1945)

From the U.S. Government Printing Office via GPO Access
 
Case:   FORD CO. V. DEPT. OF TREASURY

Case #: 323US459


NO. 75.  ARGUED DECEMBER 7, 1944.  - DECIDED JANUARY 8, 1945.  - 141
F.2D 24, VACATED. 


1.  A SUIT AGAINST THE DEPARTMENT OF TREASURY OF THE STATE OF INDIANA
AND INDIVIDUALS CONSTITUTING THE "BOARD OF THE DEPARTMENT OF TREASURY,"
BROUGHT PURSUANT TO SEC. 64-2614 OF BURNS' INDIANA STATUTES ANNOTATED
(1943 REPLACEMENT) FOR A REFUND OF TAXES ALLEGED TO HAVE BEEN ILLEGALLY
COLLECTED, HELD A SUIT AGAINST THE STATE, IN RESPECT OF WHICH THE STATE
HAD NOT CONSENTED TO THE JURISDICTION OF THE FEDERAL DISTRICT COURT. 
P. 463. 

2.  WHERE A SUIT IS IN ESSENCE ONE FOR THE RECOVERY OF MONEY FROM THE
STATE, THE STATE IS THE REAL PARTY IN INTEREST AND IS ENTITLED TO
INVOKE ITS SOVEREIGN IMMUNITY FROM SUIT, EVEN THOUGH INDIVIDUAL
OFFICIALS ARE NOMINAL DEFENDANTS.  P. 464. 

3.  THE ELEVENTH AMENDMENT DENIES TO THE FEDERAL COURTS AUTHORITY TO
ENTERTAIN A SUIT BROUGHT BY PRIVATE PARTIES AGAINST A STATE WITHOUT THE
STATE'S CONSENT.  P. 464. 

4.  INTERPRETATION OF SEC. 64-2614 AS AUTHORIZING SUITS FOR REFUNDS
OF TAXES ONLY IN STATE COURTS ACCORDS WITH THE LEGISLATIVE POLICY OF
THE STATE.  P. 466. 

5.  THE CONTENTION THAT THE SUIT IS AGAINST THE STATE AND IN
CONTRAVENTION OF THE ELEVENTH AMENDMENT IS CONSIDERED BY THIS COURT
THOUGH URGED HERE FOR THE FIRST TIME IN THIS PROCEEDING.  P. 467. 

6.  NEITHER THE ATTORNEY GENERAL NOR ANY OTHER ADMINISTRATIVE OR
EXECUTIVE OFFICER OF THE STATE WAS AUTHORIZED BY STATE LAW TO WAIVE THE
STATE'S IMMUNITY IN THIS PROCEEDING.  P. 468. 

FORD MOTOR CO. V. DEPARTMENT OF TREASURY OF INDIANA ET AL. 

CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE SEVENTH CIRCUIT. 

CERTIORARI, 322 U.S. 721, TO REVIEW THE AFFIRMANCE OF A JUDGMENT
DENYING RECOVERY IN A SUIT FOR A REFUND OF STATE TAXES ALLEGED TO HAVE
BEEN ILLEGALLY COLLECTED. 

MR. JUSTICE REED DELIVERED THE OPINION OF THE COURT. 

THIS WRIT BRINGS HERE FOR REVIEW AN ACTION BY PETITIONER, A NON
RESIDENT FOREIGN MANUFACTURING CORPORATION, AGAINST THE RESPONDENTS,
THE DEPARTMENT OF TREASURY OF THE STATE OF INDIANA AND M. CLIFFORD
TOWNSEND, JOSEPH M. ROBERTSON AND FRANK G. THOMPSON, THE GOVERNOR,
TREASURER AND AUDITOR, RESPECTIVELY, OF THE STATE OF INDIANA, WHO
"TOGETHER" CONSTITUTED THE BOARD OF THE DEPARTMENT OF TREASURY.  FN1
PETITIONER SEEKS A REFUND OF GROSS INCOME TAXES PAID TO THE DEPARTMENT
AND MEASURED BY SALES CLAIMED BY THE STATE TO HAVE OCCURRED IN
INDIANA.  FN2 JURISDICTION OF THE UNITED STATES DISTRICT COURT IS
FOUNDED ON ALLEGATIONS OF THE VIOLATION OF ARTICLE I, SEC. 8, THE
COMMERCE CLAUSE, AND THE FOURTEENTH AMENDMENT OF THE CONSTITUTION.  THE
STATE STATUTORY PROCEDURE FOR OBTAINING A REFUND WHICH PETITIONER
FOLLOWED IS SET FORTH IN SEC. 64-2614(A) OF THE INDIANA STATUTES.  FN3 

THE DISTRICT COURT DENIED RECOVERY.  THE CIRCUIT COURT OF APPEALS
AFFIRMED.  FN4  CERTIORARI WAS GRANTED  FN5  ON PETITIONER'S ASSERTION
OF ERROR IN THAT THE CIRCUIT COURT OF APPEALS DECIDED AN IMPORTANT
QUESTION OF LOCAL LAW PROBABLY IN CONFLICT WITH AN APPLICABLE DECISION
OF THE SUPREME COURT OF INDIANA.  DEPARTMENT OF TREASURY V.
INTERNATIONAL HARVESTER CO., 221 IND. 416, 47 N.E.2D 150.  AS WE
CONCLUDE THAT PETITIONER'S ACTION COULD NOT BE MAINTAINED IN THE
FEDERAL COURT, WE DO NOT DECIDE THE MERITS OF THE ISSUE. 

PETITIONER'S RIGHT TO MAINTAIN THIS ACTION IN A FEDERAL COURT
DEPENDS, FIRST, UPON WHETHER THE ACTION IS AGAINST THE STATE OF INDIANA
OR AGAINST AN INDIVIDUAL.  SECONDLY, IF THE ACTION IS AGAINST THE
STATE, WHETHER THE STATE HAS CONSENTED TO BE SUED IN THE FEDERAL
COURTS.  RECENTLY THESE QUESTIONS WERE DISCUSSED IN GREAT NORTHERN
INSURANCE CO. V. READ, 322 U.S. 47. 

IN THAT CASE THIS COURT HELD THAT AS THE SUIT WAS AGAINST A STATE
OFFICIAL AS SUCH, THROUGH PROCEEDINGS WHICH WERE AUTHORIZED BY STATUTE
TO COMPEL HIM TO CARRY OUT WITH STATE FUNDS THE STATE'S AGREEMENT TO
REIMBURSE MONEYS ILLEGALLY EXACTED UNDER COLOR OF THE TAX POWER, THE
SUIT WAS ONE AGAINST THE STATE.  WE SAID THAT SUCH A SUIT WAS CLEARLY
DISTINGUISHABLE FROM ACTIONS AGAINST A TAX COLLECTOR TO RECOVER A
PERSONAL JUDGMENT FOR MONEY WRONGFULLY COLLECTED UNDER COLOR OF STATE
LAW.  322 U.S. 47, 50-51.  WHERE RELIEF IS SOUGHT UNDER GENERAL LAW
FROM WRONGFUL ACTS OF STATE OFFICIALS, THE SOVEREIGN'S IMMUNITY UNDER
THE ELEVENTH AMENDMENT DOES NOT EXTEND TO WRONGFUL INDIVIDUAL ACTION,
AND THE CITIZEN IS ALLOWED A REMEDY AGAINST THE WRONGDOER PERSONALLY. 
ATCHISON, T. & S.F.R. CO. V. O'CONNOR, 223 U.S. 280; CF. MATTHEWS V.
RODGERS, 284 U.S. 521, 528.  WHERE, HOWEVER, AN ACTION IS AUTHORIZED BY
STATUTE AGAINST A STATE OFFICER IN HIS OFFICIAL CAPACITY AND
CONSTITUTING AN ACTION AGAINST THE STATE, THE ELEVENTH AMENDMENT
OPERATES TO BAR SUIT EXCEPT IN SO FAR AS THE STATUTE WAIVES STATE
IMMUNITY FROM SUIT.  SMITH V. REEVES, 178 U.S. 436; GREAT NORTHERN
INSURANCE CO. V. READ, 322 U.S. 47. 

WE ARE OF THE OPINION THAT PETITIONER'S SUIT IN THE INSTANT CASE
AGAINST THE DEPARTMENT AND THE INDIVIDUALS AS THE BOARD CONSTITUTES AN
ACTION AGAINST THE STATE OF INDIANA.  A STATE STATUTE PRESCRIBED THE
PROCEDURE FOR OBTAINING REFUND OF TAXES ILLEGALLY EXACTED, PROVIDING
THAT A TAXPAYER FIRST FILE A TIMELY APPLICATION FOR A REFUND WITH THE
STATE DEPARTMENT OF TREASURY.  FN6 UPON DENIAL OF SUCH CLAIM, THE
TAXPAYER IS AUTHORIZED TO RECOVER THE ILLEGAL EXACTION IN AN ACTION
AGAINST THE "DEPARTMENT."  JUDGMENT OBTAINED IN SUCH ACTION IS TO BE
SATISFIED BY PAYMENT "OUT OF ANY FUNDS IN THE STATE TREASURY."  FN7
THIS SECTION CLEARLY PROVIDES FOR AN ACTION AGAINST THE STATE, AS
OPPOSED TO ONE AGAINST THE COLLECTING OFFICIAL INDIVIDUALLY.  NO STATE
COURT DECISION HAS BEEN CALLED TO OUR ATTENTION WHICH WOULD INDICATE
THAT A DIFFERENT INTERPRETATION OF THIS STATUTE HAS BEEN ADOPTED BY
STATE COURTS. 

PETITIONER'S SUIT IN THE FEDERAL DISTRICT COURT IS BASED ON SEC. 64
2614(A) OF THE INDIANA STATUTES AND THEREFORE CONSTITUTES AN ACTION
AGAINST THE STATE, NOT AGAINST THE COLLECTING OFFICIAL AS AN
INDIVIDUAL.  PETITIONER BROUGHT ITS ACTION IN STRICT ACCORD WITH SEC.
64-2614(A).  THE ACTION IS AGAINST THE STATE'S DEPARTMENT OF TREASURY. 
THE COMPLAINT CAREFULLY DETAILS COMPLIANCE WITH THE PROVISIONS OF SEC.
64-2614(A) WHICH REQUIRE A TIMELY APPLICATION FOR REFUND TO THE
DEPARTMENT AS A PREREQUISITE TO A COURT ACTION AUTHORIZED IN THE
THE GOVERNOR, TREASURER AND AUDITOR OF THE STATE AS DEFENDANTS, WHO
"TOGETHER CONSTITUTE THE BOARD OF DEPARTMENT OF TREASURY OF THE STATE
OF INDIANA."  BUT, THEY WERE JOINED AS THE COLLECTIVE REPRESENTATIVES
OF THE STATE, NOT AS INDIVIDUALS AGAINST WHOM A PERSONAL JUDGMENT IS
SOUGHT.  THE PETITIONER DID NOT ASSERT ANY CLAIM TO A PERSONAL JUDGMENT
AGAINST THESE INDIVIDUALS FOR THE CONTESTED TAX PAYMENTS.  THE
PETITIONER'S CLAIM IS FOR A "REFUND," NOT FOR THE IMPOSITION OF
PERSONAL LIABILITY ON INDIVIDUAL DEFENDANTS FOR SUMS ILLEGALLY
EXACTED.  WE HAVE PREVIOUSLY HELD THAT THE NATURE OF A SUIT AS ONE
AGAINST THE STATE IS TO BE DETERMINED BY THE ESSENTIAL NATURE AND
EFFECT OF THE PROCEEDING.  EX PARTE AYERS, 123 U.S. 443, 490-99; EX
PARTE NEW YORK, 256 U.S. 490, 500; WORCESTER COUNTY TRUST CO. V. RILEY,
302 U.S. 292, 296-98.  AND WHEN THE ACTION IS IN ESSENCE ONE FOR THE
RECOVERY OF MONEY FROM THE STATE, THE STATE IS THE REAL, SUBSTANTIAL
PARTY IN INTEREST AND IS ENTITLED TO INVOKE ITS SOVEREIGN IMMUNITY FROM
SUIT EVEN THOUGH INDIVIDUAL OFFICIALS ARE NOMINAL DEFENDANTS.  SMITH V.
REEVES, SUPRA; GREAT NORTHERN INSURANCE CO. V. READ, SUPRA.  WE ARE OF
THE OPINION, THEREFORE, THAT THE PRESENT PROCEEDING WAS BROUGHT IN
RELIANCE ON SEC. 64-2614(A) AND IS A SUIT AGAINST THE STATE. 

IT REMAINS TO BE CONSIDERED WHETHER THE STATE OF INDIANA HAS
CONSENTED TO THIS ACTION AGAINST IT IN THE FEDERAL COURT. 

THE ELEVENTH AMENDMENT PROVIDES THAT:  "THE JUDICIAL POWER OF THE
UNITED STATES SHALL NOT BE CONSTRUED TO EXTEND TO ANY SUIT IN LAW OR
EQUITY, COMMENCED OR PROSECUTED AGAINST ONE OF THE UNITED STATES BY
CITIZENS OF ANOTHER STATE, OR BY CITIZENS OR SUBJECTS OF ANY FOREIGN
STATE."  THIS EXPRESS CONSTITUTIONAL LIMITATION DENIES TO THE FEDERAL
COURTS AUTHORITY TO ENTERTAIN A SUIT BROUGHT BY PRIVATE PARTIES AGAINST
A STATE WITHOUT ITS CONSENT.  HANS V. LOUISIANA, 134 U.S. 1, 10; EX
PARTE NEW YORK, 256 U.S. 490, 497; MISSOURI V. FISKE, 290 U.S. 18, 25;
UNITED STATES V. U.S. FIDELITY & GUARANTY CO., 309 U.S. 506, 512; GREAT
NORTHERN INSURANCE CO. V. READ, SUPRA; STATE V. MUTUAL LIFE INS. CO.,
175 IND. 59, 71, 93 N.E. 213; HOGSTON V. BELL, 185 IND. 536, 548, 112
N.E. 883.  WHILE THE STATE'S IMMUNITY FROM SUIT MAY BE WAIVED, CLARK V.
BARNARD, 108 U.S. 436, 447; GUNTER V. ATLANTIC COAST LINE, 200 U.S.
273; MISSOURI V. FISKE, 290 U.S. 18, 24, THERE IS NOTHING TO INDICATE
AUTHORIZATION OF SUCH WAIVER BY INDIANA IN THE PRESENT PROCEEDING. 

IN ANY COURT OF COMPETENT JURISDICTION; AND THE CIRCUIT OR SUPERIOR
COURT OF THE COUNTY IN WHICH THE TAXPAYER RESIDES OR IS LOCATED SHALL
HAVE ORIGINAL JURISDICTION OF ACTION TO RECOVER ANY AMOUNT IMPROPERLY
COLLECTED."  IN THE READ CASE WE CONSTRUED A SIMILAR PROVISION OF AN
OKLAHOMA TAX REFUND STATUTE AS A WAIVER OF STATE IMMUNITY FROM SUIT IN
STATE COURTS ONLY.  322 U.S. 47, 54.  AS WAS SAID IN THAT CASE:  "WHEN
A STATE AUTHORIZES A SUIT AGAINST ITSELF TO DO JUSTICE TO TAXPAYERS WHO
DEEM THEMSELVES INJURED BY ANY EXACTION, IT IS NOT CONSONANT WITH OUR
DUAL SYSTEM FOR THE FEDERAL COURTS TO BE ASTUTE TO READ THE CONSENT TO
EMBRACE FEDERAL AS WELL AS STATE COURTS...  WWHEN WE ARE DEALING WITH
THE SOVEREIGN EXEMPTION FROM JUDICIAL INTERFERENCE IN THE VITAL FIELD
OF FINANCIAL ADMINISTRATION A CLEAR DECLARATION OF THE STATE'S
INTENTION TO SUBMIT ITS FISCAL PROBLEMS TO OTHER COURTS THAN THOSE OF
ITS OWN CREATION MUST BE FOUND."  CF. UNITED STATES V. SHAW, 309 U.S.
495, 501.  SECTION 64-2614 DOES NOT CONTAIN ANY CLEAR INDICATION THAT
THE STATE INTENDED TO CONSENT TO SUIT IN FEDERAL COURTS.  FN8  THE
PROVISION IN THIS SECTION WHICH VESTS ORIGINAL JURISDICTION OF SUITS
FOR REFUND IN THE "CIRCUIT OR SUPERIOR COURT OF THE COUNTY IN WHICH THE
TAXPAYER RESIDES OR IS LOCATED" INDICATES THAT THE STATE LEGISLATURE
CONTEMPLATED SUIT IN THE STATE COURTS.  FN9  MOREOVER, THIS
INTERPRETATION OF SEC. 64-2614(A) TO AUTHORIZE SUITS ONLY IN STATE
COURTS ACCORDS WITH THE STATE LEGISLATIVE POLICY.  INDIANA HAS ADOPTED
A LIBERAL POLICY TOWARD GENERAL CONTRACT CLAIMANTS BUT CONFINES THEIR
SUITS AGAINST THE STATE TO STATE COURTS.  FN10 

IT REMAINS TO BE CONSIDERED WHETHER THE ATTORNEY GENERAL FOR THE
STATE OF INDIANA IN HIS CONDUCT OF THE PRESENT PROCEEDING HAS WAIVED
THE STATE'S IMMUNITY FROM SUIT.  THE STATE ATTORNEY GENERAL IS
AUTHORIZED TO REPRESENT THE STATE IN ACTIONS BROUGHT UNDER THE INDIANA
REFUND STATUTE  FN11.  HE APPEARED IN THE FEDERAL DISTRICT COURT AND
THE CIRCUIT COURT OF APPEALS AND DEFENDED THE SUIT ON THE MERITS.  THE
OBJECTION TO PETITIONER'S SUIT AS A VIOLATION OF THE ELEVENTH AMENDMENT
WAS FIRST MADE AND ARGUED BY INDIANA IN THIS COURT.  THIS WAS IN TIME,
HOWEVER.  THE ELEVENTH AMENDMENT DECLARES A POLICY AND SETS FORTH AN
EXPLICIT LIMITATION ON FEDERAL JUDICIAL POWER OF SUCH COMPELLING FORCE
THAT THIS COURT WILL CONSIDER THE ISSUE ARISING UNDER THIS AMENDMENT IN
THIS CASE EVEN THOUGH URGED FOR THE FIRST TIME IN THIS COURT. 

IT IS CONCEDED BY THE RESPONDENTS THAT IF IT IS WITHIN THE POWER OF
THE ADMINISTRATIVE AND EXECUTIVE OFFICERS OF INDIANA TO WAIVE THE
STATE'S IMMUNITY, THEY HAVE DONE SO IN THIS PROCEEDING.  THE ISSUE THUS
BECOMES ONE OF THEIR POWER UNDER STATE LAW TO DO SO.  AS THIS ISSUE HAS
NOT BEEN DETERMINED BY STATE COURTS,  FN12  THIS COURT MUST RESORT TO
THE GENERAL POLICY OF THE STATE AS EXPRESSED IN ITS CONSTITUTION,
STATUTES AND DECISIONS.  ARTICLE 4, SEC. 24 OF THE INDIANA CONSTITUTION
PROVIDES: 

"PROVISION MAY BE MADE, BY GENERAL LAW, FOR BRINGING SUIT AGAINST THE
STATE, AS TO ALL LIABILITIES ORIGINATING AFTER THE ADOPTION OF THIS
CONSTITUTION; BUT NO SPECIAL ACT AUTHORIZING SUCH SUIT TO BE BROUGHT,
OR MAKING COMPENSATION TO ANY PERSON CLAIMING DAMAGES AGAINST THE
STATE, SHALL EVER BE PASSED." 

WE INTERPRET THIS PROVISION AS INDICATING A POLICY PROHIBITING STATE
CONSENT TO SUIT IN ONE PARTICULAR CASE IN THE ABSENCE OF A GENERAL
CONSENT TO SUIT IN ALL SIMILAR CAUSES OF ACTION.  SINCE THE STATE
LEGISLATURE MAY WAIVE STATE IMMUNITY ONLY BY GENERAL LAW, IT IS NOT TO
BE PRESUMED IN THE ABSENCE OF CLEAR LANGUAGE TO THE CONTRARY, THAT THEY
CONFERRED ON ADMINISTRATIVE OR EXECUTIVE OFFICERS DISCRETIONARY POWER
TO GRANT OR WITHHOLD CONSENT IN INDIVIDUAL CASES.  NOR DO WE THINK THAT
ANY OF THE GENERAL OR SPECIAL POWERS CONFERRED BY STATUTE ON THE
INDIANA ATTORNEY GENERAL TO APPEAR AND DEFEND ACTIONS BROUGHT AGAINST
THE STATE OR ITS OFFICIALS CAN BE DEEMED TO CONFER ON THAT OFFICER
POWER TO CONSENT TO SUIT AGAINST THE STATE IN COURTS WHEN THE STATE HAS
NOT CONSENTED TO BE SUED.  FN13  STATE COURT DECISIONS CONSTRUE
STRICTLY THE STATUTORY POWERS CONFERRED ON THE INDIANA STATE ATTORNEY
GENERAL AND HOLD THAT HE EXERCISES ONLY THOSE POWERS "DELEGATED" TO HIM
BY STATUTE AND DOES NOT POSSESS THE POWERS OF AN ATTORNEY GENERAL AT
"COMMON LAW."  FN14  IT WOULD SEEM, THEREFORE, THAT NO PROPERLY
AUTHORIZED EXECUTIVE OR ADMINISTRATIVE OFFICER OF THE STATE HAS WAIVED
THE STATE'S IMMUNITY TO SUIT IN THE FEDERAL COURTS. 

GUNTER V. ATLANTIC COAST LINE, 200 U.S. 273, IS NOT APPLICABLE TO THE
INSTANT CASE SINCE IT INVOLVED A TAXPAYER'S ANCILLARY SUIT TO ENJOIN
SOUTH CAROLINA TAX OFFICIALS FROM COLLECTING TAXES IN VIOLATION OF AN
EARLIER DECISION OF THIS COURT UPHOLDING THE VALIDITY OF A STATE
AGREEMENT TO EXEMPT THE TAXPAYER'S PROPERTY.  HUMPHREY V. PEGUES, 16
WALL.  244.  THE PEGUES CASE INVOLVED A SUIT AGAINST THE STATE IN THE
PERSON OF ITS TAX OFFICIALS, THE STATE ATTORNEY GENERAL APPEARING FOR
THE STATE AND ARGUING THE CASE ON THE MERITS, NO ISSUE OF SOVEREIGN
IMMUNITY BEING RAISED.  IN THE GUNTER PROCEEDING, BROUGHT OVER TWENTY
YEARS LATER, DEFENDANT SOUTH CAROLINA ATTACKED THE VALIDITY OF THE
PEGUES JUDGMENT ON THE GROUND THAT IN THAT PROCEEDING THE STATE HAD NOT
CONSENTED TO BE SUED.  THIS COURT HELD THE PEGUES JUDGMENT WAS RES
JUDICATA AND BINDING ON THE STATE BECAUSE THE SOUTH CAROLINA STATUTES
CONFERRED ON THE STATE OFFICIALS AND THE ATTORNEY GENERAL POWER THERE
TO "STAND IN JUDGMENT FOR THE STATE," 200 U.S. AT 285, 286-87.  THE
STATE'S SUBMISSION TO THE COURT WAS AUTHORIZED BY STATUTE, NOT BY THE
UNAUTHORIZED CONSENT OF AN OFFICIAL.  FARISH V. STATE BANKING BOARD,
235 U.S. 498, 512.  NO DISTINCTION WAS DRAWN BETWEEN FEDERAL AND STATE
COURTS.  RELIANCE WAS PLACED ON CONTEMPORANEOUS ADMINISTRATIVE
INTERPRETATION OF THE STATE STATUTES, ABSENCE OF ANY LEGISLATIVE ACTION
REPUDIATING THE ATTORNEY GENERAL'S CONDUCT OF THE CASE AND THE FAILURE
OF THE STATE GOVERNMENT IN ALL ITS DEPARTMENTS, FOR MORE THAN TWENTY
YEARS, TO ASSERT ANY RIGHT IN CONFLICT WITH THE PEGUES ADJUDICATION. 
ADMINISTRATIVE CONSTRUCTION BY A STATE OF ITS STATUTES OF CONSENT HAS
INFLUENCE IN DETERMINING OUR CONCLUSIONS.  GREAT NORTHERN INSURANCE CO.
V. READ, SUPRA.    AS WE INDICATED IN THE READ CASE, THE CONSTRUCTION
GIVEN THE INDIANA STATUTE LEAVES OPEN THE ROAD TO REVIEW IN THIS COURT
ON CONSTITUTIONAL GROUNDS AFTER THE ISSUES HAVE BEEN PASSED UPON BY
STATE COURTS.  THE ADVANTAGE OF HAVING STATE COURTS PASS INITIALLY UPON
QUESTIONS WHICH INVOLVE THE STATE'S LIABILITY FOR TAX REFUNDS IS
ILLUSTRATED BY THE INSTANT CASE WHERE PETITIONER SUED IN A FEDERAL
COURT FOR A REFUND ONLY TO URGE ON CERTIORARI THAT THE FEDERAL COURT
ERRED IN ITS INTERPRETATION OF THE STATE LAW APPLICABLE TO THE
QUESTIONS RAISED. 

THE JUDGMENT OF THE CIRCUIT COURT OF APPEALS IS VACATED AND THE CAUSE
IS REMANDED TO THE DISTRICT COURT WITH DIRECTIONS TO DISMISS THE
COMPLAINT FOR WANT OF CONSENT BY THE STATE TO THIS SUIT. 

FN1  WE NEED NOT CONSIDER THE PRESENT STATUS OF THE BOARD OF THE
DEPARTMENT OF TREASURY AS SEC. 64-2614, BURNS, INDIANA STAT. ANN. (1943
REPLACEMENT), PROVIDES FOR SUIT AGAINST THE "DEPARTMENT."  SEE INDIANA
ACTS, 1933, CH. 4, SEC. 13; INDIANA ACTS, 1941, CH. 4 AND CH. 13, SECS.
2, 8; TUCKER V. STATE, 218 IND. 614, 35 N.E.2D 270. 

FN2  BURNS, INDIANA STAT. ANN. SEC. 64-2602(1943 REPLACEMENT). 

FN3  SECTION 64-2614(A) OF BURNS, INDIANA STAT. ANN. (1943
REPLACEMENT) PROVIDES: 

"IF ANY PERSON CONSIDERS THAT HE HAS PAID TO THE DEPARTMENT FOR ANY
YEAR AN AMOUNT WHICH IS IN EXCESS OF THE AMOUNT LEGALLY DUE FROM HIM
FOR THAT YEAR UNDER THE TERMS OF THIS ACT, HE MAY APPLY TO THE
DEPARTMENT, BY VERIFIED PETITION IN WRITING, AT ANY TIME WITHIN THREE
(3) YEARS AFTER THE PAYMENT FOR THE ANNUAL PERIOD FOR WHICH SUCH
ALLEGED OVERPAYMENT HAS BEEN MADE, FOR A CORRECTION OF THE AMOUNT SO
PAID BY HIM TO THE DEPARTMENT, AND FOR A REFUND OF THE AMOUNT WHICH HE
CLAIMS HAS BEEN ILLEGALLY COLLECTED AND PAID.  IN SUCH PETITION, HE
SHALL SET FORTH THE AMOUNT WHICH HE CLAIMS SHOULD BE REFUNDED, AND THE
REASONS FOR SUCH CLAIM.  THE DEPARTMENT SHALL PROMPTLY CONSIDER SUCH
PETITION, AND MAY GRANT SUCH REFUND, IN WHOLE OR IN PART, OR MAY WHOLLY
DENY THE SAME.  IF DENIED IN WHOLE OR IN PART, THE PETITIONER SHALL BE
FORTHWITH NOTIFIED OF SUCH ACTION OF THE DEPARTMENT, AND OF ITS GROUNDS
FOR SUCH DENIAL.  THE DEPARTMENT MAY, IN ITS DISCRETION, GRANT THE
PETITIONER A FURTHER HEARING WITH RESPECT TO SUCH PETITION.  ANY PERSON
IMPROPERLY CHARGED WITH ANY TAX PROVIDED FOR UNDER THE TERMS OF THIS
ACT, AND REQUIRED TO PAY THE SAME, MAY RECOVER ANY AMOUNT THUS
IMPROPERLY COLLECTED, TOGETHER WITH INTEREST, IN ANY PROPER ACTION OR
SUIT AGAINST THE DEPARTMENT IN ANY COURT OF COMPETENT JURISDICTION; AND
THE CIRCUIT OR SUPERIOR COURT OF THE COUNTY IN WHICH THE TAXPAYER
RESIDES OR IS LOCATED SHALL HAVE ORIGINAL JURISDICTION OF ACTION TO
RECOVER ANY AMOUNT IMPROPERLY COLLECTED:  PROVIDED, HOWEVER, THAT NO
COURT SHALL ENTERTAIN SUCH A SUIT, UNLESS THE TAXPAYER SHALL SHOW THAT
HE HAS FILED A PETITION FOR REFUND WITH THE DEPARTMENT, AS HEREINABOVE
PROVIDED, WITHIN ONE (1) YEAR PRIOR TO THE INSTITUTION OF THE ACTION:
PROVIDED, FURTHER, THAT NO SUCH SUIT SHALL BE ENTERTAINED UNTIL THE
EXPIRATION OF SIX (6) MONTHS FROM THE TIME OF FILING SUCH PETITION FOR
REFUND WITH THE DEPARTMENT, UNLESS IN THE MEANTIME, THE DEPARTMENT
SHALL HAVE NOTIFIED THE PETITIONER, IN WRITING, OF THE DENIAL OF SUCH
PETITION  ..." 


FN4  FORD MOTOR CO. V. DEPARTMENT OF TREASURY, 141 F.2D 24. 

FN5  322 U.S. 721. 

FN6  SEE NOTE 3 SUPRA, SEC. 64-2614(A). 

FN7  BURNS, INDIANA STAT. ANN. SEC. 64-2614(B)(1943 REPLACEMENT). 

FN8  SECTION 60-310, BURNS, INDIANA STAT. ANN. (1943 REPLACEMENT),
(ACTS, 1941, CH. 27, SEC. 1, P. 64), PROVIDES FOR THE CREATION OF A
STATE BOARD OF FINANCE.  THIS SECTION READS, IN PART, AS FOLLOWS:
"SUCH BOARD MAY SUE, AND BE SUED IN ITS NAME, IN ANY ACTION, AND IN ANY
COURT HAVING JURISDICTION, WHENEVER NECESSARY TO ACCOMPLISH THE
PURPOSES OF THIS ACT." 

IT DOES NOT APPEAR THAT THE RIGHT TO SUE THE DEPARTMENT OF TREASURY
FOR ERRONEOUS TAX PAYMENTS, WHICH WAS GRANTED BY SEC. 64-2614(A),
BURNS, INDIANA STAT. ANN. (1943 REPLACEMENT)(SEE ACTS, 1937, CH. 117,
SEC. 14, PP. 631-32) HAS BEEN REPEALED OR TRANSFERRED TO THE STATE
BOARD OF FINANCE BY THE ACTS, 1941, CH. 27, OR OTHERWISE. 

IF IT IS HELD BY INDIANA THAT THE STATE'S CONSENT TO BE SUED FOR THE
RECOVERY OF TAXES WAS COVERED BY SEC. 60-310 RATHER THAN BY SEC. 64
2614(A), WE SHOULD BE OF THE OPINION, UNTIL OTHERWISE ADVISED BY
INDIANA ADJUDICATIONS, THAT THE CONSENT WAS LIMITED TO SUITS IN THE
STATE COURTS. 

CHAPTER 27 OF THE ACTS OF 1941, WHICH CREATES THE STATE BOARD OF
FINANCE, APPARENTLY INVESTS THE BOARD WITH CONTROL OVER PUBLIC FUNDS
RATHER THAN WITH THE COLLECTION AND REFUND OF TAXES. 

FN9  REFERENCE TO A PARTICULAR STATE COURT IN A CALIFORNIA STATUTE
SIMILAR TO SEC. 64-2614 WAS HELD TO WARRANT AN INFERENCE THAT THE STATE
LEGISLATURE CONSENTED TO SUIT AGAINST THE STATE IN A STATE COURT ONLY. 
SEE SMITH V. REEVES, 178 U.S. 436, 441. 

FN10  BURNS, INDIANA STAT. ANN. SEC. 4-1501(1933), PROVIDES: 

"ANY PERSON OR PERSONS HAVING OR CLAIMING TO HAVE A MONEY DEMAND
AGAINST THE STATE OF INDIANA, ARISING, AT LAW OR IN EQUITY, OUT OF
CONTRACT, EXPRESS OR IMPLIED,  ..  MAAY BRING SUIT AGAINST THE STATE
THEREFOR IN THE SUPERIOR COURT OF MARION COUNTY, INDIANA,  ..  ANND
JURISDICTION IS HEREBY CONFERRED UPON SAID SUPERIOR COURT OF MARION
COUNTY, INDIANA, TO HEAR AND DETERMINE SUCH ACTION  .." 


FN11  SECTION 64-2614(C) PROVIDES: 

"IT SHALL BE THE DUTY OF THE ATTORNEY-GENERAL TO REPRESENT THE
DEPARTMENT, AND/OR THE STATE OF INDIANA, IN ALL LEGAL MATTERS OR
LITIGATION, EITHER CRIMINAL OR CIVIL, RELATING TO THE ENFORCEMENT,
CONSTRUCTION, APPLICATION AND ADMINISTRATION OF THIS ACT, UPON THE
ORDER AND UNDER THE DIRECTION OF THE DEPARTMENT." 

FN12  STATE EX REL. WOODWARD V. SMITH, 85 IND. APP. 56, 152 N.E. 836,
IS THE ONLY INDIANA DECISION WHICH HAS COME TO OUR ATTENTION AS
INVOLVING THE AUTHORITY OF STATE EXECUTIVE OR ADMINISTRATIVE OFFICIALS
TO CONSENT TO SUIT AGAINST THE STATE.  IN THAT CASE PLAINTIFF SUED TO
FORECLOSE A MORTGAGE ON CERTAIN LAND AND JOINED THE STATE OF INDIANA AS
DEFENDANT IN ORDER TO OBTAIN CANCELLATION OF A PRIOR JUDGMENT LIEN ON
THIS PROPERTY IN FAVOR OF THE STATE.  THE DEFENDANT STATE FILED A CROSS
COMPLAINT FOR AFFIRMATIVE RELIEF SEEKING SATISFACTION OF ITS LIEN.  THE
INTERMEDIATE STATE COURT HELD THAT SINCE THE STATE APPEARED, PLEADED TO
THE MERITS AND FILED A CROSS-COMPLAINT FOR AFFIRMATIVE RELIEF, IT
THEREBY CONSENTED THAT IT MIGHT BE MADE A PARTY TO DETERMINE THE
PRIORITY OF ITS LIEN.  THIS CASE INVOLVES AN APPLICATION OF THE WELL
ACCEPTED PRINCIPLE THAT WHEN A SOVEREIGN SUES FOR AFFIRMATIVE RELIEF,
IT IS DEEMED TO HAVE WAIVED ITS SOVEREIGN IMMUNITY AS TO THE ISSUES
PRESENTED BY ITS AFFIRMATIVE CLAIM.  STATE V. PORTSMOUTH SAVINGS BANK,
106 IND. 435, 7 N.E. 379. 

FN13  SECTION 4-1504, BURNS, INDIANA STAT. ANN. (1933) AUTHORIZES THE
STATE ATTORNEY GENERAL TO REPRESENT THE STATE IN ACTIONS BROUGHT
AGAINST IT UNDER SEC. 4-1501, SEE NOTE 10, SUPRA; IT PROVIDES: 

"IT SHALL BE THE DUTY OF THE ATTORNEY-GENERAL OF STATE, IN PERSON OR
BY DEPUTY, TO DEFEND AND REPRESENT THE INTERESTS OF THE STATE IN SAID
SUPERIOR COURT OF MARION COUNTY, INDIANA, AND ALSO IN THE SUPREME COURT
ON APPEAL." 


"SUCH ATTORNEY-GENERAL SHALL PROSECUTE AND DEFEND ALL SUITS THAT MAY
BE INSTITUTED BY OR AGAINST THE STATE OF INDIANA, THE PROSECUTION AND
DEFENSE OF WHICH IS NOT OTHERWISE PROVIDED FOR BY LAW, WHENEVER HE
SHALL HAVE BEEN GIVEN TEN (10) DAYS' NOTICE OF THE PENDENCY THEREOF BY
THE CLERK OF THE COURT IN WHICH SUCH SUITS ARE PENDING, AND WHENEVER
REQUIRED BY THE GOVERNOR OR A MAJORITY OF THE OFFICERS OF STATE, IN
WRITING, TO BE FURNISHED HIM WITHIN A REASONABLE TIME; AND HE SHALL
REPRESENT THE STATE IN ALL CRIMINAL CASES IN THE SUPREME COURT, AND
SHALL DEFEND ALL SUITS BROUGHT AGAINST THE STATE OFFICERS IN THEIR
OFFICIAL RELATIONS, EXCEPT SUITS BROUGHT AGAINST THEM BY THE STATE; AND
HE SHALL BE REQUIRED TO ATTEND TO THE INTERESTS OF THE STATE IN ALL
SUITS, ACTIONS OR CLAIMS IN WHICH THE STATE IS OR MAY BECOME INTERESTED
IN THE SUPREME COURT OF THIS STATE." 

IN ACTIONS BROUGHT UNDER THE PROVISIONS OF SEC. 64-2614(A) UNDER WHICH
PETITIONER'S SUIT IS BROUGHT.  SEE NOTE 11, SUPRA. 

FN14  STATE EX REL. BINGHAM V. HOME BREWING CO., 182 IND. 75, 87-95,
105 N.E. 909; JULIAN V. STATE, 122 IND. 68, 23 N.E. 690.  VARIOUS LOWER
FEDERAL COURT DECISIONS HAVE HELD THAT A STATE ATTORNEY GENERAL CANNOT
WAIVE STATE IMMUNITY FROM SUIT.  DESERET WATER, OIL & IRR.  CO. V.
CALIFORNIA, 202 F. 498; TITLE GUARANTY & SURETY CO. V. GUERNSEY, 205 F.
91; O'CONNOR V. SLAKER, 22 F.2D 147; DUNNUCK V. KANSAS STATE HIGHWAY
COMMISSION, 21 F.SUPP.  882.  THE UNITED STATES ATTORNEY GENERAL HAS
BEEN HELD TO BE WITHOUT POWER TO WAIVE THE SOVEREIGN IMMUNITY OF THE
UNITED STATES.  STANLEY V. SCHWALBY, 162 U.S. 255, 269-70; CF. UNITED
STATES V. SHAW, 309 U.S. 495, 501. 

SEE RICHARDSON V. FAJARDO SUGAR CO., 241 U.S. 44, WHERE, WITHOUT
CONSIDERATION OF ANY LIMITATIONS ON HIS POWERS, WE HELD THAT THE
ATTORNEY GENERAL OF PUERTO RICO COULD WAIVE ITS SOVEREIGN IMMUNITY. 

MR. JUSTICE MURPHY TOOK NO PART IN THE CONSIDERATION OR DECISION OF
THIS CASE. 






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