State v. Illinois Central R. Co. , 200 Minn. 583 ( 1937 )

Defendant's petition for rehearing is denied. But because there must be a new trial to the extent indicated in our decision, which is adhered to, it is proper that we should express ourselves on the following points raised by defendant's petition.

Again we are urged to consider the argument that defendant discharged its full liability to the state by paying the taxes as computed by the tax commission and its examiners long before this suit was brought. Without debate as to its soundness, we allow for the purposes of argument defendant's contention that its answer should be construed as having pleaded the defense of account stated. With that assumption, the next thing for consideration is the authority of the Minnesota Tax Commission in the determination and collection of gross earnings taxes. Under 1 Mason Minn. St. 1927, § 2239, "the public examiner, with the approval of the tax commission," has the "power to prescribe * * * a system of gross earnings accounts, * * * provided, that such system shall conform as nearly as practicable with that prescribed * * * by the United States government."

As matter merely of statutory construction, the proviso conforming the state to the federal system of accounting indicates no intention other than one for regulation of the accounts of those subject to gross earnings taxes. That exclusionary effect but confirms the conclusion, that necessarily would follow in any event, that no power is vested in the public examiner or tax commission in any manner to relieve the taxpayer from the fixed obligation to pay the tax imposed by statute.

Absent official power to alter the statutory obligation of the taxpayer, nothing done by the tax commission, its examiners or auditors can create the new obligation of an account stated to qualify that of the taxpayer, or diminish the sum due from it under the law. It is elementary that an account stated creates a new cause of action, independent of the claim or claims which were its original subject matter. Hanley v. Noyes,35 Minn. 174, 28 N.W. 189; Morse Littell v. Minton,101 Iowa, 603, 70 N.W. 691; 1 R.C.L. 212.

We have given further consideration to State v. Illinois Cent. R. Co. 246 Ill. 188, 229, 92 N.E. 814, 833. That case went for the taxpayer upon the ground that in the exercise of the "full power" conferred upon the governor there had been a settlement in the nature of an account stated between him and the taxpayer. The controlling thought was that the issue had already been decided by the chief executive of the state, rather than any inferior officer, in the exercise of the "full power" vested in him by the controlling statute. The presumption was invoked that " 'where a duty is devolved upon the chief executive of the state rather than upon an inferior officer, that it is so because his superior judgment, discretion and sense of responsibility were confided in for a more accurate, faithful and discreet performance than could be relied upon if the duty were devolved upon an officer chosen for inferior duties.' "

The present issue is in no such matrix of law and fact. There has been no final determination by the executive department in the exercise of the "full power" vested in the governor of Illinois and controlling in the case just cited. Here no "full power" has been vested in anybody. The only authority is the one noted, to prescribe a system of accounts. Certainly nothing more need be said to show how plainly the whole question is left for final settlement by the orderly method of adjudication where resort must be had thereto.

What we have said disposes also of the argument that "the tax commission, not this court, has power to prescribe the formula." The tax commission has no power, as matter of accounting or otherwise, to collect taxes under a formula which results in the collection of either less or more than under the law and on the facts is found due from the taxpayer. And we pretend to no ultimate formula-making power. We have only the judicial task of applying the law to the facts, and that we have already done in this case to the best of our present ability.

There is argument, which need not be summarized, that "the tax as sought to be imposed violates" defendant's constitutional rights. In view of the new trial that has been ordered, defendant will have full opportunity to present that argument below and make such record as may be necessary to insure its proper consideration. Nothing said in our decision will be construed as foreclosing any defense on constitutional grounds. But the main point remains that the amount due will be determined on the so-called Burlington formula unless a better one appears.

Rehearing denied.

MR. JUSTICE PETERSON, having been attorney general and counsel below, took no part in the consideration or decision of this case.