WHITING PAPER COMPANY, Claimant, 'v. STATE OF ILLINOIS, Respondent. 1
Case summary
Claimant sought refund of franchise taxes allegedly overpaid due to its own error in reporting earned surplus as paid-in surplus. The court denied the claim, holding that the payments were voluntary and made under a mistake of law, not fact, and thus not recoverable.
Cases cited: Alton Light & Traction Company vs. Rose, 117 Ill. App. 83; Yates vs. Royal Insurance Company, 200 Ill. 202; Cooper Knowlley and Company vs. Gill, 363 Ill. 418; American Can Company vs. Gill, 364 Ill. 254; Chicago Foundation Company vs. State, 8 C.C.R. 22; Mohawk Carpet Mills Inc. vs. State, 8 C.C.R. 37; Arundel Corporation vs. State, 8 C.C.R. 506; Western Dairy Company vs. State, 9 C.C.R. 498; Butler Company vs. State, 9 C.C.R. 503; Stotlar-Herrim Lumber Company vs. State, 9 C.C.R. 517
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Headnotes
- FRANCHISE 'rAx-payment of amount an excess of that lawfully due through error or anadvertence of payor- not payment made under mastake of fact is voluntiarry papnent-amount tu exc'ess of that lawyully due cannot be recovered. Where amount of franchise tax of corporation is computed by Secretary of State, in accordance with law, based on information furnished by payor, and it pays such amount without compulsion, duress or protest, such payment is a voluntary one and not made under mistake of fact, and no award can be made for refund of part in excess of thiat lawfully due, because of error in information \ furnished by payor.
- SAME - C ~ f ~o r~r ~e f u r d of amount paid, claime@t o be in excess of that lawfiilly due- remedy avazlable to payor t o h am correct amount dctermaued-j'aalure to yvaal self of- ham award for refiind. Where statutes afford remedy to person claiming to ha.ving been assessed franchise tax in amount in excess of that lawfully due, for correction of such assessment, and it fails to avail itself of such remedy, but voluntarily pays tax, without protest no award c m be made for refund of such excess amount.
On September 27, 1943, claimant, a Massachusetts corporation, with offices in Chicago, Illinois, filed its claim in this court for refund of annual franchise taxes allegedly overpaid to the State of Illinoiis for the years [*137]
I
. 4 1934 to 1943, inclusive, or for such over-payments, the recovery of which has not been barred by statutory limit ation.
The complaint alleges that the claimant, in the years 1934 to 1943, inclusive, filed the annual reports required undec the provisions of the Business Corporation Act of the State of Illinois; that it erroneously reported its earned surplus as “paid-in surplus” in the reports filed in each of the years 1934 to 1942, inclusive; that on the basis of the information so reported by claimant, the Secretary of State, of the State of Illinois, assessed annual franchise taxes for the years 1934 to 1943, inclusive, in amounts in excess of the taxes properly assessable against the claimant for such years; that the taxes assessed were paid by the claimant within the time allotted for payment, and none was delinquent.
The complaint further alleges that during the entire period of 1933-42, inclusive, the claimant’s stated capital and paid-in surplus was $300,000.00; that at no time during this period did the claimant have any “paid-in surplus” as defined by the Business Corporation Act of the State of Illinois; that its “stated capital and paid-in surplus” consisted solely of its stated capital repre- I sented by three thousand shares of common stock at a par value of $100.00 per share; that as a result of its error, an over-assessment during this period was made in the total sum of $1,184.40.
The respondent has filed its motion to dismiss the claim, contending that it fails to state a cause of action and shows on its face: (1)that claimant seeks a refund f or a franchise tax not paid under protest, without a request for hearing; and (2) that claimant,seeks a refund for a voluntary payment of a franchise tax properly assessed.
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[*138] The rule is well established in this Ekate that where an illegal or excessive tax is paid voluntarily, with full knowledge of all the facts, the same can not be recovered in the absence of a statute authorizing such'recovery.
Alton Light a3 Traction Compainy vs. Rose, 117 Ill. App. 83; Yates vs. Royal Imsurame Compan.y, 200 111. 202; Cooper K m a l e y and Company vs.'Gill, 363 Ill. 418; .American C m CornpaNy vs. Gill,364 Ill. 254. The rule is the same where such tax is paid under a mistake of law, but where it is paid under a mistake of fact, it is not considered as having been voluntarily paid, and may therefore be recovered.
Payment of a franchise taxIwhich is illegal or is in excess of amount due, however, has been held to be pay: ment not under a mistake of fact and voluntarily paid.
Chicago Foumdatiom Company vs. State, 8 C. C . R. 22; ' Mohawk Carpet Mills Irzc. vs. State, 8 C. C . R. 37 ; Arwndel Corp0ratio.n vs. State, 8 C. C. R. 506; Western Dairy Compa;?zyvs. State, 9 C. C. R. 498; Butler Compalny vs.
State, 9 C. C. R. 503; Stotlar-Herrim Lumber Company vs. State, 9 C. C. R. 517; Hafidy Buttor,: Machine Company vs. State, 10 C. C. R. 22; Orchard Theatre Corporation vs. State, 11 C. C. R. 271. Where a corporation pays an excessive franchise tax as a result of its own mistake or error, the tax is considered to have been voluntarily paid, and such payment, resulting from the negligence or inadvertance of the taxpayer, is not made under a mistake of fact. Wester% Dairy Company vs.
State, supra. Likewise, where the statutes provide a remedy for a taxpayer of which he fails So avail himself, any payment made is considered voluntary. Butler Cornpany vs. State, supra.
The payment of the excessive franchise tax alleged by the claimant, is a result of its own mistake or error; [*6] , it filed no objection with the Secretary of State; it made no inquiry in regard to the tax assessed; and it made no request for hearing as provided by the statutes. The mistake was one of law, and the payments must be held to have been voluntarily made. J o h s o m vs. State, 12 C. C. R. 157.
The motion of the respondent to dismiss is therefore granted. Claim dismissed.