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Saunders Propterties v. Municipality of Anchorage (2/12/93), 846 P 2d 135
Notice: This is subject to formal
correction before publication in the Pacific
Reporter. Readers are requested to bring
typographical or other formal errors to the
attention of the Clerk of the Appellate
Courts, 303 K Street, Anchorage, Alaska
99501, in order that corrections may be made
prior to permanent publication.
THE SUPREME COURT OF THE STATE OF ALASKA
SAUNDERS PROPERTIES, )
a Partnership, ) Supreme Court File No. S-4875
) Superior Court File No.
Appellant, ) 3AN-90-5089 Civil
v. ) O P I N I O N
MUNICIPALITY OF ANCHORAGE, )
a Municipal corporation, and )
TOM FINK, in his official )
capacity of mayor of the )
Municipality of Anchorage, )
) [No. 3933 - February 12, 1993]
Appeal from the Superior Court of the
State of Alaska, Third Judicial District,
Anchorage, Mark C. Rowland, Judge.
Appearances: Richard H. Foley, Jr. and
Pamela R. Kelley, Foley & Foley, Anchorage,
for Appellant. Scott A. Brandt-Erichsen,
Assistant Municipal Attorney, and Richard L.
McVeigh, Municipal Attorney, Anchorage, for
Before: Rabinowitz, Chief Justice,
Burke, Compton and Moore, Justices.
[Matthews, Justice, not participating].
Saunders Properties (SP) appeals the superior court's
ruling that the one-year statute of limitations set out in AS
29.45.500(b) applies to limit the Anchorage Assembly's authority
to refund tax overpayments under AS 29.45.500(c). We conclude
that the Assembly has the discretionary authority to award
refunds under subsection (c) without any prescribed limitations
period. We also hold that such quasi-judicial decisions are not
subject to mayoral veto. The Assembly erred, however, in failing
to award interest on the taxes refunded.
II. FACTS AND PROCEEDINGS
The facts of this case are not disputed. In 1979 the
Municipality of Anchorage (municipality) took a right-of-way
totalling 43,800 square feet from two parcels owned by SP. In
April 1980 the Municipal Assessor's office adjusted the
assessment records to reflect the decreased square footage of
SP's property following the taking.
In June 1980 SP's property was replatted to subdivide
the lot into two separate parcels (Tracts A and B). When the
plat was refiled, the Municipal Assessor's office mistakenly
included the land taken for the right-of-way in its assessment,
thus overstating the size of both lots. From 1981 to 1988, both
tracts were overtaxed as a result of this error.1
In 1989 the Municipal Assessor's office discovered the
error and adjusted the 1989 tax assessment. SP subsequently
requested a tax refund of the amounts overpaid on the two tracts
between 1981 and 1988. Alaska Statute 29.45.500 provides:
(a) If a taxpayer pays taxes under
protest, the taxpayer may bring suit in the
superior court against the municipality for
recovery of the taxes. If judgment for
recovery is given against the municipality,
or, if in the absence of suit, it becomes
obvious to the governing body that judgment
for recovery of the taxes would be obtained
if legal proceedings were brought, the
municipality shall refund the amount of the
taxes to the taxpayer with interest at eight
percent from the date of payment plus costs.
(b) If, in payment of taxes legally
imposed, a remittance by a taxpayer through
error or otherwise exceeds the amount due,
and the municipality, on audit of the account
in question, is satisfied that this is the
case, the municipality shall refund the
excess to the taxpayer with interest at eight
percent from the date of payment. A claim
for refund filed one year after the due date
of the tax is forever barred.
(c) The governing body may correct
manifest clerical errors at anytime.
Pursuant to AS 29.45.500(b), the Municipal Assessor's office
agreed to refund SP the amount overpaid on Tract B for the 1988
tax year ($5,031.98),2 but refused to refund SP any of the tax
overpaid in earlier years, citing the statutory provision's one-
year time limit. However, the Municipal Assessor's office
indicated that the Assembly might have the authority to make such
a refund under AS 29.45.500(c).
In April 1990 SP appeared before the Assembly and
requested a refund pursuant to AS 29.45.500(c). The mayor
subsequently entered a written opposition to SP's request,
arguing that a property owner has a duty to check the assessment
each year and that allowing refunds for past years would disrupt
the municipal budget.
In early May the Assembly voted 6 to 4 to grant SP a
refund in the amount of $32,957.3 The Assembly specified that
this amount represented only the amount overpaid and did not
include interest. A few days later Mayor Tom Fink vetoed the
Assembly action. On May 22, 1990, the Assembly addressed the
issue of Mayor Fink's veto. Although a number of Assembly
members voiced doubts as to whether the mayor had authority to
veto the Assembly's decision, the Assembly followed the normal
procedures to override the veto. The Assembly voted seven to
four to override, one short of the eight votes necessary.
Consequently, the override attempt failed, and the Assembly
denied SP's request.
SP appealed the Assembly's decision to the superior
court, seeking to recover the amount it had actually overpaid in
taxes for a total of $17,781.58. On cross-motions for summary
judgment, Superior Court Judge Mark Rowland ruled in favor of the
municipality and dismissed SP's case. This appeal followed.
A. Interpretation of AS 29.45.500(c)
The legislature enacted subsection (c) in 1985 when it
recodified former AS 29.53.390 as AS 29.45.500. Unfortunately,
the legislative history sheds no light as to the specific purpose
of this subsection. We must therefore examine the plain language
of AS 29.45.500(c) in light of its overall purpose and in
accordance with common sense and good policy.4 See Langdon v.
Champion, 745 P.2d 1371, 1372 n.2 (Alaska 1987).
Subsections (a) and (b) set forth two different
procedures under which a taxpayer may obtain a tax refund. Under
subsection (a), a taxpayer may bring a suit against the
municipality in superior court to seek a refund of taxes paid
under protest. Under subsection (b), a taxpayer may file a claim
for a refund with the municipality when "in payment of taxes
legally imposed, [the] remittance by [the] taxpayer through error
or otherwise exceeds the amount due." AS 29.45.500(b). A claim
under subsection (b) must be filed within one year of the tax due
date or it is "forever barred."Id.
Subsection (c) provides that the "governing body may
correct manifest clerical errors at any time" but does not
specifically authorize the refund of taxes overpaid as the result
of such an error.5 AS 29.45.500(c). Judge Rowland construed
subsection (c) to "empower the Assembly to correct clerical
errors, regardless of how ancient they may be,"but ruled that it
did not empower the Assembly to refund money erroneously paid as
a result of such errors after the one-year limitations period had
run. The municipality urges us to adopt this reading and claims
that interpreting AS 29.45.500(c) as providing an adjudicatory
avenue for relief would negate the one-year limitation in AS
29.45.500(b). We disagree.
In our view, the one-year limitations period should
only apply to overpayments resulting from taxpayer error and not
to overpayments resulting from the municipality's error.6 In
cases of taxpayer error, taxpayers who discover their own mistake
and make a timely claim are entitled to an automatic refund once
the overpayment is verified by audit. We believe that this one-
year limitations period makes good sense when the taxpayer is
solely responsible for the overpayment.
In contrast, we believe that the language of subsection
(c) clearly grants the governing body the discretionary authority
to correct clerical errors by the municipality and to refund
overpayments resulting from such clerical errors without any
prescribed limitations period. This reading accords with this
court's policy to liberally construe remedial statutes. See
State ex rel. Smith v. Tyonek Lumber, Inc., 680 P.2d 1148, 1157
(Alaska 1984). General principles of equity also support this
reading. See Frost v. Fowlerton Consol. Sch. Dist. No. 1, 111
S.W.2d 754, 756-57 (Tex. App. 1937) (holding that school district
had no equitable right to retain moneys paid by taxpayer under
mutual mistake of fact); State ex rel. Pabst Brewing Co. v.
Kotecki, 157 N.W. 559, 560 (Wis. 1916) (permitting taxpayer to
recover tax overpayment resulting from clerical error, and
declaring that if the city kept the money, a breach of honesty
and fair dealing would result). This is particularly true where
the error lies with the taxing body. See Pabst, 157 N.W. at 660
(payment of excess tax due to error by city constitutes a "fraud"
which entitles taxpayer to recover the overpayment); Betz v. City
of New York, 103 N.Y.S. 886, 887 (N.Y. App. 1907) (where mistake
originates with city official resulting in tax overpayment, it is
wholly unjustifiable for the city to retain the excess tax).
These fairness concerns outweigh the municipality's interest in
We therefore decline to rule that the limitations
period in subsection (b) applies generally to all claims for
refunds under AS 29.45.500.7
B. Applicability of Mayoral Veto
Because we conclude that the Assembly had the authority
to grant SP a refund, we must determine whether the mayor had the
power to veto this decision. Under the Anchorage Municipal
Charter, the mayor "may, by veto, strike or reduce items in a
budget or appropriation measure." Anchorage Municipal Charter
5.02(c); see also AMC 3.20.020(C). The Anchorage Municipal Code
No payment shall be made or obligation
incurred except in accordance with
appropriations. Obligations otherwise
incurred are void. The Assembly by ordinance
may provide for exceptions in the case of tax
refunds and other routine payments.
AMC 6.30.010(A); see also Anchorage Municipal Charter 13.08(a).
SP argues that the Assembly's decision to grant SP a refund is
not subject to veto because it is a quasi-judicial action. We
agree. The Assembly clearly performed an adjudicatory function
here. After SP presented its case before the Assembly and the
mayor's office presented its opposing view, the Assembly
determined that SP was entitled to a full refund without
interest. We have repeatedly held that a legislative body which
applies general policy to specific individuals acts as an
"administrative agency." See Kollodge v. State, 757 P.2d 1028,
1033 (Alaska 1988); Winegardner v. Greater Anchorage Area
Borough, 534 P.2d 541, 544 (Alaska 1975); Keiner v. City of
Anchorage, 378 P.2d 406, 410 (Alaska 1963).
In our opinion, the Assembly's decision is analogous to
an adverse judgment against the municipality. A judgment debt is
intrinsically different from obligations a municipality incurs in
the course of "doing business"as a municipality.8 Clearly when
a taxpayer prevails in a suit to recover taxes paid under protest
under subsection (a), the mayor has no authority to veto the
court's decision to order a refund. We conclude that such quasi-
judicial decisions by the Municipal Assembly are not subject to
mayoral veto.9 See 5 Eugene McQuillin, The Law of Municipal
Corporations, 16.42 at 240 (3d ed. rev. vol. 1989).
Because subsection (c), unlike subsections (a) and (b),
does not specifically authorize the Assembly to award interest on
the amount refunded, the Assembly concluded that it had the
discretion not to award interest.10 Taking AS 29.45.500 as a
whole, we conclude that SP is entitled to 8% interest on its
refund award.11 To hold otherwise would have the inequitable
result of singling out the taxpayer who, in good faith, pays
excess taxes as a result of a clerical error by the municipality.
We therefore hold that all refunds authorized under AS 29.45.500
properly include interest at 8% accruing from the date of
payment. See Scavenius v. City of Anchorage, 539 P.2d 1161, 1174
(Alaska 1975) (in construing a statute, the court must reconcile
the different provisions so as to make them consistent,
harmonious and sensible). We remand this case to the superior
court with directions to order the appropriate refund plus 8%
interest from the date of payment.
REVERSED and REMANDED for proceedings consistent with
1. SP was not the record owner of Tract A throughout this
entire period. In 1981 SP sold Tract A to Bykers, Inc. In 1986
Bykers, Inc. defaulted on its obligation to SP and subsequently
reconveyed Tract A to SP in a foreclosure action. Since 1989, SP
has been the record owner of both parcels.
2. Apparently no excess taxes were paid on Tract A in 1988,
and therefore SP did not request a refund for that lot.
3. This figure represents $13,533.28 in overpaid taxes for
Tract A and $19,422.98 for Tract B. However, Bykers, Inc. paid
the taxes on Tract A between 1981 and 1986 (paying $10,142.70 in
overpayments). The Assembly apparently decided to award SP all
$32,956.26 under the mistaken assumption that Bykers, Inc. had
failed to pay the property taxes on Tract A during its ownership
and that SP had paid the taxes owed when Tract A went into
foreclosure. SP never requested that the Assembly award it the
full amount. Thus SP is only entitled to the $3,390.58 it
actually overpaid on Tract A.
4. It is within the special competency of this court to
independently construe a statute. O'Callaghan v. State, 826 P.2d
1132, 1134 n.2 (Alaska 1992), cert. denied, 113 S. Ct. 176
(1992). The goal of statutory construction is to give effect to
the legislature's intent, with due regard for the meaning the
statutory language conveys to others. Tesoro Alaska Petroleum
Co. v. Kenai Pipe Line Co., 746 P.2d 896, 905 (Alaska 1987).
5. Although the entire section AS 29.45.500 is under the
section heading "Refund of Taxes,"AS 01.05.006 provides that
section headings are not adopted as law in Alaska.
6. We emphasize that neither subsection (b) nor subsection
(c) applies to situations in which a taxpayer alleges that the
municipality erred in imposing an illegal tax or in improperly
valuing the property. In such cases, the taxpayer must follow
the prescribed procedures for appealing tax assessments, see AS
29.45.190-.200 and AMC 12.05.050, or pay the taxes under protest
pursuant to subsection (a).
We are unpersuaded by the municipality's argument that
the assessment error in this case is a valuation error rather
than a clerical error. In general, clerical errors are
bookkeeping and copying errors. See Ryan v. Tracy, 453 N.E.2d
661, 663 n.4 (Ohio 1983). In this case, the Assessor's office
mistakenly used the wrong figure in calculating the taxable
square footage when the subject property was replatted.
7. We have held that common law actions to recover taxes
paid under protest are subject to a six-year limitations period.
See State v. Wakefield Fisheries, Inc., 495 P.2d 166, 172 (Alaska
1972) (six-year statute of limitations applies to common law
actions to recover taxes paid under protest), overruled on other
grounds by Principal Mutual Life Ins. Co. v. State, Div. of Ins.,
780 P.2d 1023, 1030-31 (Alaska 1989).
As the municipality points out, this conflicts with our
recent observation, in dicta, that the one-year limitations
period in AS 29.45.500(b) also applies to actions under AS
29.45.500(a). Kenai Peninsula Borough v. Cook Inlet Region,
Inc., 807 P.2d 487, 492 (Alaska 1991). Kenai Peninsula did not
actually involve an application of subsection (a). We held in
Kenai Peninsula that a taxpayer who failed to make a timely
protest under a local ordinance could not later assert that the
property was exempt from taxation and obtain a refund. After
scrutinizing the language and purpose of AS 29.45.500, we are
convinced that our comment concerning the application of the one-
year limitations period to subsection (a) was incorrect.
However, that inaccurate dicta in no way disturbs our holding in
Kenai Peninsula. Actions to recover taxes paid under protest,
both under subsection (a) and at common law, require a formal
protest at the time of payment. See Principal Mutual Life, 780
P.2d at 1030-31.
8. See, e.g., Village of Chefornak v. Hooper Bay Constr.
Co., 758 P.2d 1266, 1268-70 (Alaska 1988) (holding that judgment
against City did not constitute a "debt contracted" within
constitutional restrictions on debts contracted by a political
subdivision); see also Frost v. Fowlerton Consol. Sch. Dist. No.
1, 111 S.W.2d 754, 757 (Tex. App. 1937) (holding that a claimed
tax refund did not "create"a debt against the school district,
but rather it was a renewal and extension of a pre-existing debt
and therefore not subject to the constitutional provisions
limiting the school district's power to contract debts).
9. If the municipality refuses to satisfy such a judgment,
the taxpayer may seek to enforce the judgment through a motion
for mandamus. See Village of Chefornak, 758 P.2d at 1268
(recognizing motion for mandamus to compel payment by municipal
10. We will review the Assembly's interpretation of AS
29.45.500(c) under the substitution of judgment test. See Jager
v. State, 537 P.2d 1100, 1107 n.23 (Alaska 1975) (this court will
apply the substitution of judgment test for questions of law not
involving agency expertise).
11. As the municipality points out, the Assembly clearly
erred in awarding SP not only the amount SP overpaid in taxes
between 1981 and 1988, but also the amount that Bykers, Inc.
overpaid during its ownership of Tract A. SP is only entitled to
the amount that it actually overpaid during this period.