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FindLaw: State Resources: Minnesota: Primary
Materials: Minnesota Court Opinions
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Practice area: Taxation Law
Location: Austin, TX
Kent M. Rider
Austin, TX
This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1996).
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Edward Lopez
Austin, TX
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STATE OF MINNESOTA
IN COURT OF APPEALS
C4-98-618
Michael L. Cook
Austin, TX
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Judith A. Hargrove
Austin, TX
Country Joe, Inc., et al.,
Appellants,
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Gerald L. Brantley
Austin, TX
vs.
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City of Eagan,
Respondent.
Filed October 13, 1998
Affirmed
Amundson, Judge
Concurring specially, Kalitowski, Judge
Dakota County District Court
File No. C2-94-9530
Wood R. Foster Jr., Thomas H. Goodman, Anthony Gleekel,
Jordan M. Lewis, Siegel, Brill, Greupner, Duffy & Foster, P.
A., 1300 Washington Square, 100 Washington Avenue
South, Minneapolis, MN 55401 (for appellants)
Clifford M. Greene, John M. Baker, Sarah L. Brew, Greene
Espel, P.L.L.P., 333 South Seventh Street, Suite 1700,
Minneapolis, MN 55402; and
James F. Sheldon, Michael G. Dougherty, Severson, Sheldon,
Dougherty & Moldena, 600 Midway National Bank Building,
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Appellants challenge the district court's grant of summary
judgment in favor of the respondent city in the matter of
damages. The damages sought stem from the supreme court's
earlier decision that the city's imposition of a road unit
connection charge was actually an illegal tax. The district
court found no statutory remedy, and that appellants had not
properly sought relief through mandamus or declaratory
judgment. Appellants argue that because the supreme court
found that the city had levied an illegal tax, it is no tax at all,
and they are entitled to damages in their current action.
Alternatively, they argue that they paid the charge under
duress, which should dictate recovery even absent statutory
provision. There is no statutory provision for recovery; there
is no compelling evidence of duress. We affirm.
FACTS
Appellants Country Joe, Inc., et al., are a group of building
contractors. Respondent City of Eagan (city) imposed a road
unit connection charge as a condition for the issuance of all
building permits within the city. Appellants brought suit
against the city, arguing that the city's road unit charge was
illegal and seeking a refund for those who had paid the
charge. The suit was ultimately taken to the Minnesota
Supreme Court, which held that the road unit charge was
illegal because there was no statutory authorization for its
collection. Country Joe, Inc. v. City of Eagan , 560 N.W.2d
681 (Minn. 1997)( Country Joe I ).
The district court was to decide the matter of damages:
appellants sought a refund of those unauthorized charges they
had paid. Both parties moved for summary judgment. The
district court granted the city's motion and denied appellants'
motion, stating that appellants had no basis for recovery. This
appeal followed.
DECISION
"On an appeal from summary judgment, we ask two
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questions: (1) whether there are any genuine issues of
material fact and (2) whether the lower courts erred in their
application of the law." State by Cooper v. French , 460 N.
W.2d 2, 4 (Minn. 1990). Here, both parties agree that there is
no question of fact. Appellants argue that the district court
erred in its application of law.
I. Classification as "Tax"
Appellants argue that the district court erred in classifying the
road unit charge as a tax and, therefore, also erred in finding
that only under a statutory remedy could they recover
damages.
At the district court level, appellants argued that the charge
be seen as a "revenue measure," rather than as a tax. The
district court held that there is no meaningful difference
between a revenue measure and a tax. See Barron v. City of
Minneapolis , 212 Minn. 566, 570-01, 4 N.W.2d 622, 624
(1942) (a fee with a revenue-raising purpose is essentially a
tax).
Appellants also argued that because the supreme court found
that the charge was an illegal tax, it cannot be considered a
tax at all. The district court decided that for purposes of legal
definition, the charge is nevertheless a tax, albeit an illegal
one. We agree. The supreme court repeatedly referred to the
charge as a tax, and there is no reason, despite its illegality, to
consider it otherwise for these purposes.
The classification of the charge as a tax has implications for
appellants' recovery. "In Minnesota, the right to claim a
refund of taxes voluntarily paid in error is governed by
statute." Acton Constr. Co. v. Commissioner of Revenue ,
391 N.W.2d 828, 832 (Minn. 1986). However, no statute
exists governing any refund of an unauthorized tax in
Minnesota. While this seems curious, any lacunae in the
system must be addressed by the legislature.
II. Duress
Appellants further argue that they have a legal remedy for
recovery because they paid the charge under duress. Duress
offers an exception to the rule that taxes voluntarily paid
cannot be recovered other than by statute. To overcome the
presumption of voluntariness, however, there must be the
element of coercion in the tax's collection. Horn v. City of
Minneapolis , 182 Minn. 172, 177, 234 N.W. 289, 291
(1930). As Horn explains:
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The rule is that, where an illegal demand is
made upon a person, and the law furnishes him
adequate protection against it, or gives him an
adequate remedy in the premises, if he pays
what is demanded, instead of taking the
protection the law gives him or the remedy
which it furnishes, he must be held to have
made a voluntary payment. But although there
be a legal remedy, if his situation or the
situation of his property is such that the legal
remedy would not be adequate to protect him
from irreparable prejudice, and the
circumstances are such as to operate as a stress
or coercion upon him to comply with the
illegal demand, the payment is involuntary.
Id .
The district court found that appellants had access to legal
remedies to which Horn referred, "Caselaw makes clear that
a person faced with an illegal demand has two legal avenues
available: mandamus and declaratory judgment," citing
Crystal Green v. City of Crystal , 421 N.W.2d 393, 394
(Minn. App. 1988), review denied (Minn. May 25, 1988).
Here, appellants argue that because the charge was a
condition for the issuance of building permits, and because
they are builders by trade, they were forced by financial
imperative to pay the charge. They argue that they would
have been irreparably prejudiced by severe building delays
had they not paid the charge. There was, however, no
evidence presented of undue consequences of the failure to
pay the charge. Appellants also contend that they would have
also experienced costly delays had they sought legal
remedies prior to paying the charge. The law, however, does
not acknowledge such concerns. "[T]he limitation of
alternatives imposed by one's own financial problems does
not constitute duress." Bond v. Charlson , 374 N.W.2d 423,
428 (Minn. 1985).
Crystal Green makes clear that payment of a charge without
first seeking relief through mandamus or declaratory
judgment demonstrates a lack of duress or coercion. 421 N.
W.2d 394. Here, appellants paid the fee voluntarily and not
under a demonstrated duress, which would provide an
exception to the requirement of a statutory provision for
recovery.
It is nonetheless troubling that appellants, who have gone
through extensive litigation establishing the illegality of the
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tax, are now rewarded for their quest with no recovery of the
wrongfully collected monies. That these individual appellants
are unable to recover the unjustly levied tax, is a glaring
insufficiency of statutory law. These individual appellants are
unable to recover the unjustly levied tax. Citizens are forced
to bear the consequences of municipal iniquity and the
possibility of local larceny. It is with regret that we find
ourselves forced to conclude that the law here allows no
recovery for appellants. We have some understanding of
Flannery O'Connor's Mr. Shiftlet, who said:
'It didn't satisfy me at all.'
'It satisfied the law,' the old woman said
sharply.
'The law,' Mr. Shiftlet said and spit. "It's the
law that don't satisfy me.' (1)
The legislature might well revisit this statute to prevent such
injustices in the future.
Affirmed .
KALITOWSKI , Judge (concurring specially)
I concur only in the result.
* Retired judge of the district court, serving as judge of the
Minnesota Court of Appeals by appointment pursuant to
Minn. Const. art. VI, § 10.
1. Flannery O'Connor, "The Life You Save May Be Your
Own," in Complete Stories 145, 153 (1971).
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