General Motors Corp. v. Oklahoma County Board of Equalization

SUPPLEMENTAL OPINION ON REHEARING

PER CURIAM:

We hereby supplement the opinion .of this Court of May 17, 1983 (54 O.B.J. 1351) as amended by Order of July 26, 1983 (54 O.B.J. 2068) by adding thereto the following:

A further review of Lemon v. Kurtzman, 411 U.S. 192 , 93 S.Ct. 1463 , 36 L.Ed.2d 151 (1973) impels the conclusion that the rule of Norton v. Shelby County, 118 U.S. 425 , 6 S.Ct. 1121 , 30 L.Ed. 178 (1886) (that an unconstitutional statute “confers no rights; it imposes no duties; it affords no protection; it creates no office; it is, in legal contemplation, as inoperative as though it had never been passed”) was not abandoned in Lemon. Lemon merely recognized an exception to the rule of Norton to be applied by a court of equity under certain prescribed conditions. As we shall briefly demonstrate, the parameters of the Lemon exception have many times been recognized and applied by this Court; and we shall further demonstrate that those parameters are not present in the case at bar.

After striking down of Pennsylvania’s statutory program to reimburse non-public sectarian schools for secular educational services in Lemon v. Kurtzman, 403 U.S. 602 , 91 S.Ct. 2105 , 29 L.Ed.2d 745 (Lemon I), the Supreme Court remanded to the district court which enjoined payments for services rendered after Lemon I, but permitted reimbursement for services prior to Lemon I. Appellants challenged the scope of this decree (a case in equity).

The circumstances peculiar to Lemon II were:

1. After the statute became effective, the schools entered into the contracts in good faith, relying upon the apparent stat-utorial authority.

2. Thereafter, Appellants sought preliminary injunction to restrain payment under the scheme. However, Appellants abandoned their request for injunction to prevent the initial payment. The schools continued performing the services authorized by statute. Not until a motion for summary judgment was filed did Appellants first indicate their intent to seek to enjoin.

3. The schools could not, prior to Lemon I , have predicted the act’s unconstitutionality with assurance sufficient to undermine Appellees’ reliance on the statute. Lemon I was not “foreshadowed.”

4. The schools had a “reliance interest” to be considered in fashioning an equity decree calling for a “sensible recognition of the practical realities of the situation.”

5. Appellants urged a strange amalgam of flexibility and absolutism, claiming on the one hand they did not seek to have the *239 schools disgorge prior payments, yet seeking to enjoin future payments, and urged injunction under the rule of Norton .

6. Great hardship would be imposed upon the public, state officers, school budgets and implemented school programs if the rule of Norton were to be immutably applied as of the date of the Lemon I decision.

In fashioning the equity decree in the light of the rule of Norton and of the “reliance interest” thus demonstrated, the United States Supreme Court observed, statutory or even judge-made rules of law are hard facts on which people must rely in making decisions and in shaping their conduct; until judges say otherwise, state officers have the power to carry forward the directives of the state legislature; those officials may, in some circumstances, elect to defer acting until authoritative judicial pronouncement has been secured; but where there are no fixed and clear constitutional precedents, the choice is essentially one of discretion, and state officials may rely upon the basic presumption of constitutional validity of a duly enacted statute.

The Supreme Court concluded by saying that federalism requires that federal injunction, unrelated to state courts, be shaped with concern and care for the responsibilities of the executive and legislative branches of state government. “In short, the propriety of the relief afforded Appellants by the District Court, applying familiar equitable principles, must be measured against the totality of circumstances and in light of the general principle that, absent contrary direction, state officials and those with whom they deal are entitled to rely on a presumptively valid state statute, enacted in good faith and by no means plainly unlawful.”

The circumstances in the case at bar are not analagous to and, in fact, are significantly different than those in Lemon II.

a. Lemon II involved the fashioning of a decree in equity. The case at bar is a statutory proceeding (denial of protest seeking recovery of taxes paid). While our code pleading purports to abolish the distinction between actions at law and actions in equity, “A party bringing an action is required to frame his pleading in accord with some definite, certain theory, and the relief to which he claims to be entitled must be in accord therewith; on appeal he is bound by the position and theory assumed, and on which the case was heard in the trial court.” Yellow Cab Company v. Allen, Okl., 377 P.2d 220 (1962), quoting from Lenz v. Young, Okl., 307 P.2d 844 (1957). A chancellor has power to do equity and mold a decree to the necessities of a particular case. U.S. v. Fogaley (C.A.Okl.1951) 190 F.2d 163 ; Sinclair Oil & Gas Co. v. Bishop, Okl., 441 P.2d 436 (1967). But in law, a trial court is limited to the particular issues framed by the pleadings. La Bellman v. Gleason & Sanders, Inc., Okl., 418 P.2d 949 (1966). In the fashioning of a judgment in law, courts are less impelled to apply principles of equity.

b. No compulsion on the part of public officials to perform statutory duties until otherwise directed by the courts is involved in the case at bar, in contrast to Lemon II.

c. General Motors Corporation had a free choice as to whether it would rely upon the opinions and representations of public officials as to the constitutionality of the non-tax “agreements.” It was under no compulsion to act in reliance. It could have obtained a declaratory judgment prior to entering into the purported non-tax arrangement. Instead, it relied upon the representations in the face of the Constitution and laws of Oklahoma, and did so at its peril.

d. There is a strong suggestion of public weal involved in Lemon II and other eases in considering the force of a “reliance interest” as against the unconstitutionality of a contract or statute where prospective effect is given by court decree to a determination of unconstitutionality. In the case at bar, the reliance interest to be weighed involves General Motors Corporation’s individual rights only. In Lemon II, mid-term school budgets, programs, and expendí- *240 tures made in reliance upon a statute would invoke an extreme public hardship if abruptly terminated by a decree of unconstitutionality.

Our determination herein that the circumstances present in the case at bar do not place it within the exception enunciated in Lemon II to the rule of Norton is consistent with the prior holdings of this Court.

In Oklahoma Ed. Ass’n, Inc. v. Nigh, Okl., 642 P.2d 230 (1982), a large number of individuals acted in reliance upon the constitutionality of a statute prior to this Court’s determining it to be unconstitutional. The liability of public officials who acted in good faith reliance upon the constitutionality of the statute was likewise involved (p. 239). Both considerations impelled the Court to protect officials and citizens from liability which would result if this Court’s opinion was given retrospective effect.

In State ex rel. Poulos v. State Bd. of Equal., Okl., 646 P.2d 1269 (1982) (Poulos III), and 552 P.2d 1138 (1976) (Poulos II), an unconstitutionally inequal established system of tax valuation was determined to exist. The ability of the various county governments to function, the reliance interests of great numbers of taxpayers, and the potential liability of public officials were implicitly involved. The Court in fashioning its decree made its effective date prospective.

In State v. Board of County Com’rs of Creek County, 188 Okl. 184 , 107 P.2d 542 (1940), a large number of delinquent taxpayers secured a reduction of their taxes under a statute thereafter adjudged unconstitutional, while other taxpayers did not. The County Commissioners and County Treasurer continued to act under the law after the action was filed against them questioning the act's constitutionality, and after they had been advised by the Attorney General to refrain from acting under it, and after they were advised by the Attorney General that the act had been adjudged, and was, unconstitutional. During the time the defendant officers were proceeding under the act, they reduced the assessments and taxes on some 4,264 separate pieces of property. In applying what was in effect equity reliance rules, this Court said (547):

“One asserting rights under such a void law must bring himself within some established exception [to the rule of Nor ton]. The rule that no rights may be acquired under such a statute applies as well to rights acquired under acts performed or executed pursuant to such statute before the final determination of the unconstitutionality thereof, as to those sought to be acquired under acts performed thereunder.”

In striking down the statute and in declining to ameliorate the effect of a pronouncement of unconstitutionality, this Court said (554):

“It follows that the contention of the plaintiffs must be sustained. To hold otherwise and to sustain the judgment of the trial court would be to say that constitutional inhibitions may be lightly defeated and circumvented by subordinate executive officers, acting in excess of their lawful authority, provided the acts of such officers were fully consummated before the extent of their authority is determined in the proper forum — namely the courts. This we cannot do. Such a rule would encourage citizens to rush in and get relief under a doubtful law before its validity could be tested in the courts. It would encourage hasty action on the part of administrative officers, where deliberation and caution should be encouraged instead. It would discourage the prompt payment of taxes by holding out to the taxpayers the prospect of future legislation under which they might obtain special advantages. It would open an easy avenue for the evasion and defeat of constitutional safeguards, not only in tax matters, but in others.”

In Gordon v. Conner, 183 Okl. 82 , 80 P.2d 322 , 118 A.L.R. 783 (1938), plaintiff resident taxpayers sought recovery against the sheriff and members of the board of county commissioners under a statute au *241 thorizing the action to recover sums paid to the defendants pursuant to a statute thereafter determined to be unconstitutional. At issue was the weighing of the public interest in recovering sums paid put under a void statute against the duty of public officials to perform their statutory duties and their right to rely upon the statute’s presumed constitutionality (p. 324):

“The sheriff, however, relying upon the provisions of the special act, appointed six deputies. In this action plaintiffs seek to recover for the county, a sum equal to the salaries paid to the two deputies from July 1, 1933, to the date of filing the suit (April 27, 1936), and a similar sum for their own use and benefit.

“The trial court held that the special act was unconstitutional, but further held that the case of Wade v. Board of Commissioners of Harmon County, 161 Okl. 245 , 17 P.2d 690 , was controlling of the issues involved herein. In that case, it was held: ‘The members of the board of county commissioners of a county will not be penalized ... for the payment of salaries to county officers under an unconstitutional local act where such payments were made in good faith and before the law is declared unconstitutional, or before they are advised by the proper official as to its unconstitutionality.’

“No contention is made that defendants were ever advised by the proper officials as to the unconstitutionality of the special act. Plaintiffs take the position that since this court on several occasions has held similar acts to be unconstitutional, the defendants, being chargeable with a knowledge of the law, are chargeable with knowledge of the unconstitutionality of the special act involved herein. We cannot concur in this contention. The unconstitutionality of the special act involved herein had never been judicially established. Defendants were entitled to rely thereon as a source of authority for their official acts without assuming the risk of incurring heavy penalties in the event such act was subsequently declared to be in controvention of a constitutional provision and therefore invalid. The presumption is that a law is constitutional until its unconstitutionality is judicially established.” (Citation omitted.)

State ex rel. Cartwright v. Dunbar, Okl., 618 P.2d 900 (1980) comports with Lemon II and the foregoing cases. It is in line with the general rule in Oklahoma and elsewhere. See 16 Am.Jur.2d Constitutional Law, §§ 256, 257, 688.

BARNES, C.J., and HODGES, LAVENDER, DOOLIN, HARGRAVE, OPALA, and ALMA D. WILSON, JJ., concur.

ORDER FOR STAY OF MANDATE

THE APPLICATION FOR STAY OF MANDATE filed in this Court on the 15th day of August, 1983, by Plaintiff-Appellant, General Motors Corporation is hereby granted as follows:

THE ISSUANCE OF MANDATE IN THE ABOVE CAUSE is hereby stayed for a period of ninety (90) days from this date to allow Plaintiff-Appellant the opportunity to seek review of the judgment of this Court by the Supreme Court of the United States.

In the event that Plaintiff-Appellant proceeds to seek timely review of the judgment by the United States Supreme Court, the issuance of mandate shall continue to be stayed until such time as the United States Supreme Court makes a final determination thereof.