The opinion
SCHAUER, J.
I concur in the judgment, reluctantly, on the ground that it does not appear that on the facts shown in this record an estoppel arose. But this is because of a failure to show a representation by a responsible agent of gov *393 ernment upon which a taxpayer could reasonably rely. I do not concur in any implication that as a matter of law an estoppel cannot be invoked by a taxpayer as against the government’s claim for a deficiency, if in fact the taxpayer relied upon an administrative representation and as a result lost the opportunity to pass the tax on to others.
Preliminarily, a distinction must be recognized between the case wherein the taxpayer acts as a mere collection agent, and that in which a tax is imposed directly on the taxpayer. The unemployment insurance tax illustrates this distinction: the employer withholds a certain sum from the salary of his employes, as to which he acts as a collection agency only; he also remits a sum based on the total salaries paid, as to which he is the principal taxpayer. In such a case, if the taxpayer is informed by the proper authority that certain employes are not subject to the tax, and therefore no remittances are made with respect to the salaries paid to such employes, and if the authority later changes its position and declares a tax due, the government may be able to collect the amounts the employer should have paid on his own account, but it will not be allowed to recover from the employer the amounts which should have been withheld from the employes’ salaries. (Garrison v. State (1944), 64 Cal.App.2d 820 [ 149 P.2d 711 ] ; La Societe Francaise v. California Emp. Com. (1943), 56 Cal.App.2d 534 [ 133 P.2d 47 ].)
Where a taxpayer has refrained from paying a tax for which he is primarily liable because of reliance upon an erroneous administrative interpretation, it has been held in a number of cases that he must pay an asserted deficiency, even though he would have been able to pass on the tax had he not relied on the administrative position that no tax was due. (Market St. Ry. Co. v. California State Board of Equalization (1955), 137 Cal.App.2d 87 [ 290 P.2d 20 ]; Duhame v. State Tax Com. (1947), 65 Ariz. 268 [ 179 P.2d 252 , 171 A.L.R. 684 ]; Crane Co. v. Arizona State Tax Com. (1945), 63 Ariz. 426 [ 163 P.2d 656 , 163 A.L.R. 261 ] ; Bennetts, Inc. v. Carpenter (1943), 111 Colo. 63 [ 137 P.2d 780 ].) Inspection discloses, however, that the Duhame and Bennetts cases are of little weight in California. In Duhame the court disposed of the estoppel question by saying that “there can be no estoppel against a government or governmental agency with reference to the enforcement of taxes” (p. 260 of 179 P.2d); similarly, in Bennetts the court merely stated that “It is a general principle of law that the doctrine of estoppel cannot be invoked against any govern *394 mental agency, acting in its public capacity” (p. 782 of 137 P.2d). But the rule is established in California that estoppel may be invoked against a government entity where “justice and right require it.” (Farrell v. County of Placer (1944), 23 Cal.2d 624 /627 [ 145 P.2d 570 , 153 A.L.R. 323 ].)
The Market Street Railway case relied strongly on the Crane case, and the Crane case was based on the distinction made in La Societe Francaise v. California Emp. Com. (1943), supra, 56 Cal.App.2d 534 , between a tax imposed, directly on the taxpayer and a tax as to which he acted merely as a collection agent. The Societe Francaise case, as noted above, involved an unemployment insurance tax, and in that case the employer was held liable for the amounts he would have paid had the employes been properly included on its tax return, although not for the amounts which should have been withheld from the salaries of the particular employes. The Market Street Railway case (involving the sales tax) represents a square California holding by the District Court of Appeal that no estoppel will be raised merely because the taxpayer had a right to pass on the taxes to the purchaser, where he was under no statutory duty to do so, even though the only reason he failed to pass on the tax was because of reliance on the erroneous administrative ruling. But the principal basis of the Market Street Railway case is in ultimate analysis (through the Crane case) the Societe Francaise case.
The true theory of the Societe Francaise case seems to appear at page 555 of 56 Cal.App.2d, where the court stated: “. . . in the present case a proper regard for the protection of the interests of the government in its revenues, with recognition also of a degree of responsibility on the part óf the government to a taxpayer who has relied to his prejudice on an official ruling, is achieved by requiring the taxpayer to discharge that part of the tax burden which it was contemplated it should bear by the statute imposing the tax, while relieving it from..liability for the employees’ contributions and interest on. delayed payments. The taxpayer will pay from its 'own funds as much as it would have paid originally but for the erroneous administrative ruling, but it will not pay more.” (Italics added.) But La Societe Francaise is essentially a nonprofit organization and there was no showing that it could have passed on its costs to its customers. In a similar case, where the employer was an insurance company, the court relieved the taxpayer of liability both for the employes’ share and for the employer’s share of the tax. (Garrison v. State of *395 California (1944), supra, 64 Cal.App.2d 820 .) The court there reasoned, at page 829 (after the rule for the erroneous exemption of the particular employes had been rescinded), “collection of the employees’ percentage [which had become due] during the time the rule was in effect was for all practical purposes difficult and expensive if not impossible. With the lapse of time involved and periodical allocation of costs to policyholders, it would be unfair now to require the insurance company to pay its contributions for these employees.” (Italics added.) (See also Waterbury Savings Bank v. Danaher (1940), 128 Conn. 78 [ 20 A.2d 455, 462 ], where the court, following the same principle as that followed by the District Court of Appeal in the Garrison case, declared that “Where it appears that it is against public policy that an administrative officer should change a decision with retroactive effect, it is the court’s right and duty to curb his powers so as to serve that policy.”) If the taxpayer is to be assessed only for the amount which it would have paid from its own funds in the absence of reliance upon the erroneous administrative action, then it is inconsistent to charge it for an amount which would have been passed on to, and borne by, the ultimate consumer had the tax been properly levied. This is especially true with respect to insurance companies, whose annual premium rates are a reflection of their prior and anticipated operating costs.
Thus it appears that a governmental agency may be estopped to assert a tax deficiency, where the reason for the original nonpayment was reliance on an administrative representation which proved to be erroneous, if the taxpayer can show that he could and would have passed on the tax to his customers had he not relied on the ruling that it was not due, and that he can no longer so pass it on. Here, if the representations which were made by the state insurance commissioner had instead been made by the state board of equalization, a different result would be indicated.
For the reasons and subject to the limitations above stated I concur in the judgment.
Shenk, J., concurred.
Respondents’ petitions for a rehearing were denied December 24, 1956.