Thomas A. Vorbach
V. McGraw, Jr.
Paul L. Hicks Attorney General
Ancil G. Ramey Stephen Stockton
Steptoe & Johnson Senior Assistant Attorney General
Morgantown, West Virginia Charleston, West Virginia
Attorneys for the Appellant Attorneys for the Appellee
JUSTICE ALBRIGHT delivered the Opinion of the Court.
JUSTICE DAVIS dissents and reserves the right to file a dissenting opinion.
1. Where the issue on
appeal from the circuit court is clearly a question of law or involving an interpretation
of a statute, we apply a de novo standard of review. Syl.
Pt. 1, Chrystal R.M. v. Charlie A.L., 194 W.Va. 138, 459 S.E.2d 415 (1995).
agencies performing quasi-judicial functions have an affirmative duty to dispose
promptly of matters properly submitted. Syl. Pt. 7, in part, Allen
v. State Human Rights Comm'n, 174 W.Va. 139, 324 S.E.2d 99 (1984).
3. 'A statute may contain
constitutional and unconstitutional provisions which may be perfectly distinct
and separable so that some may stand and others will fall; and if, when the
unconstitutional portion of the statute is rejected, the remaining portion reflects
the legislative will, is complete in itself, is capable of being executed independently
of the rejected portion, and in all other respects is valid, such remaining
portion will be upheld and sustained.' Point 6, syllabus, State v. Heston,
137 W.Va. 375 [71 S.E.2d 481]. Syl. Pt. 4, State ex rel. State Building
Comm'n v. Bailey, 151 W.Va. 79, 150 S.E.2d 449 (1966).
4. The statutory language
of West Virginia Code § 11-10-10(d) (1986) (Repl.Vol.1999) , which permits
an administrative body to have ultimate discretionary authority on the critical issue of a bond or a substitute therefor, required
to perfect an appeal of that administrative body's decision to a circuit court,
violates the open courts provision set forth in article III, section 17 of the
West Virginia Constitution.
5. A taxpayer who chooses to proceed under the statutory alternative for an appeal bond under West Virginia Code § 11-10-10(d) (1986) (Repl.Vol.1999) , and who otherwise complies with the statutory requirements for requesting a waiver of the appeal bond requirement, is entitled to apply to the circuit court for a review of any adverse determination concerning bond waiver.
Appellant Gary W. Frantz,
d/b/a Frantz Lumber Company, Tri-State Logging, and Tri-State Logging, Inc.
(hereinafter Taxpayer), challenges the July 26, 1999, order of the
Circuit Court of Kanawha County dismissing his appeal from an administrative
ruling of Appellee Joseph M. Palmer, the State Tax Commissioner (hereinafter
Tax Commissioner). As grounds for the appeal, Taxpayer challenges
the constitutionality of West Virginia Code § 11-10-10(d) (1986) (Repl.Vol.1999)
insofar as that statutory provision reposes sole discretion in the Tax Commissioner
with regard to issuance of a certification of adequate assets sufficient to
secure performance in lieu of the appeal bond otherwise required by the statute.
Upon careful examination of the statutory provisions, we find that West Virginia
Code § 11-10-10(d) violates our constitutional guarantee of open access
to the courtsSee footnote 1 1
by omitting any provision for judicial review of the Tax Commissioner's
discretion concerning the issuance of a certificate of adequate assets. Accordingly,
we reverse and remand for further proceedings consistent with this opinion.
On October 22, 1998, Taxpayer
timely filed an appeal from the Tax Commissioner's decision in accordance with
the provisions of West Virginia Code § 11-10- 10.See
footnote 4 4 As part of the provisions governing the appeal,
Taxpayer was required within ninety days of the filing of the petition to file
a cash or corporate surety bond or, alternatively, to seek a certificate from the Tax Commissioner dispensing with such bonds based
on sufficient proof of assets. See W.Va. Code § 11-10-10(d). While
Taxpayer undertook efforts to obtain a corporate surety bond,See
footnote 5 5 the surety company contacted was unwilling to issue
a bond based on the fact that Taxpayer's business records for the relevant time
period had been destroyed due to the flooding of his Maryland residence in 1995.
Following the passage of the
ninety-day period for filing the appeal bond, the Tax Commissioner filed a motion
to dismissSee footnote 6 6
the appeal, citing lack of jurisdiction for Taxpayer's failure to obtain the
requisite appeal bond.See footnote 7 7
On April 15, 1999, Taxpayer filed a motion for leave to proceed without
bond or alternatively, with a reduced bond. As exhibits to this motion, Taxpayer
filed an affidavit setting forth in detail his unsuccessful efforts regarding
securing a surety bond, as well as a financial statement offered to demonstrate
the availability of personal assets sufficient to cover the amount of the tax assessment. The circuit court, upon its consideration of the various filings
of the parties, ruled that Taxpayer's failure to file an appeal bond within
the statutory requirements of West Virginia Code § 11-10-10(d) prevented
it from hearing the appeal on jurisdictional grounds. Seeking to obtain an appeal
on the merits of his case , Taxpayer asks this Court to reverse the lower court's
Among the list of guarantees
set forth in article III, section 17 of our state constitution is the laudatory
mandate that justice shall be administered without . . . delay.
W.Va. Const. art. III, § 17. Just as circuit court judges have an
affirmative duty to render timely decisions on matters properly submitted within
a reasonable time following their submission, Syl. Pt. 1, in part, State
ex rel. Patterson v. Aldredge, 173 W.Va. 446, 317 S.E.2d 805 (1984), the
obligation to act in a timely fashion is similarly imposed upon administrative
bodies, as we recognized in syllabus point seven of Allen v. State Human
Rights Commission, 174 W.Va. 139, 324 S.E.2d 99 (1984): [A]dministrative
agencies performing quasi-judicial functions have an affirmative duty to dispose promptly
of matters properly submitted.
When a litigant asserts constitutional
violations predicated on decisional delay, the inquiry becomes one of whether
the litigant can establish that his ability to prepare or defend his case has
been substantially prejudiced as a result of the delay. See Allen, 174
W.Va. at 157 n. 22, 324 S.E.2d at 117 n. 22 (discussing correlation between
administrative promptness and procedural due process); (New York State NOW
v. Cuomo, 14 F.Supp.2d 424, 431 (S.D. N.Y. 1998) (holding that administrative
delay may rise to level of constitutional violation if substantive constitutional
rights are violated), order vacated on other grounds, 261 F.3d 156 (2nd
Cir. 2001); O'Keefe v. Murphy, 345 N.E.2d 292, 294 (N.Y. 1976) ([W]henever
a delay in an administrative adjudication significantly or deliberately interferes
with a party's capacity to prepare or to present his case, the right to due
process has been violated); see generally 2 Am.Jur.2d Admin.
Law § 379 (1994). Taxpayer asserts that, due to the decisional delay,
his ability to defend his position with regard to challenging the tax assessment
has been prejudiced by the staleness of the evidence and the intervening flood-related
destruction of his business records. Rather than addressing the effects of the
delay on Taxpayer's appeal,See footnote
9 9 the Tax Commissioner observes only that Taxpayer has benefitted from the delay because he enjoyed the benefits of an interest-free
loan of money otherwise owed.See footnote
as we recognized in Allen, are frequently imposed by the Legislature
in recognition of the need for expeditiousness. 174 W.Va. at 158, 324
S.E.2d at 119. In this case, the within a "reasonable
time" period prescribed by the Legislature
for the issuance of tax decisions was clearly exceeded by the Tax Commissioner.
We would be hard pressed to find the existence of good cause with regard to
the seven-year delay between the administrative hearing and the issuance of
the decision at issue here. We admonish the Tax Commissioner to comply with
the legislatively-selected time period for the issuance of tax decisions. See
W.Va. Code § 11-10-9. Despite the availability of extraordinary relief
as a means of seeking the issuance of delayed decisions, taxpayers should not
have to resort to the judicial system to obtain a timely tax ruling.
within ninety days after the petition
for appeal is filed, or sooner if ordered by the circuit court, the taxpayer shall
file with the clerk of the circuit court a cash bond or a corporate surety bond
approved by the clerk. The surety must be qualified to do business in this state.
These bonds shall be conditioned that the taxpayer shall perform the orders of
the court. The penalty of this bond shall be not less than the total amount of
tax, additions to tax, penalties and interest for which the taxpayer was found
liable in the administrative decision of the tax commissioner. Notwithstanding
the aforegoing and in lieu of such bond, the tax commissioner, in his discretion
upon such terms as he may prescribe, may upon a sufficient showing by the taxpayer,
certify to the clerk of the circuit court that the assets of the taxpayer subject
to the lien imposed by section twelve of this article, or other indemnification,
are adequate to secure performance of the orders of the court.
W.Va. Code § 11-10-10(d) (emphasis supplied). Taxpayer's challenge to this constitutional language arises from the legislative decision to grant the Tax Commissioner sole dispositional authority to dispense with the bond requirement. With this unfettered grant of discretionary power, Taxpayer maintains that the Legislature has violated our state constitution's guarantee of open access to the courts. W.Va. Const. art. III, §17.
Taxpayer asserts that to repose
unchecked power in the administrative body that is a party to the tax appeal
necessarily works an injustice in those instances where the Tax Commissioner's
discretion is employed to deny a taxpayer access to the judicial system. Furthermore,
Taxpayer suggests that the circuit court, not the Tax Commissioner, should be
vested with ultimate authority to modify or waive the bond required for an appeal
under West Virginia Code § 11-10-10(d). We agree. An adverse party should not hold
the keys to the courthouse.
In the criminal context we
have recognized that [o]nce a person is convicted of a misdemeanor and
sentenced to jail, he must then post an appeal bond which, if cynically manipulated,
can defeat his appeal. Champ v. McGee, 165 W.Va. 567, 570, 270
S.E.2d 445, 447 (1980). We believe that the case before us implicates the principle
recognized in Champ . When one party may--by the unchecked exercise of
discretion-- prevent the right to judicial review belonging to an opposing party,
as West Virginia Code § 11-10-10(d) currently allows, then the right of
open access to the courts guaranteed by article III, section 17 of the West
Virginia Constitution has been contravened.
Other courts, in reviewing their respective tax statutes, have similarly determined that statutory provisions which deny a taxpayer's access to judicial review are unconstitutional. See, R Commun., Inc. v. Sharp, 875 S.W.2d 314 (Tex. 1994) (finding statutory enactment removing remedy of prepayment declaratory relief from tax assessment to be unconstitutional denial of open courts mandate of Texas constitution); Jensen v. State Tax Comm'n, 835 P.2d 965, 968-69 (Utah 1992) (holding that violation of Utah open courts provision results where taxpayer is unable to deposit full amount of taxes, interest, and penalties as required by statute as condition to appeal of tax assessment).
Accordingly, we hold that the statutory language of West Virginia Code § 11- 10-10(d), which permits an administrative body to have ultimate discretionary authority on the critical issue of a bond or a substitute therefor,See footnote 11 11 required to perfect an appeal of that administrative body's decision to a circuit court, violates the open courts provision set forth in article III, section 17 of the West Virginia Constitution. That ultimate discretionary authority must be vested in the courts. Determining the sufficiency of an appeal bond or its alternatives is a judicial function and not an executive function.
Turning now to fashioning
the limited relief required in this case, we heed the following axiom of statutory
construction: Acts of the Legislature are always presumed to be constitutional,
and this Court will interpret legislation in any reasonable way which will sustain
its constitutionality. State ex rel. City of Charleston v. Coghill,
156 W.Va. 877, 883, 207 S.E.2d 113, 118 (1973). Equally applicable is our recognition
[a] statute may contain constitutional and unconstitutional provisions which may be perfectly distinct and separable so that some may stand and others will fall; and if, when the unconstitutional portion of the statute is rejected, the remaining portion reflects the legislative will, is complete in itself, is capable of being executed independently of the rejected portion, and in all other respects is valid, such remaining portion will be upheld and sustained. Point 6, syllabus, State v. Heston, 137 W.Va. 375 [71 S.E.2d 481].
Syl. Pt. 4, State ex rel. State Building Comm'n v. Bailey, 151 W.Va. 79,
150 S.E.2d 449 (1966). Cognizant of our obligation to respect the legislative
will and to uphold all constitutionally valid legislative provisions, we proceed
to determine, to the greatest extent possible, the statutory provisions that may
be sustained, and to identify, as narrowly as possible, the specific language
that fails constitutional muster. See Syl. Pt. 1, in part, State ex
rel. Appalachian Power Co. v. Gainer, 149 W.Va. 740, 143 S.E.2d 351 (1965)
(In considering the constitutionality of a legislative enactment, courts
must exercise due restraint, in recognition of the principle of the separation
of powers in government among the judicial, legislative and executive branches.).
We perceive no problem with
the provisions of West Virginia Code §11-10- 10(d) which permit the Tax
Commissioner to examine whatever evidence the taxpayer presents regarding his
sufficiency of assets to cover the amount of the tax assessment. Similarly we
perceive no problems with authorizing the Tax Commissioner to certify that a
taxpayer's assets are deemed sufficient to permit an appeal to proceed without
a bond or with some other arrangements in lieu of bond, so as to permit the
parties to proceed to the appeal by agreement on the issue of a bond or other
The language in West Virginia
Code § 11-10-10(d) which is troublesome to this Court is the statutory
clause permitting the Tax Commissioner in his discretion upon such terms as he may prescribe
to grant or withhold approval
of a Taxpayer's request to substitute taxpayer's property or other indemnification
for the required appeal bond, as a condition of Taxpayer prosecuting an appeal
of the Tax Commissioner's levy of taxes, penalties and interest.See
footnote 12 12 W.Va. Code § 11-10-10(d) (emphasis supplied).
Based on our conclusion that the courts, not the Tax Commissioner, must be vested
with the ultimate discretionary authority to fix the terms upon which an appeal
bond may be waived or other property or indemnification substituted for the
bond, this broad grant of discretion to the Tax Commissioner--and the Tax Commissioner
alone_does not survive constitutional scrutiny.
Consistent with the position
of the Tax Commissioner and the court below, we acknowledge that this Court
has generally viewed compliance with statutorily-imposed deadlines for the posting
of bonds to prosecute an action or perfect an appeal as jurisdictional in nature.
See Stevens v. Saunders, 159 W.Va. 179, 220 S.E.2d 887 (1975) (affirming
dismissal on statute of limitations grounds where cost bond not obtained until
after period of repose had run), superseded by statute as stated in Crawford
v. Hatcher, 804 F.Supp. 834 (S.D. W.Va. 1992); Gaines v. Hawkins,
153 W.Va. 471, 170 S.E.2d 676 (1969) (applying statutory period for obtaining
bond in connection with civil appeals); Scott Coal & Coke Ry. Co., 70 W.Va. 777, 74 S.E. 992 (1912) (interpreting statutory provision
regarding applicable period for perfecting civil appeals). None of those cases
cited by the court below in support of its ruling, however, involve application
of the statutory provision at issue in this case or raise the issue central
to this case of a constitutional challenge to the statutory language vesting
in an opposing party--a state administrative body--the final power to approve,
modify, or excuse compliance with a bond requirement. In cases where statutory
time periods for initiating litigation were relied upon to dismiss causes of
action and the appellate courts subsequently determined that tolling statutes
applicable to minors were unconstitutional, those cases were remanded despite
the statute of limitations problem. See, e.g. Whitlow v. Board of
Educ., 190 W.Va. 223, 438 S.E.2d 15 (1993) (remanding case dismissed on
statute of limitation grounds after determining that tolling statute was unconstitutional);
accord Strahler v. St. Luke's Hosp., 706 S.W.2d 7 (Mo. 1986); Sax
v. Votteler, 648 S.W.2d 661 (Tex. 1983). For analogous reasons, our conclusion
regarding the unconstitutionality of certain language found in West Virginia
Code § 11-10-10(d) requires that Taxpayer and others affected by this language
have a meaningful opportunity to pursue their appeals through the posting of
bond or providing substitute property or indemnification in a manner consistent
with the principles set forth in this opinion.
Accordingly, pending legislative
attention to the defect we have found in West Virginia Code § 11-10-10(d),
reposing sole discretional authority in the Tax Commissioner regarding bond waiver, we hold that a taxpayer who chooses to proceed under
the statutory alternative for an appeal bond provided under West Virginia Code
§ 11-10-10(d), and who otherwise complies with the statutory requirements
for requesting a waiver of the appeal bond requirement, is entitled to apply
to the circuit court for a review of any adverse determination concerning bond
waiver. In considering such an application, the lower court should consider
evidence of Taxpayer's ability to pay the tax assessment and other relevant
factors that the Tax Commissioner or Taxpayer wish to address with regard to
the issue of adequate assets or other substitute indemnification If the circuit
court makes a determination that the Tax Commissioner has unreasonably refused
to issue a certificate regarding the taxpayer's adequacy of assets or other
proposed substitute indemnification, the circuit court has authority to set
the terms of the appeal. While the ninety-day period prescribed by statute for
obtaining an appeal bond or the statutory alternative remains enforceable, where
a litigant who properly sought a waiver from the Tax Commissioner within the
ninety-day statutory period seeks judicial review of the Tax Commissioner's
decision within that ninety-day period, the lower court has jurisdiction to
address the issue, and, in due course to hear a resulting appeal.
In undertaking to fashion
relief for the Taxpayer aggrieved by the lack of a remedy at law due to the
constitutional deficiency, we note the failure of Taxpayer to apply to the Tax
Commissioner for a waiver of the appeal bond requirement within the ninety-day period after the appeal was filed.See
footnote 13 13 See W.Va. Code § 11-10-10(d). We
note that while Taxpayer did undertake efforts within that time period to obtain
a bond, his difficulty in obtaining a bond was attributable at least indirectly,
if not directly, to the dilatory efforts of the Tax Commissioner to issue the
ruling appealed from. Based on our determination that ultimate discretionary
authority concerning the appeal bond or its substitute cannot rest with the
administrative body who is a party to the appeal, we find it necessary to allow
Taxpayer a reasonable opportunity to perfect his appeal. Accordingly, we are
remanding this matter to the circuit court with the following directions. Within
the ninety-day period next following the issuance of the mandate herein, Taxpayer
shall: (1) post the required bond or propose to Tax Commissioner what property
or other indemnification Taxpayer proposes to substitute for such bond, or,
(2) failing such agreement, apply to the circuit court below for a judicial
determination of what property or other indemnification may lawfully be substituted
if Taxpayer and Tax Commissioner do not promptly reach an agreement well before
the expiration of such ninety-day period. If it is necessary for the circuit
court to fix the terms for substituted property or other indemnification, the
lower court's order should be made as soon after the Taxpayer's application
to the circuit court or the expiration of such ninety-day period as practicable.
The lower court should consider evidence of Taxpayer's ability to pay the tax
assessment and other relevant factors that the Tax Commissioner or Taxpayer wish to adduce with regard to the issue of adequate assets or other
substitute indemnification. Any agreement between Taxpayer and the Tax Commissioner
should be filed with the Circuit Court within the ninety-day period, and preferably
well before. Upon either agreement between Taxpayer and the Tax Commissioner
or an order of the circuit court in lieu thereof, Taxpayer must either comply
within ten days of the filing of the agreement or entry of the circuit court's
order or his appeal shall be dismissed.
Accordingly, we hereby reverse
the decision of the Circuit Court of Kanawha County and remand this matter for
further proceedings consistent with the directives contained in this opinion.
Footnote: 3 3In explanation, the Tax Commissioner suggested that Taxpayer's request to submit documentation in support of his position following the administrative hearing may have contributed to the delayed ruling.
Footnote: 6 6According to the certificate of service, the Tax Commissioner served the motion to dismiss on Taxpayer on March 30, 1999. The motion, however, was not entered into the Kanawha County Circuit Court's file until July 26, 1999--the same date the circuit court's ruling was entered.
Footnote: 7 7In its response to the petition for appeal filed on December 21, 1998, the Tax Commissioner raised as an affirmative defense the resulting lack of jurisdiction in the event Taxpayer failed to timely file an appeal bond as required by West Virginia Code § 11-10- 10(d).
Footnote: 10 10The administrative decision provided that no interest accrued for the period covering approximately six months after the hearing to the August 26, 1998, date of the Tax Commissioner's ruling.
Footnote: 12 12We seek here to preserve and promote the separation of powers among the three branches of our state government, by limiting our action as narrowly as possible to the necessities created by the constitutional deficiency identified in West Virginia Code § 11-10- 10(d). See W.Va. Const. art. V, §1.