California Securities Co. v. State

LUCAS, J.,

pro tem.

These actions were brought by plaintiffs, respondents herein, to recover certain corporation license taxes paid by them under protest to Prank C. Jordan as Secretary of State, who was sued both individually and in his official capacity. The taxes were levied, assessed and collected under the provisions of the California Corporation License Tax Act (Stats. 1917, p. 371), which act had, prior to the institution of these actions, been declared unconstitutional by the Supreme Court. Both complaints herein were filed on December 31, 1927. Prior to this time, and in December, 1917, the District Court of Appeal for the First Appellate District, in the ease of

McClellan

v.

State of California,

35 Cal. App. 605 [170 Pac. 662], held that an action brought directly against the state for the recovery of moneys paid under the provisions of said act would not lie because the state could not be sued without its consent. This decision declared that the act of February 28, 1893 (Stats. 1893, p. 57), did not authorize such a suit. Subsequently, however, and on February 26, 1929, the Supreme Court, in the case of

Welsbach Co.

v.

State of California, Frank C. Jordan as Secretary of State and Charles G. Johnson as Treasurer of said State,

206 Cal. 556 [275 Pac. 436], held that an action to recover taxes collected under an unconstitutional statute was authorized by the said statute of 1893, and would lie against the state itself but not against the Secretary of State or the state treasurer, or either of them, in their official capacity.

On April 1, 1929, the attorney-general of the state of California filed answers to the complaints herein denying the alleged involuntary character of the tax payments, and alleging that the actions were barred by the terms of said statute of 1893 and by section 339 of the Code of Civil Procedure.

[260]

Apparently with the Welsbach decision in mind, respondents on July 12, 1929, secured orders from the trial court reciting that the actions were in effect actions against the State of California; that the said State of California was the real party defendant; that the actions were being defended by the duly authorized attorney for the State of California, and ordering that the State of California be substituted in the place and stead of the defendants Frank C. Jordan and Frank C. Jordan as Secretary of State in the same manner and to the same effect as if the State of California had been named as a party defendant in the original complaints filed herein.