G. L. c. 63, §§ 75, 76]

tion sixty-two, may be collected by an information brought in the supreme judicial court by the attorney general at the relation of the state treasurer. The court may issue an injunction upon such information, restraining the further prosecution of the business of the company, association or corporation until such taxes, with interest and costs thereon, have been paid; but no telegraph company accepting the provisions of section fifty-two hundred and sixty-three of the Revised Statutes of the United States shall be enjoined from constructing, maintaining or operating a telegraph line over and along any of the military or post roads of the United States within this commonwealth.

SECTION 76. The sale or transfer, otherwise than in the ordinary course of trade and in the regular and usual prosecution of the corporation's business, of any part or the whole of the assets of a domestic business corporation shall be fraudulent and void as against the commonwealth, unless such corporation shall, at least five days before the sale or transfer, notify the commissioner of the proposed sale or transfer and of the price, terms and conditions thereof, and of the character and location of said assets. Whenever such a corporation shall make such a sale or transfer, the tax imposed by this chapter shall become due and payable at the time when the commissioner is so notified, or, if he is not so notified, at the time when he should have been notified.

This section shall not apply to sales by receivers, assignees under a voluntary assignment for the benefit of creditors, trustees in bank. ruptcy, or public officers acting under judicial process.

It will be observed that the statutes provide three methods for enforcing payment of taxes assessed upon corporations and payable to the commonwealth. (1) A warrant authorizing the seizure and sale of the property of the delinquent corporation, provided by section seventy-two and constituting in effect a warrant of distress. (2) An action of contract by the commonwealth against the delinquent corporations, provided by section seventy-three. (3) An information by the attorney general at the relation of the state treasurer to restrain the corporation from carrying on business until the tax is paid, authorized by section seventy-five. The third is the method now commonly employed.

The action of contract must be brought in the name of the

[G. L. c. 63, §§ 76, 77 commonwealth. The court has no jurisdiction to entertain an action brought in the name of the state treasurer.1 The information against a corporation, on the other hand, should be brought in the name of the attorney-general.

In an information under the statute, and doubtless also in an action of contract by the commonwealth to recover the amount of a tax, it is not open to the defendant to show that the tax is excessive in amount by reason of overvaluation, or that it is illegal in part. The only recourse of the corporation in such cases is to pursue the remedies provided by sections seventy-one and seventy-seven respectively, and it cannot collaterally attack the validity of an assessment which is in part at least lawfully assessed, in an action brought to collect it. But if the assessment is wholly void, the corporation may set up its invalidity in an action brought to enforce payment.3

An information cannot be maintained to restrain a corporation engaged solely in interstate commerce from carrying on business within the commonwealth until an excise tax lawfully imposed upon it is paid. An information may however be maintained under this section against a foreign corporation engaged in interstate commerce having a usual place of business in this commonwealth, provided that it has a place of business used for other purposes, but the injunction issued will restrain it only from doing business other than interstate commerce until the tax is paid.

Remedy of Corporation in Case of Taxes Illegally Assessed

SECTION 77. Any corporation, company or association aggrieved by the exaction of any tax or excise or of any part thereof may, within six months after the payment of the same, whether such payment be after or before the issue of the warrant mentioned in section seventy-two, apply by petition to the supreme judicial court, setting forth the amount of the tax or excise and costs thereon so paid, the general legal grounds and the specific grounds in fact, if any, upon which it is claimed such tax or excise should not have been exacted. Said petition shall be the exclusive remedy and shall be entered and 'Oliver v. Colonial Gold Co., 11 Allen 283 (1865).

2

Attorney-General v. East Boston Co., 222 Mass. 450 (1916).

4 Western Union Tel. Co. v. Massachusetts, 125 U. S. 530 (1887).

Attorney-General v. Electric Storage Battery Co., 188 Mass. 239 (1905).

G. L. c. 63, §§ 77, 78]

heard in Suffolk county. A copy of the same shall be served upon the state treasurer and upon the attorney general. The proceedings upon such petition shall conform, as nearly as may be, to proceedings in equity, and an abatement shall be made of only such portion of the tax or excise as was assessed without authority of law.

SECTION 78. If the court, upon a hearing or trial, adjudges that said tax or excise, and the costs thereon, have been illegally exacted, a copy of the judgment or decree shall be transmitted by the clerk of the court to the state auditor, who shall thereupon audit and certify the amount adjudged to have been illegally exacted, with interest, and costs to be taxed by the clerk of the court in the same manner as other claims against the commonwealth, and the state treasurer shall pay the same, without any further act or resolve making appropriation therefor. So much thereof as has been paid by the commonwealth to any town may be deducted from and set off against any sum afterwards payable to such town.

The distinction between the remedy provided by section seventy-seven and the remedy by application to the board of appeal under section seventy-one is important. The application to the board of appeal is the exclusive remedy for overvaluation. The remedy by petition to the supreme judicial court was not intended to enable a corporation to bring before the court the inquiry whether there had been an overvaluation of that which was taxable, but whether there had been a wrongful assessment of a tax or excise upon that which was not the proper subject of taxation.1

While the distinction between a tax illegal in part and a tax excessive because of an erroneous construction of the law by the commissioner may be obvious in principle, in practice cases frequently arise in which it is difficult for the corporation to determine the proper remedy. In such cases the safest course is to institute proceedings under both sections, and then if the remedy first brought to trial is held to be the improper one, the corporation may fall back upon the other.

If the petition is not filed within six months after the payment of the tax, the court has no jurisdiction to entertain the proceeding. Not only must the petitioner file his petition within the

1 Boston Mfg. Co. v. Commonwealth, 144 Mass. 598 (1887).

'Lever Bros. Co. v. Commonwealth, 232 Mass. 22 (1919).

[G. L. c. 63, § 78 statutory period, but he must take out a subpoena within a reasonable time thereafter and make a reasonable effort to serve it. A general appearance on behalf of the commonwealth will not give the court jurisdiction if these requirements are not complied with.*

It is to be noted that the remedy by petition may be invoked whether the collection of the tax is enforced by warrant or it is paid without the issuance of process. It may be employed when the tax is only partially invalid. The remedy by petition can be invoked only in the case of a tax; a filing fee wrongfully collected cannot be recovered back in a proceeding under section seventy-seven. Either party may appeal from an adverse decision of a single justice to the full court; if the decision is in favor of the petitioner the appeal should be in the name of the commonwealth and not of the attorney general."

5

The remedy by petition is the exclusive remedy, at least so far as the state courts are concerned,' and prior to 1919 there was no provision authorizing the repayment of an admittedly illegal tax unless proceedings had been brought under the statute within the specified period. If the validity of the tax upon a numerous class of corporations was dependent upon the determination of a doubtful question of law, the corporations affected, even with the consent of the state authorities, could not pay their respective taxes under protest and await the result of a test case, but to protect their rights were required to go to the expense of instituting a separate proceeding in court in the case of each corporation. By legislation enacted in 1919 it was provided that the state should have authority to repay a tax illegally exacted to corporations which filed an application with the commissioner before the time for instituting proceedings in court expired, and under this statute corporations may protect their rights by filing an application and awaiting the determination of the question involved in proceedings brought by other parties.

3 International Paper Co. v. Commonwealth, 232 Mass. 7 (1919); Locomobile Co. v. Commonwealth, 232 Mass. 16 (1919).

7

Locomobile Co. v. Commonwealth, 232 Mass. 16 (1919).

Lever Bros. Co. v. Commonwealth, 232 Mass, 22 (1919).

Boston & Albany R. R. Co. v. Commonwealth, 157 Mass. 69 (1892).

Attorney-General v. East Boston Co., 222 Mass. 450 (1916).

G. L. c. 63, §§ 78-80]

A domestic corporation which has paid an illegal tax and allowed the time for instituting proceedings under section seventyseven to elapse without action on its part has lost its right to recover back the tax in any form of action; a common law action will not lie against the state treasurer, because the statute expressly provides that the remedy provided by section seventyseven is exclusive. A foreign corporation however may, it has been held, maintain an action at common law in the district court of the United States against the state treasurer who was in office when the tax was collected to recover back the amount of an illegal tax, the jurisdiction of the federal court being grounded on diversity of citizenship."

Penalties and Their Enforcement

SECTION 79. Any corporation, company or association, liable to taxation under section fifty-eight, neglecting to make the returns required by this chapter, or refusing or neglecting, when required, to submit to the examinations provided for therein, shall forfeit such sum not greater than two per cent upon the par value of its capital stock as the court may deem just and equitable.

SECTION 80. Penalties and forfeitures imposed by this chapter may be collected by an action of contract under section seventy-three or by an information under section seventy-five. An injunction issued upon such an information may contain a provision continuing it in force until the returns and certificates required by this chapter have been filed.

* International Paper Co. v. Burrill, 260 Fed. Rep. 664 (1919).