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THE DES MOINES REGISTER AND TRIBUNE COMPANY, ET. AL., (CONSOLIDATED TAX CASES) (1984) (CC) (ST)

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THE DES MOINES REGISTER AND TRIBUNE COMPANY, ET. AL., (CONSOLIDATED TAX CASES), Plaintiffs, vs. IOWA DEPARTMENT OF REVENUE, ET. AL., Defendants

Iowa District Court, Polk County

Polk

iowadist

CL 53-31240, CL 54-32040, CL 53-31285, CL 55-32143

RULING

STATEMENT

The matter before the Court are Motions for Summary Judgment filed by Plaintiffs and Defendants.

The Court heard arguments on the motions on August 31, 1984. By agreement, the Court, in this Ruling, must decide the following issues:

1. Whether Iowa's Tax On Newsprint and Ink is Unconstitutional; 2. Whether Senate File 538 is Unconstitutional; 3. Whether Section 2 of 1970 Iowa Acts, Chapter 1201 Is Severable From Sections 1 and 3.

Depending on the Court's Ruling on these issues, other issues raised by the parties may or may not need to be decided in a subsequent hearing.

After considering the arguments of counsel, their Briefs and reviewing the file, including the Stipulation of Facts, the Court files the following.

APPLICABLE LAW AND REASONING

I. Whether Iowa's Tax On Newsprint And Ink is Unconstitutional

The pertinent statutes are:

§ 422.42(3): (Following definitions of "retail sale" and "sale at retail"):

Notwithstanding the foregoing provisions of this subsection, the sale of newsprint and ink delivered after April 1, 1970 to any person, firm or corporation to be incorporated in or used in the printing of any newspaper, free newspaper or shoppers guide for publication in this state shall be considered as a sale at retail and such person, firm or corporation shall be deemed to be the consumer of such newsprint and ink and subject to the payment of sales tax.

§ 423.1(1): (Following definition of "use")

Notwithstanding the foregoing provisions of this subsection, the purchase of newsprint and ink delivered after April 1, 1970 to any person, firm or corporation to be incorporated in or used in the printing of any newspaper, free newspaper or shoppers guide for publication in this state shall be subject to the use tax imposed by this chapter.

The Minneapolis Star and Tribune Company challenged a similar Minnesota tax as an unconstitutional abridgment of freedom of the press and denial of equal protection and due process of law in Minneapolis Star and Tribune Company v. Minnesota Commissioner of Revenue, U.S. , 103 S.Ct. 1365, 75 L.Ed.2d 295 (1983).

The Minnesota statute provided:

Notwithstanding any other provisions of section 297A.01 to 297A.44 to the contrary, the cost of paper and ink products exceeding $100,000 in any calendar year, used or consumed in producing a publication as defined in section 297A.25, subdivision 1, clause (i) is subject to the tax imposed by this section.

The Court held Minnesota's ink and paper tax violated the First Amendment for two reasons: It singled out the press and it targeted a small group of newspapers with its $100,000 exemption. 103 S.Ct. at 1370 and 1375.

Justice O'Connor, writing for the majority, conceded the First Amendment does not prohibit all regulation of the press and conceded the States and the Federal Government can subject newspapers to generally applicable economic regulations without creating constitutional problems. Id., at 1369-1370. However, as the justice points out, Minnesota did not choose to apply its general sales and use tax to newspapers. Rather, it created a special tax which applied only to certain publications protected by the First Amendment. Id. at 1370.

Answering Minnesota's argument that the tax on paper and ink was part of the general scheme of taxation, the justice concluded: "... the use tax provision ... is facially discriminatory, singling out publications for treatment that is, to our knowledge, unique in Minnesota tax law." Id., at 1370.

In analysing the Minnesota statute, the justice points to two features of the statute which result in treatment of publications different from that of other enterprises: it imposes a use tax that does not serve the function of protecting the sales tax, and it taxes an intermediate transaction rather than the ultimate sale. Id., at 1370.

As to the first feature, she says: "A use tax ordinarily serves to complement the sales tax by eliminating the incentive to make major purchases in States with lower sales taxes; it requires the resident who shops out-of- state to pay a use tax equal to the sales tax savings ... Minnesota designed its overall use tax scheme to serve this function. As the regulations state, 'The use tax' is a compensatory or complementary tax.' ... Thus, in general, items exempt from the sales tax are not subject to the use tax, for, in the event of a sales tax exemption, there is no 'complementary function' for a use tax to serve ... But the use tax on ink and paper serves no such complementary function; it applies to all uses, whether or not the taxpayer purchased the ink and paper in-state, and it applies to all items exempt from the sales tax." Id., at 1370.

As to the second feature, she says: "Further, the ordinary rule in Minnesota, as discussed above, is to tax only the ultimate, or retail, sale rather than the use of components like ink and paper. 'The statutory scheme is to devise a unitary tax which exempts intermediate transactions and imposes it only on sales when the finished product is purchased by the ultimate user ... Publishers, however, are taxed on their purchase of components, even though they will eventually sell their publications at retail." Id., at 1370.

Speaking of the threats to a free press posed by differential taxation of the press, the justice says: "The fears of the Antifederalists were well- founded. A power to tax differentially, as opposed to a power to tax generally, gives a government a powerful weapon against the taxpayer selected. When the State imposes a generally applicable tax, there is little cause for concern. We need not fear that a government will destroy a selected group of taxpayers by burdensome taxation if it must impose the same burden on the rest of the constituency ... When the State singles out the press, though, the political constraints that prevent a legislature from passing crippling taxes of general applicability are weakened, and the threat of burdensome taxes becomes acute. That threat can operate as effectively as a censor to check critical comment by the press, undercutting the basic assumption of our political system that the press will often serve as an important restraint on government ... Further, differential treatment unless justified by some special characteristic of the press, suggests that the goal of the regulation is not unrelated to suppression of expression, and such a goal is presumptively unconstitutional ... Differential taxation of the press, then, places such a burden on the interests protected by the First Amendment that we cannot countenance such treatment unless the State asserts a counterbalancing interest of compelling importance that it cannot achieve without differential taxation." Id., at 1372.

Minnesota asserted as its main countervailing interest the raising of revenue.

The justice answers this assertion by simply pointing out that raising revenue is critical to any government and the same interest could be served without raising concerns under the First Amendment: "the state could raise the revenue by taxing businesses generally, avoiding the censorial threat implicit in a tax that singles out the press." Id., at 1372.

Minnesota presented other arguments in favor of the constitutionality of the statute: substance over form and the tax scheme favors the press over other businesses.

As to the first argument, Minnesota maintained the tax was merely a substitute for the sales tax, which as a generally applicable tax, would be constitutional as applied to the press, The justice rejects this assertion for two reasons: First, the State offered no explanation why it did not use the sales tax in the first place; second, the tax does not serve as a substitute. Id., at 1373, 1374.

As to the second argument, Minnesota maintained the tax rate, in the case of the press, applies to the cost of components rather than to the sales price and, thus, the tax scheme favors the press over other businesses. Rejecting this assertion, the justice says: "We would be hesitant to fashion a rule that automatically allowed the State to single out the press for a different method of taxation as long as the effective burden was no different from that on other taxpayers or the burden of the press was lighter than on other businesses. One reason for this reluctance is that the very selection of the press for special treatment threatens the press not only with the certain differential treatment, but with the possibility of subsequent differentially more burdensome treatment. Thus, even without actually imposing an extra burden on the press, the government might be able to achieve censorial effects, for "[t]he threat of sanctions may deter [the] exercise of [First Amendment] rights almost as potently as the actual application of sanctions.' ... (emphasis in original). Id., 1374.

Justice O'Connor concludes her analysis of the Court's reason for rejecting constitutionally a differential taxation on the press in the Minnesota statute: "A second reason to avoid the proposed rule is that courts as institutions are poorly equipped to evaluate with precision the relative burdens of various methods of taxation. The complexities of factual economic proof always present a certain potential for error, and courts have little familiarity with the process of evaluating the relative economic burden of taxes. In sum, the possibility of error inherent in the proposed rule poses too great a threat to concerns at the heart of the First Amendment, and we cannot tolerate that possibility. Minnesota, therefore, has offered no adequate justification for the special treatment of newspapers Id., 1374-1375.

Turning to the Iowa statutes, this Court, utilizing the analysis of Minneapolis Star and Tribune Company, must determine affirmatively two questions in reaching a determination that the sales and use tax statutes unconstitutionally abridges the freedom of the press: (1) do the statutes single out the press? (2) If so, has the State of Iowa shown counterbalancing interest of compelling importance to justify such treatment?

Iowa's special tax on newsprint and ink contains the same flaws as the U.S. Supreme Court found in Minnesota's tax in Minneapolis Star and Tribune Company, supra.

Iowa's sales and use tax statutes exempt from tax the sales of components which become an integral part of tangible personal property intended to be sold ultimately at retail. Section 422.42(3) ("Retail sale" or "sale at retail" means the sale to a consumer or to any person for any purpose, other than for processing or for resale of tangible personal property or taxable services, or for resale of tangible personal property in connection with taxable services ... or any taxable service when purchased and used in the processing of tangible personal property intended to be sold ultimately at retail. Tangible personal property is sold for processing within the meaning of this subsection only when it is intended that such property shall by means of fabrication, compounding, manufacturing, or germination become an integral part of other tangible personal property intended to be sold ultimately at retail ...") (emphasis added) and § 423.1(1) ("Use" means and includes the exercise by any person of any right or power over tangible personal property incident to the ownership of that property, except that it shall not include processing, or the sale of that property in the regular course of business. Property used in "processing" within the meaning of this subsection shall mean and include (a) any tangible personal property including containers which it is intended shall, by means of fabrication, compounding, manufacturing, or germination, become an integral part of other tangible personal property intended to be sold ultimately at retail ...") (emphasis added). Sections 422.42(3) ("... Notwithstanding the foregoing provisions of this subsection, the sale of newsprint and ink delivered after April 1, 1970 to any person, firm or corporation to be incorporated in or used in the printing of any newspaper, free newspaper or shoppers guide for publication in this state shall be considered as a sale at retail and such person, firm or corporation shall be deemed to be the consumer of such newsprint and ink and subject to the payment of sales tax.") and 423.1(1) ("... Notwithstanding the foregoing provisions of this subsection, the purchase of newsprint and ink delivered after April 1, 1970 to any person, firm or corporation be be incorporated in or used in the printing of any newspaper, free newspaper or shoppers guide for publication in this state shall be subject to the use tax imposed in this chapter.") clearly subject the sale and purchase of newsprint and ink intended to be incorporated in or used in the printing of newspapers to a sales and use tax, respective No other producers of goods for retail sales are subjected to sales and use tax in their purchases of components. The Court concludes these two sections single out the press for differential taxation.

The Defendants do not attempt to assert any counterbalancing interest of compelling importance to justify such treatment. To the contrary, they apparently concede Iowa's sales and use taxes on newsprint and ink components of newspapers which are sold violate the First Amendment of the United States Constitution. See page 7 of Defendants' Brief: "On August 18, 1983, the Register filed its Petition for Judicial Review and For Declaratory Judgment. The other Plaintiffs filed their lawsuits shortly thereafter. Defendants filed their Answer and Counterclaim on September 8, 1983. One of the Counts in Plaintiffs' Petition is the asserted invalidity of the Iowa newsprint and ink tax in light of the Star Tribune case. Defendants do not defend the Constitutionality of this tax because of the Star Tribune case. Defendants, therefore, will make no resistance in this Brief to Plaintiff's argument in pages 10 through 14 of their Brief in which Plaintiffs contend that the Iowa newsprint and ink tax is invalid. However, a decision of unconstitutionality of the newsprint and ink must come from the Court and not from the Defendants." The Court, likewise, perceives no counterbalancing interest of compelling importance to justify singling out the press for differential taxation.

The Court concludes the provisions of § 422.42(3) and 423.1(1), The Code of Iowa, which subject the sale and purchase of newsprint and ink intended to be incorporated in or used in the printing of newspapers to a sales and use tax, respectively, violate the First Amendment of the Constitution of the United States.

II. Whether Senate File 538 is Unconstitutional A. Does Senate File 538 Deprive Plaintiffs of Due Process of Law?

The Iowa Legislature's response to Minneapolis Star and Tribune was its passage of Senate File 538, which Governor Branstad approved on May 19, 1983.

That Act provides:

Section 1. Section 422.73, subsection 1, Code 1983, is amended by adding the following new unnumbered paragraph:

NEW UNNUMBERED PARAGRAPH. A credit, action, or claim for refund of sales and use taxes voluntarily paid shall not be allowed to the extent that the credit, action, or claim for refund is based upon an alleged mistake of law regarding the validity or legality under the laws or Constitution of the United States or under the Constitution of the State of Iowa, of the tax imposed by division IV of this chapter or by Chapter 423. This section prevails over any other statutes authorizing sales or use tax refunds or claims.

Sec. 2. This Act is retroactive to January 1, 1983 and applies to claims filed on or after January 1, 1983.

Sec. 3. This Act, being deemed of immediate importance, takes effect from and after its publication in Dubuque, Iowa, and in the Independence Bulletin journal, a newspaper in Independence, Iowa.

It is undisputed that if the law is constitutional, Plaintiffs claims for refunds are barred.

Plaintiffs assert that Senate File 538, because of its retroactive effect, is a denial of due process in contravention of the Fourteenth Amendment to the Constitution of the United States. The Fourteenth Amendment declares that no state shall "deprive any person of life, liberty, or property without due process of law." The Fourteenth Amendment is a limitation upon the powers of the state. Gideon v. Wainwright, 372 U.S. 355, 83 S.Ct. 792, 795 (1963); Jacobs v. City of Chariton, 245 Iowa 1378, 1393, 65 N.W.2d 561 (1954).

The question facing this Court is whether Plaintiffs have a property interest in the form of claims for refunds rising to a constitutional level under the due process clause of the Fourteenth Amendment.

Rules as to rights of actions as constituting "property" in the constitutional sense are found in 16A Am.Jur.2d, Constitutional Law, 656-657, section 672: "A right of action may be vested, and, if so, is property in the same sense in which tangible things are property and is equally protected against arbitrary interference, and whether it springs from contract or tort or from the principles of the common law, the legislature may not take it away. To permit the legislature to destroy vested rights of action is in violation of the due process clause, and since the enactment of the Fourteenth Amendment, such legislation is invalid thereunder, although prior to the passage of this amendment there was no federal constitutional limitation on the state legislatures or Congress preventing the destruction of vested rights of action. However, a litigant has no property in any particular remedy; all that he is guaranteed by the Fourteenth Amendment is the preservation of his substantial right to redress by some effective procedure. A statutory right of action, whether based on a state or federal statute, may be taken away after it has accrued or is being enforced, and if the repealing statute contains no saving clause the rights are lost to the holders. The right to abolish a cause of action has, in some cases, been based upon the fact that the particular cause of action does not exist at common law. The justification for this rule is that statutory causes are pursued with the full realization that the legislature may abolish the right to recover at any time." (emphasis added).

The Iowa Supreme Court relied on the underlined portion of the foregoing rules in Kemp v. Day & Zimmerman, Inc., 239 Iowa 829, 33 N.W.2d 569 (1948) to bar claims for overtime compensation and liquidated damages arising under the Portal-To-Portal Act, a federal statute, which was amended after the claims arose and after they had been reduced to judgments, but before the judgments became final by expiration of the time for appeal. The Court said at 239 Iowa 861: "It was the conclusion of the trial court that the judgments were final and could not be disturbed or affected by any change which the Portal-To-Portal Act effected in the Fair Labor Standards Act, which was in full force when the judgments were entered. The appellees urge the same proposition in this court. We are unwilling to go so far. In considering this proposition it is well to keep in mind, although appellees do not expressly contend to the contrary, that claims which an employee may have to overtime pay or liquidated damages, based solely and purely on the Fair Labor Standards Act of 1938, and particularly sections 206, 207, and 216(b) thereof, and not on a contract with his employer, are not 'vested rights' protected by the Fifth Amendment to the Constitution of the United States.The Fifth Amendment, rather than the Fourteenth Amendment, was implicated because a federal statute was involved. Like the Fourteenth Amendment, the Fifth has language prohibiting depriving any person of his property without due process of law. The Fifth Amendment of the Federal Constitution prevents the Federal Government or its agencies from depriving any person of his property without due process of law. The Fourteenth Amendment to the Federal Constitution, and all the various state constitutions, prevent any action by a state which would accomplish such deprivation. 16A Am.Jur.2d, Constitutional Law, 499, section 580. They are not contract rights or common-law rights. They are strictly statutory rights, arising under a statute enacted in the interest of commerce by Congress under the plenary and paramount power granted it by the commerce clause of the Constitution, Article I, section 8, clause 3. Having the power to enact such a statute, Congress necessarily had the power to limit its scope by amendment, or to repeal it, if in its supreme judgment it did not accomplish the object intended because of inherent defect, or because of misinterpretation by the judiciary of its purpose, or of the intent of Congress. And the fact that such statutory change destroys rights incidentally held by private persons in no way restricts the Congressional power. Such rights are not absolute, but conditional, and affected with the 'congenital infirmity' that Congress may take them away at any time in the proper exercise of its constitutional power. It is a long-settled rule that a statutory right of action whether based on a state or federal statute may be taken away after it has accrued or is being enforced; and if the repealing statute contains no saving clause, the rights are lost to the holders. 16 C.J.S., Constitutional Law, 675, section 254." See 3 A.L.R.2d Portal-To- Portal Act 1097 for cases citing rule.

Iowa has subsequently followed the rule in Needham PKNG. Co. v. Iowa Enys. Sec. Comm., 255 Iowa 437, 441, 123 N.W.2d 1 (1963) ("All parties are agreed that whatever rights appellants have, to receive unemployment benefits, are based solely upon and arise out of Chapter 96, Code of Iowa, and amendments thereto. No common-law or contractual relationship is involved. In such a situation the law is well settled that, so far as any constitutional question is involved, no vested rights exist and the legislature may amend, modify or repeal such legislation at will. If such repealing statute contains no saving clause, ordinarily it acts retrospectively and the rights of the holders are lost. 16 C.J.S., Constitutional Law, section 254; Kemp v. Day & Zimmerman, Inc., 239 Iowa 829, 33 N.W.2d 569.")

Three state jurisdictions in addition to the U.S. Supreme Court have considered and followed the rule in Kemp in the context of statutes repealing refund provisions. People v. Lindheimer, 371 Ill. 367, 21 N.E.2d 318 (1939); Southern Services Company v. Los Angeles County, 15 Cal.2d 1, 97 P.2d 963 (1940); Fulton Bag & Cotton Mills v. Williams, 212 Ga. 783, 95 S.E.2d 848 (1956); The Collector v. Hubbard, 79 U.S. 1, 20 L.Ed. 272 (1871).

In People v. Lindheimer, 371 Illinois 367, 21 N.E.3d 318 (1939), two taxpayers filed petitions in April, 1935 for refund of excess taxes erroneously paid in prior years. The refunds were sought pursuant to statute providing for the crediting, in subsequent years, or a refund of excess taxes paid on an over-assessed valuation of property for any year where the over-assessed valuation was ordered corrected and reduced by a competent tribunal. Upon certificates of error by the board of assessors admitting a mistake, the court corrected and reduced the assessed valuation. The trial court ordered substantial reductions in taxes for both plaintiffs. The relief granted was in the form of judgments for writs of mandamus, commanding a refund in one case, and a credit of taxes in subsequent years for excess taxes erroneously paid for a previous year. The petitions were filed in April, 1935. On July 5, 1935, the Illinois Legislature repealed the refund statute [section 268b of the Revenue Act] pursuant to which plaintiffs filed suit. The judgments in question were entered on July 23, 1938.

On appeal the Court framed the issues, pertinent to the issue now before this Court, as follows at 21 N.E.3d 320: "Appellants claim that appellees had no vested right under section 268b of the Revenue Act; that its repeal, without a saving clause, left them without any remedy ... They [appellees] further claim their rights under section 268b were vested and could not be divested by repeal."

Rejecting the "vested rights" argument of the taxpayers and reversing the trial court, the appellate court said at 21 N.W.2d 320 323: "We first notice the claim that appellees' rights were vested. This prompts an inquiry as to the source and nature of such rights. The obligation of the citizen to pay taxes is purely a statutory creation, and taxes can be levied, assessed and collected only in the method pointed out by express statute ... So, also, any right to a refund or a credit of taxes is purely of statutory origin, and in the absence of an authorizative statute, taxes voluntarily, though erroneously, paid, cannot be recovered, nor even voluntarily refunded by a county, although there may be justice in the claim. LeFevre v. County of Lee, 353 Ill. 30, 186 N.E. 536. Therefore, section 268b of the Revenue act is the exclusive source upon which any claim of a right by appellees to a refund or a credit must necessarily be based. When the legislature enacted section 268b it presumably knew our holding in the LeFevre case, and prior decisions, that taxes voluntarily paid could not be recovered and intended it as a remedial measure. Since such right or remedy applied only to one particular subject it must be held to be a special remedy ... That the legislature cannot pass a retrospective law impairing the obligation of a contract, nor deprive a citizen of a vested right, is a principle of general jurisprudence, but a right, to be within its protection, must be a vested right. It must be something more than a mere expectation based upon an anticipated continuance of the existing law. It must have become a title, legal or equitable, to the present or future enjoyment of property or to the present or future enjoyment of the demand, or a legal exemption from a demand made by another. If, before rights become vested in particular individuals, the convenience of the State induces amendment or repeal of the laws, these individuals have no cause to complain ... A retrospective statute affecting vested rights is very generally considered in this county as founded on unconstitutional principles and consequently inoperative and void; but this doctrine is not understood to apply to remedial statutes of a retrospective nature not impairing contracts or disturbing absolute vested rights ... The unconditional repeal of a special remedial statute without a saving clause stops all pending actions where the repeal finds them. If final relief has not been granted before the repeal goes into effect it cannot be granted afterwards, even if a judgment has been entered and the cause is pending on appeal. The reviewing court must dispose of the case under the law in force when its decision is rendered ... Appellees argue that the repealing statute is of doubtful constitutionality, but since we have held that no vested rights are involved, it is not necessary to consider that question."

In Southern Services Company v. Los Angeles County, 15 Cal. 2d 1, 97 P.2d 963 (1940), decided nine months after Lindheimer, the California Court followed Lindheimerin a factually similar context. Plaintiffs sued, pursuant to the California refund statute [section 3804] in effect at the time, to recover taxes alleged to have been illegally collected pursuant to an excessive tax rate adopted by the board of supervisors for the tax year 1933-1934 and recovered judgment. While the case was on appeal, the California Legislature amended section 3804 to prohibit refunds for any taxes voluntarily paid which were levied prior to January 1, 1939 and claimed to be erroneous or illegal because of errors in preparing the budget of governmental subdivisions. Defendants sought to dismiss the appeal and sought an order for a direction to the trial court to dismiss the action because of the amendment. Plaintiffs resisted, claiming that section 3804.1 violated the constitutional guarantees of due process and equal protection and the prohibition against the enactment of laws impairing contract and vested rights.

Defendants in Southern Services prevailed on their motions. In holding for defendants the Court said at 97 P.2d 967, 969 970, 971: "The effect of that legislative action [passage of amendment of section 3804.1], pursuant to cases hereinafter cited, was to cut off the remedy to the plaintiff and to terminate the action herein unless the plaintiff had a vested property interest in or a contractual right to recover the claimed excessive portion of the taxes so paid. It is the settled law of this state that illegal taxes voluntarily paid may not be recovered by the taxpayer in the absence of a statute permitting a refund thereof; and in the absence of such statute only illegal taxes paid under duress, coercion or compulsion are considered to have been involuntarily paid and therefore recoverable ... The foregoing discussion and review lead to the conclusion that the plaintiff possessed no right or remedy pursuant to section 3804 of the Political Code which existed apart from the statute itself and which the legislature could not cut off by repeal. The general relationship of sovereign and taxpayer is not founded on nor does it create any contractual rights ... A right to a credit or refund of taxes is purely statutory ... The legislature may withdraw such a statutory right or remedy, and a repeal of such a statute without a saving clause will terminate all pending actions based thereon ... Our conclusion that the legislature had the power to enact a statute which would cut off the right theretofore accorded the plaintiff and terminate pending actions under section 3804 is also supported by the case of People ... v. Lindheimer, 371 Ill. 367, 21 N.E.3d 318, 320 ... In case before us, therefore, the legislature was acting within its constitutional powers when it withdrew the right to a refund of such illegal taxes and cut off the remedy by action including all pending actions, saving only the common law right to a refund of taxes involuntarily paid ... We conclude that the application of the provisions of chapter 159 of the 1939 statutes to terminate the action here pending violates none of the constitutional rights or guarantees invoked by the plaintiff."

In Fulton Bag & Cotton Mills v. Williams, 212 Ga. 783, 95 S.E.2d 848 (1956), the taxpayer filed petition seeking to recover amount of income tax overpaid for the fiscal year November 30, 1951. On February 15, 1952, the taxpayer, a Georgia corporation, filed its income tax return for its fiscal year ending November 30, 1951 and paid tax of $101,378.81. At that time the taxpayer, in computing its net income, was permitted by statute to deduct Federal income taxes paid or accrued within the taxable year. On February 15, 1952 the Georgia Legislature amended its taxing statutes to allow loss carry overs and carry backs. No change was made in the law allowing deductions from gross income for federal taxes paid. On December 18, 1953, the Georgia Legislature amended its taxing statutes by disallowing, effective for all taxable years on or after February 15, 1952, income taxes as a deduction in computing a net operating loss. The revenue commissioner denied the refund maintaining that the act of December 18, 1953 prohibited deduction of Federal income taxes in the computation of net operating loss. The issue as framed on appeal is stated at 95 S.E.2d 851: "The controlling and decisive question is whether or not the taxpayer, by reason of the carry back provision of the acts of 1952 ... became vested with the right to reopen its tax liability for the year 1951 and carry back and deduct, against the tax paid for 1951, a loss computed on its 1952 income, by deducting Federal income taxes paid in 1952, so as to render the act of December 18, 1953, forbidding retroactively to February 15, 1952, a deduction of Federal income taxes paid in computing its net operating loss, violative of the constitutional provision against the enactment of retroactive laws."

Answering the issue in the negative the Court in Fulton Bag & Cotton Mills said at 851, 852: "A person has no vested right in statutory privileges or exemptions ... The State in taxing income is not required by any provision of the State Constitution to provide for or authorize deductions, from taxable income, of Federal taxes paid ... Such allowances and deductions of Federal income taxes paid is not a right, but a privilege accorded to the taxpayer as a matter of legislative grace ... The legislature, in allowing deductions in the computation of taxes to be paid, confers no vested rights ... Until final judgment upon a pending action, the repeal of the statute which gives the right of action, or upon which the suit is predicated, destroys the right of action, and the action itself abates ... The fact that the taxpayer had filed his petition for refund and the same was pending at the time of the passage of the act of December 18, 1953, denying to the taxpayer the privilege of deducting Federal income taxes paid in computing net operating loss for carry-back purposes for any taxable year ending subsequently to February 15, 1952, did not create any vested right, since the revenue commissioner was required to apply the law existing at the time he passed upon the application for refund. It has been held that the State, in authorizing the refund of taxes legally collected, may provide the conditions under which the refund may be made, and may repeal a statute authorizing such refund, taking away the right of the taxpayer's claim to a refund and the authority of public officers to make the same, and by such action terminate all pending actions. People ex rel. Eitel v. Lindheimer, 371 Ill. 367, 21 N.E.2d 318, 124 A.L.R. 1472, appeal dismissed People ex rel. Eitel v. Toman, 308 U.S 505, 60 S.Ct. 111, 84 L.Ed. 432; Southern Service Co., Limited v. Los Angeles County, 15 Cal.2d 1, 97 P.2d 963, appeal dismissed 310 U.S. 610, 60 S.Ct. 979, 84 L.Ed 1388. It was held in these cases that the right to a credit or refund of lawfully collected taxes is purely statutory, and the legislature may withdraw such statutory right or remedy, and the repeal of such statute without a saving clause will terminate all pending actions based thereon, and the reviewing court must dispose of the case under the law in force when its decision is rendered."

Finally, in The Collector v. Hubbard, 79 U.S. 1, 20 L.Ed. 272 (1871), the U.S. Supreme Court recognized Congress' power to effect taxpayer's right to refunds retrospectively. In this case, the taxpayer brought action to recover a federal tax illegally paid under protest following the procedure then established in the law. After the taxpayer filed suit Congress passed the following act: "That no suit shall be maintained in any court for the recovery of any tax alleged to have been erroneously or illegally assessed or collected, until appeal shall have been duly made to the Commissioner of Internal Revenue, according to the provisions of law in that regard, and the regulations of the Secretary of the Treasury established in pursuance thereof, and a decision of said commissioner shall be had thereon, unless such suit shall be brought within six months from the time of said decision, or within six months from the time this act takes effect." Answering the taxpayer's argument that this act was prospective only and not intended to affect the rights of parties already vested, the U.S. Supreme Court said at 79 U.S. 13, 14, 15, 16: "Prior to the passage of the act of the 13th of July, 1866, it is quite clear that the taxpayer, if he was illegally assessed, might maintain an action of assumpsit against a collector to recover back the amount, if he paid it under protest, although he had not taken any appeal to the Commissioner of Internal Revenue ... Remedies of the kind, given by Congress, may be changed or modified, or they may be withdrawn altogether at the pleasure of the law-maker, as the taxpayer cannot have any vested right in the remedy granted by Congress for the correction of an error in taxation ... Suits for such causes of action are absolutely prohibited until the taxpayer shall appeal to the Commissioner of Internal Revenue, and until the appeal has been decided, unless the decision is postponed longer than six months, in which case he is at liberty to sue within one year from the time when his appeal was taken ... Authority was vested in the commissioner by the prior act to remit, refund, and pay back, 'on appeal to him made,' all duties erroneously or illegally assessed or collected, and all duties that appeared to be unjustly assessed or excessive in amount. (emphasis in original). Appeals were permitted by that act, though not as a condition to a right of action, but inasmuch as the right of appeal and the right of action were conferred by the same act, the court is of the opinion that it was entirely competent for Congress to add new conditions to the exercise of that right whenever in its discretion the public interest might require such additional regulation ... Sufficient has already been remarked to show that the third proposition ["Congress cannot affect this right of action. As soon as the money was illegally collected and paid under duress, a right to recover it vested in the plaintiff with which Congress could not interfere."] of the plaintiff cannot be sustained, as a party cannot have any vested right in a remedy conferred by an act of Congress to prevent Congress from modifying it or adding new conditions to its exercise." (emphasis in original).

As is true in Illinois, California and Georgia no common law action exists in Iowa to recover illegally exacted taxes voluntarily paid. The action exists only if these taxes are involuntarily paid. If a taxpayer voluntarily pays illegally exacted taxes, his only remedy is pursuant to statute.

Kraft v. City of Keokuk, 14 Iowa 86 (1862);

Newcomb v. Davenport, 86 Iowa 291 (1892); H. L. & B. Co. v. Marion, 110 Iowa 468, 471 (1900) ("It seems to be well settled that taxes voluntarily paid cannot, in the absence of statute, be received back."); Slimmer v. Chickasaw County, 140 Iowa 448, 453 (1908) ("The action is bottomed upon section 1417 of the Code, which, so far as material, reads as follows: 'The board of supervisors shall direct the treasurer to refund to the taxpayer any tax or portion thereof found to have been erroneously or illegally exacted or paid, with all interests and costs actually paid thereon.' Under this section it has been held in many cases that a taxpayer may by action recover back taxes erroneously or illegally exacted or paid, even though paid voluntarily and without protest ... At common law no such action would lie, for the reason that taxes voluntarily paid, although erroneous or illegal, could not be recovered back ... So that, if there be any right of action at all, it exists by reason of the statute quoted.").

In Kraft, supra, the taxpayer had voluntarily paid a liquor license tax of $200 pursuant to a statute which the Iowa Supreme Court subsequently declared unconstitutional. In disallowing the taxpayer's attempted recovery, in the absence of statute authorizing a tax refund, the Court said at 14 Iowa 87: "The claim is based upon no charge of fraud, duress, deceit, or even mistake of fact, but is founded alone upon the idea of a mistake in law, unsupported by any principle of conscience, equity or morality; in other words, that the plaintiff was ignorant that the act of the legislature referred to was inoperative and void when he paid to the city of Keokuck the $200 aforesaid, for the privilege of vending intoxicating liquors for the term of six months. The law does not permit him to allege his ignorance, and make it the foundation of his right to recover back the money. The principle upon which courts refuse to relieve mistakes in law, is, we suppose, the fact that the law presumes every man to be cognizant not only of what are its provisions in force, but how far they are valid and operative ... The act against which he seeks relief is his own voluntary act, by which he must now abide."

The principle of nonrecovery of voluntarily paid taxes in absence of statute authorizing such recovery is a fundamental one in American law. In 3 Cooley, Taxation, § 1282, pp. 2564-5 (4th Ed. 1924), the author, a commentator on state taxation, says: "Where voluntary payments are not recoverable, it is immaterial that the tax or assessment has been illegally laid, or even that the law under which it was laid was unconstitutional. The principle is an ancient one in the common law, and is of general application. Every man is supposed to know the law, and if he voluntarily makes a payment which the law would not compel him to make, he cannot afterwards assign his ignorance of the law as a reason why the state should furnish him with legal remedies to recover it back. Ignorance or mistake of law by one who voluntarily pays a tax illegally assessed furnishes no ground of recovery."

Again, at page 1281, Cooley states: "A mistake of law occurs where a person is truly acquainted with the existence or nonexistence of facts but is ignorant or comes to an erroneous conclusion as to their legal effect, and includes ignorance of the law."

Thus, any rights Plaintiffs may have flow from the statutory refund procedures unless they have established they paid the taxes in question involuntarily.

The Iowa Supreme Court in a number of early tax cases has considered the question of what constitutes an involuntary payment. In Newcomb v. City of Davenport, 86 Iowa 291, 293, 27 N.W. 241 (1892) the Court held that payment under protest did not constitute an involuntary payment. What the Court required was payment upon "compulsion, as, for example, to prevent the immediate seizure of his goods, or the arrest of the person." (emphasis in original). But see Winzer v. The City of Burlington, 68 Iowa 279, 283 (1886) ("The payments were made in each year just before the tax became delinquent under the law. The treasurer endorsed upon the receipts these words: 'City taxes paid under protest.' There is a conflict of authority upon the question whether a payment under protest is voluntary or compulsory. [citations omitted]. These and other cases hold that there must be actual or threatened exercise of power by the party exacting or receiving the payment, from which the other party 'has no other means of immediate relief than by advancing the money.' On the other hand, it has been held that 'taxes illegally assessed and paid may always be recovered back if the collector understands from the payee that the taxes are regarded as illegal, and that suit will be instituted to compel the refunding of them.' [citations omitted]. We think that where a tax is not merely informal and irregular, but is illegal and void as being levied upon property not liable to taxation, and the owner of the property makes payment under protest, the better rule is that he may recover it back. Such seems to be the policy of our law.") and Thomas v. City of Burlington, 28 N.W. 480, 69 Iowa 140, 141 (1886) ("There was no distraint or seizure of property, but the taxes were paid under protest, and such fact was indorsed by the treasurer upon the receipt. It is insisted that the payment was voluntary, and therefore there cannot be a recovery. It has been held otherwise in the recent use of Winzer v. City of Burlington, 68 Iowa 279.")

The Court concludes there is no genuine issue of fact as to whether the Plaintiffs paid the taxes voluntarily. Reasonable minds would not differ in concluding, under the record of this case, that Plaintiffs paid the taxes voluntarily. This conclusion is warranted under either the "compulsion" requirement of Newcomb or the less stringent requirement under Winzer.

The stipulation of facts, the pleadings and affidavits on file do not indicate the State ever threatened to seize any property of the Plaintiffs for failure to pay the tax. Nor do these documents indicate Plaintiffs were ever, since 1970, paying the taxes "under protest" or by objection. See paragraph 16 of the Stipulation of Facts wherein Plaintiffs conceded that prior to March 29, 1983, they never filed a formal claim for refund of Iowa sales and use taxes paid on newsprint and ink components with the Iowa Department of Revenue; they never intentionally failed or refused to pay Iowa sales and use taxes on their purchases of newsprint and ink components; they never commenced legal action for declaratory judgment or injunctive relief with respect to Iowa sales and use taxes paid on newsprint and ink components.

Absent a showing of involuntary payment, Plaintiffs must necessarily ground their claims on the statutory procedures for refund. Under these circumstances, Kemp v. Day and Zimmerman, supra, would seem to control. Plaintiffs' claims for refunds are not "vested rights" since they were not reduced to final judgment before passage of Senate File 538. Lacking the attribute of "vested rights", the refund claims seemingly do not rise to the level of "property" protected by the Fourteenth Amendment of the Constitution of the United States unless the recent case of Logan v. Timmerman Bush Co., 455 U.S. 422, 102 S.Ct. 1148 (1982) dictates differently.

In Logan, the Plaintiff filed a complaint before the Illinois Fair Employment Practices Commission complaining that he had been discriminated against in his employment on the basis of a "physical ... handicap unrelated to ability," in violation of the Illinois Fair Employment Practices Act. Following the filing of the charge, the state statute provided that the Commissioner was to convene a factfinding conference on the claim within 120 days. Due to inadvertence, however, the Commission failed in plaintiff's case to convene its factfinding conference within the 120 day period. The Illinois Supreme Court held this time limitation was jurisdictional in nature, could not be waived and forever barred plaintiff from bringing his state-created employment discrimination.

Employing a procedural due process analysis, the U.S. Supreme Court reversed. At the outset, it held plaintiff was entitled to the protection of the Due Process Clause because his state-created right of action constituted a "species of property protected by the Fourteenth Amendment." Id., 102 S.Ct. at 1154. Such a property right occurs under state law, the Court implied, whenever an aggrieved "claimant has more than an abstract desire or interest in redressing his grievance" - that is, whenever "his right to redress is guaranteed by the State, with the adequacy of his claim assessed under what is, in essence, a 'for cause' standard, based upon the substantiality of the evidence." Id., at 102 S.Ct. 1155.

The Court quickly disposed of defendant's argument that strict compliance with the 120-day limitation constituted a substantive element of the cause of action for employment discrimination and that the State, not being required to enact such a statute at all, was entitled to place any conditions on the substantive scope of relief which it chose. "Of course," the Court observed, citing Martinez v. California, 484 U.S. 277, 100 S.Ct. 553 (1980), "the State remains free to create substantive defenses or immunities for use in adjudication - or to eliminate its statutorily created causes of action altogether - just as it can amend or terminate its welfare or employment programs." Id. Nevertheless, it held, "[t]he 120-day limitation in the FEPA ... involves no such thing. It is a procedural limitation on the claimant's ability to assert his rights, not a substantive element of the FEPA claim." Id.

Finally, the Court addressed the adequacy of the procedures provided by the State for the vindication of FEPA claims under federal constitutional standards and concluded that they did not pass muster. Observing that plaintiff's interest in retaining his job and redressing the alleged discrimination was substantial, that the deprivation was final, that the random nature of the requirement presented an "unjustifiably high risk that meritorious claims [would] be terminated" and that the state interests furthered by the requirement were "insubstantial," the Court held that the procedure by which a claim could be terminated through no fault of the claimant failed to meet the minimum requirements of procedural due process." What the Fourteenth Amendment ... require[s]," the Court held," is an opportunity ... granted at a meaningful time and in a meaningful manner" ... "for [a] hearing appropriate to the nature of the case" ... It is such an opportunity that Logan was denied."

Id. at 102 S.Ct. 1159 (citations omitted).

In Hixon v. Durbin, 560 F.Supp. 654, 661 (E.D.Pa. 1983), the Court's discussion of Logan and two other federal cases on what constitutes "property" crystalizes the meaning of Logan: "The principal to be derived from Logan[Logan v. Zimmerman Brush Co., 455 U.S. 422, 102 S.Ct. 1148 (1982)], Winsett [Winsett v. McGinnes, 617 F.2d 996 (3rd Cir. 1980)], and Three Rivers [Three Rivers Cablevision, Inc. v. City of Pittsburgh, 502 F.Supp. 1118 (W.D.Pa. 1980)] is a simple one. When state law provides that a given benefit which constitutes 'property' or 'liberty' (i.e., money damages to redress unlawful discrimination, admission into a work-release program, or a cable television franchise) shall be conferred upon those who take the requisite procedural steps and meet the requisite substantive standards, the right of an individual who has taken the requisite procedural steps to have his claim of entitlement to the benefit decided, not arbitrarily, but in accordance with state law, itself constitutes an interest protected by the due process clause. Because the interest does not arise until the individual claiming entitlement to the benefit has taken the requisite procedural steps (i.e., has filed a charge of discrimination with the appropriate agency, or has filed a facially adequate application to a work-release program, or has bid for a contract which municipality is required to award to the lowest responsible bidder), the class of those entitled to the protection of the due process clause is, in each case, appropriately limited. In Mr. Hixon's case, there was no law requiring the Board to offer a contract for financial advice to the lowest bidder, but there was a law authorizing the Board to contract for the services of a financial consultant as it deemed advisable. While Mr. Hixon had no protected property interests so long as he was merely seeking a contract with the Board, a protected property interest arose after the Board formally voted, pursuant to its statutory authority, to enter into contracts with him. At that point, Mr. Hixon was entitled to the substantive benefit of those contracts unless they contained one or more of the flaws defendants were responsible for detecting in the course of their statutorily mandated review. Plaintiff's claim that he was deprived of due process of law by the actions of defendants Bartle and Waldman is based on his charge that defendants refused to approve his contracts on grounds which exceeded their statutory and regulatory authority. As the Third Circuit noted in Winsett, supra, the failure of state officials to make decisions affecting property interests according to the express criteria governing those decisions constitutes a violation of procedural due process as a deprivation of fundamental fairness ... Thus, if the undisputed facts show that defendants refused to approve plaintiff's contracts on grounds which exceeded their statutory and regulatory authority, plaintiff is entitled to partial summary judgment on the issue of liability, unless defendants can establish an affirmative defense. On the other hand, if the undisputed facts show that defendants acted within their authority, they are entitled to summary judgment in their favor."

Utilizing the same analysis in this case, the Court concludes that all claims for refunds filed before May 19, 1983, date of passage of Senate File 538, were "property" within the meaning of the due process clause of the Fourteenth Amendment of the U.S. Constitution and protected by that clause. Plaintiffs who filed before Senate File 538 went into effect took the requisite procedural steps required by the refund statute then in effect and thus were entitled to have their claims of entitlement to the benefit decided in accordance with that statute. As to these Plaintiffs Senate File 538 is unconstitutional because it attempts to deprive them of their property without due process of law. These Plaintiffs must be given the opportunity to present their claims of entitlement pursuant to the statutory refund procedures in effect prior to the passage of Senate File 538.

Continuing with the analysis, the Court concludes that all claims for refunds filed after May 19, 1983, date of passage of Senate File 538, were not "property" within the meaning of the due process clause of the Fourteenth Amendment of the U.S. Constitution and consequently not protected by that clause. Plaintiffs holding these claims did not take the requisite procedural steps required by the refund statute then in effect. Thus, these Plaintiffs were not entitled to have their claims of entitlement to the benefit decided in accordance with that statute as far as their due process challenge is concerned. Kemp v. Day & Zimmerman, supra, controls, absent any other constitutional violation as claimed by these Plaintiffs.

B. Does Senate File 538 Deny Plaintiffs Equal Protection of the Law?

All Plaintiffs have asserted an equal protection challenge under State and Federal Constitutions.

The 14th Amendment "equal protection clause" of the U.S. Constitution provides simply that "No state shall ... deny to any person within its jurisdiction the equal protection of the law." The meaning of the "equal protection clause" is that persons under like circumstances shall be given equal protection and security in the enjoyment of personal and civil rights, the acquisition and enjoyment of property, the endorsement of contracts and the prevention and redress of wrongs, and shall be subject to similar taxes and penalties. In brief, it does not mean that legislation must treat every person exactly the same way, but merely requires that persons similarly situated receive equal treatment. Brown Enterprises v. Fultor 192 N.W.2d 773, 776 (Iowa 1972).

The equal protection clause of the Iowa Constitution (Art. 1 § 6) puts substantially the same limitation on state legislation as does the equal protection clause of the Fourteenth Amendment of the Federal Constitution.

City of Waterloo v. Selden, 251 N.W.2d 506, 509 (Iowa 1977).

The equal protection clause does not take away from the state the power to classify but admits of the exercise of a wide scope of discretion in that regard, and, in general, avoids what is done only when it is without any reasonable basis, and therefore is purely arbitrary. A classification must be reasonably related to the legislative goal sought to be established. Lunday v. Vogelmann, 213 N.W.2d 904, 907 (Iowa 1973).

The nature of the burden upon one attacking a statute on equal protection grounds depends upon whether the classification is one subject to close judicial scrutiny or traditional equal protection analysis. Where the classification is not based upon sex, race, alienage or national origin, or, does not involve fundamental rights, it is subject to the traditional equal protection analysis. Under this analysis the classification must be sustained unless it is patently arbitrary and bears no rational relationship to a legitimate governmental interest. Lunday, supra, at 907. In challenging the statute the challenger must establish its invalidity by negating every reasonable hypothesis upon which it might be sustained.

State v. Robbins, 257 N.W.2d 63, 67 (Iowa 1977).

But, where the classification affects fundamental rights or is based upon a suspect classification and the challenger makes out a prima facie case, the burden shifts to the state to show a compelling interest to rebut the presumption of unconstitutionality. Alexander v. Louisiana, 405 U.S. 625, 92 S.Ct. 1221, 1226 (1972).

These principles apply whether or not the discrimination is apparent on the face of the statute or is apparent in its application. Where it is not apparent, it is a de facto discrimination and the challenger must first prove there is discrimination in fact. Discrimination in fact (also called "discriminatory effect" or "result", Akins v. State of Texas, 325 U.S. 398, 65 S.Ct. 1276, 1278 (1945)) can be established in three ways: 1) Subjectively - by showing it was the intent of a statute's drafters to engage in a prohibited discrimination; Wright v. Rockefeller, 376 U.S. 53, 84 S.Ct. 603 (1964)(upholding New York congressional apportionment statute against claims that district lines had been racially gerrymandered because challengers failed to prove New York Legislature "was either motivated by racial considerations or in fact drew the districts on racial lines;" plaintiffs had not shown statute was "product of a state contrivance to segregate on the basis of race or place of origin".); Loving v. Commonwealth of Virginia, 388 U.S. 1, 87 S.Ct. 1817 (1967); 2) Objectively (intent) - by showing that there could be no governmental reasons for the classification other than to discriminate, Gomillion v. Lightfoot, 364 U.S. 339, 81 S.Ct. 125 (1960); and 3) Objectively (effect) - by showing that a prohibited discrimination results even assuming that the government did not intend it, Palmer v. Thompson, 403 U.S. 217, 91 S.Ct. 1940 (1971), Wright v. Council of Emporia, 407 U.S. 451, 92 S.Ct. 2196 (1972), Chance v. Board of Examiners, 458 F.2d 1167, 1176-1177 (2nd Cir. 1972). However, the Supreme Court has apparently shifted its approach in this last respect. Specifically in Washington v. Davis, 426 U.S. 229, 96 S.Ct. 2040 (1976), black police academy applicants challenged a verbal skills test as being racially discriminatory in effect. The Court held that a racially discriminatory impact alone would not invalidate the test; a racially discriminatory purpose must be proved.

When utilizing the rational basis analysis, the Court's role is limited. The Court simply examines the legislative classification to determine whether it is conceivable that the classification bears a rational relationship to an end of government which is not prohibited by the Constitution. City of Charlotte v. Local, 426 U.S. 283, 96 S.Ct. 2036 (1976).

When utilizing the strict scrutiny analysis, the Court's role is much greater than under the rational basis analysis in that the Court will not defer to the legislative determination, but will independently examine the classification to determine whether a compelling government interest overrides an infringement of a fundamental constitutional right or justifies a suspect classification. In examining the classification, the Court considers the facts and circumstances behind the law, the interests which the State claims to be protecting, and the interests of those who are disadvantaged by the classification. Williams v. Rhodes, 393 U.S. 29, 89 S.Ct. 5, 10 (1968). Further, when the Court reviews statutes under the strict scrutiny analysis, the general presumptions of constitutionality afforded state statutes and the traditional approval given state classifications if the Court can conceive of a "rational basis" for the distinctions made are not applicable.

The U.S. Supreme Court has defined "fundamental rights" as, at minimum, those whose source is explicitly or implicitly guaranteed by the United States Constitution, Plyler v. Doe, 457 U.S. 202, 217, 102 S.Ct. 2382, 2395 n. 15, (1982); San Antonio Independent School District v. Rodriguez, 411 U.S. 1, 93 S.Ct. 1278, 1296-1297 (1973). Any statute which impinges upon these rights triggers strict scrutiny for Fourteenth Amendment equal protection analysis.

Thus, the threshold issue in equal protection challenge is the type of scrutiny to be given challenged activity. Mills v. State, 308 N.W.2d 65, 66 (Iowa 1981).

The first question presented by Plaintiffs' equal protection challenge to Senate File 538 is whether it impinges upon a fundamental right thus triggering a strict scrutiny analysis.

In Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2697 (1972) the Court observed: "For at least a quarter-century, this Court has made clear that even though a person has no 'right' to a valuable governmental benefit and even though the government may deny him the benefit for any number of reasons, there are some reasons upon which the government may not rely. It may not deny a benefit to a person on a basis that infringes his constitutionally protected interests - especially, his interest in freedom of speech. For if the government could deny a benefit to a person because of his constitutionally protected speech or associations, his exercise of those freedoms would in effect be penalized and inhibited. This would allow the government to 'produce a result which [it] could not command directly.' Speiser v. Randall, 357 U.S. 513, 526, 78 S.Ct. 1332, 1342, 2 L.Ed.2d 1460. Such interference with constitutional rights is impermissible. We have applied this general principle to denials of tax exemptions, Speiser v. Randall, supra ..."

In Speiser the Court said at 78 S.Ct. 1338: "To deny an exemption to claimants who engage in certain forms of speech is in effect to penalize them for such speech. Its deterrent effect is the same as if the State were to fine them for this speech. The appellees are plainly mistaken in their argument that, because a tax exemption is a 'privilege' or 'bounty', its denial may not infringe speech. This contention did not prevail before the California courts, which recognized that conditions imposed upon the granting of privileges or gratuities must be 'reasonable.' It has been said that Congress may not by withdrawal of mailing privileges place limitations upon the freedom of speech which if directly attempted would be unconstitutional ... So here, the denial of a tax exemption for engaging in certain speech necessarily will have the effect of coercing the claimants to refrain from the proscribed speech."

As Plaintiffs point out at page 47 of their Brief: "It is difficult to imagine a statute which discriminates more broadly against the exercise of fundamental rights than does Senate File 538. Senate File 538's discrimination against rights whose source is explicitly or implicitly guaranteed by the United States and Iowa Constitutions is, for all intents and purposes, definitional; the statute disallows any 'credit, action or claim for refund of sales and use taxes voluntarily paid ... to the extent that the credit, action or claim for refund is based upon an alleged mistake of law regarding the validity or legality under the laws or Constitution of the United States or under the Constitution of the State of Iowa' of the sales and use taxes."

Plaintiffs correctly point out that taxpayers who wish to challenge their sales or use tax liability on constitutional grounds are exercising their fundamental rights and the State has interfered with that exercise by requiring such taxpayers, in the future, to comply with the common law requirement to pay their taxes "involuntarily" and sue for refunds and, as to past claims, by denying any remedy whatsoever. Taxpayers whose challenges are based upon Iowa law, or upon interpretation of statutes or regulations, or upon mistake of fact, face no such obstacles. The State, in effect, by withdrawing the refund procedure in Senate File 538 is placing limitations on fundamental rights which if directly attempted would be unconstitutuional - the very thing comdemned in Perry and Speiser, supra. The State seemingly recognizes this as witnessed by a statement attributed to its counsel Griger: "If we only cut off refunds to the press, it would be unconstitutional. If we cut off the rights of all taxpayers to refunds, we might be okay." (emphasis supplied). Stip.par. 14F.

It is clear to this Court that the intended purpose of Senate File 538 was to cut off sales and use tax refunds premised on First Amendment violations as set out in the Minneapolis Star and Tribune Case, supra. Several stipulated facts support this conclusion. First, the only constitutional challenges to the sales and use tax which were pending when Senate File 538 was enacted were the claims of newspaper publishers based upon Minneapolis Star and Tribune Company. Stip.par. 17b. Second, Dennis C. Prouty, Director of the Legislative Fiscal Bureau, acting upon information supplied by the Iowa Department of Revenue, submitted a Fiscal Note explaining the fiscal impact of the bill in this fashion: "The effect of this bill is to protect the state treasury from having to make refunds on the sales and use tax imposed on newsprint and ink, a tax similar to one imposed by the State of Minnesota since declared unconstitutional by the United States Supreme Court." Stip.par. 14k and Exhibit "M".

The Court thus concludes plaintiffs have made out a prima facie case that Senate File 538, by definition and by its legislative purpose, establishes a classification affecting fundamental rights. Consequently, the burden shifts to the State to show a compelling interest justifying its classification.

The State's justification is a simple one - "fiscal necessity". Standing alone, this justification is not sufficient. On this point the U.S. Supreme Court held in Plyler v. Doe, 457 U.S. at 227 (1982): "Of course, a concern for the preservation of resources standing alone can hardly justify the classification used in allocating those resources. Graham v. Richardson, 403 U.S. 365, 374-75, 29 L.Ed.2d 534, 91 S.Ct. 1848 (1971). The State must do more than justify its classification with a concise expression of an intention to discriminate.

Examining Board v. Flores de Otero, 426 U.S. 572, 49 L.Ed.2d 65, 96 S.Ct. 2264 (1976)." Cf. Minneapolis Star & Tribune, 103 S.Ct. at 1372: "The main interest asserted by Minnesota in this case is the raising of revenue. Of course that interest is critical to any government. Standing alone, however, it cannot justify the special treatment of the press, for an alternative means of achieving the same interest without raising concerns under the First Amendment is clearly available: the State could raise the revenue by taxing businesses generally, avoiding the censorial threat implicit in a tax that singles out the press."

The Court concludes the State has failed to meet its burden to show compelling interest justifying its classification.

In summary, Senate File 538, on its face impinges upon the exercise of fundamental rights. The State has failed to establish any compelling interest justifying its classifications. For these reasons, the Court concludes Senate File 538 denies Plaintiffs equal protection of the laws and must be invalidated under both the United States and Iowa Constitutions.

III

Whether Section 2 of 1970 Iowa Acts, Ch. 1201 Is Severable From Sections 1 and 3

Plaintiffs challenge Defendants' standing to challenge. The constitutionality of Section 2 of 1970 Iowa Acts, ch. 1201Exhibit H contains the full text., now incorporated in §§ 422.45(9), the Code of Iowa. Plaintiffs are correct in asserting it is a well established rule ministerial officials and political subdivisions are creatures of a State lack standing to challenge the constitutionality of a legislative act. Polk County v. Iowa State Appeal Bd., 330 N.W.2d 267, 271, 272 (Iowa 1983). The reasons for this long standing rule are explained in Bd. of Supervisors of Linn Cty. v. Dept. of Revenue, 263 N.W.2d 227, 233 ("This rule is based largely upon governmental policy. It rests upon the theory that the court should accept as final the acts of the Legislature and discourage attacks upon them except where necessary to protect the private interests of the individual asserting invalidity and peculiarly and particularly affected thereby. Officials acting ministerially are not clothed with judicial authority. To permit them to refuse to perform their duty on the ground that the commanding law is unconstitutional would be a dangerous practice, in that they who have only ministerial duties would be raising questions affecting the rights of third persons while they themselves would have no direct interest in the question and could not in any event be made responsible.

The Court alluded to the following exceptions recognized in other jurisdictions in Bd. of Sup'rs. of Linn Cty. v. Dept. of Revenue, supra, 263 N.W.2d at 233: 1) Where the subject matter of the challenged statute is of particularly major public importance; 2) Where the public officer has a duty to examine legislation or the purpose thereof in connection with his regular duties; 3) Where an official would be personally liable for implementing a statute later held invalid.

The Court determined that most of the cases, where the exceptions were applied, involved disbursement or control of public funds. In Bd. of Sup'rs. of Linn Cty., supra, the procedure for intercounty equalization of property tax valuations was being challenged but the Court noted this was not of such moment as to justify an exception to establish suit capacity requirements. The Court further noted the statute in question vested this auditor with no relevant discretion nor did he have a duty to interpret legislation. Finally, the Court noted there was no plausible basis on which the auditor or assessor could incur personal liability by complying with the new procedure if it were later determined to be unconstitutional. After making these observations the Court said at page 234: "Because neither of the two above noted exceptions is presently helpful to plaintiffs, it is unnecessary to decide whether such exceptions should now be adopted." Thus, the Iowa Supreme Court did not close the door for the adoption of the exceptions.

The Court went on to hold that plaintiffs had no sufficient personal interest or stake in the outcome of the controversy to insure the dispute would be presented in a concrete, adversarial context - the traditional test of constitutional standing. The Court noted individual taxpayers and property owners had standing since it was their interests allegedly infringed by the statute and they were in the suit and in a position to raise the constitutional questions. Under these circumstances, the Court held, the "narrowly defined jus tertii exceptions to the general standing rule are not ordinarily available", citing Iowa Movers & Warehousemen's Ass'n. v. Briggs, 237 N.W.2d 759, 772-773 (Iowa 1976).

In the instant case, this Court concludes, for a number of reasons, it has the authority, and should consider the separability issue.

First, the legislation in question involves the disbursement and control of public funds. Millions of dollars of state funds are at stake relative to the refunds sought, and relative to future enforcement of the sales tax laws. Under these circumstances, the subject matter of Section 2 is of "particularly major public importance". The exception to the general rule should apply on this basis.

Second, there are no taxpayers or other persons with sufficient interest in this lawsuit to challenge Section 2 as there were in Bd. of Sup'rs. of Linn Cty. v. Dept. of Revenue, supra. Under these circumstances, Section 2 may never be challenged. There is a close relationship between the Iowa Department of Revenue and taxpayers under circumstances where potentially millions of dollars of state revenue would not be collected because no taxpayer comes forward to challenge Section 2. This close relationship is a sufficient basis to allow the Iowa Department of Revenue the right to assert the taxpayers' rights under the doctrine of standing to assert constitutional jus tertii. See Iowa Movers & Warehousemen's Ass'n v. Briggs, supra, 237 N.W.2d at 772.

Third, the first two reasons assume the issue of constitutionality of Section 2 is raised as a result of the Defendants' actions. However, upon closer analysis this assumption is not warranted. Defendants are correct in pointing out Plaintiffs are the ones suing to declare Sections 1 and 3 of ch. 1201 unconstitutional and it is the Court's duty to determine the separability issue because it has declared the two sections (1 and 3) unconstitutional. If the Court concludes Section 2 is not severable from Sections 1 and 3 it must invalidate it along with Sections 1 and 3. Separability questions are essentially questions of statutory construction rather than constitutional. State v. Blyth, 226 N.W.2d 250, 262 (Iowa 1975) ("Whether the valid and the invalid parts of a statute are independent and separable, or interdependent, is a question of construction and of legislative intent, as indicated by the words employed and the considerations underlying the enactment of the statute, and the question is not one of legislative power."); State v. Monroe, 236 N.W.2d 24, 36 (Iowa 1975) ("The converse of the above propositions [rules of statutory construction relative to separability] acts as a limit on our power to partially invalidate a statute and leave the constitutionally inoffensive portions in force. If it appears the legislature probably would not have enacted the statute at all if the invalid part had been eliminated, then the whole must fall." Court undertook on its own to determine whether whole statute should fall after declaring a portion unconstitutional.)

The rational behind the Court's duty to determine separability questions once it has declared a portion of a statute unconstitutional is explained in Monroe, supra, 236 N.W.2d at 36: "We reject the alternative of striking down § 240.410 in its entirety, leaving § 204.401 to stand on its own. Compelling reasons render such action inappropriate. We discern a legislative scheme linking together § 204.401 and § 204.410. The legislature obviously intended to treat accommodation deliverers less harshly than non-accommodators, and we believe that subjecting all drug deliverers to §204.401 alone would frustrate the legislature's will. Furthermore, such action would, in effect, be an impermissible enlargement of § 204.401. A court may not, under the guise of construction, extend or enlarge the terms of a statute. To extend the scope of an Act's operation by invalidating a provision of limitation while allowing the remainder to continue in effect is to invite criticism that it amounts to judicial legislation." Likewise in this case, if the use tax on newsprint and ink (Sections 1 and 3) is interdependent with the exemption form sales tax of newspapers (Section 2), i.e., the legislature did not intend one without the other, this Court would, in effect, be legislating. The Court's duty is clear under these circumstances. It must determine the separability issue.

In Motor Club of Iowa v. Dept. of Transp., 251 N.W.2d 510, 518-519 (1977), the Iowa Supreme Court summarized the principles of construction as they relate to the question of separability and demonstrated the interaction between these principles and Section 4.12, The Code: "We recently summarized the principles of construction as they relate to the question of severability in State v. Blyth, 226 N.W.2d 250, 261-262 (Iowa 1975). We said: 'Separability questions are essentially questions of statutory construction. (Authority). [T]he cardinal principal construction is to save and not to destroy. [Authority]. Guidelines which serve as an aid in determining severability of statutes are summarized in this fashion in 82 C.J.S. Statutes § 93: 'Whether the valid and invalid parts of a statute are independent and separable, or interdependent, is a question of construction and of legislative intent, as indicated by the words employed and the considerations underlying the enactment of the statute, and the question is not one of legislative power. A statute may be unconstitutional in part and yet be sustained with the offending part omitted, if the paramount intent or chief purpose will not be destroyed thereby, or the legislative purpose not substantially affected or impaired, if the statute is still capable of fulfilling the apparent legislative intent, or if the remaining portions are sufficient to accomplish the legislative purpose deducible from the entire act, construed in the light of contemporary events. If, when the invalid part is stricken, that which remains is complete in itself and capable of being executed in accordance with the apparent legislative intent, or purpose, wholly independent of that which was rejected, it must be sustained to that extent; .' See also State v. Pilcher, 242 N.W.2d 348, 359-360 (Iowa 1976); Rush v. Sioux City, 240 N.W.2d 431, 445-446 (Iowa 1976); State v. Monroe, 236 N.W.2d 24, 35-37 (Iowa 1975). These authorities tell us the question of severability is one of intent. This intent is to be determined from the words employed and the considerations underlying adoption of the rule. A presumption is involved. It was articulated in State v. Books, 225 N.W.2d 322, 325 (Iowa 1975) where we said: 'Of course, where there is a severability clause in the statute itself the presumption is inescapable that this was the legislative intent. When there is no such clause, the presumption is that the statute was meant to stand or fall in its entirety (Authorities). In all cases, the determining factor is legislative intent.' See also 2 Sutherland Statutory Construction, Sands Fourth Ed., §44.13, pp. 359-360; Green v. City of Cascade, 231 N.W.2d 882, 889 (Iowa 1975); 82 C.J.S. Statutes § 94, pp. 161-166. We note the DOT rule does not contain a separability clause. Section 4.12This section provides: If any provision of an Act or statute or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act or statute which can be given effect without the invalid provision or application, and to this end the provisions of the Act or statute are severable.", The Code, cited by the intervenors, does not alter the principle that intent is the polestar in determining severability questions. The presumption described in Brooks, supra, is an aid in finding that intent. We decided Brooks after the effective date of § 4.12."

The challenged rule in Motor Club of Iowa, supra, established a 65 foot length limitation for trucks. In setting the effective date of the rule the DOT specified two conditions. The rule allowing 65 foot trucks was to be effective when the General Assembly passed legislation (1) outlawing studded tires and (2) implementing functional classification of highways. Neither condition was met. Intervenors argued the unfulfilled conditions were ultra vies and void but the balance of the rule allowing 65 foot trucks was still valid because the invalid conditions were separable.

The Iowa Supreme Court first concluded the conditions were ultra vies and then rejected intervenor's severability argument utilizing the foregoing principles: "Turning to the language of the DOT rule we find no sign separability was desired. On the contrary it clearly appears the DOT intended the ultra vires provisions to be conditions precedent. It is difficult to imagine a stronger way to express the interdependence between the conditions and the long truck rule than the technique employed, setting the effective date upon satisfaction of the conditions. Turning to the surrounding circumstances there is some conflict in the evidence. There is testimony of intended separability. But at no time did the DOT adopt a resolution favoring long trucks without the conditions. Significantly, resolutions which favored long trucks with no conditions attached had been considered and not passed. The resolution passed only when the conditions were appended. We believe the language of the rule itself and the fact the commissioners had previously refused to adopt an unconditional resolution favoring long trucks indicate interdependence and not separability of the conditions in the 65 foot rule. Certainly the presumption favoring interdependence was not rebutted. We hold the ultra views conditions cannot be severed and the entire rule is void. See Books, supra, 225 N.W.2d at 335; Aldrich, supra, 231 N.W.2d at 895; Iowa Dept. of Rev., supra, 243 N.W.2d at 615; 1A Sutherland, Statutory Construction, Sands Fourth Ed., § 31.02, p. 355." 251 N.W.2d at 519.

Smith v. Thompson, 219 Iowa 888, 894-898, 258 N.W. 190 (1935) is perhaps the leading case on rules of construction in determining legislative "intent" or "will" regarding separability. That case summarizes the rules as follows:

1. The Act shall be construed with reference to its general purpose and aim.

2. The sections of the Act are to be construed as parts of a connected whole, and harmonized, if possible.

3. Every Act must be construed with reference to the object intended to be accomplished by it.

4. If the invalidity of one portion of the Act (which is in material relation to its other portions) will modify, restrict, or extend the Act's application, it will cause the failure of the entire act.

5. Where the valid and invalid parts of the Act are so interrelated that the invalid part is a material inducement to the valid part, the whole is invalid.

6. If it appears that one section is a compensation or inducement for another section and the connection between the sections would warrant the belief that the valid part would not have been passed alone, then the whole Act must fall as a whole.

With the foregoing principles in mind, the Court turns to the task at hand and concludes that the provision (Sections 1 and 3) of this Act applying the use tax to newsprint and ink are so connected to, and interdependent with, the exemption from sales tax on newspapers in object and subject matter, meaning, and purpose that the elimination of the objectionable or unconstitutional sections (1 and 3) would result in a condition not contemplated, desired, or intended by the legislature. It follows Section 2 is invalid and must fall with Sections 1 and 3.

In support of this conclusion, the Court turns first to the circumstances surrounding the passage, in 1970, of 1970 Iowa Acts, ch. 1201.

The 1934 Iowa Acts, Chapter 82, § 38, Extraordinary Session imposed a retail sales tax on newspapers. The Tax Commission, contrary to this statute, had a long-standing administrative interpretation (Rule 60) for 35 years which held that the sales of newspapers at retail in Iowa were not subject to the Iowa sales tax. The Court condemned similar action in Des Moines and Central Railway Company v. Iowa State Commission, 253 Iowa 994, 115 N.W.2d 178, 181-182 (1962) even though neither party raised the issue on appeal: "We cannot see a statutory basis for rule 10 or rule 30. This section (Section 422.4 clearly imposes a tax on the gross receipts from all sales of personal property at retail to consumers or users ... The definitions of 'business' or 'retailer' above set out do not purport to limit the application of section 422.43 or exempt any sales therefrom ... An administrative board has only such power to enact rules as are not inconsistent with the law to be administered. It has no power to impose a tax nor to grant an exemption from a tax ... Both rule 10 and rule 30 purport to grant an exemption from the tax imposed ... Both rules are inconsistent with section 422.43. They are not included in the specified exemptions in section 422.45 ... Holding as we do that rule 10 and rule 30 are invalid, deprives plaintiff of the basis for its claim the sales in this category are not subject to the tax."

On December 29, 1969, the Iowa Attorney General rendered an opinion (1970 Op.Att'y. Gen. 384) to several legislatures on the question of whether newsprint which was purchased and processed as a component into a finished newspaper, magazine, journal, book, or other periodical for sale was subject to Iowa use tax. The attorney general concluded that the newsprint purchases, under such circumstances, were exempt from tax. In the course of this opinion it was noted that a prior opinion of the attorney general, on April 25, 1965, and rules of the state tax commission, allowed inconsistent sales and use tax treatment for newspapers in that, for purposes of the processing exemption for components, sales of newspapers were treated as sales of tangible personal property so that the processing exemption for components applied whereas for purposes of whether sales of newspapers constituted taxable retail sales of tangible personal property for sales tax purposes, newspaper sales were treated as nontaxable sales of services. The prior 1965 opinion noted this inconsistency by the rules of the tax commission, but the attorney general had stated that the rules were of long-standing so that any change must come from the legislature. The effect of the tax commission rules was to allow newspapers the processing exemption accorded to other producers of tangible personal property for sale but, unlike other producers, the retail sale of newspapers was not subject to sales tax but was considered a nontaxable service. The 1969 attorney general opinion withdrew the portions of the 1965 opinion inconsistent therewith. The attorney general noted that the tax commission had no power, notwithstanding the longevity of its rules and no intervening legislative action, to create tax exemptions, citing Morrison - Knudson Co. v. State Tax Commission, 242 Iowa 33, 44 N.W.2d 449 (1951) and Northern Natural Gas Co. v. Lauterbach, 251 Iowa 885, 100 N.W.2d 908 (1960).

Against this backdrop, H.F. 1222 was introduced on February 9, 1970, approximately a little more than one month after the 1969 attorney general opinion. This bill, which ultimately was enacted as 1970 Iowa Acts, ch. 1201, imposed the Iowa sales and use tax upon purchases of newsprint and ink components (newsprint and ink) and exempted from Iowa sales tax the retail sales of newspapers, free newspapers and shoppers guide.

The 1969 attorney general opinion was an important consideration, as both sides agree, in the passage of this Act. The legislature is presumed to know the state of the law when a new statute is passed. River Products v. Washington Cty. Bd. of Rev., 332 N.W.2d 116, 119 (Iowa App. 1982). It is obvious that as a result of this opinion, supported by Iowa cases, millions of dollars in potential future sales tax liabilities for retail sales of newspapers could accrue to the State unless the law was changed. Ch. 1201 simply reversed the import of the 1969 attorney general opinion by imposing newsprint and ink tax and exempting from tax the retail purchases of newspapers, free newspapers, and shoppers guides.

Turning to the language of the Act, the Court notes the title or preamble to chapter 1201 states:

An Act relating to the sales and use tax on newspapers and ink and to exempt the sales, publishing, and printing of all newspapers and shoppers' guides therefrom. (emphasis supplied)

This language suggests the legislature was adopting a "tax package" for the newspaper industry. Sales of newspapers and shoppers guides would be free from tax as long as newsprint and ink tax was imposed. The title contains connected or interrelated aspects dealing with the newspaper industry; a tax imposition portion (on newsprint and ink used to manufacture newspapers) and a tax exemption portion (on the sale of newspapers). The title harmonizes with sections 1, 2 and 3 of the act which contain the same connected or interrelated aspects.

As a result of this interrelationship, the tax imposition portion of ch. 1201 (sections 1 and 3) and the tax exemption portion of ch. 1201 (section 2) are self-inducing or self-compensating. The legislative "intent" or "will" was to create a "tax package" so connected and interdependent that the entire act would be inoperative if any one of the sections (1, 2 and 3) of ch. 1201 should be declared invalid. The legislature intended newspaper and shoppers guides and retail sellers-printers to pay some tax, and did not intend to have their product or components completely tax exempt which would occur if the newsprint and ink tax is declared unconstitutional while the retail sales and use tax exemptions for sales of newspapers, free newspapers, and shoppers' guides were allowed to remain in force. Given the events prior to the enactment, the legislature probably would not have enacted the Act at all if sections 1 and 3 had been eliminated. It is important to note at this point that the Act contains no separability clause.

Section 2 is not separable from Sections 1 and 3. Since the Court has held Sections 1 and 3 unconstitutional, Section 2 must also be declared invalid. Thus, the exemption in §§ 422.45(9) must be declared invalid.

CONCLUSIONS OF LAW

In summary, the Court concludes that:

1. Sections 422.42(3) and 423.1(1), The Code of Iowa violate the First Amendment of the Constitution of the United States made binding on the States by the Fourteenth Amendment of the Constitution of the United States and are therefore invalid.

2. Senate File 538 violates the due process clause of the Fourteenth Amendment of the Constitution of the United States as to all Plaintiffs who filed refund claims prior to the passage of Senate File 538. It also violates the equal protection clause of the Fourteenth Amendment of the United States as to all Plaintiffs. All Plaintiffs should be allowed to pursue their refund claims pursuant to the refund statutory procedures in effect prior to the passage of Senate File 538.

3. Section 2 of 1970 Iowa Acts, Ch. 1201 is not separable from Sections 1 and 3. Thus, Section 422.45(9), The Code of Iowa, is invalid.

RULING

IT IS THE ORDER OF THE COURT, CONSISTENT WITH THE FOREGOING CONCLUSIONS OF LAW that:

1. Plaintiffs' Motions of Summary Judgment declaring Iowa's sales and use tax imposed upon newsprint and ink, as codified inter aliain Iowa Code §§ 422.42(3) and 423.1(1) (Sections 1 and 3 respectively of the 1970 Iowa Acts, ch. 1201) to be unconstitutional are hereby SUSTAINED.

2. Plaintiffs' Motions for Summary Judgment declaring the 1983 Iowa Acts ch. 155 (Senate File 538) to be unconstitutional are hereby SUSTAINED.

3. Defendants' Motion for Summary Judgment declaring the 1970 Iowa Acts, ch. 1201 to be invalid in its entirety, including the sale tax exemption incorporated from Section 2 of that Act in Iowa Code § 422.45(9) is hereby SUSTAINED.

ORDER

IT IS THE ORDER OF THE COURT that:

1. Counsel contact Ron Brannam, Assistant Court Administrator for time and date for hearing on all remaining issues.

Dated this 26th day of December, 1984.

Judge