The Doctrine of Constructive Fraud in the Washington Law of Taxation

Two recent Washington decisions, Bellingham Development Co. v. Whatcom County and Grays Harbor Pac. R. Co. v. Grays Harbor County present separate phases of a problem which has been frequently considered by the Supreme Court of Washington and concerning which that court has formulated a general rule: namely, that the court will relieve a taxpayer from the burden of an excessive tax where the conduct of the taxing officers has been so improper that it can be called "constructively fraudulent", even though the officers acted in good faith. The rule is clearly a proper one, but, like so many "general rules", the application of it to a concrete case presents many difficulties, and it is hoped that here some light may be thrown on the characteristics of that will o' the wisp, constructive fraud, so that its presence, or absence, in future cases can be more nearly ascertained. At the outset it must be noted that it is beyond the scope of this comment to attempt a discussion of the remedies available to a taxpayer who has been the victim of improper conduct on the part of the taxing officers, nor does this comment purport to exhaust the field of situations in which the taxpayer has a remedy, because the constructive fraud cases form only a segment of the cases in which the court will grant relief from the effects of improper conduct of the taxing officers.