79 Ky. 334 | Ky. Ct. App. | 1881
delivered the opinion of the court.
These several actions in equity were instituted in the Louisville chancery court by George W. Anderson and others against the city of Louisville, in which it is alleged that they (the plaintiffs) are the owners of certain real estate in the county of Jefferson, within the corporate limits of the city of Louisville, a municipal corporation created by the laws of the state, and authorized to sue and be sued; that this corporation for a number of years not only claimed the right, but did in fact tax the lands of the plaintiffs (now apellees) for its own municipal purposes, and to defray the expenses of its municipal government. The lands taxed are-then particularly described, as well as the assessment, levy, and collection of the taxes for each year, and it is further-alleged that the land had been used during those years-for farming purposes, and that the same had never been-appropriated to or used for city purposes, and the jurisdiction, authority, and government of the city are of no use or benefit to the land or its owners; that the extension of the boundary of the city so as to embrace this land was to-enable the corporation to tax it, and thereby increase its revenue, and for no other purpose; that the taxation was unjust and illegal, and is not now imposed on the land, and the said city authorities have, since the collection of these taxes, expressly declared that this land was not the subject of taxation, nor does the corporation now claim or assert the right to tax this, property. The appellees also allege, they paid these taxes under a mistake of law and fact, and in ignorance of their rights, and when they believed the city, by reason of its charter, had the right not only to extend its boundaries, but when extended, had the right to tax all property within its corporate limits, and being satisfied
The chancellor adjudged the appellees entitled to recover on the ground that they made the payment under a mistaken •belief as to the right of the city to imjpose the taxes, and that it would proceed to sell the property (as it had threatened) if the taxes were not paid. It is plain, if the decision of this court in the case of Courtney against the city is adhered to, the corporation had no right to levy these taxes, and equally as clear the appellees paid them under a mistaken belief that the city had the right to impose the burden. There was no question raised between the corporation and these tax-payers as to their liability for the tax, and therefore it was not paid by way of compromise or when the appellees had reason to doubt the exercise of such a power on the part of the corporation. It is
A demurrer was filed by the city to the several petitions; but that pleading presents the same question as that arising from the proof. This court will assume, without discussing .the facts of the case, that the corporation exceeded its power in levying this tax and requiring its payment. The proof is conclusive on that question. It is argued by counsel for the city that this question does not arise upon any contract •made between the corporation and the tax-payer, but by reason of a contribution imposed by the former on the latter for public purposes; and when this burden is imposed, there is a moral and political duty resting on the citizen to discharge it, and although the tax is unconstitutional, if voluntarily paid, cannot be recovered back.
In the case of Underwood v. Brockman, 4 Dana, this; court ^aid: “When it can be made perfectly evident that the only consideration of a contract was a mistake as to the legal rights or obligations of the parties, and where there has been no fair compromise of bona fide and doubtful claims, we do not doubt that the agreement might be avoided on the ground of a clear mistake of law, and a total want, therefore, of consideration or mutuality.” This doctrine had been previously announced by this court, in the case of Fitzgerald v. Peck, and was followed in the case of Ray v. Thornton, 3 B. Mon., in which it is said: “Whenever, by a clear and palpable mistake of law or fact, ■essentially bearing upon and affecting the contract, money
While the payment of taxes is both a legal and moral' duty, no obligation rests on the citizen to pay or submit to a wrong assessment; and when he pays an unauthorized tax, having discharged the burden as a law-abiding citizen, he had the right to believe, when making the payment, there-had been no abuse of the power to tax by those to whom it had been confided. Instead of punishing the citizen for complying with what he believed to be his duty, by withholding-from him the money he has wrongfully paid, he should be encouraged to assume such burdens, instead of resisting the-collection, and this should be done by refunding him the-money paid when there was no legal or moral obligation upon him to make the payment, nor any legal or moral right-on the part of the city to make the demand or collect the-money.
It is true that Cooley .on Taxation lays down the doctrine,, “that a tax voluntarily paid cannot be recovered back; 01-says that it has been held by the authorities, with very few-exceptions, and it is immaterial in such a case that the tax is illegally laid, or even that the law under which it was laid;
He further says: “All payments of taxes are supposed to be voluntary which are not made under protest, or under the apparent compulsion of legal process.”
In the case of Sheldon v. School District, 24 Conn., 88, it ■was held, if one’s land is sold for taxes after protest, and .he buys it in, it must be regarded as a voluntary payment, ,and will give him no right of action. The case of Taylor v. Board of Health, 31 Pa. St., the taxes had been levied ¡under an unconstitutional law, and paid for a series of years, ■when an action was brought to recover it back. The court ■said: “The money was paid without dispute, and he thus assented to the collection of tax for public purposes, and of course to the application of it. Relief was denied.”
In the case of Town Council v. Burnet, 34 Alabama, it -was held that the payment of money to a town clerk, as the price of a license under an ordinance afterwards declared void, could not be recovered back.
All these, and many more cases referred to, sustain the '¡position assumed by the attorney for the city; but in the last named case, in denying a-recovery for money paid under "the void ordinance, the court distinguishes that case from one where money has been paid in discharge of a void assessment of taxes, because in the latter case there was an -apparent means of enforcing the illegal demand without .•resort to judicial proceedings, and without giving the party ••a day in court. (Viley v. Palmer, 14 Alabama; Crutchfield v. Wood, 16 Alabama.)
In the case of the City of Louisville against Henning &. Speed the latter sued the city to- recover back a sum of money paid under an invalid assessment, alleging that the-plaintiffs paid the money in ‘ignorance of their rights. The city denied that the tax was unauthorized and' invalid, but-admitted that if no lawful authority existed to impose the-tax, then the plaintiffs paid the money in ignorance of theirr
In the present case, both the city and the appellees acted in good faith. They both believed the taxation to be constitutional, until it was finally made to appear that both were-mistaken, and that the city had received the money of appellees without any consideration. There was no contract or bargain in this case by which one undertook to pay and the other to receive. The money was not paid at the instance of the tax-payer to one who was a mere passive agent without authority to demand or coerce payment, but to one who had not only the authority to receive it, but to exact payment by levying on the property taxed; and upon the refusal of the appellees to pay, a sale of the property was inevitable. The party charged with payment has been afforded no opportunity of being heard, and knows that the-tax-gatherer is clothed with the process of the law to enforce-his demand if payment is denied. Such a payment, or a. payment made in ignorance of the fact that the taxation is void, with a knowledge that compelling process is at hand to coerce the demand, must be regarded as involuntary, and the party entitled to recover his money.
In the case of the Town Council of Cohaha v. Burnet, already cited, where money was paid to the clerk of the town in order to obtain a license to retail liquor, and the ordinance requiring the license was subsequently held void, it was adjudged that no recovery could be had of the money paid to the clerk, as there was no proof the payment was coerced or any summary process compelling its payment. The party could have refused to pay the money, or could have tested the validity of the ordinance without subjecting himself to a penalty, or could at least have refrained from selling his liquor Qr gpods. The payment of taxes is regarded as involuntary, because the tax-collector has the authority to levy-and sell on the refusal to pay. The process is summary, and in the hands of the party making the demand, and the tax-payer must submit to the. levy or pay the money. The distinction is plain between such cases, and where the one making the payment is himself claiming the right, and the recipient of the money the mere passive agent of the corporation. We do not mean to be understood, in recognizing this distinction, as assenting to the doctrine that no recovery can be had in any case where the money sought to be recovered has been paid under a mistake of law, and without compulsion.
In this case the appellees, to avoid the plea of the statute, -reply that they did not discover the mistake until a fixed period, and to this reply there is no rejoinder; so the matter in avoidance stands confessed and must be taken as true.
We do not mean to adjudge that a decision of this court, ■ determining such taxation illegal and void, will control the - decision as to when this discovery alleged by the appellees ■was first made, as such a decision can afford no guide in ■ determining the issue. The party is required to show, when •the mistake originates from his own action as well as that of . another, that he has exercised such diligence as a prudent man would exercise in ascertaining what his rights are, and. : five years in which to make such a discovery should certainly be held sufficient. In this case, however, the mistake ■ was mutual, and both acted during the whole period as if the right to demand and receive was unquestioned. v Whether this should alter the rule as to diligence is not ; necessary to inquire, as the pleadings settle that question.
Judgment affirmed.
This opinion applies also to the case of Pat. Joyes v. City of Louisville, the cases having been considered together.