141 Ky. 633 | Ky. Ct. App. | 1911
Opinion of the Court by
Reversing.
This action was begun in the Ohio connty circuit conrt February 19, 1903, to recover the franchise taxes due by appellee to Ohio connty, as a railroad corporation exercising and owning its franchise partly in Ohio connty, for the years 1896 and 1897.
May, 1905, a judgment was rendered in the circuit court against the appellee companies for $1,804.77 and interest. This judgment was reversed by this conrt February 27, 1908. (129 ICy., 318; 32 Ky. Law Rep., 1119.) In the opinion it was held, that the Illinois Central Ry. Co. was liable only for the tax of 1897, while the Chesapeake, Ohio & Southwestern Ry. Co. was alone liable for the tax of 1896. On June 20, 1908, the conrt delivered an extended opinion, holding that the levy of the connty
“The remedy of-the fiscal court for a defect of this sort in its order is pointed out in the opinions referred to.”
The court ordered the case to be “remanded for further proceedings consistent” with the opinion.
On the return of the case the fiscal court of Ohio county met and by, orders attempted to remedy the defects pointed out bv this court in the levy orders of 1896 and 1897, by specifying the purposes for - which each levy was to be applied. The rate was not changed. Nor was the order making the levy in any other particular. Thereupon the county filed an amended petition in this case setting up the fact that, it had by its fiscal court perfected the levy orders so as to specify the purpose of each levy, and then prayed as before. The court dismissed the petition as amended, holding that the action was barred by limitation. It is from that judgment this appeal is prosecuted.
Before the collection of a tax can be enforced it must-appear (1) that it has been authorized by the legislature, and as the Constitution requires the purpose to be stated in the enactment levying the tax, that must be complied with; (2) there must appear an assessment of the property by the magistracy created by law; (3) there must be a time when and a person to whom the payment can be legally made. The levy of the tax as here indicated, is the political act of the government, which declares the public necessity, and its extent, for raising the proposed revenue. It lies at the bottom of every tax imposed. All else that is required in the proceedings depends upon it. It is not required to precede in order anything except the collection of the tax. The liability to be discharged by the tax may have been incurred, or only contemplated; the assessment, which is to say the ascertainment of the property to be taxed, its ownership and value, may precede or follow the levy ordinance; all must concur, yet they need not occur in any particular precedence. The legislature has delegated to the fiscal courts of the counties the power and duty of levying taxesupon the property and polls in the counties not exceeding certain con
Now it is urged by appellees that the fiscal court could not amend its levy orders of 1896 and 1897 eleven years afterwards, and that appellant cannot set up such curative proceedings by amended petition in this case. The statute of limitations is relied on. In Commonwealth v. Nute, 115 Ky. 239, and C., St. L. & N. O. Ry. Co. v. Commonwealth, 115 Ky. 278, it was held that the statute of limitations of five years • applies to assessments of property for purposes of taxation, that is, when the property has been omitted from assessment for any year,
The fiscal court was under the duty, if it levied a tax at all, to specify the purposes to which it was to be applied. The Constitution so required for the protection of the public, the taxpayers and creditors of the county. If that body failed to so specify, it did not relieve the county of its obligation for its debts, and consequently did not relieve taxpayers of their duty and liability to provide the means of discharging the county’s obligations whenever a valid procedure was adopted for their protection. We say in such cases that an order or ordinance or statute failing in the particular mentioned is void, and it is. But we have not said and it is not true that everything else done toward providing for the gathering in of a necessasry sum by taxation to defray the county expenses was void also; nor that it was without the power of the levying body to make a valid levy in lieu of a void one. On the contrary, it has more than once been declared that it was within their power and wás their duty to do so. (Levy v. Louisville, 97 Ky. 394; Somerset v. Somerset Banking Co., 109 Ky. 549; Morrell Refrigerator Car Co. v. Commonwealth, 32 R. 383; L. & N. Ry. Co. v. Louisville, 97 Ky. 397.) When it is said that such levy ordinances are void, it is meant that they are void until they are made to comply with the requirements of the Constitution.
Nor, is it perceived why the fiscal court might not ■do voluntarily what it could have been compelled by mandamus to do, that is, in the levy orders specify the purposes of the levy. The taxpayer who has not paid is certainly not prejudiced by the proceeding. He is protected when he is required to pay by an order complying in form with the Constitution. He is not deceived into believing that he was not intended to be taxed, whereby he has failed to protect himself by preserving evidence of the value of the property assessed. Just the contrary is true here. Indeed the county has been endeavoring by all the means afforded by law for more than ten years to collect this tax, and has been resisted at every step by appellees.
From 1896 to 1899 appellees contested before the State board of assessment and valuation their liability for franchise tax on this property at all. The assessment
Appellees complain that the amended petition is not in fact an amended, but is a supplemental petition, as, it is argued, it set up new matter not in existence when the original petition was filed. It was competent for the plaintiff to perfect the cause of action it had asserted by acts de hors the record, and then to plead them by way of amendment or supplement to the pleadings. Whether it is termed an amended petition or supplemental petition is not material on appeal-. So long as the necessary fact was made to appear of record, it became the duty of the court to recognize it in framing the judgment enforcing the legal rights of the parties. The plaintiff’s cause of action was defective when the petition was filed, not because there was not a liability on the part of appellees, nor because of lack of right on the part of plaintiffs, but because of an omission by officials to do in a particular way that which they had attempted to do, but failed through inadvertance to do as in the manner required. The failure did not defeat the county’s right to assess or collect the tax. It merely postponed it until the omission was cured. There may be a vast difference in legal effect between an entire omission to levy a tax, and an ineffectual effort to levy it. The former could not be amended. The latter may be. If the fiscal court had failed altogether — had not attempted, let us say — to levy a tax for 1896, it was nevertheless competent for it to levy it subsequently, for until its power was exhausted it might be exercised. The rights of the parties would however be fixed as of the date of the levy, not as of the time when it might have been first levied. But where the attempt had been made to levy the tax, the ordinance fixing the amount duly passed, and the assessment of all property liable to the tax had been regularly made, it was competent for the fiscal court to cure a defect in its proceedings so as to make them conform to law, as it would have been
Appellees have presented what they denominate a federal question.
First, it is said to render a personal judgment against appellee for the taxes of its principal when it was agent only would offend the fourteenth amendment to the Constitution. It does not appear that appellee is agent, or is not principal. But it is not novel that the “person in possession” is made liable to the tax. It is so of every other class of property, including bank stock. Railroads may be treated the same way. If it should be true, as appellee asserts, that it would be assessed differently from any other railroad in Kentucky, it would be because no other held its property in the same way that appellee does.
The next ground is, that there has not been an assessment of the property. But there was. It was so held in the former opinion, and in the State tax case. (128 Ky. 268.)
