Jack v. Weiennett
3 N.E. 445
Ill.
1885
Check Treatment
Mr. Justice Scholfield

delivered the opinion of the Court:

The main controversy here is, whether creditors, in case of assignment under our insolvent laws, acquire such vested rights in the property assigned that it can not be thereafter taken or appropriated for the payment of taxes levied before that time, but which had not then become a lien on the property assigned. If a claim for taxes is but an ordinary debt, creating the relation of debtor and creditor, the question must be answered in the affirmative; for all creditors» under the statutes relating to insolvency, must share pro rata under the assignment. But such a claim is not a debt, within that sense. Cooley says: “Taxes are defined as being the enforced personal contribution of persons and property, levied by the authority of the State, for the support of the government and for all public needs. They are the property of the citizen, demanded and received by the government, to be disposed of to enable it to carry into effect its mandates, and to discharge its manifold functions. ” And again he says : “In an exercise of the power to tax, the purpose always is, that a common burden shall be sustained by common contributions, regulated by some fixed general rule, and apportioned by the law according to some uniform ratio of equality.” Cooley on Taxation, 1, 2. See, also, Blackwell on Tax Titles, 7; Opinion of Judges, 58 Maine, 591; Shreveport v. Gregg, 28 La. Ann. 836; People v. McColvy, 34 Cal. 432.

A creditor has no right to distrain and sell property. He must first get a judgment and an execution. But the State, because of the importance and urgency of its claim, is not required to wait for a judgment. If a tax due is not paid on demand, the collector may proceed to seize property and sell it for its payment. (See Cooley on Taxation, 298-301.) Before property can be protected, and the rights of creditors enforced, the State must have the means of subsistence. It can not perform its functions without them, and they can only be obtained through some system of taxation. The claim for the payment of taxes upon the citizen is, therefore, of necessity paramount to all other claims against his property. Our • constitution, moreover, requires that the General Assernbly shall provide such revenue as shall be needful, by levying a tax, by valuation, so that every person and corporation shall pay a tax in proportion to the value of his, her, or its property. (Section 1, article 9.) To the enforcement of this provision it is obviously indispensable that the tax shall have priority in right of payment over individual debts.

In Dunlap v. Gallatin County, 15 Ill. 7, the court held that the -claim of the county for taxes is entitled -to priority over individual debts, and the following, from the language- of the opinion, in discussing that question, is quite pertinent here: “The claim of the county” (i. e., for taxes,) “does not stand on the same footing with the other indebtedness of the bank. It is entitled to priority in payment. A tax is not an ordinary debt. It is levied for the support of government, and takes precedence of all other demands against the owner. It is a charge upon the property, without reference to the matter of ownership. The property itself may be seized and sold, although there may be prior liens upon it. The estate of a deceased person is primarily liable for the taxes that may be due from it. The State is not bound to wait until the estate is administered, and then participate with the creditors in the distribution of the proceeds. It may enforce payment to the exclusion of all other creditors. And so of an insolvent estate in the hands of trustees, under a compulsory or voluntary assignment. In this case the property passed to the assignees for the benefit of the creditors of the" bank. It became a common fund for the payment of their debts. But the assignees acquired the same subject to the right of the State to charge it with taxes. The creditors likewise acquired interests therein subordinate to the right of taxation. They are only entitled to the surplus that may remain after the payment of the taxes, and the necessary expenses of administering the assignment. ” The same principle is referred to with approval in the subsequent case of Dennis v. Maynard et al. 15 Ill. 477.

The assignment simply placed the property in the hands of the assignees for the payment of debts, as it was in the hands of the owners for that purpose before that time. The assignees are not purchasers. They take their title subject to all equities, liens or incumbrances, whether created by operation of law or by the act of the insolvent, which existed against the property in the hands of the insolvent. (Yeatman v. Savings Institution, 95 U. S. (5 Otto,) 766; Hardin v. Osborn, 94 Ill. 576; Dunlap v. Gallatin County, supra.) Undoubtedly, if the property had been sold in good faith to a purchaser before the tax books went into the hands of the collector, then, under the authority of previous decisions of this court, the purchaser would have taken free of any lien for the taxes. But that principle has no application in this case, because no one is claiming here as purchaser. It would, moreover, seem quite clear that if this property had been of that tangible character which admits of distress, and the tax collector’s books had been delivered to him for the collection of the taxes, the collector could have distrained and sold the property, entirely disregarding the claims of private creditors. It is manifest the form of the property can make no difference,—it is still personal property, and the legal rights and liabilities are precisely the same, whatever may be its form.

If the insolvent laws can be held to have the effect of releasing either persons or property from taxation, they are to that extent unconstitutional, for by section 6, article 9, of the constitution, the General Assembly is denied the power to release any person or property from his or its proportionate share of taxes levied for State purposes. The State, then, still having the right to subject this property in the hands of the assignees to the payment of these taxes, after the tax books were placed in the hands of the collector a lien in its favor attached, and thereafter there is no pretence that anything occurred to divest the right of the State. Our present Eevenue law provides that “the power and duty to collect any tax due and unpaid shall continue in and devolve upon the county collector and his successors in office, after his return and final settlement, until the tax is paid; and the warrant attached to the collector’s book shall continue in force and confer authority upon the collector to whom the same was issued, and upon his successor in office, to collect any tax due and uncollected thereon, although such books may have been returned, or the tax carried forward into any other book.” (2 Starr & Curtiss, p. 2076, sec. 162.) The difficulty of collecting a tax on account of the intangible character or inaccessible position of the property out of which it is to be paid, can not affect the question of the right to require such property to be devoted to such payment.

We think there was no error in the order of the county court.

Objection is urged to the sufficiency of the petition in the respect that it is not specific enough in the allegation that a sum is in the hands of the assignees, by virtue of the assignment, from which it can be seen this tax can be paid. The objection is made now for the first time. It is purely technical. There is no question in respect of the fact. No injustice is done by holding, in conformity .with our ruling in chancery cases on kindred questions, that the objection comes too late. Had it been made upon the hearing, the amendment would have been allowed as a matter of course, and it would have necessitated no delay.

A final objection is to the jurisdiction of the court. We think the order is within the undoubted powers of the court in such cases. See Starr & Curtiss’ Annotated Stat. chap. 72, sec. 43 1; Freydendall v. Baldwin, 103 Ill. 325.

The order is affirmed.

, Order affirmed.

Mr. Justice Cbaig, dissenting.

Mr. Justice Sheldon does not concur.