No. 5322 | Ohio Ct. App. | Feb 24, 1956
Lead Opinion
This is an appeal on questions of law and fact by one of the defendants, Scioto-Sandusky Conservancy District, from a judgment of the Common Pleas Court of Franklin County. An appeal undertaken by The Sharon Realty Company, plaintiff in a companion case consolidated with the railroad case for trial below, was dismissed upon motion of the railroad prior to the hearing de novo of the instant case.
In the Lewis case, the court recognized the power of the district to levy the second assessment but held that it was a tax and not an assessment, required to be submitted according to budgetary procedure and to a vote of the people for approval or disapproval. In that case, the two writs of mandamus brought by the district were denied; a demurrer to a petition by *63 a Franklin County taxpayer to require the auditor to comply with the resolutions of the district was sustained. In the quo warranto action brought by Clyde E. Lewis, prosecuting attorney of Delaware County, against the district, challenging its power to levy the assessment, the right of the district to levy the assessment was sustained.
We, therefore, proceed to determine this appeal upon the premise that the collection of the tax in question was illegal and that, if the plaintiff herein has not waived its right to injunctive relief, its collection should have been permanently enjoined.
In the instant case plaintiff, on March 30, 1953, brought its action on its own behalf and on behalf of all owners of real property in Franklin County, seeking to enjoin the collection of a levy of three-tenths of a mill on the assessed valuation of property within the conservancy district including Franklin County. On April 13, 1953, a restraining order was entered, ordering that, pending further order of the court, collection of the levies made by the district on August 5, 1952, against the land and property of the plaintiff and six enumerated utilities, be enjoined, and the defendant county treasurer was directed to omit said levies from the taxes to be collected at the current tax collection from the plaintiff and six other named utilities. The treasurer and auditor were also enjoined from paying any money collected by reason of such levy from any of the taxpayers, until further order of the court.
Notwithstanding the injunction, some 70,000 Franklin County taxpayers voluntarily paid approximately $243,000 upon the district levy to the county treasurer, which he had retained without investment since August 1952. On motion of the plaintiff, on October 26, 1954, the treasurer, as custodian thereof, was ordered to invest the amount in accordance with the Uniform Depository Act. On January 17, 1955, the order of October 26, 1954, was vacated and another order was entered directing that, until further order of the court, the money be deposited pursuant to the Uniform Depository Act in a fund separate and distinct from all other public funds. The order provided further that all interest upon such deposit be paid into the county treasury to the credit of the conservancy district fund.
On May 15, 1953, plaintiff paid its tax, in the sum of $2,288.87, *64
under protest, but no action at law was brought within one year thereafter for recovery of such taxes under Section
In Trustees v. Thoman (1894),
"But it also appears as we think from the pleadings, that judgment should have been rendered for the defendants, dismissing the petition; and that the court erred in overruling the motion for such judgment. By the amended and the supplemental petition, it appears that, since the commencement of the suit, the taxes had all been paid by those assessed, except that of the plaintiff, whose lands having been returned delinquent, were sold and the taxes, some 14 cents, paid by the purchaser. So that as to him there was nothing to enjoin, the tax having been paid; and there was nothing for him to recover back, as he had paid nothing. Having permitted his land to be sold, without enforcing the injunction against it, as he might have done, his remedy thereafter was to apply to the auditor of the county for its redemption, under the provisions of the statute in that regard, for the redemption of delinquent lands. Section 2889 and the following sections. The remedy is an adequate one, but can not be had in this suit, which, under the supplemental petition, is an action to recover back the tax, alleged to have been unlawfully assessed, and paid under duress. But if he, as the others, had paid the tax, there is no rule of pleading or practice by which he for himself and the others can prosecute an action to recover back the money so paid. A suit to recover back is quite different in the grounds upon which a recovery can be had, from a suit to enjoin a tax. In the latter case, each is not only interested in the question involved, but a judgment may be rendered in favor of all as a class, upon substantially *65 the same case, and terminate the litigation. Not so in an action to recover back money paid under duress. In such case the judgment must not only be for each according to the amount due him, but must depend upon whether each as an individual, paid voluntarily or involuntarily.
"But beyond this question of practice, it is shown by the supplemental petition that the payment by all of those who made payment was a voluntary act on the part of each; and that there is no ground for a recovery back by any of them. It appears from the record that at the commencement of the suit a temporary order was made restraining the collection of the tax until the further order of the court; and that it was during the pendency of this order that the payments were made. The averment of the supplemental pleading is: `That since the commencement of this action, and since the allowance and service of the injunction heretofore granted herein, which injunction has not been modified, and is still in full force and effect in law, the defendant, Christian Shonert, as treasurer of said county, unlawfully, in violation of said injunction, and in contempt of this court, did collect and receive the whole of said "special tax," and now has the same in the county treasury.' In this state of the case it is not possible to perceive how the parties, or any of them, can be said to have involuntarily paid any part of the tax for which a recovery is now sought. They were under no legal compulsion to do so. If they paid because of the threat of the treasurer to return their lands as delinquent and cause them to be sold, or to take any other coercive step, it was their own folly, during the pendency of the injunction, to have listened to or been influenced by such threat. With the injunction in force, the treasurer was powerless to adopt any compulsory steps whatever. If he had attempted to do so, he could at once have been attached and punished by the court for disobeying its order. So that each must have paid with entire freedom from anything like duress in law. It may not have been done with alacrity, but it was none the less a voluntary act. Ample protection is afforded by law to the taxpayer against illegal levies. He may in the first instance enjoin the collection; or, having been compelled to pay under circumstances, deemed duress in law, and against his protest, he may recover back the *66 amount paid; but it is unnecessary and contrary to its policy to permit both remedies to be adopted and pursued at the same time. Where the remedy by injunction is resorted to and a temporary restraining order obtained, he cannot be coerced into payment during its pendency, and payment under such circumstances must be deemed a voluntary act, or as a waiver of any objection to the validity of the tax.
"Judgment reversed, and judgment for the defendants below,dismissing the action of the plaintiff."
In Stevens v. Cincinnati Times Star Co.,
So far as we are advised, the principles announced inTrustees v. Thoman have not been overruled or modified by subsequent decisions of the Supreme Court. The question arises, however, as to whether the decision has been modified by subsequent legislation. This requires an analysis of Sections
Prior to 1856, there was practically no remedy either at law or in equity to recover an illegal assessment. The 1856 statute created new statutory rights of action not theretofore existing.Stephan, Treas., v. Daniels,
In Western Union Telegraph Co. v. Meyer, Treas. (1876),
It will thus be noted that voluntary payment of an illegal tax constituted a waiver of the right to enjoin the collection and defeated recovery in an action to recover such tax so voluntarily paid.
In 1928, the Supreme Court approved and followed the *68 Whitbeck case, supra, distinguishing the Western Union andRatterman cases and holding that "a simple protest against the validity of the assessment is, even coupled with notice to the treasurer that the taxpayer will institute legal proceedings to recover back, not sufficient, but it must appear that payment was necessary in order to avoid the legal steps incident to the tax collection." State, ex rel. Pulskamp, v. Board of County Commrs.of Mercer County,
It is reasonable to assume that the second paragraph of Section
As above indicated, Section 12078-1, General Code (Section
The action to recover was required to be brought within one year, and recovery, as well as injunctive relief, was denied if such taxes had been voluntarily paid.
The 1911 amendment provided that if, by judgment or final order of a court, in an action not pending upon appeal, it has been or shall be adjudged and determined that any taxes or assessments levied after January 1, 1910, were illegal, and such judgment or order has not been made or shall not be made in time to prevent the collection or payment of such tax or assessment, then such tax or assessment, or such part thereof as shall remain unexpended and in the possession of the officer, shall be repaid and refunded to the person paying such tax or assessment by such officer. *69
It may be noted that the section makes no distinction between a judgment or final order made in equity or at law, but it seems to imply that it would be determined in an action to enjoin levy or collection since it says, "is not made in time to prevent the collection or payment of such tax or assessment." The language presupposes another action — not one brought pursuant to this section, but a final order or judgment in an action brought pursuant to Section
But in the instant case the plaintiff, under the rule in thePulskamp case, voluntarily paid its tax notwithstanding the temporary restraining order it had previously obtained. Where the remedy by injunction is resorted to and a temporary restraining order obtained, the taxpayer can not be coerced into payment during its pendency, and payment under such circumstances must be deemed a voluntary act, or as a waiver of any objection to the validity of the tax. Trustees v. Thoman, supra.
In the light of the foregoing decisions and observations, the following conclusions are reached:
1. A taxpayer may bring a class action to enjoin the collection of taxes, but he may not convert such class action into one to recover taxes illegally collected.
2. One who has paid a tax claimed to be illegal, may not recover such tax by way of ancillary relief in an action for injunction. It is unnecessary and contrary to the policy of the statute to permit injunction and recovery to be pursued at the same time.
3. Having resorted to the remedy of injunction and obtaining a restraining order, plaintiff cannot be coerced into payment during its pendency, and payment under such circumstances is deemed a voluntary act, or as a waiver of any objection to the validity of the tax.
4. The record herein discloses that the plaintiff either has voluntarily paid the tax in question or has waived testing its illegality by making such payment, and that no other taxpayer in Franklin County has paid his tax under protest or brought suit for the recovery thereof within one year after payment.
The plaintiff is, therefore, not entitled to further injunctive relief, or to recover the tax so voluntarily paid. The other taxpayers, whom plaintiff purports to represent, likewise voluntarily *70 paid their tax and are likewise not entitled to injunctive relief.
It is therefore concluded, as in the Thoman case, that the petition herein should be dismissed at plaintiff's costs.
In appellant's brief it is stated that the Common Pleas Court, in answer to its question No. 1, found that the levy was void because the district was without power to make the levy; that in answer to question No. 2, the court answered that the funds collected and in the possession of Newton D. Thatcher should not be paid to the treasurer of the Conservancy District; that in answer to question No. 2, the court apparently considered that it had answered that question in the disposition of question No. 2; and in relation to questions Nos. 4, 5 and 6, the court either did not answer or found that it was not judicially necessary to do so. An examination of the record fails to disclose any action by the Common Pleas Court with respect to the cross-petition or the questions therein propounded. Nevertheless, the cross-petition is before this court incident to the the appeal on questions of law and fact.
Any person whose rights, status or other legal relations are affected by a statute, municipal ordinance, contract or franchise, may have determined any question of construction or validity arising under such instrument, statute, ordinance, contract or franchise, and obtain a declaration of rights, status, or other legal relations thereunder. Section
The first question submitted is:
"(1) Whether the funds so collected by Franklin County and in the possession of the Franklin County treasurer should be paid over to the treasurer of the Scioto-Sandusky Conservancy District."
Since it is stipulated that no suit for recovery of the taxes in question has been instituted within one year after collection, we find and determine that the funds voluntarily paid to the treasurer of Franklin County and in his possession are held by him as agent for the defendant, Scioto-Sandusky Conservancy District. State, ex rel. Cromwell, v. Myers,
Judgment accordingly.
GRIFFITH, J., concurs.
NICHOLS, J., concurs in the judgment.
FESS, J., of the Sixth Appellate District, and GRIFFITH and NICHOLS, JJ., of the Seventh Appellate District, sitting by designation in the Second Appellate District. *72
UPON the CROSS-PETITION, we find that the funds voluntarily paid to the treasurer of Franklin County and in his possession are held by him as agent for the defendant, Scioto-Sandusky Conservancy District.
GRIFFITH and NICHOLS, JJ., concur.
Concurrence Opinion
With respect for the Supreme Court and a proper sense of duty to follow its decisions, I joined with my associates in deciding the case of State, ex rel. Bowers, Pros. Atty., v. MaumeeWatershed Conservancy District,
Since that decision I have given much consideration to the propositions of law involved in that as well as the instant case, and now with all respect for the Supreme Court I find this an opportune time to express my considerate views with reference to the legality of the tax levy authorized by Section
Section
It certainly was not contemplated by the electors in adopting Section 36, Article II, as an amendment to the Constitution, that the extravagance or necessities of a single county of such district would require the electors of the entire district to approve the method of providing the money necessary therefor, and by their disapproval defeat the purposes of the constitutional amendment, the benefits of which were then anticipated and have long since been demonstrated.
Surely it must have been apparent to the electors, in voting for the adoption of the amendment, that surveys and plans and plats must be procured preliminary to the accomplishment of the purposes of the amendment "up to the time money is received from the sale of bonds." It is inconceivable that the electors expected there would be voluntary contributions amounting to hundreds of thousands of dollars to pay such preliminary expenses, hence the broad and unlimited authority reposed in the General Assembly to provide therefor and thus insure the benefits anticipated. What this constitutional amendment authorized cannot be declared unconstitutional by reason of the subsequently adopted Section 2, Article XII, limiting general taxation "for all state and local purposes," to one per cent of the true value in money of property, since there is no language in Section 2, Article XII, or the schedule thereto, which clearly evinces an intention of the electors to abolish or limit the authority granted to the General Assembly to pass laws for the establishing of conservancy districts. All that the schedule does or says is to make sure that laws previously passed shall remain valid although the levies provided may exceed one per cent. This is far from providing that like levies cannot be passed in the future, and it certainly did not extinguish the right to levy assessments according to benefits. *74
It is too well settled to admit argument to the contrary that special assessments levied according to benefits may be levied without submission to any budget commission and without necessity of approval by a majority of the electors, although assessments are a form of taxation but not for general purposes.
In the Lewis case the Supreme Court has made a fine distinction between "tax" and "assessment" and it seems to be conceded that had the General Assembly used the phrase, assessment according to benefits, instead of the words "preliminary tax" on the assessed value of the property in the district, the levy would be valid. I do not understand that the Supreme Court meant to hold invalid assessments made according to benefits to retire bonds authorized by the conservancy act. Hence I can find no reason for the distinction between "tax" and "assessment." Prior to the decision in the Lewis case all the courts of Ohio had accepted the view expressed in the opinion of the Supreme Court in County of Miami v. City of Dayton,
"Now the language of the act uses the word `tax,' but the word `tax' is a general term and is used frequently as a general tax, or as a local and special tax, in which latter instance it is more frequently spoken of as an `assessment.' Indeed, it has been repeatedly held that the word `tax' is sufficiently general and comprehensive to include the word `assessment.' The very fact that personal property is excluded from bearing the cost of the improvement and that the word `property' is held to mean by the terms of the act to be real property, forces us to the conclusion that it was the intention of the Legislature to provide for the cost of the improvement by way of assessment, as in other drainage cases.
"Courts will not limit themselves to the form and name of things. It is their duty to probe deep enough to get at the substance and the essence of the thing by whatever name or brand it may be known. The whole spirit of the law and its provisions in connection with its practical operation unmistakenly indicate that the Legislature used this word `tax' in its local and special sense. In short, as an `assessment.'"
In so speaking the Supreme Court was interpreting the very act involved in this case. Is it not reasonable to believe *75 that the electors in adopting Section 2, Article XII, providing for limitation on taxing power understood what the Supreme Court had previously said in interpreting the language used in Section 6828-43, General Code?
Now, whether we consider the word "tax" in the sense interpreted by the Supreme Court in the Lewis case, or in the sense of an "assessment" as interpreted by the Supreme Court inMiami v. Dayton, supra, one thing stands out irrefutably. The levy by whatever name is applied to it was for the purpose of defraying the necessary costs and expenses of establishing the district until bonds are issued for that purpose in accordance with Section
It necessarily follows in this action, wherein plaintiff filed in the chancery court its petition for injunctive relief, no irreparable loss or damage has been suffered by the plaintiff and the decree of this court, wherein appeal has been filed by defendant on questions of law and fact, must be for the defendant, the Scioto-Sandusky Conservancy District. I specifically hold that the Pennsylvania Railroad Company, as well as those it assumes to represent, is entitled to neither injunctive relief nor the return of the so-called taxes paid, since it has paid nothing more than it be required to pay as assessment according to benefits to retire bonds issued for the purpose of defraying all the expenses of organization and maintenance of the district, including the preliminary expenses for which the board of directors attempted to levy a so-called tax, but which was the equivalent of an assessment.
Finally, in considering the constitutionality of Section