45 F. 323 | U.S. Circuit Court for the District of Montana | 1891
This is an action brought to recover from Custer county a tax claimed to have been illegally collected from plaintiff, amounting to the sum of $3,485.40, with legal interest thereon from the 14th day of June, 1886, the date said collection was made. Plaintiff sets forth in its complaint that it is a corporation organized under the laws of the kingdom of Great Britain and Ireland, and doing business in the states of Wisconsin and Wyoming, in raising, breeding, buying, and selling cattle and horses. That defendant is a public corporation, existing by virtue of the laws of formerly the territory, now the state, of Montana. That among the possessions of plaintiff in 1885 were some 4,000 head of castle, ranging at a place called “ Hanging Woman’s Creek,” in said Custer county. That said place was in said Custer county was a fact of which plaintiff was ignorant. That the assessor of said Guster county well knew the residence of the officers of plaintiff, and where those who had a right to list its said property lived. That its principal place of business was at Cheyenne, in the now state of Wyoming, and at its ranch on said Hanging Woman’s creek, in the now state of Montana. That the said assessor of said Custer county made no demand on plaintiff or any of its agents, servants, or employes to list said cattle. That the said assessor well knew the post-office address of said agents, servants, and employes of plaintiff. That the said assessor, without making said demand on plaintiff, or any of its agents, servants, or employes to list said property, listed himself the same upon information and belief, and in such listing increased the amount from 4,000 cattle to 10,000, an excess of 6,000 over the amount plaintiff had in said Custer county. That in said list were included calves under one year old, and bulls, not taxed. That subsequently the county commissioners added to said list of property of plaintiff a certain number of horses, which it válued at $2,000, and that they did this without any notice to plaintiff. That the said tax so levied upon the property so listed was turned over to the treasurer of said Custer county, with a warrant for its collection. That the said treasurer, acting as collector of taxes, threatened to, and did attempt, during the month of May, 1866, to seize the property of plaintiff', namely, its cattle, for the purpose of selling the same to pay said taxes, and that the said treasurer was only prevented from so doing by plaintiff paying to said treasurer the amount of $4,954, claimed as taxes, and $495.40 as a penalty added thereto for not paying said taxes within the time provided by law. That the said sums were so paid by plaintiff under duress of its property, and to save the same from seizure and sacrifice, and under protest, alleging that said tax was void; that the assessor had no jurisdiction to list said property, by reason of the fact that he had made no demand upon the company or its officers or agents for a list of its property; and for the reason that said assessment list and roll contained no description of plaintiff’s property subject to taxation
The first point that arises is, was the tax illegally assessed? The statute requires that every assessor shall demand of each tax-payer in, his district a list of his property. At the date of the assessment in this case the district of the assessor of Custer county embraced the whole of that county. It is a general rule of the United States courts that they will follow that construction of a state statute which it has received by the highest, court of that state. Moores v. Bank, 104 U. S. 625; Fairfield v. Gallatin Co., 100 U. S. 47; Tioga R. Co. v. Blossburg & C. R. Co., 20 Wall. 137; King v. Wilson, 1 Dill. 556. The supremo court of Montana, Territory in the case of Railroad Co. v. Carland, 5 Mont. 146, 3 Pac. Rep. 134, interpreted the statute under consideration requiring a demand to be made by the assessor upon the tax-payer to list his property subject to taxation. In speaking of that statute, it says, by Chief Justice Wade :
“Under the provisions of our statute it is the first duty of the assessor to demand a list of the property from the tax-payer or the person whose property is to be assessed. This is the first and important step towards assessing ids property for taxation. If the list is not furnished on such demand, then, and not until then, has the assessor the right himself to make a list and value the property. The demand is a condition precedent to the right of the assessor to act in the premises. That, and the neglect or refusal of the person having taxable properly, alone gives to the assessor the right to make the list himself. If this were not so, the sovereign power of taxation becomes an arbitrary exaction, subject to the caprices of a single individual, without the knowledge and behind the back of the person most interested, and whose property is to be taken for the public use. Therefore it is that onr statute has wisely provided that tlie person having taxable property shall have the right to list the same for taxation. The assessor -has no right or jurisdiction to make the list until the tax-payer or person having the property subject to taxation has neglected or refused to make it.”
This decision very fully and decisively determined the question that there must he a demand on the tax-payer or person in charge ol taxable property for a list of the property possessed by him and a refusal to list the same, before the assessor has any jurisdiction to list such property himself. It is true this was a decision of a territorial court. Rut the same reason for the rule in relation to the decisions of state courts should prevail. It was a territorial court interpreting a statute of its territory, which became a rule for the conduct of revenue officers of the territory in prosecuting their official duties. If it is not of controlling authority the rule expressed in that decision should, I am of the opinion, commend itself to the judicial mind. As to statutes providing for taxing property, it may be said as a general rule: “When the regulations pro
It is true that all ihe property plaintiff had in Montana, not exempted by statute, was subject to taxation; but that tax could be collected only as was provided by law. The plaintiff admits that it had about 4,000 head of cattle subject to taxation, and that the tax on the same was $1,964. This amount it does not seek to recover back from defendant. But the complaint shows that it paid some $3,485.40 more than was the proper tax. In other words, the defendant has received from plaintiff $3,485.40 more than it was lawfully entitled to, and this plaintiff seeks to recover hack. It is urged by defendant that, if this is an illegal tax, the remedy for plaintiff to have pursued in the matter was for it to have appealed to the board of county commissioners as a board of equalization, asking to have this tax properly adjusted. When a tax is illegal, one is not obliged to apply for an abatement, unless the statute makes that the sole remedy. Cooley, Tax’n, p. 528. When one has paid an illegal tax, the right to recover the same back from the corporation to whom the same has been paid exists, although the tax-payer had not appeared before the board of equalization to contest the assessment. 2 Desty, Tax’n, § 131, p. 787. In the case of Stanley v. Supervisors, 121 U. S. 535, 7 Sup. Ct. Rep. 1234, Justice .Field, in speaking for the court, says, (page of opinion 549,321 U. S., and 7 Sup. Ct. Rep. 1239:)
“It is only where the assessment is wholly void, or void with respect to separate portions of the property the amount on which is ascertainable, or where the assessment has been set aside as invalid that an action at law will lie for the taxes paid or for a portion thereof.”
Again, in same case, on page of opinion 550, 121 U. S., and page 1289, 7 Sup. Ct. Rep., the justice says, in speaking of boards of equalization or revision:
“To these boards of revision, by whatever name they may be called, the citizen must apply for relief against excessive and irregular taxation where the assessing officer had jurisdiction to assess the property.”
In this it appears by implication that, where the officer had no jurisdiction to assess property, and the assessment was void, there was no necessity to appeal to a board of equalization to correct the assessment.
“Of the necessity of an assessment no question can be made. Taxes by valuation cannot be apportioned without it. Moreover, it is the first step in the proceedings against individual subjects of taxation, and is the foundation of all which follows it. 'Without an assessment they have no support, and are nullities.”
In an early case in Massachusetts it was held, where the assessor had no jurisdiction to assess a tax-payer, that there was no necessity for applying to a board of review to correct the error complained of. Preston v. Boston, 12 Pick. 7. The case of Railroad Co. v. Patterson, (Mont.)24 Pac. Rep. 704,1 do not consider in point. It is true that there are some assertions in that opinion which seem to cover the ground that no action can be maintained in equity to enjoin the collection of avoid tax until there has been an appeal to the board of equalization, but, taken altogether, I think it does not controvert the doctrine that it is only in cases where there are errors and irregularities in the assessment that an appeal must first be made to the board of equalization. In it the court quotes from High on Injunctions, (volume 1, 2d Ed. § 493:)
“ Where, therefore, a particular manner is provided by law, or,a particular tribunal is designated, for the settlement and decision of all errors or irregularities on behalf of persons dissatisfied with a tax, they must avail themselves of the legal remedies thus prescribed, and will not be allowed to waive such relief and seek in equity to enjoin the collection of the tax.”
It will be observed here that the words “errors or irregularities” are used. I do not think that these words can cover the case of a void tax,
“If the officers who assessed and collected this tax were utterly without authority to collect any tax whatever, or, it there was no law by which in any case they could assess and collect a tax on shares of national banks, then it is of ho consequence to inquire of anything beyond the fact that plaintiff’s assignors did pay such tax under legal compulsion.”
When this case came up again for consideration, (see 121 U. S. 545, 7 Sup. Ct. Rep. 1236,) that court again says:
“ If he liad debts, the assessment without a deduction for them in tho estimate of the taxable value of the stock was only voidable. The assessing officers, in making the assessment, were acting within their authority, until duly notified of the debts which were to be deducted. In such case, therefore, the duty devolved upon the stockholder to show to the assessing officers what his debts were, and to take such steps as were required by the law to obtain a correction of the overassessment.”
Here, I think, the line is distinctly drawn between a void and an erroneous or voidable tax. In tho first place, it is of no consequence to inquire of anything beyond the fact that the party did pay such tax under legal compulsion. In the second place, the party is required to take such steps as were required by the law to obtain a correction of the overassessment. The conclusion I reach is that the plaintiff need not
It was urged by counsel for defendant that plaintiff ought not to have paid the tax, but should have resorted to a court of equity to have enjoined its collection. There is nothing presented in this case which would have warranted plaintiff in resorting to such a forum. In the cases of Dows v. City of Chicago, 11 Wall. 108, and Hannewinkle v. Georgetown, 15 Wall. 547, the United States supreme court held that a suit to enjoin an illegal or void tax would not lie “unless there were some special circumstances bringing the case under some recognized head of equity jurisdiction, such as that the enforcement of the tax would lead to a multiplicity of suits or produce irreparable injury, or, whore the jiroperty is real estate, throw a cloud upon the title of the complainant.” No circumstances such as would bring this case under the head of any recognized rule awarding equitable relief appear in the record. The only remedy left for plaintiff, then, was to allow its property to be seized and sold, and then bring an action against the collector in trespass, or to pay the tax claimed when the legal compulsion was presented under protest, and bring its action to recover the same back. I think enough appears in the complaint to show that the payment of what was claimed as a tax was made under compulsion. A warrant had been issued for its collection, and the collector had attempted to seize the property of plaintiff thereunder, and payment was made with the view of preventing this. When a tax is paid involuntarily, — that is, under legal compulsion,— it may be recovered back in an action at law, and from the county who has received and holds the tax. Newman v. Supervisors, 45 N. Y. 676; 2 Desfy, Tax’n, p. 795; Detroit v. Martin, 22 Amer. Rep. ("notes) 519-520. Numerous authorities might be cited to sustain the above proposition. For the above reasons it is ordered that the demurrer to the complaint be, and the same is hereby, overruled.
