85 So. 175 | Miss. | 1920
Lead Opinion
delivered the opinion of the court.
This is a proceeding begun by the .revenue agent to back-assess the appellee banks on the shares of their capital stock, surplus, and undivided profits for the years 191.0 to 1915', inclusive, under the provisions of .section 4740, Code of 1906 (section 7058, Hemingway’s Code). The additional assessment directed by the revenue agent to be made sets forth the number of the shares of stock of each of the banks, his (the revenue agent’s) valuation thereof, and the amounts of their surplus and undivided profits for each of the years. The appellees each filed protests with the board of supervisors against this assesment, setting forth, among other things, that the shares of their capital stock and their surplus and undivided profits Avere assessed against them for each of the years included in the present back-assessment and the taxes due thereon were paid, and it appears from these protests that the assessments then made and those now sought to be made are identical, except the valuation of the shares of the appellees’ capital stock and their surplus and undivided profits Avas less in the original assessment than in the one here sought, to be made. This back-assessment was disapproved by the board of supervisors, and its order in so doing was affirmed by the court below. When the cause reached the court below the appellant, apparently proceeding on the theory that it was an ordinary eommon-laAV action, governed by the rules of pleading in such cases, filed what is styled in the record a “replication” to the appellees’ protest, setting forth that the original assessments of the property here in question were fraudulent and of no .validity whatever; the replication filed in the case of the Bank of Yazoo City, of which the others are substantial copies mutatis mutandis, being as follows:
“For replication to the objection of the Bank of Yazoo City, the state revenue agent says: The original assessment mentioned, set up as res adjudicada, and in bar of the assessment sought to be validated and approved in this*393 case, was a fraudulent one and of no validity whatever; because the bank of Yazoo City did not deliver to the assessor for any one of the years involved in this suit a sworn statement as required by law (Code 1906, Section 4273), but the said taxpayer rendered, as private persons usually render assessments, the assessment pleaded by it to the tax assessor of Yazoo county, the same not being under oath; knowing that the value placed by it on its shares of capital stock was not its par value nor its true and actual value, and knowing .that the true and actual cash vlue and the par value of its said stock at the time said assessment was rendered was not less than its par value, $100 per share, and that tlie par value of its said share of stock at said time aggregated a sum not less than $400,000., it nevertheless rendered the same to. the assessor at the aggregate value of $300,000, a much less sum than the par value of said shares and much less than its true and actual value at said time; and this the said Bank of Yazoo City did knowingly, willfully, and fraudulently, with the intent, purpose, and design to cheat and defraud the state of Mississippi and the county of Yazoo of their revenue and to. enable the said bank to escape the payment of taxes justly due from it to the state and county aforesaid.
“This the state revenue agent is ready to verify.”
These replications were demurred to by the appellees, their demurrers were sustained, and the revenue agent declining to plead further, judgment final was rendered against him.
Judges Sykes, COok and Smith are of the opinion that the judgment of the court below should be affirmed, but Judges Ethridge,, Holden and Stevens are of the opinion that it should be reversed. We are therefore unable to reverse the judgment of the court below; consequently it must be affirmed.
Prodeeding- now to set forth the reasons for the opinion of Judges Sykes, Cook and Smith, section 4740, Code of 1906 (section 7058, Hemingway’s Code), under which this proceeding was begun, and which is the measure of the
The question here presented, therefore, is, Has the property which the appellant seeks to have back-assessed escaped taxation by reason of not being assessed? The admission of the appellant that the property has been assessed would seem to answer the question, if it were not for his contention that although it has been in fact assessed the assessment is void in the eyes of the law; consequently the property has escaped taxation within the meaning of the statute. The grounds on which the contention that the original assessment of this property is void rests are, first, that the statement of the appellees’ property filed with the assessor was not sworn to by its officers as required by section 4273, Code of 1906 (section 6907, Hemingway’s Code); and, second, that the property listed in this unsworn statement was knowingly, willfully, and fraudulently undervalued, with the intent, purpose, and design to cheat and defraud the state.
The fact that the statement of the appellees’ property filed with the assessor on which the original assessment was made was not sworn to cannot be held to invalidate the assessment, for the filing of such a statement is not at all necessary to the making of an assessment. The assessor has the power and it is his duty to assess property, although not listed with him at all by its owner. Sections 4265 and 4281, Code of 1906 (sections Q899 and 6915, Hemingway’s Code).
Nor does the intentional undervaluation of his property by the taxpayer when listing it with the assessor invalidate the assessment thereof. Neither the assessor nor the board of supervisors in passing on the assessment roll is bound by the taxpayer’s valuation of his property. If in the opinion of the assessor the property has been undervalued, it is his duty to report that fact to the board of supervisors when
The identical property here sought to be back-assessed was enumerated and valued on the assessment roll when the original assessment was passed on by the board of supervisors, and the correctness veil non of that valuation was a question which it was the duty of the board to then determine, and when determined it became final and conclusive against both the public and the appellees. Section 7, section 135, Laws of 1918; Yazoo, etc., Investment Co. v. Suddoth, 79 Miss. 416, 12 So. 246; State v. Simmons, 70 Miss, 501, 12 So. 477; Adams v. Bank, 108 Miss. 346, 66 So. 407; Darnell v. Johnson, 109 Miss. 570, 68 So. 780. To hold otherwise would not only violate the statute but would subject the citizen to the inconvenience and uncertainty of having his assessment reopened at any time in the future, within the period of limitation, upon the charge that he had intentionally undervalued his- property when listing it with the assessor. Such a condition of affairs would be intolerable and not within! the contemplation of the law.
But if we should hold that the original assessment of this property is void, the result would be the same, for the assessment was in fact made and the property did not in fact escape taxation. This point was expressly decided in
“The words 'escaped taxation/ under the construction of the revenue law, should receive the meaning usually and popularly accorded to them. The evil to he remedied demonstrates this. The object of the law, in respect to the back-assessment of property by the revenue agent, was to prevent property which had not been actually assessed at all from escaping its proper portion of the public burden of taxation. Property may escape taxation in varied ways, as, for example (a) by being willfully withheld from assessment by the owner; (b) by being inadvertently or accidentally omitted by the owner in returning his property to the assessor. , In either of these two cases, and in others which may be conceived, there has been in fact — there has been actually — escapé of such property from taxation; it has never been assessed at all as a matter of fact. And it was the purpose of the law, in cases like these, where the regularly constituted fiscal officers had failed to assess all property liable to taxation, to authorize the revenue agent to back-assess .such property never heretofore in fact assessed at all, and which ivas, therefore, described as property which had in fact escaped taxation. But where an assessment has in fact been made, where the.assessment roll shows on its face all that it ought to show — the name of the owner, the description of the property, the valuation of the property, the tax, etc. — but that assessment is irregular or imperfect or defective, or even absolutely and utterly void, by reason simply of a failure to comply with some vital and fuhdamental requirement of the law, such property cannot, within the meaning of these words, 'escaped taxation,/ be said to be property which has escaped taxation in fact. In such cases, manifestly, there has been an: assessment — an assessment in fact, an actual assessment. The property has not been withheld from the assessment roll. It has not been omitted by inadvertence, accident, or for any other reason. It is there on the assessment! roll. It is assessed at a certain rate. It is all assessed. But the whole roll is void because of such failure to comply with such.*397 fundamental requirement of the law. There is, in such latter case, no assessment in the eye of the law; but there has been an actual assessment in fact, though not valid in the eye of the law.
We think it far safer to hold, in view of the evil to be. remedied by the statute on the subject, and in view of the canon of construction that words not technical, as these words, ‘escaped taxation,’ ought to be given their usual, ordinary, popular signification!, that property can never be said to have escaped taxation, within the meaning of the revenue law on that subject, save only in those cases where there never has been any actual assessment at all of such property. The original thought in the statute authorizing the revenue agent t;o back-assess property which has escaped taxation was to furnish machinery, not initiating assessment primarily, but to supply the defects in an assessment already made. It will not do to say that, because an assessment is utterly void in the eye of the law, though once actually made, such property has escaped taxation. The very term ‘escape,’ ex proprio vigore, implies that it had never been found or known or listed for taxation. That escapes detection which never has been seen in fact. That .escapes assessment which never has in fact been assessed in any way. That which, as a matter of fact, has been returned by the owner, placed upon the assessment roll by the assessor, dealt with by the board of supervisors and by the tax collector, cannot be said, in any proper sense of the words ‘escaped taxation’ or within the scope of the evil to be remedied by the revenue law, to have escaped taxation.”
The case of Adams v. Clarke, 80 Miss. 134, 31; So. 216, is not in conflict, but, on the contrary, is in accord, herewith. The contention here is, not that all of the property sought to be back-assessed ivas not enumerated and valued when originally assessed, but simply that it was then undervalued. And it was expressly stated several times in the opinion in that case that the approval of the assessment roll by the board of supervisors is conclusive, “as against
Affirmed.
Dissenting Opinion
dissenting, express the following views:
The replication filed by the revenue agent in this case expressly charged that appellees “did knowingly, willfully, and fraudulently, with the intent, purpose, and design to cheat and defraud the state of Mississippi and the county of Yazoo of their revenue and to enable the said bank to escape the payment of taxes justly due from it to the state and county aforesaid,” make their tax returns which they now plead as res adjucUoatai. This replication charging willful and intentional fraud was demurred to, and it nec- ■ essarily follows that the fraud has been admitted. We are therefore confronted with the concrete proposition whether a taxpayer can be guilty of fraud, come into court! and by a solemn pleading admit the fraud, and successfully take advantage of it. We say he cannot.
This court, by Chief Justice Sharkey, in Niles et al v. Anderson et al., 5 How. 365, at page 386 of the opinion, said: “Any act, however solemn, even though it be a judgement of a court of competent jurisdiction, may be set aside, if procured by fraud. . . . Fraud vitiates everything into which it enters. . . . Fraud gives jurisdiction to the court and lays a foundation for relief; hence a general demurrer to a bill containing such an allegation cannot be allowed. So if the defendant should plead to the bill, he must still deny the fraud by answer as well as by averment in the plea.”
The judgment of a board of supervisors in tax mattersi is, of course, ordinarily binding upon both the state and the taxpayer. No one disputes this general proposition. But how can the judgment of a board of supervisors fixing the valuation of property for taxation be any more sacred or binding than the solemn judgment of a court of law, or the decree of a court of chancery? If fraud vitiates a solemn judgment at law, it will vitiate the judgment of an equalizing board.
In speaking of the jurisdiction of special tribunals in taxation matters, it is stated in Ency. of Pleading & Practice, vol. 21, p. 443,, as follows:
“The exclusiveness of jurisdiction in special tribunals is held to relate only to the correction of errors in particular matters provided for, and does not prevent a party from resorting to the ordinary tribunals for remedy against an assessor or the assessment when the assessor or special tribunal act corruptly or with malice.”
And in Ency. of Law (2 Ed.), vol. 27, p. 700, it is said: “Property which has been assessed but escaped taxation by reason of the assessment against it being illegal or void, if subject to taxation in fact, is, no doubt, assessable as omitted property under the statutes enacted for that purpose. It has also been held that where property has been grossly and fraudulently undervalued, and thus pro tanto escaped taxation, such statutes authorize the taxing officers to reassess it for the omitted value. In some jurisdictions the statutes expressly provide for reassessment in such cases.”
The principles announced by our own court in Adams v. Clarke, 80 Miss 134, 31 So. 216, are very pertinent and in fact should control the present appeal. Our court, by Chief Justice Whitfield, there said:
“Suppose a taxpayer as to money returns the amount of ‘money on hand, on deposit, or loaned,’ $500. The revenue agent discovers that the party had on hand in*400 actual money 1,000, and assesses him for the additional $500. Is the first assessment res adjudicada? Manifestly not; the taxpayer has simply made a false list. He has omitted $500 of the money he did have; it has escaped taxation, and under Code, section 8768, the assessor can assess it, and under the act) of 1894 the revenue agent can cause it to be assessed as money ‘which has escaped taxation! ”
“Every dishonest return of taxes is not only a violation of the law, and beside a wrong to the state, but it is the grossest injustice to those who honestly pay their taxes. If all citizens would take care to pay as they should, the tax rate would be lowered, probably one-half, and property in the hands of corporations and individuals Avould equally respond to its just burdens. We have held the law aloft as to corporate efforts at evasion, and Ave shall mete out the same equal justice to the fraudulent individual taxpayer.”
The lofty banner of righteousness Avhich the gifted jurist raised in the Clark Case should be cheerfully followed by the court, and the rule of fair dealing enforced against all willful and fraudulent taxpayers. It may be conceded that as a practical question.it is difficult to prove willful fraud and corruption in tax assessments, but with these practical difficulties we have no concern in the present inquiry. No proof is necessary in the present" case, as che pleadings now stand. Fraud has been boldly admitted. The question of the fraudulent undervaluation of property came before the Supreme Court of Minnesota in the case of State v. Weyerhuaeser, 68 Minn. 353, 71 N. W. 265, and 72 Minn. 519, 75 N. W. 718, and the contentions of the taxpayer carried before the Supreme Court of the United States as reflected in Weyerhaueser v. State of Minn., 176 U. S. 550, 20 Sup. Ct. 485, 44 L. Ed. 583. In the course of the opinion of the Supreme Court of the United States by Mr. Justice McKenna it was said:
“If an officer omits to assess property, or grossly undervalues it, he violates his duty, and the property and its*401 owners escape tlieir just share of the public burdens. . . It would be very strange if the state, against a gross undervalution of property, could not, in the exercise of its sovereignty, give itself a remedy for the illegal deficiency.”
Por the reasons thus briefly indicated, Ave unhesitatingly dissent from an affirmance in this case — the product of an equally divided court.