184 Ga. 605 | Ga. | 1937
Lead Opinion
The City Bank of Eort Valley failed and went into the hands of the superintendent of banks for liquidation in the year 1928. In October, 1931, T. E. Tharpe as tax-collector of the county in which the bank was located brought a suit in the superior court of that county against W. J. Davis, acting as superintendent of banks, alleging in his petition as amended that there was due as State and county taxes on real estate and personal property of the bank, in possession of the defendant, the sum of $994.50 as taxes accruing for the year 1929; and that the defendant had sufficient funds with which to pay the taxes, but refused to pay them. The plaintiff prayed that the defendant be directed to pay over to him, as State and county taxes for the year 1929, the sum specified with interest at the rate of seven per cent, per annum from December 20, 1929. The court sustained a general demurrer and dismissed the petition, and the plaintiff excepted. On review, the Court of Appeals held that the petition stated a cause of action and reversed the judgment, but made no specific ruling as to interest. Tharpe v. Gormley, 48 Ga. App. 731 (173 S. E. 212). On the next trial the allegations of fact contained in the petition were admitted, and the judge passed an order di
The banking act of 1919 as amended in 1927, provided as follows: “Sec. 19. Order of paying debts. After the payment of the expenses of liquidation, including compensation of agents and attorneys, and after the payment of unremitted collections, the order of paying off debts due by insolvent banks shall be as follows: (1) Debts due depositors. (2) Debts due for taxes, State and Federal. (3) Judgments. (4) Contractual obligations. (5) Unliquidated claims for damages and the like. Provided, that nothing herein contained shall affect the validity of any security or lien held by any person or corporation.” Ga. L. 1927, p. 195; Code, § 13-821. This statute purports to declare the order of priority only- as to “debts due by insolvent banks.” This was not a debt due by the insolvent bank, as it was not in existence at the time the bank failed, but arose afterwards. In this same case the Court of Appeals (Tharpe v. Gormley, 48 Ga. App. 731, supra) held as follows: “There is nothing in the banking act as amended, or elsewhere, absolving the property of a bank or its assets from taxes accruing after the bank has been taken over by the superintendent of banks for liquidation. The constitution of this State, in article 7, section 2, paragraph 4 (Civil Code of 1910, § 6556), provides that fall laws exempting property from taxation, other than the property herein enumerated, shall be void/ The exceptions referred to are contained in paragraph 2 of this article and section of the constitution, and do not include taxes of the character of taxes accruing against the property or assets of a bank after it has been taken over by the superintendent of banks for liquidation. The property and assets of a bank which are in the possession of the superintendent of banks for the purpose of liquidation are not exempt from taxation.”
The tax here involved was not an obligation or expense incurred by the receiver in the course of administration, but is a charge imposed by ihe sovereign. Taxes have been referred to as expenses of administration only because it is the duty of the receiver to pay them. While the property is thus in the custody-of the court, no levy can be made; and so, if the receiver does not pay the taxes otherwise, he may be required to do so by an order of court. For this reason, and no other, can it be properly said that the taxes are paid as expenses of administration. Hence, the rule that the ordinary expenses of administration do not bear interest is altogether inapplicable to the State’s lien for taxes. In Empire Cotton-Oil Co. v. Park, supra, it was held: “It is the duty of a court of equity to direct its receiver to pay the taxes accruing on the property of an insolvent corporation while in the hands of the receiver, upon a timely application for that purpose made by the purchaser of such property at the receiver’s -sale.” This refers to “taxes,” not “expenses of administration.” As to the necessity of such a proceeding because the execution can not be levied, authority has already been cited; but see also Coker v. Norman, 162 Ga. 238 (2) (133 S. E. 243); Collier v. Gormley, 178 Ga. 142 (2), 147 (172 S. E. 340). In 26 R. C. L. 391, § 348, it is stated that a “receiver is liable for penalties and interest on overdue taxes in the same manner as any other taxpayer.” This
The decision under review, holding in effect that the taxes in question should rank merely as an expense of administration, can not be sustained as one based on the law of the case. The expressions in the former decision (48 Ga. App. 731, supra) as to expenses of administration can mean only that the receiver or superintendent should be required to pay the taxes in the course of administration, because the assets in his hands are not subject to levy. This is clearly apparent from the other portions of the decision which have been quoted in this opinion. Still other portions lead to the same interpretation. Certainly it was not held that this claim should not bear interest, and be paid accordingly. There is nothing in the decisions by this court, cited therein (48 Ga. App. 734) which in any way conflicts with the views herein expressed as to the implications of the phrase “ expenses of administration,” and similar expressions, as applied to tax claims.
While it appears from the record that the petition as filed in the trial court alleged that the amount claimed for State and county taxes for the year 1929 “constitutes and is a current administrative expense incident to the liquidation of said bank, and entitled to payment as such without regard to and before payment is made of any of the claims against said bank, which existed when the defendant took' possession of its assets,” the petition also alleged sufficient facts to show the priority of the' claim as one for taxes and a duty on the part of the superintendent to pay the same as such, with interest thereon. There being no demurrer on the ground of duplicity, the petition will support a recovery upon the latter theory, and under the law as applied to the facts it should be construed accordingly. Citizens & Southern Bank v. Union Warehouse & Compress Co., 157 Ga. 434 (7), 455 (122 S. E. 327). The more especially is this true since the plaintiff was
Judgment reversed.
Dissenting Opinion
dissenting. I agree with the majority holding, as supported by Dysart v. Brown, 100 Ga. 1 (supra), that taxes do not cease to accrue against the property of an insolvent while the assets of the insolvent are in the hands of a receiver or quasi receiver; and that, in the language of the majority opinion, they thus continue to accrue as taxes “according to the general rule as to taxation.” The proposition just stated is not, however, as I 'understand the case, a disputed question. The contest is not one involving the validity of claims, but relates solely to their priority. Thus, while not questioning the validity of the claim for taxes thus accruing, I do question their priority. This is true for the reason that in such a contest, as was said by the trial judge and by the Court of Appeals, if “payable as taxes” and claiming priority merely as such against the claims of depositors, their rank is inferior thereto. The priorit}' of such taxes over the claims of depositors arises not by virtue of the priority given to taxes, inferior in rank to claims of depositors, but because such a tax claim is impressed with an additional and higher priorit]', superior to claims of depositors, by virtue of its being accounted one of the “expenses of liquidation.” Since the State in the exercise of its sovereign power has renounced what was heretofore its paramount claim for taxes, it follows that, in a contest between taxes and claims of depositors, taxes must stand aside unless they can be supported and carried forward by such additional claim to priority; but since expenses of liquidation do not bear interest, the claim of priority for taxes can advance no further than the vehicle on which it rides. In a contest between claims for taxes and creditors of an insolvent bank, other than depositors, it would be important to note that taxes bear interest, and that such interest has the same degree of priority as the taxes themselves. In a contest with depositors, however, the rule as to interest on taxes matters nothing. The important question is not whether taxes bear interest, but whether expenses of liquidation do so. It is conceded that they do not. It follows that interest on taxes incurred during liquidation can not be given priority
All this would seem plain and easy enough, were it not for the fact that the majority opinion strikes deeper by laying down the rules that these taxes do not constitute a debt due by an insolvent bank; that the State by the priority statute has not waived its paramount claim for taxes except as to debts in existence at the-time the bank failed; that consequently it still retains its priority for taxes accruing subsequently to liquidation, with the result that the priority statute has no application in a case of this kind; and that the case stands-just as if the insolvent were an ordinary corporation and not a bank. The question then is whether the priority statute governing claims against insolvent banks, which places expenses of liquidation first, claims of depositors second, and taxes third in priority, really means “taxes” or refers only to antecedent taxes. As heretofore stated, the question is not one concerning a renunciation by the State of its taxes, but only concerning the priority of taxes and other claims against insolvent banks. It would seem that this statute purports to cover and in fact does cover the entire question. Section 19 of the original banking act approved August 16, 1919 (Ga. Laws, 1919, pp. 138, 359); this section bearing the introductory title “Order of Paying Debts,” includes as a part of such “debts” but fourth in order of priority, “The expenses of liquidation, including the compensation of agents and attorneys,” and also includes as a part of such “debts,” first, “Debts due the State of Georgia,” and second, “Debts due any county, district, or municipality of the State, including unpaid taxes.” The present act, approved August 25, 1927, in amending section 19 of the former act (Ga. L. 1927, pp. 195, 199), now codified as § 13-821, is also entitled, “Order of paying debts,” and includes in such “debts” both “the expenses of liquidation, including compensation of agents and attorneys,” which expenses are now first in order of priority, and “Debts due for taxes,” which now rank after claims due depositors. If taxes accruing after liquidation are not a debt against the bank, whom is the claim against? Not against the quasi receiver; for, as