Yellowstone Packing Etc. Co. v. Hays , 83 Mont. 1 ( 1928 )

The defendant treasurer is a ministerial officer. He had no discretion in the matter involved in this appeal. Until the order of the board of county commissioners was made it was his plain duty to collect the entire amount of the taxes against the property of the appellant. After that order was made it was his plain duty to obey it, to accept the money tendered by appellant, and to cancel the delinquent taxes on his records. As a ministerial officer, subject to supervision of his official conduct by the board, he had no discretion except to obey the order of the board, so long as that order stands. It was not for him to refuse to obey because he believed the board had exceeded its jurisdiction, abused its discretion or otherwise acted erroneously. (State ex rel. Stephens v. Keaster, 82 Mont. 126,266 P. 387.)

Where fraud or the adoption of a fundamentally wrong principle of assessment is shown, courts will grant relief from excessive assessments although the statute provides a remedy before the board of equalization. (Belknap Realty Co. v. Simineo,67 Mont. 359, 215 P. 659.)

The cases cited below hold that excessive overvaluations constitute constructive fraud and the Montana case, cited above, lays down the rule that courts will relieve the taxpayer from fraud. While the procedure in other states differs somewhat from the procedure in Montana, the principle is the same. As we have seen here the question of taxation and valuation of property is strictly a local matter and the remedy for erroneous taxation lies with the board of county commissioners. It ought to be self-evident that the board has the power and ought to relieve wherever the courts hold that relief should be granted. (SouthSpring Ranch C. Co. v. State Board, 18 N.M. 531,139 P. 159; Amoskeag Mfg. Co. v. Manchester, 70 N.H. 200,46 A. 471; McHenry v. Alford, 168 U.S. 651, 42 L. Ed. 614, 621,18 Sup. Ct. Rep. 242 [see, also, Rose's U.S. Notes]; Henderson v.Pierce Co., 37 Wash. 201, 79 P. 617; Northern P. R.R. Co. v. Pierce Co., 55 Wash. 108, 104 P. 178; Case v. San JuanCo., 59 Wash. 222, 109 P. 809; Grays Harbor Const. Co. v.Grays Harbor Co., 99 Wash. 184, 168 P. 1138; Shawmut Mfg.Co. v. Inhabitants of Benton, 123 Me. 121, 122 A. 49;Birch v. Orange County, 59 Cal. App. 133, 210 P. 57; IowaCent. Ry. Co. v. Board, 176 Iowa, 131, 157 N.W. 731; People v. St. Louis Electric Bridge Co., 290 Ill. 307, 125 N.E. 280.)

As to the suggestion of defendant that the plaintiff is estopped to claim the relief asked by it: The fact that a bank furnished to the assessor the information upon which an unlawful assessment was made did not estop it to thereafter attack the validity of the tax where the Act under which the assessment was made provided a penalty for failure to furnish it, and the information was thus given under compulsion. (Union Bank TrustCo. v. Moore, 62 Mont. 132, 204 P. 361.)

Defendant in his so-called "separate and further defense" alleges that "no request was ever made to any board of equalization for any reduction or change in the assessment of said property for any of said years." Plaintiff concedes that the usual and ordinary method of securing relief from overassessment of property is by appeal in the first instance to the county board of equalization, and failing there by appeal to the state board of equalization, and failing there by a final appeal to the courts. That procedure does not and cannot apply under the conditions set forth in the complaint, for the reason that the time for taking any such action has long since expired. Furthermore, the board of county commissioners has already granted the relief asked for by plaintiff, and its action has never been questioned, and has become final and conclusive. The case at bar is distinguishable from the great mass of decided tax cases in this: Appellant did not apply to the lower court, nor is it appealing to this court, for relief against an erroneous and illegal tax. It has already been awarded that relief and now merely asks that the treasurer be required to make it effective.

It may be contended by counsel that the taxes in question are not illegal, having been, so far as procedure is concerned, assessed and levied in the ordinary manner. Even if we concede that to be true, it is to be noted that the words "erroneous" and "illegal" are used disjunctively in the statute and it is not necessary that the tax be both erroneous and illegal. We insist that the word "erroneous" in our statute (sec. 2222, Rev. Codes 1921) should be given the same construction as was given by the supreme court of New Mexico to the word "injustice" in its statute, in the case of South Spring Ranch C. Co. v. StateBoard, supra. (See, also, People v. Molloy, 34 A.D. 31,54 N.Y. Supp. 1084, 1087.) Constitutional prohibitions like those in Montana, prohibiting the releasing or compromising of delinquent taxes are, according to the supreme court of Kentucky (63 S.W. 14, 15), found in California, Colorado, Illinois, Louisiana, Missouri, Nebraska, Texas, Wyoming and Kentucky. Statutes similar to Montana statutes in reference to equalization of taxes are found in Colorado, California, Wyoming, Nebraska, Arkansas, Oklahoma, North Carolina, West Virginia, South Dakota, Illinois, Tennessee and New York. In those states the courts, as hereinafter pointed out, have held under such statutes that "a taxpayer who does not exhaust the remedy provided before an administrative board to secure the correct assessment of a tax cannot thereafter be heard by a judicial tribunal to assert its invalidity." (Gorham Mfg. Co. v. Tax Commission,266 U.S. 265, 69 L. Ed. 279, 45 Sup. Ct. Rep. 80, construing the statute of New York; First National Bank of Greeley v. Board of CountyCommrs., 264 U.S. 450, 68 L. Ed. 784, 44 Sup. Ct. Rep. 385, construing the Colorado statute; Farncomb v. City and Countyof Denver, 252 U.S. 7, 64 L. Ed. 424, 40 Sup. Ct. Rep. 271;McGregor v. Hogan, 263 U.S. 234, 68 L. Ed. 282, 44 Sup. Ct. Rep. 50; 37 Cyc. 1079, 1080.)

In Belknap Realty Co. v. Simineo, 67 Mont. 359,215 P. 659, the court gave careful consideration to the administrative remedies prescribed by the statutes of Montana, and held that the plaintiff could not complain of overvaluation of its property for assessment purposes without having exhausted the statutory remedies available to it before the county board of equalization and the state board of equalization. To the same point, Thwing v. Weiser, 65 Mont. 28, 210 P. 750; Bond v. Zweigel (Okla.), 264 P. 893; Hays v. Bonaparte (Okla.), 264 P. 605;Bradford v. Snell, 80 Okla. 56, 193 P. 982; Black v.Geissler, 58 Okla. 335, 159 P. 1124; Union Nat. Bank v.Board of County Commrs., 75 Colo. 298, 225 P. 851; FirstNat. Bank v. Board of County Commrs., 264 U.S. 450,68 L. Ed. 784, 44 Sup. Ct. Rep. 385. The complaint does not allege that the Yellowstone Packing Company availed itself of the administrative remedies afforded by sections 2113-2121 and 2123, Revised Codes 1921, and therefore the defendant's demurrer to the plaintiff's complaint should have been sustained.

"A taxpayer is bound and estopped by his own statements as to the nature, title and value of his property, made in the list which he returns for taxation." (37 Cyc. 994; St. Louis-SanFrancisco Ry. Co. v. Middlekamp, 256 U.S. 226, 65 L. Ed. 905,41 Sup. Ct. Rep. 489; Dull v. Le Fevre, 222 Fed. 471; City of Tampa v. Mugge, 40 Fla. 326, 24 So. 489,495; Pfeiffer v. City of San Antonio (Tex.Civ.App.),195 S.W. 932; People v. Illinois Cent. R. Co., 273 Ill. 220,112 N.E. 700, 718; Village of Westby v. Bekkedal, 172 Wis. 114,178 N.W. 451.)

Counsel for appellant cite a number of decisions in their brief to the effect that relief may be granted from assessments based on overvaluation. We submit that those authorities do not substantiate the appellant's contention.

Counsel for appellant base their right to relief on section 2222, Revised Codes 1921. That section says nothing about assessment, and by its own terms is plainly limited to a refund to the taxpayer of payments that may have been erroneously or illegally made by him because of some errors such as clerical in computation, double assessment, assessment of exempt property, levy without authority of law, etc. "Erroneously collected" as used in that section is synonymous with mistakenly paid. The mistake may be one of law or fact. That section has not been construed in any decisions by the supreme court of Montana. Section 3804 of the California Codes, similar to our section 2222, has been referred to several times by the supreme court of California. In Graciosa Oil Co. v. Santa Barbara County,155 Cal. 140, 20 L.R.A. (n.s.) 211, 99 P. 483, 486, the court said in effect that the section applied only to taxes that had been paid, and that "it gives a right of recovery only when the assessment is void." In Hayes v. Los Angeles County, 99 Cal. 74,33 P. 766, the court discussed the purposes of the section. In Buffalo Mut. Gaslight Co. v. Board of Supervisors,144 N.Y. 228, 39 N.E. 86, where a similar section was under consideration, the court said: "This was an illegal tax * * * but the power to direct it to be refunded does not come into action until it has been paid." The meaning of "refund" as used in that section means to pay back what has been wrongfully taken from the taxpayer. (Home Savings Bank v. Morris, 141 Iowa, 560,120 N.W. 100.) That statute was designed to enable a taxpayer to recover illegal taxes that he may have voluntarily paid because at common law taxes voluntarily paid, although illegal, could not be recovered back. An overassessment made in the exercise of lawful authority will not render the tax erroneous or void. Lack of jurisdiction to make an assessment will render the tax void, but an error in an assessment will not have that effect. The difference consists in an absence of authority and a mistake in its exercise. "Erroneously assessed" as used in the statute means an assessment illegal because of some jurisdictional defect and does not include a mere error of judgment in value of the property. (3 Cooley on Taxation, 4th ed., pp. 2505, 2506; Clay County v.Brown Lumber Co., 90 Ark. 413, 119 S.W. 251; Matter of Trusteeof Village of Delhi, 139 A.D. 412, 124 N.Y. Supp. 487.) Taxes paid on an excessive assessment do not render the tax erroneous or illegal within the meaning of the statute, and there can be no refund of such taxes. The only remedy for any grievance because of an overvaluation is by way of application to the board of equalization. (See, also, Carton v. Board of CountyCommrs., 10 Wyo. 416, 69 P. 1013, 1018; Clay County v.Brown Lumber Co., 90 Ark. 413, 119 S.W. 251, 253; Peter v.Parkinson, 83 Ohio St. 36, Ann. Cas. 1912A, 751, 93 N.E. 197.) This is a suit in equity instituted by the plaintiff to enjoin the county treasurer of Yellowstone county from issuing a tax deed upon the sale of its property for delinquent taxes; to oblige the treasurer to accept a less amount than was levied and delinquent, in compromise and discharge of such taxes, and to compel the issuance of a certificate of redemption of plaintiff's property from sale. Upon issues joined by answer to the complaint, and a reply thereto, the cause was regularly brought on for trial before the court without a jury. After the conclusion of all of the evidence introduced by the parties, the court sustained the defendant's motion to dismiss the plaintiff's complaint. Judgment was entered accordingly, and the plaintiff has appealed.

The several assignments of error present but one question determinative of the controversy, viz., Did the court err in so entering judgment?

It appears that the plaintiff's property, both real and personal, while in the possession and ownership of its predecessor in interest, had become delinquent for taxes levied thereon for the years 1921, 1922, 1923 and 1924, amounting in the aggregate, with penalties, interest and costs, to $18,125.52. On August 11, 1925, the board of county commissioners of Yellowstone county attempted by resolution, regularly passed and adopted, to compromise the amount of such delinquent taxes upon payment by the plaintiff of the sum of $6,777.67, and ordered the county treasurer to receive and accept such sum in full settlement and discharge of the entire amount shown to be due. The county treasurer refused to obey the order, taking the position that it was in excess of the board's jurisdiction. Theretofore the real estate had been sold for delinquent taxes, and the county treasurer gave notice that on October 15, 1926, he would issue a tax deed, resulting in the institution of this action on October 14, 1926.

There is no contention made by the plaintiff that any actual fraud was perpetrated by the taxing officers, or that an erroneous principle was applied in making the assessment and levying the tax. No objection was made to the assessor respecting the valuations fixed, nor to the county or state board of equalization, and the taxes so levied for the years 1921, 1922, 1923 and 1924 have not been paid, although taxes levied based on a similar assessment for the years 1918, 1919 and 1920 were paid without question.

J.B. Henderson was an officer of the Yellowstone Packing Company, the corporation which owned the property during the period of time from 1918 to 1924, inclusive, and is now the president of its successor in interest, the Yellowstone Packing Provision Company. In connection with the reorganization of the business of the Yellowstone Packing Company, after its failure, he, as an officer and representative of the Yellowstone Packing Provision Company, which latter corporation was organized to take over the property, discovered for the first time that the property was assessed at a higher valuation than other like property in the vicinity owned by other parties, resulting in the plaintiff applying to the board of county commissioners for a compromise of the delinquent taxes and the board's order above noted.

Was the order of the board of county commissioners valid?[1] Plaintiff's entire argument is predicated upon the validity of the board's order, based upon the power of the board to compromise delinquent taxes on property under the provisions of section 2222, Revised Codes 1921, which reads as follows: "Any taxes, per centum, and costs paid more than once or erroneously or illegally collected, may, by order of the board of county commissioners, be refunded by the county treasurer, and the state's portion of such tax, percentage, and costs must be refunded to the county, and the state auditor must draw his warrant therefor in favor of the county."

In construing this statute, this court has said that "taxes paid more than once, or erroneously or illegally collected, may be refunded; but these provisions and others of like import are intended to secure the collection of lawful revenue and to protect the owner whose property is made to bear more than its just proportion of the burden of taxation, and were not enacted to secure immunity from taxation to anyone." (Anaconda Min. Co. v. Ravalli County, 52 Mont. 422, 158 P. 682.)

The language employed in the statute appears to be plain and without any ambiguity; therefore it must be construed and applied in accordance with its apparent meaning. It speaks for itself, and by it the board of county commissioners of a county is permitted to refund only such taxes as have been "paid more than once, or erroneously or illegally collected." It should be manifest that the board is not empowered to remit taxes which have not been paid, and that no attempt was thereby made to clothe the board with authority to compromise delinquent taxes. Furthermore, no such authority could be conferred on the board by the lawmakers in view of the restrictions contained in section 39 of Article V of our Constitution. It is there provided that: "No obligation or liability of any person, association or corporation, held or owned by the state, or any municipal corporation therein, shall ever be exchanged, transferred, remitted, released or postponed, or in any way diminished by the legislative assembly; nor shall such liability or obligation be extinguished, except by the payment thereof into the proper treasury." The legislature having no such power, it is plain that it could not by enactment confer the same on boards of county commissioners. (Sanderson v. Bateman, 78 Mont. 235,253 P. 1100.)

However, excessive valuations for taxation may be reduced in[2, 3] advance of payment of the taxes imposed, by the county board of equalization, as hereinabove noted. A county is a political subdivision of the state for governmental purposes, and as such is subject to legislative control, except in so far as restricted by the Constitution in express terms or by necessary implication. (Hersey v. Neilson, 47 Mont. 132, Ann. Cas. 1914C, 963, 131 P. 30; Edwards v. Lewis and Clark County,53 Mont. 359, 165 P. 297.) Aside from powers expressly conferred by statute, and those of necessity implied, it possesses none, and where a reasonable doubt exists as to the existence of a particular power, it must be resolved against it. (Sullivan v. Big Horn County, 66 Mont. 45, 212 P. 1105;Stange v. Esval, 67 Mont. 301, 215 P. 807.) Necessarily, the same rule applies to the boards of county commissioners of counties. (Ainsworth v. McKay, 55 Mont. 270, 175 P. 887.) They are "inferior tribunals of special and limited jurisdiction, and their action must affirmatively appear to be in conformity with some provision of law conferring power on them, expressly or by implication, or it will be held to be without authority." (State ex rel. Lambert v. Coad, 23 Mont. 131, 57 P. 1092; State ex rel. Gillett v.Cronin, 41 Mont. 293, 109 P. 144; Morse v. GraniteCounty, 44 Mont. 78, 119 P. 286.) The only authority giving county commissioners power to reduce, or in any manner change, assessments of property for taxation, is vested in them as a board of equalization, and, when acting as such, they must strictly comply with the authority conferred upon them by statute. When taxes are regularly levied they become a lien on the property taxed; an obligation immediately rests upon the owner to pay the amount ascertained to be due. Thereafter the county commissioners can neither release the property from the lien nor discharge the owner from the obligation. (Sanderson v.Bateman, supra; State v. Central Pacific R.R. Co., 9 Nev. 79. )

The board of county commissioners is constituted the county[4] board of equalization (sec. 2113, Rev. Codes 1921), and, as such, it is given power "to increase or lower any assessment contained in the assessment book, so as to equalize the assessment of the property contained therein, and make the assessment conform to the true value of such property in money," (Id., sec. 2114); but "no reduction must be made in the valuation of property, unless the party affected thereby or his agent makes and files with the board a written application therefor, verified by his oath, showing the facts upon which it is claimed such reduction should be made" (Id., sec. 2115). In our opinion, the remedy so provided is exclusive, and this appears to be the universal rule under like statutes.

The author of the treatise on Taxation in Ruling Case Law, Volume 26, page 452, says: "Where the law provides a remedy for overassessments by petition to the assessors or to some other tribunal for abatement, the statutory remedy is exclusive and the tax stands as assessed until abated in accordance with law, if the assessors had jurisdiction to make the assessment. The action of assessing officers being judicial in character, their judgments in cases within their jurisdiction are not open to collateral attack. If not corrected by some mode pointed out by statute they are conclusive, whatever errors may have been committed in the assessment. Over-valuation of property is not a ground of action at law for the excess of taxes paid beyond what should have been levied upon a just valuation. It is only when the tax is void, either because the person assessed was not subject to taxation in the city or town, not being a resident thereof and owning no taxable property situated therein, or because it was assessed for an unlawful purpose or without compliance with provisions of law imposed for the protection of the taxpayer, that it can be recovered back in a common-law action, or treated as void in proceedings brought to enforce payment of the tax. For this reason a taxpayer cannot have the collection of a tax enjoined merely because it is excessive in amount when the statutes provide an adequate remedy for the abatement and equalization of excessive taxes." "When the statutes provide a remedy against an excessive, erroneous, or improper assessment of the property of an individual, by the proceedings before a board of equalization, or review, the taxpayer must at his peril avail himself of this remedy, and cannot resort to the courts in the first instance; and if he neglects to bring his complaint before the board of review, he cannot assail the assessment in any collateral manner, nor invoke the common-law or equitable powers of the courts for the redress of this grievance." (37 Cyc., pp. 1079, 1080; see, also, Black on Tax Titles, sec. 142; Cooley on Taxation, 4th ed., sec. 1201;Belknap Realty Co. v. Simineo, 67 Mont. 359, 215 P. 659.)

The plaintiff's learned counsel place sole reliance upon[5, 6] language employed in the opinion in the case ofBelknap Realty Co. v. Simineo, last above cited, as follows: "The statutes having made ample provision whereby a taxpayer may have an alleged excessive or erroneous assessment or valuation of his property reviewed by the county and state boards of equalization, this remedy is exclusive except in cases wherefraud or the adoption of a fundamentally wrong principle ofassessment is shown." The plaintiff, having failed to show in its complaint that it had availed itself of those remedies, has not stated any grounds to entitle it to relief in court. Its counsel argue that upon the facts in the case now before us, it comes within the exception noted in the above quotation from that decision which we have italicized, that is to say, that the assessments were constructively fraudulent and were based on a fundamentally wrong principle. Although fraud is alleged, there is a total failure of proof; the only evidence offered on either subject being to the effect that plaintiff's property was assessed much higher than like property belonging to its neighbors. This falls far short of proving constructive fraud. Without dispute it appears that the assessments involved were made upon returns subscribed and verified by the plaintiff itself, so that there could have been no fundamentally wrong principle of assessment of the property employed by the assessor in fixing the value thereof. The argument is without merit and the cases cited in support of it do not sustain counsel's contention. (Danforth v. Livingston, 23 Mont. 558,59 P. 916; Birch v. Orange County, 186 Cal. 736, 200 P. 647;Birch v. Orange County, 59 Cal. App. 133, 210 P. 57.) The proof offered would have been proper before the county board of equalization, and upon such showing that board would have granted relief; but it becomes wholly irrelevant in the present inquiry.

Relief because of excessiveness of the tax imposed could be granted only by the county board of equalization. (Thwing v.Weiser, 65 Mont. 28, 210 P. 750.) The order made by the board of county commissioners was in excess of its jurisdiction and therefore void. Consequently, the judgment must be and is hereby affirmed.

Affirmed.

MR. CHIEF JUSTICE CALLAWAY and ASSOCIATE JUSTICES MYERS, STARK and MATTHEWS concur.

Rehearing denied July 12, 1928.