Weyerhaeuser Timber Co. v. Roessler , 2 Wash. 2d 304 ( 1940 )

I am unable to concur in the majority opinion in this case.

The appellant, Weyerhaeuser Timber Company, owns a very considerable amount of taxable, unplatted real estate, together with a certain amount of taxable, platted real estate, and some personal property, in Pacific county. The real estate is largely if not entirely, either timber land or land from which the timber has been logged.

At the time the commissioners were considering the budget for the year 1940, they considered the matter of having a cruise of the timber land of the county which had not been cruised since the year 1908, the cost of which, it was estimated, would be about forty thousand dollars or more. It was testified in this case that such a cruise would result in increasing the taxable value of such land. They also took into consideration the matter of repairs to the courthouse, and budgeted for that purpose the sum of forty-five hundred dollars. But this was less, by several thousand dollars, than the necessary repairs would cost. Another matter taken into consideration was a claim by the state against the county for taking care of the indigent insane, which, by the first of the year 1940, would equal about nine thousand dollars. In another county of the state, the right of a state to collect from the counties for taking care of the indigent insane was in litigation and had not been determined at the time the budget was made up. Further than this, the taxes, as levied, are, as a rule, not all paid or collected. In Pacific county, the percentage of collections, over a period of years, averages something like seventy per cent to eighty-four per cent.

Some years ago, the county issued and sold certain road bonds upon which the final payment of principal and interest would be due July 1, 1940. The amount of money which would be necessary to take up the bonds remaining unpaid would be approximately nine thousand dollars, leaving an approximate balance of thirty-two thousand dollars in the redemption fund.

I admit (a) that the power to tax is a delegated power; (b) that no implications are to be read into the statute giving the power; and (c) that a levy made in violation, or without authority, of law is void.

As I view it, the first question is whether the commissioners had any authority to make a tax levy for the current expense fund so long as there was a cash surplus in that fund. The appellant contends that the tax levy is irregular and void, to the extent of this unappropriated surplus. The respondents contend that the commissioners, in making the tax levy, have a right, so long as they use good business judgment and exercise a sound discretion, to anticipate future obligations which cannot be definitely determined at the time.

Rem. Rev. Stat., § 3997-4 [P.C. § 1652-4], which is one of the sections of the budget law, makes it the duty of the county commissioners to meet on the first Monday in October of each year, after having given the notice therein provided for, for the purpose of holding a hearing, and, after such hearing, determine the amount of the budget and fix the levy. It is provided in that statute that the commissioners shall, after the hearing, fix the amount of the levies necessary to raise the amount of the estimated expenditures, as finally determined, "less the total of the estimated revenues from sources other than taxation including available surplus. . ."

The words here for construction are "available surplus." As already indicated, the appellant is of the view that, so long as there is such surplus, that surplus must be exhausted before a tax levy can be made. Had the legislature intended to make it mandatory that the surplus be used, it undoubtedly would have made use of some such expression as "including all surplus" instead of saying "available surplus," or the expression used by the legislature of the state of Oklahoma (Oklahoma Statutes Annot., Title 68, 240, § 290), "any cash surplus balance." The use of the word "available" is qualifying, and leaves the question as to what is an available surplus open for determination. This, of course, must, of necessity, be determined by the commissioners when they come to make the tax levy and determine the amount of the expenditures for the next year. It is a well-established rule that the taxing authorities, in making a levy, may take into consideration the needs of the county and provide for maintaining a balance in the treasury sufficient at all times to meet current claims upon it. Courts will not disturb their findings so long as they use good business judgment and exercise a sound discretion.

In 3 Cooley on Taxation (4th ed.), 2088, § 1031, it is said:

"In fixing the amount or rate, the levying body has considerable discretion. The rate necessary to produce the amount required is largely within the discretion of the levying officers, since it is uncertain what the deficiencies in collection will amount to. But while local authorities have a reasonable discretion in providing in advance for necessary taxes, the courts may interfere if the discretion is abused by raising taxes faster than they are needed. A levy for future needs is invalid as excessive only when so excessive as to show a fraudulent purpose in making the levy."

In People v. Chicago E.I.R. Co., 306 Ill. 402,138 N.E. 127, it is said:

"Taxes should not be levied for the unnecessary accumulation of funds or for remote contingencies which may never occur, but the question of the proper amount of taxes to be raised for current county expenses is committed to the reasonable discretion of the county board, and the courts will only interfere to prevent a clear abuse of this discretion. (People v. Atchison, Topeka and Santa Fe Railway Co., 261 Ill. 33.) The presumption is that the county board has properly discharged its duty, and the mere circumstance that in estimating in advance the amount that may be necessary to be levied, an amount greater than that actually required has been determined upon, is no defense to a taxpayer in refusing to pay his taxes unless the amount levied is so grossly excessive as to show a fraudulent purpose in making the levy. (People v. Chicago and Alton Railroad Co., 257 Ill. 208; People v. Sandberg Co., 277 id. 567.) Since only $80,964.05 was available for county purposes, the levy of $101,050 for all purposes for the ensuing year, which did not appear to be of itself excessive, cannot be regarded as unreasonable. The county board has the right to provide for maintaining a balance in the treasury sufficient at all times to meet all current claims upon it, and it cannot be said that the levy in question was not justified by sound business judgment."

In People v. South Dearborn Street Corp., 363 Ill. 286,2 N.E.2d 68, it is said:

"It was their duty [the board that makes the levy] to exercise sound business judgment in anticipating the immediate financial requirements of the district as well as to be fortified against the day when the financial demands against the district accruing within the near future should be met."

I see nothing in the budget law (Rem. Rev. Stat., §§ 3997-1 to 3997-10 [P.C. §§ 1652-1 to 1652-10]) which justifies a conclusion that that law does not permit the commissioners to create a surplus so long as it uses good business judgment and exercises a reasonable discretion. If it were not for the surplus in the current expense fund when the levy in question was made, the county, before the year was out for which the taxes were being levied, would be compelled to go on an emergency warrant basis, because there was to be raised by taxation for the current expense fund $55,037.49. The tax levy of 5.63 mills would only produce $46,023.59. It was to make up this difference that the commissioners transferred from the surplus fund to the current expense fund the sum of $19,013.90. Even on this basis, if there were no surplus, there would not be sufficient to pay the operating expenses of the county unless the taxes levied would be paid one hundred per cent. The evidence shows that, in Pacific county, over a period of years, the collections have amounted to from seventy to eighty-four per cent. If the county should be called upon to pay the demand of the state for the indigent insane in the sum of nine thousand dollars, again it would be necessary to issue warrants, unless there was a sufficient amount left in the surplus fund to take care of that item.

At the time the commissioners made the levy, they considered the matter of cruising the timber land of the county, and the evidence showed that, if this were done, the assessed value of the property in the county would be increased. This item, if carried out, would cost something like forty thousand dollars. It is apparent that, if there is no surplus, the county at no time would be able to levy a tax sufficient to cause a cruise of the timber land therein. It cannot be said that, if the county issued emergency warrants to make up any deficit, it could take care of them next year, because its levying power the following year could not be looked to as creating a fund sufficient to carry on the operations of the county and pay the emergency warrants issued the previous year. If the county were forced on a warrant basis, it would not only increase the expense on account of the interest on the warrants, but would tend to impair the credit of the county, which, of course, is something not to be desired. If this condition continued, the result could only be a bond issue to take care of obligations which could not be taken care of by taxation, because the county, by the forty mill law (Laws of 1939, chapter 2, p. 5, Rem. Rev. Stat. (Sup.), § 11238-1c), is not permitted to make a levy of more than ten mills. As above seen, after the mandatory levies are made, there remain for the current expense fund levy only 5.63 mills.

I cannot escape the conclusion that, if the legislature had intended to put the counties of this state in any such position, they would have made their intention plain by unequivocal language, and not left it to what might be said to be the import of the law. I see no basis for holding in this case that the commissioners should have used the surplus in the current expense fund before making a levy.

The appellant also contends that the thirty-two thousand dollar balance in the bond redemption fund should be considered as available surplus. The bonds involved were issued under the authorization in chapter 25, Laws of 1913, p. 62 (Rem. Rev. Stat., § 5592 [P.C. § 5422] et seq.). It is there made the duty of the commissioners, at least five years prior to the maturity of such bonds, and thenceforward in each year until their maturity, to ascertain and levy a tax sufficient to accumulate, in such series of years, a fund equal to the principal of all bonds then remaining outstanding and unpaid and the interest,

". . . and the amount of such tax as collected shall be by the county treasurer credited to a special fund for the payment of the principal of such bonds, which shall be designated `Road Bonds of ____ Sinking Fund,' (the blank to be filled by inserting the year in which the bonds are issued), and no part of said fund shall be diverted to any other purpose than the payment of such principal. . . ." Rem. Rev. Stat., § 5594 [P.C. § 5424].

Here is an express prohibition against using the fund for any other purpose. So long as any portion of the bonds and interest remains unpaid, the commissioners were justified in refusing to treat the fund as an available surplus and dispose of it accordingly. What disposition may be made of the surplus after the bonds are fully paid, is a question not now to be considered.

It is my view that the decree appealed from in this case should be affirmed. I therefore dissent.

BLAKE, C.J., and MILLARD, J., concur with MAIN, J.