Fourth National Bank v. City of Greenville

1. Municipal Taxes.—Code 1902, 412, 413, and 23 Stat. 972, refer to city taxes as well as county and -State, and under them a taxpayer may pay -municipal taxes claimed by him to be illegal under protest and sue to recover them. 2. Ibid.—National Banks.—A city can only assess and collect taxes of the stockholders of a National bank and not of the bank upon an assessment dietermined 'by the county board of equalization for the fiscal year in which the taxes are levied.

Before Gagd, J., Greenville, March 'term, 1911. Action by the Fourth National Bank of Greenville against the City of Greenville. The 'Circuit decree is>: “This is an-action at law -to -recover $912.64 tax money, which the -plaintiff claims -the defendants wrongly exacted from- it in the month of May, 1909. “At 'the conclusion of the plaintiff’s testimony, the defendant offering none, but relying on the same facts proved- by the plaintiff, botín sides moved for the direction of a verdict. “It therefore appeared that there was no issue of fact for •the jury; so I discharged the jury and heard argument on the issues of- law. ■ “The plaintiff started business at Greenville, July, 1908. “In February, 1909, the plaintiff lodged with the county auditor a list of its •stockholders, so that such- stockholders might be taxed on their shares. “If was the practice of the defendant when it came, for instance, to levy the tax for 1909, to levy it on -the auditor’s duplicate for 1908, instead of that for 1909. “But in the case at bar, the plaintiff -or its -stockholders did not appear -on that duplicate, for the 'bank had not organized when the duplicate for 1908 was- made up. “It was also the defendant’s practice, by a committee of assessors-, -to add to -the auditor’s duplicate such taxpayers’ names as they should discover liable to -taxation, but not on die auditor’s1 duplicate. “By this practice they added in 1909, in the early months of it, some 800 names, representing some $200,000 -of property, on1 to -the duplicate for 1908. “At the time the -tax was actually collected, in May, 1909, the plaintiff’s name was not on the county auditor’s duplicate, for that book was not completely made up until the month of August, 1909. “The plaintiff’s name aod property were therefore written by tihe city assessors into' the copy of the auditor’s duplicate of 1908, which the city bad. “The defendant based its motion for direction of a verdict on five grounds; but there are really only three grounds, to wit: (1) “That an action like this can only be maintained when it is warranted by statute; and there is no such statute about city -taxes, but only State and county. (2) “That the payment of the tax was- not involuntary as that word has been construed by the Courts. (3) “That there is no justice in the plaintiff’s case, for the plaintiff was liable for city taxes; for 1909. “The statute law on the subject consists in -sections' 412 and 413 of the Code of Laws and the acts of February, 1902, at 23 Stats, 972. “This law clearly has reference to city taxes as well as county taxes; so by its- own terms and so by our Courts. “This law prohibits any -order to stay the collection of taxes; and it give's to the person- from whom an illegal tax may be exacted, the right to -pay under protest and recover back the tax by a -suit at law. 71 S. C. 231; 88 S. C. 249. “If that be, then the able argument of the defendant's counsel, -about involuntary payment, falls- to -the ground. “But for the statute, the reasoning of counsel and the'high authorities which he cited, would be conclusive of his contention, “Is the plaintiff’s action against the justice of the case? “The plaintiff was not liable for taxes for the year 1908, for it had not started business ora the first of January of that year, the time when property is required' to be listed for taxation. The plaintiff only began business in July, 1908. “It i's true the plaintiff was liable for taxes for 1909; but liable only according to the law of the land, and not according to the unwarranted practice of the defendant. “The plaintiff followed the la.w; it returned for taxation its shares at the right time, in the right, way, and in the right place. “The defendant’s duty was to make a copy of the county auditor’s duplicate for 1909, and levy its taxes thereon for 1909. “The defendant did not do that, but made up a list of taxpayers from two sources'; one the county auditor’s duplicate for 1908, and the other a report of a committee of assessors designated by the city council. “There was no legal warrant for such a procedure, and the tax collected thereby is an illegal tax. “Penalty ought always to follow a breach of the law, and if it does so in this case, the fault is not the plaintiff’s, but the defendant’s. “I am, therefore, of the opinion that the plaintiff is entitled to recover judgment against the defendant for nine hundred and twelve and 64-100' dollars, with interest from 10th of May, 1909, and it is so ordered'.” The defendant appeals on the following exceptions: I. “The presiding Judge erred in refusing- to direct a verdict in favor of tibe defendant upon the following ground: An action for the recovery of -taxes, illegally or wrongfully assessed or levied, can be maintained only under two conditions: (a) Whereby statute such action is specifically allowed and provided for; and (b) Where there is no such statute and it appears that the taxes have been paid involuntarüy, in the legal sense of the term, and in the absence of an adequate remedy to the complaining taxpayer. II. “The presiding Judge erred in refusing to direct a verdict in favor of the defendant upon the following ground: There is no statute authorizing the institution of an action against a municipality for the recovery of taxes alleged to have been illegally or wrongfully assessed or levied. Section 413 of the Civil Code applies only to taxes collected by county treasurers. III. “The presiding Judge erred in refusing to direct a verdict in favor of the defendant upon the following ground: The complaint and testimony show that the plaintiff paid an alleged illegal demand with full knowledge of all the facts which might render such demand illegal; that there was no immediate and urgent necessity for such payment; that it was not made to relieve its property from detention or to prevent an immediate seizure thereof. Such payment, therefore, must be deemed in law a voluntary payment and cannot be recovered back, in the absence of a statute authorizing such recovery. IV. “The presiding Judge erred in refusing to- direct a verdict in favor of the defendant upon the following ground: The plaintiff had an adequate remedy before paying such taxes to test the validity of t'he assessment and levy by injunction. Section 413 making n'o provision for the recovery of municipal taxes wrongfully or illegally assessed or levied, section 41S providing that an injunction shall not be issued restraining the collection of municipal taxes for any cause, is unconstitutional, in that it abridges the constitutional power of the court of equity and the jurisdiction of the Supreme Court to issue an injunction against the enforcement of wrongful or illegal municipal taxes where the legislature has provided no adequate remedy for' the oppressed taxpayer. V. “The presiding Judge erred in refusing to direct a verdict in favor of the defendant upon the fofawitiig''ground: Even if section 413 were applicable, relief can be obtained under it only in cases where it is made to appear that the taxes were wrongfully or illegally collected for some reason going to the merits of the question. The plaintiff’s1 testimony, at most, shows that the levying' of the tax in question upon -the plaintiff for the year 1909 was a mere irregularity; upon an assessment less than the assessment for State and county taxes for 1909, upon which the plaintiff claims, it should have been levied; and that if allowed to recover the taxes paid by it for 1909, the plaintiff will have been relieved entirely of all municipal' taxes from July 20, 1908, to January; 1, 1910. VI. “The presiding Judge erred in holding that sections 412 and 413 of the Code of Laws and the act of February, 1902, 23 Stat. 972, have reference to city taxes as well as county taxes; whereas., be should have held that 'Section 413 applies only to taxes, collected by county treasurers; and that section 412, in so far as it purports to prohibit the issuance of an injunction against the collection of municipal taxes illegally levied or assessed, is- unconstitutional, in that it abridges the constitutional jurisdiction of a court of equity to enjoin the enforcement of an alleged municipal tax, where no other adequate remedy is provided by law for the relief of the taxpayer against such; tax. VII. “The presiding Judge erred in holding that section 412 prohibits any order to stay the collection of municipal taxes and that section 413 gives to the person from whom an illegal tax may be exacted, the right to pay under protest and recover 'the taxes- by a suit at law. Section 413 has no application to municipal taxes; no adequate remedy is provided by statute for the recovery of municipal taxes illegally exacted; -section 412, in so far as it purports to prohibit an injunction against the collection of municipal taxes, is unconstitutional, in that it deprives the court of equity' of' the constitutional right to issue an injunction against the collection of illegal taxes, where no adequate remedy is provided! by statute for the aggrieved taxpayer. VIII. “The presiding Judge erred in holding that the. plaintiff could proceed, and had the right to recover back the taxes paid under protest -by virtue of the provision's of section 413, and' that the defendant’s 'contention that the tax was not paid involuntarily falls to the ground. IX. “The presiding Judge erred in holding that defendant’s answer alleged nothing else than that the defendant had complied with the law; on the contrary, the answer denies the 'allegation® of the complaint; and the defendant was entitled to -rely in support of such defense, upon the grounds that there is no statute authorizing the institution of an action against a municipality for the recovery of taxes alleged to have been illegally or wrongfully assessed or levied; and upon the ground that the payment of the taxes by the plaintiff was not involuntary. X. “The presiding Judge erred in holding that the tax collected by the defendant was an illegal tax; whereas, he should have held that, at most, the tax was irregularly levied, assessed and collected. XL “The presiding Judge erred in not holding that, this being an action for money had and received, the same was subject to the defense assimilated to the defense in equity, that recovery will not be allowed except in case where ex aequo et bono the plaintiff establishes his right thereto; that he should have held that the assessment, -levying, and- collection of the- taxes in question upon the plaintiff for the year 1909 was a mere irregularity, upon an assessment less than1 the assessment for State and county taxes for 1909, upon which the plaintiff claims- it should have been levied; and that if allowed to recover back the taxes paid by it for 1909, the plaintiff will have been relieved entirely of all municipal taxes from July 20, 1908, to. January 1, 1910. XII. “That the presiding- Judge erred- in holding that the plaintiff is entitled to recover • judgment against the defendant for $912.64 with interest from the 10th May, 1909, -and in ordering judgment therefor.” rite: Sections 412, 413 of Code do, not apply to municipal taxes: 78 S. C. 217, 445 ; 71 S. C. 235; 88 S. C. 249. If they do not apply plaintiff cannot recover: 14 S. C. 520; 2 Rich. 317; 2 Sitrolb- 265; 8 Rich. 260; 2 R. R. A. 626; 15 R. I. 233; 98 U. S. 543; 97 U.'S. 181; 8 Kan. 431; 89 U. S. 444; 88 Pa. 136; 31 Pa. 73; 20 Pa. 421; 59 Vt. 131; 26' Minn, 543; 46 Wis, 210; 18 Cal. 265; 16 Kan. 597; 66 Ala. 198; 34 Ala. 400; 14 N. H. 382; 8 Kan. 436; 46 Cal. 589; 58 Wis- 230; 8 W. R. 134; 4 Gil-1. 425; 31 R. R. A. 331; 59 Am. Dec. 361; 192 U. S. 259. If it can it will be relieved of municipal taxes to lanuary, ic/io: 15 Rich. 293. cites: Code 412, 413 apply to this case: 71 S. C. 231; 78 S. C. 211; 88 S. C. 251. National b..nks are not subject to taxation: Sec. 5219 United States Rev. Stats; 104 U. S. 462; 100 U. S. 539; Code 1902, 313, 316, 317, 318, 319; 50 S. C. 337; 54 S. C. 564; 48 S. C. 395; 34 Am. R. 15. .Collection should be of stockholders: 4 Wheat. 316. Payment was involuntary: 71 S. C. 231; 41 At. R. 1024; 34 At. R. 814; 94 Am. St. R. 427; 37 Cyc.‘ 1182-3; 116 Am. St. R. 377; 4 R. R. A. 300; 14 S. C. 1; 47 N; E. 593; 5 N. W. 403; 2 At. R. 766; 132 U. S. 13; 111 U. S. 38; 30 Cyfc. R. &'P. 1307. Whether payment was voluntary is an issue 'of fact: 2 Strofo. 257.