Sanderson v. Bateman

*245 MB.‘CHIEF JUSTICE CALLAWAY delivered the opinion of the court. This is a proceeding commenced originally in this court by the plaintiff as receiver of the Commercial National Bank of Miles City against the treasurer of Custer county to obtain a writ of mandate commanding him to permit the redemption of the lands described in plaintiff’s complaint. Omitting formal allegations, the complaint shows the receiver to be the holder of title to the lands derived through mortgage foreclosure proceedings. Plaintiff’s predecessor in interest, while owner of the lands, permitted the taxes levied and assessed thereon for the year 1920, to become delinquent, and in 1921 the lands were sold for the taxes. Upon the sale Custer county became the purchaser and received a certificate of tax sale therefor. No assignment of the certificate of sale has been made by Custer county which is now the owner and holder thereof. Plaintiff’s predecessor permitted the taxes levied and assessed against the lands for the years 1921, 1922, 1923, 1924 and 1925 to become delinquent, and the treasurer duly noted the delinquencies upon the proper records of his office. The lands were held by the county for the delinquent taxes of the subsequent years under its certificate of sale issued for the 1920 taxes. Prior to the date of filing the complaint the plaintiff receiver tendered to the treasurer the amount of the original tax levied and assessed upon the lands for the years 1920, 1921 and 1922, and also an amount sufficient to pay the delinquent taxes with interest and legal charges for the years 1923, 1924, 1925 and 1926. It is alleged that the treasurer wrongfully and unlawfully refused to accept the tender and refused to permit the plaintiff to redeem the lands from the delinquent tax sale unless plaintiff would pay to the treasurer ten per cent “penalty,” publication charges, and interest at the rate of one *246 per cent per month, upon the 1920, 1921 and 1922 taxes, respectively. The complaint then sets out the provisions of Chapter 63 of the Session Laws of the Eighteenth Legislative Assembly, and it is alleged that this Chapter continued in force until 1925 when it was repealed by Chapter 77 of the Session Laws of the Nineteenth Legislative Assembly, which also is set out in the complaint. The complaint contains adequate allegations setting forth the reasons for asking leave to bring this action as an original proceeding in this court. The defendant has appeared and filed a general demurrer to the complaint. The case has been argued ably by counsel for plaintiff and defendant as well as by amicus curiae. In 1920 the law required the county treasurer, within ten days after the receipt of the duplicate assessment-book from the county clerk (sec. 2161, Rev. Codes 1921), to publish a notice specifying that taxes would be delinquent on the thirtieth day of November next thereafter at 6 o’clock P. M., and that unless paid prior thereto ten per cent would be added to the amount thereof. (Chap. 15, Sess. Laws 1917, p. 15, afterward sec. 2169, Rev. Codes 1921.) (For convenience the sections of the Revised Codes of 1921 are used unless otherwise'speeified, rather than the corresponding sections of the Revised Codes of 1907, the sections being identical except as to numbers.) Section 2175, Revised Codes of 1921, provided: “On the thirtieth day of November of each year, at six o’clock P. M., all unpaid taxes are delinquent, and thereafter the county treasurer • must collect, for the use of the county, an addition of ten per cent.” On the third Monday of December the treasurer was required to make settlement with the county clerk and to deliver to him “a complete delinquent list of all persons and property then owing taxes.” (Secs. 2176-2179, Rev. Codes 1921.) After settlement with the county treasurer the county clerk was required to charge him “with the am mint of taxes due on the delinquent list, with the ten per cent added *247 thereto, and within three days thereafter deliver the list, duly certified, to the county treasurer.” (Sec. 2180, Rev. Codes 1921.) The treasurer was then required to publish the delinquent tax list with a notice that unless the taxes delinquent, together with the costs and percentage be paid, the real property would be sold at public auction. (Secs. 2182, 2183, Rev. Codes 1921.) Section 2188, Revised Codes of 1921, provided: “The county treasurer must collect, in addition to the taxes due on the delinquent list and ten per centum added thereto, fifty cents on eacji lot, piece, or tract of land separately assessed, and on each assessment of personal property, which must be paid to the county to pay the cost of such publication.” At the sale if no purchaser in good faith appeared (sec. 2191, Rev. Codes 1921), the county treasurer was required to strike off the property to the county as the purchaser and to file “the duplicate certificate of sale” in his office, in which case he made an entry “sold to the county” on the duplicate assessment-book opposite the tax, and thereupon he was entitled to be “credited with the amount thereof in the settlement.” The duplicate certificate of sale referred to in section 2191 is provided for in section 2194, Revised Codes of 1921. Section 2207, Revised Codes of 1921, enacted as section 1 of Chapter 151, Laws of 1917, provides: “At any time after any parcel of land has been bid in by the county as the purchaser thereof for taxes, as provided in section 2191, the same not having been redeemed, the county treasurer shall assign all the right of the county therein, acquired at such sale, to any person who shall pay the amount for which the same was bid in, with interest thereon at the rate of one per cent per month, and the amount of all subsequent delinquent taxes, penalties, costs, and interest, as provided by law, upon the same from time to time when such tax became delinquent. * * * ” *248 Interest at the rate of one per cent per month must be collected on such delinquent taxes from the time they were first delinquent until paid. (Sec. 2'221.) In case property sold for taxes is purchased by the county, pursuant to section 2191, supra, it must be assessed the next year for taxes in the same manner as if it had not been so purchased. (Sec. 2231.) Property sold for taxes is subject to redemption (see. 2210), but in case it is sold to the county and is subsequently assessed pursuant to section 2231, “no person must be permitted to redeem such property except upon the payment of the amount of the subsequent assessment, costs, fees and interest.” (Sec. 2233, Rev. Codes 1921.) Section 2234 provides in part: “Whenever property sold to the county, pursuant to the provisions of this chapter, is redeemed as herein provided, the moneys received on account of such redemption must be distributed as follows: The original tax and twenty per cent paid in redemption must be apportioned between the state and county, in the same proportion that the state tax bears to the county tax, and the balance must be paid to the county.” It would seem clear from the foregoing sections that when the lands of plaintiff’s predecessor in interest were struck off to the county for the 1920 taxes, the owner was then liable to pay the taxes due upon November 30 of that year prior to 6 o’clock P. M., and ten per cent in addition thereto, the costs allowed by statute, and interest at the rate of one per cent per annum from the time the tax was first delinquent. When the owner did not pay the taxes assessed for 1921 prior to 6 o’clock P. M. of November 30, the taxes became delinquent and a ten per cent addition was made thereto. (Sec. 2175, supra.) Interest began to run upon the delinquent tax from that date at one per cent per month. The same is true of the 1922 taxes. For these amounts the property was liable. *249 In Hilger v. Moore, 56 Mont. 146, 182 Pac. 477, this court said: "Speaking strictly, there is but one subject of taxation' — persons, natural and artificial. All taxes are levied against the person, not against property. It is the owner who is taxed because of his ownership, and his property but serves as the basis for computing the measure of his liability and as security for the discharge of the lien which the tax imposes.” (State v. Camp Sing, 18 Mont. 128, 56 Am. St. Rep. 551, 32 L. R. A. 635, 44 Pac. 516.) In order to redeem the property from tax sale the owner, or his successor in interest, had to pay the amount of the taxes, additions, interest and costs. This was the situation when the Eighteenth Legislative Assembly enacted Chapter 63, Session Laws of 1923, page 135. Section 1 of that Act reads as follows: "That from and after the passage and approval of this Act, any person having an interest in real estate heretofore sold for taxes to any county or which has been struck off to such county when the property was offered for sale, and no assignment of the certificate of such tax sale has been made by the county making such sale, shall be permitted to redeem the same by paying the original tax plus seven per cent interest from the date of sale.” Section 2: "All Acts and parts of Acts in conflict herewith are hereby repealed.” This Act was repealed by Chapter 77, Session Laws of 1925, page 102. Much effort has been expended by counsel touching the effect of Chapter 63 upon prior conflicting statutes, and the repeal of that chapter by Chapter 77, supra; and as to the effect of Chapter 96, Session Laws of 1923, page 257, amending sections 2161, 2163, 2169, 2176, 2180, 2182 and other sections, and repealing 2175, 2183 and 2188, Eevised Codes of 1921. These questions we should consider if it were not for the inescapable force of section 39 of Article Y of the Constitution of Montana, *250 which controls the result of this case. “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.” In Ollivier v. City of Houston, 93 Tex. 201, 54 S. W. 940, wherein a somewhat similar constitutional provision was under consideration, we find expressions which are appropriate here: “The Constitution of itself furnishes many evidences of the earnest purpose of the framers to render impossible every form of governmental favoritism, — the granting of special privileges, or bestowal of favors. The lightening of the public burdens of one citizen at the expense of the others is contrary both to its spirit and its letter. So it is declared that taxation shall be equal and uniform; but the force of this provision would be defeated if the power remained to relinquish at will the liability thus justly and fairly fixed. For the prevention of these evils this provision was inserted. Its terms are broad enough to cover any conceivable obligation or liability, the remission of which would diminish the public revenue and thereby either directly or indirectly impose a heavier burden upon those not affected by the exemption.” That a tax demand lawfully levied and assessed by the proper authorities is a liability within the meaning of section 39, supra, was held directly in Board of County Commrs. of Custer County v. Story, 26 Mont. 517, 69 Pac. 56, and this holding is supported by the overwhelming weight of authority. As was said in the Story Case, the “power to tax is strictly legislative, and its exercise must ensue from the mandate of the law-making branch of the government in the establishment of fixed and general rules insuring, as near as may be, exact *251 impartiality and equality in the distribution of the common burden. The process by which this exaction from the individual or the estate is accomplished is the product of statutory enactment.” It is within the legislative prerogative to direct the exaction of an addition to the tax if the taxpayer does not discharge the burden imposed within the time required, as well as interest upon the delinquent tax. (See Cooley on Taxation, 4th ed., secs. 1273-1275.) Whether the addition is to be regarded as a penalty designed to punish the taxpayer for his delinquency or as damages for deferred payment, it is a liability within the meaning of the Constitution, and the same is true, of course, of interest which has accrued. It was beyond the power of the legislative assembly to remit, release or diminish in any way the liabilities based upon taxes regularly assessed and levied in 1920 and the succeeding years. (Ollivier v. City of Houston, supra; County of Lancaster v. Trimble, 33 Neb. 121, 49 N. W. 938; City of Louisville v. Louisville Ry. Co., 111 Ky. 1, 98 Am. St. Rep. 387, 63 S. W. 14; Ludlow v. City of Ludlow, 152 Ky. 545, 153 S. W. 783; Ice Co. v. Adams, 75 Miss. 410, 22 South. 944.) “In effect the Constitution guarantees to every property owner in the state that his property shall be liable for the just proportion of taxes due thereon according to the valuation as ascertained by law, and for no more. It deprives the legislature of the power to add to this amount, or to discriminate between taxpayers in any manner or form.” (State v. Graham, 17 Neb. 43, 22 N. W. 114.) “The idea of taxation imports the equality of apportionment and assessment of all property. * * * And it cannot be doubted that the exemption of the property of an individual or of a private corporation from taxation, either in whole or in part, casts an unusual and inequitable burden on the prop *252 erty of those who have not been thus graciously favored.” (State v. Hannibal-St. Joseph Railroad Co., 75 Mo. 208.) The addition, or penalty, if one chooses to call it that, and the interest charges imposed upon the lands of plaintiff for the years 1920, 1921 and 1922 were liabilities due from the delinquent, and under the Constitution the legislature was as much without authority to relieve the delinquent taxpayer of addition or interest, or portion of either, as it would have been to remit the tax itself. (Louisville Car, Wheel & Ry. Supply Co. v. City of Louisville, 146 Ky. 573, 142 S. W. 1043.) But it is argued that Chapter 63 had reference only to redemptions from tax sales; that when the property was struck off to the county the lien of the statute (sec. 2152, Rev. Codes 1921) was satisfied and the taxes were paid, saving to the owner the right to redeem. The statute undertook to permit him to redeem “by paying the original tax plus seven per cent interest from the date of sale.” It thus undertook to remit the addition of ten per cent and the interest which had accrued after delinquency and prior to the tax sale. It undertook to release the redemptioner from a portion of his liability, to diminish his obligation to that extent. No matter how pure may be the motive which impels the purpose, the legislative assembly is powerless to extend any such privilege to the taxpayer. The law-making power cannot do indirectly what the Constitution prohibits it from doing directly. (State v. Graham, supra; County of Lancaster v. Trimble, supra; Ollivier v. City of Houston, supra.) Also, the Act upon its very face discriminates in favor of one who, although»unable to prevent delinquency by payment, was fortunate enough to have his property struck off at tax sale to the county as against another whose property at the same time was struck off to a citizen; the latter to effect a redemption must pay the original tax, addition, interest and *253 costs; or if the county has assigned its certificate of sale to a citizen, the redemptioner must assume and discharge a like burden. But -it is said the constitutional provision does not include a county within its inhibitory language. It does not in express words. A county, this court has said, is not a municipal corporation. (He rsey v. Neilson, 47 Mont. 132, Ann. Cas. 1914C, 963, 131 Pac. 30; Bignell v. Cummins, 69 Mont. 294, 36 A. L. R. 634, 222 Pac. 797.) But in the opinions in those cases it was pointed out that “a county is a governmental agency or political subdivision of the state, organized for purposes of exercising some functions of the state government.” (County of San Mateo v. Coburn, 130 Cal. 631, 63 Pac. 78.) “It is merely a political agent of the state, created by law for governmental purposes, and is charged with the performance of certain duties for and on behalf of the state.” (Yamhill County v. Foster, 53 Or. 124, 99 Pac. 286.) The county is a creature of the state; the state made it and can unmake it. Among the county’s .duties, as an arm of the sovereignty, is the collection of the state’s share of ad valorem taxes. The state was entitled to a share in the original taxes due from plaintiff’s predecessor in the years 1920, 1921 and 1922, and the interest thereon (as to the ten per cent addition we express no opinion). The state could not remit, release nor diminish those taxes directly or indirectly, and what the Constitution prohibits the state from doing it cannot authorize its creature, the county, to do. The manifest intent of section 39 of Article Y is to prohibit the county, a political subdivision of the state for governmental purposes, from doing the things forbidden when the state cannot do them. Beyond a doubt Chapter 63 transgressed the commandment of section 39 of Article Y of the Constitution and the Act was *254 void. It follows that the county treasurer was right in refusing to accept the tender made. Rehearing denied February 16, 1927. The demurrer is sustained and the proceeding is dismissed. Dismissed. Associate Justices M.ers, Stark, Matthews and Galen concur.