Ætna Insurance v. Mayor of New York

Mastín, J. The first question involved in this controversy relates to the taxes assessed and collected of the plaintiff for *337 the year 1886. On the loth of June of that year the legislature jiassed an act which provides: “ The lands and real estate of such insurance companies shall continue to be assessed and taxed where situated for state, city, town, county, village, school or other local purposes; but the personal property, franchise and business of all insurance companies incorporated under the laws of this state, or any other state or country and doing business in this state, and the shares of stock of said companies shall hereafter be exempt from all assessment or taxation except as in this act prescribed; provided that this section shall not affect the fire department tax of two per cent now required to be paid.” (Laws of 1886, chap. 679, sec. 4.) The solution of this question depends upon the construction of this provision of the statute and how far it affected the tax for that year. This act expressly provided that insurance companies incorporated under the laws of any other state doing business in this state should thereafter be exempt from assessment or taxation, except in certain cases which have no application here. It is contended by the plaintiff that this statute exempted it from taxation and was applicable to the taxes for the year 1886, although the assessment for that year had been completed prior to its passage. Its claim is, that as it was to take effect immediately, and as the tax had not been actually jierfected by extending it upon the assessment roll, it was exempted from the taxes of that year. With that contention we cannot agree. Indeed the question can hardly be regarded as an open one in this court, as similar questions have been several times decided by us adversely to the plaintiff’s claim in that respect. (Matter of the American Fine Arts Society, 151 N. Y. 621; 6 App. Div. 496; Assn. for Colored Orphans v. Mayor, etc., 104 N. Y. 581; People ex rel. American Bible Society v. Tax Comrs., 142 N. Y. 348.) In the first case cited the effect of chapter 540 of the Laws of 1895 was under consideration. That statute provided that the real and personal property of the American Fine Arts Society which it held under a lease from others, when the lessee was required to pay the annual taxes, should *338 be exempt from all taxation. That act took effect on May 3rd of that year. The assessment upon property situated in the city of New York is completed in each year on the 1st day of that month. This court held in that case that as the commissioners of taxes and assessments had no power to change the assessments after that time, the act did not exempt the property of the society from a tax for that year. In the second case the same doctrine was applied, where the plaintiff became the owner of real estate after the first day of May, but before the tax was actually imposed, the court holding that the exemption did not apply to taxes for the year in which the act was passed. In the case of The Americam, Bible Society although it was held that the act there under consideration relieved the property of the relator from taxation for that year, because it was passed previous to the first day of May, and was to take effect immediately, still the court recognized the correctness of the principle established by the preceding cases. (See, also, Sisters of St. Francis v. Mayor, 51 Hun, 355 ; affirmed, 112 N. Y. 677; People ex rel. 23rd Street R. R. Co. v. Tax Comrs., 91 N. Y. 593.) It is urged by the plaintiff that the word “ taxation ” relates to the imposition of the tax itself and not to the assessment, and as the tax had not been actually levied when this statute was passed, it exempted its property from taxation for the year 1886. We think there is no distinction between this case and Matter of the American Fine Arts Society (supra), as in that case like this the exemption was from taxation. As there was no -provision in the act under consideration in this case giving it a retroactive effect, it did not affect the assessment and tax for the year 1886. It follows that the appeal of the plaintiff cannot be sustained. This brings us to the consideration of the validity of the taxes imposed for the years 1887 and 1888. Hndcr the statute to which we have already adverted, the personal property of an insurance corporation of another state doing business in this state is exempt from assessment and taxation, *339 except as therein provided. As there was nothing in the act providing for a tax such as was imposed in this case, there was no law authorizing its assessment and levy. Such a tax was forbidden by that statute, and consequently was without ■authority and contrary to law. (People ex rel. Commonwealth Ins. Co. v. Coleman, 121 N. Y. 542; Mutual Ins. Co. v. City of Poughkeepsie, 51 Hun, 595.) In National Bank of Chemung v. City of Elmira (53 N. Y. 49) it was held that assessors have no power to determine what property is taxable; that is within the province of the legislature alone, and if an erroneous decision on the part of the assessors as to what is taxable property is made, they are liable; that the assessment founded thereon is void, and that such a decision may be attacked collaterally. In that case a tax was levied in violation of chapter 761 of the Laws of 1866, which forbade the assessment of any tax upon the capital of any bank organized under the authority of the state or of the United States, and it was held that the assessors had no power to act, and that their acts were void. In Matter of the N. Y. Catholic Protectory (77 N. Y. 342), where the property of that institution was exempt by statute from assessment and taxation, it was held that the assessors had no authority to make such an assessment, and that the imposition of the tax was illegal and void for want of jurisdiction. In Prosser v. Secor (5 Barb. 607) the plaintiff was a minister of the gospel, and claimed as such to be exempt from taxation. He was, however, assessed, and it was held that the assessors had no jurisdiction to make such assessment, and it was, therefore, illegal and void. Thus it is obvious that a tax imposed upon the plaintiff was without authority of law, and was illegal and void. The tax being void, the amount paid the city may be recovered in an action for money had and received. It seems to be settled in this state that, where an assessment is valid on its face, and in fact void because the assessors had no jurisdiction to make it, an action may be maintained to recover back money involuntarily paid in satisfaction thereof without first having the assessment set aside or vacated, and a demand for *340 the return of the money is unnecessary before the commencement of an action to recover it. (Bruecher v. Village of Port Chester, 101 N. Y. 240.) We are also of- the opinion that the jiayment of the taxes for 1887 and 1888, under the circumstances disclosed by the evidence, was not voluntary, and hence the amount thereof may be recovered in this action. At the time these payments were made, section 314 of chapter 409 of the Laws of 1882 was in force. That section provides that a tax upon the shares of a bank organized under the laws of the state, or of the United States, shall be and remain a lien thereon from the day when the property was assessed, and, if transferred after that day, the transfer shall be subject to such lien. As this tax became and remained a lien upon the plaintiff’s bank stock, even after a transfer, it deprived it of an essential element of its ownership and of its right to transfer it. That being the effect of the imposition of the tax, we think it amounted to such an impounding or duress of the plaintiff’s property as to render the payment so far involuntary as to authorize an action for the recovery of the money thus wrongfully received by the defendant. The plaintiff could only establish its right to a full enjoyment of its property by proof of the facts which entitled it to an exemption under the statute of 1886, in an action or proceeding instituted for that purpose, or by payment of the tax. The defendant having, by its unauthorized act, placed the plaintiff in that position, it cannot relieve itself from a liability to refund the amount it thus wrongfully received by asserting that the payment was a voluntary one, or by claiming that the plaintiff might have pursued some other remedy to relieve its property from the lien thus established. The payment was necessary to relieve the plaintiff’s property from the lien to which it was made subject by the wrongful acts of the defendant’s officers, unless it instituted a proceeding to establish the invalidity of the tax The plaintiff, to enforce its lights, elected to pay the tax and thus relieve its property from such lien, and then to institute an action to recover the amount it was obliged to pay, instead *341 of commencing a proceeding to set aside the tax. We think the defendant is not in a position to complain because the plaintiff elected to pursue the former instead of the latter remedy, and that the payment cannot be held to be so far voluntary as to deprive the plaintiff of its right to recover the amount of taxes thus wrongfully levied and received by the defendant. Moreover, we are of the opinion that, independent of that question, there was no such voluntary payment by the plaintiff, with a knowledge of all the facts, as would bar a recovery of the moneys thus paid. The payments were made by the banks without express authority from the plaintiff. Therefore, although the banks may have had some knowledge of the facts, the plaintiff was not chargeable with that knowledge, unless the payments were made in pursuance of its express authority or consent after it had acquired full knowledge of all the facts, including the invalidity of the tax. While the bank may have been justified in paying a valid tax upon the plaintiff’s property, it had no authority to pay one which it knew to be invalid, unless by the express direction of plaintiff, with full knowledge of its invalidity. Hence it is obvious that the payments for 1887 and 1888 were so far involuntary as to justify a recovery in this action. (Carver v. Creque, 48 N. Y. 385 ; Mason v. Prendergast, 120 N. Y. 536.) The defendant contends that the bank shares owned by the plaintiff did not fall within the provisions of the act of 1886, because the state had a separate and independent system of taxation of stockholders in state and national banks, and there was nothing in the act of 1886 indicating an intent to abrogate the provisions of that system. The authority to tax shares of national banks was conferred by section 5219 of the Be vised Statutes of the United States, which provided that the legislature of each state might determine and direct the manner and place of' taxing all shares of national banking associations located within the state, subject to two restrictions, first, that the tax should not be at a greater rate than is assessed upon other moneyed capi *342 tal in the hands of individuals, and, second, that the shares of a national bank owned by non-residents should be taxed in the town or city where the bank is located. To carry that provision into effect chapter 409 of the Laws of 1882 was passed. Section 312 of that act provided that the stockholders of every bank organized under the authority of the state or of the United States, should be assessed and taxed on the value of every share of stock therein, and that such stock should be included in the valuation of the personal property of such stockholders in the assessment of taxes at the place where the banking association was located. Thus it is seen that, by virtue of the very statute to which the defendant refers, the shares of the stockholders of such banks are to be included in and form a part of the personal property for which the stockholders are to be assessed, while the statute of 1886 expressly provided that the personal property, franchises and business of insurance companies incorporated under the laws of another state and doing business in this should thereafter be exempt. It is difficult to see how it can be held that bank shares which are, by the statute of 1882, expressly made a part of the personal property of the stockholder, can be excluded from the exemption provided by the statute of 1886, which expressly exempts all the personal property, franchises and business of the company. That, independent of that statute,' shares of stock in a bank are personal property there can be no doubt, Moreover, the statute expressly recognizes them as such. That under these circumstances they should be regarded as within the provisions of the statute of 1886 is obvious. That statute was passed subsequent to. the statute of 1882, and if there had been any intention to exclude bank shares from the operation of that act, presumably it would have been expressed in the statute. The statutes of 1882 and 1886 must be read and construed together, and if there is any inconsistency in their provisions the latter must be regarded as modifying the former. We think plaintiff’s shares of stock in the various banks ■ of this state formed a portion of its personal property, and *343 were exempted from taxation by the statute of 1886. Under the circumstances of this case we are clearly of the opinion, that the plaintiff was not liable to taxation upon the stocks of Hew York banks owned by it in the years 1887 and 1888, and that the recovery herein should he sustained. Therefore, the judgment of the learned Appellate Division should be affirmed, hut as botli parties have appealed, without costs to either. All concur. Judgment affirmed.