Great Northern Railway Co. v. Mustad

This action was brought by the plaintiff railway company for a declaratory judgment pursuant to the provisions of Chapter 32-23, Rev Code 1943 (The Uniform Declaratory Judgments Act, Vol 9, U.L.A. p 215), and for an injunction to restrain the levy and collection of certain taxes against its property. The action was begun on October 24, 1947. Service on the defendants was made immediately thereafter. Defendants demurred to the complaint. The case was heard on the issues raised thereby on December 19, and the order from which the instant appeal was taken was entered on December 20. The appeal was perfected on January 7, 1948. Plaintiff is a foreign corporation. The defendant, Easton School District, is a taxing authority organized and functioning pursuant to the statutes of the State of North Dakota. The remaining defendants are the officers charged with the duty of levying, extending and collecting the taxes required to enable the district to function. The complaint sets forth at length the facts on which the plaintiff predicates its prayer for relief. Summarized, the complaint states that the plaintiff is the owner of property of great value subject to taxation within the defendant school district; that the defendants intend to and will assess, levy and extend taxes against the property of the plaintiff in excess of the amount that properly may be charged against it pursuant to the statutes providing for the taxation of property for school purposes, and intend to and will proceed to enforce the collection of the same; that a similar situation and condition exists in many school districts within the State of North Dakota, and because of this a great multiplicity of suit will result; that this condition and situation is due to the construction put upon Chapter 359, SL 1947, amending § 57-1514, Rev Code 1943; that by reason thereof the school district will exact from the plaintiff in violation of its constitutional rights, excessive tax moneys in a considerable sum; that the plaintiff has no plain, speedy and adequate remedy at law; that accordingly it is entitled to and prays for a declaratory judgment construing the statute in question and for an injunction permanently restraining the defendants from levying, *Page 87 extending and collecting the unlawful tax, (the plaintiff alleging that it is ready and willing to pay the tax justly due). To this complaint the defendant demurred on the grounds I. "That said action and the issues presented thereby do not present any judiciable controversy of which the court has jurisdiction under the declaratory judgment act, Chapter 32-23 of the North Dakota Revised Code of 1943. II. "That plaintiff's complaint does not state facts sufficient to constitute a cause of action." The matter came on for hearing on the issues arising upon these demurrers. Defendants withdrew the first ground of demurrer above set forth. After hearing had, the court made and entered the following order: "The above entitled action came on for hearing and determination . . . on December 19th, 1947, pursuant to notice. Plaintiff . . . and the defendants appeared. . . . The defendants withdrew from their demurrer the first ground specified therein to the effect that said action and the issues presented thereby do not present any justiciable controversy of which the court has jurisdiction under the declaratory judgment act, Chapter 32-23 of the North Dakota Code 1943, and agreed that upon consideration thereof, that said ground for demurrer was not well taken. This left for consideration only the ground that the plaintiff's complaint does not state facts sufficient to constitute a cause of action. The Court upon consideration of the pleadings is of the opinion and finds that this action presents a proper case for the rendition of a declaratory judgment; the Court believes that the law should be declared on the merits but is of the opinion that the law should be declared contrary to the contentions of the plaintiff. It is accordingly — ORDERED, That the demurrer of the defendants upon the ground that the plaintiff's *Page 88 complaint does not state facts sufficient to constitute a cause of action, be and the same is hereby sustained." Whereupon the plaintiff perfected the instant appeal from such order. The statute, § 57-1514, Rev Code 1943, provided, "The aggregate amount (of taxes) levied by any school district. . . . shall not exceed such amount as will be produced by a levy of fifteen mills on the dollar of the net assessed valuation of the district, except that;. . . . any school district maintaining a consolidated elementary school may levy not to exceed seventeen mills on the dollar of its net taxable valuation. . . ." In 1946 the defendant school district maintained such a consolidated elementary school. The statute, Chapter 57-16, Rev. Code 1943, provided that the voters of a school district at an election called for that purpose by the district's Board of Directors might increase this rate of tax "for the current year and not to exceed four succeeding years" by fifty percent if sixty percent of those voting voted therefor, and seventy-five percent if seventy-five percent of those voting voted therefor. In that behalf the statute, § 57-1606 provided, "Upon the ballot the question shall be submitted in substantially the following form: "Shall . . . . . . . . school district levy taxes for the year (or years) . . . . . . . ., which shall exceed the legal limit by . . . . . . . . percent, so that the taxes levied for this current year instead of being . . . . . . . . dollars, which is the limit authorized by law, shall be . . . . . . . . dollars: Yes ( ). No ( )." Pursuant to this statutory provision an election was held in 1946 in the defendant school district at which the ballot read, "Shall Easton School District No. 6 of Steele County, North Dakota, levy taxes for the years 1946 and 1947 which shall exceed the legal limit by 50 percent so that the taxes levied for this *Page 89 current year, instead of being $5800.00, which is the limit authorized by law, shall be $8700.00. Yes ( ). No ( )." At the election thus held sixty percent of the voters voted in the affirmative. The auditor, having been duly notified, extended a tax of twenty-five and a half mills on the taxable property of the district. The tax thus levied, in fact, produced $8809.00. Thereafter in 1947 the legislative assembly enacted Chapter 359, SL 1947, amending § 57-1514 by increasing the legal tax limit from seventeen mills to twenty-seven mills. In July 1947, the defendant school district levied a tax of $13,679 on the taxable property within its district, that being a levy of about fifty percent more than the legal limit prescribed by Chapter 359, SL 1947 and certified the same to the county auditor. Though the record does not affirmatively so show, yet it must be presumed that the auditor had extended the tax pursuant to this certification, before this action was begun. In any event it is undisputed that the auditor had theretofore advised the plaintiff he would do so in accordance with an opinion written from the Office of the Attorney General of the State of North Dakota as to the construction and effect of Chapter 359, supra. It is the contention of the plaintiff that the legislature in enacting Chapter 359, supra, did not intend that it should be effective retroactively so that in those cases where the electors of a school district theretofore had voted to exceed the limit imposed by § 57-1514, such vote would have the effect of increasing by the percentage voted the limit thereafter prescribed by Chapter 359. On the other hand the defendants contend, and this in accordance with the opinion of the attorney general above referred to, that when the legal tax limit was enlarged from seventeen mills to twenty-seven mills by Chapter 359, supra, any increase theretofore voted by the electors of the school district pursuant to the provisions of Chapter 57-16, Rev Code 1943, applied to the enlarged tax limit subsequently prescribed by Chapter 359. Stated concretely, defendants contend that in the instant case the increase of fifty percent voted in 1946 when the *Page 90 legal limit was seventeen mills would effect an increase of fifty percent of the legal limit of twenty-seven mills thereafter prescribed by Chapter 359, so that instead of the limit being twenty-five and a half mills as it was voted to be prior to the enactment of Chapter 359, it automatically became forty and a half mills. On the other hand the plaintiff contends that the legal limit is either twenty-five and a half mills, the limit voted at the election in 1946, or twenty-seven mills, the legal limit fixed by Chapter 359, supra. The plaintiff in its complaint seeks two sorts of relief, one by way of a declaratory judgment, and the other, injunctional relief. The complaint sets forth facts which plaintiff contends warrant such relief. The defendants interposed a demurrer on the ground that the complaint did not state facts sufficient to constitute a cause of action. This was a general demurrer and if the facts set forth in the complaint warranted a judgment for either sort of relief for which the plaintiff prayed, the demurrer should have been overruled. An examination of the complaint discloses that it does not state facts sufficient to warrant the granting of injunctional relief. The property of the plaintiff on which the tax was imposed, was for purposes of taxation, personal property. See § 57-0504, Rev Code 1943; Minneapolis, St. P. S. Ste. M.R. Co. v. Dickey County, 11 N.D. 107, 90 N.W. 260. And "As a general rule equity will not interfere by injunction with the enforcement or collection of a tax which is alleged to be illegal or void, merely because of its illegality, hardship, or irregularity, but, in addition thereto, facts must be shown to exist bringing the case within some recognized head of equity jurisprudence; otherwise the party aggrieved will be left to his remedy at law." Bismarck Water Supply Co. v. Barnes, 30 N.D. 555,153 N.W. 454, LRA1916A 965, and cases cited. There is no such showing here. For it does not appear that the plaintiff would suffer irreparable injury. And it is clear it had an adequate remedy at law. It could have paid the tax under protest and sued to recover the amount of the illegal exaction. Sections 57-2020, 2021, Rev Code 1943; *Page 91 Home Owners' Loan Corp. v. Wright, 71 N.D. 235, 299 N.W. 860. See also Chicago, M. P.S.R. Co. v. Bowman County, 31 N.D. 150,153 NW 986, decided prior to the enactment of §§ 57-2020, 2021, supra. Considering now the cause of action for relief by way of a declaratory judgment, it is to be noted the order of the trial court first recites that when the cause came on for argument the defendants withdrew the demurrer interposed on the ground that said action and the issues presented by the complaint did not present any justiciable controversy over which the court had jurisdiction under the declaratory judgment act, and agreed that upon consideration said ground for demurrer was not well taken. The court further said, "This left for consideration only the ground that the plaintiff's complaint does not state facts sufficient to constitute a cause of action. The Court upon consideration of thepleadings is of the opinion and finds that this action presentsa proper case for the rendition of a declaratory judgment; theCourt believes that the law should be declared on the merits butis of the opinion that the law should be declared contrary to thecontentions of the plaintiff. It is accordingly — Ordered, That the demurrer of the defendants upon the ground that the plaintiff's complaint does not state facts sufficient to constitute a cause of action, be and the same is hereby sustained." This order is inconsistent and self-contradictory insofar as the ruling of the court touches the cause and prayer for a declaratory judgment. The order recites that "The Court upon consideration of the pleadings is of the opinion and finds that this action presents a proper case for the rendition of a declaratory judgment; the Court believes that the law should be declared on the merits but is of the opinion that the law should be declared contrary to the contentions of the plaintiff." but, notwithstanding, orders that the demurrer be sustained. In this the court erred for if the complaint states facts sufficient to warrant the rendition of a declaratory judgment the demurrer challenging the sufficiency of the complaint should have been *Page 92 overruled. We believe the court as well as counsel misconceived the character and purpose of the declaratory judgments act. Due to this misconception the court considered the merits of the contentions of the respective parties as to the construction to be put upon the statute, Chapter 359, supra, rather than the sufficiency of the complaint to state a cause of action for a declaratory judgment construing the statute. A complaint in an action for a declaratory judgment is to be considered and treated the same as the complaint in any other action. It differs from such a complaint only in that it does not seek coercive or executory relief as of course. 34 Am Bar Asso J p 379 (May 1948); 1 CJS 1018; 16 Am Jur 275; Declaratory Judgments; Borchard, Declaratory Judgments 2d ed pp 25 et seq. The judgment in a declaratory action is a conclusive determination of rights, status, or other legal relations and carries the same weight as any other judgment under the principles of res judicata. Am Bar Asso J supra; Anderson, Declaratory Judgments §§ 197 et seq.; Borchard, Declaratory Judgments 2d ed pp 438 et seq.; 16 Am Jur 342, Declaratory Judgments; Am L Inst Restatement, Judgments, § 77. Only the parties to the action in which it is rendered are bound by such a judgment. As to all others it is effective only as a precedent as to the matters declared by it. Where coercive or executory relief ancillary or supplemental to declaratory relief is warranted by the facts alleged in the complaint, such relief may be granted when prayed for if the facts be established as alleged; and where such relief is not granted, and it thereafter appears that supplemental relief is necessary in order to render the declaratory judgment effective, such relief may be granted on proper application. See 32-2308, Rev Code 1943; Borchard, Declaratory Judgments, 2d ed pp 439 et seq. If the order entered by the court in the instant case be considered as an order holding only that the complaint does not state facts sufficient to warrant the granting of injunctive relief, it was, as we have heretofore shown, correct. But such relief, owing to its nature, must of necessity have been denied whether *Page 93 the complaint does or does not state facts sufficient to constitute a cause of action for declaratory relief. If the words of the order last quoted above be taken at their face value, then the demurrer was in effect overruled, and if the defendants had chosen to stand upon it, the court should have ordered a declaratory judgment construing the statute. Furthermore, if the order entered be considered as an order overruling the demurrer, such an order not being appealable — see § 28-2702, Rev Code 1943 — the case is not before us. Again — the defendants having withdrawn their first ground for demurrer and having stated to the court that upon further consideration they were agreed that said ground for demurrer was not well taken — if the order of the court be considered an order for judgment, then, not being appealable — § 28-2702, supra, — the case is not before us. On the other hand, if the order be considered as sustaining the demurrer then it becomes necessary to examine the complaint and see whether the facts stated therein are sufficient to constitute a cause of action for a declaratory judgment. This court has heretofore had occasion to pass upon and apply the provisions of the declaratory judgments act. See Langer v. State, 69 N.D. 129, 284 N.W. 238; Asbury Hospital v. Cass County,72 N.D. 359, 7 N.W.2d 438; Ginakes v. Johnson, 75 N.D. 164, 26 N.W.2d 368. In Langer v. State we quoted with approval from State ex rel. La Follette v. Dammann, 220 Wis. 17, 264 N.W. 627, 103 ALR 1089, wherein that court said: "The requisite precedent facts or conditions which the courts generally hold must exist in order that declaratory relief may be obtained may be summarized as follows: (1) there must exist a justiciable controversy; that is to say, a controversy in which a claim of right is asserted against one who has an interest in contesting it; (2) the controversy must be between persons whose interests are adverse; (3) the party seeking declaratory relief must have a legal interest in the controversy, that is to say, a legally protectible interest; and (4) the issue must be ripe for judicial determination." And we see no reason to depart from our holding in the Langer *Page 94 case. See also in this connection Anderson, Declaratory Judgments p 125; Aetna L. Ins. Co. v. Haworth, 300 U.S. 227, 81 L ed 617,57 S Ct 461, 108 ALR 1000. Examining the complaint in the instant case in the light of the rule thus approved and followed in Langer v. State, 69 N.D. 129,284 N.W. 238, supra, we hold that the complaint states facts sufficient to constitute a cause of action for a declaratory judgment. There is a justiciable controversy. The plaintiff owns property within the Easton School District that is subject to taxation. The taxing authorities have levied and extended against this property a tax which the plaintiff contends is illegal and substantially excessive. The defendants have threatened to and will take steps to enforce and collect that tax. The controversy arises on account of the construction and application of the provisions of the statute. Clearly the interests of the parties to it are adverse. It likewise is beyond question that the plaintiff seeking declaratory relief has a legal interest in the controversy. Finally, the issue is ripe for judicial determination. The tax has been levied and extended. The defendants will take steps to enforce and collect it. The declaratory judgment which the plaintiff seeks will determine whether it is a legal tax and collectible and the parties, both plaintiff and defendants, will be bound by the determination thus made. We can come to no other conclusion than that the facts alleged in the complaint satisfy all the requirements of the rule set forth in the case of Langer v. State. Accordingly the court should not have sustained the demurrer. In any event, whatever view may be taken of the order appealed from, the case must be reversed and remanded for further proceedings consistent with this opinion. BURKE, J., and HUTCHINSON and MILLER, District Judges, concur. BURR and MORRIS, JJ., did not participate.