Commonwealth v. Vanderbilt

Opinion of the court by JUDGE NUNN Affirming. The auditoi*’s agent for Mason county instituted this proceeding in the court of that county under section 4241, of the-Kentucky Statutes, authorizing him to list omitted property. The proceeding was commenced by filing in the court a statement and amendments thereto alleging that appellees were-the owners of the stock of three railroad corporations, to-wit,. a corporation created by the laws of Virginia, a corporation created by the laws of West Virginia, and one created by the laws of 1he State of Kentucky, and alleged that all these corporations had organized and were doing business in the State of Kentucky, and became and were jointly and severally possessed of and owned a line of railway beginning at Covington, Ky., thence along the Ohio river through Mason, county to Ashland, Ky., and thence through the State of West Virginia to Newport News, in the State of Virginia; that each of these corporations had been since 1893, and prior thereto, exercising a franchise continuously within [789] this Commonwealth, and had tailed to report to the Railroad Commission-, or the Board of Valuation and Assessment, or to any one, the value of t-heir franchises for taxation, and the same had been wholly omitted by the Board of Valuation and Assessment, Railroad Commission, and every other officer whose duty , it was to assess such property, nor had any taxes been paid to the Commonwealth by any of these corporations on. their franchises, and the same were worth each year since at least $20,000,000. Appellant also stated that appellees Vanderbilt are residents of the State of New York, and owned during the time mentioned at least 700,000 shares of stock in these corporations, worth $100 per share, and that, by reason of the -failure of these corporations to pay the taxes due the Commonwealth, the stock of the appellees Vanderbilt are by virtue of sections 4085, 4088, Kentucky Statutes, not exempt from taxation, and that the appellees were liable to pay taxes to the Commonwealth on their stock from the year 1892 up to and including the year 1901. Appellant, by proper procedure, caused a warning order to be made, and an attorney to be appointed to defend for appellees, as nonresidents, and afterwards filed an amended statement alleging that appellees had no-agent or attorney in that county upon whom process might be served, but that the Chesapeake & Ohio Railway Company was in the possession of the stock of the appellees, and asked that this corporation be summoned and required to answer. This corporation answered, and denied that it held or controlled any stock, of any amount, kind, or character, belonging to the appellees, the Vanderbilts, and also denied that the corporations referred to had failed to list their property or franchises for taxation in the State of Kentucky, and denied that they, or any of them,*had failed for any time to pay the taxes due to the Commonwealth on [790] their property or franchises. On this state of facts, without any proof, the case was submitted to the lower court for judgment, and the court dismissed appellant’s proceeding. Appellant concedes that it had no right to tax the stock of appellees in the corporations named, unless the corporations failed to list and pay the taxes on the corporate property, including franchises. In the statement it was alleged that the corporations failed to pay these taxes. The appellees were only constructively summoned, and had not entered their appearance to the proceedings, and no proof was introduced by appellant showing that these corporations had failed to pay the taxes, Section 126 of the Code provides that every material allegation of a pleading must, for the purpose of the action, be taken as true, unless specially traversed, except allegations against defendants constructively summoned who have not appeared in the action. Under the state of pleading and this section of the Code, we are unable to see how the lower court could have done otherwise than dismiss the proceedings. Again, under section 419 of the Code of Civil Practice, it is provided that no personal judgment shall be rendered against a defendant constructively summoned, and the record does not show that any lien was created upon the property of appellees by attachment or otherwise; and, under these circumstances, the lower court did not have jurisdiction to render a judgment against appellees, or make any order affecting their interest in any way. An attachment is necessary to give the court jurisdiction in an action against a defendant constructively summoned, unless a lien is asserted. See Grigsby v. Barr, 14 Bush, 330; Dunn v. Lancaster, 4 Bush, 585, 96 Am. Dec., 317; and Trabue v. Conners, 84 Ky., 283, 8 R., 288, 1 S. W., 470. [791] For these reasons, we are of the opinion that the lower court was correct in dismissing appellant’s statement or proceedings and the judgment is therefore affirmed.