State ex rel. Phillips v. Rowse

Bliss, Judge, delivered the opinion of the court. The Rlinois River Packet Company had for several years neglected to pay their taxes, although regularly assessed, and finally made an assignment under the statute to Ansyl Phillips, for the benefit of their creditors. Subsequent to the assignment the defendant Rowse, as tax-collector, seized and sold a sufficient portion of the property so assigned to pay the taxes, which was bid in for the precise amount due, for the benefit of the assignees. This suit was instituted against Rowse on his official bond, and the Circuit Court gave judgment against him. [592] It is admitted that the State has no express lien by statute upon personal property for taxes assessed against its owner on account of such property. Otherwise the property could be pursued wherever it might be found’, though purchased for value without notice. In view of the enormous amount of property that escapes, taxation altogether, and the consequent increased burdens upon those who honestly pay taxes, it may be a question whether a limited lien, considered necessary in most of the States, should not be created; But in the absence of such a lien the inquiry arises whether the obligation to pay taxes is not of such an imperative character as to make the claim of the State upon the property of the tax debtor paramount to that of other Creditors. By the common law all debts due the crown were preferred 'to claims of private citizens. So far as taxes are concerned, every consideration requires that this rule be rigidly observed. The liability for them is not an ordinary one, and cannot be likened to a common debt. Their collection is. vital to the enforcement of the law and the very existence of government, and 1 know of no authority that places the obligation to pay them upon a level with liabilities upon contracts. If the claim of the State were an ordinary one, such as might arise on behalf of an individual, the authorities cited might show that its priority was lost by the assignment, but the obligation to pay taxes can never be so considered, although there may be no express statutory provision upon the subject. It is true the act concerning assignments does not, like that concerning administration, provide for such preferences, and for the reason that it does not, like the latter act, undertake to classify the liabilities, but uses the general term, “ according to their right,” in directing the payment of demands. (Wagn. Stat. 156, § 35.) Had the statute, as in the administration act, classified the demands and omitted to give a priority to taxes, it would give color to the claim that the State intended to place this ‘liability upon a level with others. But the omission to make any classification can receive no such construction. The claim of the State may be likened to an equitable lien— [593] one that is not actual and will follow the property into the-hands of a bona fide purchaser for value, but still a quasi lien that attaches to the property until it encounters a higher equity. Such liens are not discharged by an assignment for the-benefit of creditors. “ The prevailing rule now is that neither- the assignee nor the creditors whom he represents are• purchasers-for a valuable consideration without notice, as against prion equitable liens. There must be some consideration passing-, at the time of the assignment, some new responsibility incurred, or some rights given up, to invest an assignee with.this-character.” (Burr. Assign., 2d ed., 484.) The author, on the same page, mistakes the spirit of our decisions when he says that “in Missouri assignees are treated as bona.fide purchasers for valuable considerations,” and refers to Grates v. Labeaume, 19 Mo. 17. The consideration is sufficient to support the assignment as against the statute of frauds, and so it is held in all the .States, but it is not such as to cut off equities that were good ■ against the assignor. The assignee, so far, stands in his shoes. If the assignment does not divest, the State of its claims, how shall it be enforced ? Section 26 of the revenue act, under which the levy was made (Wagn. Stat. 1188), provides that collectors “ shall have power to seize and sell the goods and chattels of the persons liable for the taxes," in the same manner as goods and chattels are or may be required to be seized and sold under-execution issued on judgments- at law, and no property shall be-exempt,” etc. This provision (1) authorizes the collection of taxes by seizure and sale of goods, and (2) provides that they shall be sold as under common execution. Was the defendant authorized under it to seize and sell property in the hands of the assignee? The claim that they are no longer “the goods and chattels of the person liable for the taxes’”is not without plausibility, and yet they are held for him, to be used in. his interest, by one who holds, among other relations, that of an. agent of the: assignor, and the State has a prior claim upon them- Under these circumstances the spirit of the law would treat the-property as so. far the property of the assignor, and will not drive- the State into equity to enforce its claim. This is not a case of a sale or morí [594] gage for a consideration that would protect it from a secret or equitable lien, but the property is still that of the assignor, with, the trust ingrafted upon it. If there is a surplus after paying the debts it goes back to him, and, in the interest of the public revenue, should be still treated as so far his as to be subject to the statutory provision for the collection of taxes. Counsel upon each side have presented many decisions of other States, but I have made no reference to them, as they are of necessity colored by the legislation of those States. I have se.en none that tends to throw doubt upon the conclusions at which we have arrived, but, on the other hand, the spirit of all sustains it. The judgment must be reversed and the petition dismissed. The other judges concur.