Adams v. Stonewall Cotton Mills

• Citation: 89 Miss. 865,43 So. 65
• Decision Date: 04 March 1907
• Docket Number: 12,143
• Court: Mississippi Supreme Court
• Parties: WIRT ADAMS, STATE REVENUE AGENT, v. STONEWALL COTTON MILLS

43 So. 65

89 Miss. 865

WIRT ADAMS, STATE REVENUE AGENT, v. STONEWALL COTTON MILLS

No. 12,143

Supreme Court of Mississippi

March 4, 1907

FROM the chancery court of Clarke county, HON. JAMES L MCCASIKILL, Chancellor.

Adams state revenue agent, appellant, was complainant in the court below; Stonewall Cotton Mills, a corporation, the appellee was defendant there. From a judgment in defendant's favor, dismissing the bill, complainant appealed to the supreme court.

The bill was filed originally against the Stonewall Manufacturing Company and the present appellee for the collection of alleged delinquent taxes. It charged that the Stonewall Manufacturing Company was chartered in 1870 as a corporation with power to exist for twenty-five years; that from the date of its charter up to the filing of the bill it had operated a large cotton factory in Clarke county, its domicile; that designated property was assessed to it upon its own return from 1886 to 1894, inclusive, and that like assessments were made against the appellee, the Stonewall Cotton Mills, for the years 1895 to 1897, inclusive, and taxes levied thereon which were unpaid; that the two corporations were the same the Stonewall Cotton Mills being the Stonewall Manufacturing Company under another name; that in 1895, when the charter of the manufacturing company expired, the stockholders, with a view of further enjoying the exemptions from taxation previously enjoyed for twenty- five years, changed the name of the corporation to the "Stonewall Cotton Mills," with intent to defraud the state and county of taxes fraudulently pretending that the cotton mills was a new manufacturing enterprise, and entitled to exemptions from taxation as such; that no conveyance of property was recorded, although the manufacturing company pretends to have transferred its property to the cotton mills; that the taxes due from the Stonewall Manufacturing Company were liens upon the property of that corporation in the hands of the Stonewall Cotton Mills, and, as the two corporations were in fact one, the taxes due from the cotton mills were liens upon the property; that the alleged dissolution of the Stonewall Manufacturing Company by limitation of its charter, in 1895, and the alleged organization of a new corporation by name of the Stonewall Cotton Mills, in the same year, constituted a fraudulent arrangement on the part of the stockholders to defraud the state of the taxes, and the bill prayed for a decree against the corporations for the amount of the state and county taxes. The Stonewall Manufacturing Company made a motion for a dismissal of the bill as to it on the ground that it had ceased to exist more than three years before the filing of the bill, and hence could not be sued, which motion was supported by affidavits, and was sustained and the bill dismissed as to the manufacturing company. The Stonewall Cotton Mills, the appellee, demurred to the bill, and the demurrer was sustained, but upon complainant's appeal to the supreme court the decree was reversed and the cause remanded to the chancery court and appellee required to answer the bill. The case is reported, Adams, Revenue Agent, v. Stonewall Mills, 80 Miss. 94 (S.C., 31 So. 544), and the report contains a full statement of the facts alleged in the bill and the grounds of the defendant's demurrer to it.

The answer of the Cotton Mills, appellee, filed when the case was remanded, denied that there was any collusion or pretended transfer between the Manufacturing Company and the appellee, or that the appellee was a continuation of the 'Company in a reorganized form, and denied its liability for the taxes claimed in the bill; it alleged that the Manufacturing Company was chartered in 1870, and that its charter expired April 22, 1895; that appellee organized April 2, 1895, as a corporation, for a period of fifty years; that after its organization it became the owner of all of the capital stock and property of the Manufacturing Company, acquiring the same before April 22, 1895; that the stockholders in the Manufacturing Company surrendered their stock and received therefor new stock in the Stonewall Cotton Mills for like amounts, the two corporations coexisting for twenty days; being, however, entirely different organizations. The answer admitted that it had assumed the debts of the Stonewall Manufacturing Company, when it took over its property, and was therefore liable for the taxes, if duly assessed and legally due by that company; but insisted that under the exemptions granted to the Stonewall Manufacturing Company, to which it was entitled, there was no liability on the part of either. These exemptions are stated in the opinion of the court.

The answer further stated, as proof of the fair intentions of the appellee touching the payment of all just taxes, that opinions had been secured from the state's attorney-general as to its liability for taxation and as to its rights to exemptions, and the action of the appellee had been based upon such opinions; and the answer, which was under oath, set forth at length and in itemized form its property and assets, and the property and assets of the Stonewall Manufacturing Company at the respective dates when the three exemptions, referred to in the opinion, were granted, and also the correspondence with the attorney-general and state auditor as to the same.

On the trial the complainant offered in evidence merely the tax records and supervisors' minutes of the county. The only testimony offered was that of the tax assessor who was in office from 1891 to 1900, and of the superintendent of the appellee, who had acted as superintendent and secretary of the Stonewall Manufacturing Company for the time covered by complainant's bill, both being witnesses for appellee. This, together with the exhibits to the answer, comprised the evidence in the case. The court below decided in favor of the defendant and dismissed complainant's bill. The opinion further states the case.

Decree affirmed.

Fewell & Son, for appellant.

The first question here is whether the entering of the property on the assessment rolls and the extension of the state and county taxes on the rolls, and the approval of the rolls without any order of the board striking out the items, amounted to an assessment of the property for taxation under the attendant facts and circumstances.

The superintendent of appellee gave in the property as being exempt. It was not his intention to return the property for taxation; nevertheless, the assessor placed the property on the assessement rolls the same as he did other property, and the only fact or circumstances which went to indicate that the property was not assessed for taxation was the writing by the assessor on the rolls (except the rolls for 1890 and 1891), opposite the entries, the words, "Exempt under the act of 1882." Our contention is, that these words had no place on the rolls; that they were not placed there by any person authorized to such end, and that they are to be considered as mere surplusage, not in any way affecting the rolls, or the character or meaning of the proper entries thereon, and that it is a case where the rule "utile per inutile non vitiatur," applies. This maxim was discussed in the case of Adams v. Bank, 74 Miss. 307 (S. C., 32 So. 881). Authorities were there adduced on behalf of the state revenue agent, showing that it was applicable under all sorts of conditions. While it was ruled in that case that the maximum did not apply, yet the reasoning of the court, at least inferentially, would indicate that it does apply in this case. The assessor had no right whatever to determine what property was exempt, nor to make any notation on the rolls indicating what property was exempt; nor had the board of supervisors any right to determine what property was exempt, nor to indicate by any entry on the rolls that any property was exempt, and the entry by the assessor and the approval by the board, with the notation on the rolls, amounted, as to the assessor, to a legal assessment for taxation, and, as to the board, the approval of the assessment applied only to the legal and proper entries on the rolls, and not to any notations other than those which by law belonged on the roll.

We know of no law which gives to the assessor or to the board of supervisors any power to determine what property is exempt. No objection to the rolls containing these entries was made. The board could not have made an order directing the property to be exempt--much less could it provide for an exemption by such notations as were here found or entered upon the rolls. The statutes provide what shall be placed on the roll, and anything placed on the roll by any one at any time, other than that which the law requires to be placed there, amounts to nothing. If the entry of the property on the assessment rolls, and the approval of the rolls with said property on them, and the levy on the rolls as showing the taxable property in the county, amounted in law, as we contend, to a valid assessment, then no act of the auditor or of the board in any settlement could affect the matter or the rights of the state or county.

It was contended by appellee in the lower court that the settlements made between the tax collector and the auditor and the board of supervisors, in which settlements credit was given the collector for the taxes levied on these items, operated to confirm the exemptions. If the ingenuity of counsel can fit these allowances to these items, we say it was not in the power of the auditor or the board to give any such credits and that they were false credits which may be recovered back. But if the court should hold that the things that were done did not amount to a legal and binding assessment for...