Bank of Indianola v. Miller

• Decision Date: 09 May 1927
• Docket Number: 26112
• Citation: 147 Miss. 695,112 So. 877
• Court: Mississippi Supreme Court
• Parties: BANK OF INDIANOLA et al. v. MILLER, STATE REVENUE AGENT. [*]

112 So. 877

147 Miss. 695

BANK OF INDIANOLA et al. v. MILLER, STATE REVENUE AGENT. ^[*]

No. 26112

Supreme Court of Mississippi

May 9, 1927

Suggestion of Error Overruled June 6, 1927.

APPEAL from chancery court of Sunflower county HON. E. N. THOMAS Chancellor.

Separate suits by W. J. Miller, state revenue agent, against the Bank of Indianola and another, which were consolidated for trial. Decrees for complainant, and defendants appeal. Affirmed.

Decree affirmed.

Chapman, Moody & Johnson, for appellants.

I. Even if the appellants be charged with interest on the daily balances, when by the account, there should be excluded interest on so much of said balances as represented taxes collected for the levee and drainage districts. This statute which imposes interest, creates an obligation which did not exist at common law, and, for that reason, must be strictly construed: 33 C. J. 187, sec. 27; Warren County v Klein, 51 Miss. 807; 36 Cyc. 1180-1188; 36 Cyc. 1119; Ellis v. Murray, 28 Miss. 129, 142.

The levee district is a subdivision of the state, but it is not a subdivision of the county. If the words "subdivisions thereof" do not include a subdivision of the state, then it follows that taxes collected for the levee district are not included within the terms of the statute. A drainage district is not a subdivision of a county. Robertson v Thomas, 79 So. 289. Therefore the decree, if otherwise correct, should be reversed so that there should be deducted from the amount decreed, as interest and damages on levee and drainage district taxes.

II. If liable for interest on the daily balances, shown by the accounts, which daily balances are proven to be not daily balances of tax collections, the penalty of five per cent per month, or fraction thereof, does not attach. The statute, by its terms, prescribes a penalty for a failure to pay, when due, interest on tax collections computed at two per cent per annum on daily balances. The daily balances of tax collections, as a fact, have not been, and cannot be, established either by the complainant or defendants.

The law, as stated in the former opinion of this court, is that the defendants must so keep their accounts as to show the daily balances of tax collections; and, failing to do so, they must pay, as damages, interest on the daily balances shown by the account, whether tax collections or not. That is, the law in such a case awards damages against the defendants for failing to keep accounts that show the daily balances of tax collections.

The penalty, imposed by the statute, follows the establishment of the fact. From the inability to prove the fact owing to the acts of omission of the defendants, damages are awarded against them to the extent of interest computed at two per cent per annum on the daily balances shown by the account. The law does not presume, from a lack of evidence, that the fact exists, but merely awards damages for the nonproduction of the evidence. 22 C. J. 109, sec. 49. In other words, accepting what the opinion states the law to be, which, of course, we do, that law, not the statute per se, awards damages computed at two per cent per annum, etc., for the failure to keep the accounts.

Damages are awarded for the breach of a duty, that is the failure to keep the account. Kieppner v. Lemon, 47 A. 353; Stone v. Marshall Oil Co., 57 A. 183. The penalty imposed by the statute, attaches for a failure to pay the interest due, not damages awarded for the breach of a duty. If no interest due is established, no penalty follows. Therefore, in awarding the penalty on the damages, the decree in that respect, at least, is erroneous. Therefore, the decree, if otherwise correct, it should be reversed and the damages, decreed against both defendants, remitted.

III. The act is violative of section 90 (d) of the Constitution of 1890. 25 R. C. L. 820, Note; 25 R. C. L. 824, sec. 73; 36 Cyc. 1007. If the law is special, not general, the fact that it relates to public funds will not save it. That the law is special is obvious. The test, under section 90 is whether the subject-matter could be provided for under a general law. In other words whether the statute which regulates the interest to be paid for the use of funds mentioned in it could be made applicable to all persons. If a general law would fit the case such a law must be enacted. A law is ascertained to be special not by what it includes but by what it excludes. For good statement of the rule see Budd v. Hancock, 48 A. (N. J.) 1024.

IV. The statute, as the basis of this suit, violates sections 12 and 24 of the Constitution of 1890, and that portion of the Fourteenth Amendment which provides that no state shall deprive any person of his property without due process of law. Ex parte Young, 14 Am. & Eng. Ann. Cases, pages 764-70-1.

Whether the legislature has the authority to enact a law, imposing interest on daily balances of tax collections, is questioned. If it has, the amount of the interest claimed is denied. A denial to the appellants of access to the courts to have both or either of these questions adjudicated, would confessedly be unconstitutional. Likewise if the penalty imposed, is so out of proportion to the amount involved, as to have that effect. If the amount of interest claimed, and established, be one thousand dollars, a penalty of five per cent per month is imposed when the interest became due, not when it was adjudicated to be due, and, from the former date, a penalty of five per cent per month, or fraction thereof, is imposed. A year, at least, from the date of a chancery suit is filed to a decision in this court, elapses. Therefore, if the appellants are wrong, they pay a penalty of six hundred dollars for resorting to the courts to have adjudicated whether they owe one thousand dollars.

If the penalty that is imposed attaches, in such a manner as to be so out of proportion to the duty to be performed--that is the debt to be paid--that it deters access to the courts, in order to have the question of the duty adjudicated, it is void. The statute, under consideration, does not create the debt. When facts, in conformity with the rule laid down in the statute, are established the debt results. The enormity of the penalty, imposed by the statute, must be determined in relation to the amount involved, or the debt claimed to be due. Gulf, etc., R. R. Co. v. Ellis, 41 L.Ed. 666-667-8. The penalty imposed by the statute, is so enormous as to deny access to the courts, and, as a consequence, property is taken without due process of law.

V. The statute, under consideration, is void, in that it denies to the appellants the equal protection of the law, as provided by the Fourteenth Amendment to the Constitution of the United States. Chapter 174, Acts of 1922. This is a penalty imposed on banks only, for a failure to pay a debt due by them to the county, and is imposed on no other class of individuals or corporations. All debtors, owing debts to counties, as a class, are not so punished. Therefore, we insist that the statute is unconstitutional, as such banks are denied the equal protection of the laws, in that as debtors in general and in particular, and as litigants they are penalized and others are not. Gulf, etc., Ry. v. Ellis, 41 L.Ed. 666, 667-8; Sorenson v. Webb, 71 So. 273.

J. H. Sumrall, for appellee, and Wilson & Henley, amici curiae.

I. Subsection D, of section 90, is not violated by the provisions of the statute in question. In the first place the act in question does not, in any sense, deal with the rate of interest on money, in the sense contemplated by the section of the Constitution referred to. In the next place the money referred to in the section of the Constitution in question has to do with money in the sense that the lawful rate of interest fixed by statute to be contracted for by all persons must be general in its nature, and uniform in its application throughout the state. Halsell v. Union Insurance Company, 105 Miss. 268.

The inhibition of the statute relied on by appellants would not be applicable to the case at bar for two reasons. In the first place, if the banks, as contemplated by the statute under consideration, may be segregated because of their methods of doing business with tax collections (and I think they can), then the law would not be unconstitutional, even though it should be admitted that this was a special law. But while the charge made against the banks, for the use of public moneys handled by them, is called interest, it is not the kind of interest contemplated by the Constitution, in the sense that it amounts to a fixing of a local rate of interest; as was the case in the Halsell case, supra.

It is necessary to take into consideration what the term "bank" implies. Section 3578, Hemingway's Code; State v. Kelsey, 44 N.J.L. 1. The history of the legislation leading up to the enactment of chapter 174, of the Laws of 1922, clearly demonstrate the object of the legislature in enacting said statute. See chapter 315, Laws of 1920; chapter 174, Laws of 1922.

It is manifest that the term "any bank" as used in said law, imposing a condition on handling of public funds, is a broad and comprehensive term, and applies equally to any person, firm or corporation in the state who would have occasion to handle such deposits, since any lawful handling of such deposits would constitute such person, firm or corporation a "bank" under the laws of this state.

II. The statute attacked does not violate sections 12 and 24 of the state Constitution. The rule quoted by counsel for appellants from Ex parte Young, 14 American and English Annotated Cases 764 and 701, is a complete answer to their own contention, that the appellants would be deprived of their property without due...