Board of Com'rs of Moore County v. Blue

• Decision Date: 09 December 1925
• Docket Number: 431.
• Citation: 130 S.E. 743,190 N.C. 638
• Parties: BOARD OF COM'RS OF MOORE COUNTY v. BLUE, SHERIFF, ET AL.
• Court: North Carolina Supreme Court

130 S.E. 743

190 N.C. 638

BOARD OF COM'RS OF MOORE COUNTY v. BLUE, SHERIFF, ET AL.

No. 431.

Supreme Court of North Carolina

December 9, 1925

Appeal from Superior Court, Moore County; Bryson, Judge.

Action by the State, on the relation of Board of Commissioners of Moore County, against Daniel Alphonso Blue, Sheriff of Moore County and his bondsmen, wherein the sheriff pleaded a counterclaim. From a judgment sustaining a demurrer to his counterclaim, and from an order requiring deposit of tax lists and books in vaults in the office of the register of deeds pending litigation, the Sheriff and other defendants appeal. Judgment and order affirmed.

Sheriff in action to compel accounting for taxes collected cannot "counterclaim" for alleged overpayment in prior years.

Order for safe-keeping of tax records pending suit to compel accounting by sheriff held proper.

The plaintiff alleged the levy of taxes for 1922, for its several purposes in the sum of $276,292.23, and that these lists were duly certified to the defendant Daniel Alphonso Blue sheriff, for collection, and that he had failed to pay the plaintiff, or to receive credit for a balance thereof in the aggregate sum of $56,283.70 with interest on $36,720.35 thereof at 2 per cent. per annum from September 30, 1924, and interest on $20,563.35 thereof at 6 per cent. from September 30, 1924 (said date being the date of the institution of this action).

The defendant sheriff denied the amount of plaintiff's claims, and alleges his willingness to settle and pay the correct amount due plaintiff, but set up that there had been no settlement in reference to the taxes for 1922, and no demand on defendant Daniel Alphonso Blue, sheriff, therefor. The defendants further alleged special errors in paying over taxes in 1918, 1919, 1920, 1921, each year, in the sum of $5,000, and during the years 1921 and 1922 the plaintiff wrongfully charged in the tax list $6,450, comprised of items of taxes levied on "foreign stock," that is, stock owned by residents of Moore county in corporations of other states, and that he was entitled in the 1922 settlement to recover $2,400 over payment.

To this counterclaim, plaintiff demurred as follows:

"(1) That the said defendant sheriff, under the laws of this state, cannot plead any special error against him in the settlements of the taxes of 1918, 1919, 1920, and 1921, or special error in the settlement for either of said years as a set-off, counterclaim or recoupment in this action brought against him by plaintiff for taxes collected, due and owing by him to plaintiff for the year of 1922.

(2) That plaintiff's cause of action herein does not arise upon contract, but is based upon the duty of the defendant sheriff to collect and account to the plaintiff for the county's moneys which he has collected as its agent for the year 1922, and should have in hand, and the same is not under the laws of this state, subject to set-off counterclaim, or recoupment for special errors in settlements for said years of 1918, 1919, 1920, and 1921."

Plaintiff further demurred to the offset, counterclaim and recoupment set up by defendant sheriff with reference to the item of $6,450, which the said sheriff says was wrongfully charged against him, as follows:

"(1) That plaintiff's demands in this action for 1922 taxes cannot be offset, counterclaimed or in anyway reduced by plea of any special error in the settlement of 1921 taxes charged against said defendant sheriff on foreign corporate stock, whether collected by said sheriff or not.

(2) That under the Constitution and laws of the state the county of Moore was in 1921 and 1922 required to levy taxes on and against foreign corporation stock held in Moore county, and the said sheriff is not entitled to relief on account thereof, except in such cases as the board of commissioners of said county may have granted relief."

On February 14, 1925, an order was entered directing that the tax lists or tax books of Moore county, indorsed by the board of commissioners to the defendant sheriff for the collection of the public taxes for the years 1918, 1919, 1920, 1921, and 1922, be filed for safe-keeping in the fireproof vaults in the office of the register of deeds for Moore county, as public records of said office. The purpose of this order is thus stated: "Where the same may be accessible to the public and the parties to this action."

The defendant sheriff appealed from this order.

This action was instituted against the defendant Daniel Alphonso Blue, Sheriff of Moore county, and the other defendants who are his bondsmen.

Siler & Barber, of Pittsboro, and Hoyle & Hoyle, of Carthage, for appellants.

R. L. Burns, of Carthage, for appellee.

VARSER J.

Defendants' appeal presents two questions: (1) Whether the pleaded counterclaim is available as such in this action; and (2) whether there was error in the order with reference to the safe-keeping of the tax list.

We are clearly of the opinion, and so hold, that at the time of the hearing at February term of Moore superior court, 1925, the pleaded counterclaim was not good against the demurrer, and was not available to the defendant in any respect as a bar to the suit of Moore county to compel the defendant sheriff to make settlement, as required by law, of the taxes represented by the tax list and duly certified to him, as allowed by law. Battle v. Thompson, 65 N.C. 406; Cobb v. Elizabeth City, 75 N.C. 1; Gatling v. Commissioners, 92 N.C. 536, 539, 53 Am. Rep. 432; State v. Georgia Co., 112 N.C. 34, 17 S.E. 10, 19 L. R. A. 485; Commissioners v. White, 123 N.C. 534, 31 S.E. 670; Wilmington v. Bryan, 141 N.C. 666, 54 S.E. 543; Morgantown Graded School v. McDowell, 157 N.C. 316, 317, 72 S.E. 1083; Cooley on Taxation, 15, 16. This question is squarely presented in Commissioners v. Hall, 177 N.C. 490, 99 S.E. 372, when the court upheld a demurrer against a counterclaim, such as has been pleaded in the instant case. As stated by Brown, J., in Wilmington v. Bryan, supra: "No counterclaim is valid against a demand for taxes." And in the same case, Walker, J., concurring as to this proposition, says:

"Neither a taxpayer nor a sheriff can plead a set-off in a suit against him for taxes due and owing. * * * This is so upon the ground of public policy. To permit a taxpayer, or an officer charged with the collection of taxes, to set up an opposing claim against the state or a city might seriously embarrass the government in its financial operations by delaying the collection of taxes to pay current expenses."

This reasoning applies with equal force to a county which has, necessarily, made its levy for the respective years mentioned in the counterclaim upon the then needs of the county government, and to allow a counterclaim collected through the years against the settlement sued for might result in much embarrassment to the county and its taxpayers. Taxes are not debts resting upon contract or upon the consent of the taxpayers, and are not debts in the ordinary sense of the word, and to hold that a tax is liable to set-off would be subversive to the power of government, and destructive for the purpose for which the tax is levied. Gatling v. Commissioners, supra.

"Recoupment" and "set-off," unknown at common law, are creatures of the statute. Electric Co. v. Williams, 123 N.C. 51, 31 S.E. 288; Boyett v. Vaughan, 85 N.C. 363. Counterclaim is broader, and embraces recoupment and set-offs, but exceeds them both. It was unknown in this state until the Code of Civil Procedure was adopted. Valentine v. Holloman, 63 N.C. 475; Teague v. James, 63 N.C. 91; March v. Thomas, 63 N.C. 87; Electric Co. v. Williams, supra; Bank v. Wilson, 124 N.C. 562, 570, 32 S.E. 889; 24 R. C. L. 792 et seq.

The counterclaim, wherein the defendant sheriff seeks to challenge the right and power of the commissioners of Moore county to levy a tax on shares of stock in foreign corporations, is not available to defendants for two reasons: (1) Prior to the adoption of the Revenue Act of 1923, § 4 (Pub. Laws 1923, c. 4) such a tax was authorized and directed to be levied. Public Laws 1921, c. 38, § 40, with necessary machinery for fixing values prescribed therein. Worth v. Commissioners, 82 N.C. 420, 33 Am. Rep. 692; Worth v. Commissioners, 90 N.C. 409; Redmond v. Commissioners, 106 N.C. 122, 10 S.E. 845, 7 L. R. A. 539. An interesting discussion of this and similar tax legislation appears in Person v. Watts, 184 N.C. 499, 115 S.E. 336, and in Person v. Doughton, 186 N.C. 723, 120 S.E. 481. County commissioners have no power to release from taxation property subject thereto. C. S. § 7976. Lemly v. Commissioners, 85 N.C. 379. The Legislature has no power to compel a return of taxes legally collected. Bailey v. Raleigh, 130 N.C. 209, 41 S.E. 281, 58 L. R. A. 178. (2) The defendant sheriff is estopped to question the authority of the commissioners to levy the taxes certified to him when the tax lists have been received by him and he has acted under them. State v. Woodside, 31 N.C. 496; McGuire v. Williams, 123 N.C. 349, 31 S.E. 627.

Defendants however, claim that whatever was the status of their pleaded counterclaim, when the judgment on the demurrer was rendered, that on March 10, 1925, chapter 254, Public Laws 1925, was ratified by the Legislature, and that this act expressly permits the pleaded counterclaim. This act is broad enough to cover specific errors and mistakes made against "ex-sheriff" or "ex-tax collector." The county commissioners are given authority to correct such errors, and give him credit when he goes out of office, and it provides that, in action for the settlement of taxes, such errors and mistakes shall be allowed as set-offs or counterclaims against any amount that he may owe...