Childs v. Reunion Bank

• Decision Date: 06 August 1979
• Docket Number: No. 19961,19961
• Citation: 587 S.W.2d 466
• Parties: John CHILDS et al., Appellants, v. REUNION BANK and Charles N. Brewer, Appellees.
• Court: Texas Court of Appeals

Page 466

587 S.W.2d 466

John CHILDS et al., Appellants, v. REUNION BANK and Charles N. Brewer, Appellees.

No. 19961.

Court of Civil Appeals of Texas, Dallas.

Aug. 6, 1979.

Rehearing Denied Sept. 10, 1979.

Henry M. Wade, Dist. Atty., Charles Bowling, Jr., Asst. Dist. Atty., Dallas, for appellants.

Before AKIN, ROBERTSON and HUMPHREYS, JJ.

AKIN, Justice.

This is an appeal by the Tax Assessor-Collector and the Board of Equalization of Dallas County from a permanent injunction commanding them to desist from assessing or collecting 1977 and 1978 ad valorem taxes on the stock of Reunion Bank. The suit was brought by appellee bank as agent for its shareholders and by appellee Charles N. Brewer, a shareholder and president of the bank and representative of a class consisting of all its shareholders. The trial court held that appellants' tax scheme was arbitrary, deliberate, and erroneous, and enjoined its implementation as to these taxpayer-plaintiffs. The tax collector raises four principal contentions on appeal. First, he claims the trial court erred in denying appellants' plea that this suit for injunction was filed too late because the tax plan had already been put into effect. Secondly, he contends the trial court erred in granting the injunction because the taxpayers did not sustain their burden of proof, they did not seek to do equity, and the injunction constituted an improper tax exemption for appellees. Thirdly, the tax collector maintains the trial court erred in denying his request for a jury trial, and lastly, the trial court erred in assessing court costs against him. We overrule the tax collector's contentions and affirm the trial court's judgment.

This is the second suit enjoining the tax collector from collecting ad valorem taxes under Tex.Rev.Civ.Stat.Ann. art. 7166 (Vernon 1960) on the shares of Reunion Bank. Article 7166 provides as follows:

Every banking corporation, State or national, doing business in this State shall, in the city or town in which it is located, render its real estate to the tax assessor at the time and in the manner required of individuals. At the time of making such rendition the president or some other officer of said bank shall file with said assessor a sworn statement showing the number and amount of the shares of said bank, the name and residence of each shareholder, and the number and amount of shares owned by him. Every shareholder of said bank shall, in the city or town where said bank is located, render at their actual value to the tax assessor all shares owned by him in such bank; and in case of his failure so to do, the assessor shall assess such unrendered shares as other unrendered property. Each share in such bank shall be taxed only for the difference between its actual cash value and the proportionate amount per share at which its real estate is assessed. The taxes due upon the shares of banking corporations shall be a lien thereon, and no banking corporation shall pay any dividend to any shareholder who is in default in the payment of taxes due on his shares; nor shall any banking corporation permit the transfer upon its books of any share, the owner of which is in default in the payment of his taxes upon the same. Nothing herein shall be so construed as to tax national or State banks, or the shareholders thereof, at a greater rate than is assessed against other moneyed capital in the hands of individuals.

In the first suit the bank successfully enjoined the tax collector from collecting the taxes from the bank. The tax collector then attempted to collect the tax from the individual shareholders, and these taxpayers brought this suit.

The tax collector's first contention is that the trial court erred in failing to hold that the suit was filed too late. He claims that the taxpayers' suit for injunction was not filed until after the county's tax scheme had been certified and a substantial amount of taxes had been collected. He cites City of Arlington v. Cannon, 153 Tex. 566, 271 S.W.2d 414, 416-17 (1954), for the proposition that the remedies of mandamus and injunction are lost to a taxpayer challenging a taxing plan if they are not asserted before the taxing authority puts the plan into effect. The Cannon court held as follows:

In the recent case of State v. Whittenburg (, Tex.Sup., 265 S.W.2d 569) . . . we recognized the right to relief from such an arbitrary plan of taxation. However, if the taxpayer fails to avail himself of the remedies of mandamus and injunction to prevent a taxing authority from putting such a plan into effect, . . . his right to relief is limited . . . Once such a plan is put into effect the litigant may defeat the recovery of taxes only to the extent that they are excessive and he must assume the burden of proving excessiveness . . . The difficulties to be encountered in making the necessary proof as a basis for relief is the penalty the taxpayer must pay for sitting idly by while taxing authorities put into effect a plan of taxation which deliberately permits certain classes of property to escape taxation. 271 S.W.2d at 416-17 (Emphasis added)

We cannot agree that the case here falls within the ambit of the rule enunciated in Cannon with respect to appellees' property because the record before us shows that appellees were diligent at all times under the standard set forth in Cannon. Under the rationale of Cannon, the taxpayer must lack diligence before that rule is applicable. In our case, the shareholders received their tax notices in January 1978. Appellee Charles N. Brewer obtained permission on May 31, 1978, to appear before the Board of Equalization, individually and on behalf of all shareholders, in the Board's first series of meetings in July. At his appearance Brewer presented a position paper explaining the nature of his complaint against the county's tax scheme. The tax scheme had not yet been certified or implemented. After his appearance, Brewer understood that the Board of Equalization would seek an attorney general's opinion before approving the enrollment of the tax against the bank stock, and would not place the Reunion Bank shares on the taxrolls unless the attorney general so advised. Immediately after Brewer's appearance, he met with the tax collector who agreed not to enroll the Reunion Bank shareholders on the taxrolls until an attorney general's opinion on the legality of the tax scheme was obtained. A second meeting confirming this agreement was held on or about August 15, 1978.

Notwithstanding these assurances, on September 29, 1978, Brewer received a tax statement for ad valorem taxes on the bank shares. This was his first notification since his appearance before the Board of Equalization that the contested tax scheme would be implemented. He immediately directed his attorney to bring this lawsuit, which was filed on October 5, 1978. Although implementation of the tax scheme had already begun at this filing, we hold that the taxpayers' diligence, coupled with their invited reliance on the appellants' representations, takes this case out of the rule announced in Cannon. Consequently, these taxpayers still had the remedy of injunction available to them, and they had no burden to show excessiveness in attacking the tax scheme.

To hold otherwise would place these taxpayers in an unjust dilemma. See Burklund v. Hackett, 575 S.W.2d 389, 393 (Tex.Civ.App. Tyler 1978, no writ). If they had brought suit prior to notification that the taxing authorities were going to proceed with their tax scheme, in other words, during the time when the tax collector's agreement not to proceed with the tax scheme was still in effect, the injunction would have been premature since there was no probability of substantial injury to the taxpayers. The tax collector, however, would have us hold that these taxpayers have waived their injunction remedy by not bringing a premature injunction action. Such a ruling would allow taxing authorities to escape any injunction or mandamus attack on their taxing schemes by promising not to implement the scheme against the complaining taxpayer until such a time as the scheme has already been certified and implemented against other noncomplaining taxpayers. We note that the taxpayers filed suit within a week of notification that the tax scheme was being implemented. In view of the promises by the taxing authorities and the continuing diligence of these taxpayers in challenging this tax scheme, they were not required to do more than is shown in this record to preserve their right to...