Cincinnati, N.O. & T.P. Ry. Co. v. Com., Etc.

• Decision Date: 20 February 1934
• Court: United States State Supreme Court — District of Kentucky
• Parties: Cincinnati, N.O. & T.P. Ry. Co. v. Commonwealth ex rel. Barkley, Sheriff, for Use and Benefit of Scott County, Ky., et al.

253 Ky. 24

Cincinnati, N.O. & T.P. Ry. Co. v. Commonwealth ex rel. Barkley, Sheriff, for Use and Benefit of Scott County, Ky., et al.

Court of Appeals of Kentucky.

Decided February 20, 1934.

1. Taxation. — Taxpayer, having timely tendered full payment of county taxes, held not liable for interest or penalties thereon, notwithstanding refusal to pay supposedly illegal taxes owed to boards of education (Ky. Stats., secs. 4084, 4091).

2. Taxation. — Tax penalties are not imposed for mere delinquency or to hasten payment, but also to punish fraud, evasion, or neglect of duty (Ky. Stats., sec. 4091).

3. Taxation. — Taxpayer, believing taxes illegal, may refuse payment, not being required to pay and then sue for recovery.

4. Taxation. — Although taxes are partly legal and partly illegal, taxpayer neglecting to pay any part may be subjected to penalties on entire amount (Ky. Stats., sec. 4091).

5. Taxation. — Penalties may rightfully be imposed on taxpayer neglecting or refusing to perform duty under tax laws (Ky. Stats., sec. 4091).

Appeal from Scott Circuit Court.

BRADLEY & BRADLEY for appellant.

JOHN F. FORD, Jr., for appellees.

OPINION OF THE COURT BY JUDGE RICHARDSON.

Reversing.

This suit was brought for the benefit of Scott county, Ky., Scott county board of education, and the board of education of Corinth consolidated school, to recover taxes assessed against the Cincinnati, New Orleans & Texas Pacific Railway Company for the year 1932; interest and penalties of $935.30 for the county; $789.45 for the county school; and $51.94 for the Corinth consolidated school. The questions involved as to each claim are the same, except as to the tax and penalty alleged to be due the county. The question of the regularity of the assessment of the taxes is not involved. The auditor of the state, pursuant to section 4084, Kentucky Statutes, certified to the county clerk of Scott county, and he to the sheriff of the county, the taxes due from the railway company for the year 1932, to each of the taxing units. On December 13, 1932, the sheriff mailed notice, inclosed it in an envelope, sealed and stamped, addressed to "Murray H. Hubbard, Tax Commissioner of the Cincinnati, New Orleans and Texas Pacific Railway Company, Atlanta, Georgia." It was deposited in the United States mail, and the fact it was received by the railway company is not disputed. It is the argument of the railway company that Hubbard predeceased the mailing of the notice; therefore, this fact rendered it insufficient to meet the requirement of section 4084, Kentucky Statutes. The sufficiency or insufficiency of the notice becomes immaterial in view of the reasons we shall hereafter express. Section 4084, Kentucky Statutes, provides after the tax is certified to "the proper collecting officer of the county, city, town or taxing district for collection," the same "shall be due and payable" 30 days after the notice of the amount of such tax is given by the officer whose duty it is to collect same.

Within 30 days after it received the notice addressed to Hubbard, on the 10th day of January, 1933, the railway company tendered to the sheriff, in payment of the taxes, $17,454.46, or $314.93 less than the total amount certified by the auditor. At the time of the tender and in explanation thereof, the railway company claimed the $314.93 of the taxes due the county board of education and the Corinth consolidated schools were illegal, but it was willing to pay the $314.93 whenever it should thereafter be held by the court the same were legal.

At the time of the tender the railway company requested the sheriff to accept the amount tendered, credit it on the tax bills, and also offered to give him a statement showing the amount paid would not affect in any way the question of collection of the balance. The sheriff refused to accept the amount tendered or to credit same on the tax bills, or to accept the writing showing the acceptance of the amount tendered would not affect in any way the question of the collection of the balance, asserting he had no right to accept less than the full amount of the tax bills as certified to him. He made no objection to the form of the tender or because same was in the form of drafts.

At the date of the tender there were pending in this court involving the validity of a like levy of the taxes due other taxing units for county schools, Commonwealth for Use & Benefit of McCreary Bd. of Education, v. C., N.O. & T.P. Ry. Co., 246 Ky. 684, 55 S.W. (2d) 913; Newell et al. v. C., N.O. & T.P. Ry. Co., 246 Ky. 628, 55 S.W. (2d) 662. After these cases were disposed of by this court, and on January 26, 1933, the railway company tendered to the sheriff $17,769.39, the full amount of the taxes due these taxing units, without penalty and interest. The sheriff refused to accept the amount offered without the payment of the 10 per cent. penalty and 10 per cent. interest authorized by section 4091, Kentucky Statutes, claiming the railway company was delinquent on and after January 13, 1933. The railway company refused to pay the penalty and interest, but again offered to pay the taxes without penalty and interest. Hence this action.

It is the contention of the taxing units that the sheriff properly refused to accept the tender of the taxes on January 10, 1933, and allow the railway company to retain the $314.93; also in refusing to accept a written statement from the railway company showing its retention of this sum. These taxing units argue that when the railway company's taxes were certified by the auditor in accordance with section 4084, to the county clerk and he to the sheriff, the amount so certified was due and payable 30 days after the notice was given to the railway company by the sheriff, and that the notice mailed, addressed as we have indicated, was a compliance with the statute. It is their position "there is no provision in the statutes which requires or permits the sheriff to collect the amount of taxes due from the railway company in installments; his duty is to collect the amounts certified to him by the county clerk. * * * The sheriff should not be compelled to make a collection agency of his office in the sense that he is to collect taxes by installments. * * * And further the provision of section 4148[2], Supp. 1933, that `He may accept part payment,' has no application." They argue:

"It must be particularly noted this section contains the clause, `all state, county and district taxes, except as...