City of Fairmont v. Pitrolo Pontiac-Cadillac Co., PONTIAC-CADILLAC

• Decision Date: 18 July 1983
• Docket Number: PONTIAC-CADILLAC,No. CC935,CC935
• Citation: 308 S.E.2d 527,172 W.Va. 505
• Court: West Virginia Supreme Court
• Parties: CITY OF FAIRMONT, etc. v. PITROLOCO., et al.

Page 527

308 S.E.2d 527

172 W.Va. 505

CITY OF FAIRMONT, etc. v. PITROLO PONTIAC-CADILLAC CO., et al.

No. CC935.

Supreme Court of Appeals of West Virginia.

July 18, 1983.

Dissenting Opinion July 25, 1983.

Concurring Opinion Oct. 17, 1983.

Syllabus by the Court

1. "Where certain ordinances of the City of Wheeling impose upon owners of property a police service charge based upon the value of property, as determined from the land books and personal property books

of the Ohio County Assessor, such ordinances impose, in fact, an ad valorem tax upon property, and where, without regard to the police service charge, property within the City of Wheeling is taxed to the maximum amount permitted under W.Va. Const., art. X, § 1, known as the 'Tax Limitation Amendment,' and W.Va.Code, 11-8-6d [1949], such ordinances violate that constitutional provision." Syllabus, Hare v. City of Wheeling, 171 W.Va.284, 298 S.E.2d 820 (1982).

2. The character of a tax is determined not by its label but by analyzing its operation and effect.

3. The essential characteristic of an ad valorem tax, as its name suggests, is that the tax is levied according to the value of the property. Also, assessment on a regular basis is a common characteristic.

4. No matter how fairly apportioned an ad valorem property tax may be, if its amount exceeds the constitutional levy limits prescribed by Section 1 of Article X of the Constitution of West Virginia, it is void.

5. Once an ad valorem tax is found to exist under a municipal ordinance and the municipality is already at the maximum ad valorem rates prescribed by law, such additional ad valorem tax violates Section 1 of Article X of the Constitution of West Virginia.

6. Generally, when a statute or ordinance is declared unconstitutional, it is inoperative, as if it had never been passed.

7. Ordinarily, in the absence of any statutory right permitting recovery, a voluntary payment of a tax made under a statute which is later declared unconstitutional cannot be recovered.

Higinbotham & Higinbotham, George R. Higinbotham, Fairmont, for plaintiff.

Amos & Rodeheaver and Robert M. Amos, Fairmont, for Pitrolo Pontiac-Cadillac Co.

McKittrick & Vaughan, Dennis R. Vaughan, Jr. and Harry C. Taylor, III, St. Albans, for amicus curiae Municipal Leagues.

Jackson, Kelly, Holt & O'Farrell, Thomas N. Chambers and Jennie Ovrom Ferritti, Robert R. Harpold, Jr., City Atty., Charleston, for amicus curiae City of Charleston.

John L. DePolo, City Atty., Clarksburg, for amicus curiae City of Clarksburg.

MILLER, Justice:

The issues in this certified case arose when the City of Fairmont filed suit against Pitrolo Pontiac-Cadillac and Acme Land Company to collect delinquent fire service fees. The defendants sought to defeat the collection by claiming that the City fire service charge was an ad valorem tax and violated the provisions of Section 1 of Article X of the Constitution of West Virginia. While this case was pending in the circuit court, we issued our opinion in Hare v. City of Wheeling, 171 W.Va.284, 298 S.E.2d 820 (1982), where we said in its single Syllabus:

"Where certain ordinances of the City of Wheeling impose upon owners of property a police service charge based upon the value of property, as determined from the land books and personal property books of the Ohio County Assessor, such ordinances impose, in fact, an ad valorem tax upon property, and where, without regard to the police service charge, property within the City of Wheeling is taxed to the maximum amount permitted under W.Va. Const., art. X, § 1, known as the 'Tax Limitation Amendment,' and W.Va.Code, 11-8-6d [1949], such ordinances violate that constitutional provision."

The circuit court held that the ordinance was unconstitutional under Hare. It also concluded that the ruling in Hare was applicable as against the City's argument that Hare should not be made applicable to delinquent taxes accruing prior to the date of the Hare opinion. We agree with the circuit court's decision on both issues.

There is no argument that the maximum levy provisions of Section 1 of Article X relate to ad valorem taxes on real and personal property. ¹ Hare, supra; Appalachian Power Company v. The County Court of Mercer County, 146 W.Va. 118, 118 S.E.2d 531 (1961); Bee v. City of Huntington, 114 W.Va. 40, 171 S.E. 539 (1933); Finlayson v. City of Shinnston, 113 W.Va. 434, 168 S.E. 479 (1933).

We are asked to distinguish the Hare case by characterizing the tax in this case as a service fee rather than a property tax. The City argues that Hare did not recognize the distinction between a service fee and a property tax. Because W.Va.Code, 8-13-13, authorizes imposition of fees for municipal services, the City claims that its fire service charge should be sustained as a fee and not as a property tax. Furthermore, the City suggests that there are differences between a fee and a property tax. First, a fee is usually imposed for some specific purpose, and in the present case it is for fire protection. Second, a property tax ordinarily creates a lien and is not enforceable against the taxpayer personally; whereas, a fee does not create a lien and may be enforced personally.

This issue of property tax versus service fee was raised in Hare, although not as extensively argued, and we stated: "The issue before this Court, therefore, is whether the police service charge promulgated by the City of Wheeling was a fee not precluded by the Tax Limitation Amendment, or whether the police service charge was, in fact, an ad valorem tax upon property enacted in violation of the Tax Limitation Amendment." 171 W.Va. 288, 298 S.E.2d at 825. We then proceeded to cite Dawson v. Kentucky Distilleries & Warehouse Co., 255 U.S. 288, 41 S.Ct. 272, 65 L.Ed. 638 (1921), ² and Hukle v. City of Huntington, 134 W.Va. 249, 58 S.E.2d 780 (1950), to the effect that the character of a tax is determined not by its label but by analyzing its operation and effect, and concluded:

"It is without question that the police service charge in this action is, in fact, an ad valorem tax upon property. The ordinances were imposed upon the owners of property within the City of Wheeling, and the amount to be collected was directly related to the assessed value of that property. Pursuant to Ordinance No. 7278, the value of property for purposes of the ordinances was to be determined from the land books and personal property books of the Ohio County Assessor." 171 W.Va. 290, 298 S.E.2d at 826.

When we turn to the pertinent provisions of the City of Fairmont Ordinance No. 524, we believe that the tax is an ad valorem tax and not a service fee. Section 2 of the ordinance imposes and assesses on all residential, commercial, industrial, or other buildings within the city, the amount of fifty-five cents per one hundred dollars of the value of such buildings. ³ This section also prescribes the same rate of tax for all tangible personal property, goods, and chattels. The value according to the ordinance is "that as fixed for tax purposes by the Assessor of the County, or by the Board of Public Works of the State." ⁴

Under Section 3 of the ordinance the tax is collected in two semiannual installments. ⁵ The first is due and payable on October 1 and the second on April 1 of each year. ⁶ This section further states that the tax "shall be collected in the same manner as municipal taxes are collected under the statutes of the State by the Sheriff of the County." ⁷

The distinction between an ad valorem tax and other taxes has been discussed in a number of cases. In re City of Enid, 195 Okl. 365, 158 P.2d 348 (1945), contains a lengthy review of various authorities which have considered the question and the court concluded:

"In the early case of Society for Savings v. Coite, 73 U.S. 594, 6 Wall. 594, 18 L.Ed. 897, it was pointed out that whenever a property tax was imposed by law, provision was made that the value of the property be ascertained by appraisement and that the tax be assessed upon the appraised value of the property. The essential difference between an ad valorem tax and any form of privilege tax is that the ad valorem property tax is based upon the value of the property, tangible or intangible. Pacific Gas & Electric Co. v. Roberts, 168 Cal. 420, 143 P. 700. See, also, Commonwealth v. Columbia Gas & Electric Corporation, 336 Pa. 209, 8 A.2d 404, 131 A.L.R. 927. Other authorities to the same tenor and effect as those hereinabove cited are collected in the following annotations: 89 A.L.R. 1432, 110 A.L.R. 1485, 117 A.L.R. 847, 128 A.L.R. 894, 103 A.L.R. 93. See, also, 26 R.C.L., sec. 19, p. 35; 33 C.J.S., Excise, p. 110." 195 Okl. at 369, 158 P.2d at 352.

In Callaway v. City of Overland Park, 211 Kan. 646, 651, 508 P.2d 902, 907 (1973), the court made this distinction:

"The term 'excise tax' has come to mean and include practically any tax which is not an ad valorem tax. An ad valorem tax is a tax imposed on the basis of the value of the article or thing taxed. An excise tax is a tax imposed on the performance of an act, the engaging in an occupation or the enjoyment of a privilege. (See 15A Words and Phrases, p. 150.)" (Emphasis added)

The Maryland Supreme Court used this general definition of a property tax in Weaver v. Prince George's County, 281 Md. 349, 357-58, 379 A.2d 399, 403-04 (1977):

"The consensus of opinion appears to be that a property tax is a charge on the owner of property by reason of his ownership alone without regard to any use that might be made of it, Bromley v. McCaughn, 280 U.S. 124, 136, 50 S.Ct. 46 , 74 L.Ed. 226 (1929); Dawson v. Kentucky Distilleries Co., 255 U.S. 288, 294, 41 S.Ct. 272 , 65 L.Ed. 638 (1921); Flint v. Stone Tracy Co., 220 U.S. 107, 152, 31 S.Ct. 342 , 55 L.Ed. 389 (1911); Herman v. M. & C.C. of Baltimore, 189 Md. at 197, 55 A.2d 491; ...

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"Finally, the property tax and the excise tax may be differentiated by the methods used to impose...