City of Houston v. McCarthy

• Decision Date: 19 September 1963
• Docket Number: No. 14271,14271
• Citation: 371 S.W.2d 587
• Parties: The CITY OF HOUSTON et al., Appellants, v. Glenn H. McCARTHY et ux., Appellees.
• Court: Texas Court of Appeals

Page 587

371 S.W.2d 587

The CITY OF HOUSTON et al., Appellants, v. Glenn H. McCARTHY et ux., Appellees.

No. 14271.

Court of Civil Appeals of Texas, Houston.

Sept. 19, 1963.

On Rehearing Oct. 10, 1963.

R. H. Burks, City Atty., G. Gordon Whitman, Sr., Asst. City Atty., B. F. Richard, Asst. City Atty., Houston, for appellants.

Franklin R. Navarro and B. Rice Aston, Houston, for appellees.

WERLEIN, Justice.

The City of Houston and the Houston Independent School District sought to recover against appellees delinquent taxes, penalties, interest and attorney's fees for the years 1951, 1953, 1954 and 1956 to 1962, inclusive. Appellants made out a prima facie case of the validity of the assessed valuations and delinquent taxes by introducing in evidence their official records. Doneghy v. State, Tex.Civ.App., 334 S.W.2d 506, error ref., n. r. e.; Whaley v. Nocona Independent School Dist., Tex.Civ.App., 339 S.W.2d 265, error ref.; Joy v. City of Terrell, Tex.Civ.App., 143 S.W.2d 704, dism., judg. cor.; City of San Marcos v. Zimmerman, Tex.Civ.App., 361 S.W.2d 929, writ ref., n. r. e. From a judgment of the trial court in favor of appellees for all of said years except 1962, appellants have perfected their appeal.

In their first four points, briefed together, appellants contend that there is no evidence, or insufficient evidence, to show any monetary injury to appellees by reason of any illegal scheme of taxation employed by appellants and that the court erred in submitting issues with respect thereto and also erred in overruling their motions for an instructed verdict and judgment non obstante veredicto. Appellees, on the other hand, take the position that the court properly entered judgment for them since the undisputed evidence shows that appellants made no attempt to assess or collect taxes on bank accounts and savings accounts or upon household furniture and furnishings, clothing, jewelry, stocks, and bonds and other personal property in Houston, and that only 5% of such personalty was voluntarily rendered by owners, and only 15% or less of the bank accounts were tax exempt. They also assert that the jury on sufficient evidence found that appellants employed during the years 1951 to 1961 a scheme for fixing values of property for taxing purposes that was not uniform, fair and equal, and that such scheme resulted in substantial injury to appellees.

We agree with appellees that the evidence shows that the scheme employed by appellants for fixing values of property for taxing purposes was illegal, in that no effect was made to assess bank accounts and other personal property generally. Section 1 of Article VIII of the Texas Constitution, Vernon's Ann.St. provides that: 'Taxation shall be equal and uniform. All property in this State * * * shall be taxed in proportion to its value.' City of Arlington v. Cannon, 1954, 153 Tex. 566, 271 S.W.2d 414.

The burden was on appellees, however, to show that they suffered substantial injury as a result of appellants' failure to assess bank accounts and other personal property. It is not enough to show that an illegal system of rendering and assessing taxes was employed. In State v. Federal Land Bank of Houston, 160 Tex. 282, 329 S.W.2d 847, our Supreme Court, through Justice Greenhill, said:

'But while the Land Bank did prove an arbitrary and illegal scheme of ad valorem taxation, that fact alone under the facts here does not of itself entitle it to relief. This is not a direct attack on the scheme of taxation or a suit to prevent the initiation or operation of an illegal scheme. No relief was sought by mandamus or injunction. Here the taxpayer sat by and allowed the plan to be put into operation without even a suggestion of a protest, objection, or appeal. The County and the other taxpayers have proceeded under the plan. The point is made only after the county-wide valuations have been fixed and adjusted in the board of equalization, the taxes levied, assessed, and presumably paid by the other taxpayers in the county. Under those circumstances, the Land Bank must assume a very heavy and onerous burden.'

The present case does not constitute a direct attack on the scheme of taxation or a suit to prevent the initiation or operation of an illegal scheme. No relief was sought by mandamus or injunction. The taxpayers sat by and allowed the plan to be put into operation without even a suggestion of a protest, objection, or appeal. Other taxpayers have proceeded under the plan.

The Court, in State v. Federal Land Bank of Houston, supra, also said:

'The government does not lose its right to taxes on one parcel of property by reason of the failure of its officers, either negligently or designedly, to assess other property that is likewise taxable. 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 prove the excessiveness. City of Arlington v. Cannon, 1954, 153 Tex. 566, 271 S.W.2d 414. When the attack is made because the taxing authority has followed an arbitrary plan or scheme, the taxpayer, to prevail, must show not only that the plan was an arbitrary and illegal one but also that the use of the plan worked to his substantial injury. State v. Whittenburg, 1954, 153 Tex. 205, 265 S.W.2d 569.'

Appellees have failed to prove by sufficient evidence that their taxes were substantially higher by virtue of the omission of the taxable personal property and the failure to assess such property at its market value. The burden was on them not only to prove excessiveness but the extent thereof. City of Arlington v. Cannon, supra; Whelan v. State, 1955, 155 Tex. 14, 282 S.W.2d 378; State v. Whittenburg, 1954, 153 Tex. 205, 265 S.W.2d 569; City of Orange, Texas v. Levingston Ship Building Co., 5 Cir. 1958, 258 F.2d 240. The jury finding that the scheme employed by appellants for taxing property resulted in substantial injury to appellees is not supported by sufficient evidence.

The jury also found that the failure of appellants during the years 1951 through 1961 to collect or assess taxes, or assess or collect taxes on bank accounts, savings and loan accounts, furniture, jewelry, stocks and bonds, and clothing, did not result in substantial injury to appellees, and that if the City had during such years attempted to assess and collect taxes, and had collected taxes on such personal property, appellees' tax bill would not have been lessened. The answers of the jury to these last two issues support appellants' contention that appellees failed to prove that they had suffered substantial damage as a result of the omission of appellants to assess and tax personal property generally within the jurisdiction of the taxing authorities. The findings of the jury to these two issues seem in conflict with the finding that the scheme employed by appellants resulted in substantial injury to appellees, since the main basis for the finding that the scheme employed was not uniform, fair and equal, appearently was the failure of appellants to assess and collect taxes on personal property.

The parties entered into a stipulation to the effect that appropriate officials of the various 66 banks and 16 savings and loan associations in Houston would, if present, testify as to the total amounts of money on deposit in their respective institutions as of December 31 of the years 1951 through 1961; and that other competent...